Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, today announced results for its fourth quarter and year ended December 31, 2017.
Net income for the 2017 fourth quarter was $114.9 million, or $2.11 diluted earnings per share, compared with $113.9 million, or $2.11 diluted earnings per share, for the 2016 fourth quarter. The increase in net income for the 2017 fourth quarter, when compared with the same period last year, is primarily the result of an increase in net interest income, fueled by strong average deposit and loan growth as well as an increase in prepayment penalty income. These factors were partially offset by an increase in the provision for loan losses attributable to taxi medallion loan write-downs and increased non-interest expenses.
Net interest income for the 2017 fourth quarter rose $23.0 million, or 7.7 percent, to $319.8 million, compared with the fourth quarter of 2016. This increase is primarily due to growth in average interest-earning assets. Total assets reached $43.12 billion at December 31, 2017, expanding $4.07 billion, or 10.4 percent, from $39.05 billion at December 31, 2016. Average assets for the 2017 fourth quarter reached $42.15 billion, an increase of $3.97 billion, or 10.4 percent, versus the comparable period a year ago.
Deposits for the 2017 fourth quarter declined $238.0 million, or 0.7 percent, to $33.44 billion at December 31, 2017, while non-interest bearing deposits increased $688.5 million and represent 34.0 percent of total deposits. Overall deposit growth in 2017 was 5.0 percent, or $1.58 billion, when compared with deposits at the end of 2016. Average total deposits for 2017 were $33.16 billion, growing $3.41 billion, or 11.5 percent, versus average total deposits of $29.75 billion for 2016.
“2017 was a year during which our highly successful, single point of contact business model further distinguished Signature Bank in an exceedingly competitive marketplace. We continued to attract quality business relationships as evidenced by the growth in both our core deposits and loans. Notwithstanding our challenges in the taxi medallion business, we were able to achieve a double-digit return on equity,” explained Joseph J. DePaolo, President and Chief Executive Officer.
“Now with tax legislation becoming law and the positive effect we believe it will have on future earnings and capital, we look forward to the $50 billion SIFI threshold potentially moving higher, to at least $100 billion. This will allow the Bank to slow down the pace of expense growth. Realistically, Signature Bank, with its uncomplicated and straight-forward balance sheet, should not be subject to the same standards as a truly complex, systemically important trillion-dollar financial institution. We welcome 2018 as we plan to strengthen our foundation by making major investments in our loan operation and origination systems, payments architecture platform and new foreign exchange system. We also will look to expand our geographic presence in areas where we have significant client synergies, such as the West Coast, after we successfully tested the waters in 2017 with the appointment of a team and the opening of our new accommodation office in San Francisco,” he concluded.
Signature Bank Chairman of the Board Scott A. Shay, noted: “We are proud of the Bank’s performance for 2017. We are pleased with the progress we’ve made in building our businesses for the future. We believe in dealing with issues head on, as we did in 2017 with respect to our taxi medallion portfolio. We also are enhancing our franchise for the future by making technology investments that prepare and position the Bank for the rapidly evolving financial services arena. While adapting to changes of the world, we keep our dual missions front and center, namely ensuring the best client service and sleep at night depositor safety. Many in our industry prioritize by following the latest social media fads, but we are convinced our two pillars of service and depositor safety will continue to grow the value of our franchise over time.”
“We are also increasingly hopeful that Congress will pass legislation recognizing banks such as ours should not be put at a disadvantage to the mega banks by being saddled with regulatory burdens disproportionate to our size and complexity,” Shay concluded.
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 9.72 percent, 11.97 percent, 11.97 percent and 13.30 percent, respectively, as of December 31, 2017. 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 total tangible common shareholders’ equity to total tangible assets.
Net Interest Income
Net interest income for the 2017 fourth quarter was $319.8 million, up $23.0 million, or 7.7 percent, when compared with the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $41.53 billion for the 2017 fourth quarter represent an increase of $3.80 billion, or 10.1 percent, from the 2016 fourth quarter. The yield on interest-earning assets for the 2017 fourth quarter rose 10 basis points to 3.71 percent, compared to the fourth quarter of last year.
Average cost of deposits and average cost of funds for the 2017 fourth quarter increased by 16 and 18 basis points, to 0.58 percent and 0.71 percent, respectively, versus the comparable period a year ago.
Net interest margin on a tax-equivalent basis for the 2017 fourth quarter was 3.07 percent versus 3.14 percent reported in the 2016 fourth quarter and 3.05 percent in the 2017 third quarter. Excluding loan prepayment penalty income in both quarters, linked quarter core margin on a tax-equivalent basis decreased one basis point to 2.98 percent.
Provision for Loan Losses
The Bank’s provision for loan losses for the fourth quarter of 2017 was $41.7 million, an increase of $19.5 million, or 87.7 percent, versus the 2016 fourth quarter. The increase was primarily due to additional charge-offs for taxi medallion loans.
Net charge-offs for the 2017 fourth quarter were $38.8 million, or 0.48 percent of average loans on an annualized basis, versus $3.8 million, or 0.05 percent, for the 2017 third quarter and $13.5 million, or 0.19 percent, for the 2016 fourth quarter. The 2017 fourth quarter net charge-offs included $36.8 million for taxi medallion loans.
Non-Interest Income and Non-Interest Expense
Non-interest income for the 2017 fourth quarter was $8.5 million, down $1.6 million from $10.1 million reported in the fourth quarter of last year. The decrease was driven by a rise of $1.9 million in other losses from additional amortization of low income housing tax credit investments.
Non-interest expense for the 2017 fourth quarter was $110.0 million, an increase of $14.1 million, or 14.6 percent, versus $95.9 million reported in the 2016 fourth quarter. The increase was primarily a result of new private client banking teams joining, as well as an increase in costs in our risk management and compliance related activities. The Bank also incurred additional FDIC assessment fees.
The Bank’s efficiency ratio was 33.50 percent for the fourth quarter of 2017 compared with 31.25 percent for the same period a year ago.
Income Taxes
Income tax expense includes a net tax benefit of $2.0 million related to the impact of recently enacted Federal corporate tax reform. The Bank anticipates its 2018 estimated effective tax rate to be approximately 27 percent.
Loans
Loans, excluding loans held for sale, expanded $1.43 billion, or 4.6 percent, during the 2017 fourth quarter to $32.61 billion, versus $31.19 billion at September 30, 2017. At December 31, 2017, loans accounted for 75.6 percent of total assets, compared with 75.5 percent at the end of the 2017 third quarter and 74.4 percent at the end of 2016. Average loans, excluding loans held for sale, reached $31.78 billion in the 2017 fourth quarter, growing $1.10 billion, or 3.6 percent, from the 2017 third quarter and $3.54 billion, or 12.5 percent, from the fourth quarter of 2016. The increase in loans for the quarter and the year was primarily driven by growth in commercial real estate and multi-family loans, as well as a strong showing in commercial and industrial loans.
At December 31, 2017, non-accrual loans were $326.9 million, representing 1.00 percent of total loans and 0.76 percent of total assets, versus non-accrual loans of $376.9 million, or 1.21 percent of total loans, at September 30, 2017 and $157.6 million, or 0.54 percent of total loans, at December 31, 2016. Excluding non-accruing loans secured by taxi medallions of $309.9 million, non-accrual loans for the remainder of the portfolio are $17.0 million, or five basis points of total loans. At December 31, 2017, the ratio of allowance for loan and lease losses to total loans was 0.60 percent, versus 0.62 percent at September 30, 2017 and 0.74 percent at December 31, 2016. Additionally, the ratio of allowance for loan and lease losses to non-accrual loans, or the coverage ratio, was 60 percent for the 2017 fourth quarter versus 51 percent for the 2017 third quarter and 135 percent for the 2016 fourth quarter.
Conference Call
Signature Bank’s management will host a conference call to review results of the 2017 fourth quarter and year-end on Thursday, January 18, 2018, 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 #2874578. International callers should dial 901-300-3484.
To hear a live web simulcast or to listen to the archived webcast following completion of the call, please visit the Bank’s website 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 #2874578. The replay will be available from approximately 1:00 PM ET on Thursday, January 18, 2018 through 11:59 PM ET on Monday, January 22, 2018.
About Signature Bank
Signature Bank, member FDIC, is a New York-based full-service commercial bank with 30 private client offices throughout the New York metropolitan area, including those in Manhattan, Brooklyn, Westchester, Long Island, Queens, the Bronx, Staten Island and Connecticut. The Bank's growing network of private client banking teams serves the needs of privately owned businesses, their owners and senior managers.
Signature Bank offers a wide variety of business and personal banking products and services. Its specialty finance subsidiary, Signature Financial, LLC, provides equipment finance and leasing. Signature Securities Group Corporation, a wholly owned Bank subsidiary, is a licensed broker-dealer, investment adviser and member FINRA/SIPC, offering investment, brokerage, asset management and insurance products and services.
Signature Bank recently earned several third-party recognitions, including: appeared on Forbes' Best Banks in America list for the eighth consecutive year in 2018; named Best Private Bank and Best Attorney Escrow Services provider and among the top three Best Business Banks for the eighth consecutive year by the New York Law Journal in the publication’s annual Best of reader survey; cited in the top three of the nation's best private banking services providers in the 2017 Best of The National Law Journal reader rankings; earned Best Commercial Bank of the Year - U.S. award from International Banker in their International Banker 2017 North and South American Awards program; received two gold Stevie Awards® in The 15th Annual American Business Awards for 2017: Company of the Year in both Banking and Financial Services-Large categories.
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 December 31, | Twelve months ended December 31, | |||||||||||||
| (dollars in thousands, except per share amounts) | 2017 | 2016 | 2017 | 2016 | ||||||||||
| INTEREST AND DIVIDEND INCOME | ||||||||||||||
| Loans held for sale | $ | 1,179 | 963 | 4,334 | 4,572 | |||||||||
| Loans and leases, net | 316,166 | 276,128 | 1,191,194 | 1,042,717 | ||||||||||
| Securities available-for-sale | 51,004 | 47,695 | 201,657 | 198,001 | ||||||||||
| Securities held-to-maturity | 14,509 | 15,054 | 58,855 | 62,834 | ||||||||||
| Other investments | 4,100 | 2,450 | 14,129 | 9,027 | ||||||||||
| Total interest income | 386,958 | 342,290 | 1,470,169 | 1,317,151 | ||||||||||
| INTEREST EXPENSE | ||||||||||||||
| Deposits | 50,057 | 33,379 | 171,829 | 123,285 | ||||||||||
| Federal funds purchased and securities sold under | ||||||||||||||
| agreements to repurchase | 2,367 | 2,724 | 9,695 | 11,857 | ||||||||||
| Federal Home Loan Bank borrowings | 11,118 | 5,711 | 36,524 | 24,565 | ||||||||||
| Subordinated debt | 3,645 | 3,660 | 14,535 | 10,202 | ||||||||||
| Total interest expense | 67,187 | 45,474 | 232,583 | 169,909 | ||||||||||
| Net interest income before provision for loan and lease losses | 319,771 | 296,816 | 1,237,586 | 1,147,242 | ||||||||||
| Provision for loan and lease losses | 41,737 | 22,234 | 263,297 | 155,774 | ||||||||||
| Net interest income after provision for loan and lease losses | 278,034 | 274,582 | 974,289 | 991,468 | ||||||||||
| NON-INTEREST INCOME | ||||||||||||||
| Commissions | 3,204 | 3,442 | 12,299 | 11,474 | ||||||||||
| Fees and service charges | 5,431 | 5,802 | 23,557 | 21,846 | ||||||||||
| Net gains on sales of securities | 700 | 569 | 3,963 | 7,711 | ||||||||||
| Net gains on sales of loans | 2,561 | 1,701 | 9,218 | 6,750 | ||||||||||
| Other-than-temporary impairment losses on securities: | ||||||||||||||
Total impairment losses on securities | (21 | ) | (283 | ) | (654 | ) | (986 | ) | ||||||
| Portion recognized in other comprehensive income (before taxes) | (11 | ) | 145 | 21 | 559 | |||||||||
| Net impairment losses on securities recognized in earnings | (32 | ) | (138 | ) | (633 | ) | (427 | ) | ||||||
| Other losses | (3,367 | ) | (1,300 | ) | (12,363 | ) | (4,604 | ) | ||||||
| Total non-interest income | 8,497 | 10,076 | 36,041 | 42,750 | ||||||||||
| NON-INTEREST EXPENSE | ||||||||||||||
| Salaries and benefits | 68,384 | 58,940 | 273,240 | 246,406 | ||||||||||
| Occupancy and equipment | 7,860 | 7,758 | 32,141 | 29,140 | ||||||||||
| Information technology | 5,879 | 5,450 | 22,623 | 20,343 | ||||||||||
| FDIC assessment fees | 6,754 | 6,299 | 26,996 | 21,265 | ||||||||||
| Professional fees | 2,799 | 3,249 | 12,021 | 9,671 | ||||||||||
| Other general and administrative | 18,288 | 14,223 | 68,045 | 49,946 | ||||||||||
| Total non-interest expense | 109,964 | 95,919 | 435,066 | 376,771 | ||||||||||
| Income before income taxes | 176,567 | 188,739 | 575,264 | 657,447 | ||||||||||
| Income tax expense | 61,701 | 74,802 | 188,055 | 261,123 | ||||||||||
| Net income | $ | 114,866 | 113,937 | 387,209 | 396,324 | |||||||||
| PER COMMON SHARE DATA | ||||||||||||||
| Earnings per share – basic | $ | 2.12 | 2.12 | 7.17 | 7.42 | |||||||||
| Earnings per share – diluted | $ | 2.11 | 2.11 | 7.12 | 7.37 | |||||||||
| SIGNATURE BANK | ||||||||
| CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | ||||||||
| December 31, | December 31, | |||||||
| 2017 | 2016 | |||||||
| (dollars in thousands, except shares and per share amounts) | (unaudited) | |||||||
| ASSETS | ||||||||
| Cash and due from banks | $ | 450,874 | 499,856 | |||||
| Short-term investments | 45,388 | 39,095 | ||||||
| Total cash and cash equivalents | 496,262 | 538,951 | ||||||
| Securities available-for-sale | 6,953,719 | 6,335,347 | ||||||
| Securities held-to-maturity (fair value $1,983,087 at December 31, 2017 | ||||||||
| and $2,027,393 at December 31, 2016) | 1,996,376 | 2,038,125 | ||||||
| Federal Home Loan Bank stock | 227,920 | 132,629 | ||||||
| Loans held for sale | 432,277 | 559,528 | ||||||
| Loans and leases, net | 32,416,580 | 28,829,670 | ||||||
| Premises and equipment, net | 61,571 | 50,698 | ||||||
| Accrued interest and dividends receivable | 117,070 | 102,963 | ||||||
| Other assets | 415,945 | 459,700 | ||||||
| Total assets | $ | 43,117,720 | 39,047,611 | |||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Deposits | ||||||||
| Non-interest-bearing | $ | 11,353,038 | 10,520,529 | |||||
| Interest-bearing | 22,086,789 | 21,340,731 | ||||||
| Total deposits | 33,439,827 | 31,861,260 | ||||||
| Federal funds purchased and securities sold under agreements | ||||||||
| to repurchase | 790,000 | 893,000 | ||||||
| Federal Home Loan Bank borrowings | 4,195,000 | 2,050,900 | ||||||
| Subordinated debt | 257,381 | 256,588 | ||||||
| Accrued expenses and other liabilities | 403,821 | 373,599 | ||||||
| Total liabilities | 39,086,029 | 35,435,347 | ||||||
| Shareholders’ equity | ||||||||
| Preferred stock, par value $.01 per share; 61,000,000 shares authorized; | ||||||||
| none issued at December 31, 2017 and December 31, 2016 | - | - | ||||||
| Common stock, par value $.01 per share; 64,000,000 shares authorized; | ||||||||
| 54,979,213 shares issued and outstanding at December 31, 2017; | ||||||||
| 54,610,593 shares issued and outstanding at December 31, 2016 | 550 | 546 | ||||||
| Additional paid-in capital | 1,809,642 | 1,763,100 | ||||||
| Retained earnings (1) | 2,290,537 | 1,903,332 | ||||||
| Treasury stock, 1,242 shares at December 31, 2017 and none at December 31, 2016 | (171 | ) | - | |||||
| Accumulated other comprehensive loss (1) | (68,867 | ) | (54,714 | ) | ||||
| Total shareholders' equity | 4,031,691 | 3,612,264 | ||||||
| Total liabilities and shareholders' equity | $ | 43,117,720 | 39,047,611 | |||||
(1) Preliminary. Pending FASB guidance regarding the Financial Reporting Effects of the Tax Cuts and Jobs Act. | ||||||||
| 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) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
| PER COMMON SHARE | ||||||||||||||||
| Net income - basic | $ | 2.12 | $ | 2.12 | $ | 7.17 | $ | 7.42 | ||||||||
| Net income - diluted | $ | 2.11 | $ | 2.11 | $ | 7.12 | $ | 7.37 | ||||||||
| Average shares outstanding - basic | 54,098 | 53,684 | 54,001 | 53,406 | ||||||||||||
| Average shares outstanding - diluted | 54,377 | 54,060 | 54,418 | 53,811 | ||||||||||||
| Book value | $ | 73.33 | $ | 66.15 | $ | 73.33 | $ | 66.15 | ||||||||
| SELECTED FINANCIAL DATA | ||||||||||||||||
| Return on average total assets | 1.08 | % | 1.19 | % | 0.95 | % | 1.09 | % | ||||||||
| Return on average shareholders' equity | 11.44 | % | 12.64 | % | 10.13 | % | 12.19 | % | ||||||||
| Efficiency ratio (1) | 33.50 | % | 31.25 | % | 34.16 | % | 31.66 | % | ||||||||
| Yield on interest-earning assets | 3.70 | % | 3.61 | % | 3.66 | % | 3.66 | % | ||||||||
| Yield on interest-earning assets, tax-equivalent basis (1)(2) | 3.71 | % | 3.61 | % | 3.67 | % | 3.66 | % | ||||||||
| Cost of deposits and borrowings | 0.71 | % | 0.53 | % | 0.64 | % | 0.52 | % | ||||||||
| Net interest margin | 3.05 | % | 3.13 | % | 3.08 | % | 3.19 | % | ||||||||
| Net interest margin, tax-equivalent basis (2)(3) | 3.07 | % | 3.14 | % | 3.09 | % | 3.19 | % | ||||||||
(1) See "Non-GAAP Financial Measures" for related calculation. | ||||||||||||||||
(2) Based on the 35 percent U.S. federal statutory tax rate. 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. | ||||||||||||||||
| (in thousands, except ratios and per share amounts) | December 31, 2017 | September 30, 2017 | December 31, 2016 | |||||||||||||
| CAPITAL RATIOS | ||||||||||||||||
| Tangible common equity (4) | 9.29 | % | 9.44 | % | 9.21 | % | ||||||||||
| Tier 1 leverage (5) | 9.72 | % | 9.72 | % | 9.61 | % | ||||||||||
| Common equity Tier 1 risk-based (5) | 11.97 | % | 11.96 | % | 11.92 | % | ||||||||||
| Tier 1 risk-based (5) | 11.97 | % | 11.96 | % | 11.92 | % | ||||||||||
| Total risk-based (5) | 13.30 | % | 13.32 | % | 13.46 | % | ||||||||||
| ASSET QUALITY | ||||||||||||||||
| Non-accrual loans | $ | 326,918 | $ | 376,867 | $ | 157,578 | ||||||||||
| Allowance for loan and lease losses | $ | 195,959 | $ | 193,040 | $ | 213,495 | ||||||||||
| Allowance for loan and lease losses to non-accrual loans | 59.94 | % | 51.22 | % | 135.49 | % | ||||||||||
| Allowance for loan and lease losses to total loans | 0.60 | % | 0.62 | % | 0.74 | % | ||||||||||
| Non-accrual loans to total loans | 1.00 | % | 1.21 | % | 0.54 | % | ||||||||||
| Quarterly net charge-offs to average loans, annualized | 0.48 | % | 0.05 | % | 0.19 | % | ||||||||||
(4) We define tangible common equity as the ratio of total tangible common equity to total tangible assets (the "TCE ratio"). Tangible common equity is considered to be a non-GAAP financial measure and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. The TCE ratio is a metric used by management to evaluate the adequacy of our capital levels. In addition to tangible common equity, management uses other metrics, such as Tier 1 capital related ratios, to evaluate capital levels. See "Non-GAAP Financial Measures" for related calculation. |
(5) December 31, 2017 ratios are preliminary. |
| SIGNATURE BANK | |||||||||||||||||
| NET INTEREST MARGIN ANALYSIS | |||||||||||||||||
| (unaudited) | |||||||||||||||||
| Three months ended | Three months ended | ||||||||||||||||
| December 31, 2017 | December 31, 2016 | ||||||||||||||||
| (dollars in thousands) | Average | Interest | Average | Average | Interest | Average | |||||||||||
| INTEREST-EARNING ASSETS | |||||||||||||||||
| Short-term investments | $ | 436,240 | 1,420 | 1.29 | % | 604,788 | 781 | 0.51 | % | ||||||||
| Investment securities | 9,120,767 | 68,193 | 2.99 | % | 8,612,077 | 64,418 | 2.99 | % | |||||||||
| Commercial loans, mortgages and leases (1)(2) | 31,524,498 | 315,158 | 3.97 | % | 27,954,484 | 274,048 | 3.90 | % | |||||||||
| Residential mortgages and consumer loans | 257,324 | 2,296 | 3.54 | % | 287,757 | 2,640 | 3.65 | % | |||||||||
| Loans held for sale | 195,823 | 1,179 | 2.39 | % | 275,110 | 963 | 1.39 | % | |||||||||
| Total interest-earning assets | 41,534,652 | 388,246 | 3.71 | % | 37,734,216 | 342,850 | 3.61 | % | |||||||||
| Non-interest-earning assets | 617,240 | 447,739 | |||||||||||||||
| Total assets | $ | 42,151,892 | 38,181,955 | ||||||||||||||
| INTEREST-BEARING LIABILITIES | |||||||||||||||||
| Interest-bearing deposits | |||||||||||||||||
| NOW and interest-bearing demand | $ | 3,952,056 | 9,412 | 0.94 | % | 4,078,045 | 4,879 | 0.48 | % | ||||||||
| Money market | 17,331,981 | 35,587 | 0.81 | % | 16,199,212 | 25,234 | 0.62 | % | |||||||||
| Time deposits | 1,598,735 | 5,058 | 1.26 | % | 1,397,421 | 3,266 | 0.93 | % | |||||||||
| Non-interest-bearing demand deposits | 11,138,285 | - | - | 10,002,625 | - | - | |||||||||||
| Total deposits | 34,021,057 | 50,057 | 0.58 | % | 31,677,303 | 33,379 | 0.42 | % | |||||||||
| Subordinated debt | 257,251 | 3,645 | 5.67 | % | 256,502 | 3,659 | 5.71 | % | |||||||||
| Other borrowings | 3,480,120 | 13,485 | 1.54 | % | 2,337,563 | 8,436 | 1.44 | % | |||||||||
| Total deposits and borrowings | 37,758,428 | 67,187 | 0.71 | % | 34,271,368 | 45,474 | 0.53 | % | |||||||||
| Other non-interest-bearing liabilities | |||||||||||||||||
| and shareholders' equity | 4,393,464 | 3,910,587 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 42,151,892 | 38,181,955 | ||||||||||||||
| OTHER DATA | |||||||||||||||||
| Net interest income / interest rate spread (1) | 321,059 | 3.00 | % | 297,376 | 3.08 | % | |||||||||||
| Tax-equivalent adjustment | (1,288 | ) | (560 | ) | |||||||||||||
| Net interest income, as reported | 319,771 | 296,816 | |||||||||||||||
| Net interest margin | 3.05 | % | 3.13 | % | |||||||||||||
| Tax-equivalent effect | 0.02 | % | 0.01 | % | |||||||||||||
| Net interest margin on a fully tax-equivalent basis (1)(2) | 3.07 | % | 3.14 | % | |||||||||||||
| Ratio of average interest-earning assets | |||||||||||||||||
| to average interest-bearing liabilities | 110.00 | % | 110.10 | % | |||||||||||||
(1) Presented on a tax-equivalent, non-GAAP, basis using the U.S. federal statutory tax rate of 35 percent for municipal leasing and financing transactions. | |||||||||||||||||
(2) See "Non-GAAP Financial Measures" for related calculation. | |||||||||||||||||
| SIGNATURE BANK | ||||||||||||||||||
| NET INTEREST MARGIN ANALYSIS | ||||||||||||||||||
| (unaudited) | ||||||||||||||||||
| Twelve months ended | Twelve months ended | |||||||||||||||||
| December 31, 2017 | December 31, 2016 | |||||||||||||||||
| (dollars in thousands) | Average | Interest | Average | Average | Interest | Average | ||||||||||||
| INTEREST-EARNING ASSETS | ||||||||||||||||||
| Short-term investments | $ | 462,351 | 5,017 | 1.09 | % | 493,646 | 2,456 | 0.50 | % | |||||||||
| Investment securities | 8,948,973 | 269,624 | 3.01 | % | 8,695,632 | 267,406 | 3.08 | % | ||||||||||
| Commercial loans, mortgages and leases (1)(2) | 30,299,144 | 1,184,911 | 3.91 | % | 26,212,811 | 1,032,829 | 3.94 | % | ||||||||||
| Residential mortgages and consumer loans | 267,757 | 10,147 | 3.79 | % | 297,478 | 11,235 | 3.78 | % | ||||||||||
| Loans held for sale | 196,585 | 4,334 | 2.20 | % | 305,391 | 4,572 | 1.50 | % | ||||||||||
| Total interest-earning assets | 40,174,810 | 1,474,033 | 3.67 | % | 36,004,958 | 1,318,498 | 3.66 | % | ||||||||||
| Non-interest-earning assets | 578,233 | 410,764 | ||||||||||||||||
| Total assets | $ | 40,753,043 | 36,415,722 | |||||||||||||||
| INTEREST-BEARING LIABILITIES | ||||||||||||||||||
| Interest-bearing deposits | ||||||||||||||||||
| NOW and interest-bearing demand | $ | 3,864,932 | 29,915 | 0.77 | % | 3,591,984 | 16,573 | 0.46 | % | |||||||||
| Money market | 17,086,353 | 125,014 | 0.73 | % | 15,399,825 | 94,294 | 0.61 | % | ||||||||||
| Time deposits | 1,504,887 | 16,900 | 1.12 | % | 1,286,775 | 12,418 | 0.97 | % | ||||||||||
| Non-interest-bearing demand deposits | 10,702,062 | - | - | 9,469,240 | - | - | ||||||||||||
| Total deposits | 33,158,234 | 171,829 | 0.52 | % | 29,747,824 | 123,285 | 0.41 | % | ||||||||||
| Subordinated debt | 256,953 | 14,535 | 5.66 | % | 180,120 | 10,202 | 5.66 | % | ||||||||||
| Other borrowings | 3,143,218 | 46,219 | 1.47 | % | 2,781,305 | 36,422 | 1.31 | % | ||||||||||
| Total deposits and borrowings | 36,558,405 | 232,583 | 0.64 | % | 32,709,249 | 169,909 | 0.52 | % | ||||||||||
| Other non-interest-bearing liabilities | ||||||||||||||||||
| and shareholders' equity | 4,194,638 | 3,706,473 | ||||||||||||||||
| Total liabilities and shareholders' equity | $ | 40,753,043 | 36,415,722 | |||||||||||||||
| OTHER DATA | ||||||||||||||||||
| Net interest income / interest rate spread (1) | 1,241,450 | 3.03 | % | 1,148,589 | 3.14 | % | ||||||||||||
| Tax-equivalent adjustment | (3,864 | ) | (1,347 | ) | ||||||||||||||
| Net interest income, as reported | 1,237,586 | 1,147,242 | ||||||||||||||||
| Net interest margin | 3.08 | % | 3.19 | % | ||||||||||||||
| Tax-equivalent effect | 0.01 | % | - | |||||||||||||||
| Net interest margin on a fully tax-equivalent basis (1)(2) | 3.09 | % | 3.19 | % | ||||||||||||||
| Ratio of average interest-earning assets | ||||||||||||||||||
| to average interest-bearing liabilities | 109.89 | % | 110.08 | % | ||||||||||||||
(1) Presented on a tax-equivalent, non-GAAP, basis using the U.S. federal statutory tax rate of 35 percent for municipal leasing and financing transactions. | ||||||||||||||||||
(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) Net income and diluted earnings per share (as reported) to net income and diluted earnings per share excluding net write-downs for the taxi medallion portfolio and the net tax benefit from the recently enacted Federal corporate tax reform, (ii) Net income and diluted earnings per share (as reported) to net income and diluted earnings per share excluding provision expense and write-downs for taxi medallion loans, and several tax adjustments, (iii) tangible common equity ratio, (iv) efficiency ratio, (v) yield on interest-earning assets, tax-equivalent basis, and (vi) 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 change in net income excluding net write-downs for the taxi medallion portfolio and net tax benefit for the recently enacted Federal corporate tax reform: | |||||||
| Three months ended December 31, | |||||||
| (dollars in thousands, except per share amounts) | 2017 | 2016 | |||||
| Net income (as reported) | $ | 114,866 | 113,937 | ||||
| Net write-downs for the taxi medallion portfolio | 36,819 | 11,589 | |||||
| Tax effect, taxi medallion portfolio net write-downs, including loss related benefit | (17,423 | ) | (4,588 | ) | |||
| Net tax benefit for the Federal corporate tax reform | (1,958 | ) | - | ||||
| Total net income (adjusted) | $ | 132,304 | 120,938 | ||||
| Diluted earnings per share (as reported) | $ | 2.11 | 2.11 | ||||
| Write-downs for the taxi medallion portfolio | 0.68 | 0.21 | |||||
| Tax effect, taxi medallion portfolio net write-downs including loss related benefit | (0.32 | ) | (0.08 | ) | |||
| Net tax benefit for the Federal corporate tax reform | (0.04 | ) | - | ||||
Diluted earnings per share - excluding net write-downs for the taxi medallion portfolio and net tax benefit for the Federal corporate tax reform | $ | 2.43 | 2.24 | ||||
| The following table presents the change in net income excluding provision expense and write-downs for the taxi medallion portfolio, and several tax adjustments: | |||||||
| Twelve months ended December 31, | |||||||
| (dollars in thousands, except per share amounts) | 2017 | 2016 | |||||
| Net income (as reported) | $ | 387,209 | 396,324 | ||||
| Provision expense & write-downs for the taxi medallion portfolio | 232,878 | 167,093 | |||||
Tax effect, taxi medallion portfolio provision expense and write-downs, including loss related benefit | (111,604 | ) | (65,642 | ) | |||
| 2015 & 2016 NYC affordable housing tax benefit | (15,070 | ) | - | ||||
| ASU 2016-09 tax benefit | (6,535 | ) | - | ||||
| Net tax benefit for the Federal corporate tax reform | (1,958 | ) | - | ||||
| Total net income (adjusted) | $ | 484,920 | 497,775 | ||||
| Diluted earnings per share (as reported) | $ | 7.12 | 7.37 | ||||
| Provision expense & write-downs for the taxi medallion portfolio | 4.28 | 3.11 | |||||
Tax effect, taxi medallion portfolio provision expense and write-downs, including loss related benefit | (2.05 | ) | (1.22 | ) | |||
| 2015 & 2016 NYC affordable housing tax benefit | (0.28 | ) | - | ||||
| ASU 2016-09 tax benefit | (0.12 | ) | - | ||||
| Net tax benefit for the Federal corporate tax reform | (0.04 | ) | - | ||||
Diluted earnings per share - excluding provision expense and write-downs for the taxi medallion portfolio and several tax adjustments | $ | 8.91 | 9.26 | ||||
| SIGNATURE BANK | |||||||||||||||||||
| NON-GAAP FINANCIAL MEASURES | |||||||||||||||||||
| (unaudited) | |||||||||||||||||||
| The following table presents the tangible common equity ratio calculation: | |||||||||||||||||||
| (dollars in thousands) | December 31, 2017 | September 30, 2017 | December 31, 2016 | ||||||||||||||||
| Consolidated common shareholders' equity | $ | 4,031,691 | 3,931,953 | 3,612,264 | |||||||||||||||
| Intangible assets | 28,643 | 32,741 | 19,640 | ||||||||||||||||
| Consolidated tangible common shareholders' equity (TCE) | $ | 4,003,048 | 3,899,212 | 3,592,624 | |||||||||||||||
| Consolidated total assets | $ | 43,117,720 | 41,326,924 | 39,047,611 | |||||||||||||||
| Intangible assets | 28,643 | 32,741 | 19,640 | ||||||||||||||||
| Consolidated tangible total assets (TTA) | $ | 43,089,077 | 41,294,183 | 39,027,971 | |||||||||||||||
| Tangible common equity ratio (TCE/TTA) | 9.29 | % | 9.44 | % | 9.21 | % | |||||||||||||
| The following table presents the efficiency ratio calculation: | |||||||||||||||||||
| Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||||||
| (dollars in thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
| Non-interest expense (NIE) | $ | 109,964 | 95,919 | 435,066 | 376,771 | ||||||||||||||
| Net interest income before provision for loan and lease losses | 319,771 | 296,816 | 1,237,586 | 1,147,242 | |||||||||||||||
| Other non-interest income | 8,497 | 10,076 | 36,041 | 42,750 | |||||||||||||||
| Total income (TI) | $ | 328,268 | 306,892 | 1,273,627 | 1,189,992 | ||||||||||||||
| Efficiency ratio (NIE/TI) | 33.50 | % | 31.25 | % | 34.16 | % | 31.66 | % | |||||||||||
| 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) | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
| Interest income (as reported) | $ | 386,958 | 342,290 | 1,470,169 | 1,317,151 | ||||||||||||||
| Tax-equivalent adjustment | 1,288 | 560 | 3,864 | 1,347 | |||||||||||||||
| Interest income, tax-equivalent basis | $ | 388,246 | 342,850 | 1,474,033 | 1,318,498 | ||||||||||||||
| Interest-earning assets | $ | 41,534,652 | 37,734,216 | 40,174,810 | 36,004,958 | ||||||||||||||
| Yield on interest-earning assets | 3.70 | % | 3.61 | % | 3.66 | % | 3.66 | % | |||||||||||
| Tax-equivalent effect | 0.01 | % | - | 0.01 | % | - | |||||||||||||
| Yield on interest-earning assets, tax-equivalent basis | 3.71 | % | 3.61 | % | 3.67 | % | 3.66 | % | |||||||||||
| 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, | |||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||
| Net interest margin (as reported) | 3.05 | % | 3.13 | % | 3.04 | % | 3.13 | % | 3.08 | % | 3.19 | % | |||||||
| Tax-equivalent adjustment | 0.02 | % | 0.01 | % | 0.01 | % | 0.01 | % | 0.01 | % | - | ||||||||
| Margin contribution from loan prepayment penalty income | (0.09 | )% | (0.08 | )% | (0.06 | )% | (0.07 | )% | (0.07 | )% | (0.09 | )% | |||||||
| Core net interest margin, tax-equivalent basis excluding loan prepayment penalty income | 2.98 | % | 3.06 | % | 2.99 | % | 3.07 | % | 3.02 | % | 3.10 | % | |||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20180118005248/en/
Contacts:
Investor Contact:
Eric R.
Howell, 646-822-1402
Executive Vice President –
Corporate &
Business Development
ehowell@signatureny.com
or
Media
Contact:
Susan J. Lewis, 646-822-1825
slewis@signatureny.com
