Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, today announced results for its second quarter ended June 30, 2020.
Net income for the 2020 second quarter was $117.2 million, or $2.21 diluted earnings per share, versus $147.3 million, or $2.71 diluted earnings per share, for the 2019 second quarter. The decrease in net income for the 2020 second quarter, versus the comparable quarter last year, is due to an increase in the provision for credit losses of $87.6 million predominantly due to effects of COVID-19 on the U.S. economy. Pre-tax, pre-provision earnings were $247.9 million, representing an increase of $36.5 million, or 17.3 percent, compared with $211.4 million for the 2019 second quarter.
Net interest income for the 2020 second quarter reached $387.1 million, up $60.9 million, or 18.6 percent, when compared with the 2019 second quarter. This increase is primarily due to growth in average interest-earning assets. Total assets reached $60.35 billion at June 30, 2020, an increase of $11.47 billion, or 23.5 percent, from $48.88 billion at June 30, 2019. Average assets for the 2020 second quarter reached $57.66 billion, an increase of $8.90 billion, or 18.3 percent, compared with the 2019 second quarter.
Deposits for the 2020 second quarter rose a record $7.99 billion to $50.23 billion at June 30, 2020. When compared with deposits at June 30, 2019, overall deposit growth for the last twelve months was 33.8 percent, or $12.69 billion. Average deposits for the 2020 second quarter reached $47.37 billion, a record increase of $6.23 billion.
“The best way to address the future COVID-19 economic uncertainty is by executing in the present. We are working tirelessly to assist our clients through these most difficult times. To this end, we’ve been rewarded by their dedication to our bankers and Signature Bank, which led to, by far, our greatest growth quarter ever. By controlling what we can amid this tumultuous environment – through a commitment to our single-point-of-contact model and ongoing execution of our diversification strategy – we believe we are well positioned to navigate this difficult landscape, and to ultimately excel,” explained Signature Bank President and Chief Executive Officer Joseph J. DePaolo.
“The record quarterly deposit growth emanated from all facets of the Bank, including our well-established private client banking teams and business units, our blockchain-based payments platform, Signet™, the recently formed Digital Banking Group, Fund Banking Division, Venture Banking Group and Specialized Mortgage Servicing Banking Team as well as our latest West Coast expansion efforts. Additionally, this quarter we saw record loan growth, both with and without the Payroll Protection Program (PPP) loans. This occurred while we also continued our asset diversification strategy - by furthering Commercial and Industrial lending - primarily through the Fund Banking Division, and selectively growing our commercial real estate portfolio. Perhaps, most importantly, the best reflection of the quarter’s strong results can be evidenced in our reduction of payment deferrals. As of July 15th, of the loans that had their payment deferral come due after three months, we’ve seen 60 percent of the loans resume payment status,” DePaolo concluded.
“These unprecedented times reveal the strength of our client relationships. As with the 2007-2009 financial crisis -- first and foremost -- clients must be confident in knowing they have a trusted advisor, such as a bank that will leave no stone unturned when supporting them; one which ensures sleep-at-night safety for their funds. Signature Bank has proven its place as this type of institution, time and again; possibly more so now than ever. Our private client bankers and senior management team have been in constant contact with clients as the current economic situation unfolded and unexpectedly impacted their businesses. Furthermore, we put forth a major effort on behalf of our clients, working closely with them on the PPP process to enable eligibility for accessing these funds. We are extremely proud of our colleagues’ dedication, as they worked diligently to get this right. Clients noticed and appreciated this level of performance, which further validated how Signature Bank is a safe repository for their hard-earned monies and a fortress for their funds. We know we are better together and prosper as our clients prosper,” explained Scott A. Shay, Chairman of the Board.
Capital
The Bank’s Tier 1 leverage, common equity Tier 1 risk-based, Tier 1 risk-based, and total risk-based capital ratios were approximately 8.76 percent, 10.40 percent, 10.40 percent, and 12.13 percent, respectively, as of June 30, 2020. Each of these ratios is well in excess of regulatory requirements. The Bank’s strong risk-based capital ratios reflect the relatively low risk profile of the Bank’s balance sheet. The Bank’s tangible common equity ratio remains strong at 7.99 percent. The Bank defines tangible common equity ratio as the ratio of tangible common equity to adjusted tangible assets and calculates this ratio by dividing total consolidated common shareholders’ equity by consolidated total assets.
The Bank declared a cash dividend of $0.56 per share, payable on or after August 14, 2020 to common stockholders of record at the close of business on July 31, 2020. In the second quarter of 2020, the Bank paid a cash dividend of $0.56 per share to common stockholders of record at the close of business on May 4, 2020.
Net Interest Income
Net interest income for the 2020 second quarter was $387.1 million, an increase of $60.9 million, or 18.6 percent, versus the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $56.46 billion for the 2020 second quarter represent an increase of $8.51 billion, or 17.8 percent, from the 2019 second quarter. Yield on interest-earning assets for the 2020 second quarter decreased 59 basis points to 3.44 percent, compared to the second quarter of last year.
Average cost of deposits and average cost of funds for the second quarter of 2020 decreased by 63 and 69 basis points, to 0.56 percent and 0.73 percent, respectively, versus the comparable period a year ago.
Net interest margin on a tax-equivalent basis for the 2020 second quarter was 2.77 percent versus 2.74 percent reported in the 2019 second quarter and 2.79 percent in the 2020 first quarter. Excluding loan prepayment penalties in both quarters, linked quarter core net interest margin on a tax-equivalent basis decreased two basis points to 2.69 percent. The 2020 second quarter net interest margin was negatively affected by 15 basis points due to significant excess cash balances driven by record deposit growth.
Provision for Credit Losses
The Bank’s provision for credit losses for the second quarter of 2020 was $93.0 million, compared with $66.8 million for the 2020 first quarter and $5.4 million for the 2019 second quarter. The Bank’s elevated provision for credit losses for the second quarter was predominantly attributable to effects of COVID-19 on the U.S. economy. Additionally, this is the second quarter since the bank adopted CECL on January 1, 2020.
Net charge offs for the 2020 second quarter were $4.6 million, or 0.04 percent of average loans, on an annualized basis, versus $1.7 million, or 0.02 percent, for the 2020 first quarter and net recoveries of $3.7 million, or 0.04 percent, for the 2019 second quarter.
Non-Interest Income and Non-Interest Expense
Non-interest income for the 2020 second quarter was $12.7 million, down $4.3 million when compared with $17.0 million reported in the 2019 second quarter. Non-interest expense for the second quarter of 2020 was $151.9 million, an increase of $20.0 million, or 15.2 percent, versus $131.9 million reported in the 2019 second quarter. The increase was predominantly due to a rise of $14.6 million in salaries and benefits from the significant hiring for the new national business initiatives, coupled with the addition of 15 private client banking teams on the West Coast during the first half of 2020.
The Bank’s efficiency ratio improved to 38.0 percent for the 2020 second quarter compared with 38.4 percent for the same period a year ago, and 39.7 percent for the first quarter of 2020.
Loans
Loans, excluding loans held for sale, grew a record $4.20 billion, or 10.2 percent, during the second quarter of 2020 to $45.20 billion, compared with $41.00 billion at March 31, 2020. Average loans, excluding loans held for sale, reached $42.73 billion in the 2020 second quarter, growing $3.18 billion, or 8.0 percent, from the 2020 first quarter and $4.91 billion, or 13.0 percent, from the 2019 second quarter. For the seventh consecutive quarter, the increase in loans was primarily driven by growth in commercial and industrial loans, led by capital call facilities to private equity funds.
At June 30, 2020, non-accrual loans were $46.9 million, representing 0.10 percent of total loans and 0.08 percent of total assets, compared with non-accrual loans of $59.0 million, or 0.14 percent of total loans, at March 31, 2020 and $41.3 million, or 0.11 percent of total loans, at June 30, 2019. The ratio of allowance for credit losses for loans and leases to total loans at June 30, 2020 was 0.98 percent, versus 0.87 percent at March 31, 2020 and 0.64 percent at June 30, 2019. Additionally, the ratio of allowance for credit losses for loans and leases to non-accrual loans, or the coverage ratio, was 947 percent for the 2020 second quarter versus 603 percent for the first quarter of 2020 and 593 percent for the 2019 second quarter.
Conference Call
Signature Bank’s management will host a conference call to review results of the 2020 second quarter on Tuesday, July 21, 2020, at 10:00 AM ET. All participants should dial 866-359-8135 at least ten minutes prior to the start of the call and reference conference ID #2117356. International callers should dial 901-300-3484.
To hear a live web simulcast or to listen to the archived web cast following completion of the call, please visit the Bank’s web site at www.signatureny.com, click on “Investor Information,” "Quarterly Results" to access the link to the call. To listen to a telephone replay of the conference call, please dial 800-585-8367 or 404-537-3406 and enter conference ID #2117356. The replay will be available from approximately 1:00 PM ET on Tuesday, July 21, 2020 through 11:59 PM ET on Friday, July 24, 2020.
About Signature Bank
Signature Bank, member FDIC, is a New York-based full-service commercial bank with 32 private client offices throughout the New York metropolitan area including Greenwich, Conn. as well as in San Francisco and Charlotte, N.C. The Bank’s growing network of private client banking teams serves the needs of privately owned businesses, their owners and senior managers. Signature Bank’s specialty finance subsidiary, Signature Financial, LLC, provides equipment finance and leasing. Signature Securities Group Corporation, a wholly owned Bank subsidiary, is a licensed broker-dealer, investment adviser and member FINRA/SIPC, offering investment, brokerage, asset management and insurance products and services. Signature Bank’s revolutionary, blockchain-based digital payments platform, Signet™, allows the Bank’s commercial clients to make real-time payments in U.S. dollars, 24/7/365, safely and securely, without transaction fees. Signature Bank is the first FDIC-insured bank to launch a blockchain-based digital payments platform, and Signet is the first such platform to be approved for use by the NYS Department of Financial Services.
Signature Bank is one of the top 40 largest banks in the U.S., based on deposits (S&P Global Market Intelligence). The Bank recently earned several third-party recognitions, including: appeared on Forbes' Best Banks in America list for the 10th consecutive year in 2020; and, named number one in the Business Bank, Private Bank and Attorney Escrow Services categories by the New York Law Journal in the publication’s annual “Best of” survey for 2019, earning it a place in the New York Law Journal’s Hall of Fame (awarded to companies that have ranked in the “Best of” survey for at least three of the past four years). The Bank also ranked second nationally in the Business Bank, Private Banking Services and Attorney Escrow Service categories of both the 2019 and 2020 National Law Journal’s “Best of” survey.
For more information, please visit https://www.signatureny.com/.
This press release and oral statements made from time to time by our representatives contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. You should not place undue reliance on those statements because they are subject to numerous risks and uncertainties relating to our operations and business environment, all of which are difficult to predict and may be beyond our control. Forward-looking statements include information concerning our future results, interest rates and the interest rate environment, loan and deposit growth, loan performance, operations, new private client teams and other hires, new office openings, our business strategy and the impact of the COVID-19 pandemic on each of the foregoing and on our business overall. These statements often include words such as "may," "believe," "expect," "anticipate," "intend," “potential,” “opportunity,” “could,” “project,” “seek,” “target”, “goal”, “should,” “will,” “would,” "plan," "estimate" or other similar expressions. As you consider forward-looking statements, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions that could cause actual results to differ materially from those in the forward-looking statements and can change as a result of many possible events or factors, not all of which are known to us or in our control. These factors include but are not limited to: (i) prevailing economic conditions; (ii) changes in interest rates, loan demand, real estate values and competition, any of which can materially affect origination levels and gain on sale results in our business, as well as other aspects of our financial performance, including earnings on interest-bearing assets; (iii) the level of defaults, losses and prepayments on loans made by us, whether held in portfolio or sold in the whole loan secondary markets, which can materially affect charge-off levels and required credit loss reserve levels; (iv) changes in monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System; (v) changes in the banking and other financial services regulatory environment, (vi) our ability to maintain the continuity, integrity, security and safety of our operations and (vii) competition for qualified personnel and desirable office locations. All of these factors are subject to additional uncertainty in the context of the COVID-19 pandemic, which is having an unprecedented impact on all aspects of our operations, the financial services industry and the economy as a whole. Although we believe that these forward-looking statements are based on reasonable assumptions, beliefs and expectations, if a change occurs or our beliefs, assumptions and expectations were incorrect, our business, financial condition, liquidity or results of operations may vary materially from those expressed in our forward-looking statements. Additional risks are described in our quarterly and annual reports filed with the FDIC. You should keep in mind that any forward-looking statements made by Signature Bank speak only as of the date on which they were made. New risks and uncertainties come up from time to time, and we cannot predict these events or how they may affect the Bank. Signature Bank has no duty to, and does not intend to, update or revise the forward-looking statements after the date on which they are made. In light of these risks and uncertainties, you should keep in mind that any forward-looking statement made in this release or elsewhere might not reflect actual results.
| SIGNATURE BANK | ||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||
| (unaudited) | ||||||
Three months ended
| Six months ended
| |||||
| (dollars in thousands, except per share amounts) | 2020 | 2019 | 2020 | 2019 | ||
| INTEREST AND DIVIDEND INCOME | ||||||
| Loans held for sale | $ 937 | 646 | 1,642 | 2,369 | ||
| Loans and leases, net | 413,767 | 398,746 | 818,277 | 780,107 | ||
| Securities available-for-sale | 47,684 | 57,897 | 99,432 | 116,998 | ||
| Securities held-to-maturity | 14,030 | 15,441 | 28,624 | 31,054 | ||
| Other investments | 5,364 | 7,931 | 13,621 | 15,697 | ||
| Total interest income | 481,782 | 480,661 | 961,596 | 946,225 | ||
| INTEREST EXPENSE | ||||||
| Deposits | 65,550 | 109,447 | 165,290 | 213,494 | ||
| Federal funds purchased and securities sold under | ||||||
| agreements to repurchase | 719 | 6,063 | 1,467 | 11,892 | ||
| Federal Home Loan Bank borrowings | 22,528 | 35,219 | 47,739 | 68,276 | ||
| Subordinated debt | 5,852 | 3,644 | 11,704 | 7,283 | ||
| Total interest expense | 94,649 | 154,373 | 226,200 | 300,945 | ||
| Net interest income before provision for credit losses | 387,133 | 326,288 | 735,396 | 645,280 | ||
| Provision for credit losses | 93,008 | 5,408 | 159,831 | 11,717 | ||
| Net interest income after provision for credit losses | 294,125 | 320,880 | 575,565 | 633,563 | ||
| NON-INTEREST INCOME | ||||||
| Commissions | 2,877 | 3,739 | 6,527 | 7,379 | ||
| Fees and service charges | 10,307 | 7,546 | 20,901 | 15,574 | ||
| Net gains on sales of securities | - | 361 | - | 914 | ||
| Net gains on sales of loans | 1,821 | 4,133 | 4,556 | 6,128 | ||
| Other income (1) | (2,341) | 1,260 | (5,140) | 975 | ||
| Total non-interest income | 12,664 | 17,039 | 26,844 | 30,970 | ||
| NON-INTEREST EXPENSE | ||||||
| Salaries and benefits | 99,084 | 84,446 | 192,116 | 164,315 | ||
| Occupancy and equipment | 11,282 | 10,524 | 21,819 | 21,622 | ||
| Information technology | 10,254 | 8,968 | 20,473 | 17,454 | ||
| FDIC assessment fees | 3,699 | 3,164 | 6,597 | 6,347 | ||
| Professional fees | 4,789 | 3,731 | 9,532 | 6,619 | ||
| Other general and administrative | 22,765 | 21,055 | 45,302 | 40,594 | ||
| Total non-interest expense | 151,873 | 131,888 | 295,839 | 256,951 | ||
| Income before income taxes | 154,916 | 206,031 | 306,570 | 407,582 | ||
| Income tax expense | 37,702 | 58,730 | 89,769 | 116,826 | ||
| Net income | $ 117,214 | 147,301 | 216,801 | 290,756 | ||
| PER COMMON SHARE DATA | ||||||
| Earnings per share – basic | $ 2.22 | 2.71 | 4.10 | 5.35 | ||
| Earnings per share – diluted | $ 2.21 | 2.71 | 4.09 | 5.33 | ||
| Dividends per common share | $ 0.56 | 0.56 | 1.12 | 1.12 | ||
| (1) Effective January 1, 2020, we changed our accounting policy for Low Income Housing Tax Credit ("LIHTC") investments from the equity method to the proportional amortization method as it was determined to be the preferable method. All applicable prior period amounts have been retroactively restated to conform to the new accounting policy. |
| SIGNATURE BANK | ||||||
| CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | ||||||
June 30, | December 31, | |||||
2020 | 2019 | |||||
| (dollars in thousands, except shares and per share amounts) | (unaudited) | |||||
| ASSETS | ||||||
| Cash and due from banks | $ 4,475,716 | 702,277 | ||||
| Short-term investments | 95,052 | 87,555 | ||||
| Total cash and cash equivalents | 4,570,768 | 789,832 | ||||
| Securities available-for-sale (amortized cost $7,098,966 at June 30, 2020 | ||||||
| and $7,186,493 at December 31, 2019); (allowance for credit losses | ||||||
| $36 at June 30, 2020) | 7,149,435 | 7,143,864 | ||||
| Securities held-to-maturity (fair value $2,148,544 at June 30, 2020 | ||||||
| and $2,115,541 at December 31, 2019); (allowance for credit losses | ||||||
| $60 at June 30, 2020) | 2,076,555 | 2,101,970 | ||||
| Federal Home Loan Bank stock | 218,703 | 231,339 | ||||
| Loans held for sale | 284,772 | 290,593 | ||||
| Loans and leases | 45,200,572 | 39,109,623 | ||||
| Allowance for credit losses for loans and leases | (444,672 | ) | (249,989 | ) | ||
| Loans and leases, net | 44,755,900 | 38,859,634 | ||||
| Premises and equipment, net | 75,121 | 66,419 | ||||
| Operating lease right-of-use assets | 216,742 | 217,578 | ||||
| Accrued interest and dividends receivable | 209,803 | 147,527 | ||||
| Other assets (1) | 792,009 | 743,053 | ||||
| Total assets | $ 60,349,808 | 50,591,809 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
| Deposits | ||||||
| Non-interest-bearing | $ 16,082,385 | 13,016,931 | ||||
| Interest-bearing | 34,149,497 | 27,366,276 | ||||
| Total deposits | 50,231,882 | 40,383,207 | ||||
| Federal funds purchased and securities sold under agreements | ||||||
| to repurchase | 150,000 | 150,000 | ||||
| Federal Home Loan Bank borrowings | 3,884,245 | 4,142,144 | ||||
| Subordinated debt | 456,808 | 456,119 | ||||
| Operating lease liabilities | 244,118 | 242,587 | ||||
| Accrued expenses and other liabilities | 520,173 | 472,554 | ||||
| Total liabilities | 55,487,226 | 45,846,611 | ||||
| Shareholders’ equity | ||||||
| Preferred stock, par value $.01 per share; 61,000,000 shares authorized; | ||||||
| none issued at June 30, 2020 and December 31, 2019 | - | - | ||||
| Common stock, par value $.01 per share; 64,000,000 shares authorized; | ||||||
| 55,525,540 shares issued and 53,568,244 outstanding at June 30, 2020; | ||||||
| 55,427,631 shares issued and 53,519,644 outstanding at December 31, 2019 | 555 | 554 | ||||
| Additional paid-in capital | 1,848,634 | 1,871,571 | ||||
| Retained earnings (1) | 3,296,750 | 3,172,273 | ||||
| Treasury stock, 1,900,788 shares at June 30, 2020 and 1,907,987 shares at December 31, 2019 | (232,703 | ) | (233,570 | ) | ||
| Accumulated other comprehensive loss | (50,654 | ) | (65,630 | ) | ||
| Total shareholders' equity | 4,862,582 | 4,745,198 | ||||
| Total liabilities and shareholders' equity | $ 60,349,808 | 50,591,809 | ||||
| (1) Effective January 1, 2020, we changed our accounting policy for Low Income Housing Tax Credit ("LIHTC") investments from the equity method to the proportional amortization method as it was determined to be the preferable method. All applicable prior period amounts have been retroactively restated to conform to the new accounting policy. |
| SIGNATURE BANK | ||||||||||
| FINANCIAL SUMMARY, CAPITAL RATIOS, ASSET QUALITY | ||||||||||
| (unaudited) | ||||||||||
Three months ended
| Six months ended
| |||||||||
| (in thousands, except ratios and per share amounts) | 2020 | 2019 (6) | 2020 | 2019 (6) | ||||||
| PER COMMON SHARE | ||||||||||
| Net income - basic | $ 2.22 | $ 2.71 | $ 4.10 | $ 5.35 | ||||||
| Net income - diluted | $ 2.21 | $ 2.71 | $ 4.09 | $ 5.33 | ||||||
| Average shares outstanding - basic | 52,672 | 54,213 | 52,609 | 54,189 | ||||||
| Average shares outstanding - diluted | 52,785 | 54,250 | 52,763 | 54,334 | ||||||
| Book value | $ 90.77 | $ 84.53 | $ 90.77 | $ 84.53 | ||||||
| SELECTED FINANCIAL DATA | ||||||||||
| Return on average total assets | 0.82 | % | 1.21 | % | 0.80 | % | 1.21 | % | ||
| Return on average shareholders' equity | 9.79 | % | 12.89 | % | 9.08 | % | 13.00 | % | ||
| Efficiency ratio (1) | 37.99 | % | 38.41 | % | 38.81 | % | 38.00 | % | ||
| Yield on interest-earning assets | 3.43 | % | 4.02 | % | 3.62 | % | 4.01 | % | ||
| Yield on interest-earning assets, tax-equivalent basis (1)(2) | 3.44 | % | 4.03 | % | 3.63 | % | 4.02 | % | ||
| Cost of deposits and borrowings | 0.73 | % | 1.42 | % | 0.93 | % | 1.41 | % | ||
| Net interest margin | 2.76 | % | 2.73 | % | 2.77 | % | 2.74 | % | ||
| Net interest margin, tax-equivalent basis (2)(3) | 2.77 | % | 2.74 | % | 2.78 | % | 2.75 | % | ||
| (1) See "Non-GAAP Financial Measures" for related calculation. | ||||||
| (2) Based on the 21 percent U.S. federal statutory tax rate for the periods presented. The tax-equivalent basis is considered a non-GAAP financial measure and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. This ratio is a metric used by management to evaluate the impact of tax-exempt assets on the Bank's yield on interest-earning assets and net interest margin. | ||||||
| (3) See "Net Interest Margin Analysis" for related calculation. |
| June 30, 2020 | March 31, 2020 | December 31, 2019 (6) | June 30, 2019 (6) | |||
| CAPITAL RATIOS | ||||||
| Tangible common equity (4) | 7.99% | 8.90% | 9.30% | 9.41% | ||
| Tier 1 leverage (5) | 8.76% | 9.45% | 9.55% | 9.65% | ||
| Common equity Tier 1 risk-based (5) | 10.40% | 11.05% | 11.56% | 11.55% | ||
| Tier 1 risk-based (5) | 10.40% | 11.05% | 11.56% | 11.55% | ||
| Total risk-based (5) | 12.13% | 12.77% | 13.26% | 12.79% | ||
| ASSET QUALITY | ||||||
| Non-accrual loans | $ 46,939 | $ 59,055 | $ 57,355 | $ 41,255 | ||
| Allowance for loan and lease losses | $ 444,672 | $ 356,274 | $ 249,989 | $ 244,517 | ||
| Allowance for loan and lease losses to non-accrual loans | 947.34% | 603.29% | 435.86% | 592.70% | ||
| Allowance for loan and lease losses to total loans | 0.98% | 0.87% | 0.64% | 0.64% | ||
| Non-accrual loans to total loans | 0.10% | 0.14% | 0.15% | 0.11% | ||
| Quarterly net charge-offs (recoveries) to average loans, annualized | 0.04% | 0.02% | 0.03% | (0.04)% | ||
| (4) We define tangible common equity as the ratio of total tangible common equity to total tangible assets (the "TCE ratio"). Tangible common equity is considered to be a non-GAAP financial measure and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. The TCE ratio is a metric used by management to evaluate the adequacy of our capital levels. In addition to tangible common equity, management uses other metrics, such as Tier 1 capital related ratios, to evaluate capital levels. See "Non-GAAP Financial Measures" for related calculation. | ||||||
| (5) June 30, 2020 ratios are preliminary. | ||||||
| (6) Effective January 1, 2020, we changed our accounting policy for Low Income Housing Tax Credit ("LIHTC") investments from the equity method to the proportional amortization method as it was determined to be the preferable method. All applicable prior period amounts have been retroactively restated to conform to the new accounting policy. |
| SIGNATURE BANK | |||||||||||
| NET INTEREST MARGIN ANALYSIS | |||||||||||
| (unaudited) | |||||||||||
| Three months ended | Three months ended | ||||||||||
| June 30, 2020 | June 30, 2019 | ||||||||||
| (dollars in thousands) | Average Balance | Interest Income/ Expense | Average Yield/ Rate | Average Balance | Interest Income/ Expense | Average Yield/ Rate | |||||
| INTEREST-EARNING ASSETS | |||||||||||
| Short-term investments | $ 4,120,084 | 1,889 | 0.18 | % | 518,445 | 3,284 | 2.54 | % | |||
| Investment securities | 9,379,183 | 65,189 | 2.78 | % | 9,530,829 | 77,985 | 3.27 | % | |||
| Commercial loans, mortgages and leases (1) | 42,551,809 | 413,284 | 3.91 | % | 37,605,138 | 397,570 | 4.24 | % | |||
| Residential mortgages and consumer loans | 180,320 | 2,026 | 4.52 | % | 214,799 | 2,470 | 4.61 | % | |||
| Loans held for sale | 227,023 | 937 | 1.66 | % | 75,684 | 646 | 3.42 | % | |||
| Total interest-earning assets | 56,458,419 | 483,325 | 3.44 | % | 47,944,895 | 481,955 | 4.03 | % | |||
| Non-interest-earning assets (2) | 1,202,816 | 814,135 | |||||||||
| Total assets | $ 57,661,235 | 48,759,030 | |||||||||
| INTEREST-BEARING LIABILITIES | |||||||||||
| Interest-bearing deposits | |||||||||||
| NOW and interest-bearing demand | $ 7,696,059 | 12,875 | 0.67 | % | 3,953,047 | 20,086 | 2.04 | % | |||
| Money market | 22,597,010 | 42,126 | 0.75 | % | 18,215,523 | 73,287 | 1.61 | % | |||
| Time deposits | 2,233,641 | 10,549 | 1.90 | % | 2,688,912 | 16,074 | 2.40 | % | |||
| Non-interest-bearing demand deposits | 14,848,167 | - | - | 12,073,427 | - | - | |||||
| Total deposits | 47,374,877 | 65,550 | 0.56 | % | 36,930,909 | 109,447 | 1.19 | % | |||
| Subordinated debt | 456,584 | 5,852 | 5.13 | % | 258,438 | 3,643 | 5.64 | % | |||
| Other borrowings | 4,318,476 | 23,247 | 2.17 | % | 6,307,221 | 41,283 | 2.63 | % | |||
| Total deposits and borrowings | 52,149,937 | 94,649 | 0.73 | % | 43,496,568 | 154,373 | 1.42 | % | |||
| Other non-interest-bearing liabilities | |||||||||||
| and shareholders' equity (2) | 5,511,298 | 5,262,462 | |||||||||
| Total liabilities and shareholders' equity | $ 57,661,235 | 48,759,030 | |||||||||
| OTHER DATA | |||||||||||
| Net interest income / interest rate spread (1) | 388,676 | 2.71 | % | 327,582 | 2.61 | % | |||||
| Tax-equivalent adjustment | (1,543 | ) | (1,294 | ) | |||||||
| Net interest income, as reported | 387,133 | 326,288 | |||||||||
| Net interest margin | 2.76 | % | 2.73 | % | |||||||
| Tax-equivalent effect | 0.01 | % | 0.01 | % | |||||||
| Net interest margin on a tax-equivalent basis (1) | 2.77 | % | 2.74 | % | |||||||
| Ratio of average interest-earning assets | |||||||||||
| to average interest-bearing liabilities | 108.26 | % | 110.23 | % | |||||||
| (1) Presented on a tax-equivalent, non-GAAP, basis for municipal leasing and financing transactions using the U.S. federal statutory tax rate of 21 percent for the periods presented. | |||||||
| (2) Effective January 1, 2020, we changed our accounting policy for Low Income Housing Tax Credit ("LIHTC") investments from the equity method to the proportional amortization method as it was determined to be the preferable method. All applicable prior period amounts have been retroactively restated to conform to the new accounting policy. |
| SIGNATURE BANK | |||||||||||
| NET INTEREST MARGIN ANALYSIS | |||||||||||
| (unaudited) | |||||||||||
| Six months ended | Six months ended | ||||||||||
| June 30, 2020 | June 30, 2019 | ||||||||||
| (dollars in thousands) | Average Balance | Interest Income/ Expense | Average Yield/ Rate | Average Balance | Interest Income/ Expense | Average Yield/ Rate | |||||
| INTEREST-EARNING ASSETS | |||||||||||
| Short-term investments | $ 2,693,115 | 6,303 | 0.47 | % | 491,909 | 6,199 | 2.54 | % | |||
| Investment securities | 9,490,033 | 135,374 | 2.85 | % | 9,568,049 | 157,550 | 3.29 | % | |||
| Commercial loans, mortgages and leases (1) | 40,957,747 | 817,648 | 4.01 | % | 37,130,680 | 777,615 | 4.22 | % | |||
| Residential mortgages and consumer loans | 183,920 | 3,675 | 4.02 | % | 216,418 | 4,946 | 4.61 | % | |||
| Loans held for sale | 154,415 | 1,642 | 2.14 | % | 150,698 | 2,369 | 3.17 | % | |||
| Total interest-earning assets | 53,479,230 | 964,642 | 3.63 | % | 47,557,754 | 948,679 | 4.02 | % | |||
| Non-interest-earning assets (2) | 993,553 | 742,117 | |||||||||
| Total assets | $ 54,472,783 | 48,299,871 | |||||||||
| INTEREST-BEARING LIABILITIES | |||||||||||
| Interest-bearing deposits | |||||||||||
| NOW and interest-bearing demand | $ 6,623,067 | 32,886 | 1.00 | % | 4,083,775 | 41,375 | 2.04 | % | |||
| Money market | 21,508,865 | 109,288 | 1.02 | % | 18,344,116 | 143,648 | 1.58 | % | |||
| Time deposits | 2,300,393 | 23,116 | 2.02 | % | 2,441,635 | 28,471 | 2.35 | % | |||
| Non-interest-bearing demand deposits | 13,826,244 | - | - | 11,834,648 | - | - | |||||
| Total deposits | 44,258,569 | 165,290 | 0.75 | % | 36,704,174 | 213,494 | 1.17 | % | |||
| Subordinated debt | 456,411 | 11,704 | 5.13 | % | 258,340 | 7,283 | 5.64 | % | |||
| Other borrowings | 4,252,950 | 49,206 | 2.33 | % | 6,207,286 | 80,168 | 2.60 | % | |||
| Total deposits and borrowings | 48,967,930 | 226,200 | 0.93 | % | 43,169,800 | 300,945 | 1.41 | % | |||
| Other non-interest-bearing liabilities | |||||||||||
| and shareholders' equity (2) | 5,504,853 | 5,130,071 | |||||||||
| Total liabilities and shareholders' equity | $ 54,472,783 | 48,299,871 | |||||||||
| OTHER DATA | |||||||||||
| Net interest income / interest rate spread (1) | 738,442 | 2.70 | % | 647,734 | 2.61 | % | |||||
| Tax-equivalent adjustment | (3,046 | ) | (2,454 | ) | |||||||
| Net interest income, as reported | 735,396 | 645,280 | |||||||||
| Net interest margin | 2.77 | % | 2.74 | % | |||||||
| Tax-equivalent effect | 0.01 | 0.01 | |||||||||
| Net interest margin on a tax-equivalent basis (1) | 2.78 | % | 2.75 | % | |||||||
| Ratio of average interest-earning assets | |||||||||||
| to average interest-bearing liabilities | 109.21 | % | 110.16 | % | |||||||
| (1) Presented on a tax-equivalent, non-GAAP, basis for municipal leasing and financing transactions using the U.S. federal statutory tax rate of 21 percent for the periods presented. | |||||||
| (2) Effective January 1, 2020, we changed our accounting policy for Low Income Housing Tax Credit ("LIHTC") investments from the equity method to the proportional amortization method as it was determined to be the preferable method. All applicable prior period amounts have been retroactively restated to conform to the new accounting policy. |
| SIGNATURE BANK | |||||||
| NON-GAAP FINANCIAL MEASURES | |||||||
| (unaudited) | |||||||
| Management believes that the presentation of certain non-GAAP financial measures assists investors when comparing results period-to-period in a more consistent manner and provides a better measure of Signature Bank's results. These non-GAAP measures include the Bank's (i) tangible common equity ratio, (ii) efficiency ratio, (iii) yield on interest-earning assets, tax-equivalent basis, (iv) core net interest margin, tax-equivalent basis excluding loan prepayment penalty income, (v) pre-tax, pre-provision earnings, (vi) loans and leases to core loans excluding Paycheck Protection Program loans. These non-GAAP measures should not be considered a substitute for GAAP-basis measures and results. We strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. Effective January 1, 2020, we changed our accounting policy for Low Income Housing Tax Credit ("LIHTC") investments from the equity method to the proportional amortization method as it was determined to be the preferable method. All applicable prior period amounts have been retroactively restated to conform to the new accounting policy. | |||||||
| The following table presents the tangible common equity ratio calculation: | |||||||
| (dollars in thousands) | June 30, 2020 | March 31, 2020 | December 31, 2019 (1) | June 30, 2019 (1) | |||
| Consolidated common shareholders' equity | $ 4,862,582 | 4,763,961 | 4,745,198 | 4,638,319 | |||
| Intangible assets | 46,385 | 45,711 | 45,907 | 44,148 | |||
| Consolidated tangible common shareholders' equity (TCE) | $ 4,816,197 | 4,718,250 | 4,699,291 | 4,594,171 | |||
| Consolidated total assets | $ 60,349,808 | 53,074,716 | 50,591,809 | 48,853,473 | |||
| Intangible assets | 46,385 | 45,711 | 45,907 | 44,148 | |||
| Consolidated tangible total assets (TTA) | $ 60,303,423 | 53,029,005 | 50,545,902 | 48,809,325 | |||
| Tangible common equity ratio (TCE/TTA) | 7.99% | 8.90% | 9.30% | 9.41% | |||
| The following table presents the efficiency ratio calculation: | |||||||
Three months ended
| Six months ended
| ||||||
| (dollars in thousands) | 2020 | 2019 (1) | 2020 | 2019 (1) | |||
| Non-interest expense (NIE) | $ 151,873 | 131,888 | 295,839 | 256,951 | |||
| Net interest income before provision for loan and lease losses | 387,133 | 326,288 | 735,396 | 645,280 | |||
| Other non-interest income | 12,664 | 17,039 | 26,844 | 30,970 | |||
| Total income (TI) | $ 399,797 | 343,327 | 762,240 | 676,250 | |||
| Efficiency ratio (NIE/TI) | 37.99% | 38.41% | 38.81% | 38.00% | |||
| The following table reconciles yield on interest-earning assets to the yield on interest-earning assets on a tax-equivalent basis: | |||||||
Three months ended
| Six months ended
| ||||||
| (dollars in thousands) | 2020 | 2019 (1) | 2020 | 2019 (1) | |||
| Interest income (as reported) | $ 481,782 | 480,661 | 961,596 | 946,225 | |||
| Tax-equivalent adjustment | 1,543 | 1,294 | 3,046 | 2,454 | |||
| Interest income, tax-equivalent basis | $ 483,325 | 481,955 | 964,642 | 948,679 | |||
| Interest-earnings assets | $ 56,458,419 | 47,944,895 | 53,479,230 | 47,557,754 | |||
| Yield on interest-earning assets | 3.43% | 4.02% | 3.62% | 4.01% | |||
| Tax-equivalent effect | 0.01% | 0.01% | 0.01% | 0.01% | |||
| Yield on interest-earning assets, tax-equivalent basis | 3.44% | 4.03% | 3.63% | 4.02% | |||
| (1) Effective January 1, 2020, we changed our accounting policy for Low Income Housing Tax Credit ("LIHTC") investments from the equity method to the proportional amortization method as it was determined to be the preferable method. All applicable prior period amounts have been retroactively restated to conform to the new accounting policy. |
| SIGNATURE BANK | |||||||
| NON-GAAP FINANCIAL MEASURES | |||||||
| (unaudited) | |||||||
| The following table reconciles net interest margin (as reported) to core net interest margin on a tax-equivalent basis excluding loan prepayment penalty income: | |||||||
Three months ended
| Six months ended
| ||||||
2020 | 2019 | 2020 | 2019 | ||||
| Net interest margin (as reported) | 2.76% | 2.73% | 2.77% | 2.74% | |||
| Tax-equivalent adjustment | 0.01% | 0.01% | 0.01% | 0.01% | |||
| Margin contribution from loan prepayment penalty income | (0.08)% | (0.03)% | (0.08)% | (0.03)% | |||
| Core net interest margin, tax-equivalent basis excluding loan prepayment penalty income | 2.69% | 2.71% | 2.70% | 2.72% | |||
| The following table reconciles net income (as reported) to pre-tax, pre-provision earnings: | |||||||
Three months ended
| Six months ended
| ||||||
| (dollars in thousands) | 2020 | 2019 (1) | 2020 | 2019 (1) | |||
| Net income (as reported) | $ 117,214 | 147,301 | 216,801 | 290,756 | |||
| Income tax expense | 37,702 | 58,730 | 89,769 | 116,826 | |||
| Provision for credit losses | 93,008 | 5,408 | 159,831 | 11,717 | |||
| Pre-tax, pre-provision earnings | $ 247,924 | 211,439 | 466,401 | 419,299 | |||
| (1) Effective January 1, 2020, we changed our accounting policy for Low Income Housing Tax Credit ("LIHTC") investments from the equity method to the proportional amortization method as it was determined to be the preferable method. All applicable prior period amounts have been retroactively restated to conform to the new accounting policy. | |||||||
| The following table reconciles loans and leases (as reported) to core loans excluding Paycheck Protection Program ("PPP") loans : | |||||||
| (dollars in thousands) | June 30, 2020 | March 31, 2020 | December 31, 2019 | June 30, 2019 | |||
| Loans and leases (as reported) | $ 45,200,572 | 41,001,156 | 39,109,623 | 37,932,170 | |||
| PPP loans | 1,961,966 | - | - | - | |||
| Core loans excluding PPP loans | $ 43,238,606 | 41,001,156 | 39,109,623 | 37,932,170 | |||
View source version on businesswire.com: https://www.businesswire.com/news/home/20200721005347/en/
Contacts:
Eric R. Howell, Executive Vice President – Corporate & Business Development
646-822-1402, ehowell@signatureny.com
Media Contact:
Susan Turkell Lewis, 646-822-1825, slewis@signatureny.com
