Signature Bank
Oct 20, 2016

Signature Bank Reports 2016 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, 2016. Net income for the 2016 third quarter was $76.1 million, or $1.41 diluted earnings per share, versus $96.2 million, or $1.88 diluted earnings per share, for the 2015 third quarter. The decrease in net income for the 2016 third quarter, versus the comparable quarter last year, is primarily due to an increase in the provision for loan losses of $69.1 million. $61.7 million of the increase in provision for loan losses was due to the Chicago taxi medallion portfolio.

Net interest income for the 2016 third quarter reached $290.5 million, up $40.5 million, or 16.2 percent, when compared with the 2015 third quarter. This increase is primarily due to growth in average interest-earning assets. Total assets reached $37.79 billion at September 30, 2016, an increase of $5.87 billion, or 18.4 percent, from $31.92 billion at September 30, 2015. Average assets for the 2016 third quarter reached $37.30 billion, an increase of $6.10 billion, or 19.6 percent, compared with the 2015 third quarter.

Deposits for the 2016 third quarter rose $1.82 billion, or 6.1 percent, to $31.40 billion at September 30, 2016. When compared with deposits at September 30, 2015, overall deposit growth for the last twelve months was 18.0 percent, or $4.78 billion. Average deposits for the 2016 third quarter reached $30.52 billion, an increase of $1.44 billion, or 4.9 percent.

"This quarter, Signature Bank effectively put the Chicago taxi medallion portfolio issues behind us, while growing deposits in excess of $1.8 billion. As we grow, we continue to expand our geographic outreach for securing deposits on a national basis across a number of industries. Our capabilities, service and trusted reputation for safety have always enabled the Bank to compete with major financial institutions throughout the New York metropolitan area. Now, these attributes afford us the opportunity to garner deposits in other regions of the country as well," stated Joseph J. DePaolo, President and Chief Executive Officer.

"The client service differentiators Signature Bank brings do not go unnoticed. This quarter, the Bank was ranked Best Business Bank by New York Law Journal readers. Since the New York Law Journal, a leading trade publication for the legal market in New York, introduced its reader survey seven years ago, the Bank has continually secured the top spot or ranked within the top three positions in each category in which it was named. Law firms are a meaningful constituent within our client base, and this ranking is a testament to the fact that the Bank truly stands out amongst professional services organizations. Additionally, Weiss Ratings, a national independent provider of financial strength ratings for the bank and insurance industries, recently ranked Signature Bank amongst the top five highest-rated, largest banks in the U.S., depicting yet another example of our commitment to depositor-first, sleep-at-night, safety," DePaolo explained.

Scott A. Shay, Chairman of the Board, commented: "At Signature Bank, we recognize that our core asset is trust. Our clients trust us to do two things: first, to keep their money safe; and secondly, to ensure all of their banking activities are conducted within their best interests. We value the great confidence our clients place in us, and we are dedicated to ensuring we deliver on that conviction with every client transaction. We also believe we have to keep our balance sheet pristine to maintain that trust and our actions this quarter demonstrate that commitment.

"And, then there is trust amongst our colleagues to serve our clients with integrity in both good and bad economic times. Our relationship-based approach has been the foundation of our business model since our inception. As we have demonstrated since our founding, we prosper as our clients prosper. We will continue to execute on our client-centric philosophy."

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 9.51 percent, 12.00 percent, 12.00 percent, and 13.56 percent, respectively, as of September 30, 2016. 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 9.41 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 2016 third quarter was $290.5 million, an increase of $40.5 million, or 16.2 percent, versus the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $36.89 billion for the 2016 third quarter represent an increase of $6.08 billion, or 19.7 percent, from the 2015 third quarter. Yield on interest-earning assets for the 2016 third quarter decreased two basis points, to 3.62 percent, compared with the 2015 third quarter. This decrease was primarily attributable to prolonged low interest rates and lower prepayment penalty income.

Average cost of deposits and average cost of funds for the third quarter of 2016 increased by two and seven basis points, respectively, versus the 2015 third quarter to 0.42 percent and 0.53 percent.

Net interest margin on a tax-equivalent basis for the 2016 third quarter was 3.14 percent versus 3.22 percent reported in the same period a year ago. On a linked quarter basis, net interest margin on a tax-equivalent basis decreased five basis points. Excluding loan prepayment penalties in both quarters, linked quarter core margin decreased five basis points to 3.07 percent.

Provision for Loan Losses

The Bank's provision for loan losses for the third quarter of 2016 was $80.5 million, compared with $33.3 million for the 2016 second quarter and $11.4 million for the 2015 third quarter. The elevated provision in the 2016 third quarter was predominantly due to the Chicago taxi medallion portfolio.

Net charge-offs for the 2016 third quarter were $100.5 million, or 1.46 percent of average loans on an annualized basis, versus $15.4 million, or 0.24 percent, for the 2016 second quarter and $5.5 million, or 0.10 percent, for the 2015 third quarter. $95.1 million of the charge-offs in the 2016 third quarter were for the Chicago taxi medallion portfolio. The remaining Chicago taxi medallion portfolio balance is $58.4 million with an associated allowance for loan losses of $12.6 million for a net exposure of $45.8 million.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2016 third quarter was $11.1 million, up $3.2 million when compared with $7.9 million reported in the 2015 third quarter. The increase in non-interest income was driven by increases in net gains on sales of securities and loans.

Non-interest expense for the third quarter of 2016 was $96.2 million, an increase of $10.0 million, or 11.7 percent, versus $86.2 million reported in the 2015 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 improved to 31.9 percent for the 2016 third quarter versus 33.4 percent for the comparable period last year. The improvement was primarily due to growth in net interest income.

Loans

Loans, excluding loans held for sale, grew $1.06 billion, or 4.0 percent, during the third quarter of 2016 to $27.77 billion, compared with $26.71 billion at June 30, 2016. At September 30, 2016, loans accounted for 73.5 percent of total assets, versus 73.1 percent at the end of the 2016 second quarter and 69.6 percent at the end of 2015 third quarter. Average loans, excluding loans held for sale, reached $27.33 billion in the 2016 third quarter, growing $1.27 billion, or 4.9 percent, from the 2016 second quarter and $5.94 billion, or 27.8 percent, from the 2015 third quarter. The increase in loans for the quarter was primarily driven by growth in commercial real estate and multi-family loans.

At September 30, 2016, non-accrual loans were $162.8 million, representing 0.59 percent of total loans and 0.43 percent of total assets, compared with non-accrual loans of $129.5 million, or 0.48 percent of total loans, at June 30, 2016 and $59.6 million, or 0.27 percent of total loans, at September 30, 2015. At the end of the 2016 third quarter, $140.1 million of non-accrual loans were taxi medallions. At September 30, 2016, the ratio of allowance for loan and lease losses to total loans was 0.74 percent, versus 0.84 percent at June 30, 2016 and 0.82 percent at September 30, 2015. Additionally, the ratio of allowance for loan and lease losses to non-accrual loans, or the coverage ratio, was 126 percent for the 2016 third quarter versus 174 percent for the second quarter of 2016 and 307 percent for the 2015 third quarter.

Conference Call

Signature Bank's management will host a conference call to review results of the 2016 third quarter on Thursday, October 20, 2016, 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 #94265857. 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 #94265857. The replay will be available from approximately 1:00 PM ET on Thursday, October 20, 2016 through 11:59 PM ET on Monday, October 24, 2016.

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 sixth best on Forbes' Best and Worst Banks in America 2016 list 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.

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)   2016   2015   2016   2015
INTEREST AND DIVIDEND INCOME
Loans held for sale $ 1,619 1,291 3,609 2,399
Loans and leases, net 266,756 216,928 766,589 604,889
Securities available-for-sale 48,963 46,966 150,305 143,333
Securities held-to-maturity 15,448 16,445 47,781 50,213
Other short-term investments     2,341     1,364     6,577     3,715  
  Total interest income     335,127     282,994     974,861     804,549  
INTEREST EXPENSE
Deposits 31,871 26,375 89,907 75,978
Federal funds purchased and securities sold under
agreements to repurchase 2,966 3,163 9,133 10,465
Federal Home Loan Bank borrowings 6,186 3,489 18,854 9,345
Long-term debt     3,636     -     6,541     -  
  Total interest expense     44,659     33,027     124,435     95,788  
Net interest income before provision for loan and lease losses 290,468 249,967 850,426 708,761
Provision for loan and lease losses     80,460     11,384     133,541     28,228  
Net interest income after provision for loan and lease losses     210,008     238,583     716,885     680,533  
NON-INTEREST INCOME
Commissions 2,705 2,615 8,032 8,077
Fees and service charges 5,443 5,424 16,044 16,350
Net gains on sales of securities 2,287 250 7,142 871
Net gains on sales of loans 2,069 882 5,049 5,894
Other-than-temporary impairment losses on securities:
Total impairment losses on securities (278 ) (366 ) (702 ) (1,659 )
Portion recognized in other comprehensive income (before taxes)   108     246     413     977  
Net impairment losses on securities recognized in earnings (170 ) (120 ) (289 ) (682 )
Other losses     (1,267 )   (1,196 )   (3,303 )   (2,749 )
  Total non-interest income     11,067     7,855     32,675     27,761  
NON-INTEREST EXPENSE
Salaries and benefits 63,258 58,709 187,466 171,545
Occupancy and equipment 7,673 6,722 21,381 18,970
Data processing 5,134 4,275 14,893 12,196
FDIC assessment fees 5,682 3,855 14,967 11,323
Professional fees 2,231 1,866 6,422 7,324
Other general and administrative     12,239     10,748     35,723     31,426  
  Total non-interest expense     96,217     86,175     280,852     252,784  
Income before income taxes 124,858 160,263 468,708 455,510
Income tax expense     48,748     64,038     186,321     185,433  
Net income   $ 76,110     96,225     282,387     270,077  
PER COMMON SHARE DATA
Earnings per share - basic $ 1.42 1.89 5.30 5.33
Earnings per share - diluted $ 1.41 1.88 5.26 5.27
 
SIGNATURE BANK    
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
 
September 30, December 31,
2016 2015
(dollars in thousands, except shares and per share amounts)   (unaudited)    
ASSETS
Cash and due from banks $ 650,171 311,254
Short-term investments     36,358   30,292  
  Total cash and cash equivalents     686,529   341,546  
Securities available-for-sale 6,332,317 6,240,761
Securities held-to-maturity (fair value $2,069,284 at September 30, 2016
and $2,137,913 at December 31, 2015) 2,019,481 2,133,144
Federal Home Loan Bank stock 127,229 154,405
Loans held for sale 510,666 456,358
Loans and leases, net 27,569,427 23,597,541
Premises and equipment, net 47,668 44,161
Accrued interest and dividends receivable 98,926 94,006
Other assets     400,077   388,623  
  Total assets   $ 37,792,320   33,450,545  
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest-bearing $ 9,733,630 8,567,300
Interest-bearing     21,661,739   18,206,623  
  Total deposits     31,395,369   26,773,923  
Federal funds purchased and securities sold under agreements
to repurchase 395,000 817,000
Federal Home Loan Bank borrowings 1,930,900 2,720,163
Long-term debt 256,545 -
Accrued expenses and other liabilities     252,909   247,625  
  Total liabilities     34,230,723   30,558,711  
Shareholders' equity
Preferred stock, par value $.01 per share; 61,000,000 shares authorized;
none issued at September 30, 2016 and December 31, 2015 - -
Common stock, par value $.01 per share; 64,000,000 shares authorized;
54,610,665 shares issued and outstanding at September 30, 2016;
51,929,064 shares issued and outstanding at December 31, 2015; 546 509
Additional paid-in capital 1,752,178 1,399,501
Retained earnings 1,789,398 1,507,011
Treasury stock, none at September 30, 2016 and 41,087 shares at December 31, 2015 - (5,684 )
Accumulated other comprehensive income (loss)     19,475   (9,503 )
  Total shareholders' equity     3,561,597   2,891,834  
  Total liabilities and shareholders' equity   $ 37,792,320   33,450,545  
 
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)     2016       2015       2016       2015  
PER COMMON SHARE
Net income - basic $ 1.42 $ 1.89 $ 5.30 $ 5.33
Net income - diluted $ 1.41 $ 1.88 $ 5.26 $ 5.27
Average shares outstanding - basic 53,683 50,888 53,313 50,685
Average shares outstanding - diluted 53,918 51,264 53,677 51,209
Book value $ 65.22 $ 55.43 $ 65.22 $ 55.43
 
SELECTED FINANCIAL DATA
Return on average total assets 0.81 % 1.22 % 1.05 % 1.22 %
Return on average shareholders' equity 8.58 % 13.83 % 11.69 % 13.58 %
Efficiency ratio (1) 31.91 % 33.42 % 31.80 % 34.32 %

Efficiency ratio excluding net gains on sales of securities
  and net impairment losses on securities recognized
  in earnings (1) (2)

32.13 % 33.44 % 32.05 % 34.33 %
Yield on interest-earning assets 3.61 % 3.64 % 3.68 % 3.69 %
Yield on interest-earning assets, tax-equivalent basis (3) 3.62 % 3.64 % 3.68 % 3.69 %
Cost of deposits and borrowings 0.53 % 0.46 % 0.52 % 0.48 %
Net interest margin 3.13 % 3.22 % 3.21 % 3.25 %
Net interest margin, tax-equivalent basis (3) 3.14 % 3.22 % 3.21 % 3.25 %
 
(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. This ratio, a non-GAAP measure, is a metric used by management to evaluate the performance of the Bank's business activities.
 
(2) The efficiency ratio excluding net gains on sales of securities and net impairment losses on securities recognized in earnings 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 performance of the Bank's core business activities.
 
(3) 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.
 
     

September 30,
2016

 

June 30,
2016

 

December 31,
2015

 

September 30,
2015

CAPITAL RATIOS        
Tangible common equity (4) 9.41 % 9.52 % 8.64 % 8.84 %
Tier 1 leverage (5) 9.51 % 9.60 % 8.87 % 8.95 %
Common equity Tier 1 risk-based (5) 12.00 % 12.01 % 11.33 % 11.58 %
Tier 1 risk-based (5) 12.00 % 12.01 % 11.33 % 11.58 %
Total risk-based (5) 13.56 % 13.69 % 12.10 % 12.34 %
 
ASSET QUALITY
Non-accrual loans $ 162,772 $ 129,460 $ 71,905 $ 59,648
Allowance for loan and lease losses $ 204,809 $ 224,878 $ 195,023 $ 182,951
Allowance for loan and lease losses to non-accrual loans 125.83 % 173.70 % 271.22 % 306.72 %
Allowance for loan and lease losses to total loans 0.74 % 0.84 % 0.82 % 0.82 %
Non-accrual loans to total loans 0.59 % 0.48 % 0.30 % 0.27 %
Quarterly net charge-offs to average loans, annualized 1.46 % 0.24 % 0.08 % 0.10 %
 
(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.
 
(5) September 30, 2016 ratios are preliminary.
 
SIGNATURE BANK            
NET INTEREST MARGIN ANALYSIS
(unaudited)
 
 
Three months ended Three months ended
September 30, 2016 September 30, 2015
(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 $ 529,184 656 0.49 % 514,760 315 0.24 %
Investment securities 8,684,586 66,096 3.04 % 8,482,932 64,460 3.04 %
Commercial loans, mortgages and leases (1) 27,032,191 264,383 3.89 % 21,057,887 213,820 4.03 %
Residential mortgages and consumer loans 293,260 2,754 3.74 % 326,280 3,108 3.78 %
Loans held for sale     354,805   1,619     1.82 %   427,382   1,291   1.20 %
Total interest-earning assets     36,894,026   335,508     3.62 %   30,809,241   282,994   3.64 %
Non-interest-earning assets     401,517           384,117        
Total assets   $ 37,295,543           31,193,358        
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand $ 3,849,114 4,465 0.46 % 2,432,951 2,522 0.41 %
Money market 15,605,406 24,094 0.61 % 14,355,641 21,188 0.59 %
Time deposits 1,395,889 3,312 0.94 % 982,019 2,665 1.08 %
Non-interest-bearing demand deposits     9,665,906   -     -     8,325,949   -   -  
Total deposits     30,516,315   31,871     0.42 %   26,096,560   26,375   0.40 %
Long-term debt 256,419 3,636 5.67 % - - -
Other borrowings     2,709,055   9,152     1.34 %   2,084,836   6,652   1.27 %
Total deposits and borrowings     33,481,789   44,659     0.53 %   28,181,396   33,027   0.46 %
Other non-interest-bearing liabilities
and shareholders' equity     3,813,754           3,011,962        
Total liabilities and shareholders' equity   $ 37,295,543           31,193,358        
OTHER DATA
Net interest income / interest rate spread (1) 290,849 3.09 % 249,967 3.18 %
Tax-equivalent adjustment (381 ) -
Net interest income, as reported 290,468   249,967
Net interest margin 3.13 % 3.22 %
Tax-equivalent effect 0.01 % -  
Net interest margin on a fully tax-equivalent basis (1) 3.14 % 3.22 %
Ratio of average interest-earning assets
to average interest-bearing liabilities 110.19 % 109.32 %
 

(1) Presented on a tax-equivalent, non-GAAP, basis using the U.S. federal statutory tax rate of 35 percent.

 
SIGNATURE BANK            
NET INTEREST MARGIN ANALYSIS
(unaudited)
 
 
Nine months ended Nine months ended
September 30, 2016 September 30, 2015
(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 $ 456,328 1,674 0.49 % 431,443 782 0.24 %
Investment securities 8,723,687 202,989 3.10 % 8,516,240 196,479 3.08 %
Commercial loans, mortgages and leases (1) 25,628,015 758,779 3.95 % 19,614,462 595,607 4.06 %
Residential mortgages and consumer loans 300,742 8,595 3.82 % 329,958 9,282 3.76 %
Loans held for sale     315,558   3,609     1.53 %   280,214   2,399   1.14 %
Total interest-earning assets     35,424,330   975,646     3.68 %   29,172,317   804,549   3.69 %
Non-interest-earning assets     398,350           349,403        
Total assets   $ 35,822,680           29,521,720        
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand $ 3,428,780 11,695 0.46 % 2,050,853 6,108 0.40 %
Money market 15,131,418 69,060 0.61 % 13,919,401 61,797 0.59 %
Time deposits 1,249,624 9,152 0.98 % 958,960 8,073 1.13 %
Non-interest-bearing demand deposits     9,290,147   -     -     7,759,218   -   -  
Total deposits     29,099,969   89,907     0.41 %   24,688,432   75,978   0.41 %
Long-term debt 154,473 6,542 5.65 % - - -
Other borrowings     2,930,299   27,986     1.28 %   1,979,075   19,810   1.34 %
Total deposits and borrowings     32,184,741   124,435     0.52 %   26,667,507   95,788   0.48 %
Other non-interest-bearing liabilities
and shareholders' equity     3,637,939           2,854,213        
Total liabilities and shareholders' equity   $ 35,822,680           29,521,720        
OTHER DATA
Net interest income / interest rate spread (1) 851,211 3.16 % 708,761 3.21 %
Tax-equivalent adjustment (785 ) -
Net interest income, as reported 850,426   708,761
Net interest margin 3.21 % 3.25 %
Tax-equivalent effect -   -  
Net interest margin on a fully tax-equivalent basis (1) 3.21 % 3.25 %
Ratio of average interest-earning assets
to average interest-bearing liabilities 110.07 % 109.39 %
 
(1) Presented on a tax-equivalent, non-GAAP, basis using the U.S. federal statutory tax rate of 35 percent.
 

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 excluding the after tax effect of net gains on sales of securities and net impairment losses on securities recognized in earnings, (ii) net income and diluted earnings per share excluding the after tax effect of the Chicago taxi medallion portfolio provision for loan and lease losses, (iii) pre-tax, pre-provision income, (iv) tangible common equity ratio, (v) efficiency ratio excluding net gains on sales of securities and net impairment losses on securities recognized in earnings, (vi) yield on interest-earning assets, tax-equivalent basis, (vii) net interest margin, tax-equivalent basis, and (viii) 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. For a description of the tangible common equity ratio, efficiency ratio, tax-equivalent yield on interest-earning assets, and tax equivalent net interest margin see "Financial Summary, Capital Ratios, Asset Quality."
 
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 securities and net impairment losses on securities recognized in earnings:
 

Three months ended
September 30,

 

Nine months ended
September 30,

(dollars in thousands, except per share amounts)     2016     2015     2016     2015  
Net income (as reported) $ 76,110   96,225 282,387   270,077
Net gains on sales of securities (2,287 ) (250 ) (7,142 ) (871 )
Net impairment losses on securities recognized in earnings 170 120 289 682
Tax effect     827     52     2,702     77  
Net income - excluding after tax effect of net gains on sales of securities
and net impairment losses on securities recognized in earnings   $ 74,820     96,147     278,236     269,965  
 
Diluted earnings per share (as reported) $ 1.41 1.88 5.26 5.27
Net gains on sales of securities (0.04 ) - (0.13 ) (0.01 )
Net impairment losses on securities recognized in earnings - - - 0.01
Tax effect     0.02     -     0.05     -  
Diluted earnings per share - excluding after tax effect of net gains on sales of securities
of securities and net impairment losses on securities recognized in earnings   $ 1.39     1.88     5.18     5.27  
 
 
The following table presents a reconciliation of net income (as reported) to net income excluding provision for loan and lease losses for the Chicago taxi medallion portfolio:
 

Three months ended
September 30,

Nine months ended
September 30,

(dollars in thousands, except per share amounts)     2016     2015     2016     2015  
Net income (as reported) $ 76,110 96,225 282,387 270,077
Provision for loan and lease losses for the Chicago taxi medallion portfolio 61,703 869 112,504 4,151
Tax effect     (24,089 )   (347 )   (44,411 )   (1,697 )
Net income - excluding provision for loan and lease losses
for the Chicago taxi medallion portfolio   $ 113,724     96,747     350,480     272,531  
 
Diluted earnings per share (as reported) $ 1.41 1.88 5.26 5.27
Provision for loan and lease losses for the Chicago taxi medallion portfolio 1.15 0.02 2.10 0.08
Tax effect     (0.45 )   (0.01 )   (0.83 )   (0.03 )
Diluted earnings per share - excluding after tax effect of provision for loan and lease
losses for the Chicago taxi medallion portfolio   $ 2.11     1.89     6.53     5.32  
 
SIGNATURE BANK        
NON-GAAP FINANCIAL MEASURES
(unaudited)
 
 
The following table presents a reconciliation of net income (as reported) to income excluding provision for loan and lease losses and income tax expense:
 

Three months ended
September 30,

Nine months ended
September 30,

(dollars in thousands)     2016     2015     2016     2015  
Net income (as reported) $ 76,110 96,225 282,387 270,077
Provision for loan and lease losses 80,460 11,384 133,541 28,228
Income tax expense     48,748     64,038     186,321     185,433  
Income - excluding provision for loan and lease losses and income tax expense   $ 205,318     171,647     602,249     483,738  
 
 
The following table presents the tangible common equity ratio calculation:
 
(dollars in thousands except, per ratio)   September 30,

2016

  June 30,

2016

  December 31,

2015

  September 30,

2015

Consolidated common shareholders' equity 3,561,597 3,494,486 2,891,834 2,821,677
Intangible assets     6,527     15,016     1,832     -  
Consolidated tangible common shareholders' equity (TCE)     3,555,070     3,479,470     2,890,002     2,821,677  
 
Consolidated total assets 37,792,320 36,546,835 33,450,545 31,920,524
Intangible assets     6,527     15,016     1,832     -  
Consolidated tangible total assets (TTA)     37,785,793     36,531,819     33,448,713     31,920,524  
Tangible common equity ratio (TCE/TTA)     9.41 %   9.52 %   8.64 %   8.84 %
 
 
The following table reconciles net interest margin (as reported) to core net interest margin excluding loan prepayment penalty income:
 

Three months ended
September 30,

Nine months ended
September 30,

        2016     2015     2016     2015  
Net interest margin (as reported) 3.13 % 3.22 % 3.21 % 3.25 %
Tax-equivalent adjustment 0.01 % - - -
Margin contribution from loan prepayment penalty income     (0.07 )%   (0.11 )%   (0.09 )%   (0.10 )%
Core net interest margin - excluding loan prepayment penalty income     3.07 %   3.11 %   3.12 %   3.15 %
 

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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