Signature Bank Reports 2018 Third Quarter Results

Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, today announced results for its third quarter ended September 30, 2018. Net income for the 2018 third quarter was $155.4 million, or $2.84 diluted earnings per share, versus $124.5 million, or $2.29 diluted earnings per share, for the 2017 third quarter. The increase in net income for the 2018 third quarter, versus the comparable quarter last year, is primarily due to an increase in net interest income and a decrease in the provision for loan losses and income tax expense.

Net interest income for the 2018 third quarter reached $324.8 million, up $16.0 million, or 5.2 percent, when compared with the 2017 third quarter. This increase is primarily due to growth in average interest-earning assets. Total assets reached $45.87 billion at September 30, 2018, an increase of $4.54 billion, or 11.0 percent, from $41.33 billion at September 30, 2017. Average assets for the 2018 third quarter reached $45.48 billion, an increase of $4.60 billion, or 11.3 percent, compared with the 2017 third quarter.

Deposits for the 2018 third quarter rose $1.10 billion, or 3.1 percent, to $36.09 billion at September 30, 2018. When compared with deposits at September 30, 2017, overall deposit growth for the last twelve months was 7.2 percent, or $2.41 billion. Average deposits for the 2018 third quarter reached $35.78 billion, an increase of $1.27 billion, or 3.7 percent.

During the past few quarters, Signature Bank has executed several growth initiatives paving the way for the future direction of this institution. These strategies include taking our successful single-point-of-contact model outside of the metro-New York area — where we spent 17 years building the foundation of our business — and bringing it to San Francisco after we identified a glaring need. In the 2018 first quarter, we appointed a digital asset banking team because we want to be nimble and ready to change as the market evolves. Just recently, we hired a nine-person team focusing on capital call and subscription finance for private equity firms. And lastly, we have been heavily investing in our infrastructure with the implementation of new systems for loan operations (now in place), credit approvals and foreign exchange as well as an enhanced payments platform, explained Joseph J. DePaolo, President and Chief Executive Officer.

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Our success since our founding in 2001 is predicated on our ability to attract seasoned bankers who serve as client contacts for all banking needs. This client-centric philosophy is at the crux of all we do. The advancements we are making are all accomplished with client satisfaction at their core. At the same time, we are expanding our reach in new business activities, geography and capabilities. We must take measured risks to fuel future growth, but they are far less than the long-range risks of comfortable inaction. We believe the initiatives upon which we are embarking today will set the stage for the Signature Bank of tomorrow, DePaolo concluded.

Scott A. Shay, Chairman of the Board, said: Signature Bank has grown into the 40th largest bank in the U.S., without performing any mergers or acquisitions. Instead, we built our business methodically and organically — banker by banker — partnering with those individuals who attract, build and nurture an expansive portfolio of loyal banking clients. We are proud that even after 17+ years in operation, we are still the bank of choice amongst veteran bankers who are passionate about delivering best-in-class service to clients. Every team we attract brings along an unwavering commitment to catering to clients.

While we recognize the maxim that ˜what got you here, won’t get you there, we are constantly on the lookout for new ideas adjacent to our business strategy, including those we can thoughtfully expand upon and which allow us to continue to execute on our service hallmark. This is evidenced by our recent San Francisco expansion. We also recognize that banking and payment technologies are rapidly advancing, and are focused on incorporating evolving technologies relevant to our clients needs. While the banking landscape always seems to be increasingly more competitive and challenging, Signature Bank remains stable and at the forefront of both thought- and action-based leadership that positively influences the success of clients, Shay stated.

Capital

The Banks Tier 1 leverage, common equity Tier 1 risk-based, Tier 1 risk-based, and total risk-based capital ratios were approximately 9.67 percent, 12.13 percent, 12.13 percent, and 13.44 percent, respectively, as of September 30, 2018. Each of these ratios is well in excess of regulatory requirements. The Banks strong risk-based capital ratios reflect the relatively low risk profile of the Banks balance sheet. The Banks tangible common equity ratio remains strong at 9.15 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 November 15, 2018 to common stockholders of record at the close of business on November 1, 2018. In the third 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 August 1, 2018.

Net Interest Income

Net interest income for the 2018 third quarter was $324.8 million, an increase of $16.0 million, or 5.2 percent, versus the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $44.86 billion for the 2018 third quarter represent an increase of $4.56 billion, or 11.3 percent, from the 2017 third quarter. Yield on interest-earning assets for the 2018 third quarter increased 19 basis points, to 3.85 percent, compared with the 2017 third quarter.

Average cost of deposits and average cost of funds for the third quarter of 2018 increased by 33 and 39 basis points, to 0.88 percent and 1.06 percent, respectively versus the comparable period a year ago.

Net interest margin on a tax-equivalent basis for the 2018 third quarter was 2.88 percent versus 3.05 percent reported in the same period a year ago. On a linked quarter basis, net interest margin on a tax-equivalent basis decreased six basis points. Excluding loan prepayment penalties in both quarters, linked quarter core net interest margin on a tax-equivalent basis decreased four basis points to 2.85 percent.

Provision for Loan Losses

The Banks provision for loan losses for the third quarter of 2018 was $7.4 million, compared with $8.0 million for the 2018 second quarter and $14.3 million for the 2017 third quarter.

Net charge-offs for the 2018 third quarter were $11,000, or less than one basis point of average loans on an annualized basis, versus $3.0 million, or 0.04 percent, for the 2018 second quarter and $3.8 million, or 0.05 percent, for the 2017 third quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2018 third quarter was $4.5 million, down $3.6 million when compared with $8.1 million reported in the 2017 third quarter. The decrease was primarily due to a $4.0 million increase in tax credit investment amortization. These investments positively impact our effective tax rate.

Non-interest expense for the third quarter of 2018 was $117.2 million, an increase of $11.6 million, or 11.0 percent, versus $105.6 million reported in the 2017 third quarter. The increase was primarily a result of the addition of new private client banking teams, as well as an increase in costs in our risk management and compliance related activities.

The Banks efficiency ratio was 35.6 percent for the 2018 third quarter versus 33.3 percent for the comparable period last year and 34.5 percent for the 2018 second quarter.

Loans

Loans, excluding loans held for sale, grew $979.7 million, or 2.9 percent, during the third quarter of 2018 to $35.13 billion, compared with $34.15 billion at June 30, 2018. At September 30, 2018, loans accounted for 76.6 percent of total assets, versus 75.5 percent at the end of both the 2018 second quarter and the 2017 third quarter. Average loans, excluding loans held for sale, reached $34.53 billion in the 2018 third quarter, growing $854.4 million, or 2.5 percent, from the 2018 second quarter and $3.84 billion, or 12.5 percent, from the 2017 third quarter. The increase in loans for the quarter was primarily driven by growth in specialty finance, commercial real estate and multi-family loans.

At September 30, 2018, non-accrual loans were $134.2 million, representing 0.38 percent of total loans and 0.29 percent of total assets, compared with non-accrual loans of $158.1 million, or 0.46 percent of total loans, at June 30, 2018 and $376.9 million, or 1.21 percent of total loans, at September 30, 2017. Excluding non-accruing loans secured by taxi medallions of $111.7 million, non-accrual loans for the remainder of the entire portfolio are $22.5 million, or six basis points of total loans. At September 30, 2018, the ratio of allowance for loan and lease losses to total loans was 0.63 percent, versus 0.62 percent for June 30, 2018 and September 30, 2017. Additionally, the ratio of allowance for loan and lease losses to non-accrual loans, or the coverage ratio, was 164 percent for the 2018 third quarter versus 135 percent for the second quarter of 2018 and 51 percent for the 2017 third quarter.

Conference Call

Signature Banks management will host a conference call to review results of the 2018 third quarter on Thursday, October 18, 2018, 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 #1869699. 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 Banks 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 #1869699. The replay will be available from approximately 1:00 PM ET on Thursday, October 18, 2018 through 11:59 PM ET on Monday, October 22, 2018.

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 Banks growing network of private client banking teams serves the needs of privately owned businesses, their owners and senior managers.

Signature Banks 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; named Best Business Bank, Best Private Bank and Best Attorney Escrow Services provider by the New York Law Journal in the publications annual Best of survey for 2018, earning it a place in the New York Law Journals 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. 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)     2018     2017     2018     2017
INTEREST AND DIVIDEND INCOME        
Loans held for sale $ 2,442 911 8,205 3,155
Loans and leases, net 351,743 301,561 1,011,765 875,028
Securities available-for-sale 58,381 49,986 165,073 150,653
Securities held-to-maturity 14,394 14,549 43,437 44,346
Other investments       7,268       3,662       19,623       10,030  
Total interest income       434,228       370,669       1,248,103       1,083,212  
INTEREST EXPENSE
Deposits 79,200 46,659 199,264 121,772

Federal funds purchased and securities sold under agreements to repurchase

2,519 1,913 7,909 7,329
Federal Home Loan Bank borrowings 24,068 9,634 66,048 25,407
Subordinated debt       3,645       3,645       10,928       10,890  
Total interest expense       109,432       61,851       284,149       165,398  
Net interest income before provision for loan and lease losses 324,796 308,818 963,954 917,814
Provision for loan and lease losses       7,351       14,340       156,083       221,560  
Net interest income after provision for loan and lease losses       317,445       294,478       807,871       696,254  
NON-INTEREST INCOME
Commissions 3,249 3,036 9,704 9,094
Fees and service charges 6,914 6,112 20,708 18,127
Net gains on sales of securities 12 735 810 3,263
Net gains on sales of loans 1,931 2,204 5,133 6,657
Other-than-temporary impairment losses on securities:
Total impairment losses on securities (361 ) (2 ) (634 )
Portion recognized in other comprehensive income (before taxes)               (14 )     32  
Net impairment losses on securities recognized in earnings (361 ) (16 ) (602 )
Tax credit investment amortization (8,369 ) (4,388 ) (21,654 ) (11,523 )
Other Income       806       781       2,675       2,527  
Total non-interest income       4,543       8,119       17,360       27,543  
NON-INTEREST EXPENSE
Salaries and benefits 76,140 70,112 225,023 204,856
Occupancy and equipment 8,638 8,210 25,172 24,280
Information technology 6,083 5,970 18,661 16,743
FDIC assessment fees 7,070 7,260 21,504 20,242
Professional fees 3,307 3,181 10,086 9,222
Other general and administrative       15,970       10,895       66,689       49,756  
Total non-interest expense       117,208       105,628       367,135       325,099  
Income before income taxes 204,780 196,969 458,096 398,698
Income tax expense       49,334       72,498       113,594       126,354  
Net income     $ 155,446       124,471       344,502       272,344  
PER COMMON SHARE DATA
Earnings per share “ basic $ 2.84 2.30 6.32 5.05
Earnings per share “ diluted $ 2.84 2.29 6.30 5.01
Dividends per common share $ 0.56 0.56
 
 
SIGNATURE BANK
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
    September 30,     December 31,
2018 2017
(dollars in thousands, except shares and per share amounts)     (unaudited)      
ASSETS
Cash and due from banks $ 155,791 290,078
Short-term investments       39,613       45,388  
Total cash and cash equivalents       195,404       335,466  
Securities available-for-sale 7,220,219 6,953,719

Securities held-to-maturity (fair value $1,829,462 at September 30, 2018 and $1,983,087 at December 31, 2017)

1,903,343 1,996,376
Federal Home Loan Bank stock 230,677 227,920
Loans held for sale 502,915 432,277
Loans and leases, net 34,906,505 32,416,580
Premises and equipment, net 69,062 61,571
Accrued interest and dividends receivable 133,527 117,070
Other assets       709,058       576,741  
Total assets     $ 45,870,710       43,117,720  
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Non-interest-bearing $ 12,158,738 11,353,038
Interest-bearing       23,932,487       22,086,789  
Total deposits       36,091,225       33,439,827  

Federal funds purchased and securities sold under agreements to repurchase

575,000 790,000
Federal Home Loan Bank borrowings 4,210,000 4,195,000
Subordinated debt 257,974 257,381
Accrued expenses and other liabilities       498,514       403,821  
Total liabilities       41,632,713       39,086,029  
Shareholders equity
Preferred stock, par value $.01 per share; 61,000,000 shares authorized;
none issued at September 30, 2018 and December 31, 2017
Common stock, par value $.01 per share; 64,000,000 shares authorized;
55,384,378 shares issued and 55,383,361 outstanding at September 30, 2018;
54,979,213 shares issued and 54,977,971 outstanding at December 31, 2017 554 550
Additional paid-in capital 1,848,624 1,809,642
Retained earnings 2,601,073 2,290,537
Treasury stock, 1,017 shares at September 30, 2018 and 1,242 shares at December 31, 2017 (113 ) (171 )
Accumulated other comprehensive loss       (212,141 )     (68,867 )
Total shareholders’ equity       4,237,997       4,031,691  
Total liabilities and shareholders’ equity     $ 45,870,710       43,117,720  
 
 
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)     2018     2017     2018     2017
PER COMMON SHARE        
Net income – basic $ 2.84 $ 2.30 $ 6.32 $ 5.05
Net income – diluted $ 2.84 $ 2.29 $ 6.30 $ 5.01
Average shares outstanding – basic 54,544 54,098 54,406 53,968
Average shares outstanding – diluted 54,610 54,300 54,646 54,349
Book value $ 76.52 $ 71.52 $ 76.52 $ 71.52
 
SELECTED FINANCIAL DATA
Return on average total assets 1.36 % 1.21 % 1.03 % 0.90 %
Return on average shareholders’ equity 14.71 % 12.78 % 11.14 % 9.65 %
Efficiency ratio (1) 35.59 % 33.33 % 37.41 % 34.39 %
Yield on interest-earning assets 3.84 % 3.65 % 3.80 % 3.65 %
Yield on interest-earning assets, tax-equivalent basis (1)(2) 3.85 % 3.66 % 3.81 % 3.66 %
Cost of deposits and borrowings 1.06 % 0.67 % 0.95 % 0.61 %
Net interest margin 2.87 % 3.04 % 2.93 % 3.09 %
Net interest margin, tax-equivalent basis (2)(3) 2.88 % 3.05 % 2.94 % 3.10 %
(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.
 
     

September 30, 2018

   

June 30, 2018

   

December 31, 2017

   

September 30, 2017

CAPITAL RATIOS                
Tangible common equity (4) 9.15 % 9.10 % 9.29 % 9.44 %
Tier 1 leverage (5) 9.67 % 9.64 % 9.72 % 9.72 %
Common equity Tier 1 risk-based (5) 12.13 % 12.10 % 11.99 % 11.96 %
Tier 1 risk-based (5) 12.13 % 12.10 % 11.99 % 11.96 %
Total risk-based (5) 13.44 % 13.42 % 13.32 % 13.32 %
 
ASSET QUALITY
Non-accrual loans $ 134,197 $ 158,077 $ 326,918 $ 376,867
Allowance for loan and lease losses $ 220,706 $ 213,367 $ 195,959 $ 193,040
Allowance for loan and lease losses to non-accrual loans 164.46 % 134.98 % 59.94 % 51.22 %
Allowance for loan and lease losses to total loans 0.63 % 0.62 % 0.60 % 0.62 %
Non-accrual loans to total loans 0.38 % 0.46 % 1.00 % 1.21 %
Quarterly net charge-offs to average loans, annualized 0.00 % 0.04 % 0.48 % 0.05 %
(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, 2018 ratios are preliminary.
 
 
SIGNATURE BANK    
NET INTEREST MARGIN ANALYSIS
(unaudited)
 
Three months ended     Three months ended
September 30, 2018 September 30, 2017
(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 $ 485,749 2,488 2.03 % 470,171 1,455 1.23 %
Investment securities 9,526,123 77,555 3.26 % 8,987,262 66,742 2.97 %
Commercial loans, mortgages and leases (1)(2) 34,301,452 350,358 4.05 % 30,419,546 299,974 3.91 %
Residential mortgages and consumer loans 223,929 2,393 4.24 % 265,083 2,649 3.96 %
Loans held for sale       320,712     2,442       3.02 %     153,042     911       2.36 %
Total interest-earning assets       44,857,965     435,236       3.85 %     40,295,104     371,731       3.66 %
Non-interest-earning assets       624,664                 587,209            
Total assets     $ 45,482,629                 40,882,313            
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand $ 3,654,079 14,122 1.53 % 3,919,003 8,627 0.87 %
Money market 18,090,481 56,798 1.25 % 17,260,584 33,523 0.77 %
Time deposits 1,765,996 8,280 1.86 % 1,516,042 4,509 1.18 %
Non-interest-bearing demand deposits       12,213,759                 10,678,696            
Total deposits       35,724,315     79,200       0.88 %     33,374,325     46,659       0.55 %
Subordinated debt 257,843 3,645 5.65 % 257,050 3,645 5.67 %
Other borrowings       4,850,924     26,587       2.17 %     3,085,542     11,547       1.48 %
Total deposits and borrowings       40,833,082     109,432       1.06 %     36,716,917     61,851       0.67 %

Other non-interest-bearing liabilities and shareholders’ equity

      4,649,547                 4,165,396            
Total liabilities and shareholders’ equity     $ 45,482,629                 40,882,313            
OTHER DATA
Net interest income / interest rate spread (1) 325,804 2.79 % 309,880 2.99 %
Tax-equivalent adjustment (1,008 ) (1,062 )
Net interest income, as reported 324,796   308,818  
Net interest margin 2.87 % 3.04 %
Tax-equivalent effect 0.01 % 0.01 %
Net interest margin on a tax-equivalent basis (1)(2) 2.88 % 3.05 %

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

109.86 % 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 period ended September 30, 2018 and 35 percent for the period ended September 30, 2017.

 

(2)

 

See “Non-GAAP Financial Measures” for related calculation.

 
 
SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)
 
    Nine months ended     Nine months ended
September 30, 2018 September 30, 2017
(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 $ 465,298 6,209 1.78 % 471,151 3,598 1.02 %
Investment securities 9,359,974 221,924 3.16 % 8,891,079 201,431 3.02 %
Commercial loans, mortgages and leases (1)(2) 33,483,359 1,007,006 4.02 % 29,886,204 869,752 3.89 %
Residential mortgages and consumer loans 234,007 7,255 4.15 % 271,273 7,850 3.87 %
Loans held for sale       384,571     8,205       2.85 %     196,842     3,155       2.14 %
Total interest-earning assets       43,927,209     1,250,599       3.81 %     39,716,549     1,085,786       3.66 %
Non-interest-earning assets       593,551                 565,087            
Total assets     $ 44,520,760                 40,281,636            
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand $ 3,678,705 36,843 1.34 % 3,835,571 20,502 0.71 %
Money market 17,676,403 143,082 1.08 % 17,003,578 89,427 0.70 %
Time deposits 1,564,257 19,339 1.65 % 1,473,261 11,843 1.07 %
Non-interest-bearing demand deposits       11,845,801                 10,555,056            
Total deposits       34,765,166     199,264       0.77 %     32,867,466     121,772       0.50 %
Subordinated debt 257,647 10,928 5.66 % 256,853 10,890 5.65 %
Other borrowings       5,002,029     73,957       1.98 %     3,029,683     32,736       1.44 %
Total deposits and borrowings       40,024,842     284,149       0.95 %     36,154,002     165,398       0.61 %

Other non-interest-bearing liabilities and shareholders’ equity

      4,495,918                 4,127,634            
Total liabilities and shareholders’ equity     $ 44,520,760                 40,281,636            
OTHER DATA
Net interest income / interest rate spread (1) 966,450 2.86 % 920,388 3.05 %
Tax-equivalent adjustment (2,742 ) (2,574 )
Net interest income, as reported 963,708   917,814  
Net interest margin 2.93 % 3.09 %
Tax-equivalent effect 0.01   0.01  
Net interest margin on a tax-equivalent basis (1)(2) 2.94 % 3.10 %

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

109.75 % 109.85 %
(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 September 30, 2018 and 35 percent for the period ended September 30, 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)    

September 30, 2018

   

June 30, 2018

   

December 31, 2017

   

September 30, 2017

Consolidated common shareholders’ equity     $ 4,237,997     4,147,623     4,031,691     3,931,953
Intangible assets       43,372       34,261       28,643       32,741  
Consolidated tangible common shareholders’ equity (TCE)     $ 4,194,625       4,113,362       4,003,048       3,899,212  
                         
Consolidated total assets $ 45,870,710 45,215,484 43,117,720 41,326,924
Intangible assets       43,372       34,261       28,643       32,741  
Consolidated tangible total assets (TTA)     $ 45,827,338       45,181,223       43,089,077       41,294,183  
Tangible common equity ratio (TCE/TTA)       9.15 %     9.10 %     9.29 %     9.44 %
 
 
The following table presents the efficiency ratio calculation:
 

Three months ended September 30,

Nine months ended September 30,

(dollars in thousands)     2018     2017     2018     2017
Non-interest expense (NIE)     $ 117,208       105,628       367,135       325,099  
Net interest income before provision for loan and lease losses 324,796 308,818 963,954 917,814
Other non-interest income       4,543       8,119       17,360       27,543  
Total income (TI)     $ 329,339       316,937       981,314       945,357  
Efficiency ratio (NIE/TI)       35.59 %     33.33 %     37.41 %     34.39 %
 
 
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,

      2018     2017     2018     2017
Interest income (as reported) $ 434,228 370,669 1,248,103 1,083,212
Tax-equivalent adjustment       1,008       1,062       2,742       2,574  
Interest income, tax-equivalent basis     $ 435,236       371,731       1,250,845       1,085,786  
Interest-earnings assets     $ 44,857,965       40,295,104       43,927,209       39,716,549  
 
Yield on interest-earning assets 3.84 % 3.65 % 3.80 % 3.65 %
Tax-equivalent effect       0.01 %     0.01 %     0.01 %     0.01 %
Yield on interest-earning assets, tax-equivalent basis       3.85 %     3.66 %     3.81 %     3.66 %
 
 
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,

      2018     2017     2018     2017
Net interest margin (as reported) 2.87 % 3.04 % 2.93 % 3.09 %
Tax-equivalent adjustment 0.01 % 0.01 % 0.01 % 0.01 %
Margin contribution from loan prepayment penalty income       (0.03 )%     (0.06 )%     (0.05 )%     (0.06 )%
Core net interest margin, tax-equivalent basis excluding loan prepayment penalty income       2.85 %     2.99 %     2.89 %     3.04 %

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

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

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