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press release

Jan. 21, 2021, 5:00 a.m. EST

Signature Bank Reports 2020 Fourth Quarter and Year-end Results

Net Income for the 2020 Fourth Quarter Was A Record $173.0 Million, or $3.26 Diluted Earnings Per Share, Versus $147.6 Million, or $2.76 Diluted Earnings Per Share, Reported in the 2019 Fourth Quarter. Pre-Tax, Pre-Provision Earnings for the 2020 Fourth Quarter Were $261.5 Million, an Increase of $45.2 Million, or 20.9 Percent, Compared with $216.3 Million for the 2019 Fourth QuarterNet Income for 2020 Was $528.4 Million, or $9.96 Diluted Earnings Per Share, Compared with $586.5 Million or $10.87 Diluted Earnings Per Share in 2019. Pre-Tax, Pre-Provision Earnings for 2020 Were $980.3 Million, an Increase of $136.3 Million, or 16.2 Percent, Compared with $844.0 Million for 2019Total Deposits in the Fourth Quarter Increased a Record $8.98 Billion to $63.32 Billion, While Average Deposits Increased a Record $10.36 Billion, or 20.1 Percent Total Deposits Grew a Record $22.93 Billion, or 56.8 Percent, in 2020. Average Deposits for 2020 Grew to $50.56 Billion, Representing a Record Increase of $12.51 Billion, or 32.9 Percent, Versus $38.06 Billion in 2019For the 2020 Fourth Quarter, Core Loans (Excluding Paycheck Protection Program Loans) Increased a record $2.73 Billion. Since Year-end 2019, Core Loans Increased a Record $7.85 Billion, or 20.1 Percent Non-Accrual Loans Were $120.2 Million, or 0.25 Percent of Total Loans, at December 31, 2020, Versus $81.3 Million, or 0.18 Percent, at the End of the 2020 Third Quarter and $57.4 Million, or 0.15 Percent, at the End of the 2019 Fourth QuarterAs of December 31, 2020, the Bank has Entered into COVID-19 Principal and Interest Deferrals of $1.31Billion Significant Excess Cash Balances From Continued Strong Deposit Flows Impacted Core Net Interest Margin by 46 Basis Points. Net Interest Margin on a Tax-Equivalent Basis was 2.23 Percent, Compared With 2.55 Percent for the 2020 Third Quarter and 2.72 Percent for the 2019 Fourth Quarter. Core Net Interest Margin on a Tax-Equivalent Basis Excluding Loan Prepayment Penalty Income Decreased 31 Basis Points to 2.21 Percent, Compared with 2.52 Percent for the 2020 ThirdQuarter Tier 1 Leverage, Common Equity Tier 1 Risk-Based, Tier 1 Risk-Based, and Total Risk-Based Capital Ratios were 8.55 Percent, 9.87 Percent, 11.20 Percent, and 13.54 Percent, Respectively, at December 31, 2020. Signature Bank Remains Significantly Above FDIC “Well Capitalized” Standards. Tangible Common Equity Ratio was 6.89 PercentDuring the Fourth Quarter, the Bank Issued $375.0 Million in Subordinated Debt and Successfully Raised $730.0 Million in a Public Offering of Noncumulative Perpetual Series A Preferred StockThe Bank Declared a Cash Dividend of $0.56 Per Share, Payable on or After February 12, 2021 to Common Stockholders of Record at the Close of Business on February 1, 2021For 2020, 20 Private Client Banking Teams Joined the Bank: Two in New York, Five in San Francisco, and 13 in the Greater Los Angeles Marketplace. The Bank Now Has a Total of 116 Private Client Banking Teams, of Which 23 Are Located on the West Coast

Signature Bank /zigman2/quotes/204403715/composite SBNY +2.63% , a New York-based full-service commercial bank, today announced results for its fourth quarter ended December 31, 2020.

Net income for the 2020 fourth quarter was $173.0 million, or $3.26 diluted earnings per share, versus $147.6 million, or $2.76 diluted earnings per share, for the 2019 fourth quarter. The increase in net income for the 2020 fourth quarter, versus the comparable quarter last year, is primarily the result of an increase in net interest income, fueled by strong average deposit and loan growth. This is partially offset by an increase in the provision for credit losses of $25.8 million predominantly due to effects of COVID-19 on the U.S. economy. Pre-tax, pre-provision earnings were $261.5 million, representing an increase of $45.2 million, or 20.9 percent, compared with $216.3 million for the 2019 fourth quarter.

Net interest income for the 2020 fourth quarter rose $56.7 million, or 16.8 percent, to $395.0 million, when compared with the fourth quarter of 2019. This increase is primarily due to growth in average interest-earning assets. Total assets reached $73.89 billion at December 31, 2020, expanding $23.30 billion, or 46.0 percent, from $50.59 billion at December 31, 2019. Average assets for the 2020 fourth quarter reached $71.81 billion, an increase of $21.41 billion, or 42.5 percent, versus the comparable period a year ago.

Deposits for the 2020 fourth quarter increased $8.98 billion, or 16.5 percent to $63.32 billion, including non-interest bearing deposit growth of $2.47 billion. Non-interest bearing deposits now represent 29.6 percent of total deposits. Overall deposit growth for the last twelve months was 56.8 percent, or $22.93 billion, when compared with deposits at the end of 2019. Average total deposits for 2020 were $50.56 billion, growing $12.51 billion, or 32.9 percent, versus average total deposits of $38.06 billion for 2019.

"2020 was a year where many worldwide suffered immensely due to the effects of the COVID-19 pandemic. With the distribution of the vaccines, we hope the world will be a safer place soon and look forward to 2021 being a year where we return to normal and all whose lives have been horribly affected can heal. During these difficult times, Signature Bank focused on providing assistance for colleagues and clients alike through several beneficial programs, including PPP, to help them through their struggles. 2020 also marked the time where recent initiatives put forth by the Bank developed into full-fledged businesses as the pandemic did not slow their progress. These new businesses, coupled with efforts emanating from our existing franchise, flourished throughout the year. The Bank saw remarkable record deposit growth and significant record loan growth leading to nearly $1 billion in pretax, pre-provision earnings, which increased 16.1 percent for the year. Furthermore, we strengthened our West Coast presence meaningfully utilizing our core banking model in California. To this end, 17 teams were appointed in Los Angeles and San Francisco in 2020 alone,” explained Signature Bank President and Chief Executive Officer Joseph J. DePaolo.

“Signature Bank enters 2021 as a stronger financial institution through the bolstering of our capital position in excess of $1 billion with the issuance of $375 million in subordinated debt and $730 million in preferred stock. Moreover, we’ve reached asset/liability neutrality by significantly increasing floating rate assets as a percentage of the balance sheet while also notably reducing our commercial real estate concentration. Additionally, we have meaningfully improved our liquidity position through significant record core deposit inflows and reduced borrowings which contributed to a decline in our loan-to-deposit ratio to 77.1 percent. Signature Bank now has a multi-faceted growth profile, with traditional private client banking teams leading the charge in New York, San Francisco and Los Angeles. Further fortifying the Bank’s market position are our multitude of national businesses, including Signature Financial, Asset Based Lending, Fund Banking, Venture Banking, Digital Banking, and Specialized Mortgage Banking Solutions, as well as Signet [TM] , our state-of-the-art blockchain-based payments platform. We look forward to a healthier 2021 as recovery from the COVID-19 pandemic commences, and life begins to return to normal,” DePaolo concluded.

Scott A. Shay, Chairman of the Board, added: “2020 was a dramatically difficult year from many perspectives. At Signature Bank, sadly, we saw some of our colleagues lose loved ones. The real human toll of COVID-19 was central to many of our activities in 2020 in relation to our colleagues and clients. We are ever mindful that our real assets are those with whom we work every day. Concurrently, during 2020, Signature Bank’s amazing organic growth was widespread across all areas of focus including the aforementioned new businesses. To support our growth, the Bank raised more than $1 billion in capital while remaining focused on credit quality. In difficult times, clients care about the basics, namely good, unbiased advice that puts them and their sleep-at-night safety first and foremost. We provide these levels of comfort through our dedicated bankers, who, throughout 2020, catered to clients at all hours.”

“Additionally, part of being a safe bank amid this landscape is paying close attention to technological advances. We have been at the forefront, as evidenced by the first to launch a blockchain-based payments platform, and we intend to keep it that way. Hence the reason we invested in developing Signet before most investors -- and even our clients -- recognized the emergence of and massive changes in the digital payments economy.”

“As the rapid and safe deployment of vaccines penetrates the nation, we look forward to an end to the pandemic, and the new opportunities that lie ahead,” Shay concluded.

Capital

In the 2020 fourth quarter, the Bank issued $375.0 million of subordinated debt and successfully raised $730.0 million in a public offering of Noncumulative Perpetual Series A Preferred Stock. Proceeds from both offerings will be used for general corporate purposes, including to support our growth. The Bank’s Tier 1 leverage, common equity Tier 1 risk-based, Tier 1 risk-based, and total risk-based capital ratios were approximately 8.55 percent, 9.87 percent, 11.20 percent, and 13.54 percent, respectively, as of December 31, 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 6.89 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 February 12, 2021 to common stockholders of record at the close of business on February 1, 2021. In the fourth 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 November 2, 2020.

Net Interest Income

Net interest income for the 2020 fourth quarter was $395.0 million, up $56.7 million, or 16.8 percent, when compared with the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $70.83 billion for the 2020 fourth quarter represent an increase of $21.27 billion, or 42.9 percent, from the 2019 fourth quarter. Due to the current low interest rate environment, the yield on interest-earning assets for the 2020 fourth quarter fell 112 basis points to 2.75 percent, compared to the fourth quarter of last year.

Average cost of deposits and average cost of funds for the fourth quarter of 2020 decreased 66 and 69 basis points, to 0.42 percent and 0.57 percent, respectively, versus the comparable period a year ago.

Net interest margin on a tax-equivalent basis for the 2020 fourth quarter was 2.23 percent versus 2.72 percent reported in the 2019 fourth quarter and 2.55 percent in the 2020 third quarter. Excluding loan prepayment penalties in both quarters, linked quarter core net interest margin on a tax-equivalent basis decreased 31 basis points to 2.21 percent.

Provision for Credit Losses

The Bank’s provision for credit losses for the fourth quarter of 2020 was $35.6 million, an increase of $25.84 million, or over 100 percent, versus the 2019 fourth quarter. The Bank’s elevated provision for credit losses for the fourth quarter was predominantly attributable to effects of COVID-19 on the U.S. economy. Additionally, the bank adopted CECL on January 1, 2020.

Net charge-offs for the 2020 fourth quarter were $11.4 million, or 0.10 percent of average loans, on an annualized basis, versus $10.5 million, or 0.09 percent, for the 2020 third quarter and net charge-offs of $2.5 million, or 0.03 percent, for the 2019 fourth quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2020 fourth quarter was $24.2 million, up $8.2 million from $16.0 million reported in the fourth quarter of last year. The increase was primarily driven by a $5.5 million increase in fees and service charges.

Non-interest expense for the fourth quarter of 2020 was $157.7 million, an increase of $19.6 million, or 14.2 percent, versus $138.0 million reported in the 2019 fourth quarter. The increase was predominantly due to an increase of $11.4 million in salaries and benefits from the significant hiring of private client banking teams.

The Bank’s efficiency ratio improved to 37.6 percent for the 2020 fourth quarter compared with 39.0 percent for the same period a year ago, and 38.9 percent for the third quarter of 2020.

Loans

Loans, excluding loans held for sale, expanded $2.62 billion, or 5.7 percent, during the 2020 fourth quarter to $48.83 billion, versus $46.21 billion at September 30, 2020. Average loans, excluding loans held for sale, reached $47.39 billion in the 2020 fourth quarter, growing $1.96 billion, or 4.3 percent, from the 2020 third quarter and $9.28 billion, or 24.4 percent, from the fourth quarter of 2019. For the ninth consecutive quarter, the increase in loans was primarily driven by growth in commercial and industrial loans.

At December 31, 2020, non-accrual loans were $120.2 million, representing 0.25 percent of total loans and 0.16 percent of total assets, compared with non-accrual loans of $81.3 million, or 0.18 percent of total loans, at September 30, 2020 and $57.4 million, or 0.15 percent of total loans, at December 31, 2019. At December 31, 2020, the ratio of allowance for credit losses for loans and leases to total loans, was 1.04 percent, versus 1.05 percent at September 30, 2020 and 0.64 percent at December 31, 2019. Additionally, the ratio of allowance for credit losses for loans and leases to non-accrual loans, or the coverage ratio, was 423 percent for the 2020 fourth quarter versus 596 percent for the third quarter of 2020 and 436 percent for the 2019 fourth quarter.

COVID-19 Related Loan Modifications

As of December 31, 2020, total principal and interest deferrals significantly decreased to $1.31 billion, or 2.7 percent of the Bank’s total loan portfolio from their peak level as of June 30, 2020. The positive trend is the result of the Bank’s ability to work closely with its clients toward reasonable resolutions.

    Principal and Interest Deferrals
(dollars in millions) Portfolio Balance
12/31/2020
Deferral Balance %
of Loan Category
Multi-family $ 15,173 615 4.1 %
Retail 5,637 369 6.5 %
Office 3,930 150 3.8 %
Acquisition, Development, and Construction (ADC) 1,367 12 0.9 %
Industrial 574 3 0.5 %
Hotel 77 0.0 %
Land 38 0.0 %
Other 297 10 3.4 %
Total Commercial Real Estate 27,093 1,159 4.3 %
Fund Banking and Venture Banking 11,416 0.0 %
Asset Based Lending 319 0.0 %
Signature Financial 5,046 35 0.7 %
Traditional Commercial & Industrial 2,537 80 3.2 %
Total Commercial & Industrial 19,318 115 0.6 %
PPP Loans 1,874 0.0 %
Consumer and Residential 584 37 6.3 %
Premium, deferred fees, and costs (36) 0.0 %
Total Loans $ 48,833 1,311 2.7 %

Additionally, the Bank has made other COVID-19 related modifications that have resulted in the receipt of modified principal and interest payments totaling 6.6 percent of the loan book.

Conference Call

Signature Bank’s management will host a conference call to review results of the 2020 fourth quarter on Thursday, January 21, 2021 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 #4079502. 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/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 #4079502. The replay will be available from approximately 1:00 PM ET on Thursday, January 21, 2021 through 11:59 PM ET on Sunday, January 24, 2021.

About Signature Bank

Signature Bank, member FDIC, is a New York-based full-service commercial bank with 36 private client offices throughout the metropolitan New York area, including those in Connecticut as well as in California and North Carolina. Through its single-point-of-contact approach, the Bank’s private client banking teams primarily serve the needs of privately owned businesses, their owners and senior managers. The Bank has two wholly owned subsidiaries: Signature Financial, LLC, provides equipment finance and leasing: Signature Securities Group Corporation, a licensed broker-dealer, investment adviser and member FINRA/SIPC, offers investment, brokerage, asset management and insurance products and services. Signature Bank was the first FDIC-insured bank to launch a blockchain-based digital payments platform. Signet™ allows commercial clients to make real-time payments in U.S. dollars, 24/7/365 and was also the first solution 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).

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.

FINANCIAL TABLES ATTACHED

SIGNATURE BANK        
CONSOLIDATED STATEMENTS OF INCOME        
(unaudited)        
         
  Three months ended December 31, Twelve months ended December 31,
(dollars in thousands, except per share amounts) 2020 2019 2020 2019
INTEREST INCOME        
Loans held for sale $ 1,321 1,325 3,655 4,978
Loans and leases, net 427,018 399,609 1,661,912 1,579,268
Securities available-for-sale 41,886 54,003 186,569 227,535
Securities held-to-maturity 12,675 14,551 55,335 60,843
Other investments 5,658 11,908 24,175 39,052
Total interest income 488,558 481,396 1,931,646 1,911,676
INTEREST EXPENSE        
Deposits 65,990 108,928 297,349 440,730
Federal funds purchases and securities sold under
agreements to repurchase
595 733 2,742 14,170
Federal Home Loan Bank borrowings 17,420 28,323 85,333 129,138
Subordinated debt 9,570 5,117 27,130 16,045
Total interest expense 93,575 143,101 412,554 600,083
Net interest income before provision for credit losses 394,983 338,295 1,519,092 1,311,593
Provision for credit losses 35,599 9,755 248,094 22,636
Net interest income after provision for credit losses 359,384 328,540 1,270,998 1,288,957
NON-INTEREST INCOME        
Commissions 3,731 3,673 13,441 14,504
Fees and service charges 14,625 9,174 46,397 32,926
Net (losses) gains on sales of securities (17) 3,606 1,034
Net gains on sale of loans 3,099 1,957 12,651 10,836
Other income (1) 2,753 1,225 (847) 2,415
Total non-interest income 24,191 16,029 75,248 61,715
NON-INTEREST EXPENSE        
Salaries and benefits 95,703 84,301 389,125 335,054
Occupancy and equipment 10,934 10,357 44,371 42,833
Information technology 11,420 9,410 43,217 36,961
FDIC assessment fees 3,955 2,894 13,742 12,432
Professional fees 5,355 3,996 18,286 14,689
Other general and administrative 30,284 27,065 105,313 87,300
Total non-interest expense 157,651 138,023 614,054 529,269
Income before income taxes 225,924 206,546 732,192 821,403
Income tax expense (1) 52,915 58,932 203,833 234,917
Net income $ 173,009 147,614 528,359 586,486
Preferred stock dividends
Net income available to common shareholders $ 173,009 147,614 528,359 586,486
PER COMMON SHARE DATA        
Earnings per common share - basic (1) $ 3.28 2.78 10.00 10.87
Earnings per common share - diluted (1) $ 3.26 2.76 9.96 10.82
Dividends per common share $ 0.56 0.56 2.24 2.24
(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    
  December 31,
  2020 2019
(dollars in thousands, except shares and per share amounts) (unaudited)  
ASSETS    
Cash and due from banks $ 12,208,997 702,277
Short-term investments 139,334 87,555
Total cash and cash equivalents 12,348,331 789,832
Securities available-for-sale (amortized cost $8,894,719 at December 31, 2020 and
$7,186,494 at December 31, 2019); ()
December 31, 2020)
8,890,417 7,143,864
Securities held-to-maturity (fair value $2,329,378 at December 31, 2020 and
$2,115,541 December 31, 2019); ()
2020)
2,282,830 2,101,970
Federal Home Loan Bank stock 171,678 231,339
Loans held for sale 407,363 290,593
Loans and leases 48,833,098 39,109,623
Allowance for credit losses for loans and leases (508,299) (249,989)
Loans and leases, net 48,324,799 38,859,634
Premises and equipment, net 80,274 66,419
Operating lease right-of-use assets 237,407 217,578
Accrued interest and dividends receivable 277,801 147,527
Other assets (1) 867,444 743,053
Total assets $ 73,888,344 50,591,809
LIABILITIES AND SHAREHOLDERS' EQUITY    
Deposits    
Non-interest-bearing $ 18,757,771 13,016,931
Interest-bearing 44,557,552 27,366,276
Total deposits 63,315,323 40,383,207
Federal funds purchased and securities sold under agreements to repurchase 150,000 150,000
Federal Home Loan Bank borrowings 2,839,245 4,142,144
Subordinated debt 828,588 456,119
Operating lease liabilities 265,354 242,587
Accrued expenses and other liabilities 662,925 472,554
Total liabilities 68,061,435 45,846,611
Shareholders' equity    
Preferred stock, par value $.01 per share; 61,000,000 shares authorized,
730,000 shares issued and outstanding at December 31, 2020; and none issued and
outstanding at December 31, 2019
7
Common stock, par value $.01 per share; 64,000.000 shares authorized;
55,520,417 shares issued and 53,564,573 outstanding at December 31, 2020;
55,427,631 shares issued and 53,519,644 outstanding at December 31, 2019
555 554
Additional paid-in capital 2,583,514 1,871,571
Retained earnings (1) 3,548,260 3,172,273
Treasury stock, 1,899,336 shares at December 31, 2020 and 1,907,987 shares at December 31, 2019 (232,531) (233,570)
Accumulated other comprehensive loss (72,896) (65,630)
Total shareholders' equity 5,826,909 4,745,198
Total liabilities and shareholders' equity $ 73,888,344 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 December 31, Twelve months ended December 31,
(in thousands, except ratios and per share amounts) 2020 2019 (6) 2020 2019 (6)
PER COMMON SHARE        
Earnings per common share - basic $ 3.28 2.78 $ 10.00 10.87
Earnings per common share - diluted $ 3.26 2.76 $ 9.96 10.82
Weighted average common shares outstanding - basic 52,673 53,008 52,641 53,774
Weighted average common shares outstanding - diluted 52,970 53,234 52,889 54,011
Book value per common share $ 95.56 88.66 $ 95.56 88.66
         
SELECTED FINANCIAL DATA        
Return on average total assets 0.96% 1.16% 0.87% 1.19%
Return on average common shareholders' equity 13.59% 12.38% 10.75% 12.85%
Efficiency ratio (1) 37.61% 38.95% 38.51% 38.54%
Yield on interest-earning assets 2.74% 3.85% 3.24% 3.95%
Yield on interest-earning assets, tax-equivalent basis (1) (2) 2.75% 3.87% 3.25% 3.96%
Cost of deposits and borrowings 0.57% 1.26% 0.75% 1.37%
Net interest margin 2.22% 2.71% 2.55% 2.71%
Net interest margin, tax-equivalent basis (2)(3) 2.23% 2.72% 2.56% 2.72%
(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.
  December 31,
2020
September 30,
2020
December 31,
2019 (6)
CAPITAL RATIOS      
Tangible common equity (4)   6.89 %   7.75 %   9.30 %
Tier 1 leverage (5)   8.55 %   8.56 %   9.55 %
Common equity Tier 1 risk-based (5)   9.87 %   10.26 %   11.56 %
Tier 1 risk-based (5)   11.20 %   10.26 %   11.56 %
Total risk-based (5)   13.54 %   11.98 %   13.26 %
       
ASSET QUALITY      
Non-accrual loans $ 120,171   $ 81,305   $ 57,355  
Allowance for loan and lease losses $ 508,299   $ 484,923   $ 249,989  
Allowance for loan and lease losses to non-accrual loans   422.98 %   596.42 %   435.86 %
Allowance for loan and lease losses to total loans   1.04 %   1.05 %   0.64 %
Non-accrual loans to total loans   0.25 %   0.18 %   0.15 %
Quarterly net charge-offs to average loans, annualized   0.10 %   0.09 %   0.03 %
(4) We define tangible common equity as the ratio of total tangible common equity to total tangible assets (the "TCE ratio"). TCE represents the Company's common stock shareholders' equity (i.e., total stockholders' equity less preferred equity) less intangible assets. The TCE ratio 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, 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
December 31, 2020
  Three Months Ended
December 31, 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 $ 12,511,429   3,569   0.11 %   1,743,038   7,755   1.77 %
Investment securities 10,631,245   56,650   2.13 %   9,541,382   72,707   3.05 %
Commercial loans, mortgages and leases (1) 47,223,197   427,210   3.60 %   37,903,214   398,935   4.18 %
Residential mortgages and consumer loans 162,349   1,444   3.54 %   203,066   2,131   4.16 %
Loans held for sale 305,885   1,321   1.72 %   169,495   1,325   3.10 %
Total interest-earning assets 70,834,105   490,194   2.75 %   49,560,195   482,853   3.87 %
Non-interest-earning assets (2) 972,433         808,272      
Total assets $ 71,806,538         50,368,467      
INTEREST-BEARING LIABILITIES              
Interest-bearing deposits              
NOW and interest-bearing demand $ 12,362,930   19,334   0.62 %   4,722,763   19,727   1.66 %
Money market 28,511,134   39,934   0.56 %   20,183,695   75,138   1.48 %
Time deposits 1,898,286   6,722   1.41 %   2,430,110   14,063   2.30 %
Non-interest-bearing demand deposits 19,203,186     %   12,750,429     %
Total deposits 61,975,536   65,990   0.42 %   40,086,997   108,928   1.08 %
Subordinated debt 808,454   9,570   4.73 %   389,730   5,117   5.25 %
Other borrowings 2,989,245   18,015   2.40 %   4,460,079   29,056   2.58 %
Total deposits and borrowings 65,773,235   93,575   0.57 %   44,936,806   143,101   1.26 %
Other non-interest-bearing liabilities 854,144         700,680      
Preferred equity 115,818              
Common equity (2) 5,063,341         4,730,981      
Total liabilities and shareholders' equity $ 71,806,538         50,368,467      
OTHER DATA              
Net interest income / interest rate spread (1)   396,619   2.18 %     339,752   2.61 %
Tax-equivalent adjustment   (1,636)         (1,457)    
Net interest income, as reported   394,983         338,295    
Net interest margin     2.22 %       2.71 %
Tax-equivalent effect     0.01 %       0.01 %
Net interest margin on a tax-equivalent basis (1)     2.23 %       2.72 %
Ratio of average interest-earning assets              
to average interest-bearing liabilities     107.69 %       110.29 %
(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)              
               
  Twelve Months Ended
December 31, 2020
  Twelve Months Ended
December 31, 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 $ 5,887,909   11,748   0.20 %   1,007,237   21,127   2.10 %
Investment securities 9,812,898   254,331   2.59 %   9,561,736   306,303   3.20 %
Commercial loans, mortgages and leases (1) 43,612,057   1,661,455   3.81 %   37,449,199   1,575,074   4.21 %
Residential mortgages and consumer loans 175,560   6,742   3.84 %   212,254   9,463   4.46 %
Loans held for sale 196,948   3,655   1.86 %   152,571   4,978   3.26 %
Total interest-earning assets 59,685,372   1,937,931   3.25 %   48,382,997   1,916,945   3.96 %
Non-interest-earning assets (2) 920,531         764,837      
Total assets $ 60,605,903         49,147,834      
INTEREST-BEARING LIABILITIES              
Interest-bearing deposits              
NOW and interest-bearing demand $ 8,783,053   67,948   0.77 %   4,297,419   82,180   1.91 %
Money market 23,924,076   191,353   0.80 %   19,103,463   299,874   1.57 %
Time deposits 2,132,466   38,048   1.78 %   2,498,190   58,676   2.35 %
Non-interest-bearing demand deposits 15,722,196     %   12,155,929     %
Total deposits 50,561,791   297,349   0.59 %   38,055,001   440,730   1.16 %
Subordinated debt 545,031   27,130   4.98 %   291,532   16,045   5.50 %
Other borrowings 3,804,585   88,075   2.31 %   5,516,093   143,308   2.60 %
Total deposits and borrowings 54,911,407   412,554   0.75 %   43,862,626   600,083   1.37 %
Other non-interest-bearing liabilities 750,691         685,008      
Preferred equity 29,112              
Common equity (2) 4,914,693         4,600,200      
Total liabilities and shareholders' equity $ 60,605,903         49,147,834      
OTHER DATA              
Net interest income / interest rate spread (1)   1,525,377   2.50 %     1,316,862   2.59 %
Tax-equivalent adjustment   (6,285)         (5,269)    
Net interest income, as reported   1,519,092         1,311,593    
Net interest margin     2.55 %       2.71 %
Tax-equivalent effect     0.01 %       0.01 %
Net interest margin on a tax-equivalent basis (1)     2.56 %       2.72 %
Ratio of average interest-earning assets              
to average interest-bearing liabilities     108.69 %       110.31 %
               
(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, and (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.
 
The following table presents the tangible common equity ratio calculation:
(dollars in thousands) December 31,
2020
September 30,
2020
December 31,
2019 (1)
Consolidated total shareholders' equity $ 5,826,909 4,983,199 4,745,198
Less: Preferred equity 708,019
Common shareholders' equity $ 5,118,890 4,983,199 4,745,198
Intangible assets 32,301 43,768 45,907
Tangible common shareholders' equity (TCE) $ 5,086,589 4,939,431 4,699,291
       
Consolidated total assets $ 73,888,344 63,760,313 50,591,809
Intangible assets 32,301 43,768 45,907
Consolidated tangible total assets (TTA) $ 73,856,043 63,716,545 50,545,902
Tangible common equity ratio (TCE/TTA) 6.89% 7.75% 9.30%
The following table presents the efficiency ratio calculation:
 
  Three months ended December 31,   Twelve months ended December 31,
(dollars in thousands) 2020 2019 (1)   2020 2019 (1)
Non-interest expense (NIE) $ 157,651 138,023   614,054 529,269
Net interest income before provision for credit losses 394,983 338,295   1,519,092 1,311,593
Other non-interest income 24,191 16,029   75,248 61,715
Total income (TI) $ 419,174 354,324   1,594,340 1,373,308
Efficiency ratio (NIE/TI) 37.61% 38.95%   38.51% 38.54%
(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 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,
(dollars in thousands) 2020 2019   2020 2019
Interest income (as reported) $ 488,558 481,396   1,931,646 1,911,676
Tax-equivalent adjustment   1,636 1,457   6,285 5,269
Interest income, tax-equivalent basis $ 490,194 482,853   1,937,931 1,916,945
Interest-earnings assets $ 70,834,105 49,560,195   59,685,372 48,382,997
           
Yield on interest-earning assets   2.74% 3.85%   3.24% 3.95%
Tax-equivalent effect   0.01% 0.02%   0.01% 0.01%
Yield on interest-earning assets, tax-equivalent basis   2.75% 3.87%   3.25% 3.96%
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,
(dollars in thousands) 2020 2019 2020 2019 2020 2019
Net interest margin (as reported) 2.22% 2.71% 2.54% 2.67% 2.55% 2.71%
Tax-equivalent adjustment 0.01% 0.01% 0.01% 0.01% 0.01% 0.01%
Margin contribution from loan prepayment penalty income (0.02)% (0.05)% (0.03)% (0.02)% (0.07)% (0.03)%
Core net interest margin, tax-equivalent basis excluding loan prepayment penalty income 2.21% 2.67% 2.52% 2.66% 2.49% 2.69%
The following table reconciles net income (as reported) to pre-tax, pre-provision earnings:
 
  Three months ended December 31,   Twelve months ended December 31,
(dollars in thousands) 2020 2019 (1)   2020 2019 (1)
Net income (as reported) $ 173,009   147,614     528,359   586,486  
Income tax expense 52,915   58,932     203,833   234,917  
Provision for credit losses 35,599   9,755     248,094   22,636  
Pre-tax, pre-provision earnings $ 261,523   216,301     980,286   844,039  
(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) December 31,
2020
September 30,
2020
December 31,
2019
Loans and leases (as reported) $ 48,833,098   46,212,092   39,109,623  
PPP loans   1,874,447   1,985,357    
Core loans (excluding PPP loans) $ 46,958,651   44,226,735   39,109,623  

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210121005195/en/

SOURCE: Signature Bank

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

COMTEX_378041051/2456/2021-01-21T05:00:24

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