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Press Release

Signature Bank Reports 2020 Second Quarter Results

Company Release - 7/21/2020 5:00 AM ET
  • Net Income for the 2020 Second Quarter Was $117.2 Million, or $2.21 Diluted Earnings Per Share, Versus $147.3 Million, or $2.71 Diluted Earnings Per Share, Reported in the 2019 Second Quarter
  • Pre-Tax, Pre-Provision Earnings for the 2020 Second Quarter Were $247.9 Million, an Increase of $36.5 Million, or 17.3 Percent, Compared with $211.4 Million for the 2019 Second Quarter
  • The Bank Declared a Cash Dividend of $0.56 Per Share, Payable on or After August 14, 2020 to Common Stockholders of Record at the Close of Business on July 31, 2020
  • Total Deposits in the Second Quarter Grew a Record $7.99 Billion to $50.23 Billion, While Average Deposits Increased a Record $6.23 Billion. Total Deposit Growth for the first Six Months of 2020 was $9.85 Billion. Total Deposits for the Prior Twelve Months Have Grown $12.69 Billion, or 33.8 Percent
  • For the 2020 Second Quarter, Loans Increased a Record $4.20 Billion, or 10.2 Percent, to $45.20 Billion. Core Loans (Excluding Paycheck Protection Program Loans) for the Quarter increased $2.24 Billion. Since the End of the 2019 Second Quarter, Core Loans Have Increased 14.0 Percent, or $5.31 Billion
  • Non-Accrual Loans Were $46.9 Million, or 0.10 Percent of Total Loans, at June 30, 2020, Versus $59.0 Million, or 0.14 Percent, at the End of the 2020 First Quarter and $41.3 Million, or 0.11 Percent, at the End of the 2019 Second Quarter
  • As of July 15, 2020, of the $2.22 Billion in Loans Coming Out of Their COVID-19 Related Deferral Period, $1.33 Billion Returned to Current Payment Status. An Additional $294.9 Million of Loans Not Scheduled to Come Due, Also Returned to Current Status, Bringing the Overall Level of Payment Deferrals to $9.38 Billion. The Majority of Deferrals Come Due in the August to September Timeframe
  • Net Interest Margin on a Tax-Equivalent Basis was 2.77 Percent, Compared With 2.79 Percent for the 2020 First Quarter and 2.74 Percent for the 2019 Second Quarter. Core Net Interest Margin on a Tax-Equivalent Basis Excluding Loan Prepayment Penalty Income Decreased Two Basis Points to 2.69 Percent, Compared with 2.71 Percent for the 2020 First Quarter. Excess Cash Balances From Record Deposit Flows Led to 15 Basis Points of the Core Net Interest Margin Decline
  • Tier 1 Leverage, Common Equity Tier 1 Risk-Based, Tier 1 Risk-Based, and Total Risk-Based Capital Ratios were 8.76 Percent, 10.40 Percent, 10.40 Percent, and 12.13 Percent, Respectively, at June 30, 2020. Signature Bank Remains Significantly Above FDIC “Well Capitalized” Standards. Tangible Common Equity Ratio was 7.99 Percent
  • In the 2020 Second Quarter, the Bank On-Boarded Three Private Client Banking Teams Bringing the Total to 10 Teams in the Greater Los Angeles Marketplace. Together With Our San Francisco Office, the Bank Now Has a Total of 19 Private Client Banking Teams on the West Coast. Additionally, the Bank Is Building Out Four New Private Client Banking Offices in the LA Market

NEW YORK--(BUSINESS WIRE)-- Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, today announced results for its second quarter ended June 30, 2020.

Net income for the 2020 second quarter was $117.2 million, or $2.21 diluted earnings per share, versus $147.3 million, or $2.71 diluted earnings per share, for the 2019 second quarter. The decrease in net income for the 2020 second quarter, versus the comparable quarter last year, is due to an increase in the provision for credit losses of $87.6 million predominantly due to effects of COVID-19 on the U.S. economy. Pre-tax, pre-provision earnings were $247.9 million, representing an increase of $36.5 million, or 17.3 percent, compared with $211.4 million for the 2019 second quarter.

Net interest income for the 2020 second quarter reached $387.1 million, up $60.9 million, or 18.6 percent, when compared with the 2019 second quarter. This increase is primarily due to growth in average interest-earning assets. Total assets reached $60.35 billion at June 30, 2020, an increase of $11.47 billion, or 23.5 percent, from $48.88 billion at June 30, 2019. Average assets for the 2020 second quarter reached $57.66 billion, an increase of $8.90 billion, or 18.3 percent, compared with the 2019 second quarter.

Deposits for the 2020 second quarter rose a record $7.99 billion to $50.23 billion at June 30, 2020. When compared with deposits at June 30, 2019, overall deposit growth for the last twelve months was 33.8 percent, or $12.69 billion. Average deposits for the 2020 second quarter reached $47.37 billion, a record increase of $6.23 billion.

“The best way to address the future COVID-19 economic uncertainty is by executing in the present. We are working tirelessly to assist our clients through these most difficult times. To this end, we’ve been rewarded by their dedication to our bankers and Signature Bank, which led to, by far, our greatest growth quarter ever. By controlling what we can amid this tumultuous environment – through a commitment to our single-point-of-contact model and ongoing execution of our diversification strategy – we believe we are well positioned to navigate this difficult landscape, and to ultimately excel,” explained Signature Bank President and Chief Executive Officer Joseph J. DePaolo.

“The record quarterly deposit growth emanated from all facets of the Bank, including our well-established private client banking teams and business units, our blockchain-based payments platform, Signet™, the recently formed Digital Banking Group, Fund Banking Division, Venture Banking Group and Specialized Mortgage Servicing Banking Team as well as our latest West Coast expansion efforts. Additionally, this quarter we saw record loan growth, both with and without the Payroll Protection Program (PPP) loans. This occurred while we also continued our asset diversification strategy - by furthering Commercial and Industrial lending - primarily through the Fund Banking Division, and selectively growing our commercial real estate portfolio. Perhaps, most importantly, the best reflection of the quarter’s strong results can be evidenced in our reduction of payment deferrals. As of July 15th, of the loans that had their payment deferral come due after three months, we’ve seen 60 percent of the loans resume payment status,” DePaolo concluded.

“These unprecedented times reveal the strength of our client relationships. As with the 2007-2009 financial crisis -- first and foremost -- clients must be confident in knowing they have a trusted advisor, such as a bank that will leave no stone unturned when supporting them; one which ensures sleep-at-night safety for their funds. Signature Bank has proven its place as this type of institution, time and again; possibly more so now than ever. Our private client bankers and senior management team have been in constant contact with clients as the current economic situation unfolded and unexpectedly impacted their businesses. Furthermore, we put forth a major effort on behalf of our clients, working closely with them on the PPP process to enable eligibility for accessing these funds. We are extremely proud of our colleagues’ dedication, as they worked diligently to get this right. Clients noticed and appreciated this level of performance, which further validated how Signature Bank is a safe repository for their hard-earned monies and a fortress for their funds. We know we are better together and prosper as our clients prosper,” explained Scott A. Shay, Chairman of the Board.

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 8.76 percent, 10.40 percent, 10.40 percent, and 12.13 percent, respectively, as of June 30, 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 7.99 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 August 14, 2020 to common stockholders of record at the close of business on July 31, 2020. In the second 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 May 4, 2020.

Net Interest Income

Net interest income for the 2020 second quarter was $387.1 million, an increase of $60.9 million, or 18.6 percent, versus the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $56.46 billion for the 2020 second quarter represent an increase of $8.51 billion, or 17.8 percent, from the 2019 second quarter. Yield on interest-earning assets for the 2020 second quarter decreased 59 basis points to 3.44 percent, compared to the second quarter of last year.

Average cost of deposits and average cost of funds for the second quarter of 2020 decreased by 63 and 69 basis points, to 0.56 percent and 0.73 percent, respectively, versus the comparable period a year ago.

Net interest margin on a tax-equivalent basis for the 2020 second quarter was 2.77 percent versus 2.74 percent reported in the 2019 second quarter and 2.79 percent in the 2020 first quarter. Excluding loan prepayment penalties in both quarters, linked quarter core net interest margin on a tax-equivalent basis decreased two basis points to 2.69 percent. The 2020 second quarter net interest margin was negatively affected by 15 basis points due to significant excess cash balances driven by record deposit growth.

Provision for Credit Losses

The Bank’s provision for credit losses for the second quarter of 2020 was $93.0 million, compared with $66.8 million for the 2020 first quarter and $5.4 million for the 2019 second quarter. The Bank’s elevated provision for credit losses for the second quarter was predominantly attributable to effects of COVID-19 on the U.S. economy. Additionally, this is the second quarter since the bank adopted CECL on January 1, 2020.

Net charge offs for the 2020 second quarter were $4.6 million, or 0.04 percent of average loans, on an annualized basis, versus $1.7 million, or 0.02 percent, for the 2020 first quarter and net recoveries of $3.7 million, or 0.04 percent, for the 2019 second quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2020 second quarter was $12.7 million, down $4.3 million when compared with $17.0 million reported in the 2019 second quarter. Non-interest expense for the second quarter of 2020 was $151.9 million, an increase of $20.0 million, or 15.2 percent, versus $131.9 million reported in the 2019 second quarter. The increase was predominantly due to a rise of $14.6 million in salaries and benefits from the significant hiring for the new national business initiatives, coupled with the addition of 15 private client banking teams on the West Coast during the first half of 2020.

The Bank’s efficiency ratio improved to 38.0 percent for the 2020 second quarter compared with 38.4 percent for the same period a year ago, and 39.7 percent for the first quarter of 2020.

Loans

Loans, excluding loans held for sale, grew a record $4.20 billion, or 10.2 percent, during the second quarter of 2020 to $45.20 billion, compared with $41.00 billion at March 31, 2020. Average loans, excluding loans held for sale, reached $42.73 billion in the 2020 second quarter, growing $3.18 billion, or 8.0 percent, from the 2020 first quarter and $4.91 billion, or 13.0 percent, from the 2019 second quarter. For the seventh consecutive quarter, the increase in loans was primarily driven by growth in commercial and industrial loans, led by capital call facilities to private equity funds.

At June 30, 2020, non-accrual loans were $46.9 million, representing 0.10 percent of total loans and 0.08 percent of total assets, compared with non-accrual loans of $59.0 million, or 0.14 percent of total loans, at March 31, 2020 and $41.3 million, or 0.11 percent of total loans, at June 30, 2019. The ratio of allowance for credit losses for loans and leases to total loans at June 30, 2020 was 0.98 percent, versus 0.87 percent at March 31, 2020 and 0.64 percent at June 30, 2019. Additionally, the ratio of allowance for credit losses for loans and leases to non-accrual loans, or the coverage ratio, was 947 percent for the 2020 second quarter versus 603 percent for the first quarter of 2020 and 593 percent for the 2019 second quarter.

Conference Call

Signature Bank’s management will host a conference call to review results of the 2020 second quarter on Tuesday, July 21, 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 #2117356. 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 #2117356. The replay will be available from approximately 1:00 PM ET on Tuesday, July 21, 2020 through 11:59 PM ET on Friday, July 24, 2020.

About Signature Bank

Signature Bank, member FDIC, is a New York-based full-service commercial bank with 32 private client offices throughout the New York metropolitan area including Greenwich, Conn. as well as in San Francisco and Charlotte, N.C. 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’s revolutionary, blockchain-based digital payments platform, Signet™, allows the Bank’s commercial clients to make real-time 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 banks 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 2020National 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 and on our business overall. These statements often include words such as "may," "believe," "expect," "anticipate," "intend," “potential,” “opportunity,” “could,” “project,” “seek,” “target”, “goal”, “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
June 30,

 

Six months ended
June 30,

(dollars in thousands, except per share amounts)

2020

2019

 

2020

2019

INTEREST AND DIVIDEND INCOME
Loans held for sale

$ 937

646

1,642

2,369

Loans and leases, net

413,767

398,746

818,277

780,107

Securities available-for-sale

47,684

57,897

99,432

116,998

Securities held-to-maturity

14,030

15,441

28,624

31,054

Other investments

5,364

7,931

13,621

15,697

Total interest income

481,782

480,661

961,596

946,225

INTEREST EXPENSE
Deposits

65,550

109,447

165,290

213,494

Federal funds purchased and securities sold under
agreements to repurchase

719

6,063

1,467

11,892

Federal Home Loan Bank borrowings

22,528

35,219

47,739

68,276

Subordinated debt

5,852

3,644

11,704

7,283

Total interest expense

94,649

154,373

226,200

300,945

Net interest income before provision for credit losses

387,133

326,288

735,396

645,280

Provision for credit losses

93,008

5,408

159,831

11,717

Net interest income after provision for credit losses

294,125

320,880

575,565

633,563

NON-INTEREST INCOME
Commissions

2,877

3,739

6,527

7,379

Fees and service charges

10,307

7,546

20,901

15,574

Net gains on sales of securities

-

361

-

914

Net gains on sales of loans

1,821

4,133

4,556

6,128

Other income (1)

(2,341)

1,260

(5,140)

975

Total non-interest income

12,664

17,039

26,844

30,970

NON-INTEREST EXPENSE
Salaries and benefits

99,084

84,446

192,116

164,315

Occupancy and equipment

11,282

10,524

21,819

21,622

Information technology

10,254

8,968

20,473

17,454

FDIC assessment fees

3,699

3,164

6,597

6,347

Professional fees

4,789

3,731

9,532

6,619

Other general and administrative

22,765

21,055

45,302

40,594

Total non-interest expense

151,873

131,888

295,839

256,951

Income before income taxes

154,916

206,031

306,570

407,582

Income tax expense

37,702

58,730

89,769

116,826

Net income

$ 117,214

147,301

216,801

290,756

PER COMMON SHARE DATA
Earnings per share – basic

$ 2.22

2.71

4.10

5.35

Earnings per share – diluted

$ 2.21

2.71

4.09

5.33

Dividends per common share

$ 0.56

0.56

1.12

1.12

(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
 

June 30,

December 31,

2020

2019

(dollars in thousands, except shares and per share amounts)

(unaudited)

 

ASSETS
Cash and due from banks

$ 4,475,716

 

702,277

 

Short-term investments

95,052

 

87,555

 

Total cash and cash equivalents

4,570,768

 

789,832

 

Securities available-for-sale (amortized cost $7,098,966 at June 30, 2020
and $7,186,493 at December 31, 2019); (allowance for credit losses
$36 at June 30, 2020)

7,149,435

 

7,143,864

 

Securities held-to-maturity (fair value $2,148,544 at June 30, 2020
and $2,115,541 at December 31, 2019); (allowance for credit losses
$60 at June 30, 2020)

2,076,555

 

2,101,970

 

Federal Home Loan Bank stock

218,703

 

231,339

 

Loans held for sale

284,772

 

290,593

 

Loans and leases

45,200,572

 

39,109,623

 

Allowance for credit losses for loans and leases

(444,672

)

(249,989

)

Loans and leases, net

44,755,900

 

38,859,634

 

Premises and equipment, net

75,121

 

66,419

 

Operating lease right-of-use assets

216,742

 

217,578

 

Accrued interest and dividends receivable

209,803

 

147,527

 

Other assets (1)

792,009

 

743,053

 

Total assets

$ 60,349,808

 

50,591,809

 

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest-bearing

$ 16,082,385

 

13,016,931

 

Interest-bearing

34,149,497

 

27,366,276

 

Total deposits

50,231,882

 

40,383,207

 

Federal funds purchased and securities sold under agreements
to repurchase

150,000

 

150,000

 

Federal Home Loan Bank borrowings

3,884,245

 

4,142,144

 

Subordinated debt

456,808

 

456,119

 

Operating lease liabilities

244,118

 

242,587

 

Accrued expenses and other liabilities

520,173

 

472,554

 

Total liabilities

55,487,226

 

45,846,611

 

Shareholders’ equity
Preferred stock, par value $.01 per share; 61,000,000 shares authorized;
none issued at June 30, 2020 and December 31, 2019

-

 

-

 

Common stock, par value $.01 per share; 64,000,000 shares authorized;
55,525,540 shares issued and 53,568,244 outstanding at June 30, 2020;
55,427,631 shares issued and 53,519,644 outstanding at December 31, 2019

555

 

554

 

Additional paid-in capital

1,848,634

 

1,871,571

 

Retained earnings (1)

3,296,750

 

3,172,273

 

Treasury stock, 1,900,788 shares at June 30, 2020 and 1,907,987 shares at December 31, 2019

(232,703

)

(233,570

)

Accumulated other comprehensive loss

(50,654

)

(65,630

)

Total shareholders' equity

4,862,582

 

4,745,198

 

Total liabilities and shareholders' equity

$ 60,349,808

 

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
June 30,

 

Six months ended
June 30,

(in thousands, except ratios and per share amounts)

2020

2019 (6)

 

2020

2019 (6)

PER COMMON SHARE
Net income - basic

$ 2.22

 

$ 2.71

 

$ 4.10

 

$ 5.35

 

Net income - diluted

$ 2.21

 

$ 2.71

 

$ 4.09

 

$ 5.33

 

Average shares outstanding - basic

52,672

 

54,213

 

52,609

 

54,189

 

Average shares outstanding - diluted

52,785

 

54,250

 

52,763

 

54,334

 

Book value

$ 90.77

 

$ 84.53

 

$ 90.77

 

$ 84.53

 

 
SELECTED FINANCIAL DATA
Return on average total assets

0.82

%

1.21

%

0.80

%

1.21

%

Return on average shareholders' equity

9.79

%

12.89

%

9.08

%

13.00

%

Efficiency ratio (1)

37.99

%

38.41

%

38.81

%

38.00

%

Yield on interest-earning assets

3.43

%

4.02

%

3.62

%

4.01

%

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

3.44

%

4.03

%

3.63

%

4.02

%

Cost of deposits and borrowings

0.73

%

1.42

%

0.93

%

1.41

%

Net interest margin

2.76

%

2.73

%

2.77

%

2.74

%

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

2.77

%

2.74

%

2.78

%

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.
June 30,
2020
March 31,
2020
December 31,
2019
(6)
June 30,
2019
(6)
CAPITAL RATIOS
Tangible common equity (4)

7.99%

8.90%

9.30%

9.41%

Tier 1 leverage (5)

8.76%

9.45%

9.55%

9.65%

Common equity Tier 1 risk-based (5)

10.40%

11.05%

11.56%

11.55%

Tier 1 risk-based (5)

10.40%

11.05%

11.56%

11.55%

Total risk-based (5)

12.13%

12.77%

13.26%

12.79%

 
ASSET QUALITY
Non-accrual loans

$ 46,939

$ 59,055

$ 57,355

$ 41,255

Allowance for loan and lease losses

$ 444,672

$ 356,274

$ 249,989

$ 244,517

Allowance for loan and lease losses to non-accrual loans

947.34%

603.29%

435.86%

592.70%

Allowance for loan and lease losses to total loans

0.98%

0.87%

0.64%

0.64%

Non-accrual loans to total loans

0.10%

0.14%

0.15%

0.11%

Quarterly net charge-offs (recoveries) to average loans, annualized

0.04%

0.02%

0.03%

(0.04)%

(4) We define tangible common equity as the ratio of total tangible common equity to total tangible assets (the "TCE ratio"). Tangible common equity is considered to be a non-GAAP financial measure and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. The TCE ratio is a metric used by management to evaluate the adequacy of our capital levels. In addition to tangible common equity, management uses other metrics, such as Tier 1 capital related ratios, to evaluate capital levels. See "Non-GAAP Financial Measures" for related calculation.
(5) June 30, 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 endedThree months ended
June 30, 2020June 30, 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

$ 4,120,084

1,889

 

0.18

%

518,445

3,284

 

2.54

%

Investment securities

9,379,183

65,189

 

2.78

%

9,530,829

77,985

 

3.27

%

Commercial loans, mortgages and leases (1)

42,551,809

413,284

 

3.91

%

37,605,138

397,570

 

4.24

%

Residential mortgages and consumer loans

180,320

2,026

 

4.52

%

214,799

2,470

 

4.61

%

Loans held for sale

227,023

937

 

1.66

%

75,684

646

 

3.42

%

Total interest-earning assets

56,458,419

483,325

 

3.44

%

47,944,895

481,955

 

4.03

%

Non-interest-earning assets (2)

1,202,816

814,135

Total assets

$ 57,661,235

48,759,030

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

$ 7,696,059

12,875

 

0.67

%

3,953,047

20,086

 

2.04

%

Money market

22,597,010

42,126

 

0.75

%

18,215,523

73,287

 

1.61

%

Time deposits

2,233,641

10,549

 

1.90

%

2,688,912

16,074

 

2.40

%

Non-interest-bearing demand deposits

14,848,167

-

 

-

 

12,073,427

-

 

-

 

Total deposits

47,374,877

65,550

 

0.56

%

36,930,909

109,447

 

1.19

%

Subordinated debt

456,584

5,852

 

5.13

%

258,438

3,643

 

5.64

%

Other borrowings

4,318,476

23,247

 

2.17

%

6,307,221

41,283

 

2.63

%

Total deposits and borrowings

52,149,937

94,649

 

0.73

%

43,496,568

154,373

 

1.42

%

Other non-interest-bearing liabilities
and shareholders' equity (2)

5,511,298

5,262,462

Total liabilities and shareholders' equity

$ 57,661,235

48,759,030

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

388,676

 

2.71

%

327,582

 

2.61

%

Tax-equivalent adjustment

(1,543

)

(1,294

)

Net interest income, as reported

387,133

 

326,288

 

Net interest margin

2.76

%

2.73

%

Tax-equivalent effect

0.01

%

0.01

%

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

2.77

%

2.74

%

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

108.26

%

110.23

%

(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) 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)
 
Six months endedSix months ended
June 30, 2020June 30, 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

$ 2,693,115

6,303

 

0.47

%

491,909

6,199

 

2.54

%

Investment securities

9,490,033

135,374

 

2.85

%

9,568,049

157,550

 

3.29

%

Commercial loans, mortgages and leases (1)

40,957,747

817,648

 

4.01

%

37,130,680

777,615

 

4.22

%

Residential mortgages and consumer loans

183,920

3,675

 

4.02

%

216,418

4,946

 

4.61

%

Loans held for sale

154,415

1,642

 

2.14

%

150,698

2,369

 

3.17

%

Total interest-earning assets

53,479,230

964,642

 

3.63

%

47,557,754

948,679

 

4.02

%

Non-interest-earning assets (2)

993,553

742,117

Total assets

$ 54,472,783

48,299,871

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

$ 6,623,067

32,886

 

1.00

%

4,083,775

41,375

 

2.04

%

Money market

21,508,865

109,288

 

1.02

%

18,344,116

143,648

 

1.58

%

Time deposits

2,300,393

23,116

 

2.02

%

2,441,635

28,471

 

2.35

%

Non-interest-bearing demand deposits

13,826,244

-

 

-

 

11,834,648

-

 

-

 

Total deposits

44,258,569

165,290

 

0.75

%

36,704,174

213,494

 

1.17

%

Subordinated debt

456,411

11,704

 

5.13

%

258,340

7,283

 

5.64

%

Other borrowings

4,252,950

49,206

 

2.33

%

6,207,286

80,168

 

2.60

%

Total deposits and borrowings

48,967,930

226,200

 

0.93

%

43,169,800

300,945

 

1.41

%

Other non-interest-bearing liabilities
and shareholders' equity (2)

5,504,853

5,130,071

Total liabilities and shareholders' equity

$ 54,472,783

48,299,871

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

738,442

 

2.70

%

647,734

 

2.61

%

Tax-equivalent adjustment

(3,046

)

(2,454

)

Net interest income, as reported

735,396

 

645,280

 

Net interest margin

2.77

%

2.74

%

Tax-equivalent effect

0.01

 

0.01

 

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

2.78

%

2.75

%

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

109.21

%

110.16

%

(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) 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, (v) pre-tax, pre-provision earnings, (vi) loans and leases to core loans excluding Paycheck Protection Program loans. 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:
(dollars in thousands)June 30,
2020
March 31,
2020
December 31,
2019 (1)
June 30,
2019 (1)
Consolidated common shareholders' equity

$ 4,862,582

4,763,961

4,745,198

4,638,319

Intangible assets

46,385

45,711

45,907

44,148

Consolidated tangible common shareholders' equity (TCE)

$ 4,816,197

4,718,250

4,699,291

4,594,171

 
Consolidated total assets

$ 60,349,808

53,074,716

50,591,809

48,853,473

Intangible assets

46,385

45,711

45,907

44,148

Consolidated tangible total assets (TTA)

$ 60,303,423

53,029,005

50,545,902

48,809,325

Tangible common equity ratio (TCE/TTA)

7.99%

8.90%

9.30%

9.41%

 
 
The following table presents the efficiency ratio calculation:

Three months ended
June 30,

 

Six months ended
June 30,

(dollars in thousands)

2020

2019 (1)

 

2020

 

2019 (1)

Non-interest expense (NIE)

$ 151,873

131,888

295,839

256,951

Net interest income before provision for loan and lease losses

387,133

326,288

735,396

645,280

Other non-interest income

12,664

17,039

26,844

30,970

Total income (TI)

$ 399,797

343,327

762,240

676,250

Efficiency ratio (NIE/TI)

37.99%

38.41%

38.81%

38.00%

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

Three months ended
June 30,

 

Six months ended
June 30,

(dollars in thousands)

2020

2019 (1)

 

2020

 

2019 (1)

Interest income (as reported)

$ 481,782

480,661

961,596

946,225

Tax-equivalent adjustment

1,543

1,294

3,046

2,454

Interest income, tax-equivalent basis

$ 483,325

481,955

964,642

948,679

Interest-earnings assets

$ 56,458,419

47,944,895

53,479,230

47,557,754

 
Yield on interest-earning assets

3.43%

4.02%

3.62%

4.01%

Tax-equivalent effect

0.01%

0.01%

0.01%

0.01%

Yield on interest-earning assets, tax-equivalent basis

3.44%

4.03%

3.63%

4.02%

(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
NON-GAAP FINANCIAL MEASURES
(unaudited)
 
The following table reconciles net interest margin (as reported) to core net interest margin on a tax-equivalent basis excluding loan prepayment penalty income:

Three months ended
June 30,

 

Six months ended
June 30,

2020

2019

 

2020

 

2019

Net interest margin (as reported)

2.76%

2.73%

2.77%

2.74%

Tax-equivalent adjustment

0.01%

0.01%

0.01%

0.01%

Margin contribution from loan prepayment penalty income

(0.08)%

(0.03)%

(0.08)%

(0.03)%

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

2.69%

2.71%

2.70%

2.72%

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

Three months ended
June 30,

 

Six months ended
June 30,

(dollars in thousands)

2020

2019 (1)

 

2020

 

2019 (1)

Net income (as reported)

$ 117,214

147,301

216,801

290,756

Income tax expense

37,702

58,730

89,769

116,826

Provision for credit losses

93,008

5,408

159,831

11,717

Pre-tax, pre-provision earnings

$ 247,924

211,439

466,401

419,299

 
(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.
 
The following table reconciles loans and leases (as reported) to core loans excluding Paycheck Protection Program ("PPP") loans :
 
(dollars in thousands)June 30,
2020
March 31,
2020
December 31,
2019
June 30,
2019
Loans and leases (as reported)

$ 45,200,572

41,001,156

39,109,623

37,932,170

PPP loans

1,961,966

-

-

-

Core loans excluding PPP loans

$ 43,238,606

41,001,156

39,109,623

37,932,170

 

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