Signature Bank
Oct 19, 2017

Signature Bank Reports 2017 Third Quarter Results

NEW YORK--(BUSINESS WIRE)-- Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, today announced results for its third quarter ended September 30, 2017. Net income for the 2017 third quarter was $124.5 million, or $2.29 diluted earnings per share, versus $76.1 million, or $1.41 diluted earnings per share, for the 2016 third quarter. The increase in net income for the 2017 third quarter, versus the comparable quarter last year, is primarily due to a decrease in the provision for loan losses of $66.1 million and an increase in net interest income. $60.2 million of the decrease in provision for loan losses was due to the Chicago taxi medallion portfolio.

Net interest income for the 2017 third quarter reached $308.8 million, up $18.4 million, or 6.3 percent, when compared with the 2016 third quarter. This increase is primarily due to growth in average interest-earning assets. Total assets reached $41.33 billion at September 30, 2017, an increase of $3.53 billion, or 9.4 percent, from $37.79 billion at September 30, 2016. Average assets for the 2017 third quarter reached $40.88 billion, an increase of $3.59 billion, or 9.6 percent, compared with the 2016 third quarter.

Deposits for the 2017 third quarter rose $508.9 million, or 1.5 percent, to $33.68 billion at September 30, 2017. When compared with deposits at September 30, 2016, overall deposit growth for the last twelve months was 7.3 percent, or $2.28 billion. Average deposits for the 2017 third quarter reached $33.37 billion, an increase of $417.3 million, or 1.3 percent.

"While we recognize there have been some near-term challenges for Signature Bank, including the recent impact on our taxi medallion loan portfolio and commercial real estate headwinds, our ability to attract veteran bankers and on-board core clients has continued unabated. We have never veered from the differentiated, relationship-based banking model upon which this institution was founded. Our single-point-of-contact, client-centric approach remains fully intact, allowing us to deliver solid growth -- quarter after quarter -- albeit not quite at the extraordinary pace of the past few years. However, a slower growth rate for Signature Bank still far outpaces that of our average peer group," explained Joseph J. DePaolo, President and Chief Executive Officer.

"Evidence of our commitment to client care and service are still among the reasons Signature Bank continues to distinguish itself in the commercial banking arena. For example, for eight consecutive years, the New York Law Journal cited the Bank as a top-ranking institution in the three banking categories of its Best of Survey of its readers. This year, the Bank was named Best Private Bank, Best Attorney Escrow Services provider and ranked second in the Best Business Bank category. Additionally, back in the spring, the Bank placed in the top three in the country in the Nation's Best Private Banking Services category of The National Law Journal, a sister publication of the New York Law Journal. Whether it is our attorney clients or others in commercial sectors, the fact of the matter is that Signature Bank's unrelenting dedication to our clients has and always will be our priority and sets us apart in the marketplace," DePaolo said.

Scott A. Shay, Chairman of the Board, commented: "Recently, we conducted market research in an attempt to determine if any commercial bank in American history had ever grown organically in its first 15 years of operations at a pace greater than that of Signature Bank. We could find none. Perhaps the results that contributed to our extraordinary 15-year track record became expected. But, our growth did not occur by accident. At Signature Bank, we endeavor to think and plan for the long term to benefit our shareholders. We continually seek profitable, sustainable growth that adds to shareholder value and depositor safety. While our growth might ebb and flow in the short term, it is our pledge to long-term value creation as well as safety and soundness that will always remain our sharpest focus."

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 9.72 percent, 11.92 percent, 11.92 percent, and 13.28 percent, respectively, as of September 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 9.44 percent. The Bank defines tangible common equity ratio as the ratio of total tangible common shareholders' equity to total tangible assets.

Net Interest Income

Net interest income for the 2017 third quarter was $308.8 million, an increase of $18.4 million, or 6.3 percent, versus the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $40.30 billion for the 2017 third quarter represent an increase of $3.40 billion, or 9.2 percent, from the 2016 third quarter. Yield on interest-earning assets for the 2017 third quarter increased four basis points, to 3.66 percent, compared with the 2016 third quarter.

Average cost of deposits and average cost of funds for the third quarter of 2017 increased by 13 and 14 basis points, to 0.55 percent and 0.67 percent, respectively versus the comparable period a year ago.

Net interest margin on a tax-equivalent basis for the 2017 third quarter was 3.05 percent versus 3.14 percent reported in the same period a year ago. On a linked quarter basis, net interest margin on a tax-equivalent basis decreased six 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 2.99 percent.

Provision for Loan Losses

The Bank's provision for loan losses for the third quarter of 2017 was $14.3 million, compared with $187.6 million for the 2017 second quarter and $80.5 million for the 2016 third quarter. The elevated provisions in the 2017 second quarter and the 2016 third quarter were predominantly due to the taxi medallion portfolio.

Net charge-offs for the 2017 third quarter were $3.8 million, or 0.05 percent of average loans on an annualized basis, versus $229.0 million, or 3.04 percent, for the 2017 second quarter and $100.5 million, or 1.46 percent, for the 2016 third quarter. $229.7 million of the 2017 second quarter charge-offs and $98.7 million of the charge-offs in the 2016 third quarter were for taxi medallion loans.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2017 third quarter was $8.1 million, down $3.0 million when compared with $11.1 million reported in the 2016 third quarter. The decrease was due to a $1.6 million decrease in net gains on sales of securities and loans 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 third quarter of 2017 was $105.6 million, an increase of $9.4 million, or 9.8 percent, versus $96.2 million reported in the 2016 third quarter. The increase was primarily a result of the addition of new private client banking teams, as well as 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 was 33.3 percent for the 2017 third quarter versus 31.9 percent for the comparable period last year and 36.7 percent for the 2017 second quarter. The decrease from the 2017 second quarter was primarily due to a decrease in other general and administrative expenses of $14.3 million primarily due to write-downs on repossessed New York City taxi medallion loans in the 2017 second quarter.

Loans

Loans, excluding loans held for sale, grew $799.4 million, or 2.6 percent, during the third quarter of 2017 to $31.19 billion, compared with $30.39 billion at June 30, 2017. At September 30, 2017, loans accounted for 75.5 percent of total assets, versus 74.6 percent at the end of the 2017 second quarter and 73.5 percent at the end of 2016 third quarter. Average loans, excluding loans held for sale, reached $30.68 billion in the 2017 third quarter, growing $514.2 million, or 1.7 percent, from the 2017 second quarter and $3.36 billion, or 12.3 percent, from the 2016 third quarter. The increase in loans for the quarter was primarily driven by growth in specialty finance, commercial real estate and multi-family loans.

At September 30, 2017, non-accrual loans were $376.9 million, representing 1.21 percent of total loans and 0.91 percent of total assets, compared with non-accrual loans of $392.9 million, or 1.29 percent of total loans, at June 30, 2017 and $162.8 million, or 0.59 percent of total loans, at September 30, 2016. Excluding non-accruing loans secured by taxi medallions of $352.9 million, non-accrual loans for the remainder of the entire portfolio are $24.0 million, or eight basis points of total loans. At September 30, 2017, the ratio of allowance for loan and lease losses to total loans was 0.62 percent, versus 0.60 percent at June 30, 2017 and 0.74 percent at September 30, 2016. Additionally, the ratio of allowance for loan and lease losses to non-accrual loans, or the coverage ratio, was 51 percent for the 2017 third quarter versus 46 percent for the second quarter of 2017 and 126 percent for the 2016 third quarter.

Conference Call

Signature Bank's management will host a conference call to review results of the 2017 third quarter on Thursday, October 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 #96636294. 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 #96636294. The replay will be available from approximately 1:00 PM ET on Thursday, October 19, 2017 through 11:59 PM ET on Monday, October 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 also ranked among the Best Business Banks for the eighth consecutive year by the New York Law Journal in the publication's eighth annual reader survey. 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
September 30,

   

Nine months ended
September 30,

(dollars in thousands, except per share amounts)     2017   2016     2017   2016
INTEREST AND DIVIDEND INCOME    
Loans held for sale $ 911 1,619 3,155 3,609
Loans and leases, net 301,561 266,756 875,028 766,589
Securities available-for-sale 49,986 48,963 150,653 150,305
Securities held-to-maturity 14,549 15,448 44,346 47,781
Other investments       3,662     2,341       10,030     6,577  
Total interest income       370,669     335,127       1,083,212     974,861  
INTEREST EXPENSE
Deposits 46,659 31,871 121,772 89,907
Federal funds purchased and securities sold under
agreements to repurchase 1,913 2,966 7,329 9,133
Federal Home Loan Bank borrowings 9,634 6,186 25,407 18,854
Subordinated debt       3,645     3,636       10,890     6,541  
Total interest expense       61,851     44,659       165,398     124,435  
Net interest income before provision for loan and lease losses 308,818 290,468 917,814 850,426
Provision for loan and lease losses       14,340     80,460       221,560     133,541  
Net interest income after provision for loan and lease losses       294,478     210,008       696,254     716,885  
NON-INTEREST INCOME
Commissions 3,036 2,705 9,094 8,032
Fees and service charges 6,112 5,443 18,127 16,044
Net gains on sales of securities 735 2,287 3,263 7,142
Net gains on sales of loans 2,204 2,069 6,657 5,049
Other-than-temporary impairment losses on securities:
Total impairment losses on securities (361 ) (278 ) (634 ) (702 )
Portion recognized in other comprehensive income (before taxes)   -     108       32     413  
Net impairment losses on securities recognized in earnings (361 ) (170 ) (602 ) (289 )
Other losses       (3,607 )   (1,267 )     (8,996 )   (3,303 )
Total non-interest income       8,119     11,067       27,543     32,675  
NON-INTEREST EXPENSE
Salaries and benefits 70,112 63,258 204,856 187,466
Occupancy and equipment 8,210 7,673 24,280 21,381
Information technology 5,970 5,134 16,743 14,893
FDIC assessment fees 7,260 5,682 20,242 14,967
Professional fees 3,181 2,231 9,222 6,422
Other general and administrative       10,895     12,239       49,756     35,723  
Total non-interest expense       105,628     96,217       325,099     280,852  
Income before income taxes 196,969 124,858 398,698 468,708
Income tax expense       72,498     48,748       126,354     186,321  
Net income     $ 124,471     76,110       272,344     282,387  
PER COMMON SHARE DATA
Earnings per share - basic $ 2.30 1.42 5.05 5.30
Earnings per share - diluted $ 2.29 1.41 5.01 5.26
 
SIGNATURE BANK
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
    September 30,     December 31,
2017 2016
(dollars in thousands, except shares and per share amounts)     (unaudited)      
ASSETS
Cash and due from banks $ 250,064 499,856
Short-term investments       43,694       39,095  
Total cash and cash equivalents       293,758       538,951  
Securities available-for-sale 6,793,636 6,335,347
Securities held-to-maturity (fair value $2,004,018 at September 30, 2017
and $2,027,393 at December 31, 2016) 2,003,332 2,038,125
Federal Home Loan Bank stock 153,670 132,629
Loans held for sale 370,793 559,528
Loans and leases, net 30,992,075 28,829,670
Premises and equipment, net 60,025 50,698
Accrued interest and dividends receivable 103,752 102,963
Other assets       555,883       459,700  
Total assets     $ 41,326,924       39,047,611  
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest-bearing $ 10,664,551 10,520,529
Interest-bearing       23,013,316       21,340,731  
Total deposits       33,677,867       31,861,260  
Federal funds purchased and securities sold under agreements
to repurchase 517,000 893,000
Federal Home Loan Bank borrowings 2,545,000 2,050,900
Subordinated debt 257,181 256,588
Accrued expenses and other liabilities       397,923       373,599  
Total liabilities       37,394,971       35,435,347  
Shareholders' equity
Preferred stock, par value $.01 per share; 61,000,000 shares authorized;
none issued at September 30, 2017 and December 31, 2016 - -
Common stock, par value $.01 per share; 64,000,000 shares authorized;
54,973,983 shares issued and outstanding at September 30, 2017;
54,610,593 shares issued and outstanding at December 31, 2016 550 546
Additional paid-in capital 1,798,605 1,763,100
Retained earnings 2,175,676 1,903,332
Accumulated other comprehensive loss       (42,878 )     (54,714 )
Total shareholders' equity       3,931,953       3,612,264  
Total liabilities and shareholders' equity     $ 41,326,924       39,047,611  
 
SIGNATURE BANK
FINANCIAL SUMMARY, CAPITAL RATIOS, ASSET QUALITY
(unaudited)
 
   

Three months ended
September 30,

   

Nine months ended
September 30,

(in thousands, except ratios and per share amounts)     2017   2016     2017   2016
PER COMMON SHARE    
Net income - basic $ 2.30 $ 1.42 $ 5.05 $ 5.30
Net income - diluted $ 2.29 $ 1.41 $ 5.01 $ 5.26
Average shares outstanding - basic 54,098 53,683 53,968 53,313
Average shares outstanding - diluted 54,300 53,918 54,349 53,677
Book value $ 71.52 $ 65.22 $ 71.52 $ 65.22
 
SELECTED FINANCIAL DATA
Return on average total assets 1.21 % 0.81 % 0.90 % 1.05 %
Return on average shareholders' equity 12.78 % 8.58 % 9.65 % 11.69 %
Efficiency ratio (1) 33.33 % 31.91 % 34.39 % 31.80 %
Yield on interest-earning assets 3.65 % 3.61 % 3.65 % 3.68 %
Yield on interest-earning assets, tax-equivalent basis (1)(2) 3.66 % 3.62 % 3.66 % 3.68 %
Cost of deposits and borrowings 0.67 % 0.53 % 0.61 % 0.52 %
Net interest margin 3.04 % 3.13 % 3.09 % 3.21 %
Net interest margin, tax-equivalent basis (2)(3) 3.05 % 3.14 % 3.10 % 3.21 %
(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.
     

September 30,
2017

 

June 30,
2017

 

December 31,
2016

 

September 30,
2016

CAPITAL RATIOS          
Tangible common equity (4) 9.44 % 9.26 % 9.21 % 9.41 %
Tier 1 leverage (5) 9.72 % 9.52 % 9.61 % 9.51 %
Common equity Tier 1 risk-based (5) 11.92 % 11.68 % 11.92 % 12.00 %
Tier 1 risk-based (5) 11.92 % 11.68 % 11.92 % 12.00 %
Total risk-based (5) 13.28 % 13.03 % 13.46 % 13.56 %
 
ASSET QUALITY
Non-accrual loans $ 376,867 $ 392,880 $ 157,578 $ 162,772
Allowance for loan and lease losses $ 193,040 $ 182,541 $ 213,495 $ 204,809
Allowance for loan and lease losses to non-accrual loans 51.22 % 46.46 % 135.49 % 125.83 %
Allowance for loan and lease losses to total loans 0.62 % 0.60 % 0.74 % 0.74 %
Non-accrual loans to total loans 1.21 % 1.29 % 0.54 % 0.59 %
Quarterly net charge-offs to average loans, annualized 0.05 % 3.04 % 0.19 % 1.46 %
(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) September 30, 2017 ratios are preliminary.
 
 
SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)
 
    Three months ended     Three months ended
September 30, 2017 September 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 $ 470,171 1,455 1.23 % 529,184 656 0.49 %
Investment securities 8,987,262 66,742 2.97 % 8,684,586 66,096 3.04 %
Commercial loans, mortgages and leases (1)(2) 30,419,546 299,974 3.91 % 27,032,191 264,383 3.89 %
Residential mortgages and consumer loans 265,083 2,649 3.96 % 293,260 2,754 3.74 %
Loans held for sale       153,042   911     2.36 %     354,805   1,619     1.82 %
Total interest-earning assets       40,295,104   371,731     3.66 %     36,894,026   335,508     3.62 %
Non-interest-earning assets       587,209             401,517        
Total assets     $ 40,882,313             37,295,543        
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand $ 3,919,003 8,627 0.87 % 3,849,114 4,465 0.46 %
Money market 17,260,584 33,523 0.77 % 15,605,406 24,094 0.61 %
Time deposits 1,516,042 4,509 1.18 % 1,395,889 3,312 0.94 %
Non-interest-bearing demand deposits       10,678,696   -     -       9,665,906   -     -  
Total deposits       33,374,325   46,659     0.55 %     30,516,315   31,871     0.42 %
Subordinated debt 257,050 3,645 5.67 % 256,419 3,636 5.67 %
Other borrowings       3,085,542   11,547     1.48 %     2,709,055   9,152     1.34 %
Total deposits and borrowings       36,716,917   61,851     0.67 %     33,481,789   44,659     0.53 %

Other non-interest-bearing liabilities and shareholders' equity

      4,165,396             3,813,754        
Total liabilities and shareholders' equity     $ 40,882,313             37,295,543        
OTHER DATA

Net interest income/interest rate spread (1)

309,880 2.99 % 290,849 3.09 %
Tax-equivalent adjustment (1,062 ) (381 )
Net interest income, as reported 308,818   290,468  
Net interest margin 3.04 % 3.13 %
Tax-equivalent effect 0.01 % 0.01 %
Net interest margin on a fully tax-equivalent basis (1)(2) 3.05 % 3.14 %

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

109.75 % 110.19 %

(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)
 
    Nine months ended     Nine months ended
September 30, 2017 September 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 $ 471,151 3,598 1.02 % 456,328 1,674 0.49 %
Investment securities 8,891,079 201,431 3.02 % 8,723,687 202,989 3.10 %
Commercial loans, mortgages and leases (1)(2) 29,886,204 869,752 3.89 % 25,628,015 758,779 3.95 %
Residential mortgages and consumer loans 271,273 7,850 3.87 % 300,742 8,595 3.82 %
Loans held for sale       196,842   3,155     2.14 %     315,558   3,609     1.53 %
Total interest-earning assets       39,716,549   1,085,786     3.66 %     35,424,330   975,646     3.68 %
Non-interest-earning assets       565,087             398,350        
Total assets     $ 40,281,636             35,822,680        
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand $ 3,835,571 20,502 0.71 % 3,428,780 11,695 0.46 %
Money market 17,003,578 89,427 0.70 % 15,131,418 69,060 0.61 %
Time deposits 1,473,261 11,843 1.07 % 1,249,624 9,152 0.98 %
Non-interest-bearing demand deposits       10,555,056   -     -       9,290,147   -     -  
Total deposits       32,867,466   121,772     0.50 %     29,099,969   89,907     0.41 %
Subordinated debt 256,853 10,890 5.65 % 154,473 6,541 5.65 %
Other borrowings       3,029,683   32,736     1.44 %     2,930,299   27,987     1.28 %
Total deposits and borrowings       36,154,002   165,398     0.61 %     32,184,741   124,435     0.52 %

Other non-interest-bearing liabilities and shareholders' equity

      4,127,634             3,637,939        
Total liabilities and shareholders' equity     $ 40,281,636             35,822,680        
OTHER DATA
Net interest income / interest rate spread (1) 920,388 3.05 % 851,211 3.16 %
Tax-equivalent adjustment (2,574 ) (785 )
Net interest income, as reported 917,814   850,426  
Net interest margin 3.09 % 3.21 %
Tax-equivalent effect 0.01 % -  
Net interest margin on a fully tax-equivalent basis (1)(2) 3.10 % 3.21 %

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

109.85 % 110.07 %

(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) tangible common equity ratio, (ii) efficiency ratio, (iii) yield on interest-earning assets, tax-equivalent basis, and (iv) 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 tangible common equity ratio calculation:

(dollars in thousands)        

September 30,
2017

   

June 30,
2017

   

December 31,
2016

   

September 30,
2016

Consolidated common shareholders' equity         $ 3,931,953     3,797,246     3,612,264     3,561,597
Intangible assets           32,741       27,374       19,640       6,527  
Consolidated tangible common shareholders' equity (TCE)         $ 3,899,212       3,769,872       3,592,624       3,555,070  
                             
Consolidated total assets $ 41,326,924 40,718,610 39,047,611 37,792,320
Intangible assets           32,741       27,374       19,640       6,527  
Consolidated tangible total assets (TTA)         $ 41,294,183       40,691,236       39,027,971       37,785,793  
Tangible common equity ratio (TCE/TTA)           9.44 %     9.26 %     9.21 %     9.41 %
 

The following table presents the efficiency ratio calculation:

       

Three months ended
September 30,

   

Nine months ended
September 30,

(dollars in thousands)         2017     2016     2017     2016
Non-interest expense (NIE)         $ 105,628       96,217       325,099       280,852  
Net interest income before provision for loan and lease losses 308,818     290,468 917,814     850,426
Other non-interest income           8,119       11,067       27,543       32,675  
Total income (TI)         $ 316,937       301,535       945,357       883,101  
Efficiency ratio (NIE/TI)           33.33 %     31.91 %     34.39 %     31.80 %
 

The following table reconciles yield on interest-earning assets to the yield on interest-earning assets on a tax-equivalent basis:

       

Three months ended
September 30,

   

Nine months ended
September 30,

(dollars in thousands)         2017     2016     2017     2016
Interest income (as reported) $ 370,669     335,127 1,083,212     974,861
Tax-equivalent adjustment           1,062       381       2,574       785  
Interest income, tax-equivalent basis         $ 371,731       335,508       1,085,786       975,646  
Interest-earning assets         $ 40,295,104       36,894,026       39,716,549       35,424,330  
 
Yield on interest-earning assets 3.65 % 3.61 % 3.65 % 3.68 %
Tax-equivalent effect           0.01 %     0.01 %     0.01 %     0.00 %
Yield on interest-earning assets, tax-equivalent basis           3.66 %     3.62 %     3.66 %     3.68 %
 

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
September 30,

   

Nine months ended
September 30,

          2017     2016     2017     2016
Net interest margin (as reported) 3.04 %     3.13 % 3.09 %     3.21 %
Tax-equivalent adjustment 0.01 % 0.01 % 0.01 % -
Margin contribution from loan prepayment penalty income         (0.06 )%     (0.07 )%     (0.06 )%     (0.09 )%
Core net interest margin, tax-equivalent basis excluding loan prepayment penalty income         2.99 %     3.07 %     3.04 %     3.12 %

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

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