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Jul 19, 2018

Signature Bank Reports 2018 Second Quarter Results

Bank Announces Inaugural Quarterly Dividend of $0.56 Per Share

  • Net Income for the 2018 Second Quarter Was $154.6 Million, or $2.83 Diluted Earnings Per Share Versus $14.0 Million, or $0.26 Diluted Earnings Per Share, Reported in the 2017 Second Quarter. Excluding Provision Expense and Write-Downs for the Taxi Medallion Portfolio, 2017 Second Quarter Net Income Would Have Been $120.2 Million, or $2.21 Diluted Earnings Per Share
  • The Bank Declared a Cash Dividend of $0.56 Per Share, Payable on or After August 15, 2018 to Common Shareholders of Record at the Close of Business on August 1, 2018
  • Total Deposits in the Second Quarter Grew $176.0 Million to $34.99 Billion, Affected By a Decrease of $918.2 Million in Escrow Deposits; Total Deposits Have Grown $1.83 Billion, or 5.5 Percent, Since the End of the 2017 Second Quarter. Average Deposits Increased $237.0 Million in the 2018 Second Quarter
  • For the 2018 Second Quarter, Loans Increased $900.3 Million, or 2.7 Percent, to $34.15 Billion. Since the End of the 2017 Second Quarter, Loans Have Increased 12.4 Percent, or $3.76 Billion
  • Non-Accrual Loans were $158.1 Million, or 0.46 Percent of Total Loans, at June 30, 2018, Versus $168.7 Million, or 0.51 Percent, at the End of the 2018 First Quarter and $392.9 Million, or 1.29 Percent, at the End of the 2017 Second Quarter. Excluding Taxi Medallion Loans, Which Were All Placed on Non-Accrual in the 2017 Second Quarter, Non-Accrual Loans Were $23.4 Million, or Seven Basis Points of Total Loans
  • Net Interest Margin on a Tax-Equivalent Basis Was 2.94 Percent, Compared with 3.01 Percent for the 2018 First Quarter and 3.11 Percent for the 2017 Second Quarter. Core Net Interest Margin on a Tax-Equivalent Basis Excluding Loan Prepayment Penalty Income Declined Six Basis Points to 2.89 Percent for the 2018 Second Quarter when Compared with the 2018 First Quarter
  • Tier 1 Leverage, Common Equity Tier 1 Risk-Based, Tier 1 Risk-Based and Total Risk-Based Capital Ratios were 9.64 Percent, 12.10 Percent, 12.10 Percent and 13.42 Percent, Respectively, at June 30, 2018. Signature Bank Remains Significantly Above FDIC “Well Capitalized” Standards. Tangible Common Equity Ratio Was 9.10 Percent
  • Two Private Client Banking Teams Joined During the 2018 Second Quarter Bringing the Total Team Hires to Four in 2018. Another Two Teams Have Joined Thus Far in the Third Quarter of 2018

NEW YORK--(BUSINESS WIRE)--Jul. 19, 2018-- Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, today announced results for its second quarter ended June 30, 2018. Net income for the 2018 second quarter was $154.6 million, or $2.83 diluted earnings per share, versus $14.0 million, or $0.26 diluted earnings per share, for the 2017 second quarter. The increase in net income for the 2018 second quarter, versus the comparable quarter last year, is due to a decrease of $179.6 million in the provision for loan losses nearly all attributable to the New York City taxi medallion portfolio.

Net interest income for the 2018 second quarter reached $321.0 million, up $13.8 million, or 4.5 percent, when compared with the 2017 second quarter. This increase is primarily due to growth in average interest-earning assets. Total assets reached $45.22 billion at June 30, 2018, an increase of $4.50 billion, or 11.0 percent, from $40.72 billion at June 30, 2017. Average assets for the 2018 second quarter reached $44.58 billion, an increase of $4.27 billion, or 10.6 percent, compared with the 2017 second quarter.

Deposits during the 2018 second quarter rose $176.0 million, or 0.5 percent, to $34.99 billion at June 30, 2018, affected by a decrease of $918.2 million in escrow deposits. When compared with deposits at June 30, 2017, overall deposit growth for the last twelve months was 5.5 percent, or $1.83 billion. Average deposits for the 2018 second quarter reached $34.46 billion, an increase of $237.0 million, or 0.7 percent.

“Signature Bank’s solid earnings and growth this quarter, coupled with both the positive impact of the $50 billion SIFI mark moving higher and tax reform has enabled us to declare an inaugural quarterly cash dividend of $0.56 per share to our common shareholders, representing an annualized dividend of $2.24 per share. We are proud of our colleagues who work hard for our clients every day, and we believe those efforts show through in our results and in returns for our shareholders,” explained Joseph J. DePaolo, President and Chief Executive Officer.

“Additionally, Signature Bank continues to make the necessary investments to further our progress. Recent initiatives indicative of the Bank’s plan for sustained growth include the hiring of private client banking teams in both New York and San Francisco, where we are now building a strong Signature Bank presence. We are strengthening our infrastructure with a new loan system soon to be in place. We are investing in a new credit approval system, foreign exchange system and an enhanced payments platform, to which we previously alluded. All these efforts are augmenting Signature Bank’s solid foundation and will allow us to further our growth initiatives,” DePaolo said.

“The recent passing of the Economic Growth, Regulatory Relief and Consumer Protection Act by Congress bodes well for banks like ours. Raising the SIFI designation threshold from $50 billion to $250 billion will foster greater competition by affording banks of varying size more opportunity within the banking industry,” said Scott A. Shay, Chairman of the Board.

“In turn, this will prove beneficial for small and medium-sized businesses as they stand to gain better access to capital. Now, nimble, medium-sized banks such as Signature Bank will be better positioned to more effectively compete with the too-big-to-fail megabanks, and the commercial banking landscape will offer better options to growing companies thereby further stimulating economic growth,” Shay concluded.

Capital

The Bank’s Tier 1 leverage, common equity Tier 1 risk-based, Tier 1 risk-based, and total risk-based capital ratios were approximately 9.64 percent, 12.10 percent, 12.10 percent, and 13.42 percent, respectively, as of June 30, 2018. Each of these ratios is well in excess of regulatory requirements. The Bank’s strong risk-based capital ratios reflect the relatively low risk profile of the Bank’s balance sheet. The Bank’s tangible common equity ratio remains strong at 9.10 percent. The Bank defines tangible common equity ratio as the ratio of tangible common equity to adjusted tangible assets and calculates this ratio by dividing total consolidated common shareholders’ equity by consolidated total assets.

Net Interest Income

Net interest income for the 2018 second quarter was $321.0 million, an increase of $13.8 million, or 4.5 percent, versus the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $43.89 billion for the 2018 second quarter represent an increase of $4.15 billion, or 10.4 percent, from the 2017 second quarter. Yield on interest-earning assets for the 2018 second quarter increased 16 basis points to 3.82 percent, compared with the 2017 second quarter.

Average cost of deposits and average cost of funds for the second quarter of 2018 increased by 27 basis points and 35 basis points, to 0.76 percent and 0.96 percent, respectively versus the 2017 second quarter.

Net interest margin on a tax-equivalent basis for the 2018 second quarter was 2.94 percent versus 3.11 percent reported in the same period a year ago. On a linked quarter basis, net interest margin on a tax-equivalent basis decreased seven basis points. Excluding loan prepayment penalties in both quarters, linked quarter core net interest margin on a tax-equivalent basis decreased six basis points to 2.89 percent.

Provision for Loan Losses

The Bank’s provision for loan losses for the second quarter of 2018 was $8.0 million, compared with $140.8 million for the 2018 first quarter and $187.6 million for the 2017 second quarter. The elevated provisions for the 2018 first quarter and the 2017 second quarter were due to the New York City taxi medallion loan portfolio.

Net charge-offs for the 2018 second quarter were $3.0 million, or 0.04 percent of average loans on an annualized basis, versus $128.3 million, or 1.58 percent, for the 2018 first quarter and $229.0 million, or 3.04 percent, for the 2017 second quarter. The elevated level of charge-offs for the 2018 first quarter and the 2017 second quarter were due to the taxi medallion portfolio.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2018 second quarter was $5.6 million, down $4.0 million when compared with $9.6 million reported in the 2017 second quarter. The decrease was due to a $3.8 million increase in tax credit investment amortization. These investments positively impact our effective tax rate.

Non-interest expense for the second quarter of 2018 was $112.6 million, a decrease of $3.7 million, or 3.2 percent, versus $116.3 million reported in the 2017 second quarter. The decrease was primarily a result of write-downs of $11.5 million on repossessed New York City taxi medallion loans that occurred in the 2017 second quarter. This decrease was partially offset by increases in salaries and benefits from the addition of new private client banking teams.

The Bank’s efficiency ratio decreased to 34.5 percent for the 2018 second quarter versus 36.7 percent for the comparable period last year. The decrease was primarily due to a decrease in other general and administrative expenses of $13.7 million primarily due to the absence of write-downs on repossessed New York City taxi medallion loans.

Loans

Loans, excluding loans held for sale, grew $900.3 million, or 2.7 percent, during the second quarter of 2018 to $34.15 billion, compared with $33.25 billion at March 31, 2018. At June 30, 2018, loans accounted for 75.5 percent of total assets, versus 74.8 percent at the end of the 2018 first quarter and 74.6 percent at the end of 2017 second quarter. Average loans, excluding loans held for sale, reached $33.67 billion in the 2018 second quarter, growing $732.7 million, or 2.2 percent, from the 2018 first quarter and $3.50 billion, or 11.6 percent, from the 2017 second quarter. The increase in loans for the quarter was primarily driven by growth in commercial and industrial lending, specialty finance, multi-family and commercial real estate loans.

At June 30, 2018, non-accrual loans were $158.1 million, representing 0.46 percent of total loans and 0.35 percent of total assets, compared with non-accrual loans of $168.7 million, or 0.51 percent of total loans, at March 31, 2018 and $392.9 million, or 1.29 percent of total loans, at June 30, 2017. Excluding non-accruing loans secured by taxi medallions of $134.6 million, non-accrual loans for the remainder of the entire portfolio are $23.4 million, or seven basis points of total loans. At June 30, 2018, the ratio of allowance for loan and lease losses to total loans was 0.62 percent, versus 0.63 percent at March 31, 2018 and 0.60 percent at June 30, 2017. Additionally, the ratio of allowance for loan and lease losses to non-accrual loans, or the coverage ratio, was 135 percent for the 2018 second quarter versus 124 percent for the first quarter of 2018 and 46 percent for the 2017 second quarter.

Conference Call

Signature Bank’s management will host a conference call to review results of the 2018 second quarter on Thursday, July 19, 2018, at 10:00 AM ET. All participants should dial 866-359-8135 at least ten minutes prior to the start of the call and reference conference ID #6364689. International callers should dial 901-300-3484.

To hear a live web simulcast or to listen to the archived web cast following completion of the call, please visit the Bank’s web site at www.signatureny.com, click on "Investor Information," then, under "Company News," select "Conference Calls" to access the link to the call. To listen to a telephone replay of the conference call, please dial 800-585-8367 or 404-537-3406 and enter conference ID #6364689. The replay will be available from approximately 1:00 PM ET on Thursday, July 19, 2018 through 11:59 PM ET on Monday, July 23, 2018.

About Signature Bank

Signature Bank, member FDIC, is a New York-based full-service commercial bank with 30 private client offices throughout the New York metropolitan area, including those in Manhattan, Brooklyn, Westchester, Long Island, Queens, the Bronx, Staten Island and Connecticut. The Bank’s growing network of private client banking teams serves the needs of privately owned businesses, their owners and senior managers.

Signature Bank offers a wide variety of business and personal banking products and services. Its specialty finance subsidiary, Signature Financial, LLC, provides equipment finance and leasing. Signature Securities Group Corporation, a wholly owned Bank subsidiary, is a licensed broker-dealer, investment adviser and member FINRA/SIPC, offering investment, brokerage, asset management and insurance products and services.

Signature Bank is ranked the 40th largest bank in the U.S. from nearly 6,000, based on deposits (SNL Financial). The Bank recently earned several third-party recognitions, including: appeared on Forbes' Best Banks in America list for the eighth consecutive year in 2018; named Best Private Bank and Best Attorney Escrow Services provider and among the top three Best Business Banks for the eighth consecutive year by the New York Law Journal in the publication’s annual Best of reader survey; and, cited in the top three of the nation's best private banking services providers in the 2017 Best of The National Law Journal reader rankings.

For more information, please visit www.signatureny.com.

This press release and oral statements made from time to time by our representatives contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. You should not place undue reliance on those statements because they are subject to numerous risks and uncertainties relating to our operations and business environment, all of which are difficult to predict and may be beyond our control. Forward-looking statements include information concerning our future results, interest rates and the interest rate environment, loan and deposit growth, loan performance, operations, new private client teams and other hires, new office openings and business strategy. These statements often include words such as "may," "believe," "expect," "anticipate," "intend," “potential,” “opportunity,” “could,” “project,” “seek,” “should,” “will,” “would,” "plan," "estimate" or other similar expressions. As you consider forward-looking statements, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions that could cause actual results to differ materially from those in the forward-looking statements and can change as a result of many possible events or factors, not all of which are known to us or in our control. These factors include but are not limited to: (i) prevailing economic conditions; (ii) changes in interest rates, loan demand, real estate values and competition, any of which can materially affect origination levels and gain on sale results in our business, as well as other aspects of our financial performance, including earnings on interest-bearing assets; (iii) the level of defaults, losses and prepayments on loans made by us, whether held in portfolio or sold in the whole loan secondary markets, which can materially affect charge-off levels and required credit loss reserve levels; (iv) changes in monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System; (v) changes in the banking and other financial services regulatory environment and (vi) competition for qualified personnel and desirable office locations. Although we believe that these forward-looking statements are based on reasonable assumptions, beliefs and expectations, if a change occurs or our beliefs, assumptions and expectations were incorrect, our business, financial condition, liquidity or results of operations may vary materially from those expressed in our forward-looking statements. Additional risks are described in our quarterly and annual reports filed with the FDIC.You should keep in mind that any forward-looking statements made by Signature Bank speak only as of the date on which they were made. New risks and uncertainties come up from time to time, and we cannot predict these events or how they may affect the Bank.Signature Bank has no duty to, and does not intend to, update or revise the forward-looking statements after the date on which they are made. In light of these risks and uncertainties, you should keep in mind that any forward-looking statement made in this release or elsewhere might not reflect actual results.

       
SIGNATURE BANK
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
 
 

Three months ended

Six months ended

June 30,

June 30,

(dollars in thousands, except per share amounts)   2018   2017   2018   2017
INTEREST AND DIVIDEND INCOME
Loans held for sale $ 3,499 860 5,763 2,244
Loans and leases, net 337,584 291,892 660,021 573,467
Securities available-for-sale 54,428 50,848 106,692 100,667
Securities held-to-maturity 14,510 14,784 29,043 29,797
Other investments     6,783     3,553     12,355     6,367  
Total interest income     416,804     361,937     813,874     712,542  
INTEREST EXPENSE
Deposits 65,201 40,311 120,063 75,113
Federal funds purchased and securities sold under
agreements to repurchase 3,003 2,025 5,390 5,416
Federal Home Loan Bank borrowings 23,945 8,756 41,980 15,772
Subordinated debt     3,643     3,605     7,283     7,245  
Total interest expense     95,792     54,697     174,716     103,546  
Net interest income before provision for loan and lease losses 321,012 307,240 639,158 608,996
Provision for loan and lease losses     7,970     187,590     148,732     207,220  
Net interest income after provision for loan and lease losses     313,042     119,650     490,426     401,776  
NON-INTEREST INCOME
Commissions 3,280 3,051 6,455 6,058
Fees and service charges 7,152 6,067 13,794 12,015
Net gains on sales of securities 357 1,679 798 2,529
Net gains on sales of loans 1,183 1,956 3,202 4,453
Other-than-temporary impairment losses on securities:
Total impairment losses on securities - (81 ) (2 ) (273 )
Portion recognized in other comprehensive income (before taxes)   -     -     (14 )   32  
Net impairment losses on securities recognized in earnings - (81 ) (16 ) (241 )
Tax credit investment amortization (7,423 ) (3,672 ) (13,285 ) (7,135 )
Other Income     1,066     550     1,870     1,745  
Total non-interest income     5,615     9,550     12,818     19,424  
NON-INTEREST EXPENSE
Salaries and benefits 75,720 68,358 148,883 134,744
Occupancy and equipment 8,335 7,985 16,534 16,070
Information technology 6,291 5,464 12,578 10,773
FDIC assessment fees 7,447 6,839 14,434 12,981
Professional fees 3,503 2,667 6,778 6,040
Other general and administrative     11,297     24,960     50,718     38,863  
Total non-interest expense     112,593     116,273     249,925     219,471  
Income before income taxes 206,064 12,927 253,319 201,729
Income tax expense (benefit)     51,479     (1,030 )   64,261     53,856  
Net income   $ 154,585     13,957     189,058     147,873  
PER COMMON SHARE DATA
Earnings per share – basic $ 2.84 0.26 3.48 2.74
Earnings per share – diluted $ 2.83 0.26 3.47 2.73
 
SIGNATURE BANK    
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
 
June 30, December 31,
2018 2017
(dollars in thousands, except shares and per share amounts)   (unaudited)    
ASSETS
Cash and due from banks $ 500,617 290,078
Short-term investments     43,302     45,388  
Total cash and cash equivalents     543,919     335,466  
Securities available-for-sale 7,012,774 6,953,719
Securities held-to-maturity (fair value $1,849,822 at June 30, 2018
and $1,983,087 at December 31, 2017) 1,904,377 1,996,376
Federal Home Loan Bank stock 257,002 227,920
Loans held for sale 664,717 432,277
Loans and leases, net 33,934,159 32,416,580
Premises and equipment, net 66,499 61,571
Accrued interest and dividends receivable 126,272 117,070
Other assets     705,765     576,741  
Total assets   $ 45,215,484     43,117,720  
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest-bearing $ 11,808,240 11,353,038
Interest-bearing     23,185,497     22,086,789  
Total deposits     34,993,737     33,439,827  
Federal funds purchased and securities sold under agreements
to repurchase 585,000 790,000
Federal Home Loan Bank borrowings 4,795,000 4,195,000
Subordinated debt 257,774 257,381
Accrued expenses and other liabilities     436,350     403,821  
Total liabilities     41,067,861     39,086,029  
Shareholders’ equity
Preferred stock, par value $.01 per share; 61,000,000 shares authorized;
none issued at June 30, 2018 and December 31, 2017 - -
Common stock, par value $.01 per share; 64,000,000 shares authorized;
55,351,482 shares issued and outstanding at June 30, 2018;
54,979,213 shares issued and 54,977,971 outstanding at December 31, 2017 554 550
Additional paid-in capital 1,835,574 1,809,642
Retained earnings 2,476,623 2,290,537
Treasury stock, none at June 30, 2018 and 1,242 shares at December 31, 2017 - (171 )
Accumulated other comprehensive loss     (165,128 )   (68,867 )
Total shareholders' equity     4,147,623     4,031,691  
Total liabilities and shareholders' equity   $ 45,215,484     43,117,720  
 
SIGNATURE BANK        
FINANCIAL SUMMARY, CAPITAL RATIOS, ASSET QUALITY
(unaudited)
 
 

Three months ended

Six months ended

June 30,

June 30,

(in thousands, except ratios and per share amounts)   2018   2017   2018   2017
PER COMMON SHARE
Net income - basic $ 2.84 $ 0.26 $ 3.48 $ 2.74
Net income - diluted $ 2.83 $ 0.26 $ 3.47 $ 2.73
Average shares outstanding - basic 54,527 54,083 54,336 53,902
Average shares outstanding - diluted 54,599 54,290 54,558 54,262
Book value $ 74.93 $ 69.07 $ 74.93 $ 69.07
 
SELECTED FINANCIAL DATA
Return on average total assets 1.39 % 0.14 % 0.86 % 0.75 %
Return on average shareholders' equity 15.22 % 1.48 % 9.32 % 8.05 %
Efficiency ratio (1) 34.47 % 36.70 % 38.33 % 34.92 %
Yield on interest-earning assets 3.81 % 3.65 % 3.78 % 3.64 %
Yield on interest-earning assets, tax-equivalent basis (1)(2) 3.82 % 3.66 % 3.78 % 3.65 %
Cost of deposits and borrowings 0.96 % 0.61 % 0.89 % 0.58 %
Net interest margin 2.93 % 3.10 % 2.97 % 3.12 %
Net interest margin, tax-equivalent basis (2)(3) 2.94 % 3.11 % 2.97 % 3.12 %
 
(1) See "Non-GAAP Financial Measures" for related calculation.
 
(2) Based on the 21 percent U.S. federal statutory tax rate for the 2018 periods presented, and the 35 percent rate for the 2017 periods presented. The tax-equivalent basis is considered a non-GAAP financial measure and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. This ratio is a metric used by management to evaluate the impact of tax-exempt assets on the Bank's yield on interest-earning assets and net interest margin.
 
(3) See "Net Interest Margin Analysis" for related calculation.
 
  June 30,   March 31,   December 31,   June 30,
    2018   2018   2017   2017
CAPITAL RATIOS
Tangible common equity (4) 9.10 % 8.95 % 9.29 % 9.26 %
Tier 1 leverage (5) 9.64 % 9.47 % 9.72 % 9.52 %
Common equity Tier 1 risk-based (5) 12.10 % 12.09 % 11.99 % 11.68 %
Tier 1 risk-based (5) 12.10 % 12.09 % 11.99 % 11.68 %
Total risk-based (5) 13.42 % 13.45 % 13.32 % 13.03 %
 
ASSET QUALITY
Non-accrual loans $ 158,077 $ 168,713 $ 326,918 $ 392,880
Allowance for loan and lease losses $ 213,367 $ 208,385 $ 195,959 $ 182,541
Allowance for loan and lease losses to non-accrual loans 134.98 % 123.51 % 59.94 % 46.46 %
Allowance for loan and lease losses to total loans 0.62 % 0.63 % 0.60 % 0.60 %
Non-accrual loans to total loans 0.46 % 0.51 % 1.00 % 1.29 %
Quarterly net charge-offs to average loans, annualized 0.04 % 1.58 % 0.48 % 3.04 %
 
(4)   We define tangible common equity as the ratio of total tangible common equity to total tangible assets (the "TCE ratio"). Tangible common equity is considered to be a non-GAAP financial measure and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. The TCE ratio is a metric used by management to evaluate the adequacy of our capital levels. In addition to tangible common equity, management uses other metrics, such as Tier 1 capital related ratios, to evaluate capital levels. See "Non-GAAP Financial Measures" for related calculation.
 
(5) June 30, 2018 ratios are preliminary.
 
SIGNATURE BANK            
NET INTEREST MARGIN ANALYSIS
(unaudited)
 
 
Three months ended Three months ended
June 30, 2018 June 30, 2017

 

 

Interest Average

 

Interest Average

Average

Income/

Yield/

Average

Income/ Yield/

(dollars in thousands)

 

Balance

  Expense  

Rate

 

Balance

  Expense   Rate
INTEREST-EARNING ASSETS
Short-term investments $ 443,433 1,979 1.79 % 528,169 1,358 1.03 %
Investment securities 9,301,617 73,742 3.17 % 8,889,069 67,827 3.05 %
Commercial loans, mortgages and leases (1)(2) 33,437,782 336,005 4.03 % 29,899,100 290,189 3.89 %
Residential mortgages and consumer loans 233,213 2,464 4.24 % 271,284 2,561 3.79 %
Loans held for sale     477,407   3,499     2.94 %   159,497   860     2.16 %
Total interest-earning assets     43,893,452   417,689     3.82 %   39,747,119   362,795     3.66 %
Non-interest-earning assets     688,126           568,253        
Total assets   $ 44,581,578           40,315,372        
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand $ 3,539,748 11,892 1.35 % 3,832,360 6,654 0.70 %
Money market 17,691,714 47,565 1.08 % 17,062,993 29,735 0.70 %
Time deposits 1,392,458 5,744 1.65 % 1,469,043 3,922 1.07 %
Non-interest-bearing demand deposits     11,831,308   -     -     10,592,678   -     -  
Total deposits     34,455,228   65,201     0.76 %   32,957,074   40,311     0.49 %
Subordinated debt 257,645 3,643 5.66 % 256,851 3,605 5.61 %
Other borrowings     5,394,121   26,948     2.00 %   2,927,435   10,781     1.48 %
Total deposits and borrowings     40,106,994   95,792     0.96 %   36,141,360   54,697     0.61 %
Other non-interest-bearing liabilities
and shareholders' equity     4,474,584           4,174,012        
Total liabilities and shareholders' equity   $ 44,581,578           40,315,372        
OTHER DATA
Net interest income / interest rate spread (1) 321,897 2.86 % 308,098 3.05 %
Tax-equivalent adjustment (885 ) (858 )
Net interest income, as reported 321,012   307,240  
Net interest margin 2.93 % 3.10 %
Tax-equivalent effect 0.01 % 0.01 %
Net interest margin on a tax-equivalent basis (1)(2) 2.94 % 3.11 %
Ratio of average interest-earning assets
to average interest-bearing liabilities 109.44 % 109.98 %
 

(1)

 

Presented on a tax-equivalent, non-GAAP, basis for municipal leasing and financing transactions using the U.S. federal statutory tax rate of 21 percent for the period ended June 30, 2018 and 35 percent for the period ended June 30, 2017.

 

(2)

 

See "Non-GAAP Financial Measures" for related calculation.

 
           
SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)
 
 
Six months ended Six months ended
June 30, 2018 June 30, 2017
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/

(dollars in thousands)

  Balance   Expense   Rate   Balance   Expense   Rate
INTEREST-EARNING ASSETS
Short-term investments $ 454,902 3,721 1.65 % 471,649 2,142 0.92 %
Investment securities 9,275,523 144,369 3.11 % 8,842,191 134,689 3.05 %
Commercial loans, mortgages and leases (1)(2) 33,067,533 656,893 4.01 % 29,615,113 569,780 3.88 %
Residential mortgages and consumer loans 239,130 4,862 4.10 % 274,420 5,201 3.82 %
Loans held for sale     417,029   5,763     2.79 %   219,105   2,244     2.07 %
Total interest-earning assets     43,454,117   815,608     3.78 %   39,422,478   714,056     3.65 %
Non-interest-earning assets     675,674           553,844        
Total assets   $ 44,129,791           39,976,322        
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand $ 3,691,222 22,721 1.24 % 3,793,164 11,875 0.63 %
Money market 17,465,933 86,283 1.00 % 16,872,945 55,904 0.67 %
Time deposits 1,461,716 11,059 1.53 % 1,451,516 7,334 1.02 %
Non-interest-bearing demand deposits     11,718,727   -     -     10,492,211   -     -  
Total deposits     34,337,598   120,063     0.71 %   32,609,836   75,113     0.46 %
Subordinated debt 257,547 7,283 5.66 % 256,754 7,245 5.64 %
Other borrowings     5,078,834   47,370     1.88 %   3,001,291   21,188     1.42 %
Total deposits and borrowings     39,673,979   174,716     0.89 %   35,867,881   103,546     0.58 %
Other non-interest-bearing liabilities
and shareholders' equity     4,455,812           4,108,441        
Total liabilities and shareholders' equity   $ 44,129,791           39,976,322        
OTHER DATA
Net interest income / interest rate spread (1) 640,892 2.89 % 610,510 3.07 %
Tax-equivalent adjustment (1,734 ) (1,514 )
Net interest income, as reported 639,158   608,996  
Net interest margin 2.97 % 3.12 %
Tax-equivalent effect -   -  
Net interest margin on a tax-equivalent basis (1)(2) 2.97 % 3.12 %
Ratio of average interest-earning assets
to average interest-bearing liabilities 109.53 % 109.91 %
 

(1)

 

Presented on a tax-equivalent, non-GAAP, basis for municipal leasing and financing transactions using the U.S. federal statutory tax rate of 21 percent for the period ended June 30, 2018 and 35 percent for the period ended June 30, 2017.

 

(2)

 

See "Non-GAAP Financial Measures" for related calculation.

 

SIGNATURE BANK

NON-GAAP FINANCIAL MEASURES

(unaudited)

 
Management believes that the presentation of certain non-GAAP financial measures assists investors when comparing results period-to-period in a more consistent manner and provides a better measure of Signature Bank's results. These non-GAAP measures include the Bank's i) Net income and diluted earnings per share (as reported) to net income and diluted earnings per share excluding write-downs and fair value adjustments for the taxi medallion portfolio,(ii) tangible common equity ratio, (iii) efficiency ratio,(iv) yield on interest-earning assets, tax-equivalent basis, and (v) core net interest margin, tax-equivalent basis excluding loan prepayment penalty income. These non-GAAP measures should not be considered a substitute for GAAP-basis measures and results. We strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.
 
The following table presents the change in net income excluding write-downs and fair value adjustments for the taxi medallion portfolio:
   

Three months ended

Six months ended

June 30,

June 30,

(dollars in thousands, except per share amounts)

  2018   2017   2018   2017
Net income (as reported) $ 154,585   13,957 189,058   147,873
Write-downs and fair value (FV) adjustments for the taxi medallion portfolio (848 ) 179,309 153,602 193,251
Tax effect, taxi medallion portfolio write-downs and FV adjustments     216     (73,034 )   (38,975 )   (94,088 )
Total net income (adjusted)   $ 153,953     120,232     303,685     247,036  
 
Diluted earnings per share (as reported) 2.83 0.26 3.47 2.73
Write-downs and FV adjustments for the taxi medallion portfolio (0.02 ) 3.30 2.82 3.56
Tax effect, taxi medallion portfolio write-downs and FV adjustments     0.01     (1.35 )   (0.72 )   (1.74 )

Diluted earnings per share - excluding write-downs and FV adjustments for the taxi
medallion portfolio (adjusted)

  $ 2.82     2.21     5.57     4.55  
 
 

The following table presents the tangible common equity ratio calculation:

 

June 30,

March 31, December 31, June 30,

(dollars in thousands)

  2018   2018   2017   2017
Consolidated common shareholders' equity $ 4,147,623 4,001,172 4,031,691 3,797,246
Intangible assets     34,261     27,687     28,643     27,374  
Consolidated tangible common shareholders' equity (TCE)   $ 4,113,362     3,973,485     4,003,048     3,769,872  
                 
Consolidated total assets $ 45,215,484 44,435,634 43,117,720 40,718,610
Intangible assets     34,261     27,687     28,643     27,374  
Consolidated tangible total assets (TTA)   $ 45,181,223     44,407,947     43,089,077     40,691,236  
Tangible common equity ratio (TCE/TTA)     9.10 %   8.95 %   9.29 %   9.26 %
 
 

The following table presents the efficiency ratio calculation:

 

Three months ended
June 30,

Six months ended
June 30,

(dollars in thousands)   2018   2017   2018   2017
Non-interest expense (NIE)   $ 112,593     116,273     249,925     219,471  
Net interest income before provision for loan and lease losses 321,012 307,240 639,158 608,996
Other non-interest income     5,615     9,550     12,818     19,424  
Total income (TI)   $ 326,627     316,790     651,976     628,420  
Efficiency ratio (NIE/TI)     34.47 %   36.70 %   38.33 %   34.92 %
 
SIGNATURE BANK
NON-GAAP FINANCIAL MEASURES
(unaudited)
 
 
The following table reconciles yield on interest-earning assets to the yield on interest-earning assets on a tax-equivalent basis:
 
 

Three months ended
June 30,

 

Six months ended
June 30,

    2018   2017   2018   2017
Interest income (as reported) $ 416,804   361,937 813,874   712,542
Tax-equivalent adjustment     885     858     1,734     1,514  
Interest income, tax-equivalent basis   $ 417,689     362,795     815,608     714,056  
Interest-earnings assets   $ 43,893,452     39,747,119     43,454,117     39,422,478  
 
Yield on interest-earning assets 3.81 % 3.65 % 3.78 % 3.64 %
Tax-equivalent effect     0.01 %   0.01 %   0.00 %   0.01 %
Yield on interest-earning assets, tax-equivalent basis     3.82 %   3.66 %   3.78 %   3.65 %
 
 

The following table reconciles net interest margin (as reported) to core net interest margin on a tax-equivalent basis excluding loan
prepayment penalty income:

 
 

Three months ended
June 30,

 

Six months ended
June 30,

    2018   2017   2018   2017
Net interest margin (as reported) 2.93 %   3.10 % 2.97 %   3.12 %
Tax-equivalent adjustment 0.01 % 0.01 % - -
Margin contribution from loan prepayment penalty income  

(0.05)

%

 

(0.07)

%

 

(0.06)

%

 

(0.06)

%

Core net interest margin, tax-equivalent basis excluding loan prepayment penalty income   2.89 %   3.04 %   2.91 %   3.06 %
 

Source: Signature Bank

Signature Bank
Investor Contact:
Eric R. Howell, 646-822-1402
Executive Vice President – Corporate & Business Development
ehowell@signatureny.com
or
Media Contact:
Susan J. Lewis, 646-822-1825
slewis@signatureny.com