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Press Release

Signature Bank Reports 2020 First Quarter Results

Company Release - 4/23/2020 5:00 AM ET
  • Net Income for the 2020 First Quarter Was $99.6 Million, or $1.88 Diluted Earnings Per Share, Versus $143.5 Million, or $2.63 Diluted Earnings Per Share, Reported in the 2019 First Quarter
  • Pre-Tax, Pre-Provision Earnings for the 2020 First Quarter Were $218.5 Million, an Increase of $10.6 Million, or 5.1 Percent, Compared with $207.9 Million for the 2019 First Quarter
  • The Bank Declared a Cash Dividend of $0.56 Per Share, Payable on or After May 15, 2020 to Common Stockholders of Record at the Close of Business on May 4, 2020
  • During the 2020 First Quarter, the Bank Repurchased 392,959 Shares of Common Stock for a Total of $50.0 Million. The Bank Has Suspended Any Future Repurchases of Common Stock Given COVID-19 Circumstances
  • Total Deposits in the First Quarter Grew $1.86 Billion to $42.24 Billion, While Average Deposits Increased $1.06 Billion. Total Deposits for the Prior Twelve Months Have Grown $5.62 Billion, or 15.3 Percent
  • For the 2020 First Quarter, Loans Increased a Record $1.89 Billion, or 4.8 Percent, to $41.0 Billion. Since the End of the 2019 First Quarter, Loans Have Increased 9.4 Percent, or $3.54 Billion
  • Non-Accrual Loans Were $59.0 Million, or 0.14 Percent of Total Loans, at March 31, 2020, Versus $57.4 Million, or 0.15 Percent, at the End of the 2019 Fourth Quarter and $94.7 Million, or 0.25 Percent, at the End of the 2019 First Quarter
  • On January 1, 2020, the Bank Adopted CECL. Upon Adoption the Bank Recorded an Increase in Allowance for Credit Losses of $45.8 million, or 18.2%. The Bank’s Provision for Credit Losses of $66.8 Million for the First Quarter of 2020 was Wholly Attributable to COVID-19
  • Net Interest Margin on a Tax-Equivalent Basis was 2.79 Percent, Compared with 2.72 Percent for the 2019 Fourth Quarter and 2.75 Percent for the 2019 First Quarter. Core Net Interest Margin on a Tax-Equivalent Basis Excluding Loan Prepayment Penalty Income Increased Four Basis Points to 2.71 Percent, Compared with 2.67 Percent for the 2019 Fourth Quarter
  • Tier 1 Leverage, Common Equity Tier 1 Risk-Based, Tier 1 Risk-Based, and Total Risk-Based Capital Ratios were 9.45 Percent, 11.05 Percent, 11.05 Percent, and 12.77 Percent, Respectively, at March 31, 2020. Signature Bank Remains Significantly Above FDIC “Well Capitalized” Standards. Tangible Common Equity Ratio was 8.90 Percent
  • In the 2020 First Quarter, the Bank Appointed New Leadership for the West Coast and Onboarded 12 Private Client Banking Teams; Seven to Spearhead the Banks Efforts in the Greater Los Angeles Marketplace, as well as, Five Additional Teams to Bolster Its Presence in the San Francisco Market. The Bank Plans to Open Four New Offices in Los Angeles

NEW YORK--(BUSINESS WIRE)-- Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, today announced results for its first quarter ended March 31, 2020.

Net income for the 2020 first quarter was $99.6 million, or $1.88 diluted earnings per share, versus $143.5 million, or $2.63 diluted earnings per share, for the 2019 first quarter. The decrease in net income for the 2020 first quarter, versus the comparable quarter last year, is due to an increase in the provision for credit losses of $60.5 million. Pre-tax, pre-provision earnings were $218.5 million, representing an increase of $10.6 million, or 5.1 percent, compared with $207.9 million for the 2019 first quarter.

Net interest income for the 2020 first quarter reached $348.3 million, up $29.3 million, or 9.2 percent, when compared with the 2019 first quarter. This increase is primarily due to growth in average interest-earning assets. Total assets reached $53.07 billion at March 31, 2020, an increase of $4.55 billion, or 9.4 percent, from $48.52 billion at March 31, 2019. Average assets for the 2020 first quarter reached $51.28 billion, an increase of $3.45 billion, or 7.2 percent, compared with the 2019 first quarter.

Deposits for the 2020 first quarter rose $1.86 billion to $42.24 billion at March 31, 2020. When compared with deposits at March 31, 2019, overall deposit growth for the last twelve months was 15.3 percent, or $5.62 billion. Average deposits for the 2020 first quarter reached $41.14 billion, an increase of $1.06 billion.

“First, let me say our hearts go out to our clients, colleagues, friends and their families during this tumultuous time in the world. We’re proud of our colleagues’ dedication to their clients, families and communities. They’ve persevered through these extraordinary circumstances. There is no better test of an organization than such periods in history. In the 19 years since we began operations, we endured 9/11 just after opening our doors; during the financial crisis we not only survived, but rather thrived; and, we overcame Super Storm Sandy. Once again, we have come together during the COVID-19 pandemic, where the personal stress level of many have reached monumental proportions, due to life and death situations for the masses. We will endure,” said Signature Bank President and Chief Executive Officer Joseph J. DePaolo.

“Although we are highly focused on the current environment, we have not lost sight of our long-term vision. Once again, we have executed on our proven model by attracting new leadership for our West Coast initiative and onboarding 12 Private Client Banking Teams; seven teams to spearhead our efforts in the greater Los Angeles marketplace, as well as five additional ones to bolster our presence in the San Francisco market. We currently have plans to open four new offices in Los Angeles. Our premise for bringing our banking model to the West Coast is certainly bearing fruit where we continue to see significant disruption in the marketplace,” DePaolo concluded.

“I want to echo Joe’s sentiments about our feelings toward our friends, colleagues, clients and their families during this pandemic. These are unprecedented times for many individuals, the nation and all of humanity. We are working tirelessly to do our part to make the situation better for all those with whom we interact. We never lose sight of the fact that people want to know their money is safe in difficult times. During the financial crisis of 2008-2010, Signature Bank was a source of strength to clients because we always were motivated by our depositors’ desire for our balance sheet to have fortress-like strength,” explained Scott A. Shay, Chairman of the Board.

“As soon as the COVID-19 crisis began, we immediately recognized the nation would be in search of liquidity so we maintained extraordinarily high cash levels, which further solidifies our balance sheet. We pledge to remain a “sleep-at-night” bank for our depositors even in the midst of this crisis. We also want to assure our borrowers who may now need to draw on their lines that there is no need to draw early and pay interest as we have plenty of funds available whenever they need them. We are grateful that our clients recognize the strength of our balance sheet as in this quarter alone, they have deposited nearly $2 billion in new funds with the Bank. We single-mindedly focus on being the safest bank, and in times like these, that makes a world of difference. We are confident that over the long-haul, our deposit base will grow and our shareholders will be rewarded for our commitment to long-term safety and soundness perspective,” Shay said.

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 9.45 percent, 11.05 percent, 11.05 percent, and 12.77 percent, respectively, as of March 31, 2020. Each of these ratios is well in excess of regulatory requirements. The Bank’s strong risk-based capital ratios reflect the relatively low risk profile of the Bank’s balance sheet. The Bank’s tangible common equity ratio remains strong at 8.90 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.

The Bank declared a cash dividend of $0.56 per share, payable on or after May 15, 2020 to common stockholders of record at the close of business on May 4, 2020. In the first quarter of 2020, the Bank paid a cash dividend of $0.56 per share to common stockholders of record at the close of business on January 31, 2020. Additionally, during the 2020 first quarter, the Bank repurchased 392,959 shares of common stock for a total of $50.0 million. During the 2020 first quarter, the Bank suspended all future repurchases of common stock due to the COVID-19 circumstances.

Net Interest Income

Net interest income for the 2020 first quarter was $348.3 million, an increase of $29.3 million, or 9.2 percent, versus the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $50.50 billion for the 2020 first quarter represent an increase of $3.33 billion, or 7.1 percent, from the 2019 first quarter. Yield on interest-earning assets for the 2020 first quarter decreased 18 basis points to 3.83 percent, compared to the first quarter of last year.

Average cost of deposits and average cost of funds for the first quarter of 2020 decreased by 18 and 23 basis points, to 0.98 percent and 1.16 percent, respectively, versus the comparable period a year ago.

Net interest margin on a tax-equivalent basis for the 2020 first quarter was 2.79 percent versus 2.75 percent reported in the 2019 first quarter and 2.72 percent in the 2019 fourth quarter. Excluding loan prepayment penalties in both quarters, linked quarter core net interest margin on a tax-equivalent basis increased four basis points to 2.71 percent.

Provision for Credit Losses

The Bank’s provision for credit losses for the first quarter of 2020 was $66.8 million, compared with $9.8 million for the 2019 fourth quarter and $6.3 million for the 2019 first quarter. The Bank’s first quarter provision was wholly attributable to COVID-19. Upon adoption of CECL on January 1, 2020, the Bank’s allowance for credit losses increased $45.8 million, or 18.2%.

Net charge offs for the 2020 first quarter were $1.7 million, or 0.02 percent of average loans, on an annualized basis, versus $2.5 million, or 0.03 percent, for the 2019 fourth quarter and $879,000, or 0.01 percent, for the 2019 first quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2020 first quarter was $14.2 million, up $300,000 when compared with $13.9 million reported in the 2019 first quarter. This quarter the Bank adopted the proportional amortization method of accounting for its low-income housing tax credit investments. The related amortization is now recorded as income tax expense instead of non-interest income. For the 2020 first quarter, amortization expense totaled $9.1 million. This change was retrospectively applied to prior period financial statements for comparability.

Non-interest expense for the first quarter of 2020 was $144.0 million, an increase of $18.9 million, or 15.1 percent, versus $125.1 million reported in the 2019 first quarter. The increase was predominantly due to a rise of $13.2 million in salaries and benefits from the significant hiring for the new national business initiatives, coupled with the addition of 12 private client banking teams on the West Coast during the first quarter of 2020.

The Bank’s efficiency ratio was 39.7 percent for the 2020 first quarter compared with 37.6 percent for the same period a year ago, and 39.0 percent for the fourth quarter of 2019.

Loans

Loans, excluding loans held for sale, grew a record $1.89 billion, or 4.8 percent, during the first quarter of 2020 to $41.0 billion, compared with $39.11 billion at December 31, 2019. Average loans, excluding loans held for sale, reached $39.55 billion in the 2020 first quarter, growing $1.44 billion, or 3.8 percent, from the 2019 fourth quarter and $2.68 billion, or 7.3 percent, from the 2019 first quarter. For the sixth consecutive quarter, the increase in loans was primarily driven by growth in commercial and industrial loans, primarily capital call facilities to private equity funds.

At March 31, 2020, non-accrual loans were $59.0 million, representing 0.14 percent of total loans and 0.11 percent of total assets, compared with non-accrual loans of $57.4 million, or 0.15 percent of total loans, at December 31, 2019 and $94.7 million, or 0.25 percent of total loans, at March 31, 2019. The ratio of allowance for credit losses for loans and leases to total loans at March 31, 2020 was 0.87 percent, versus 0.64 percent at December 31, 2019 and 0.63 percent at March 31, 2019. Additionally, the ratio of allowance for credit losses for loans and leases to non-accrual loans, or the coverage ratio, was 603 percent for the 2020 first quarter versus 436 percent for the fourth quarter of 2019 and 249 percent for the 2019 first quarter.

Conference Call

Signature Bank’s management will host a conference call to review results of the 2020 first quarter on Thursday, April 23, 2020, 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 #6995686. 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,” "Quarterly Results" 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 #6995686. The replay will be available from approximately 1:00 PM ET on Thursday, April 23, 2020 through 11:59 PM ET on Sunday, April 26, 2020.

About Signature Bank

Signature Bank, member FDIC, is a New York-based full-service commercial bank with 31 private client offices throughout the New York metropolitan area and Connecticut as well as San Francisco. The Bank's growing network of private client banking teams serves the needs of privately owned businesses, their owners and senior managers.

Signature Bank’s 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 recently introduced its revolutionary, blockchain-based digital payments platform, Signet™, enabling real-time payments for its commercial clients. The Signet Platform allows the Bank’s commercial clients to make payments in U.S. dollars, 24/7/365, safely and securely, without transaction fees.

Signature Bank is the first FDIC-insured bank to launch a blockchain-based digital payments platform, and Signet is the first such platform to be approved for use by the NYS Department of Financial Services.

Signature Bank is one of the top 40 largest bank in the U.S., based on deposits (S&P Global Market Intelligence). The Bank recently earned several third-party recognitions, including: appeared on Forbes' Best Banks in America list for the 10th consecutive year in 2020; and, named number one in the Business Bank, Private Bank and Attorney Escrow Services categories by the New York Law Journal in the publication’s annual “Best of” survey for 2019, earning it a place in the New York Law Journal’s Hall of Fame (awarded to companies that have ranked in the “Best of” Survey for at least three of the past four years). The Bank also ranked second nationally in the Business Bank, Private Banking Services and Attorney Escrow Service categories of both the 2019 and 2020 National Law Journal’s “Best of” survey.

For more information, please visit https://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, our business strategy and the impact of the COVID-19 pandemic on each of the foregoing. 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, (vi) our ability to maintain the continuity, integrity, security and safety of our operations and (vii) competition for qualified personnel and desirable office locations. All of these factors are subject to additional uncertainty in the context of the COVID-19 pandemic, which is having an unprecedented impact on all aspects of our operations, the financial services industry and the economy as a whole. 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 March 31,

(dollars in thousands, except per share amounts)

2020

2019

INTEREST AND DIVIDEND INCOME
Loans held for sale

 $             704

1,724

Loans and leases, net

404,510

381,361

Securities available-for-sale

51,748

59,101

Securities held-to-maturity

14,594

15,613

Other investments

8,258

7,766

Total interest income

479,814

465,565

INTEREST EXPENSE
Deposits

99,739

104,047

Federal funds purchased and securities sold under
agreements to repurchase

748

5,829

Federal Home Loan Bank borrowings

25,212

33,056

Subordinated debt

             5,852

3,641

Total interest expense

131,551

146,573

Net interest income before provision for credit losses

348,263

318,992

Provision for credit losses

66,823

6,309

Net interest income after provision for credit losses

281,440

312,683

NON-INTEREST INCOME
Commissions

3,650

3,640

Fees and service charges

10,594

8,028

Net gains on sales of securities

                  -  

553

Net gains on sales of loans

             2,735

             1,995

Other Income (1)

            (2,799)

(283)

Total non-interest income

14,180

13,933

NON-INTEREST EXPENSE
Salaries and benefits

93,032

79,869

Occupancy and equipment

10,537

11,098

Information technology

           10,219

8,486

FDIC assessment fees

             2,898

             3,184

Professional fees

             4,744

             2,888

Other general and administrative

           22,536

19,539

Total non-interest expense

143,966

125,064

Income before income taxes

          151,654

201,552

Income tax expense (1) 

           52,067

58,097

Net income 

 $         99,587

143,455

PER COMMON SHARE DATA
Earnings per share – basic (1)

 $            1.89

2.64

Earnings per share – diluted (1)

 $            1.88

2.63

Dividends per common share

 $            0.56

               0.56

(1) Effective January 1, 2020, we changed our accounting policy for Low Income Housing Tax Credit ("LIHTC") investments from the equity method to the proportional amortization method as it was determined to be the preferable method. All applicable prior period amounts have been retroactively restated to conform to the new accounting policy.
SIGNATURE BANK
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 

March 31,

December 31,

2020

2019

(dollars in thousands, except shares and per share amounts)(unaudited)  
ASSETS
Cash and due from banks

 $      1,480,705

 

           702,277

 

Short-term investments

72,316

 

87,555

 

 Total cash and cash equivalents

1,553,021

 

789,832

 

 
Securities available-for-sale (amortized cost $7,001,268 at March 31, 2020
and $7,186,493 at December 31, 2019); (allowance for credit losses 
zero at March 31, 2020)

7,052,516

 

         7,143,864

 

Securities held-to-maturity (fair value $2,164,426 at March 31, 2020
and $2,115,541 at December 31, 2019); (allowance for credit losses 
$56 at March 31, 2020)

         2,083,355

 

2,101,970

 

Federal Home Loan Bank stock

243,359

 

231,339

 

Loans held for sale

307,001

 

290,593

 

Loans and leases

41,001,156

 

39,109,623

 

Allowance for credit losses for loans and leases

          (356,274

)

          (249,989

)

Loans and leases, net

       40,644,882

 

       38,859,634

 

 
Premises and equipment, net

75,249

 

66,419

 

Operating lease right-of-use assets 

           217,774

 

217,578

 

Accrued interest and dividends receivable

148,551

 

147,527

 

Other assets (1)

749,008

 

743,053

 

 Total assets

 $    53,074,716

 

       50,591,809

 

 
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest-bearing

 $    13,424,657

 

13,016,931

 

Interest-bearing

28,816,163

 

27,366,276

 

 Total deposits

42,240,820

 

40,383,207

 

 
Federal funds purchased and securities sold under agreements
to repurchase

520,000

 

150,000

 

Federal Home Loan Bank borrowings

4,409,245

 

4,142,144

 

Subordinated debt

           456,463

 

           456,119

 

Operating lease liabilities 

           244,453

 

           242,587

 

Accrued expenses and other liabilities

439,774

 

472,554

 

 Total liabilities

48,310,755

 

45,846,611

 

 
Shareholders’ equity
Preferred stock, par value $.01 per share; 61,000,000 shares authorized;
none issued at March 31, 2020 and December 31, 2019

                    -  

 

                    -  

 

Common stock, par value $.01 per share; 64,000,000 shares authorized;
55,523,536 shares issued and 53,565,279 outstanding at March 31, 2020;
55,427,631 shares issued and 53,519,644 outstanding at December 31, 2019

555

 

554

 

Additional paid-in capital

         1,835,576

 

1,871,571

 

Retained earnings (1)

3,209,564

 

3,172,273

 

Treasury stock, 1,901,749 shares at March 31, 2020 and 1,907,987 shares
   at December 31, 2019

          (232,817

)

(233,570

)

Accumulated other comprehensive loss

(48,917

)

(65,630

)

 Total shareholders' equity

4,763,961

 

4,745,198

 

 
 Total liabilities and shareholders' equity

 $    53,074,716

 

       50,591,809

 

 
(1) Effective January 1, 2020, we changed our accounting policy for Low Income Housing Tax Credit ("LIHTC") investments from the equity method to the proportional amortization method as it was determined to be the preferable method. All applicable prior period amounts have been retroactively restated to conform to the new accounting policy.
SIGNATURE BANK
FINANCIAL SUMMARY, CAPITAL RATIOS, ASSET QUALITY
(unaudited)
 
Three months ended
(in thousands, except ratios and per share amounts)March 31,
2020
December 31,
2019
(6)
March 31,
2019
(6)
PER COMMON SHARE
Net income - basic

 $           1.89

 $            2.78

 $           2.64

Net income - diluted

 $           1.88

 $            2.77

 $           2.63

Average shares outstanding - basic

          52,546

           53,008

          54,165

Average shares outstanding - diluted

          52,686

           53,234

          54,269

Book value

 $         88.94

 $          88.66

 $         81.94

 
SELECTED FINANCIAL DATA
Return on average total assets

0.78%

1.16%

1.22%

Return on average shareholders' equity

8.42%

12.38%

13.05%

Efficiency ratio (1)

39.72%

38.95%

37.57%

Yield on interest-earning assets

3.82%

3.85%

4.00%

Yield on interest-earning assets, tax-equivalent basis (1)(2)

3.83%

3.87%

4.01%

Cost of deposits and borrowings

1.16%

1.26%

1.39%

Net interest margin

2.78%

2.71%

2.74%

Net interest margin, tax-equivalent basis (2)(3)

2.79%

2.72%

2.75%

(1) See "Non-GAAP Financial Measures" for related calculation.
(2) Based on the 21 percent U.S. federal statutory tax rate for the periods presented. The tax-equivalent basis is considered a non-GAAP financial measure and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP.  This ratio is a metric used by management to evaluate the impact of tax-exempt assets on the Bank's yield on interest-earning assets and net interest margin.
(3) See "Net Interest Margin Analysis" for related calculation.
  March 31,
2020
December 31,
2019
(6)
March 31,
2019
(6)
CAPITAL RATIOS
Tangible common equity (4)

 

8.90%

 

9.30%

 

9.25%

Tier 1 leverage (5)

 

9.45%

 

9.55%

 

9.64%

Common equity Tier 1 risk-based (5)

 

11.05%

 

11.56%

 

11.91%

Tier 1 risk-based (5)

 

11.05%

 

11.56%

 

11.91%

Total risk-based (5)

 

12.77%

 

13.26%

 

13.19%

 
ASSET QUALITY
Non-accrual loans

 $

       59,055

 $

        57,355

 $

       94,670

Allowance for credit losses for loans and leases 

 $

     356,274

 $

       249,989

 $

     235,435

Allowance for credit losses for loans and leases to non-accrual loans

 

603.29%

 

435.86%

 

248.69%

Allowance for credit losses for loans and leases to total loans

 

0.87%

 

0.64%

 

0.63%

Non-accrual loans to total loans

 

0.14%

 

0.15%

 

0.25%

Quarterly net charge-offs to average loans, annualized

 

0.02%

 

0.03%

 

0.01%

(4) We define tangible common equity ratio as the ratio of total tangible common equity to total tangible assets (the "TCE ratio").  The TCE ratio 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) March 31, 2020 ratios are preliminary.
(6) Effective January 1, 2020, we changed our accounting policy for Low Income Housing Tax Credit ("LIHTC") investments from the equity method to the proportional amortization method as it was determined to be the preferable method. All applicable prior period amounts have been retroactively restated to conform to the new accounting policy.
SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)
 

Three months ended

 

Three months ended

March 31, 2020

 

March 31, 2019

(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

 $   1,266,147

4,413

 

1.40

%

465,077

2,915

 

2.54

%

Investment securities

9,600,884

70,187

 

2.92

%

9,605,682

79,565

 

3.31

%

Commercial loans, mortgages and leases (1)(2)

39,363,685

404,364

 

4.13

%

36,650,950

380,045

 

4.21

%

Residential mortgages and consumer loans

187,521

1,649

 

3.54

%

218,054

2,476

 

4.61

%

Loans held for sale

81,806

704

 

3.46

%

226,546

1,724

 

3.09

%

Total interest-earning assets

50,500,043

481,317

 

3.83

%

 

47,166,309

466,725

 

4.01

%

 
Non-interest-earning assets (3)

784,289

670,549

Total assets

 $ 51,284,332

   

 47,836,858

   
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand

 $   5,550,076

20,011

 

1.45

%

4,215,955

21,289

 

2.05

%

Money market

20,420,720

67,161

 

1.32

%

18,474,137

70,361

 

1.54

%

Time deposits

2,367,145

12,567

 

2.14

%

2,191,609

12,397

 

2.29

%

Non-interest-bearing demand deposits

12,804,321

               -  

 

          -  

 

11,593,215

               -  

 

          -  

 

Total deposits

41,142,262

99,739

 

0.98

%

 

36,474,916

104,047

 

1.16

%

 
Subordinated debt

        456,237

          5,852

 

5.13

%

      258,242

          3,641

 

5.64

%

Other borrowings

4,187,423

25,960

 

2.49

%

6,106,241

38,885

 

2.58

%

Total deposits and borrowings

45,785,922

131,551

 

1.16

%

 

42,839,399

146,573

 

1.39

%

 
Other non-interest-bearing liabilities
and shareholders' equity (3)

5,498,410

 

4,997,459

 
Total liabilities and shareholders' equity

 $ 51,284,332

   

 47,836,858

   
OTHER DATA
Net interest income / interest rate spread (1)

349,766

 

2.67

%

320,152

 

2.62

%

Tax-equivalent adjustment

(1,503

)

         (1,160

)

Net interest income, as reported

348,263

 

318,992

 

Net interest margin

2.78

%

2.74

%

Tax-equivalent effect

0.01

%

0.01

%

Net interest margin on a tax-equivalent basis (1)(2)

2.79

%

2.75

%

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

110.30

%

110.10

%

(1)  Presented on a tax-equivalent, non-GAAP, basis for municipal leasing and financing transactions using the U.S. federal statutory tax rate of 21 percent for the periods presented.
(2)  See "Non-GAAP Financial Measures" for related calculation.
(3)  Effective January 1, 2020, we changed our accounting policy for Low Income Housing Tax Credit ("LIHTC") investments from the equity method to the proportional amortization method as it was determined to be the preferable method. All applicable prior period amounts have been retroactively restated to conform to the new accounting policy.
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, (iv) core net interest margin, tax-equivalent basis excluding loan prepayment penalty income, and (v) pre-tax, pre-provision earnings. 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.

Effective January 1, 2020, we changed our accounting policy for Low Income Housing Tax Credit ("LIHTC") investments from the equity method to the proportional amortization method as it was determined to be the preferable method. All applicable prior period amounts have been retroactively restated to conform to the new accounting policy.

 
The following table presents the tangible common equity ratio calculation:

Three months ended March 31,

(dollars in thousands)

2020

2019

Consolidated common shareholders' equity

 $       4,763,961

4,529,248

Intangible assets

              45,711

46,716

Consolidated tangible common shareholders' equity (TCE)

 $       4,718,250

      4,482,532

    
Consolidated total assets

 $     53,074,716

    48,523,659

Intangible assets

     45,711

          46,716

Consolidated tangible total assets (TTA)

 $     53,029,005

    48,476,943

Tangible common equity ratio (TCE/TTA)

8.90%

9.25%

 
 The following table presents the efficiency ratio calculation:
Three months ended March 31,
(dollars in thousands)

2020

2019

Non-interest expense (NIE)

 $          143,966

        125,064

Net interest income before provision for credit losses

            348,263

        318,992

Other non-interest income

              14,180

          13,933

Total income (TI)

 $          362,443

        332,925

Efficiency ratio (NIE/TI)

39.72%

37.57%

SIGNATURE BANK
NON-GAAP FINANCIAL MEASURES
(unaudited)
 
The following table reconciles yield on interest-earning assets to the yield on interest-earning assets on a tax-equivalent basis:

Three months ended March 31,

(dollars in thousands)

2020

2019

Interest income (as reported)

 $          479,814

        465,565

Tax-equivalent adjustment

                1,503

            1,160

Interest income, tax-equivalent basis

 $          481,317

        466,725

Interest-earnings assets

 $     50,500,043

    47,166,309

 
Yield on interest-earning assets

3.82%

4.00%

Tax-equivalent effect

0.01%

0.01%

Yield on interest-earning assets, tax-equivalent basis

3.83%

4.01%

 
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 March 31,

  

2020

2019

Net interest margin (as reported)

2.78%

2.74%

Tax-equivalent adjustment

0.01%

0.01%

Margin contribution from loan prepayment penalty income

(0.08)%

(0.02)%

Core net interest margin, tax-equivalent basis excluding loan prepayment penalty income

2.71%

2.73%

 
The following table reconciles net income (as reported) to pre-tax, pre-provision earnings:
 

Three months ended March 31,

(dollars in thousands)

2020

2019

Net income (as reported)

 $           99,587

        143,455

Income tax expense 

              52,067

          58,097

Provision for credit losses

              66,823

            6,309

Pre-tax, pre-provision earnings

 $          218,477

        207,861

 

Investor Contact:
Eric R. Howell, Executive Vice President – Corporate & Business Development
646-822-1402, ehowell@signatureny.com

Media Contact:
Susan Turkell Lewis
646-822-1825, slewis@signatureny.com

Source: Signature Bank