Signature Bank Reports 2019 First Quarter Results

  • 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, Reported in the 2018 First Quarter.
    Excluding the Effect of the Taxi Medallion Portfolio, 2018 First
    Quarter Net Income Would Have Been $146.8 Million, or $2.69 Diluted
    Earnings Per Share
  • 2019 First Quarter Net Income Was Negatively Affected by a
    Decrease in Prepayment Penalty Income of $9.4 Million and $4.3 Million
    From the 2018 Fourth and First Quarters, Respectively
  • 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
  • During the 2019 First Quarter, the Bank Repurchased 173,193
    Shares of Common Stock For a Total of $22.9 Million
  • Total Deposits in the First Quarter Grew $243.8 Million to
    $36.62 Billion; Total Deposits Have Grown $1.80 Billion, or 5.2
    Percent, Since the End of the 2018 First Quarter. Escrow Deposits
    Decreased $659.8 Million in the 2019 First Quarter. Average Deposits
    Increased $210.0 Million in the 2019 First Quarter
  • For the 2019 First Quarter, Loans Increased $1.04 Billion, or
    2.9 Percent, to $37.47 Billion. Since the End of the 2018 First
    Quarter, Loans Have Increased 12.7 Percent, or $4.22 Billion
  • Non-Accrual Loans Were $94.7 Million, or 0.25 Percent of Total
    Loans, at March 31, 2019, Versus $108.6 Million, or 0.30 Percent, at
    the End of the 2018 Fourth Quarter and $168.7 Million, or 0.51
    Percent, at the End of the 2018 First Quarter. Excluding Taxi
    Medallion Loans, Which Were All Placed on Non-Accrual in the 2017
    Second Quarter, Non-Accrual Loans Were $18.6 Million, or Five Basis
    Points of Total Loans
  • Net Interest Margin on a Tax-Equivalent Basis was 2.75 Percent,
    Compared with 2.90 Percent for the 2018 Fourth Quarter and 3.01
    Percent for the 2018 First Quarter. Core Net Interest Margin on a
    Tax-Equivalent Basis Excluding Loan Prepayment Penalty Income
    Decreased Seven Basis Points to 2.73 Percent, Compared with 2.80
    Percent for the 2018 Fourth Quarter
  • Tier 1 Leverage, Common Equity Tier 1 Risk-Based, Tier 1
    Risk-Based, and Total Risk-Based Capital Ratios were 9.68 Percent,
    11.97 Percent, 11.97 Percent, and 13.24 Percent, Respectively, at
    March 31, 2019. Signature Bank Remains Significantly Above FDIC “Well
    Capitalized” Standards. Tangible Common Equity Ratio was 9.29 Percent
  • In the 2019 First Quarter, the Bank Appointed One Private Client
    Banking Team and Announced Its Entry Into Venture Banking With the
    Hiring of a Twenty Plus Person Team. Thus Far in the 2019 Second
    Quarter, the Bank Has Hired One Additional Private Client Banking Team
    for its San Francisco Office

NEW YORK–(BUSINESS WIRE)–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.

 
SIGNATURE BANK
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
         
Three months ended March 31,
(dollars in thousands, except per share amounts)     2019     2018
INTEREST AND DIVIDEND INCOME
Loans held for sale $ 1,724 2,264
Loans and leases, net 381,361 322,438
Securities available-for-sale 59,101 52,264
Securities held-to-maturity 15,613 14,533
Other investments       7,766       5,573  
  Total interest income       465,565       397,072  
INTEREST EXPENSE
Deposits 104,047 54,863
Federal funds purchased and securities sold under
agreements to repurchase 5,829 2,388
Federal Home Loan Bank borrowings 33,056 18,034
Subordinated debt       3,641       3,641  
  Total interest expense       146,573       78,926  
Net interest income before provision for loan and lease losses 318,992 318,146
Provision for loan and lease losses       6,309       140,762  
Net interest income after provision for loan and lease losses       312,683       177,384  
NON-INTEREST INCOME
Commissions 3,640 3,175
Fees and service charges 8,028 6,642
Net gains on sales of securities 553 441
Net gains on sales of loans 1,995 2,018
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 (9,153 ) (5,863 )
Other Income       1,025       805  
  Total non-interest income       6,088       7,202  
NON-INTEREST EXPENSE
Salaries and benefits 79,869 73,163
Occupancy and equipment 11,098 8,199
Information technology 8,486 6,287
FDIC assessment fees 3,184 6,988
Professional fees 2,888 3,276
Other general and administrative       19,539       39,419  
  Total non-interest expense       125,064       137,332  
Income before income taxes 193,707 47,254
Income tax expense       49,642       12,782  
Net income     $ 144,065       34,472  
PER COMMON SHARE DATA
Earnings per share – basic $ 2.65 0.64
Earnings per share – diluted $ 2.65 0.63
Dividends per common share $ 0.56
 
       
SIGNATURE BANK
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
March 31, December 31,
2019 2018
(dollars in thousands, except shares and per share amounts)     (unaudited)      
ASSETS
Cash and due from banks $ 404,715 269,204
Short-term investments       74,673       48,051  
  Total cash and cash equivalents       479,388       317,255  
Securities available-for-sale 7,280,431 7,301,604
Securities held-to-maturity (fair value $2,017,390 at March 31, 2019
and $1,845,198 at December 31, 2018) 2,035,026 1,883,533
Federal Home Loan Bank stock 274,208 264,877
Loans held for sale 113,349 485,305
Loans and leases, net 37,230,195 36,193,122
Premises and equipment, net 54,085 59,051
Operating lease right-of-use assets (1) 228,463
Accrued interest and dividends receivable 146,217 141,829
Other assets       705,092       718,240  
  Total assets     $ 48,546,454       47,364,816  
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Non-interest-bearing $ 11,719,641 12,016,197
Interest-bearing       24,902,946       24,362,576  
  Total deposits       36,622,587       36,378,773  
Federal funds purchased and securities sold under agreements
to repurchase 1,203,000 820,000
Federal Home Loan Bank borrowings 5,177,364 4,970,000
Subordinated debt 258,370 258,174
Operating lease liabilities (1) 244,432
Accrued expenses and other liabilities       488,658       530,729  
  Total liabilities       43,994,411       42,957,676  
Shareholders’ equity
Preferred stock, par value $.01 per share; 61,000,000 shares
authorized;
none issued at March 31, 2019 and December 31, 2018
Common stock, par value $.01 per share; 64,000,000 shares authorized;
55,437,020 shares issued and 55,275,158 outstanding at March 31,
2019;
55,405,531 shares issued and 55,039,433 outstanding at December 31,
2018
554 554
Additional paid-in capital 1,833,105 1,862,896
Retained earnings 2,843,982 2,730,899
Treasury stock, 161,862 shares at March 31, 2019 and 366,098 shares

at December 31, 2018

(21,488 ) (42,680 )
Accumulated other comprehensive loss       (104,110 )     (144,529 )
  Total shareholders’ equity       4,552,043       4,407,140  
  Total liabilities and shareholders’ equity     $ 48,546,454       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
(in thousands, except ratios and per share amounts)     March 31,

2019

    December 31,

2018

    March 31,

2018

PER COMMON SHARE
Net income – basic $ 2.65 $ 2.94 $ 0.64
Net income – diluted $ 2.65 $ 2.94 $ 0.63
Average shares outstanding – basic 54,165 54,510 54,143
Average shares outstanding – diluted 54,269 54,631 54,395
Book value $ 82.35 $ 80.07 $ 72.29
 
SELECTED FINANCIAL DATA
Return on average total assets 1.22% 1.37% 0.32%
Return on average shareholders’ equity 13.04% 14.76% 3.48%
Efficiency ratio (1) 38.47% 34.94% 42.21%
Yield on interest-earning assets 4.00% 3.98% 3.74%
Yield on interest-earning assets, tax-equivalent basis (1)(2) 4.01% 3.99% 3.75%
Cost of deposits and borrowings 1.39% 1.19% 0.82%
Net interest margin 2.74% 2.89% 3.00%
Net interest margin, tax-equivalent basis (2)(3) 2.75% 2.90% 3.01%

Contacts

Investor Contact:
Eric R. Howell,
Executive Vice President – Corporate & Business Development
646-822-1402,
ehowell@signatureny.com

Media
Contact:

Susan J. Lewis, 646-822-1825, slewis@signatureny.com

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