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Signature Bank Reports 2019 Third Quarter Results

2019-10-17 05:00 ET - News Release

  • Net Income for the 2019 Third Quarter Was $148.7 Million, or $2.75 Diluted Earnings Per Share, Versus $155.4 Million, or $2.84 Diluted Earnings Per Share, Reported in the 2018 Third Quarter
  • The Bank Declared a Cash Dividend of $0.56 Per Share, Payable on or After November 15, 2019 to Common Stockholders of Record at the Close of Business on November 1, 2019
  • During the 2019 Third Quarter, the Bank Repurchased 629,503 Shares of Common Stock For a Total of $75.0 Million. Thus Far, the Bank Has Repurchased $189.7 Million of Common Stock From Its $500 Million Authorization
  • Total Deposits in the Third Quarter Grew $1.52 Billion to $39.06 Billion; Total Deposits Have Grown $2.97 Billion, or 8.2 Percent, Since the End of the 2018 Third Quarter. Average Deposits Increased a Record $1.75 Billion in the 2019 Third Quarter
  • In Line with the Bank’s Strategy to Increase Floating Rate Assets and Reduce Its Commercial Real Estate Concentration, the Bank Decreased Commercial Real Estate Loans by $873.1 Million. Conversely, Commercial & Industrial Loans Grew by $885.4 Million During the Quarter. Therefore, For the 2019 Third Quarter, Loans Increased $4.9 Million to $37.94 Billion. Since the End of the 2018 Third Quarter, Loans Have Increased 8.0 Percent, or $2.81 Billion.
  • Non-Accrual Loans Were $32.5 Million, or 0.09 Percent of Total Loans, at September 30, 2019, Versus $41.3 Million, or 0.11 Percent, at the End of the 2019 Second Quarter and $134.2 Million, or 0.38 Percent, at the End of the 2018 Third Quarter. Excluding Taxi Medallion Loans, Non-Accrual Loans Were $22.9 Million, or Six Basis Points of Total Loans
  • Net Interest Margin on a Tax-Equivalent Basis was 2.68 Percent, Compared with 2.74 Percent for the 2019 Second Quarter and 2.88 Percent for the 2018 Third Quarter. Core Net Interest Margin on a Tax-Equivalent Basis Excluding Loan Prepayment Penalty Income Decreased Five Basis Points to 2.66 Percent, Compared with 2.71 Percent for the 2019 Second Quarter. Excess Cash Balances From Significant Deposit Flows Lead to Four 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 9.66 Percent, 11.91 Percent, 11.91 Percent, and 13.16 Percent, Respectively, at September 30, 2019. Signature Bank Remains Significantly Above FDIC “Well Capitalized” Standards. Tangible Common Equity Ratio was 9.51 Percent


Company Website: http://www.signatureny.com
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, 2019.

Net income for the 2019 third quarter was $148.7 million, or $2.75 diluted earnings per share, versus $155.4 million, or $2.84 diluted earnings per share, for the 2018 third quarter. The decrease in net income for the 2019 third quarter, versus the comparable quarter last year, is due to an increase of $17.1 million, or 14.6 percent, in non-interest expenses mostly due to the significant hiring of private client banking teams, including 55 professionals added for the Fund Banking Division, Venture Banking Group and the Specialized Mortgage Servicing Banking Team.

Net interest income for the 2019 third quarter reached $328.0 million, up $3.2 million, or 1.0 percent, when compared with the 2018 third quarter. This increase is primarily due to growth in average interest-earning assets. Total assets reached $49.41 billion at September 30, 2019, an increase of $3.54 billion, or 7.7 percent, from $45.87 billion at September 30, 2018. Average assets for the 2019 third quarter reached $49.62 billion, an increase of $4.14 billion, or 9.1 percent, compared with the 2018 third quarter.

Deposits for the 2019 third quarter rose $1.52 billion to $39.06 billion at September 30, 2019. When compared with deposits at September 30, 2018, overall deposit growth for the last twelve months was 8.2 percent, or $2.97 billion. Average deposits for the 2019 third quarter reached $38.68 billion, a record increase of $1.75 billion.

“In order to thrive, one must consistently think about transforming. The key element to success is when to act upon said transformation. Well, we’ve begun the process and energized our colleagues and we’re pleased with the initial outcome. The results we are seeing include reduced borrowings, an increase in floating rate commercial and industrial loans led by the Fund Banking Division, a decrease in fixed rate commercial real estate loan concentration and funding with record average deposit growth,” explained Joseph J. DePaolo, President and Chief Executive Officer.

“We’ve added three transformational groups to our institution in the past year and also introduced an innovative new commercial payments platform (Signet). The Fund Banking Division made significant contributions to our results this quarter, as did our Venture Banking Group, which just officially opened for business. We look forward to the continued efforts of these teams as well as those of our new Specialized Mortgage Servicing Banking Team, which has now built out the necessary infrastructure to support their clients’ needs. As always, our traditional banking teams also fueled our ongoing growth. We continue to adapt and transform to benefit the success of our clients,” DePaolo concluded.

“Signature Bank’s clients continue to reference the unusually confusing economic times we are currently experiencing. With uncertainty surrounding international trade issues, profound political differences across the major parties, threats to our country’s technological leadership, the need for massive daily liquidity intervention by the Fed, and a yield curve that is sending a signal of economic caution, it can be difficult to know what to expect. Signature Bank always set a goal to be the sleep-at-night bank for our clients, especially during tumultuous times. During the 2008-2010 financial crisis, the bank was a safe haven for our depositor clients and flourished throughout the upheaval,” explained Scott A. Shay, Chairman of the Board.

“However, we take nothing for granted and remain ever vigilant. We continue to emphasize future growth and diversification, as evidenced by the addition of major new teams in the Private Equity, Venture Capital and Mortgage Banking arenas, the opening of our first West Coast office and the recent introduction of Signet, our blockchain-based real-time payments platform. These are among the reasons we continue to believe the best of times are yet to come for Signature Bank,” 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 9.66 percent, 11.91 percent, 11.91 percent, and 13.16 percent, respectively, as of September 30, 2019. 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 9.51 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 for the third quarter of $0.56 per share, payable on or after November 15, 2019 to common stockholders of record at the close of business on November 1, 2019. In the third quarter of 2019, the Bank paid the second quarter’s cash dividend of $0.56 per share to common stockholders of record at the close of business on August 1, 2019. Additionally, during the 2019 third quarter, the Bank repurchased 629,503 shares of common stock for a total of $75.0 million. Since the 2018 fourth quarter, the Bank has repurchased $189.7 million of common stock from its $500 million authorization.

Net Interest Income

Net interest income for the 2019 third quarter was $328.0 million, an increase of $3.2 million, or 1.0 percent, versus the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $48.83 billion for the 2019 third quarter represent an increase of $3.97 billion, or 8.9 percent, from the 2018 third quarter. Yield on interest-earning assets for the 2019 third quarter increased nine basis points to 3.94 percent, compared to the third quarter of last year.

Average cost of deposits and average cost of funds for the third quarter of 2019 increased by 33 and 34 basis points, to 1.21 percent and 1.40 percent, respectively, versus the comparable period a year ago.

Net interest margin on a tax-equivalent basis for the 2019 third quarter was 2.68 percent versus 2.88 percent reported in the 2018 third quarter and 2.74 percent in the 2019 second quarter. Excluding loan prepayment penalties in both quarters, linked quarter core net interest margin on a tax-equivalent basis decreased five basis points to 2.66 percent. Four basis points of the decline in core margin in the quarter was driven by excess cash balances from strong deposit growth.

Provision for Loan Losses

The Bank’s provision for loan losses for the third quarter of 2019 was $1.2 million, compared with $5.4 million for the 2019 second quarter and $7.4 million for the 2018 third quarter.

Net charge offs for the 2019 third quarter were $2.9 million, or 0.03 percent of average loans, on an annualized basis, versus net recoveries of $3.7 million, or 0.04 percent, for the 2019 second quarter and net charge offs of $11,000, or less than one basis point, for the 2018 third quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2019 third quarter was $6.0 million, up $1.5 million when compared with $4.5 million reported in the 2018 third quarter. The increase was driven by a $1.3 million increase in fees and services charges.

Non-interest expense for the third quarter of 2019 was $134.3 million, an increase of $17.1 million, or 14.6 percent, versus $117.2 million reported in the 2018 third quarter. The increase was predominantly due to an increase of $10.3 million in salaries and benefits from the significant hiring of private client banking teams, including 55 professionals added for the Fund Banking Division, the Venture Banking Group and the Specialized Mortgage Servicing Banking Team.

The Bank’s efficiency ratio was 40.2 percent for the 2019 third quarter versus 35.6 percent for the comparable period last year. The Bank’s efficiency ratio was negatively impacted by the decline in net interest margin as well as a meaningful increase in salaries and benefits predominantly due to the aforementioned hiring of private client banking teams.

Loans

Loans, excluding loans held for sale, grew $4.9 million during the third quarter of 2019 to $37.94 billion, compared with $37.93 billion at June 30, 2019. Average loans, excluding loans held for sale, reached $37.84 billion in the 2019 third quarter, growing $15.1 million from the 2019 second quarter and $3.31 billion, or 9.6 percent, from the 2018 third quarter. For the fourth consecutive quarter, the increase in loans for the third quarter was primarily driven by growth in commercial and industrial loans.

At September 30, 2019, non-accrual loans were $32.5 million, representing 0.09 percent of total loans and 0.07 percent of total assets, compared with non-accrual loans of $41.3 million, or 0.11 percent of total loans, at June 30, 2019 and $134.2 million, or 0.38 percent of total loans, at September 30, 2018. The ratio of allowance for loan and lease losses to total loans at September 30, 2019 was 0.64 percent, stable from June 30, 2019 and up one basis point from September 30, 2018. Additionally, the ratio of allowance for loan and lease losses to non-accrual loans, or the coverage ratio, was 746 percent for the 2019 third quarter versus 593 percent for the second quarter of 2019 and 164 percent for the 2018 third quarter.

Conference Call

Signature Bank’s management will host a conference call to review results of the 2019 third quarter on Thursday, October 17, 2019, 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 #8188917. 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 #8188917. The replay will be available from approximately 1:00 PM ET on Thursday, October 17, 2019 through 11:59 PM ET on Monday, October 21, 2019.

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 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 ninth consecutive year in 2019; 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 the National Law Journal’s 2019 “Best of” survey.

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)

2019

 

2018

 

2019

 

2018

INTEREST AND DIVIDEND INCOME
Loans held for sale

$

1,284

 

2,442

 

3,653

 

8,205

 

Loans and leases, net

 

399,552

 

351,743

 

1,179,659

 

1,011,765

 

Securities available-for-sale

 

56,534

 

58,381

 

173,532

 

165,073

 

Securities held-to-maturity

 

15,238

 

14,394

 

46,292

 

43,437

 

Other investments

 

11,447

 

7,268

 

27,144

 

19,623

 

Total interest income

 

484,055

 

434,228

 

1,430,280

 

1,248,103

 

INTEREST EXPENSE
Deposits

 

118,308

 

79,200

 

331,802

 

199,264

 

Federal funds purchased and securities sold under agreements to repurchase

 

1,154

 

2,519

 

13,437

 

7,909

 

Federal Home Loan Bank borrowings

 

32,929

 

24,068

 

100,814

 

66,048

 

Subordinated debt

 

3,645

 

3,645

 

10,928

 

10,928

 

Total interest expense

 

156,036

 

109,432

 

456,981

 

284,149

 

Net interest income before provision for loan and lease losses

 

328,019

 

324,796

 

973,299

 

963,954

 

Provision for loan and lease losses

 

1,164

 

7,351

 

12,881

 

156,083

 

Net interest income after provision for loan and lease losses

 

326,855

 

317,445

 

960,418

 

807,871

 

NON-INTEREST INCOME
Commissions

 

3,452

 

3,249

 

10,831

 

9,704

 

Fees and service charges

 

8,178

 

6,914

 

23,752

 

20,708

 

Net gains on sales of securities

 

120

 

12

 

1,034

 

810

 

Net gains on sales of loans

 

2,752

 

1,931

 

8,880

 

5,133

 

Other-than-temporary impairment losses on securities:
Total impairment losses on securities

 

-

 

-

 

-

 

(2

)

Portion recognized in other comprehensive income (before taxes)

 

-

 

-

 

-

 

(14

)

Net impairment losses on securities recognized in earnings

 

-

 

-

 

-

 

(16

)

Tax credit investment amortization

 

(9,747

)

(8,369

)

(28,339

)

(21,654

)

Other Income

 

1,222

 

806

 

4,502

 

2,675

 

Total non-interest income

 

5,977

 

4,543

 

20,660

 

17,360

 

NON-INTEREST EXPENSE
Salaries and benefits

 

86,438

 

76,140

 

250,753

 

225,023

 

Occupancy and equipment

 

10,854

 

8,638

 

32,476

 

25,172

 

Information technology

 

10,098

 

6,083

 

27,552

 

18,661

 

FDIC assessment fees

 

3,191

 

7,070

 

9,538

 

21,504

 

Professional fees

 

4,075

 

3,307

 

10,693

 

10,086

 

Other general and administrative

 

19,639

 

15,970

 

60,235

 

66,689

 

Total non-interest expense

 

134,295

 

117,208

 

391,247

 

367,135

 

Income before income taxes

 

198,537

 

204,780

 

589,831

 

458,096

 

Income tax expense

 

49,809

 

49,334

 

149,127

 

113,594

 

Net income

$

148,728

 

155,446

 

440,704

 

344,502

 

PER COMMON SHARE DATA
Earnings per share – basic

$

2.76

 

2.84

 

8.13

 

6.32

 

Earnings per share – diluted

$

2.75

 

2.84

 

8.10

 

6.30

 

Dividends per common share

$

0.56

 

0.56

 

1.68

 

0.56

 

 
SIGNATURE BANK
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

September 30,

 

December 31,

2019

 

2018

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

(unaudited)

 

 

ASSETS
Cash and due from banks

$

798,524

 

269,204

 

Short-term investments

 

71,400

 

48,051

 

Total cash and cash equivalents

 

869,924

 

317,255

 

Securities available-for-sale

 

7,124,746

 

7,301,604

 

Securities held-to-maturity (fair value $2,100,094 at September 30, 2019 and $1,845,198 at December 31, 2018)

 

2,069,940

 

1,883,533

 

Federal Home Loan Bank stock

 

245,964

 

264,877

 

Loans held for sale

 

282,700

 

485,305

 

Loans and leases, net

 

37,694,277

 

36,193,122

 

Premises and equipment, net

 

57,723

 

59,051

 

Operating lease right-of-use assets (1)

 

223,781

 

-

 

Accrued interest and dividends receivable

 

142,533

 

141,829

 

Other assets

 

700,168

 

718,240

 

Total assets

$

49,411,756

 

47,364,816

 

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest-bearing

$

12,016,920

 

12,016,197

 

Interest-bearing

 

27,039,967

 

24,362,576

 

Total deposits

 

39,056,887

 

36,378,773

 

Federal funds purchased and securities sold under agreements to repurchase

 

150,000

 

820,000

 

Federal Home Loan Bank borrowings

 

4,467,144

 

4,970,000

 

Subordinated debt

 

258,768

 

258,174

 

Operating lease liabilities (1)

 

247,146

 

-

 

Accrued expenses and other liabilities

 

489,955

 

530,729

 

Total liabilities

 

44,669,900

 

42,957,676

 

Shareholders’ equity
Preferred stock, par value $.01 per share; 61,000,000 shares authorized;
none issued at September 30, 2019 and December 31, 2018

 

-

 

-

 

Common stock, par value $.01 per share; 64,000,000 shares authorized;
55,445,643 shares issued and 54,242,614 outstanding at September 30, 2019;
55,405,531 shares issued and 55,039,433 outstanding at December 31, 2018

 

554

 

554

 

Additional paid-in capital

 

1,861,197

 

1,862,896

 

Retained earnings

 

3,079,002

 

2,730,899

 

Treasury stock, 1,203,029 shares at September 30, 2019 and 366,098 shares at December 31, 2018

 

(146,346

)

(42,680

)

Accumulated other comprehensive loss

 

(52,551

)

(144,529

)

Total shareholders' equity

 

4,741,856

 

4,407,140

 

Total liabilities and shareholders' equity

$

49,411,756

 

47,364,816

 

(1)

Effective January 1, 2019, we adopted ASU 2016-02, Leases (Topic 842) and elected not to restate comparative prior periods, a transition option provided by ASU 2018-11, Leases- Targeted Improvements (Topic 842).
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)

2019

 

2018

 

2019

 

2018

PER COMMON SHARE
Net income - basic

$

2.76

 

$

2.84

 

$

8.13

 

$

6.32

 

Net income - diluted

$

2.75

 

$

2.84

 

$

8.10

 

$

6.30

 

Average shares outstanding - basic

 

53,722

 

 

54,544

 

 

54,032

 

 

54,406

 

Average shares outstanding - diluted

 

53,830

 

 

54,610

 

 

54,224

 

 

54,646

 

Book value

$

87.42

 

$

76.52

 

$

87.42

 

$

76.52

 

 
SELECTED FINANCIAL DATA
Return on average total assets

 

1.19

%

 

1.36

%

 

1.21

%

 

1.03

%

Return on average shareholders' equity

 

12.55

%

 

14.71

%

 

12.88

%

 

11.14

%

Efficiency ratio (1)

 

40.21

%

 

35.59

%

 

39.36

%

 

37.41

%

Yield on interest-earning assets

 

3.93

%

 

3.84

%

 

3.99

%

 

3.80

%

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

 

3.94

%

 

3.85

%

 

4.00

%

 

3.81

%

Cost of deposits and borrowings

 

1.40

%

 

1.06

%

 

1.40

%

 

0.95

%

Net interest margin

 

2.67

%

 

2.87

%

 

2.71

%

 

2.93

%

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

 

2.68

%

 

2.88

%

 

2.72

%

 

2.94

%

(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.

September 30,
2019

 

June 30,
2019

 

December 31,
2018

 

September 30,
2018

CAPITAL RATIOS
Tangible common equity (4)

 

9.51

%

 

9.46

%

 

9.21

%

 

9.15

%

Tier 1 leverage (5)

 

9.66

%

 

9.70

%

 

9.70

%

 

9.67

%

Common equity Tier 1 risk-based (5)

 

11.91

%

 

11.61

%

 

12.11

%

 

12.16

%

Tier 1 risk-based (5)

 

11.91

%

 

11.61

%

 

12.11

%

 

12.16

%

Total risk-based (5)

 

13.16

%

 

12.84

%

 

13.41

%

 

13.47

%

 
ASSET QUALITY
Non-accrual loans

$

32,539

 

$

41,255

 

$

108,654

 

$

134,197

 

Allowance for loan and lease losses

$

242,754

 

$

244,517

 

$

230,005

 

$

220,706

 

Allowance for loan and lease losses to non-accrual loans

 

746.04

%

 

592.70

%

 

211.69

%

 

164.46

%

Allowance for loan and lease losses to total loans

 

0.64

%

 

0.64

%

 

0.63

%

 

0.63

%

Non-accrual loans to total loans

 

0.09

%

 

0.11

%

 

0.30

%

 

0.38

%

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

 

0.03

%

 

(0.04

)%

 

(0.03

)%

 

0.00

%

(4)

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

(5)

September 30, 2019 ratios are preliminary.
SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)
 

Three months ended

Three months ended

September 30, 2019

September 30, 2018

(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

$

1,285,289

7,173

 

2.21

%

485,749

2,488

 

2.03

%

Investment securities

 

9,569,671

76,046

 

3.18

%

9,526,123

77,555

 

3.26

%

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

 

37,621,834

398,523

 

4.20

%

34,301,452

350,358

 

4.05

%

Residential mortgages and consumer loans

 

213,251

2,385

 

4.44

%

223,929

2,393

 

4.24

%

Loans held for sale

 

139,332

1,284

 

3.66

%

320,712

2,442

 

3.02

%

Total interest-earning assets

 

48,829,377

485,411

 

3.94

%

44,857,965

435,236

 

3.85

%

Non-interest-earning assets

 

790,888

624,664

Total assets

$

49,620,265

45,482,629

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

$

4,304,971

21,078

 

1.94

%

3,654,079

14,122

 

1.53

%

Money market

 

19,431,159

81,088

 

1.66

%

18,090,481

56,798

 

1.25

%

Time deposits

 

2,677,536

16,142

 

2.39

%

1,765,996

8,280

 

1.86

%

Non-interest-bearing demand deposits

 

12,266,945

-

 

-

 

12,213,759

-

 

-

 

Total deposits

 

38,680,611

118,308

 

1.21

%

35,724,315

79,200

 

0.88

%

Subordinated debt

 

258,636

3,645

 

5.64

%

257,843

3,645

 

5.65

%

Other borrowings

 

5,212,259

34,083

 

2.59

%

4,850,924

26,587

 

2.17

%

Total deposits and borrowings

 

44,151,506

156,036

 

1.40

%

40,833,082

109,432

 

1.06

%

Other non-interest-bearing liabilities and shareholders' equity

 

5,468,759

4,649,547

Total liabilities and shareholders' equity

$

49,620,265

45,482,629

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

329,375

 

2.54

%

325,804

 

2.79

%

Tax-equivalent adjustment

(1,356

)

(1,008

)

Net interest income, as reported

328,019

 

324,796

 

Net interest margin

2.67

%

2.87

%

Tax-equivalent effect

0.01

%

0.01

%

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

2.68

%

2.88

%

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

110.60

%

109.86

%

(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.
SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)
 

Nine months ended

 

Nine months ended

September 30, 2019

 

September 30, 2018

(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

$

759,275

13,372

 

2.35

%

465,298

6,209

 

1.78

%

Investment securities

 

9,568,596

233,596

 

3.26

%

9,359,974

221,924

 

3.16

%

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

 

37,296,197

1,176,139

 

4.22

%

33,483,359

1,007,252

 

4.02

%

Residential mortgages and consumer loans

 

215,350

7,331

 

4.55

%

234,007

7,255

 

4.15

%

Loans held for sale

 

146,868

3,653

 

3.33

%

384,571

8,205

 

2.85

%

Total interest-earning assets

 

47,986,286

1,434,091

 

4.00

%

43,927,209

1,250,845

 

3.81

%

Non-interest-earning assets

 

774,028

593,551

Total assets

$

48,760,314

44,520,760

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

$

4,158,317

62,453

 

2.01

%

3,678,705

36,843

 

1.34

%

Money market

 

18,710,445

224,736

 

1.61

%

17,676,403

143,082

 

1.08

%

Time deposits

 

2,521,132

44,613

 

2.37

%

1,564,257

19,339

 

1.65

%

Non-interest-bearing demand deposits

 

11,980,330

-

 

-

 

11,845,801

-

 

-

 

Total deposits

 

37,370,224

331,802

 

1.19

%

34,765,166

199,264

 

0.77

%

Subordinated debt

 

258,440

10,928

 

5.64

%

257,647

10,928

 

5.66

%

Other borrowings

 

5,871,966

114,251

 

2.60

%

5,002,029

73,957

 

1.98

%

Total deposits and borrowings

 

43,500,630

456,981

 

1.40

%

40,024,842

284,149

 

0.95

%

Other non-interest-bearing liabilities and shareholders' equity

 

5,259,684

4,495,918

Total liabilities and shareholders' equity

$

48,760,314

44,520,760

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

977,110

 

2.60

%

966,696

 

2.86

%

Tax-equivalent adjustment

(3,811

)

(2,742

)

Net interest income, as reported

973,299

 

963,954

 

Net interest margin

2.71

%

2.93

%

Tax-equivalent effect

0.01

 

0.01

 

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

2.72

%

2.94

%

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

110.31

%

109.75

%

(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.

SIGNATURE BANK
NON-GAAP FINANCIAL MEASURES
(unaudited)

Management believes that the presentation of certain non-GAAP financial measures assists investors when comparing results period-to-period in a more consistent manner and provides a better measure of Signature Bank's results. These non-GAAP measures include the Bank's (i) tangible common equity ratio, (ii) efficiency ratio, (iii) yield on interest-earning assets, tax-equivalent basis, and (iv) core net interest margin, tax-equivalent basis excluding loan prepayment penalty income. These non-GAAP measures should not be considered a substitute for GAAP-basis measures and results. We strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.

 
The following table presents the tangible common equity ratio calculation:
(dollars in thousands)

September 30,
2019

 

June 30,
2019

 

December 31,
2018

 

September 30,
2018

Consolidated common shareholders' equity

$

4,741,856

 

4,661,724

 

4,407,140

 

4,237,997

 

Intangible assets

 

49,213

 

44,148

 

50,020

 

43,372

 

Consolidated tangible common shareholders' equity (TCE)

$

4,692,643

 

4,617,576

 

4,357,120

 

4,194,625

 

 
Consolidated total assets

$

49,411,756

 

48,876,878

 

47,364,816

 

45,870,710

 

Intangible assets

 

49,213

 

44,148

 

50,020

 

43,372

 

Consolidated tangible total assets (TTA)

$

49,362,543

 

48,832,730

 

47,314,796

 

45,827,338

 

Tangible common equity ratio (TCE/TTA)

 

9.51

%

9.46

%

9.21

%

9.15

%

 
The following table presents the efficiency ratio calculation:

Three months ended
September 30,

 

Nine months ended
September 30,

(dollars in thousands)

2019

 

2018

 

2019

 

2018

Non-interest expense (NIE)

$

134,295

 

117,208

 

391,247

 

367,135

 

Net interest income before provision for loan and lease losses

 

328,019

 

324,796

 

973,299

 

963,954

 

Other non-interest income

 

5,977

 

4,543

 

20,660

 

17,360

 

Total income (TI)

$

333,996

 

329,339

 

993,959

 

981,314

 

Efficiency ratio (NIE/TI)

 

40.21

%

35.59

%

39.36

%

37.41

%

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

Three months ended
September 30,

 

Nine months ended
September 30,

(dollars in thousands)

2019

 

2018

 

2019

 

2018

Interest income (as reported)

$

484,055

 

434,228

 

1,430,280

 

1,248,103

 

Tax-equivalent adjustment

 

1,356

 

1,008

 

3,811

 

2,742

 

Interest income, tax-equivalent basis

$

485,411

 

435,236

 

1,434,091

 

1,250,845

 

Interest-earnings assets

$

48,829,377

 

44,857,965

 

47,986,286

 

43,927,209

 

 
Yield on interest-earning assets

 

3.93

%

3.84

%

3.99

%

3.80

%

Tax-equivalent effect

 

0.01

%

0.01

%

0.01

%

0.01

%

Yield on interest-earning assets, tax-equivalent basis

 

3.94

%

3.85

%

4.00

%

3.81

%

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

Three months ended
September 30,

 

Nine months ended
September 30,

2019

 

2018

 

2019

 

2018

Net interest margin (as reported)

 

2.67

%

2.87

%

2.71

%

2.93

%

Tax-equivalent adjustment

 

0.01

%

0.01

%

0.01

%

0.01

%

Margin contribution from loan prepayment penalty income

 

(0.02

)%

(0.03

)%

(0.02

)%

(0.05

)%

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

 

2.66

%

2.85

%

2.70

%

2.89

%

 

Contacts:

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

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

Source: Signature Bank

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