Signature Bank Reports 2018 Fourth Quarter and Year-End Results

  • Net Income for the 2018 Fourth Quarter Was $160.8 Million, or
    $2.94 Diluted Earnings Per Share, Versus $114.9 Million, or $2.11
    Diluted Earnings Per Share Reported in the 2017 Fourth Quarter
  • Net Income for 2018 Was $505.3 Million, or $9.23 Diluted
    Earnings Per Share, Compared with $387.2 Million or $7.12 Diluted
    Earnings Per Share in 2017, an Increase of $118.1 Million, or 30.5
    Percent
  • The Bank Declared a Cash Dividend of $0.56 Per Share, Payable on
    or After February 15, 2019 to Common Stockholders of Record at the
    Close of Business on February 1, 2019
  • During the 2018 Fourth Quarter, the Bank Repurchased 358,492
    Shares of Common Stock For a Total of $41.8 Million
  • Total Deposits in the 2018 Fourth Quarter Increased $287.5
    Million to $36.38 Billion, While Average Deposits Increased $540.6
    Million, or 1.5 Percent
  • Total Deposits Grew $2.94 Billion, or 8.8 Percent, in 2018.
    Average Deposits for 2018 at $35.14 Billion, Representing an Increase
    of $1.98 Billion, or 6.0 Percent, Versus $33.16 Billion in 2017
  • Loans Increased $1.30 Billion, or 3.7 Percent, to $36.42 Billion
    in the 2018 Fourth Quarter. Since Year-end 2017, Loans Increased $3.81
    Billion, or 11.7 Percent
  • Non-Accrual Loans Were $108.6 Million, or 0.30 Percent of Total
    Loans, at December 31, 2018, Versus $134.2 Million, or 0.38 Percent of
    Total Loans, at the End of the 2018 Third Quarter. Non-Accrual Loans
    at Year-end 2017 were $326.9 Million, or 1.0 Percent of Total Loans.
    Excluding Taxi Medallion Loans, Which Were All Placed on Non-Accrual
    in the 2017 Second Quarter, Non-Accrual Loans Were $20.1 Million, or
    Six Basis Points of Total Loans
  • Net Interest Margin on a Tax-Equivalent Basis Was 2.90 Percent
    for the 2018 Fourth Quarter, Compared with 2.88 Percent for the 2018
    Third Quarter and 3.07 Percent for the 2017 Fourth Quarter
  • Core Net Interest Margin on a Tax-Equivalent Basis, Which
    Excludes Loan Prepayment Penalty Income, Decreased Five Basis Points
    to 2.80 Percent for the 2018 Fourth Quarter, Compared with 2.85
    Percent for the 2018 Third Quarter
  • Tier 1 Leverage, Common Equity Tier 1 Risk-Based, Tier 1
    Risk-Based and Total Risk-Based Capital Ratios were 9.70 Percent,
    12.09 Percent, 12.09 Percent and 13.39 Percent, Respectively, at
    December 31, 2018. Signature Bank Remains Significantly Above FDIC
    “Well-Capitalized” Standards. Tangible Common Equity Ratio was 9.21
    Percent
  • For 2018, Eight Private Client Banking Teams Joined Including
    the Fund Banking Division. Thus Far in 2019, One Private Client
    Banking Team Joined

NEW YORK–(BUSINESS WIRE)–Signature
Bank
(Nasdaq: SBNY), a New York-based full-service commercial bank,
today announced results for its fourth quarter and year ended December
31, 2018.

Net income for the 2018 fourth quarter was $160.8 million, or $2.94
diluted earnings per share, compared with $114.9 million, or $2.11
diluted earnings per share, for the 2017 fourth quarter. The increase in
net income for the 2018 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, and a decrease in the provision
for loan losses attributable to taxi medallion loan write-downs. These
factors were partially offset by an increase in non-interest expenses.

Net interest income for the 2018 fourth quarter rose $15.3 million, or
4.8 percent, to $335.0 million, compared with the fourth quarter of
2017. This increase is primarily due to growth in average
interest-earning assets and an increase in prepayment penalty income.
Total assets reached $47.36 billion at December 31, 2018, expanding
$4.24 billion, or 9.8 percent, from $43.12 billion at December 31, 2017.
Average assets for the 2018 fourth quarter reached $46.60 billion, an
increase of $4.45 billion, or 10.6 percent, versus the comparable period
a year ago.

Deposits for the 2018 fourth quarter increased $287.5 million, or 0.8
percent, to $36.38 billion at December 31, 2018, while non-interest
bearing deposits decreased $142.5 million and represent 33.0 percent of
total deposits. Overall deposit growth in 2018 was 8.8 percent, or $2.94
billion, when compared with deposits at the end of 2017. Average total
deposits for 2018 were $35.14 billion, growing $1.98 billion, or 6.0
percent, versus average total deposits of $33.16 billion for 2017.

“Throughout 2018, Signature Bank continued to execute its core strategy.
We expanded our network with the addition of eight Private Client
Banking teams while growing across all key metrics, including core
deposits, loans and earnings. We bolstered our West Coast operations and
added a Funds Banking Division catering to private equity firms, which
are heavily emphasized on both coasts. This will allow us to further
transform the balance sheet to increase floating rate assets.
Additionally, we continued to reinvest in our infrastructure with the
implementation of a new loan operating system, buildouts of a new loan
approval system and foreign exchange platform as well as the
reorganization of our Cash Management and Product Management groups.
Lastly, on January 1, 2019, we innovated when we launched SignetTM,
a new proprietary, blockchain-based digital payments platform, allowing
our commercial clients to interact in a real-time and transparent
manner,” explained Joseph J. DePaolo, President and Chief Executive
Officer.

“This past year has been a volatile time for the banking industry,
driven by a variety of external factors. However, we continued to
perform by keeping with our founding mission and sustaining our
leadership position in serving privately held businesses. Our focus,
initiatives and proven capabilities should differentiate us from the
pack, and we are prepared to address any challenges that may lie ahead,”
DePaolo concluded.

Scott A. Shay, Chairman of the Board, said: “We are ever-mindful of the
fact that technology is reshaping banking. We could not have founded
Signature Bank in 2001 as a full-service commercial bank with a new
single point of contact model without the technological advancements of
the 1990s. We continuously examine the needs of our business clients to
set our technology agenda, and strive to save them money and keep it
safe, while allowing them to focus on their own business — and not
banking. It is from this fundamental perspective Signet was born. By
launching Signet, we are empowering our clients to make instantaneous
USD payments in real time (24/7/365) at no cost per transaction. With
Signet, we are playing a key role in the revolutionizing of commercial
digital payments.

“The client response to Signet has been uniformly positive. Clients are
already evaluating their business practices to determine how they might
bring their ecosystems onto the Signet platform. There are no other
platforms that offer transparency and convenience commercially at this
time. We are working with clients across specific industries to tailor
the system as we strive for continuous improvement. We recognize banking
will be vastly different five years from now, and we aim to be among the
leaders.”

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 9.70
percent, 12.09 percent, 12.09 percent and 13.39 percent, respectively,
as of December 31, 2018. 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 9.21 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 15, 2019 to common stockholders of record at the close of
business on February 1, 2019. In the fourth quarter of 2018, the Bank
paid a cash dividend of $0.56 per share to common stockholders of record
at the close of business on November 1, 2018. Additionally, during the
2018 fourth quarter, the Bank repurchased 358,492 shares of common stock
for a total of $41.8 million.

Net Interest Income

Net interest income for the 2018 fourth quarter was $335.0 million, up
$15.3 million, or 4.8 percent, when compared with the same period last
year, primarily due to growth in average interest-earning assets.
Average interest-earning assets of $45.94 billion for the 2018 fourth
quarter represent an increase of $4.40 billion, or 10.6 percent, from
the 2017 fourth quarter. The yield on interest-earning assets for the
2018 fourth quarter rose 28 basis points to 3.99 percent, compared to
the fourth quarter of last year.

Average cost of deposits and average cost of funds for the 2018 fourth
quarter increased by 40 and 48 basis points, to 0.98 percent and 1.19
percent, respectively, versus the comparable period a year ago.

Net interest margin on a tax-equivalent basis for the 2018 fourth
quarter was 2.90 percent versus 3.07 percent reported in the 2017 fourth
quarter and 2.88 percent in the 2018 third quarter. Excluding loan
prepayment penalty income in both quarters, linked quarter core net
interest margin on a tax-equivalent basis decreased five basis points to
2.80 percent.

Provision for Loan Losses

The Bank’s provision for loan losses for the fourth quarter of 2018 was
$6.4 million, a decrease of $35.3 million, or 84.6 percent, versus the
2017 fourth quarter. The decrease was primarily due to a decline in
charge-offs for taxi medallion loans.

Net recoveries for the 2018 fourth quarter were $2.9 million, or 0.03
percent of average loans on an annualized basis, versus net charge-offs
of $11,000, or less than one basis point of average loans on an
annualized basis, for the 2018 third quarter and $38.8 million, or 0.48
percent, for the 2017 fourth quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2018 fourth quarter was $5.9 million, down
$2.6 million from $8.5 million reported in the fourth quarter of last
year. The decrease was driven by a $4.2 million increase in tax credit
investment amortization. These investments positively impact our
effective tax rate.

Non-interest expense for the 2018 fourth quarter was $119.2 million, an
increase of $9.2 million, or 8.4 percent, versus $110.0 million reported
in the 2017 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’s efficiency ratio was 34.94 percent for the fourth quarter of
2018 compared with 33.50 percent for the same period a year ago, and
35.59 percent for the third quarter of 2018.

Loans

Loans, excluding loans held for sale, expanded $1.30 billion, or 3.7
percent, during the 2018 fourth quarter to $36.42 billion, versus $35.13
billion at September 30, 2018. At December 31, 2018, loans accounted for
76.9 percent of total assets, compared with 76.6 percent at the end of
the 2018 third quarter and 75.6 percent at the end of 2017. Average
loans, excluding loans held for sale, reached $35.64 billion in the 2018
fourth quarter, growing $1.12 billion, or 3.2 percent, from the 2018
third quarter and $3.86 billion, or 12.2 percent, from the fourth
quarter of 2017. The increase in loans for the quarter was primarily
driven by growth in commercial and industrial loans, including specialty
finance.

At December 31, 2018, non-accrual loans were $108.6 million,
representing 0.30 percent of total loans and 0.23 percent of total
assets, versus non-accrual loans of $134.2 million, or 0.38 percent of
total loans, at September 30, 2018 and $326.9 million, or 1.00 percent
of total loans, at December 31, 2017. Excluding non-accruing loans
secured by taxi medallions of $88.5 million, non-accrual loans for the
remainder of the portfolio are $20.1 million, or six basis points of
total loans. At December 31, 2018, the ratio of allowance for loan and
lease losses to total loans was 0.63 percent, versus 0.63 percent at
September 30, 2018 and 0.60 percent at December 31, 2017. Additionally,
the ratio of allowance for loan and lease losses to non-accrual loans,
or the coverage ratio, was 212 percent for the 2018 fourth quarter
versus 164 percent for the 2018 third quarter and 60 percent for the
2017 fourth quarter.

Conference Call

Signature Bank’s management will host a conference call to review
results of the 2018 fourth quarter and year-end on Thursday, January 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
#3184218. 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 #3184218. The replay will be
available from approximately 1:00 PM ET on Thursday, January 17, 2019
through 11:59 PM ET on Monday, January 21, 2019.

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. In 2018, the Bank
expanded its footprint on the West Coast with the opening of its first
full-service private client banking office in 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 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 is ranked the 40th largest bank in the U.S. from nearly
6,000, based on deposits (SNL Financial). The Bank recently earned
several third-party recognitions, including: appeared on Forbes’
Best Banks in America
list for the eighth consecutive year in
2018; 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).

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, 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)     2018     2017     2018     2017
INTEREST AND DIVIDEND INCOME
Loans held for sale $ 2,658 1,179 10,863 4,334
Loans and leases, net 377,670 316,166 1,389,435 1,191,194
Securities available-for-sale 58,939 51,004 224,012 201,657
Securities held-to-maturity 14,492 14,509 57,930 58,855
Other investments       7,058       4,100       26,680       14,129  
  Total interest income       460,817       386,958       1,708,920       1,470,169  
INTEREST EXPENSE
Deposits 89,985 50,057 289,248 171,829
Federal funds purchased and securities sold under
agreements to repurchase 5,575 2,367 13,484 9,695
Federal Home Loan Bank borrowings 26,580 11,118 92,628 36,524
Subordinated debt       3,645       3,645       14,573       14,535  
  Total interest expense       125,785       67,187       409,933       232,583  
Net interest income before provision for loan and lease losses 335,032 319,771 1,298,987 1,237,586
Provision for loan and lease losses       6,441       41,737       162,524       263,297  
Net interest income after provision for loan and lease losses       328,591       278,034       1,136,463       974,289  
NON-INTEREST INCOME
Commissions 3,416 3,204 13,120 12,299
Fees and service charges 7,845 5,431 28,553 23,557
Net gains on sales of securities 179 700 989 3,963
Net gains on sales of loans 1,605 2,561 6,738 9,218
Other-than-temporary impairment losses on securities:
Total impairment losses on securities (21 ) (2 ) (654 )
Portion recognized in other comprehensive income (before taxes)         (11 )     (14 )     21  
Net impairment losses on securities recognized in earnings (32 ) (16 ) (633 )
Tax credit investment amortization (8,540 ) (4,298 ) (30,195 ) (15,821 )
Other Income       1,414       931       4,089       3,458  
  Total non-interest income       5,919       8,497       23,278       36,041  
NON-INTEREST EXPENSE
Salaries and benefits 77,071 68,384 302,095 273,240
Occupancy and equipment 9,139 7,860 34,311 32,141
Information technology 7,071 5,879 25,732 22,623
FDIC assessment fees 3,751 6,754 25,256 26,996
Professional fees 3,613 2,799 13,698 12,021
Other general and administrative       18,498       18,288       85,186       68,045  
  Total non-interest expense       119,143       109,964       486,278       435,066  
Income before income taxes 215,367 176,567 673,463 575,264
Income tax expense       54,527       61,701       168,121       188,055  
Net income     $ 160,840       114,866       505,342       387,209  
PER COMMON SHARE DATA
Earnings per share – basic $ 2.94 2.12 9.27 7.17
Earnings per share – diluted $ 2.94 2.11 9.23 7.12
Dividends per common share $ 0.56 1.12
 
       
SIGNATURE BANK
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
December 31, December 31,
2018 2017
(dollars in thousands, except shares and per share amounts)     (unaudited)      
ASSETS
Cash and due from banks $ 269,204 290,078
Short-term investments       48,051       45,388  
  Total cash and cash equivalents       317,255       335,466  
Securities available-for-sale 7,301,604 6,953,719
Securities held-to-maturity (fair value $1,845,198 at December 31,
2018
and $1,983,087 at December 31, 2017) 1,883,533 1,996,376
Federal Home Loan Bank stock 264,877 227,920
Loans held for sale 485,305 432,277
Loans and leases, net 36,193,122 32,416,580
Premises and equipment, net 59,051 61,571
Accrued interest and dividends receivable 141,829 117,070
Other assets       718,240       576,741  
  Total assets     $ 47,364,816       43,117,720  
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Non-interest-bearing $ 12,016,197 11,353,038
Interest-bearing       24,362,576       22,086,789  
  Total deposits       36,378,773       33,439,827  
Federal funds purchased and securities sold under agreements
to repurchase 820,000 790,000
Federal Home Loan Bank borrowings 4,970,000 4,195,000
Subordinated debt 258,174 257,381
Accrued expenses and other liabilities       530,729       403,821  
  Total liabilities       42,957,676       39,086,029  
Shareholders’ equity
Preferred stock, par value $.01 per share; 61,000,000 shares
authorized;
none issued at December 31, 2018 and December 31, 2017
Common stock, par value $.01 per share; 64,000,000 shares authorized;
55,405,531 shares issued and 55,039,433 outstanding at December 31,
2018;
54,979,213 shares issued and 54,977,971 outstanding at December 31,
2017
554 550
Additional paid-in capital 1,862,896 1,809,642
Retained earnings 2,730,899 2,290,537
Treasury stock, 366,098 shares at December 31, 2018 and 1,242 shares
at December 31, 2017
(42,680 ) (171 )
Accumulated other comprehensive loss       (144,529 )     (68,867 )
  Total shareholders’ equity       4,407,140       4,031,691  
  Total liabilities and shareholders’ equity     $ 47,364,816       43,117,720  
 
               
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)     2018     2017     2018     2017
PER COMMON SHARE
Net income – basic $ 2.94 $ 2.12 $ 9.27 $ 7.17
Net income – diluted $ 2.94 $ 2.11 $ 9.23 $ 7.12
Average shares outstanding – basic 54,510 54,098 54,406 54,001
Average shares outstanding – diluted 54,631 54,377 54,666 54,418
Book value $ 80.07 $ 73.33 $ 80.07 $ 73.33
 
SELECTED FINANCIAL DATA
Return on average total assets 1.37 % 1.08 % 1.12 % 0.95 %
Return on average shareholders’ equity 14.76 % 11.44 % 11.98 % 10.13 %
Efficiency ratio (1) 34.94 % 33.50 % 36.78 % 34.16 %
Yield on interest-earning assets 3.98 % 3.70 % 3.85 % 3.66 %
Yield on interest-earning assets, tax-equivalent basis (1)(2) 3.99 % 3.71 % 3.85 % 3.67 %
Cost of deposits and borrowings 1.19 % 0.71 % 1.01 % 0.64 %
Net interest margin 2.89 % 3.05 % 2.92 % 3.08 %
Net interest margin, tax-equivalent basis (2)(3) 2.90 % 3.07 % 2.93 % 3.09 %

Contacts

Signature Bank
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

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