Signature Bank

07/18/2019 | Press release | Distributed by Public on 07/18/2019 03:26

Signature Bank Reports 2019 Second Quarter Results

  • Net Income for the 2019 Second Quarter Was $147.9 Million, or $2.72 Diluted Earnings Per Share, Versus $154.6 Million, or $2.83 Diluted Earnings Per Share, Reported in the 2018 Second Quarter
  • The Bank Declared a Cash Dividend of $0.56 Per Share, Payable on or After August 15, 2019 to Common Stockholders of Record at the Close of Business on August 1, 2019
  • During the 2019 Second Quarter, the Bank Repurchased 412,977 Shares of Common Stock For a Total of $50.0 Million. Thus Far, the Bank Has Repurchased $114.7 Million of Common Stock From Its $500 Million Authorization
  • Total Deposits in the Second Quarter Grew $917.9 Million to $37.54 Billion; Total Deposits Have Grown $2.55 Billion, or 7.3 Percent, Since the End of the 2018 Second Quarter. Average Deposits Increased $456.0 Million in the 2019 Second Quarter
  • For the 2019 Second Quarter, Loans Increased $466.5 Million, or 1.2 Percent, to $37.93 Billion. Since the End of the 2018 Second Quarter, Loans Have Increased 11.1 Percent, or $3.78 Billion. During the 2019 Second Quarter, the Bank Sold $46.4 Million of Taxi Medallion Loans and Sold a $91.8 Million Portfolio of Signature Financial Equipment Loans. Excluding These Sales, Loans Would Have Increased $604.7 Million
  • Non-Accrual Loans Were $41.3 Million, or 0.11 Percent of Total Loans, at June 30, 2019, Versus $94.7 Million, or 0.25 Percent, at the End of the 2019 First Quarter and $158.1 Million, or 0.46 Percent, at the End of the 2018 Second Quarter. Excluding Taxi Medallion Loans, Non-Accrual Loans Were $22.5 Million, or Six Basis Points of Total Loans
  • Net Interest Margin on a Tax-Equivalent Basis was 2.74 Percent, Compared with 2.75 Percent for the 2019 First Quarter and 2.94 Percent for the 2018 Second Quarter. Core Net Interest Margin on a Tax-Equivalent Basis Excluding Loan Prepayment Penalty Income Decreased Two Basis Points to 2.71 Percent, Compared with 2.73 Percent for the 2019 First Quarter
  • Tier 1 Leverage, Common Equity Tier 1 Risk-Based, Tier 1 Risk-Based, and Total Risk-Based Capital Ratios were 9.70 Percent, 11.59 Percent, 11.59 Percent, and 12.82 Percent, Respectively, at June 30, 2019. Signature Bank Remains Significantly Above FDIC 'Well Capitalized' Standards. Tangible Common Equity Ratio was 9.46 Percent
  • In the 2019 Second Quarter, the Bank Appointed Two Private Client Banking Teams. Thus Far in 2019, Four Teams have Joined the Bank, Including the 28 Person Venture Banking Group and the Eight Person Kanno-Wood Team Which Specializes in Banking to Mortgage Servicing Clients

NEW YORK--(BUSINESS WIRE)--Jul. 18, 2019-- Signature Bank (Nasdaq: SBNY), a New York-based full service commercial bank, today announced results for its second quarter ended June 30, 2019.

Net income for the 2019 second quarter was $147.9 million, or $2.72 diluted earnings per share, versus $154.6 million, or $2.83 diluted earnings per share, for the 2018 second quarter. The decrease in net income for the 2019 second quarter, versus the comparable quarter last year, is due to an increase of $19.3 million in non-interest expenses mostly due to the significant hiring of private client banking teams, including nearly 50 employees added for the Fund Banking Division, Venture Banking Group and the Kanno-Wood Team.

Net interest income for the 2019 second quarter reached $326.3 million, up $5.3 million, or 1.6 percent, when compared with the 2018 second quarter. This increase is primarily due to growth in average interest-earning assets. Total assets reached $48.88 billion at June 30, 2019, an increase of $3.66 billion, or 8.1 percent, from $45.22 billion at June 30, 2018. Average assets for the 2019 second quarter reached $48.78 billion, an increase of $4.20 billion, or 9.4 percent, compared with the 2018 second quarter.

Deposits for the 2019 second quarter rose $917.9 million to $37.54 billion at June 30, 2019. When compared with deposits at June 30, 2018, overall deposit growth for the last twelve months was 7.3 percent, or $2.55 billion. Average deposits for the 2019 second quarter reached $36.93 billion, an increase of $456.0 million.

'During the past several years, and particularly over the last twelve months, Signature Bank has been focused on expanding our franchise and securing a larger presence throughout the national banking landscape. To reflect, we began diversifying our revenue streams with the launch of Signature Financial, our specialty finance subsidiary. We continued the diversification and expansion of the Bank with the addition of the Digital Banking Team and the Fund Banking Division, which have both already made meaningful contributions. Moreover, we recently added the Venture Banking Group as well as the Kanno-Wood team, which will provide treasury management products and services to residential and commercial mortgage servicers. We also launched Signet, our 24/7 payments platform, which today continues to be the only such platform offered by an FDIC-insured institution. All these banking teams, which are national in scope, have raised Signature Bank's profile and offerings and are contributing to a more diversified credit and asset liability position over the short and long term,' explained Joseph J. DePaolo, President and Chief Executive Officer.

'Signature Bank is establishing a banking presence across the country. We have always grown this institution prudently and methodically, utilizing our strong reputation and solid capital position to attract the best bankers available in their industry and keeping the needs of our clients and their depositor safety at the forefront of all we do,' DePaolo concluded.

'In spite of a challenging deposit environment, we once again delivered solid deposit and loan growth leading to strong earnings. Also, we further reduced our risk in the Taxi Medallion portfolio with the sale of $46.4 million in NYC taxi loans on 375 medallions. Additionally, we have put in place several major new initiatives, which will provide significant benefit to our institution over the coming years. Personally, I have never been more positive on our future growth prospects. Our model of doing business remains robust, and we will continue to build value for our long-term investors,' 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 9.70 percent, 11.59 percent, 11.59 percent, and 12.82 percent, respectively, as of June 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 9.46 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 second quarter of $0.56 per share, payable on or after August 15, 2019 to common stockholders of record at the close of business on August 1, 2019. In the second quarter of 2019, the Bank paid the first quarter's cash dividend of $0.56 per share to common stockholders of record at the close of business on May 1, 2019. Additionally, during the 2019 second quarter, the Bank repurchased 412,977 shares of common stock for a total of $50.0 million. Since the 2018 fourth quarter, the Bank has repurchased $114.7 million of common stock from its $500 million authorization.

Net Interest Income

Net interest income for the 2019 second quarter was $326.3 million, an increase of $5.3 million, or 1.6 percent, versus the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $47.94 billion for the 2019 second quarter represent an increase of $4.05 billion, or 9.2 percent, from the 2018 second quarter. Yield on interest-earning assets for the 2019 second quarter increased 21 basis points to 4.03 percent, compared to the second quarter of last year.

Average cost of deposits and average cost of funds for the second quarter of 2019 increased by 43 and 46 basis points, to 1.19 percent and 1.42 percent, respectively, versus the comparable period a year ago.

Net interest margin on a tax-equivalent basis for the 2019 second quarter was 2.74 percent versus 2.94 percent reported in the 2018 second quarter and 2.75 percent in the 2019 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 2.71 percent.

Provision for Loan Losses

The Bank's provision for loan losses for the second quarter of 2019 was $5.4 million, compared with $6.3 million for the 2019 first quarter and $8.0 million for the 2018 second quarter.

Net recoveries for the 2019 second quarter were $3.7 million, or 0.04 percent of average loans, on an annualized basis, versus net charge offs of $879,000, or 0.01 percent, for the 2019 first quarter and net charge offs of $3.0 million, or 0.04 percent, for the 2018 second quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2019 second quarter was $8.6 million, up $3.0 million when compared with $5.6 million reported in the 2018 second quarter. The increase was driven by a $3.0 million increase in net gains on sales of loans, mostly due to a portfolio sale of Signature Financial equipment loans.

Non-interest expense for the second quarter of 2019 was $131.9 million, an increase of $19.3 million, or 17.1 percent, versus $112.6 million reported in the 2018 second quarter. The increase was predominantly due to an increase of $8.7 million in salaries and benefits from the significant hiring of private client banking teams, including nearly 50 employees added for the Fund Banking Division, the Venture Banking Group and the Kanno-Wood Team.

The Bank's efficiency ratio was 39.4 percent for the 2019 second quarter versus 34.5 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 an increase in salaries and benefits predominantly due to the aforementioned hiring of private client banking teams.

Loans

Loans, excluding loans held for sale, grew $466.5 million, or 1.2 percent, during the second quarter of 2019 to $37.93 billion, compared with $37.47 billion at March 31, 2019. Average loans, excluding loans held for sale, reached $37.82 billion in the 2019 second quarter, growing $950.9 million, or 2.6 percent, from the 2019 first quarter and $4.15 billion, or 12.3 percent, from the 2018 second quarter. For the third consecutive quarter, the increase in loans for the second quarter was primarily driven by growth in commercial and industrial loans.

In the 2019 second quarter, the Bank sold $46.4 million of its non-performing New York City taxi medallion loans. The Bank now has $18.8 million in non-performing taxi medallion loans and $43.8 million in repossessed taxi medallions remaining. Additionally, capitalizing on the interest rate environment and as part of our ongoing management of credit exposures to our clients, Signature Financial's Capital Markets Desk sold a $91.8 million portfolio of performing equipment loans for a gain of $2.4 million.

At June 30, 2019, non-accrual loans were $41.3 million, representing 0.11 percent of total loans and 0.08 percent of total assets, compared with non-accrual loans of $94.7 million, or 0.25 percent of total loans, at March 31, 2019 and $158.1 million, or 0.46 percent of total loans, at June 30, 2018. Excluding non-accruing loans secured by taxi medallions of $18.8 million, non-accrual loans for the remainder of the portfolio are $22.5 million, or six basis points of total loans. The ratio of allowance for loan and lease losses to total loans at June 30, 2019 was 0.64 percent, up one basis point from March 31, 2019 and June 30, 2018. Additionally, the ratio of allowance for loan and lease losses to non-accrual loans, or the coverage ratio, was 593 percent for the 2019 second quarter versus 249 percent for the first quarter of 2019 and 135 percent for the 2018 second quarter.

Conference Call

Signature Bank's management will host a conference call to review results of the 2019 second quarter on Thursday, July 18, 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 #6935767. 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 #6935767. The replay will be available from approximately 1:00 PM ET on Thursday, July 18, 2019 through 11:59 PM ET on Monday, July 22, 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 Best Business Bank, Best Private Bank and Best Attorney Escrow Services provider by the New York Law Journal in the publication's annual 'Best of' survey for 2018, 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 Best Business Bank, Best Private Bank and Best Attorney Escrow Services 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
June 30,
Six months ended
June 30,
(dollars in thousands, except per share amounts)

2019

2018

2019

2018

INTEREST AND DIVIDEND INCOME
Loans held for sale

$

646

3,499

2,369

5,763

Loans and leases, net

398,746

337,584

780,107

660,021

Securities available-for-sale

57,897

54,428

116,998

106,692

Securities held-to-maturity

15,441

14,510

31,054

29,043

Other investments

7,931

6,783

15,697

12,355

Total interest income

480,661

416,804

946,225

813,874

INTEREST EXPENSE
Deposits

109,447

65,201

213,494

120,063

Federal funds purchased and securities sold under
agreements to repurchase

6,063

3,003

11,892

5,390

Federal Home Loan Bank borrowings

35,219

23,945

68,276

41,980

Subordinated debt

3,644

3,643

7,283

7,283

Total interest expense

154,373

95,792

300,945

174,716

Net interest income before provision for loan and lease losses

326,288

321,012

645,280

639,158

Provision for loan and lease losses

5,408

7,970

11,717

148,732

Net interest income after provision for loan and lease losses

320,880

313,042

633,563

490,426

NON-INTEREST INCOME
Commissions

3,739

3,280

7,379

6,455

Fees and service charges

7,546

7,152

15,574

13,794

Net gains on sales of securities

361

357

914

798

Net gains on sales of loans

4,133

1,183

6,128

3,202

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

(9,439

)

(7,423

)

(18,592

)

(13,285

)

Other Income

2,255

1,066

3,279

1,870

Total non-interest income

8,595

5,615

14,682

12,818

NON-INTEREST EXPENSE
Salaries and benefits

84,446

75,720

164,315

148,883

Occupancy and equipment

10,524

8,335

21,622

16,534

Information technology

8,968

6,291

17,454

12,578

FDIC assessment fees

3,164

7,447

6,347

14,434

Professional fees

3,731

3,503

6,619

6,778

Other general and administrative

21,055

11,297

40,594

50,718

Total non-interest expense

131,888

112,593

256,951

249,925

Income before income taxes

197,587

206,064

391,294

253,319

Income tax expense

49,676

51,479

99,318

64,261

Net income

$

147,911

154,585

291,976

189,058

PER COMMON SHARE DATA
Earnings per share - basic

$

2.72

2.84

5.37

3.48

Earnings per share - diluted

$

2.72

2.83

5.36

3.47

Dividends per common share

$

0.56

-

1.12

-

SIGNATURE BANK
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

June 30,

December 31,

2019

2018

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

$

204,863

269,204

Short-term investments

119,511

48,051

Total cash and cash equivalents

324,374

317,255

Securities available-for-sale

7,139,529

7,301,604

Securities held-to-maturity (fair value $2,016,610 at June 30, 2019
and $1,845,198 at December 31, 2018)

2,002,476

1,883,533

Federal Home Loan Bank stock

286,249

264,877

Loans held for sale

308,801

485,305

Loans and leases, net

37,687,653

36,193,122

Premises and equipment, net

56,854

59,051

Operating lease right-of-use assets (1)

222,473

-

Accrued interest and dividends receivable

145,583

141,829

Other assets

702,886

718,240

Total assets

$

48,876,878

47,364,816

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest-bearing

$

12,265,712

12,016,197

Interest-bearing

25,274,744

24,362,576

Total deposits

37,540,456

36,378,773

Federal funds purchased and securities sold under agreements
to repurchase

254,000

820,000

Federal Home Loan Bank borrowings

5,362,364

4,970,000

Subordinated debt

258,568

258,174

Operating lease liabilities (1)

244,114

-

Accrued expenses and other liabilities

555,652

530,729

Total liabilities

44,215,154

42,957,676

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

-

-

Common stock, par value $.01 per share; 64,000,000 shares authorized;
55,443,414 shares issued and 54,869,794 outstanding at June 30, 2019;
55,405,531 shares issued and 55,039,433 outstanding at December 31, 2018

554

554

Additional paid-in capital

1,847,042

1,862,896

Retained earnings

2,960,963

2,730,899

Treasury stock, 573,620 shares at June 30, 2019 and 366,098 shares
at December 31, 2018

(71,345

)

(42,680

)

Accumulated other comprehensive loss

(75,490

)

(144,529

)

Total shareholders' equity

4,661,724

4,407,140

Total liabilities and shareholders' equity

$

48,876,878

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
June 30,
Six months ended
June 30,
(in thousands, except ratios and per share amounts)

2019

2018

2019

2018

PER COMMON SHARE
Net income - basic

$

2.72

$

2.84

$

5.37

$

3.48

Net income - diluted

$

2.72

$

2.83

$

5.36

$

3.47

Average shares outstanding - basic

54,213

54,527

54,189

54,336

Average shares outstanding - diluted

54,250

54,599

54,334

54,558

Book value

$

84.96

$

74.93

$

84.96

$

74.93

SELECTED FINANCIAL DATA
Return on average total assets

1.22

%

1.39

%

1.22

%

0.86

%

Return on average shareholders' equity

12.88

%

15.22

%

12.98

%

9.32

%

Efficiency ratio (1)

39.38

%

34.47

%

38.93

%

38.33

%

Yield on interest-earning assets

4.02

%

3.81

%

4.01

%

3.78

%

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

4.03

%

3.82

%

4.02

%

3.78

%

Cost of deposits and borrowings

1.42

%

0.96

%

1.41

%

0.89

%

Net interest margin

2.73

%

2.93

%

2.74

%

2.97

%

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

2.74

%

2.94

%

2.75

%

2.97

%

(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,
2019
March 31,
2019
December 31,
2018
June 30,
2018
CAPITAL RATIOS
Tangible common equity (4)

9.46

%

9.29

%

9.21

%

9.10

%

Tier 1 leverage (5)

9.70

%

9.68

%

9.70

%

9.64

%

Common equity Tier 1 risk-based (5)

11.59

%

11.97

%

12.11

%

12.11

%

Tier 1 risk-based (5)

11.59

%

11.97

%

12.11

%

12.11

%

Total risk-based (5)

12.82

%

13.24

%

13.41

%

13.43

%

ASSET QUALITY
Non-accrual loans

$

41,255

$

94,670

$

108,654

$

158,077

Allowance for loan and lease losses

$

244,517

$

235,435

$

230,005

$

213,367

Allowance for loan and lease losses to non-accrual loans

592.70

%

248.69

%

211.69

%

134.98

%

Allowance for loan and lease losses to total loans

0.64

%

0.63

%

0.63

%

0.62

%

Non-accrual loans to total loans

0.11

%

0.25

%

0.30

%

0.46

%

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

(0.04

)%

0.01

%

(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, 2019 ratios are preliminary.
SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)
Three months ended Three months ended
June 30, 2019 June 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

$

518,445

3,284

2.54

%

443,433

1,979

1.79

%

Investment securities

9,530,829

77,985

3.27

%

9,301,617

73,742

3.17

%

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

37,605,138

397,570

4.24

%

33,437,782

336,005

4.03

%

Residential mortgages and consumer loans

214,799

2,470

4.61

%

233,213

2,464

4.24

%

Loans held for sale

75,684

646

3.42

%

477,407

3,499

2.94

%

Total interest-earning assets

47,944,895

481,955

4.03

%

43,893,452

417,689

3.82

%

Non-interest-earning assets

837,082

688,126

Total assets

$

48,781,977

44,581,578

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

$

3,953,047

20,086

2.04

%

3,539,748

11,892

1.35

%

Money market

18,215,523

73,287

1.61

%

17,691,714

47,565

1.08

%

Time deposits

2,688,912

16,074

2.40

%

1,392,458

5,744

1.65

%

Non-interest-bearing demand deposits

12,073,427

-

-

11,831,308

-

-

Total deposits

36,930,909

109,447

1.19

%

34,455,228

65,201

0.76

%

Subordinated debt

258,438

3,643

5.64

%

257,645

3,643

5.66

%

Other borrowings

6,307,221

41,283

2.63

%

5,394,121

26,948

2.00

%

Total deposits and borrowings

43,496,568

154,373

1.42

%

40,106,994

95,792

0.96

%

Other non-interest-bearing liabilities
and shareholders' equity

5,285,409

4,474,584

Total liabilities and shareholders' equity

$

48,781,977

44,581,578

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

327,582

2.61

%

321,897

2.86

%

Tax-equivalent adjustment

(1,294

)

(885

)

Net interest income, as reported

326,288

321,012

Net interest margin

2.73

%

2.93

%

Tax-equivalent effect

0.01

%

0.01

%

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

2.74

%

2.94

%

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

110.23

%

109.44

%

(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 or the periods presented.
(2) See 'Non-GAAP Financial Measures' for related calculation.
SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)
Six months ended Six months ended
June 30, 2019 June 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

$

491,909

6,199

2.54

%

454,902

3,721

1.65

%

Investment securities

9,568,049

157,550

3.29

%

9,275,523

144,369

3.11

%

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

37,130,680

777,615

4.22

%

33,067,533

656,893

4.01

%

Residential mortgages and consumer loans

216,418

4,946

4.61

%

239,130

4,862

4.10

%

Loans held for sale

150,698

2,369

3.17

%

417,029

5,763

2.79

%

Total interest-earning assets

47,557,754

948,679

4.02

%

43,454,117

815,608

3.78

%

Non-interest-earning assets

765,458

675,674

Total assets

$

48,323,212

44,129,791

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

$

4,083,775

41,375

2.04

%

3,691,222

22,721

1.24

%

Money market

18,344,116

143,648

1.58

%

17,465,933

86,283

1.00

%

Time deposits

2,441,635

28,471

2.35

%

1,461,716

11,059

1.53

%

Non-interest-bearing demand deposits

11,834,648

-

-

11,718,727

-

-

Total deposits

36,704,174

213,494

1.17

%

34,337,598

120,063

0.71

%

Subordinated debt

258,340

7,283

5.64

%

257,547

7,283

5.66

%

Other borrowings

6,207,286

80,168

2.60

%

5,078,834

47,370

1.88

%

Total deposits and borrowings

43,169,800

300,945

1.41

%

39,673,979

174,716

0.89

%

Other non-interest-bearing liabilities
and shareholders' equity

5,153,412

4,455,812

Total liabilities and shareholders' equity

$

48,323,212

44,129,791

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

647,734

2.61

%

640,892

2.89

%

Tax-equivalent adjustment

(2,454

)

(1,734

)

Net interest income, as reported

645,280

639,158

Net interest margin

2.74

%

2.97

%

Tax-equivalent effect

0.01

-

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

2.75

%

2.97

%

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

110.16

%

109.53

%

(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 assist 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) June 30,
2019
March 31,
2019
December 31,
2018
June 30,
2018
Consolidated common shareholders' equity

$

4,661,724

4,552,043

4,407,140

4,147,623

Intangible assets

44,148

46,716

50,020

34,261

Consolidated tangible common shareholders' equity (TCE)

$

4,617,576

4,505,327

4,357,120

4,113,362

Consolidated total assets

$

48,876,878

48,546,454

47,364,816

45,215,484

Intangible assets

44,148

46,716

50,020

34,261

Consolidated tangible total assets (TTA)

$

48,832,730

48,499,738

47,314,796

45,181,223

Tangible common equity ratio (TCE/TTA)

9.46

%

9.29

%

9.21

%

9.10

%

The following table presents the efficiency ratio calculation:
Three months ended
June 30,
Six months ended
June 30,
(dollars in thousands)

2019

2018

2019

2018

Non-interest expense (NIE)

$

131,888

112,593

256,951

249,925

Net interest income before provision for loan and lease losses

326,288

321,012

645,280

639,158

Other non-interest income

8,595

5,615

14,682

12,818

Total income (TI)

$

334,883

326,627

659,962

651,976

Efficiency ratio (NIE/TI)

39.38

%

34.47

%

38.93

%

38.33

%

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)

2019

2018

2019

2018

Interest income (as reported)

$

480,661

416,804

946,225

813,874

Tax-equivalent adjustment

1,294

885

2,454

1,734

Interest income, tax-equivalent basis

$

481,955

417,689

948,679

815,608

Interest-earnings assets

$

47,944,895

43,893,452

47,557,754

43,454,117

Yield on interest-earning assets

4.02

%

3.81

%

4.01

%

3.78

%

Tax-equivalent effect

0.01

%

0.01

%

0.01

%

0.00

%

Yield on interest-earning assets, tax-equivalent basis

4.03

%

3.82

%

4.02

%

3.78

%

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,

2019

2018

2019

2018

Net interest margin (as reported)

2.73

%

2.93

%

2.74

%

2.97

%

Tax-equivalent adjustment

0.01

%

0.01

%

0.01

%

-

Margin contribution from loan prepayment penalty income

(0.03

)%

(0.05

)%

(0.03

)%

(0.06

)%

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

2.71

%

2.89

%

2.72

%

2.91

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20190718005164/en/

Source: Signature Bank

Investor Contact:
Eric R. Howell, Executive Vice President - Corporate & Business Development
646-822-1402, [email protected]

Media Contact:
Susan J. Lewis, 646-822-1825
[email protected]