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

Net income for the 2019 fourth quarter was $148.2 million, or $2.78 diluted earnings per share, compared with $160.8 million, or $2.94 diluted earnings per share, for the 2018 fourth quarter. The decrease in net income is mainly the result of a decrease in loan prepayment penalty income, as well as a rise in non-interest expense from the significant investment in new private client banking teams, including over 50 professionals across the Fund Banking Division, the Venture Banking Group and the Specialized Mortgage Servicing Banking Team.

Net interest income for the 2019 fourth quarter rose $3.3 million, or 1.0 percent, to $338.3 million, compared with the fourth quarter of 2018. This increase is primarily due to growth in average interest-earning assets and the stabilization of our net interest margin. Total assets reached $50.62 billion at December 31, 2019, expanding $3.26 billion, or 6.9 percent, from $47.36 billion at December 31, 2018. Average assets for the 2019 fourth quarter reached $50.39 billion, an increase of $3.79 billion, or 8.1 percent, versus the comparable period a year ago.

Deposits for the 2019 fourth quarter increased $1.33 billion, or 3.4 percent, to $40.38 billion at December 31, 2019, while non-interest bearing deposits increased $1.0 billion and represent 32.2 percent of total deposits. Overall deposit growth in 2019 was 11.0 percent, or $4.0 billion, when compared with deposits at the end of 2018. Average total deposits for 2019 were $38.06 billion, growing $2.92 billion, or 8.3 percent, versus average total deposits of $35.14 billion for 2018.

“At Signature Bank, we have never been concerned about reaching and emphasizing milestones because each time we reach one, we are well aware there is always another waiting. Unlike sports, there’s never an offseason in banking. However, this quarter, the Bank reached a milestone worth recognizing – surpassing $50 billion in total assets. In less than 19 years, Signature Bank has grown from $50 million to $50 billion in total assets, purely organically; a feat we believe no other bank has accomplished. We appreciate the efforts put forth by all our colleagues and the loyalty of our clients to reach this important milestone,” noted Joseph J. DePaolo, President and Chief Executive Officer.

“2019 was a strong year for Signature Bank -- one where deposits increased $4.0 billion, loans rose $2.7 billion and earnings increased 17 percent. Additionally, we have laid the necessary groundwork for future growth with the launch of several new businesses and execution of certain key initiatives, including Signet™, our blockchain-based payments platform; the official opening of our full-service private client banking office in the heart of downtown San Francisco; the hiring of our Venture Banking Group; the on-boarding of the Specialized Mortgage Servicing Banking Team; and, further advancement of both our Digital Asset Banking Team and Fund Banking Division. We look forward to the positive impact these businesses will have on the Bank’s future operations as well as the ongoing contributions of our existing teams and colleagues,” DePaolo said.

Scott A. Shay, Chairman of the Board, said: “We take this opportunity to thank all of Signature Bank colleagues for their contributions to our reaching the $50 billion threshold in assets. We are gratified on several levels. First, since the Bank has grown without any acquisitions, every depositor made a conscious decision to bank with Signature Bank, based on our service levels and focus on their safety. We continue our depositor-centric focus, which will become even more critical at this later stage of the credit cycle.

“We are also very mindful of the transition away from LIBOR which will impact virtually every financial institution and large parts of other industries. We are preparing for the administrative tasks related to the demise of LIBOR and transition to another index such as SOFR or AMERIBORTM (AMBOR). We plan to recommend AMERIBOR to our clients and utilize AMERIBOR whenever our clients agree. As we enter 2020, we look forward to continuing to serve our clients to make their banking easier, their payments faster and their companies more profitable. As for Signature Bank, I believe the best is yet to come,” Shay concluded.

Capital

In the 2019 fourth quarter, the Bank issued $200.0 million of subordinated debt in a public offering. Proceeds from the offering will be used for general corporate purposes, including to repurchase common stock. The Bank’s Tier 1 leverage, common equity Tier 1 risk-based, Tier 1 risk-based and total risk-based capital ratios were approximately 9.60 percent, 11.62 percent, 11.62 percent and 13.32 percent, respectively, as of December 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 9.34 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 14, 2020 to common stockholders of record at the close of business on January 31, 2020. In the fourth 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 November 1, 2019. Additionally, during the 2019 fourth quarter, the Bank repurchased 722,420 shares of common stock for a total of $89.4 million.

Net Interest Income

Net interest income for the 2019 fourth quarter was $338.3 million, up $3.3 million, or 1.0 percent, when compared with the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $49.56 billion for the 2019 fourth quarter represent an increase of $3.62 billion, or 7.9 percent, from the 2018 fourth quarter. The yield on interest-earning assets for the 2019 fourth quarter fell 12 basis points to 3.87 percent, compared to the fourth quarter of last year.

Average cost of deposits and average cost of funds for the 2019 fourth quarter increased by ten and 7 basis points, to 1.08 percent and 1.26 percent, respectively, versus the comparable period a year ago.

Net interest margin on a tax-equivalent basis for the 2019 fourth quarter was 2.72 percent versus 2.90 percent reported in the 2018 fourth quarter and 2.68 percent in the 2019 third quarter. Excluding loan prepayment penalty income in both quarters, linked quarter core net interest margin on a tax-equivalent basis increased one basis point to 2.67 percent.

Provision for Loan Losses

The Bank’s provision for loan losses for the fourth quarter of 2019 was $9.8 million, an increase of $3.3 million, or 51.5 percent, versus the 2018 fourth quarter.

Net charge-offs for the 2019 fourth quarter were $2.5 million, or 0.03 percent of average loans on an annualized basis, versus $2.9 million, or 0.03 percent of average loans on an annualized basis, for the 2019 third quarter and net recoveries of $2.9 million, or 0.03 percent, for the 2018 fourth quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2019 fourth quarter was $7.3 million, up $1.4 million from $5.9 million reported in the fourth quarter of last year. The increase was driven by a $1.3 million increase in fees and service charges.

Non-interest expense for the 2019 fourth quarter was $138.0 million, an increase of $18.9 million, or 15.8 percent, versus $119.1 million reported in the 2018 fourth quarter. The increase was predominantly due to an increase of $7.2 million in salaries and benefits from the significant hiring of private client banking teams, including 50 plus professionals added for the Fund Banking Division, the Venture Banking Group and the Specialized Mortgage Servicing Banking Team.

The Bank’s efficiency ratio was 39.94 percent for the fourth quarter of 2019 compared with 34.94 percent for the same period a year ago, and 40.2 percent for the third quarter of 2019.

Loans

Loans, excluding loans held for sale, expanded $1.17 billion, or 3.1 percent, during the 2019 fourth quarter to $39.11 billion, versus $37.94 billion at September 30, 2019. Average loans, excluding loans held for sale, reached $38.11 billion in the 2019 fourth quarter, growing $271.2 million, or 0.7 percent, from the 2019 third quarter and $2.46 billion, or 6.9 percent, from the fourth quarter of 2018. For the fifth consecutive quarter, the increase in loans for the quarter was primarily driven by growth in commercial and industrial loans.

At December 31, 2019, non-accrual loans were $57.4 million, representing 0.15 percent of total loans and 0.11 percent of total assets, versus non-accrual loans of $32.5 million, or 0.09 percent of total loans, at September 30, 2019 and $108.6 million, or 0.30 percent of total loans, at December 31, 2018. At December 31, 2019, the ratio of allowance for loan and lease losses to total loans was 0.64 percent, versus 0.64 percent at September 30, 2019 and 0.63 percent at December 31, 2018. Additionally, the ratio of allowance for loan and lease losses to non-accrual loans, or the coverage ratio, was 436 percent for the 2019 fourth quarter versus 746 percent for the 2019 third quarter and 212 percent for the 2018 fourth quarter.

Conference Call

Signature Bank’s management will host a conference call to review results of the 2019 fourth quarter and year-end on Tuesday, January 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 #3648128. 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 #3648128. The replay will be available from approximately 1:00 PM ET on Tuesday, January 21, 2020 through 11:59 PM ET on Friday, January 24, 2020.

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 bank 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 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 the National Law Journal’s 2019 “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 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)

 

2019

 

2018

 

 

2019

 

2018

 

INTEREST AND DIVIDEND INCOME
Loans held for sale

$

1,325

 

2,658

 

4,978

 

10,863

 

Loans and leases, net

 

399,609

 

377,670

 

1,579,268

 

1,389,435

 

Securities available-for-sale

 

54,003

 

58,939

 

227,535

 

224,012

 

Securities held-to-maturity

 

14,551

 

14,492

 

60,843

 

57,930

 

Other investments

 

11,908

 

7,058

 

39,052

 

26,680

 

Total interest income

 

481,396

 

460,817

 

1,911,676

 

1,708,920

 

INTEREST EXPENSE
Deposits

 

108,928

 

89,985

 

440,730

 

289,248

 

Federal funds purchased and securities sold under
agreements to repurchase

 

733

 

5,575

 

14,170

 

13,484

 

Federal Home Loan Bank borrowings

 

28,323

 

26,580

 

129,138

 

92,628

 

Subordinated debt

 

5,117

 

3,645

 

16,045

 

14,573

 

Total interest expense

 

143,101

 

125,785

 

600,083

 

409,933

 

Net interest income before provision for loan and lease losses

 

338,295

 

335,032

 

1,311,593

 

1,298,987

 

Provision for loan and lease losses

 

9,755

 

6,441

 

22,636

 

162,524

 

Net interest income after provision for loan and lease losses

 

328,540

 

328,591

 

1,288,957

 

1,136,463

 

NON-INTEREST INCOME
Commissions

 

3,673

 

3,416

 

14,504

 

13,120

 

Fees and service charges

 

9,174

 

7,845

 

32,926

 

28,553

 

Net gains on sales of securities

 

-

 

179

 

1,034

 

989

 

Net gains on sales of loans

 

1,957

 

1,605

 

10,836

 

6,738

 

Other-than-temporary impairment losses on securities:
Total impairment losses on securities

 

-

 

-

 

-

 

(2

)

Portion recognized in other comprehensive income (before taxes)

 

-

 

-

 

-

 

(14

)

Net impairment losses on securities recognized in earnings

 

-

 

-

 

-

 

(16

)

Tax credit investment amortization

 

(10,084

)

(8,540

)

(38,424

)

(30,195

)

Other Income

 

2,569

 

1,414

 

7,072

 

4,089

 

Total non-interest income

 

7,289

 

5,919

 

27,948

 

23,278

 

NON-INTEREST EXPENSE
Salaries and benefits

 

84,301

 

77,071

 

335,054

 

302,095

 

Occupancy and equipment

 

10,357

 

9,139

 

42,833

 

34,311

 

Information technology

 

9,410

 

7,071

 

36,961

 

25,732

 

FDIC assessment fees

 

2,894

 

3,751

 

12,432

 

25,256

 

Professional fees

 

3,996

 

3,613

 

14,689

 

13,698

 

Other general and administrative

 

27,065

 

18,498

 

87,300

 

85,186

 

Total non-interest expense

 

138,023

 

119,143

 

529,269

 

486,278

 

Income before income taxes

 

197,806

 

215,367

 

787,636

 

673,463

 

Income tax expense

 

49,583

 

54,527

 

198,710

 

168,121

 

Net income

$

148,223

 

160,840

 

588,926

 

505,342

 

PER COMMON SHARE DATA
Earnings per share – basic

$

2.79

 

2.94

 

10.92

 

9.27

 

Earnings per share – diluted

$

2.78

 

2.94

 

10.87

 

9.23

 

Dividends per common share

$

0.56

 

0.56

 

2.24

 

1.12

 

SIGNATURE BANK
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 

December 31,

December 31,

 

2019

 

2018

 

(dollars in thousands, except shares and per share amounts)(unaudited)
ASSETS
Cash and due from banks

$

702,277

 

269,204

 

Short-term investments

 

87,555

 

48,051

 

Total cash and cash equivalents

 

789,832

 

317,255

 

Securities available-for-sale

 

7,143,864

 

7,301,604

 

Securities held-to-maturity (fair value $2,115,541 at December 31, 2019
and $1,845,198 at December 31, 2018)

 

2,101,970

 

1,883,533

 

Federal Home Loan Bank stock

 

231,339

 

264,877

 

Loans held for sale

 

290,593

 

485,305

 

Loans and leases, net

 

38,859,634

 

36,193,122

 

Premises and equipment, net

 

66,419

 

59,051

 

Operating lease right-of-use assets (1)

 

217,578

 

-

 

Accrued interest and dividends receivable

 

147,527

 

141,829

 

Other assets

 

767,678

 

718,240

 

Total assets

$

50,616,434

 

47,364,816

 

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest-bearing

$

13,016,931

 

12,016,197

 

Interest-bearing

 

27,366,276

 

24,362,576

 

Total deposits

 

40,383,207

 

36,378,773

 

Federal funds purchased and securities sold under agreements
to repurchase

 

150,000

 

820,000

 

Federal Home Loan Bank borrowings

 

4,142,144

 

4,970,000

 

Subordinated debt

 

456,119

 

258,174

 

Operating lease liabilities (1)

 

242,587

 

-

 

Accrued expenses and other liabilities

 

472,554

 

530,729

 

Total liabilities

 

45,846,611

 

42,957,676

 

Shareholders’ equity
Preferred stock, par value $.01 per share; 61,000,000 shares authorized;
none issued at December 31, 2019 and December 31, 2018

 

-

 

-

 

Common stock, par value $.01 per share; 64,000,000 shares authorized;
55,427,631 shares issued and 53,519,644 outstanding at December 31, 2019;
55,405,531 shares issued and 55,039,433 outstanding at December 31, 2018;

 

554

 

554

 

Additional paid-in capital

 

1,871,571

 

1,862,896

 

Retained earnings

 

3,196,898

 

2,730,899

 

Treasury stock, 1,907,987 shares at December 31, 2019 and 366,098 shares
at December 31, 2018

 

(233,570

)

(42,680

)

Accumulated other comprehensive loss

 

(65,630

)

(144,529

)

Total shareholders' equity

 

4,769,823

 

4,407,140

 

Total liabilities and shareholders' equity

$

50,616,434

 

47,364,816

 

(1) Effective January 1, 2019, we adopted ASU 2016-02, Leases (Topic 842) and elected not to restate comparative prior periods, a transition option provided by ASU 2018-11, Leases- Targeted Improvements (Topic 842).
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)

2019

2018

 

2019

2018

PER COMMON SHARE
Net income - basic

$ 2.79

$ 2.94

$ 10.92

$ 9.27

Net income - diluted

$ 2.78

$ 2.94

$ 10.87

$ 9.23

Average shares outstanding - basic

53,008

54,510

53,774

54,406

Average shares outstanding - diluted

53,234

54,631

54,011

54,666

Book value

$ 89.12

$ 80.07

$ 89.12

$ 80.07

 
SELECTED FINANCIAL DATA
Return on average total assets

1.17%

1.37%

1.20%

1.12%

Return on average shareholders' equity

12.36%

14.76%

12.83%

11.98%

Efficiency ratio (1)

39.94%

34.94%

39.51%

36.78%

Yield on interest-earning assets

3.85%

3.98%

3.95%

3.85%

Yield on interest-earning assets, tax-equivalent basis (1)(2)

3.87%

3.99%

3.96%

3.85%

Cost of deposits and borrowings

1.26%

1.19%

1.37%

1.01%

Net interest margin

2.71%

2.89%

2.71%

2.92%

Net interest margin, tax-equivalent basis (2)(3)

2.72%

2.90%

2.72%

2.93%

(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,
2019

September 30,
2019

 

December 31,
2018

CAPITAL RATIOS
Tangible common equity (4)

9.34%

9.51%

9.21%

Tier 1 leverage (5)

9.60%

9.66%

9.70%

Common equity Tier 1 risk-based (5)

11.62%

11.95%

12.11%

Tier 1 risk-based (5)

11.62%

11.95%

12.11%

Total risk-based (5)

13.32%

13.20%

13.41%

 
ASSET QUALITY
Non-accrual loans

$ 57,355

$ 32,539

$ 108,654

Allowance for loan and lease losses

$ 249,989

$ 242,754

$ 230,005

Allowance for loan and lease losses to non-accrual loans

435.86%

746.04%

211.69%

Allowance for loan and lease losses to total loans

0.64%

0.64%

0.63%

Non-accrual loans to total loans

0.15%

0.09%

0.30%

Quarterly net charge-offs (recoveries) to average loans, annualized

0.03%

0.03%

(0.03)%

(4) We define tangible common equity ratio as the ratio of total tangible common equity to total tangible assets (the "TCE ratio"). 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, 2019 ratios are preliminary.
SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)
 
Three months endedThree months ended
December 31, 2019December 31, 2018
(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

$

1,743,038

7,755

 

1.77

%

459,354

2,715

 

2.34

%

Investment securities

 

9,541,382

72,707

 

3.05

%

9,489,265

77,774

 

3.28

%

Commercial loans, mortgages and leases (1)(2)

 

37,903,214

398,935

 

4.18

%

35,423,810

376,280

 

4.21

%

Residential mortgages and consumer loans

 

203,066

2,131

 

4.16

%

220,994

2,464

 

4.42

%

Loans held for sale

 

169,495

1,325

 

3.10

%

345,053

2,658

 

3.06

%

Total interest-earning assets

 

49,560,195

482,853

 

3.87

%

45,938,476

461,891

 

3.99

%

Non-interest-earning assets

 

832,592

664,475

Total assets

$

50,392,787

46,602,951

INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand

$

4,722,763

19,727

 

1.66

%

3,611,831

15,583

 

1.71

%

Money market

 

20,183,695

75,138

 

1.48

%

18,478,235

64,610

 

1.39

%

Time deposits

 

2,430,110

14,063

 

2.30

%

1,898,217

9,792

 

2.05

%

Non-interest-bearing demand deposits

 

12,750,429

-

 

-

 

12,276,668

-

 

-

 

Total deposits

 

40,086,997

108,928

 

1.08

%

36,264,951

89,985

 

0.98

%

Subordinated debt

 

389,730

5,117

 

5.25

%

258,043

3,645

 

5.65

%

Other borrowings

 

4,460,079

29,056

 

2.58

%

5,286,978

32,155

 

2.41

%

Total deposits and borrowings

 

44,936,806

143,101

 

1.26

%

41,809,972

125,785

 

1.19

%

Other non-interest-bearing liabilities
and shareholders' equity

 

5,455,981

4,792,979

Total liabilities and shareholders' equity

$

50,392,787

46,602,951

OTHER DATA
Net interest income / interest rate spread (1)

339,752

 

2.61

%

336,106

 

2.80

%

Tax-equivalent adjustment

(1,457

)

(1,074

)

Net interest income, as reported

338,295

 

335,032

 

Net interest margin

2.71

%

2.89

%

Tax-equivalent effect

0.01

%

0.01

%

Net interest margin on a tax-equivalent basis (1)(2)

2.72

%

2.90

%

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

110.29

%

109.87

%

(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) See "Non-GAAP Financial Measures" for related calculation.
SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)
 
Twelve months endedTwelve months ended
December 31, 2019December 31, 2018
(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

$

1,007,237

21,127

 

2.10

%

463,799

8,925

 

1.92

%

Investment securities

 

9,561,736

306,303

 

3.20

%

9,392,563

299,697

 

3.19

%

Commercial loans, mortgages and leases (1)(2)

 

37,449,199

1,575,074

 

4.21

%

33,972,459

1,383,531

 

4.07

%

Residential mortgages and consumer loans

 

212,254

9,463

 

4.46

%

230,727

9,719

 

4.21

%

Loans held for sale

 

152,571

4,978

 

3.26

%

374,610

10,863

 

2.90

%

Total interest-earning assets

 

48,382,997

1,916,945

 

3.96

%

44,434,158

1,712,735

 

3.85

%

Non-interest-earning assets

 

788,789

611,430

Total assets

$

49,171,786

45,045,588

INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand

$

4,297,419

82,180

 

1.91

%

3,661,849

52,426

 

1.43

%

Money market

 

19,103,463

299,874

 

1.57

%

17,878,509

207,690

 

1.16

%

Time deposits

 

2,498,190

58,676

 

2.35

%

1,648,433

29,132

 

1.77

%

Non-interest-bearing demand deposits

 

12,155,929

-

 

-

 

11,954,403

-

 

-

 

Total deposits

 

38,055,001

440,730

 

1.16

%

35,143,194

289,248

 

0.82

%

Subordinated debt

 

291,532

16,045

 

5.50

%

257,748

14,573

 

5.65

%

Other borrowings

 

5,516,093

143,308

 

2.60

%

5,073,852

106,112

 

2.09

%

Total deposits and borrowings

 

43,862,626

600,083

 

1.37

%

40,474,794

409,933

 

1.01

%

Other non-interest-bearing liabilities
and shareholders' equity

 

5,309,160

4,570,794

Total liabilities and shareholders' equity

$

49,171,786

45,045,588

OTHER DATA
Net interest income / interest rate spread (1)

1,316,862

 

2.59

%

1,302,802

 

2.84

%

Tax-equivalent adjustment

(5,269

)

(3,815

)

Net interest income, as reported

1,311,593

 

1,298,987

 

Net interest margin

2.71

%

2.92

%

Tax-equivalent effect

0.01

%

0.01

%

Net interest margin on a tax-equivalent basis (1)(2)

2.72

%

2.93

%

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

110.31

%

109.78

%

(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) 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 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, 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,
2019

September 30,
2019

December 31,
2018

Consolidated common shareholders' equity

$ 4,769,823

4,741,856

4,407,140

Intangible assets

45,907

49,213

50,020

Consolidated tangible common shareholders' equity (TCE)

$ 4,723,916

4,692,643

4,357,120

 
Consolidated total assets

$ 50,616,434

49,411,756

47,364,816

Intangible assets

45,907

49,213

50,020

Consolidated tangible total assets (TTA)

$ 50,570,527

49,362,543

47,314,796

Tangible common equity ratio (TCE/TTA)

9.34%

9.51%

9.21%

The following table presents the efficiency ratio calculation:
Three months ended
December 31,		Twelve months ended
December 31,
(dollars in thousands)

2019

2018

2019

2018

Non-interest expense (NIE)

$ 138,023

119,143

529,269

486,278

Net interest income before provision for loan and lease losses

338,295

335,032

1,311,593

1,298,987

Other non-interest income

7,289

5,919

27,948

23,278

Total income (TI)

$ 345,584

340,951

1,339,541

1,322,265

Efficiency ratio (NIE/TI)

39.94%

34.94%

39.51%

36.78%

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)

2019

2018

 

2019

 

2018

Interest income (as reported)

$ 481,396

460,817

1,911,676

1,708,920

Tax-equivalent adjustment

1,457

1,074

5,269

3,815

Interest income, tax-equivalent basis

$ 482,853

461,891

1,916,945

1,712,735

Interest-earnings assets

$ 49,560,195

45,938,476

48,382,997

44,434,158

 
Yield on interest-earning assets

3.85%

3.98%

3.95%

3.85%

Tax-equivalent effect

0.02%

0.01%

0.01%

0.00%

Yield on interest-earning assets, tax-equivalent basis

3.87%

3.99%

3.96%

3.85%

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,

2019

2018

 

2019

 

2018

 

2019

2018

Net interest margin (as reported)

2.71%

2.89%

2.67%

2.87%

2.71%

2.92%

Tax-equivalent adjustment

0.01%

0.01%

0.01%

0.01%

0.01%

0.01%

Margin contribution from loan prepayment penalty income

(0.05)%

(0.10)%

(0.02)%

(0.03)%

(0.03)%

(0.06)%

Core net interest margin, tax-equivalent basis excluding loan prepayment penalty income

2.67%

2.80%

2.66%

2.85%

2.69%

2.87%