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When Bert Padell's banker left HSBC Bank USA to join Signature Bank shortly after its founding in 2001, Mr. Padell did not hesitate. The business manager for such stars as Britney Spears and Alicia Keys promptly moved his account to Signature and advised his clients to do the same.
While most of Signature's 20 banking team leaders have brought far less glamorous clients with them-from small business owners to lawyers and accountants-together they have assembled a mountain of money. The total now stretches to $950 million.
"Signature has enjoyed off-the-charts deposit growth," says James McCormick, president of First Manhattan Consulting Group, which specializes in financial institutions.
On the strength of that influx, Signature has grown to rank among the largest 5% of all U.S. commercial banks in just 20 months. It also expects to report its first profit this quarter. The bank has achieved those results by hiring seasoned relationship bankers who brought with them sizable books of business. It has kept and added to that business by providing better service than many of its rivals.
With more banks crowding into Manhattan every week, though, maintaining that type of growth is getting harder, as more institutions vie for many of the same bankers and clients. In addition, while Signature has outpaced its peers in deposit growth, it has lagged them in turning those funds into profitgenerating assets, such as loans. The net result...