NEW YORK--(BUSINESS WIRE)--Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, today announced results for its fourth quarter and year ended December 31, 2018.
Net income for the 2018 fourth quarter was $160.8 million, or $2.94 diluted earnings per share, compared with $114.9 million, or $2.11 diluted earnings per share, for the 2017 fourth quarter. The increase in net income for the 2018 fourth quarter, when compared with the same period last year, is primarily the result of an increase in net interest income, fueled by strong average deposit and loan growth as well as an increase in prepayment penalty income, and a decrease in the provision for loan losses attributable to taxi medallion loan write-downs. These factors were partially offset by an increase in non-interest expenses.
Net interest income for the 2018 fourth quarter rose $15.3 million, or 4.8 percent, to $335.0 million, compared with the fourth quarter of 2017. This increase is primarily due to growth in average interest-earning assets and an increase in prepayment penalty income. Total assets reached $47.36 billion at December 31, 2018, expanding $4.24 billion, or 9.8 percent, from $43.12 billion at December 31, 2017. Average assets for the 2018 fourth quarter reached $46.60 billion, an increase of $4.45 billion, or 10.6 percent, versus the comparable period a year ago.
Deposits for the 2018 fourth quarter increased $287.5 million, or 0.8 percent, to $36.38 billion at December 31, 2018, while non-interest bearing deposits decreased $142.5 million and represent 33.0 percent of total deposits. Overall deposit growth in 2018 was 8.8 percent, or $2.94 billion, when compared with deposits at the end of 2017. Average total deposits for 2018 were $35.14 billion, growing $1.98 billion, or 6.0 percent, versus average total deposits of $33.16 billion for 2017.
“Throughout 2018, Signature Bank continued to execute its core strategy. We expanded our network with the addition of eight Private Client Banking teams while growing across all key metrics, including core deposits, loans and earnings. We bolstered our West Coast operations and added a Funds Banking Division catering to private equity firms, which are heavily emphasized on both coasts. This will allow us to further transform the balance sheet to increase floating rate assets. Additionally, we continued to reinvest in our infrastructure with the implementation of a new loan operating system, buildouts of a new loan approval system and foreign exchange platform as well as the reorganization of our Cash Management and Product Management groups. Lastly, on January 1, 2019, we innovated when we launched SignetTM, a new proprietary, blockchain-based digital payments platform, allowing our commercial clients to interact in a real-time and transparent manner,” explained Joseph J. DePaolo, President and Chief Executive Officer.
“This past year has been a volatile time for the banking industry, driven by a variety of external factors. However, we continued to perform by keeping with our founding mission and sustaining our leadership position in serving privately held businesses. Our focus, initiatives and proven capabilities should differentiate us from the pack, and we are prepared to address any challenges that may lie ahead,” DePaolo concluded.
Scott A. Shay, Chairman of the Board, said: “We are ever-mindful of the fact that technology is reshaping banking. We could not have founded Signature Bank in 2001 as a full-service commercial bank with a new single point of contact model without the technological advancements of the 1990s. We continuously examine the needs of our business clients to set our technology agenda, and strive to save them money and keep it safe, while allowing them to focus on their own business -- and not banking. It is from this fundamental perspective Signet was born. By launching Signet, we are empowering our clients to make instantaneous USD payments in real time (24/7/365) at no cost per transaction. With Signet, we are playing a key role in the revolutionizing of commercial digital payments.
“The client response to Signet has been uniformly positive. Clients are already evaluating their business practices to determine how they might bring their ecosystems onto the Signet platform. There are no other platforms that offer transparency and convenience commercially at this time. We are working with clients across specific industries to tailor the system as we strive for continuous improvement. We recognize banking will be vastly different five years from now, and we aim to be among the leaders.”
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, 12.09 percent, 12.09 percent and 13.39 percent, respectively, as of December 31, 2018. 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 9.21 percent. The Bank defines tangible common equity ratio as the ratio of total tangible common shareholders’ equity to total tangible assets.
The Bank declared a cash dividend of $0.56 per share, payable on or after February 15, 2019 to common stockholders of record at the close of business on February 1, 2019. In the fourth quarter of 2018, the Bank paid a cash dividend of $0.56 per share to common stockholders of record at the close of business on November 1, 2018. Additionally, during the 2018 fourth quarter, the Bank repurchased 358,492 shares of common stock for a total of $41.8 million.
Net Interest Income
Net interest income for the 2018 fourth quarter was $335.0 million, up $15.3 million, or 4.8 percent, when compared with the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $45.94 billion for the 2018 fourth quarter represent an increase of $4.40 billion, or 10.6 percent, from the 2017 fourth quarter. The yield on interest-earning assets for the 2018 fourth quarter rose 28 basis points to 3.99 percent, compared to the fourth quarter of last year.
Average cost of deposits and average cost of funds for the 2018 fourth quarter increased by 40 and 48 basis points, to 0.98 percent and 1.19 percent, respectively, versus the comparable period a year ago.
Net interest margin on a tax-equivalent basis for the 2018 fourth quarter was 2.90 percent versus 3.07 percent reported in the 2017 fourth quarter and 2.88 percent in the 2018 third quarter. Excluding loan prepayment penalty income in both quarters, linked quarter core net interest margin on a tax-equivalent basis decreased five basis points to 2.80 percent.
Provision for Loan Losses
The Bank’s provision for loan losses for the fourth quarter of 2018 was $6.4 million, a decrease of $35.3 million, or 84.6 percent, versus the 2017 fourth quarter. The decrease was primarily due to a decline in charge-offs for taxi medallion loans.
Net recoveries for the 2018 fourth quarter were $2.9 million, or 0.03 percent of average loans on an annualized basis, versus net charge-offs of $11,000, or less than one basis point of average loans on an annualized basis, for the 2018 third quarter and $38.8 million, or 0.48 percent, for the 2017 fourth quarter.
Non-Interest Income and Non-Interest Expense
Non-interest income for the 2018 fourth quarter was $5.9 million, down $2.6 million from $8.5 million reported in the fourth quarter of last year. The decrease was driven by a $4.2 million increase in tax credit investment amortization. These investments positively impact our effective tax rate.
Non-interest expense for the 2018 fourth quarter was $119.2 million, an increase of $9.2 million, or 8.4 percent, versus $110.0 million reported in the 2017 fourth quarter. The increase was primarily a result of new private client banking teams joining, as well as an increase in costs in our risk management and compliance related activities.
The Bank’s efficiency ratio was 34.94 percent for the fourth quarter of 2018 compared with 33.50 percent for the same period a year ago, and 35.59 percent for the third quarter of 2018.
Loans
Loans, excluding loans held for sale, expanded $1.30 billion, or 3.7 percent, during the 2018 fourth quarter to $36.42 billion, versus $35.13 billion at September 30, 2018. At December 31, 2018, loans accounted for 76.9 percent of total assets, compared with 76.6 percent at the end of the 2018 third quarter and 75.6 percent at the end of 2017. Average loans, excluding loans held for sale, reached $35.64 billion in the 2018 fourth quarter, growing $1.12 billion, or 3.2 percent, from the 2018 third quarter and $3.86 billion, or 12.2 percent, from the fourth quarter of 2017. The increase in loans for the quarter was primarily driven by growth in commercial and industrial loans, including specialty finance.
At December 31, 2018, non-accrual loans were $108.6 million, representing 0.30 percent of total loans and 0.23 percent of total assets, versus non-accrual loans of $134.2 million, or 0.38 percent of total loans, at September 30, 2018 and $326.9 million, or 1.00 percent of total loans, at December 31, 2017. Excluding non-accruing loans secured by taxi medallions of $88.5 million, non-accrual loans for the remainder of the portfolio are $20.1 million, or six basis points of total loans. At December 31, 2018, the ratio of allowance for loan and lease losses to total loans was 0.63 percent, versus 0.63 percent at September 30, 2018 and 0.60 percent at December 31, 2017. Additionally, the ratio of allowance for loan and lease losses to non-accrual loans, or the coverage ratio, was 212 percent for the 2018 fourth quarter versus 164 percent for the 2018 third quarter and 60 percent for the 2017 fourth quarter.
Conference Call
Signature Bank’s management will host a conference call to review results of the 2018 fourth quarter and year-end on Thursday, January 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 #3184218. 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 #3184218. The replay will be available from approximately 1:00 PM ET on Thursday, January 17, 2019 through 11:59 PM ET on Monday, January 21, 2019.
About Signature Bank
Signature Bank, member FDIC, is a New York-based full-service commercial bank with 30 private client offices throughout the New York metropolitan area, including those in Manhattan, Brooklyn, Westchester, Long Island, Queens, the Bronx, Staten Island and Connecticut. In 2018, the Bank expanded its footprint on the West Coast with the opening of its first full-service private client banking office in 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 offers a wide variety of business and personal banking products and services. Its specialty finance subsidiary, Signature Financial, LLC, provides equipment finance and leasing. Signature Securities Group Corporation, a wholly owned Bank subsidiary, is a licensed broker-dealer, investment adviser and member FINRA/SIPC, offering investment, brokerage, asset management and insurance products and services.
Signature Bank is ranked the 40th largest bank in the U.S. from nearly 6,000, based on deposits (SNL Financial). The Bank recently earned several third-party recognitions, including: appeared on Forbes' Best Banks in America list for the eighth consecutive year in 2018; 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).
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, and new products, future dividends and share repurchases. 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
December 31, |
Twelve months ended
December 31, |
|||||||||||||||||
| (dollars in thousands, except per share amounts) | 2018 | 2017 | 2018 | 2017 | ||||||||||||||
| INTEREST AND DIVIDEND INCOME | ||||||||||||||||||
| Loans held for sale | $ | 2,658 | 1,179 | 10,863 | 4,334 | |||||||||||||
| Loans and leases, net | 377,670 | 316,166 | 1,389,435 | 1,191,194 | ||||||||||||||
| Securities available-for-sale | 58,939 | 51,004 | 224,012 | 201,657 | ||||||||||||||
| Securities held-to-maturity | 14,492 | 14,509 | 57,930 | 58,855 | ||||||||||||||
| Other investments | 7,058 | 4,100 | 26,680 | 14,129 | ||||||||||||||
| Total interest income | 460,817 | 386,958 | 1,708,920 | 1,470,169 | ||||||||||||||
| INTEREST EXPENSE | ||||||||||||||||||
| Deposits | 89,985 | 50,057 | 289,248 | 171,829 | ||||||||||||||
| Federal funds purchased and securities sold under | ||||||||||||||||||
| agreements to repurchase | 5,575 | 2,367 | 13,484 | 9,695 | ||||||||||||||
| Federal Home Loan Bank borrowings | 26,580 | 11,118 | 92,628 | 36,524 | ||||||||||||||
| Subordinated debt | 3,645 | 3,645 | 14,573 | 14,535 | ||||||||||||||
| Total interest expense | 125,785 | 67,187 | 409,933 | 232,583 | ||||||||||||||
| Net interest income before provision for loan and lease losses | 335,032 | 319,771 | 1,298,987 | 1,237,586 | ||||||||||||||
| Provision for loan and lease losses | 6,441 | 41,737 | 162,524 | 263,297 | ||||||||||||||
| Net interest income after provision for loan and lease losses | 328,591 | 278,034 | 1,136,463 | 974,289 | ||||||||||||||
| NON-INTEREST INCOME | ||||||||||||||||||
| Commissions | 3,416 | 3,204 | 13,120 | 12,299 | ||||||||||||||
| Fees and service charges | 7,845 | 5,431 | 28,553 | 23,557 | ||||||||||||||
| Net gains on sales of securities | 179 | 700 | 989 | 3,963 | ||||||||||||||
| Net gains on sales of loans | 1,605 | 2,561 | 6,738 | 9,218 | ||||||||||||||
| Other-than-temporary impairment losses on securities: | ||||||||||||||||||
| Total impairment losses on securities | - | (21 | ) | (2 | ) | (654 | ) | |||||||||||
| Portion recognized in other comprehensive income (before taxes) | - | (11 | ) | (14 | ) | 21 | ||||||||||||
| Net impairment losses on securities recognized in earnings | - | (32 | ) | (16 | ) | (633 | ) | |||||||||||
| Tax credit investment amortization | (8,540 | ) | (4,298 | ) | (30,195 | ) | (15,821 | ) | ||||||||||
| Other Income | 1,414 | 931 | 4,089 | 3,458 | ||||||||||||||
| Total non-interest income | 5,919 | 8,497 | 23,278 | 36,041 | ||||||||||||||
| NON-INTEREST EXPENSE | ||||||||||||||||||
| Salaries and benefits | 77,071 | 68,384 | 302,095 | 273,240 | ||||||||||||||
| Occupancy and equipment | 9,139 | 7,860 | 34,311 | 32,141 | ||||||||||||||
| Information technology | 7,071 | 5,879 | 25,732 | 22,623 | ||||||||||||||
| FDIC assessment fees | 3,751 | 6,754 | 25,256 | 26,996 | ||||||||||||||
| Professional fees | 3,613 | 2,799 | 13,698 | 12,021 | ||||||||||||||
| Other general and administrative | 18,498 | 18,288 | 85,186 | 68,045 | ||||||||||||||
| Total non-interest expense | 119,143 | 109,964 | 486,278 | 435,066 | ||||||||||||||
| Income before income taxes | 215,367 | 176,567 | 673,463 | 575,264 | ||||||||||||||
| Income tax expense | 54,527 | 61,701 | 168,121 | 188,055 | ||||||||||||||
| Net income | $ | 160,840 | 114,866 | 505,342 | 387,209 | |||||||||||||
| PER COMMON SHARE DATA | ||||||||||||||||||
| Earnings per share – basic | $ | 2.94 | 2.12 | 9.27 | 7.17 | |||||||||||||
| Earnings per share – diluted | $ | 2.94 | 2.11 | 9.23 | 7.12 | |||||||||||||
| Dividends per common share | $ | 0.56 | - | 1.12 | - | |||||||||||||
| SIGNATURE BANK | ||||||||||
| CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | ||||||||||
| December 31, | December 31, | |||||||||
| 2018 | 2017 | |||||||||
| (dollars in thousands, except shares and per share amounts) | (unaudited) | |||||||||
| ASSETS | ||||||||||
| Cash and due from banks | $ | 269,204 | 290,078 | |||||||
| Short-term investments | 48,051 | 45,388 | ||||||||
| Total cash and cash equivalents | 317,255 | 335,466 | ||||||||
| Securities available-for-sale | 7,301,604 | 6,953,719 | ||||||||
| Securities held-to-maturity (fair value $1,845,198 at December 31, 2018 | ||||||||||
| and $1,983,087 at December 31, 2017) | 1,883,533 | 1,996,376 | ||||||||
| Federal Home Loan Bank stock | 264,877 | 227,920 | ||||||||
| Loans held for sale | 485,305 | 432,277 | ||||||||
| Loans and leases, net | 36,193,122 | 32,416,580 | ||||||||
| Premises and equipment, net | 59,051 | 61,571 | ||||||||
| Accrued interest and dividends receivable | 141,829 | 117,070 | ||||||||
| Other assets | 718,240 | 576,741 | ||||||||
| Total assets | $ | 47,364,816 | 43,117,720 | |||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||
| Deposits | ||||||||||
| Non-interest-bearing | $ | 12,016,197 | 11,353,038 | |||||||
| Interest-bearing | 24,362,576 | 22,086,789 | ||||||||
| Total deposits | 36,378,773 | 33,439,827 | ||||||||
| Federal funds purchased and securities sold under agreements | ||||||||||
| to repurchase | 820,000 | 790,000 | ||||||||
| Federal Home Loan Bank borrowings | 4,970,000 | 4,195,000 | ||||||||
| Subordinated debt | 258,174 | 257,381 | ||||||||
| Accrued expenses and other liabilities | 530,729 | 403,821 | ||||||||
| Total liabilities | 42,957,676 | 39,086,029 | ||||||||
| Shareholders’ equity | ||||||||||
| Preferred stock, par value $.01 per share; 61,000,000 shares authorized; | ||||||||||
| none issued at December 31, 2018 and December 31, 2017 | - | - | ||||||||
| Common stock, par value $.01 per share; 64,000,000 shares authorized; | ||||||||||
| 55,405,531 shares issued and 55,039,433 outstanding at December 31, 2018; | ||||||||||
| 54,979,213 shares issued and 54,977,971 outstanding at December 31, 2017 | 554 | 550 | ||||||||
| Additional paid-in capital | 1,862,896 | 1,809,642 | ||||||||
| Retained earnings | 2,730,899 | 2,290,537 | ||||||||
| Treasury stock, 366,098 shares at December 31, 2018 and 1,242 shares at December 31, 2017 | (42,680 | ) | (171 | ) | ||||||
| Accumulated other comprehensive loss | (144,529 | ) | (68,867 | ) | ||||||
| Total shareholders' equity | 4,407,140 | 4,031,691 | ||||||||
| Total liabilities and shareholders' equity | $ | 47,364,816 | 43,117,720 | |||||||
| SIGNATURE BANK | |||||||||||||||||||||
| FINANCIAL SUMMARY, CAPITAL RATIOS, ASSET QUALITY | |||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||
|
Three months ended
December 31, |
Twelve months ended
December 31, |
||||||||||||||||||||
| (in thousands, except ratios and per share amounts) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||
| PER COMMON SHARE | |||||||||||||||||||||
| Net income - basic | $ | 2.94 | $ | 2.12 | $ | 9.27 | $ | 7.17 | |||||||||||||
| Net income - diluted | $ | 2.94 | $ | 2.11 | $ | 9.23 | $ | 7.12 | |||||||||||||
| Average shares outstanding - basic | 54,510 | 54,098 | 54,406 | 54,001 | |||||||||||||||||
| Average shares outstanding - diluted | 54,631 | 54,377 | 54,666 | 54,418 | |||||||||||||||||
| Book value | $ | 80.07 | $ | 73.33 | $ | 80.07 | $ | 73.33 | |||||||||||||
| SELECTED FINANCIAL DATA | |||||||||||||||||||||
| Return on average total assets | 1.37 | % | 1.08 | % | 1.12 | % | 0.95 | % | |||||||||||||
| Return on average shareholders' equity | 14.76 | % | 11.44 | % | 11.98 | % | 10.13 | % | |||||||||||||
| Efficiency ratio (1) | 34.94 | % | 33.50 | % | 36.78 | % | 34.16 | % | |||||||||||||
| Yield on interest-earning assets | 3.98 | % | 3.70 | % | 3.85 | % | 3.66 | % | |||||||||||||
| Yield on interest-earning assets, tax-equivalent basis (1)(2) | 3.99 | % | 3.71 | % | 3.85 | % | 3.67 | % | |||||||||||||
| Cost of deposits and borrowings | 1.19 | % | 0.71 | % | 1.01 | % | 0.64 | % | |||||||||||||
| Net interest margin | 2.89 | % | 3.05 | % | 2.92 | % | 3.08 | % | |||||||||||||
| Net interest margin, tax-equivalent basis (2)(3) | 2.90 | % | 3.07 | % | 2.93 | % | 3.09 | % | |||||||||||||
| (1) | See "Non-GAAP Financial Measures" for related calculation. | |
| (2) | Based on the 21 percent U.S. federal statutory tax rate for the 2018 periods presented, and the 35 percent rate for the 2017 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. | |
|
December 31,
2018 |
September 30,
2018 |
December 31,
2017 |
||||||||||||||
| CAPITAL RATIOS | ||||||||||||||||
| Tangible common equity (4) | 9.21 | % | 9.15 | % | 9.29 | % | ||||||||||
| Tier 1 leverage (5) | 9.70 | % | 9.67 | % | 9.72 | % | ||||||||||
| Common equity Tier 1 risk-based (5) | 12.09 | % | 12.16 | % | 11.99 | % | ||||||||||
| Tier 1 risk-based (5) | 12.09 | % | 12.16 | % | 11.99 | % | ||||||||||
| Total risk-based (5) | 13.39 | % | 13.47 | % | 13.32 | % | ||||||||||
| ASSET QUALITY | ||||||||||||||||
| Non-accrual loans | $ | 108,654 | $ | 134,197 | $ | 326,918 | ||||||||||
| Allowance for loan and lease losses | $ | 230,005 | $ | 220,706 | $ | 195,959 | ||||||||||
| Allowance for loan and lease losses to non-accrual loans | 211.69 | % | 164.46 | % | 59.94 | % | ||||||||||
| Allowance for loan and lease losses to total loans | 0.63 | % | 0.63 | % | 0.60 | % | ||||||||||
| Non-accrual loans to total loans | 0.30 | % | 0.38 | % | 1.00 | % | ||||||||||
| Quarterly net charge-offs (recoveries) to average loans, annualized | (0.03 | )% | 0.00 | % | 0.48 | % | ||||||||||
| (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) | December 31, 2018 ratios are preliminary. | |
| SIGNATURE BANK | |||||||||||||||||||||||
| NET INTEREST MARGIN ANALYSIS | |||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||
| Three months ended | Three months ended | ||||||||||||||||||||||
| December 31, 2018 | December 31, 2017 | ||||||||||||||||||||||
| (dollars in thousands) |
Average |
Interest |
Average |
Average |
Interest |
Average |
|||||||||||||||||
| INTEREST-EARNING ASSETS | |||||||||||||||||||||||
| Short-term investments | $ | 459,354 | 2,715 | 2.34 | % | 436,240 | 1,420 | 1.29 | % | ||||||||||||||
| Investment securities | 9,489,265 | 77,774 | 3.28 | % | 9,120,767 | 68,193 | 2.99 | % | |||||||||||||||
| Commercial loans, mortgages and leases (1)(2) | 35,423,810 | 376,280 | 4.21 | % | 31,524,498 | 315,158 | 3.97 | % | |||||||||||||||
| Residential mortgages and consumer loans | 220,994 | 2,464 | 4.42 | % | 257,324 | 2,296 | 3.54 | % | |||||||||||||||
| Loans held for sale | 345,053 | 2,658 | 3.06 | % | 195,823 | 1,179 | 2.39 | % | |||||||||||||||
| Total interest-earning assets | 45,938,476 | 461,891 | 3.99 | % | 41,534,652 | 388,246 | 3.71 | % | |||||||||||||||
| Non-interest-earning assets | 664,475 | 617,240 | |||||||||||||||||||||
| Total assets | $ | 46,602,951 | 42,151,892 | ||||||||||||||||||||
| INTEREST-BEARING LIABILITIES | |||||||||||||||||||||||
| Interest-bearing deposits | |||||||||||||||||||||||
| NOW and interest-bearing demand | $ | 3,611,831 | 15,583 | 1.71 | % | 3,952,056 | 9,412 | 0.94 | % | ||||||||||||||
| Money market | 18,478,235 | 64,610 | 1.39 | % | 17,331,981 | 35,587 | 0.81 | % | |||||||||||||||
| Time deposits | 1,898,217 | 9,792 | 2.05 | % | 1,598,735 | 5,058 | 1.26 | % | |||||||||||||||
| Non-interest-bearing demand deposits | 12,276,668 | - | - | 11,138,285 | - | - | |||||||||||||||||
| Total deposits | 36,264,951 | 89,985 | 0.98 | % | 34,021,057 | 50,057 | 0.58 | % | |||||||||||||||
| Subordinated debt | 258,043 | 3,645 | 5.65 | % | 257,251 | 3,645 | 5.67 | % | |||||||||||||||
| Other borrowings | 5,286,978 | 32,155 | 2.41 | % | 3,480,120 | 13,485 | 1.54 | % | |||||||||||||||
| Total deposits and borrowings | 41,809,972 | 125,785 | 1.19 | % | 37,758,428 | 67,187 | 0.71 | % | |||||||||||||||
| Other non-interest-bearing liabilities | |||||||||||||||||||||||
| and shareholders' equity | 4,792,979 | 4,393,464 | |||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 46,602,951 | 42,151,892 | ||||||||||||||||||||
| OTHER DATA | |||||||||||||||||||||||
| Net interest income / interest rate spread (1) | 336,106 | 2.80 | % | 321,059 | 3.00 | % | |||||||||||||||||
| Tax-equivalent adjustment | (1,074 | ) | (1,288 | ) | |||||||||||||||||||
| Net interest income, as reported | 335,032 | 319,771 | |||||||||||||||||||||
| Net interest margin | 2.89 | % | 3.05 | % | |||||||||||||||||||
| Tax-equivalent effect | 0.01 | % | 0.02 | % | |||||||||||||||||||
| Net interest margin on a tax-equivalent basis (1)(2) | 2.90 | % | 3.07 | % | |||||||||||||||||||
| Ratio of average interest-earning assets | |||||||||||||||||||||||
| to average interest-bearing liabilities | 109.87 | % | 110.00 | % | |||||||||||||||||||
|
(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 period ended December 31, 2018 and 35 percent for the period ended December 31, 2017. |
|
|
(2) |
See "Non-GAAP Financial Measures" for related calculation. |
|
| SIGNATURE BANK | |||||||||||||||||||||||
| NET INTEREST MARGIN ANALYSIS | |||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||
| Twelve months ended | Twelve months ended | ||||||||||||||||||||||
| December 31, 2018 | December 31, 2017 | ||||||||||||||||||||||
| (dollars in thousands) |
Average |
Interest |
Average |
Average |
Interest |
Average |
|||||||||||||||||
| INTEREST-EARNING ASSETS | |||||||||||||||||||||||
| Short-term investments | $ | 463,799 | 8,925 | 1.92 | % | 462,351 | 5,017 | 1.09 | % | ||||||||||||||
| Investment securities | 9,392,563 | 299,697 | 3.19 | % | 8,948,973 | 269,624 | 3.01 | % | |||||||||||||||
| Commercial loans, mortgages and leases (1)(2) | 33,972,459 | 1,383,531 | 4.07 | % | 30,299,144 | 1,184,911 | 3.91 | % | |||||||||||||||
| Residential mortgages and consumer loans | 230,727 | 9,719 | 4.21 | % | 267,757 | 10,147 | 3.79 | % | |||||||||||||||
| Loans held for sale | 374,610 | 10,863 | 2.90 | % | 196,585 | 4,334 | 2.20 | % | |||||||||||||||
| Total interest-earning assets | 44,434,158 | 1,712,735 | 3.85 | % | 40,174,810 | 1,474,033 | 3.67 | % | |||||||||||||||
| Non-interest-earning assets | 611,430 | 578,233 | |||||||||||||||||||||
| Total assets | $ | 45,045,588 | 40,753,043 | ||||||||||||||||||||
| INTEREST-BEARING LIABILITIES | |||||||||||||||||||||||
| Interest-bearing deposits | |||||||||||||||||||||||
| NOW and interest-bearing demand | $ | 3,661,849 | 52,426 | 1.43 | % | 3,864,932 | 29,915 | 0.77 | % | ||||||||||||||
| Money market | 17,878,509 | 207,690 | 1.16 | % | 17,086,353 | 125,014 | 0.73 | % | |||||||||||||||
| Time deposits | 1,648,433 | 29,132 | 1.77 | % | 1,504,887 | 16,900 | 1.12 | % | |||||||||||||||
| Non-interest-bearing demand deposits | 11,954,403 | - | - | 10,702,062 | - | - | |||||||||||||||||
| Total deposits | 35,143,194 | 289,248 | 0.82 | % | 33,158,234 | 171,829 | 0.52 | % | |||||||||||||||
| Subordinated debt | 257,748 | 14,573 | 5.65 | % | 256,953 | 14,535 | 5.66 | % | |||||||||||||||
| Other borrowings | 5,073,852 | 106,112 | 2.09 | % | 3,143,218 | 46,219 | 1.47 | % | |||||||||||||||
| Total deposits and borrowings | 40,474,794 | 409,933 | 1.01 | % | 36,558,405 | 232,583 | 0.64 | % | |||||||||||||||
| Other non-interest-bearing liabilities | |||||||||||||||||||||||
| and shareholders' equity | 4,570,794 | 4,194,638 | |||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 45,045,588 | 40,753,043 | ||||||||||||||||||||
| OTHER DATA | |||||||||||||||||||||||
| Net interest income / interest rate spread (1) | 1,302,802 | 2.84 | % | 1,241,450 | 3.03 | % | |||||||||||||||||
| Tax-equivalent adjustment | (3,815 | ) | (3,864 | ) | |||||||||||||||||||
| Net interest income, as reported | 1,298,987 | 1,237,586 | |||||||||||||||||||||
| Net interest margin | 2.92 | % | 3.08 | % | |||||||||||||||||||
| Tax-equivalent effect | 0.01 | % | 0.01 | % | |||||||||||||||||||
| Net interest margin on a tax-equivalent basis (1)(2) | 2.93 | % | 3.09 | % | |||||||||||||||||||
| Ratio of average interest-earning assets | |||||||||||||||||||||||
| to average interest-bearing liabilities | 109.78 | % | 109.89 | % | |||||||||||||||||||
|
(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 period ended December 31, 2018 and 35 percent for the period ended December 31, 2017. |
|
|
(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) |
December 31,
2018 |
September 30,
2018 |
December 31,
2017 |
|||||||
| Consolidated common shareholders' equity | $ 4,407,140 | 4,237,997 | 4,031,691 | |||||||
| Intangible assets | 50,020 | 43,372 | 28,643 | |||||||
| Consolidated tangible common shareholders' equity (TCE) | $ 4,357,120 | 4,194,625 | 4,003,048 | |||||||
| Consolidated total assets | $ 47,364,816 | 45,870,710 | 43,117,720 | |||||||
| Intangible assets | 50,020 | 43,372 | 28,643 | |||||||
| Consolidated tangible total assets (TTA) | $ 47,314,796 | 45,827,338 | 43,089,077 | |||||||
| Tangible common equity ratio (TCE/TTA) | 9.21% | 9.15% | 9.29% | |||||||
| The following table presents the efficiency ratio calculation: |
|
Three months ended
December 31, |
Twelve months ended
December 31, |
|||||||||||||||||
| (dollars in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||||
| Non-interest expense (NIE) | $ | 119,143 | 109,964 | 486,278 | 435,066 | |||||||||||||
| Net interest income before provision for loan and lease losses | 335,032 | 319,771 | 1,298,987 | 1,237,586 | ||||||||||||||
| Other non-interest income | 5,919 | 8,497 | 23,278 | 36,041 | ||||||||||||||
| Total income (TI) | $ | 340,951 | 328,268 | 1,322,265 | 1,273,627 | |||||||||||||
| Efficiency ratio (NIE/TI) | 34.94 | % | 33.50 | % | 36.78 | % | 34.16 | % | ||||||||||
| The following table reconciles yield on interest-earning assets to the yield on interest-earning assets on a tax-equivalent basis: |
|
Three months ended
December 31, |
Twelve months ended
December 31, |
|||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||
| Interest income (as reported) | $ | 460,817 | 386,958 | 1,708,920 | 1,470,169 | |||||||||||||
| Tax-equivalent adjustment | 1,074 | 1,288 | 3,815 | 3,864 | ||||||||||||||
| Interest income, tax-equivalent basis | $ | 461,891 | 388,246 | 1,712,735 | 1,474,033 | |||||||||||||
| Interest-earnings assets | $ | 45,938,476 | 41,534,652 | 44,434,158 | 40,174,810 | |||||||||||||
| Yield on interest-earning assets | 3.98 | % | 3.70 | % | 3.85 | % | 3.66 | % | ||||||||||
| Tax-equivalent effect | 0.01 | % | 0.01 | % | 0.00 | % | 0.01 | % | ||||||||||
| Yield on interest-earning assets, tax-equivalent basis | 3.99 | % | 3.71 | % | 3.85 | % | 3.67 | % | ||||||||||
| 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
December 31, |
Three months ended
September 30, |
Twelve months ended
December 31, |
|||||||||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
| Net interest margin (as reported) | 2.89 | % | 3.05 | % | 2.87 | % | 3.04 | % | 2.92 | % | 3.08 | % | |||||||||||||
| Tax-equivalent adjustment | 0.01 | % | 0.02 | % | 0.01 | % | 0.01 | % | 0.01 | % | 0.01 | % | |||||||||||||
| Margin contribution from loan prepayment penalty income | (0.10 | )% | (0.09 | )% | (0.03 | )% | (0.06 | )% | (0.06 | )% | (0.07 | )% | |||||||||||||
| Core net interest margin, tax-equivalent basis excluding loan prepayment penalty income | 2.80 | % | 2.98 | % | 2.85 | % | 2.99 | % | 2.87 | % | 3.02 | % | |||||||||||||
