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Signature Bank Reports 2018 Fourth Quarter and Year-End Results

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)2018201720182017
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,
20182017
(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)2018201720182017
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 endedThree months ended
December 31, 2018December 31, 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 $ 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 endedTwelve months ended
December 31, 2018December 31, 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 $ 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)2018201720182017
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,

2018201720182017
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,

201820172018201720182017
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 %

Contacts:

Signature Bank
Investor Contact:
Eric R. Howell, 646-822-1402
Executive Vice President – Corporate & Business Development
ehowell@signatureny.com
or
Media Contact:
Susan J. Lewis, 646-822-1825
slewis@signatureny.com

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