Signature Bank
Jul 19, 2017

Signature Bank Reports 2017 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, 2017. Net income for the 2017 second quarter was $14.0 million, or $0.26 diluted earnings per share, versus $102.2 million, or $1.90 diluted earnings per share, for the 2016 second quarter. Excluding provision expense and write-downs for the taxi medallion portfolio, net income would have been $120.2 million, or $2.21 diluted earnings per share. The decrease in net income for the 2017 second quarter, versus the comparable quarter last year, is due to an increase of $154.3 million in the provision for loan losses nearly all attributable to the New York City taxi medallion portfolio.

Net interest income for the 2017 second quarter reached $307.2 million, up $25.6 million, or 9.1 percent, when compared with the 2016 second quarter. This increase is primarily due to growth in average interest-earning assets. Total assets reached $40.72 billion at June 30, 2017, an increase of $4.17 billion, or 11.4 percent, from $36.55 billion at June 30, 2016. Average assets for the 2017 second quarter reached $40.32 billion, an increase of $4.30 billion, or 11.9 percent, compared with the 2016 second quarter.

Deposits for the 2017 second quarter rose $233.8 million, or 0.7 percent, to $33.17 billion at June 30, 2017, affected by a decrease of $587.9 million in escrow deposits. When compared with deposits at June 30, 2016, overall deposit growth for the last twelve months was 12.1 percent, or $3.59 billion. Average deposits for the 2017 second quarter reached $32.96 billion, an increase of $698.3 million, or 2.2 percent.

"Signature Bank has executed its business strategy almost flawlessly for 16+ years. Sometimes, the trials and tribulations of business - and how we address them - define us. Recently, we encountered adversity within the taxi medallion landscape. Signature Bank has continually persevered, despite this adversity, which will ultimately strengthen our business. We are now coming out on the other side of it, and are looking forward. We have repositioned our taxi medallion business to better resolve these types of loans and enable management of Signature Financial to once again fully direct their efforts toward growth initiatives. This quarter, Signature Financial loans grew $252.4 million, excluding taxi medallion loans. Our diversification strategy has always proved beneficial to our model," explained Joseph J. DePaolo, Signature Bank President and Chief Executive Officer.

"In times of disruption, we rely on the strength and success of Signature Bank's depositor-first model to sustain our focus. This deposit first-and-foremost strategy, coupled with our strong, well-capitalized balance sheet, positions us to not only weather storms, but also to grasp opportunities in the marketplace, as evidenced by the two private client banking teams that joined this quarter to further our deposit and loan growth efforts. Additionally, our solid reputation and proven results recently earned the Bank ‘Company of the Year' (in both Banking and Financial Services-Large categories) in the 2017 American Business Awards competition, demonstrating our ongoing strength, growth and commitment to client care," DePaolo added.

"We did not, nor did any others, foresee the dramatic decline in taxi medallion values caused by a combination of rapid radical disruption by app-based hailing systems and inaction by governmental authorities. We did, however, see the disruption coming in time to set an upper limit on loan amounts and to stop our lending earlier than most," said Scott A. Shay, Chairman of the Board.

"That said, the overwhelming majority of our taxi medallion clients are hardworking, many of whom immigrated to this country and built their lives, maintained their families and sent their children to college by driving a taxi. We will continue to work with these clients to create resolutions that make sense for them as well as the Bank. In the meantime, we have always maintained that our balance sheet needs to be a fortress of strength, and are adamant about appropriately valuing every asset. Also, we will remain focused on executing our successful business plan, which differentiates us from our competition. We intend to keep up our pace of attracting veteran bankers whose experience and relationships significantly builds on our ongoing 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 9.52 percent, 11.61 percent, 11.61 percent, and 12.95 percent, respectively, as of June 30, 2017. 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 9.26 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 2017 second quarter was $307.2 million, an increase of $25.6 million, or 9.1 percent, versus the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $39.75 billion for the 2017 second quarter represent an increase of $4.13 billion, or 11.6 percent, from the 2016 second quarter. Yield on interest-earning assets for the 2017 second quarter remained stable at 3.66 percent, compared with the 2016 second quarter.

Average cost of deposits and average cost of funds for the second quarter of 2017 both increased by 8 basis points, versus the 2016 second quarter to 0.41 percent and 0.53 percent, respectively.

Net interest margin on a tax-equivalent basis for the 2017 second quarter was 3.11 percent versus 3.19 percent reported in the same period a year ago. On a linked quarter basis, net interest margin on a tax-equivalent basis decreased three basis points. Excluding loan prepayment penalties in both quarters, linked quarter core net interest margin on a tax-equivalent basis decreased five basis points to 3.04 percent. One basis point of the linked quarter decline in core net interest margin was due to both one less day in the quarter and the reversal of interest income for taxi medallion loans placed on non-accrual in the quarter.

Provision for Loan Losses

The Bank's provision for loan losses for the second quarter of 2017 was $187.6 million, compared with $19.6 million for the 2017 first quarter and $33.3 million for the 2016 second quarter. The elevated provision for the 2017 second quarter was due to the New York City taxi medallion loan portfolio.

Net charge-offs for the 2017 second quarter were $229.0 million, or 3.04 percent of average loans on an annualized basis, versus $9.2 million, or 0.13 percent, for the 2017 first quarter and $15.4 million, or 0.24 percent, for the 2016 second quarter. $229.7 million of the 2017 second quarter charge-offs were for taxi medallion loans, which were partially offset by a net recovery for all other portfolios.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2017 second quarter was $9.6 million, down $3.5 million when compared with $13.1 million reported in the 2016 second quarter. The decrease was due to a $2.9 million decrease in net gains on sales of securities and an increase in other losses of $2.3 million from additional amortization of low income housing tax credit investments.

Non-interest expense for the second quarter of 2017 was $116.3 million, an increase of $24.0 million, or 26.0 percent, versus $92.3 million reported in the 2016 second quarter. The increase was primarily a result of write-downs of $11.5 million on repossessed New York City taxi medallion loans, the addition of new private client banking teams and an increase in costs in our risk management and compliance related activities. The Bank also incurred additional FDIC assessment fees.

The Bank's efficiency ratio increased to 36.7 percent for the 2017 second quarter versus 31.3 percent for the comparable period last year. The increase was primarily due to an increase in other general and administrative expenses of $12.6 million primarily due to the write-down on repossessed New York City taxi medallion loans.

Loans

Loans, excluding loans held for sale, grew $362.1 million, or 1.2 percent, during the second quarter of 2017 to $30.39 billion, compared with $30.02 billion at March 31, 2017. Excluding payoffs and charge-offs of $236.0 million on taxi medallion loans, total loans would have grown $598.1 million. At June 30, 2017, loans accounted for 74.6 percent of total assets, versus 74.6 percent at the end of the 2017 first quarter and 73.1 percent at the end of 2016 second quarter. Average loans, excluding loans held for sale, reached $30.17 billion in the 2017 second quarter, growing $564.8 million, or 1.9 percent, from the 2017 first quarter and $4.12 billion, or 15.8 percent, from the 2016 second quarter. The increase in loans for the quarter was primarily driven by growth in specialty finance, multi-family and commercial real estate loans.

At June 30, 2017, non-accrual loans were $392.9 million, representing 1.29 percent of total loans and 0.96 percent of total assets, compared with non-accrual loans of $225.9 million, or 0.75 percent of total loans, at March 31, 2017 and $129.5 million, or 0.48 percent of total loans, at June 30, 2016. Excluding non-accruing loans secured by taxi medallions of $367.0 million, non-accrual loans for the remainder of the entire portfolio are $25.9 million, or nine basis points of total loans. At June 30, 2017, the ratio of allowance for loan and lease losses to total loans was 0.60 percent, versus 0.75 percent at March 31, 2017 and 0.84 percent at June 30, 2016. Additionally, the ratio of allowance for loan and lease losses to non-accrual loans, or the coverage ratio, was 46 percent for the 2017 second quarter versus 99 percent for the first quarter of 2017 and 174 percent for the 2016 second quarter.

Conference Call

Signature Bank's management will host a conference call to review results of the 2017 second quarter on Wednesday, July 19, 2017, 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 #50275105. 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 #50275105. The replay will be available from approximately 1:00 PM ET on Wednesday, July 19, 2017 through 11:59 PM ET on Sunday, July 23, 2017.

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 ranked on Forbes' Best Banks in America list for the seventh consecutive year in 2017 and was recently named Best Business Bank for the third consecutive year by the New York Law Journal in the publication's seventh annual reader survey. The Bank also ranked second in the Best Private Bank and Best Attorney Escrow Services categories in the listing. Additionally, Signature Bank was cited among the top three of the nation's best private banking services providers in the 2017 Best of The National Law Journal reader rankings. The Bank was also named Best Commercial Bank of the Year - U.S. by International Banker in their International Banker 2017 North and South American Awards program. Furthermore, Signature Bank was the recipient of two gold Stevie Awards® in The 15th Annual American Business Awards for 2017: Company of the Year in both Banking and Financial Services-Large categories.

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
June 30,

Six months ended
June 30,

(dollars in thousands, except per share amounts)     2017     2016     2017     2016
INTEREST AND DIVIDEND INCOME        
Loans held for sale $ 860 742 2,244 1,991
Loans and leases, net 291,892 253,894 573,467 499,833
Securities available-for-sale 50,848 51,055 100,667 101,342
Securities held-to-maturity 14,784 16,044 29,797 32,333
Other investments       3,553       2,226       6,367       4,236  
Total interest income       361,937       323,961       712,542       639,735  
INTEREST EXPENSE
Deposits 40,311 29,798 75,113 58,035

Federal funds purchased and securities sold under agreements to repurchase

2,025 3,099 5,416 6,167
Federal Home Loan Bank borrowings 8,756 6,510 15,772 12,669
Subordinated debt       3,605       2,906       7,245       2,906  
Total interest expense       54,697       42,313       103,546       79,777  
Net interest income before provision for loan and lease losses 307,240 281,648 608,996 559,958
Provision for loan and lease losses       187,590       33,269       207,220       53,081  
Net interest income after provision for loan and lease losses       119,650       248,379       401,776       506,877  
NON-INTEREST INCOME
Commissions 3,051 2,619 6,058 5,326
Fees and service charges 6,067 5,451 12,015 10,601
Net gains on sales of securities 1,679 4,617 2,529 4,854
Net gains on sales of loans 1,956 1,354 4,453 2,981
Other-than-temporary impairment losses on securities:
Total impairment losses on securities (81 ) (369 ) (273 ) (424 )
Portion recognized in other comprehensive income (before taxes)   -       306       32       306  
Net impairment losses on securities recognized in earnings (81 ) (63 ) (241 ) (118 )
Other losses       (3,122 )     (835 )     (5,390 )     (2,037 )
Total non-interest income       9,550       13,143       19,424       21,607  
NON-INTEREST EXPENSE
Salaries and benefits 68,358 61,927 134,744 124,207
Occupancy and equipment 7,985 7,069 16,070 13,709
Data processing 5,464 4,874 10,773 9,759
FDIC assessment fees 6,839 4,302 12,981 9,285
Professional fees 2,667 2,304 6,040 4,190
Other general and administrative       24,960       11,833       38,863       23,485  
Total non-interest expense       116,273       92,309       219,471       184,635  
Income before income taxes 12,927 169,213 201,729 343,849
Income tax (benefit) expense       (1,030 )     66,971       53,856       137,572  
Net income     $ 13,957       102,242       147,873       206,277  
PER COMMON SHARE DATA
Earnings per share - basic $ 0.26 1.91 2.74 3.88
Earnings per share - diluted $ 0.26 1.90 2.73 3.86
 
 
SIGNATURE BANK
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
    June 30,     December 31,
2017 2016
(dollars in thousands, except shares and per share amounts)     (unaudited)      
ASSETS
Cash and due from banks $ 489,888 499,856
Short-term investments       42,160       39,095  
Total cash and cash equivalents       532,048       538,951  
Securities available-for-sale 6,722,563 6,335,347
Securities held-to-maturity (fair value $2,051,815 at June 30, 2017
and $2,027,393 at December 31, 2016) 2,048,049 2,038,125
Federal Home Loan Bank stock 164,014 132,629
Loans held for sale 327,470 559,528
Loans and leases, net 30,203,170 28,829,670
Premises and equipment, net 56,337 50,698
Accrued interest and dividends receivable 103,317 102,963
Other assets       561,642       459,700  
Total assets     $ 40,718,610       39,047,611  
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest-bearing $ 10,570,920 10,520,529
Interest-bearing       22,598,073       21,340,731  
Total deposits       33,168,993       31,861,260  

Federal funds purchased and securities sold under agreements

to repurchase

710,000 893,000
Federal Home Loan Bank borrowings 2,600,900 2,050,900
Subordinated debt 256,981 256,588
Accrued expenses and other liabilities       184,490       373,599  
Total liabilities       36,921,364       35,435,347  
Shareholders' equity
Preferred stock, par value $.01 per share; 61,000,000 shares authorized;
none issued at June 30, 2017 and December 31, 2016 - -
Common stock, par value $.01 per share; 64,000,000 shares authorized;
54,974,399 shares issued and outstanding at June 30, 2017;
54,610,593 shares issued and outstanding at December 31, 2016 550 546
Additional paid-in capital 1,786,162 1,763,100
Retained earnings 2,051,205 1,903,332
Accumulated other comprehensive loss       (40,671 )     (54,714 )
Total shareholders' equity       3,797,246       3,612,264  
Total liabilities and shareholders' equity     $ 40,718,610       39,047,611  
 
 
SIGNATURE BANK
FINANCIAL SUMMARY, CAPITAL RATIOS, ASSET QUALITY
(unaudited)
 
   

Three months ended
June 30,

   

Six months ended
June 30,

(in thousands, except ratios and per share amounts)     2017     2016     2017     2016
PER COMMON SHARE        
Net income - basic $ 0.26 $ 1.91 $ 2.74 $ 3.88
Net income - diluted $ 0.26 $ 1.90 $ 2.73 $ 3.86
Average shares outstanding - basic 54,083 53,668 53,902 53,126
Average shares outstanding - diluted 54,290 53,886 54,262 53,461
Book value $ 69.07 $ 65.09 $ 69.07 $ 65.09
 
SELECTED FINANCIAL DATA
Return on average total assets 0.14 % 1.14 % 0.75 % 1.18 %
Return on average shareholders' equity 1.48 % 11.98 % 8.05 % 12.99 %
Efficiency ratio (1) 36.70 % 31.31 % 34.92 % 31.75 %
Yield on interest-earning assets 3.65 % 3.66 % 3.64 % 3.71 %
Yield on interest-earning assets, tax-equivalent basis (1)(2) 3.66 % 3.66 % 3.65 % 3.71 %
Cost of deposits and borrowings 0.61 % 0.53 % 0.58 % 0.51 %
Net interest margin 3.10 % 3.18 % 3.12 % 3.25 %
Net interest margin, tax-equivalent basis (2)(3) 3.11 % 3.19 % 3.12 % 3.25 %
(1)   See "Non-GAAP Financial Measures" for related calculation.
 
(2) Based on the 35 percent U.S. federal statutory tax rate. 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,
2017

   

March 31,
2017

   

December 31,
2016

   

June 30,
2016

CAPITAL RATIOS                
Tangible common equity (4) 9.26 % 9.27 % 9.21 % 9.52 %
Tier 1 leverage (5) 9.52 % 9.61 % 9.61 % 9.60 %
Common equity Tier 1 risk-based (5) 11.61 % 12.05 % 11.92 % 12.01 %
Tier 1 risk-based (5) 11.61 % 12.05 % 11.92 % 12.01 %
Total risk-based (5) 12.95 % 13.57 % 13.46 % 13.69 %
 
ASSET QUALITY
Non-accrual loans $ 392,880 $ 225,938 $ 157,578 $ 129,460
Allowance for loan and lease losses $ 182,541 $ 223,951 $ 213,495 $ 224,878
Allowance for loan and lease losses to non-accrual loans 46.46 % 99.12 % 135.49 % 173.70 %
Allowance for loan and lease losses to total loans 0.60 % 0.75 % 0.74 % 0.84 %
Non-accrual loans to total loans 1.29 % 0.75 % 0.54 % 0.48 %
Quarterly net charge-offs to average loans, annualized 3.04 % 0.13 % 0.19 % 0.24 %
(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, 2017 ratios are preliminary.
 
 
SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)
   
Three months ended     Three months ended
June 30, 2017 June 30, 2016
(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 $ 528,169 1,358 1.03 % 446,254 546 0.49 %
Investment securities 8,889,069 67,827 3.05 % 8,838,625 68,779 3.11 %
Commercial loans, mortgages and leases (1)(2) 29,899,100 290,189 3.89 % 25,749,690 251,240 3.92 %
Residential mortgages and consumer loans 271,284 2,561 3.79 % 301,430 2,894 3.86 %
Loans held for sale       159,497     860       2.16 %     276,256     742       1.08 %
Total interest-earning assets       39,747,119     362,795       3.66 %     35,612,255     324,201       3.66 %
Non-interest-earning assets       568,253                 401,871            
Total assets     $ 40,315,372                 36,014,126            
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand $ 3,832,360 6,654 0.70 % 3,510,696 3,939 0.45 %
Money market 17,062,993 29,735 0.70 % 14,850,446 22,717 0.62 %
Time deposits 1,469,043 3,922 1.07 % 1,256,480 3,142 1.01 %
Non-interest-bearing demand deposits       10,592,678     -       -       9,461,144     -       -  
Total deposits       32,957,074     40,311       0.49 %     29,078,766     29,798       0.41 %
Subordinated debt 256,851 3,605 5.61 % 205,882 2,906 5.65 %
Other borrowings       2,927,435     10,781       1.48 %     3,082,813     9,609       1.25 %
Total deposits and borrowings       36,141,360     54,697       0.61 %     32,367,461     42,313       0.53 %

Other non-interest-bearing liabilities and shareholders' equity

      4,174,012                 3,646,665            
Total liabilities and shareholders' equity     $ 40,315,372                 36,014,126            
OTHER DATA
Net interest income / interest rate spread (1) 308,098 3.05 % 281,888 3.13 %
Tax-equivalent adjustment (858 ) (240 )
Net interest income, as reported 307,240   281,648  
Net interest margin 3.10 % 3.18 %
Tax-equivalent effect 0.01 % 0.01 %
Net interest margin on a fully tax-equivalent basis (1)(2) 3.11 % 3.19 %

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

109.98 % 110.02 %

(1)

 

Presented on a tax-equivalent, non-GAAP, basis using the U.S. federal statutory tax rate of 35 percent for municipal leasing and financing transactions.

(2)

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

 
 
SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)
 
    Six months ended     Six months ended
June 30, 2017 June 30, 2016
(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 $ 471,649 2,142 0.92 % 419,500 1,019 0.49 %
Investment securities 8,842,191 134,689 1.52 % 8,743,452 136,892 3.13 %
Commercial loans, mortgages and leases (1)(2) 29,615,113 569,780 3.88 % 24,918,212 494,397 3.99 %
Residential mortgages and consumer loans 274,420 5,201 3.82 % 304,524 5,841 3.86 %
Loans held for sale       219,105     2,244       2.07 %     295,719     1,991       1.35 %
Total interest-earning assets       39,422,478     714,056       3.65 %     34,681,407     640,140       3.71 %
Non-interest-earning assets       553,844                 396,750            
Total assets     $ 39,976,322                 35,078,157            
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand $ 3,793,164 11,875 0.63 % 3,216,304 7,229 0.45 %
Money market 16,872,945 55,904 0.67 % 14,891,820 44,966 0.61 %
Time deposits 1,451,516 7,334 1.02 % 1,175,688 5,840 1.00 %
Non-interest-bearing demand deposits       10,492,211     -       -       9,100,203     -       -  
Total deposits       32,609,836     75,113       0.46 %     28,384,015     58,035       0.41 %
Subordinated debt 256,754 7,245 2.82 % 102,942.00 2,906.00 0.06
Other borrowings       3,001,291     21,188       1.42 %     3,042,137     18,836       1.25 %
Total deposits and borrowings       35,867,881     103,546       0.58 %     31,529,094     79,777       0.51 %

Other non-interest-bearing liabilities and shareholders' equity

      4,108,441                 3,549,063            
Total liabilities and shareholders' equity     $ 39,976,322                 35,078,157            
OTHER DATA
Net interest income / interest rate spread (1) 610,510 3.07 % 560,363 3.20 %
Tax-equivalent adjustment (1,514 ) (405 )
Net interest income, as reported 608,996   559,958  
Net interest margin 3.12 % 3.25 %
Tax-equivalent effect -   -  
Net interest margin on a fully tax-equivalent basis (1)(2) 3.12 % 3.25 %

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

109.91 % 110.00 %

(1)

 

Presented on a tax-equivalent, non-GAAP, basis using the U.S. federal statutory tax rate of 35 percent for municipal leasing and financing transactions.

(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 the NYC affordable housing tax benefit and, provision for loan and lease losses and write-downs for the taxi medallion portfolio, (ii) change in loans and leases excluding payoffs and charge-offs on taxi medallion loans, (iii) tangible common equity ratio, (iv) efficiency ratio, (v) yield on interest-earning assets, tax-equivalent basis, and (vi) 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 a reconciliation of net income and diluted earnings per share (as reported) to net income and diluted earnings per share excluding the 2015 and 2016 New York City (NYC) affordable housing tax benefit and, provision for loan and lease losses and write-downs for the taxi medallion portfolio:

       

Three months ended
June 30,

   

Six months ended
June 30,

(dollars in thousands, except per share amounts)         2017     2016     2017     2016
Net income (as reported) $ 13,957     102,242 147,873     206,277
2015 & 2016 NYC affordable housing tax benefit - - (14,413 ) -
Provision for loan and lease losses and write-downs for the taxi medallion portfolio 179,309 60,055 193,251 78,732
Tax effect, including taxi loss related benefit           (73,034 )     (24,457 )     (94,088 )     (30,946 )

Net income - excluding NYC affordable housing and, provision for loan and lease losses and write-downs for the taxi medallion portfolio

        $ 120,232       137,840       232,623       254,063  
 
Diluted earnings per share (as reported) $ 0.26 1.90 2.73 3.86
2015 & 2016 NYC affordable housing tax benefit - - (0.27 ) -
Provision for loan and lease losses and write-downs for the taxi medallion portfolio 3.30 1.11 3.56 1.47
Tax effect, including taxi loss related benefit           (1.36 )     (0.45 )     (1.74 )     (0.58 )

Diluted earnings per share - excluding the NYC affordable housing tax benefit and, provision for loan and lease losses and write-downs for the taxi medallion portfolio

        $ 2.21       2.56       4.28       4.75  
 
 

The following table presents the change in loans and leases for the quarter excluding payoffs and charge-offs on taxi medallion loans:

(dollars in thousands)                

June 30, 2017

Loans and leases, gross (as reported)                 $ 30,385,711
Payoffs and charge-offs on taxi medallions - second quarter 2017                   235,987
Total loans and leases, gross - excluding payoffs and charge-offs on taxi medallions                 $ 30,621,698
Loans and leases, gross (as reported) - March 31, 2017                   30,023,610
Change in loans and leases, gross (adjusted)                 $ 598,088
 
 

The following table presents the tangible common equity ratio calculation:

(dollars in thousands except, per ratio)        

June 30,
2017

   

March 31,
2017

   

December 31,
2016

   

June 30,
2016

Consolidated common shareholders' equity         $ 3,797,246     3,764,863     3,612,264     3,494,486
Intangible assets           27,374       37,436       19,640       15,016  
Consolidated tangible common shareholders' equity (TCE)         $ 3,769,872       3,727,427       3,592,624       3,479,470  
                             
Consolidated total assets $ 40,718,610 40,265,334 39,047,611 36,546,835
Intangible assets           27,374       37,436       19,640       15,016  
Consolidated tangible total assets (TTA)         $ 40,691,236       40,227,898       39,027,971       36,531,819  
Tangible common equity ratio (TCE/TTA)           9.26 %     9.27 %     9.21 %     9.52 %
 
 

SIGNATURE BANK
NON-GAAP FINANCIAL MEASURES
(unaudited)

The following table presents the efficiency ratio calculation:

       

Three months ended
June 30,

   

Six months ended
June 30,

          2017     2016     2017     2016
Non-interest expense (NIE)         $ 116,273       92,309       219,471       184,635  
Net interest income before provision for loan and lease losses 307,240     281,648 608,996     559,958
Other non-interest income           9,550       13,143       19,424       21,607  
Total income (TI)         $ 316,790       294,791       628,420       581,565  
Efficiency ratio (NIE/TI)           36.70 %     31.31 %     34.92 %     31.75 %
 
 

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,

          2017     2016     2017     2016
Interest income (as reported) $ 361,937     323,961 712,542     639,735
Tax-equivalent adjustment           858       240       1,514       405  
Interest income, tax-equivalent basis         $ 362,795       324,201       714,056       640,140  
Interest-earnings assets         $ 39,747,119       35,612,255       39,422,478       34,681,407  
 
Yield on interest-earning assets 3.65 % 3.66 % 3.64 % 3.71 %
Tax-equivalent effect           0.01 %     -       0.01 %     -  
Yield on interest-earning assets, tax-equivalent basis           3.66 %     3.66 %     3.65 %     3.71 %
 
 

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,

          2017     2016     2017     2016
Net interest margin (as reported) 3.10 %     3.18 % 3.12 %     3.25 %
Tax-equivalent adjustment 0.01 % 0.01 % - -
Margin contribution from loan prepayment penalty income         (0.07 )%     (0.07 )%     (0.06 )%     (0.11 )%
Core net interest margin, tax-equivalent basis excluding loan prepayment penalty income         3.04 %     3.12 %     3.06 %     3.14 %

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

Source: Signature Bank

News Provided by Acquire Media