Signature Bank (Nasdaq: SBNY), a New York-based full service commercial bank, today announced results for its first quarter ended March 31, 2019.

Net income for the 2019 first quarter was $144.1 million, or $2.65 diluted earnings per share, versus $34.5 million, or $0.63 diluted earnings per share, for the 2018 first quarter. The increase in net income for the 2019 first quarter, versus the comparable quarter last year, is due to a decrease of $134.5 million in the provision for loan losses, nearly all attributable to the New York City taxi medallion portfolio. Excluding write-downs for the taxi medallion portfolio, net income for the 2018 first quarter would have been $146.8 million, or $2.69 diluted earnings per share. Additionally, prepayment penalty income for the 2019 first quarter was $2.4 million, down $4.3 million from the 2018 first quarter.

Net interest income for the 2019 first quarter reached $319.0 million, up $0.9 million, or 0.3 percent, when compared with the 2018 first quarter. This increase is primarily due to growth in average interest-earning assets. Total assets reached $48.55 billion at March 31, 2019, an increase of $4.11 billion, or 9.3 percent, from $44.44 billion at March 31, 2018. Average assets for the 2019 first quarter reached $47.86 billion, an increase of $4.19 billion, or 9.6 percent, compared with the 2018 first quarter.

Deposits for the 2019 first quarter rose $243.8 million to $36.62 billion at March 31, 2019, affected by a decrease in escrow deposits of $659.8 million. When compared with deposits at March 31, 2018, overall deposit growth for the last twelve months was 5.2 percent, or $1.80 billion. Average deposits for the 2019 first quarter reached $36.47 billion, an increase of $210.0 million.

“The past several quarters have been extremely productive for Signature Bank as we build for the future. During this time, we started two best-in-class divisions -- the Fund Banking Division and the Venture Banking Group -- while also commencing our West Coast operations with the opening of our San Francisco private client banking office. Additionally, we launched SignetTM, our proprietary, blockchain-based digital real time (24/7/365) payments platform. We have added qualified colleagues to our team across the board to support all of these new business initiatives. We embarked on these pertinent growth initiatives simultaneously as we believe they will all contribute to strengthening our franchise and help position the Bank for continued success,” explained Joseph J. DePaolo, Co-founder, President and Chief Executive Officer.

“Private equity and venture banking clients are an ever-growing component of the economic landscape, especially in the primary markets we serve throughout New York and California. Our Fund and Venture Banking businesses will afford us the opportunity to cater to these expanding client bases while also furthering our commitment to grow core deposits and diversify our balance sheet,” DePaolo concluded.

“While we just celebrated our 15th anniversary as a public company, we remain an innovator, ensuring we are providing clients what they need to successfully operate their businesses. This can be evidenced by the introduction of our blockchain-based technology platform, Signet, which provides 24/7/365 funds transfers and will change the way our commercial clients conduct business,” explained Scott A. Shay, Chairman of the Board.

“Signature Bank remains the bank of choice for banking teams looking for the most responsive venue to best serve their clients. Perhaps the real testimony to our success is that we always hold fast to our commitment to serve our clients with the best possible means while providing depositor safety by remaining a sleep-at-night bank,” Shay said.

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 9.68 percent, 11.97 percent, 11.97 percent, and 13.24 percent, respectively, as of March 31, 2019. Each of these ratios is well in excess of regulatory requirements. The Bank’s strong risk-based capital ratios reflect the relatively low risk profile of the Bank’s balance sheet. The Bank’s tangible common equity ratio remains strong at 9.29 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 May 15, 2019 to common stockholders of record at the close of business on May 1, 2019. In the first quarter of 2019, the Bank paid a cash dividend of $0.56 per share to common stockholders of record at the close of business on February 1, 2019. Additionally, during the 2019 first quarter, the Bank repurchased 173,193 shares of common stock for a total of $22.9 million.

Net Interest Income

Net interest income for the 2019 first quarter was $319.0 million, an increase of $0.9 million, or 0.3 percent, versus the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $47.17 billion for the 2019 first quarter represent an increase of $4.16 billion, or 9.7 percent, from the 2018 first quarter. Yield on interest-earning assets for the 2019 first quarter increased 26 basis points to 4.01 percent, compared to the first quarter of last year.

Average cost of deposits and average cost of funds for the first quarter of 2019 increased by 51 and 57 basis points, to 1.16 percent and 1.39 percent, respectively, versus the comparable period a year ago.

Net interest margin on a tax-equivalent basis for the 2019 first quarter was 2.75 percent versus 3.01 percent reported in the 2018 first quarter and 2.90 percent in the 2018 fourth quarter. Excluding loan prepayment penalties in both quarters, linked quarter core net interest margin on a tax-equivalent basis decreased seven basis points to 2.73 percent.

Provision for Loan Losses

The Bank’s provision for loan losses for the first quarter of 2019 was $6.3 million, compared with $6.4 million for the 2018 fourth quarter and $140.8 million for the 2018 first quarter. The elevated provision for the 2018 first quarter was nearly all due to the New York City taxi medallion loan portfolio.

Net charge offs for the 2019 first quarter were $879,000, or 0.01 percent of average loans, on an annualized basis, versus net recoveries of $2.9 million, or 0.03 percent, for the 2018 fourth quarter and net charge offs of $128.3 million, or 1.58 percent, for the 2018 first quarter. The 2018 first quarter net charge-offs included $128.6 million for taxi medallion loans.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2019 first quarter was $6.1 million, down $1.1 million when compared with $7.2 million reported in the 2018 first quarter. The decrease was driven by an increase in tax credit investment amortization. These investments positively impact our effective tax rate.

Non-interest expense for the first quarter of 2019 was $125.1 million, a decrease of $12.2 million, or 8.9 percent, versus $137.3 million reported in the 2018 first quarter. The decrease was primarily due to the absence of write-downs of $24.0 million on repossessed New York City taxi medallions that were taken in the first quarter of 2018, partially offset by the addition of new private client banking teams.

The Bank’s efficiency ratio improved to 38.5 percent for the 2019 first quarter versus 42.2 percent for the comparable period last year. The gain was primarily due to a decrease in other general and administrative expenses of $19.9 million primarily due to the aforementioned write-down on the repossessed medallions that was taken in the first quarter of 2018.

Loans

Loans, excluding loans held for sale, grew $1.04 billion, or 2.9 percent, during the first quarter of 2019 to $37.47 billion, compared with $36.42 billion at December 31, 2018. At March 31, 2019, loans accounted for 77.2 percent of total assets, versus 76.9 percent at the end of the 2018 fourth quarter and 74.8 percent at the end of 2018 first quarter. Average loans, excluding loans held for sale, reached $36.87 billion in the 2019 first quarter, growing $1.22 billion, or 3.4 percent, from the 2018 fourth quarter and $3.93 billion, or 11.9 percent, from the 2018 first quarter. For the second consecutive quarter, the increase in loans for the first quarter was primarily driven by growth in commercial and industrial loans.

At March 31, 2019, non-accrual loans were $94.7 million, representing 0.25 percent of total loans and 0.20 percent of total assets, compared with non-accrual loans of $108.6 million, or 0.30 percent of total loans, at December 31, 2018 and $168.7 million, or 0.51 percent of total loans, at March 31, 2018. Excluding non-accruing loans secured by taxi medallions of $76.1 million, non-accrual loans for the remainder of the portfolio are $18.6 million, or five basis points of total loans. The ratio of allowance for loan and lease losses to total loans at March 31, 2019 was 0.63 percent, unchanged from December 31, 2018 and March 31, 2018. Additionally, the ratio of allowance for loan and lease losses to non-accrual loans, or the coverage ratio, was 249 percent for the 2019 first quarter versus 212 percent for the fourth quarter of 2018 and 124 percent for the 2018 first quarter.

Conference Call

Signature Bank’s management will host a conference call to review results of the 2019 first quarter on Wednesday, April 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 #2615648. 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 #2615648. The replay will be available from approximately 1:00 PM ET on Wednesday, April 17, 2019 through 11:59 PM ET on Sunday, April 21, 2019.

About Signature Bank

Signature Bank, member FDIC, is a New York-based full-service commercial bank with 31 private client offices throughout the New York metropolitan area and Connecticut as well as San Francisco. The Bank’s growing network of private client banking teams serves the needs of privately owned businesses, their owners and senior managers.

Signature Bank’s specialty finance subsidiary, Signature Financial, LLC, provides equipment finance and leasing. Signature Securities Group Corporation, a wholly owned Bank subsidiary, is a licensed broker-dealer, investment adviser and member FINRA/SIPC, offering investment, brokerage, asset management and insurance products and services.

Signature Bank recently introduced its revolutionary, blockchain-based digital payments platform, Signet™, enabling real-time payments for its commercial clients. The Signet Platform allows the Bank’s commercial clients to make payments in U.S. dollars, 24/7/365, safely and securely, without transaction fees. Signature Bank is the first FDIC-insured bank to launch a blockchain-based digital payments platform, and Signet is the first such platform to be approved for use by the NYS Department of Financial Services

Signature Bank is one of the top 40 largest banks in the U.S., based on deposits (S&P Global Market Intelligence). The Bank recently earned several third-party recognitions, including: appeared on Forbes' Best Banks in America list for the ninth consecutive year in 2019; and, named Best Business Bank, Best Private Bank and Best Attorney Escrow Services provider by the New York Law Journal in the publication’s annual “Best of” survey for 2018, earning it a place in the New York Law Journal’s Hall of Fame (awarded to companies that have ranked in the “Best of” survey for at least three of the past four years). The Bank also ranked second nationally in the Best Business Bank, Best Private Bank and Best Attorney Escrow Services categories of the National Law Journal’s 2019 “Best of” survey.

For more information, please visit www.signatureny.com.

This press release and oral statements made from time to time by our representatives contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. You should not place undue reliance on those statements because they are subject to numerous risks and uncertainties relating to our operations and business environment, all of which are difficult to predict and may be beyond our control. Forward-looking statements include information concerning our future results, interest rates and the interest rate environment, loan and deposit growth, loan performance, operations, new private client teams and other hires, new office openings and business strategy. These statements often include words such as "may," "believe," "expect," "anticipate," "intend," “potential,” “opportunity,” “could,” “project,” “seek,” “should,” “will,” “would,” "plan," "estimate" or other similar expressions. As you consider forward-looking statements, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions that could cause actual results to differ materially from those in the forward-looking statements and can change as a result of many possible events or factors, not all of which are known to us or in our control. These factors include but are not limited to: (i) prevailing economic conditions; (ii) changes in interest rates, loan demand, real estate values and competition, any of which can materially affect origination levels and gain on sale results in our business, as well as other aspects of our financial performance, including earnings on interest-bearing assets; (iii) the level of defaults, losses and prepayments on loans made by us, whether held in portfolio or sold in the whole loan secondary markets, which can materially affect charge-off levels and required credit loss reserve levels; (iv) changes in monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System; (v) changes in the banking and other financial services regulatory environment and (vi) competition for qualified personnel and desirable office locations. Although we believe that these forward-looking statements are based on reasonable assumptions, beliefs and expectations, if a change occurs or our beliefs, assumptions and expectations were incorrect, our business, financial condition, liquidity or results of operations may vary materially from those expressed in our forward-looking statements. Additional risks are described in our quarterly and annual reports filed with the FDIC.You should keep in mind that any forward-looking statements made by Signature Bank speak only as of the date on which they were made. New risks and uncertainties come up from time to time, and we cannot predict these events or how they may affect the Bank. Signature Bank has no duty to, and does not intend to, update or revise the forward-looking statements after the date on which they are made. In light of these risks and uncertainties, you should keep in mind that any forward-looking statement made in this release or elsewhere might not reflect actual results.

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