Signature Bank
Jul 23, 2013

Signature Bank Reports 2013 Second Quarter Results

NEW YORK--(BUSINESS WIRE)-- Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, today announced results for its second quarter ended June 30, 2013.

Net income for the 2013 second quarter reached a record $53.6 million, or $1.12 diluted earnings per share, versus $45.3 million, or $0.96 diluted earnings per share, for the 2012 second quarter. The record net income for the 2013 second quarter, versus the comparable quarter last year, is primarily due to an increase in net interest income, fueled by strong deposit and loan growth. These factors were partially offset by an increase in non-interest expenses.

Net interest income for the 2013 second quarter reached $154.5 million, up $20.3 million, or 15.2 percent, when compared with the 2012 second quarter. This increase is primarily due to growth in average interest-earning assets and an increase of $3.1 million in loan prepayment penalty income. Total assets reached $19.72 billion at June 30, 2013, an increase of $3.85 billion, or 24.2 percent, from $15.87 billion at June 30, 2012. The increase was due in part to the pre-investment of future cash flows in our securities portfolio given the advantageous interest rate environment at the end of the 2013 second quarter. Average assets for the 2013 second quarter reached $18.80 billion, an increase of $3.26 billion, or 21.0 percent, compared with the 2012 second quarter.

Deposits for the 2013 second quarter rose $471.9 million, or 3.2 percent, to $15.27 billion at June 30, 2013. When compared with deposits at December 31, 2012, overall deposit growth for the first half of 2013 was 8.4 percent, or $1.19 billion. Excluding short-term escrow deposits and brokered deposits of $842.4 million and $148.2 million at June 30, 2013, and $978.2 million and $152.3 million at March 31, 2013, respectively, core deposits increased $611.8 million for the quarter. Average deposits for the 2013 second quarter reached $15.11 billion, an increase of $525.8 million, or 3.6 percent.

"Despite increased competition in the marketplace -- particularly in the multi-family lending arena -- we again delivered strong growth and record performance. The second quarter marked Signature Bank's 15th consecutive quarter of record earnings, which is a testament to our client-centric, single-point-of-contact approach and superior execution. Our model allows us to stand out amongst our competitors," stated Joseph J. DePaolo, President and Chief Executive Officer.

"Furthermore, we continued to invest in the future as evidenced by the on-going build out of Signature Financial as well as the four private client banking teams we added this quarter, expanding our network of talented banking professionals. The addition of these four teams now brings the total number of teams hired this year to seven. We are also pleased two veteran banking group directors joined existing teams. We look forward to the contributions these experienced teams and bankers will make in the coming years," DePaolo noted.

Scott A. Shay, Chairman of the Board, added: "Our investment strategy has been unwavering - never too long or too short in duration - but tactically positioned to react to the volatile interest rate changes we have anticipated for some time. This view has buttressed our loan pricing discipline and willingness to shrink the size of our investment portfolio when we felt such conservatism was warranted. We are committed to taking a restrained, longer view on financial markets and by consequence, maintaining our deposit and loan pricing in a manner that has allowed us to serve our clients in all markets. It is our client-centric model, coupled with our commitment to depositor safety that attracts best-in-class bankers who want to put their clients first and foremost. Our pledge is to remain steadfast in our approach as we focus every day on further strengthening the long-term value of our banking franchise."

Capital

The Bank's Tier 1 leverage, Tier 1 risk-based, and total risk-based capital ratios were approximately 9.14 percent, 14.90 percent and 15.94 percent, respectively, as of June 30, 2013. 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 8.65 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 2013 second quarter was $154.5 million, an increase of $20.3 million, or 15.2 percent, versus the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $18.46 billion for the 2013 second quarter represent an increase of $3.22 billion, or 21.1 percent, from the 2012 second quarter. Yield on interest-earning assets for the 2013 second quarter decreased 36 basis points, to 3.92 percent, compared with the 2012 second quarter. This decrease was primarily attributable to prolonged low interest rates.

Average cost of deposits and average cost of funds for the second quarter of 2013 decreased by 15 and 20 basis points, respectively, versus the 2012 second quarter to 0.51 percent and 0.61 percent. These decreases were predominantly due to prolonged low interest rates.

Net interest margin for the 2013 second quarter was 3.36 percent versus 3.54 percent reported in the same period a year ago. On a linked quarter basis, net interest margin decreased seven basis points. Excluding loan prepayment penalties in both quarters, linked quarter core margin declined nine basis points to 3.21 percent. The linked quarter decreases in overall and core margin are predominantly due to the reinvestment of cash flows from investments and commercial mortgages, including refinance activity, into lower yielding investments and loans.

Provision for Loan Losses

The Bank's provision for loan losses for the second quarter of 2013 was $9.7 million, a decrease of $634,000, or 6.2 percent, compared with the 2012 second quarter. The decrease was largely due to a decrease in net charge-offs of $1.2 million.

Net charge-offs for the 2013 second quarter were $3.5 million, or 0.13 percent of average loans on an annualized basis, versus $4.5 million, or 0.18 percent, for the 2013 first quarter and $4.7 million, or 0.25 percent, for the 2012 second quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2013 second quarter was $9.3 million, down $598,000 when compared with $9.9 million reported in the 2012 second quarter. The decrease was due to a $3.2 million decline in net gains on sales of securities. The 2012 second quarter included a pre-tax $2.6 million gain on sale of an SBA interest-only strip security.

Non-interest expense for the second quarter of 2013 was $61.4 million, an increase of $6.6 million, or 12.0 percent, versus $54.9 million reported in the 2012 second quarter. The increase was primarily a result of the addition of new private client banking teams and our continued investment in the growth of Signature Financial.

The Bank's efficiency ratio improved to 37.5 percent for the 2013 second quarter versus 38.1 percent for the comparable period last year. The improvement was primarily due to growth in net interest income coupled with expense containment.

Loans

Loans, excluding loans held for sale, grew $701.3 million, or 6.8 percent, during the second quarter of 2013 to $11.07 billion, compared with $10.36 billion at March 31, 2013. At June 30, 2013, loans accounted for 56.1 percent of total assets, versus 56.7 percent at the end of the 2013 first quarter and 50.6 percent at the end of 2012 second quarter. Average loans, excluding loans held for sale, reached $10.74 billion in the 2013 second quarter, growing $684.6 million, or 6.8 percent, from the 2013 first quarter and $3.05 billion, or 39.6 percent, from the 2012 second quarter. The increase in loans for the quarter was primarily driven by growth in commercial real estate and multi-family loans, as well as specialty finance.

At June 30, 2013, non-accrual loans were $35.9 million, representing 0.32 percent of total loans and 0.18 percent of total assets, compared with non-accrual loans of $35.1 million, or 0.34 percent of total loans, at March 31, 2013 and $31.9 million, or 0.40 percent of total loans, at June 30, 2012. At June 30, 2013, the ratio of allowance for loan and lease losses to total loans was 1.08 percent, versus 1.09 percent at March 31, 2013 and 1.21 percent at June 30, 2012. Additionally, the ratio of allowance for loan and lease losses to non-accrual loans, or the coverage ratio, was 332 percent for the 2013 second quarter versus 322 percent for the first quarter of 2013 and 305 percent for the 2012 second quarter.

Conference Call

Signature Bank's management will host a conference call to review results of the 2013 second quarter on Tuesday, July 23, 2013, 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 # 21194339.

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 the "Investor Relations" tab, then select "Company News," followed by "Conference Calls," to access the link to the call. To listen to a telephone replay of the conference call, please dial 800-585-8367 and enter conference ID # 21194339. The replay will be available from approximately 1:00 PM ET on Tuesday, July 23, 2013 through 11:59 PM ET on Friday, July 26, 2013.

About Signature Bank

Signature Bank, member FDIC, is a New York-based full-service commercial bank with 27 private client offices throughout the New York metropolitan area. 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. The Bank operates Signature Financial, LLC, a specialty finance subsidiary focused on equipment finance and leasing, transportation financing and taxi medallion financing. Investment, brokerage, asset management and insurance products and services are offered through the Bank's subsidiary, Signature Securities Group Corporation, a licensed broker-dealer, investment adviser and member FINRA/SIPC.

Signature Bank's 27 offices are located: In Manhattan (9) - 261 Madison Avenue; 300 Park Avenue; 71 Broadway; 565 Fifth Avenue; 950 Third Avenue; 200 Park Avenue South; 1020 Madison Avenue; 50 West 57th Street and 2 Penn Plaza. Brooklyn (3) - 26 Court Street; 84 Broadway and 6321 New Utrecht Avenue. Westchester (2) - 1C Quaker Ridge Road, New Rochelle and 360 Hamilton Avenue, White Plains. Long Island (7) - 1225 Franklin Avenue, Garden City; 279 Sunrise Highway, Rockville Centre; 68 South Service Road, Melville; 923 Broadway, Woodmere; 40 Cuttermill Road, Great Neck; 100 Jericho Quadrangle, Jericho and 360 Motor Parkway, Hauppauge. Queens (3) — 36-36 33rd Street, Long Island City; 78-27 37th Avenue, Jackson Heights and 8936 Sutphin Blvd., Jamaica. Bronx (1) - 421 Hunts Point Avenue, Bronx. Staten Island (2) - 2066 Hylan Blvd. and 1688 Victory Blvd.

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 team 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. 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. As you read and consider forward-looking statements, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions and can change as a result of many possible events or factors, not all of which are known to us or in our control. 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 OPERATIONS
(unaudited)
       
 

Three months ended

Six months ended

June 30,

June 30,

(dollars in thousands, except per share amounts)   2013   2012   2013   2012
INTEREST AND DIVIDEND INCOME
Loans held for sale $ 755 753 1,672 1,530
Loans and leases, net 124,752 99,604 242,381 191,898
Securities available-for-sale 45,029 56,586 93,603 113,934
Securities held-to-maturity 9,052 4,813 14,971 9,605
Other short-term investments     698     516     1,290     1,003  
Total interest income     180,286     162,272     353,917     317,970  
INTEREST EXPENSE
Deposits 19,304 21,055 38,757 42,945

Federal funds purchased and securities sold under agreements to repurchase

4,970 5,937 9,855 11,789
Federal Home Loan Bank advances     1,481     1,089     2,666     2,245  
Total interest expense     25,755     28,081     51,278     56,979  
Net interest income before provision for loan and lease losses 154,531 134,191 302,639 260,991
Provision for loan and lease losses     9,669     10,303     19,595     20,967  
Net interest income after provision for loan and lease losses     144,862     123,888     283,044     240,024  
NON-INTEREST INCOME
Commissions 2,445 2,065 4,644 4,434
Fees and service charges 4,394 3,817 8,392 7,523
Net gains on sales of securities 898 4,136 2,426 5,568
Net gains on sales of loans 2,264 2,768 4,782 4,189
Other-than-temporary impairment losses on securities:
Total impairment losses on securities (1,048 ) (4,165 ) (2,728 ) (9,379 )
Portion recognized in other comprehensive income (before taxes)   155     2,765     563     7,265  
Net impairment losses on securities recognized in earnings (893 ) (1,400 ) (2,165 ) (2,114 )
Net trading income 756 377 981 357
Other loss     (576 )   (1,877 )   (936 )   (957 )
Total non-interest income     9,288     9,886     18,124     19,000  
NON-INTEREST EXPENSE
Salaries and benefits 40,987 36,740 80,250 69,763
Occupancy and equipment 4,748 4,272 9,499 8,658
Other general and administrative     15,712     13,839     30,630     26,778  
Total non-interest expense     61,447     54,851     120,379     105,199  
Income before income taxes 92,703 78,923 180,789 153,825
Income tax expense     39,101     33,641     76,554     66,174  
Net income   $ 53,602     45,282     104,235     87,651  
PER COMMON SHARE DATA
Earnings per share — basic $ 1.13 0.97 2.21 1.89
Earnings per share — diluted $ 1.12 0.96 2.18 1.86
 
 
SIGNATURE BANK
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
   
 
June 30, December 31,
2013 2012
(dollars in thousands, except per share amounts)   (unaudited)    
ASSETS
Cash and due from banks $ 122,313 86,186
Short-term investments     15,587     7,779
Total cash and cash equivalents     137,900     93,965

Securities available-for-sale (pledged $2,853,124 at June 30, 2013 and $2,467,409 at December 31, 2012)

5,581,664 6,130,356

Securities held-to-maturity (fair value $1,891,616 at June 30, 2013 and $755,469 at December 31, 2012; pledged $1,467,961 at June 30, 2013 and $543,351 at December 31, 2012)

1,922,011 739,835
Federal Home Loan Bank stock 95,678 50,012
Loans held for sale 538,922 369,468
Loans and leases, net 10,946,732 9,664,337
Premises and equipment, net 36,626 32,192
Accrued interest and dividends receivable 66,076 64,367
Other assets     396,866     311,525
Total assets   $ 19,722,475     17,456,057
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest-bearing 4,690,753 4,444,964
Interest-bearing     10,581,680     9,637,688
Total deposits     15,272,433     14,082,652

Federal funds purchased and securities sold under agreements to repurchase

1,042,000 995,000
Federal Home Loan Bank advances 1,525,163 590,000
Accrued expenses and other liabilities     176,612     138,078
Total liabilities     18,016,208     15,805,730
Shareholders' equity

Preferred stock, par value $.01 per share; 61,000,000 shares authorized; none issued at June 30, 2013 and December 31, 2012

- -

Common stock, par value $.01 per share; 64,000,000 shares authorized; 47,262,551 and 47,230,266 shares issued and outstanding at June 30, 2013 and December 31, 2012

473 472
Additional paid-in capital 1,003,224 997,517
Retained earnings 712,746 608,511
Net unrealized (losses) gains on securities, net of tax     (10,176 )   43,827
Total shareholders' equity     1,706,267     1,650,327
Total liabilities and shareholders' equity   $ 19,722,475     17,456,057
 
       
SIGNATURE BANK
FINANCIAL SUMMARY, CAPITAL RATIOS, ASSET QUALITY
(unaudited)
 
 

Three months ended

Six months ended

June 30,

June 30,

(dollars in thousands, except ratios and per share amounts)   2013   2012   2013   2012
PER COMMON SHARE
Net income - basic $ 1.13 $ 0.97 $ 2.21 $ 1.89
Net income - diluted $ 1.12 $ 0.96 $ 2.18 $ 1.86
Average shares outstanding - basic 47,260 46,549 47,255 46,377
Average shares outstanding - diluted 47,929 47,307 47,914 47,202
Book value $ 36.10 $ 32.49 $ 36.10 $ 32.49
 
SELECTED FINANCIAL DATA
Return on average total assets 1.14 % 1.17 % 1.15 % 1.16 %
Return on average shareholders' equity 12.57 % 12.22 % 12.52 % 12.06 %
Efficiency ratio (1) 37.51 % 38.07 % 37.53 % 37.57 %

Efficiency ratio excluding net gains on sales of securities and net impairment losses on securities recognized in earnings (1)

37.51 % 38.81 % 37.56 % 38.04 %
Yield on interest-earning assets 3.92 % 4.28 % 3.97 % 4.29 %
Cost of deposits and borrowings 0.61 % 0.81 % 0.63 % 0.84 %
Net interest margin 3.36 % 3.54 % 3.39 % 3.52 %
 
(1) The efficiency ratio is calculated by dividing non-interest expense by the sum of net interest income before provision for loan and lease losses and non-interest income.
 
       
 
June 30, March 31, December 31, June 30,
    2013   2013   2012   2012
CAPITAL RATIOS
Tangible common equity (2) 8.65 % 9.39 % 9.45 % 9.55 %
Tier 1 leverage 9.14 % 9.31 % 9.51 % 9.57 %
Tier 1 risk-based 14.90 % 15.21 % 15.32 % 16.45 %
Total risk-based 15.94 % 16.26 % 16.35 % 17.55 %
 
ASSET QUALITY
Non-accrual loans $ 35,866 $ 35,066 $ 27,190 $ 31,905
Allowance for loan and lease losses $ 118,971 $ 112,815 $ 107,433 $ 97,403
Allowance for loan and lease losses to non-accrual loans 331.71 % 321.72 % 395.12 % 305.29 %
Allowance for loan and lease losses to total loans 1.08 % 1.09 % 1.10 % 1.21 %
Non-accrual loans to total loans 0.32 % 0.34 % 0.28 % 0.40 %
Quarterly net charge-offs to average loans (annualized) 0.13 % 0.18 % 0.25 % 0.25 %
 
(2)   We define tangible common equity as the ratio of tangible common equity to adjusted tangible assets (the "TCE ratio") and calculate this ratio by dividing total consolidated common shareholders' equity by consolidated total assets (we had no intangible assets at any of the dates presented above). 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.
 
           
SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)
 
 
Three months ended Three months ended
June 30, 2013 June 30, 2012
(dollars in thousands)  

Average
Balance

 

Interest
Income/
Expense

 

Average
Yield/
Rate

 

Average
Balance

 

Interest
Income/
Expense

 

Average
Yield/
Rate

INTEREST-EARNING ASSETS
Short-term investments $ 124,008 109 0.35 % 79,214 67 0.34 %
Investment securities 7,271,335 54,670 3.01 % 7,245,984 61,848 3.41 %
Commercial loans, mortgages and leases 10,357,980 121,260 4.70 % 7,319,304 95,783 5.26 %
Residential mortgages and consumer loans 381,945 3,492 3.67 % 373,206 3,821 4.12 %
Loans held for sale     322,346   755   0.94 %   220,666   753   1.37 %
Total interest-earning assets     18,457,614   180,286   3.92 %   15,238,374   162,272   4.28 %
Non-interest-earning assets     343,605           299,585        
Total assets   $ 18,801,219           15,537,959        
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand 825,524 753 0.37 % 660,303 751 0.46 %
Money market 8,664,925 15,363 0.71 % 7,777,176 16,714 0.86 %
Time deposits 978,757 3,188 1.31 % 917,656 3,590 1.57 %
Non-interest-bearing demand deposits     4,640,352   -   -     3,340,556   -   -  
Total deposits     15,109,558   19,304   0.51 %   12,695,691   21,055   0.67 %
Borrowings     1,835,943   6,451   1.41 %   1,266,234   7,026   2.23 %
Total deposits and borrowings     16,945,501   25,755   0.61 %   13,961,925   28,081   0.81 %

Other non-interest-bearing liabilities and shareholders' equity

    1,855,718           1,576,034        
Total liabilities and shareholders' equity   $ 18,801,219           15,537,959        
OTHER DATA
Net interest income / interest rate spread       154,531   3.31 %       134,191   3.47 %
Net interest margin           3.36 %           3.54 %

Ratio of average interest-earning assets to average interest-bearing liabilities

          108.92 %           109.14 %
 
           
SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)
 
 
Six months ended Six months ended
June 30, 2013 June 30, 2012
(dollars in thousands)  

Average
Balance

 

Interest
Income/
Expense

 

Average
Yield/
Rate

 

Average
Balance

 

Interest
Income/
Expense

 

Average
Yield/
Rate

INTEREST-EARNING ASSETS
Short-term investments $ 120,344 210 0.35 % 85,325 143 0.34 %
Investment securities 7,168,629 109,654 3.06 % 7,202,060 124,399 3.45 %
Commercial loans, mortgages and leases 10,014,901 235,083 4.73 % 6,999,071 184,093 5.29 %
Residential mortgages and consumer loans 384,629 7,298 3.83 % 377,259 7,805 4.16 %
Loans held for sale     298,456   1,672   1.13 %   243,298   1,530   1.26 %
Total interest-earning assets     17,986,959   353,917   3.97 %   14,907,013   317,970   4.29 %
Non-interest-earning assets     332,174           285,212        
Total assets   $ 18,319,133           15,192,225        
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand 796,375 1,518 0.38 % 659,522 1,527 0.47 %
Money market 8,568,255 30,754 0.72 % 7,637,541 34,159 0.90 %
Time deposits 980,137 6,485 1.33 % 904,575 7,259 1.61 %
Non-interest-bearing demand deposits     4,503,363   -   -     3,269,699   -   -  
Total deposits     14,848,130   38,757   0.53 %   12,471,337   42,945   0.69 %
Borrowings     1,652,072   12,521   1.53 %   1,187,006   14,034   2.38 %
Total deposits and borrowings     16,500,202   51,278   0.63 %   13,658,343   56,979   0.84 %

Other non-interest-bearing liabilities and shareholders' equity

    1,818,931           1,533,882        
Total liabilities and shareholders' equity   $ 18,319,133           15,192,225        
OTHER DATA
Net interest income / interest rate spread       302,639   3.34 %       260,991   3.45 %
Net interest margin           3.39 %           3.52 %

Ratio of average interest-earning assets to average interest-bearing liabilities

          109.01 %           109.14 %
 
 
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) tangible common equity ratio, (ii) net income and diluted earnings per share excluding the after-tax effect of gains from the sales of SBA interest-only strip securities and (iii) core net interest margin 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 a reconciliation of net income and diluted earnings per share (as reported) to net income and diluted earnings per share excluding the after-tax effect of gains from the sales of SBA interest-only strip securities:
 
       

Three months ended

Six months ended

June 30,

June 30,

(dollars in thousands, except per share amounts)   2013   2012   2013   2012
Net income (as reported) $ 53,602 45,282 104,235 87,651
Gains on sales of SBA interest-only strip securities - (2,624 ) - (2,664 )
Tax effect     -     1,119     -     1,136  

Net income - excluding after-tax effect of gains on sales of SBA interest-only strip securities

  $ 53,602     43,777     104,235     86,123  
 
Diluted earnings per share (as reported) $ 1.12 0.96 2.18 1.86
Gains on sales of SBA interest-only strip securities - (0.05 ) - (0.06 )
Tax effect     -     0.02     -     0.02  

Diluted earnings per share - excluding after-tax effect of gains on sales of SBA interest-only strip securities

  $ 1.12     0.93     2.18     1.82  
 
 
The following table reconciles net interest margin (as reported) to core net interest margin excluding loan prepayment penalty income:
 
 

Three months ended

Six months ended

June 30,

June 30,

    2013   2012   2013   2012
Net interest margin (as reported) 3.36 % 3.54 % 3.39 % 3.52 %
Margin contribution from loan prepayment penalty income     (0.15 )%   (0.10 )%   (0.14 )%   (0.08 )%
Core net interest margin - excluding loan prepayment penalty income     3.21 %   3.44 %   3.25 %   3.44 %

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

Source: Signature Bank

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