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Signature Bank Reports 2022 Third Quarter Results

  • Net Income for the 2022 Third Quarter Increased $117.0 Million, or 48.5 Percent, to a Record $358.5 Million, or $5.57 Diluted Earnings Per Share, Versus $241.4 Million, or $3.88 Diluted Earnings Per Share, Reported in the 2021 Third Quarter. Pre-Tax, Pre-Provision Earnings for the 2022 Third Quarter Were a Record $492.3 Million, an Increase of $161.3 Million, or 48.7 Percent, Compared with $331.0 Million for the 2021 Third Quarter
  • Return on Common Equity Reaches a Record 18.4 Percent for the 2022 Third Quarter
  • Total Deposits in the Third Quarter Declined $1.34 Billion to $102.78 Billion. The Decline Was Primarily Driven by the Digital Asset Banking Team, Which Declined $3.0 Billion. This Decrease was Offset by Deposit Growth of $1.7 Billion Coming From Other Businesses. Total Deposits for the Prior Twelve Months Have Grown $7.21 Billion, or 7.5 Percent
  • For the 2022 Third Quarter, Loans Increased $1.84 Billion, or 2.6 Percent, to $73.84 Billion. Since the End of the 2021 Third Quarter, Loans Have Increased 26.0 Percent, or $15.25 Billion
  • For the 2022 Third Quarter, Non-Accrual Loans Increased $17.4 Million to $185.3 Million, or 0.25 Percent of Total Loans, at September 30, 2022, Versus $167.9 Million, or 0.23 Percent, at the End of the 2022 Second Quarter
  • Net Interest Margin on a Tax-Equivalent Basis Increased to 2.38 Percent, Compared With 2.23 Percent for the 2022 Second Quarter and 1.88 Percent for the 2021 Third Quarter
  • Tier 1 Leverage, Common Equity Tier 1 Risk-Based, Tier 1 Risk-Based, and Total Risk-Based Capital Ratios were 8.47 Percent, 10.11 Percent, 10.90 Percent, and 11.99 Percent, Respectively, at September 30, 2022. Signature Bank Remains Significantly Above FDIC “Well Capitalized” Standards. Tangible Common Equity Ratio was 6.10 Percent
  • The Bank Declared a Cash Dividend of $0.56 Per Share, Payable on or After November 10, 2022 to Common Shareholders of Record at the Close of Business on October 28, 2022. The Bank Also Declared a Cash Dividend of $12.50 Per Share Payable on or After December 30, 2022 to Preferred Shareholders of Record at the Close of Business on December 16, 2022
  • In the 2022 Third Quarter, the Bank Hired Two Private Client Banking Teams; One in New York and One on the West Coast. This Brings the Total Teams Hired to 12 for the Year. Additionally, Our Newest National Banking Practice, the Health Care Banking and Finance Team, Launched in the Second Quarter of 2022

Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, today announced results for its third quarter ended September 30, 2022.

Net income for the 2022 third quarter was a record $358.5 million, or $5.57 diluted earnings per share, versus $241.4 million, or $3.88 diluted earnings per share, for the 2021 third quarter. The increase in net income for the 2022 third quarter, versus the comparable quarter last year, is primarily the result of an increase in net interest income, fueled by strong loan and securities growth, higher interest rates, as well as the utilization of our excess cash. Pre-tax, pre-provision earnings were a record $492.3 million, representing an increase of $161.3 million, or 48.7 percent, compared with $331.0 million for the 2021 third quarter.

Net interest income for the 2022 third quarter reached $674.0 million, up $193.1 million, or 40.2 percent, when compared with the 2021 third quarter. This increase is primarily due to growth in average interest-earning assets, higher prevailing market interest rates, and the utilization of our excess cash. Total assets reached $114.47 billion at September 30, 2022, an increase of $6.62 billion, or 6.1 percent, from $107.85 billion at September 30, 2021. Average assets for the 2022 third quarter reached $114.60 billion, an increase of $12.11 billion, or 11.8 percent, compared with the 2021 third quarter.

Deposits for the 2022 third quarter decreased $1.34 billion to $102.78 billion, including a non-interest bearing deposit reduction of $4.03 billion, which brings our non-interest bearing mix to 36.4 percent of deposits at September 30, 2022. Overall deposit growth for the last twelve months was 7.5 percent, or $7.21 billion. Average deposits for the 2022 third quarter reached $102.66 billion, a decrease of $4.03 billion when compared with the prior quarter.

“Throughout the past two decades, Signature Bank has continued to emerge a stronger institution, despite navigating challenging economic landscapes at times. The Bank’s ongoing success is directly attributed to our deliberate focus on what we can control, as well as the distinctive competitive advantages of our enterprise. These include our ability to recruit best-in-class banking teams and national lending practices affording them the platform needed to service their clients. The strong relationships our colleagues forge today are the foundation of the franchise we are growing for tomorrow. As Warren Buffett once said, ‘Someone is sitting in the shade today because someone planted a tree a long time ago.’ This theme is the basis on which we service each and every client who selected Signature Bank as their bank-of-choice,” said Joseph J. DePaolo, Signature Bank President and Chief Executive Officer.

“We have always preferred to assess our performance based on the metrics we can control — such as growth in client relationships — rather than on external macroeconomic forces beyond our control. Through our founding single-point-of-contact model — which delivers high levels of client care and service — we have maintained strong client relationships while also adding many new ones across all our business lines. During the 2022 third quarter, the Bank added over 1,000 new client business relationships across the institution. The momentum that continues to build on the client expansion front today translates into deep relationships that bear fruit from that shady tree tomorrow,” DePaolo concluded.

Scott A. Shay, Chairman of the Board, added: “It is during tumultuous times that Signature Bank’s strengths really stand out. Our Group Directors and National Banking Practice Leaders act as trusted advisors to our clients and foster a feeling that we are all in it together.

"As Joe alluded to, the Bank put several long-term strategies in place to grow its business and serve more clients. To this end, our innovations in the digital world with our Signet™ payments platform helped our clients better operate their businesses. As the payment space further evolves, so will Signature Bank, ensuring our clients and shareholders benefit from new developments.

"Our technology advancements, client retention and expansion and business diversification all contributed to the $114.47 billion in assets we reached in the third quarter. These efforts, coupled with exceptional returns on capital, excellent credit metrics and an emphasis on safe, less risky assets, continues to shape the future successes of Signature Bank."

Net Interest Income

Net interest income for the 2022 third quarter was $674.0 million, an increase of $193.1 million, or 40.2 percent, when compared with the same period last year, primarily due to growth in average interest-earning assets and higher prevailing market interest rates. Average interest-earning assets of $112.61 billion for the 2022 third quarter represent an increase of $10.95 billion, or 10.8 percent, from the 2021 third quarter. Due to higher interest rates across all of our asset classes, the yield on interest-earning assets for the 2022 third quarter increased 127 basis points to 3.45 percent, compared to the third quarter of last year.

Average cost of deposits and average cost of funds for the third quarter of 2022 increased by 89 and 82 basis points, to 1.11 percent and 1.14 percent, respectively, versus the comparable period a year ago.

Net interest margin on a tax-equivalent basis for the 2022 third quarter was 2.38 percent versus 1.88 percent reported in the 2021 third quarter and 2.23 percent in the 2022 second quarter.

Provision for Credit Losses

The Bank’s provision for credit losses for the third quarter of 2022 was $29.1 million, compared with $4.2 million for the 2022 second quarter and $4.0 million for the 2021 third quarter. The increase in the provision for credit losses for the 2022 third quarter, compared to the same quarter last year, was predominantly attributable to a deteriorating macroeconomic forecast compared with the same period last year.

Net charge offs for the 2022 third quarter were $10.2 million, or 0.06 percent of average loans, on an annualized basis, versus 19.7 million, or 0.11 percent, for the 2022 second quarter and net charge offs of $17.3 million, or 0.12 percent, for the 2021 third quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2022 third quarter was $43.8 million, up $12.4 million when compared with $31.4 million reported in the 2021 third quarter. The increase was primarily driven by a $9.0 million increase in fees and service charges and a $4.8 million increase in other income, including foreign currency activity, as well as mark-to-market gains related to our non-hedging derivatives.

Non-interest expense for the third quarter of 2022 was $225.5 million, an increase of $44.2 million, or 24.4 percent, versus $181.2 million reported in the 2021 third quarter. The increase was predominantly due to the addition of new private client banking teams, national banking practices, and operational personnel, as well as client activity related expenses that have increased with the growth in our clients and businesses.

Despite the significant team hiring, the launch of the Healthcare Banking and Finance team, and considerable operational investment, the Bank’s efficiency ratio was 31.4 percent for the 2022 third quarter compared with 35.4 percent for the same period a year ago, and 30.6 percent for the second quarter of 2022.

Income Taxes

Income tax expense for the third quarter of 2022 included an increase in tax benefits associated with sustainable finance lending. This lowered our quarterly effective tax rate to 22.6 percent compared with 26.2 percent for the same period a year ago, and 28.2 percent for the second quarter of 2022.

Loans

Loans, excluding loans held for sale, grew $1.84 billion, or 2.6 percent, during the third quarter of 2022 to $73.84 billion, compared with $72.00 billion at June 30, 2022. Average loans, excluding loans held for sale, reached $73.47 billion in the 2022 third quarter, growing $4.80 billion, or 7.0 percent, from the 2022 second quarter and $18.01 billion, or 32.5 percent, from the 2021 third quarter.

At September 30, 2022, non-accrual loans were $185.3 million, representing 0.25 percent of total loans and 0.16 percent of total assets, compared with non-accrual loans of $167.9 million, or 0.23 percent of total loans, at June 30, 2022 and $165.4 million, or 0.28 percent of total loans, at September 30, 2021. The ratio of allowance for credit losses for loans and leases to total loans at September 30, 2022 was 0.63 percent, versus 0.62 percent at June 30, 2022 and 0.85 percent at September 30, 2021. Additionally, the ratio of allowance for credit losses for loans and leases to non-accrual loans, or the coverage ratio, was 251 percent for the 2022 third quarter versus 266 percent for the second quarter of 2022 and 303 percent for the 2021 third quarter.

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 8.47 percent, 10.11 percent, 10.90 percent, and 11.99 percent, respectively, as of September 30, 2022. 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 declared a cash dividend of $0.56 per share, payable on or after November 10, 2022 to common stockholders of record at the close of business on October 28, 2022. The Bank also declared a cash dividend of $12.50 per share payable on December 30, 2022 to preferred shareholders of record at the close of business on December 16, 2022. In the third quarter of 2022, the Bank paid a cash dividend of $0.56 per share to common stockholders of record at the close of business on July 29, 2022. The Bank also paid a cash dividend of $12.50 per share to preferred shareholders of record at the close of business on September 16, 2022.

Conference Call

Signature Bank’s management will host a conference call to review results of its 2022 third quarter on Tuesday, October 18, 2022, at 9:00 AM ET. All participants should dial 800-225-9448 and international callers should dial 203-518-9708, at least ten minutes prior to the start of the call and reference conference ID SBNYQ322.

To hear a live web simulcast or to listen to the archived web cast following completion of the call, please visit the Bank’s web site at www.signatureny.com, click on “Investor Information,” "Quarterly Results/Conference Calls" to access the link to the call.

An earnings slide presentation accompanying the call will be accessible through the live web cast and available on Signature Bank’s website here.

To listen to a telephone replay of the conference call, please dial 800-723-0520 or 402-220-2653. The replay will be available from approximately 12:00 PM ET on Tuesday, October 18, 2022 through 11:59 PM ET on Friday, October 21, 2022.

About Signature Bank

Signature Bank, member FDIC, is a New York-based full-service commercial bank with 40 private client offices throughout the metropolitan New York area, as well as those in Connecticut, California and North Carolina. Through its single-point-of-contact approach, the Bank’s private client banking teams primarily serve the needs of privately owned businesses, their owners and senior managers. The Bank has two wholly owned subsidiaries: Signature Financial, LLC, provides equipment finance and leasing; and, Signature Securities Group Corporation, a licensed broker-dealer, investment adviser and member FINRA/SIPC, offers investment, brokerage, asset management and insurance products and services. Signature Bank was the first FDIC-insured bank to launch a blockchain-based digital payments platform. Signet™ allows commercial clients to make real-time payments in U.S. dollars, 24/7/365 and was also the first blockchain-based solution to be approved for use by the NYS Department of Financial Services.

Signature Bank placed 19th on S&P Global’s list of the largest banks in the U.S., based on deposits.

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. 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 expectations regarding future results, interest rates and the interest rate environment, loan and deposit growth, loan performance, operations, new private client teams' hires, new office openings, business strategy and the impact of the COVID-19 pandemic on each of the foregoing and on our business overall. Forward-looking statements often include words such as "may," "believe," "expect," "anticipate," "intend," “potential,” “opportunity,” “could,” “project,” “seek,” “target,” “goal,” “should,” “will,” “would,” "plan," "estimate" or other similar expressions. Forward-looking statements may also address our sustainability progress, plans, and goals (including climate change and environmental-related matters and disclosures), which may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. As you consider forward-looking statements, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions that could cause actual results to differ materially from those in the forward-looking statements and can change as a result of many possible events or factors, not all of which are known to us or in our control. These factors include but are not limited to: (i) prevailing economic conditions; (ii) changes in interest rates, loan demand, real estate values and competition, any of which can materially affect origination levels and gain on sale results in our business, as well as other aspects of our financial performance, including earnings on interest-bearing assets; (iii) the level of defaults, losses and prepayments on loans made by us, whether held in portfolio or sold in the whole loan secondary markets, which can materially affect charge-off levels and required credit loss reserve levels; (iv) changes in monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System; (v) changes in the banking and other financial services regulatory environment; (vi) our ability to maintain the continuity, integrity, security and safety of our operations and (vii) competition for qualified personnel and desirable office locations. All of these factors are subject to additional uncertainty in the context of the COVID-19 pandemic and the conflict in Ukraine, which are having impacts on all aspects of our operations, the financial services industry and the economy as a whole. Additional risks are described in our quarterly and annual reports filed with the FDIC. 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. 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.

FINANCIAL TABLES ATTACHED

SIGNATURE BANK

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

 

 

 

 

 

 

Three months ended

September 30,

 

Nine months ended

September 30,

(dollars in thousands, except per share amounts)

2022

 

2021

 

2022

 

2021

INTEREST INCOME

 

 

 

 

Loans and leases

$

763,200

 

480,771

 

1,896,920

 

1,376,500

 

Loans held for sale

 

4,220

 

1,625

 

8,397

 

3,202

 

Securities available-for-sale

 

106,771

 

47,325

 

279,731

 

135,923

 

Securities held-to-maturity

 

29,524

 

12,549

 

74,635

 

38,750

 

Other investments

 

72,638

 

13,450

 

133,413

 

29,697

 

Total interest income

 

976,353

 

555,720

 

2,393,096

 

1,584,072

 

INTEREST EXPENSE

 

 

 

 

Deposits

 

286,036

 

51,272

 

438,380

 

163,724

 

Federal funds purchased and securities sold under agreements to repurchase

 

602

 

602

 

1,779

 

1,799

 

Federal Home Loan Bank borrowings

 

9,558

 

16,803

 

37,834

 

51,045

 

Subordinated debt

 

6,167

 

6,167

 

18,448

 

22,900

 

Total interest expense

 

302,363

 

74,844

 

496,441

 

239,468

 

Net interest income before provision for credit losses

 

673,990

 

480,876

 

1,896,655

 

1,344,604

 

Provision for credit losses

 

29,066

 

3,985

 

36,009

 

43,165

 

Net interest income after provision for credit losses

 

644,924

 

476,891

 

1,860,646

 

1,301,439

 

NON-INTEREST INCOME

 

 

 

 

Fees and service charges

 

29,005

 

20,032

 

76,485

 

53,567

 

Commissions

 

4,490

 

4,331

 

12,998

 

12,233

 

Net losses on sales of securities

 

 

 

(816

)

 

Net gains on sales of loans

 

2,132

 

3,651

 

8,427

 

14,104

 

Other (loss) income

 

8,124

 

3,353

 

18,723

 

7,532

 

Total non-interest income

 

43,751

 

31,367

 

115,817

 

87,436

 

NON-INTEREST EXPENSE

 

 

 

 

Salaries and benefits

 

133,491

 

116,924

 

393,331

 

335,781

 

Occupancy and equipment

 

13,882

 

11,761

 

38,494

 

34,313

 

Information technology

 

15,401

 

13,230

 

44,885

 

35,433

 

FDIC assessment fees

 

7,661

 

6,896

 

23,602

 

17,107

 

Professional fees

 

11,937

 

9,981

 

33,456

 

22,401

 

Other general and administrative

 

43,089

 

22,451

 

95,119

 

74,618

 

Total non-interest expense

 

225,461

 

181,243

 

628,887

 

519,653

 

Income before income taxes

 

463,214

 

327,015

 

1,347,576

 

869,222

 

Income tax expense

 

104,747

 

85,592

 

311,373

 

222,773

 

Net income

$

358,467

 

241,423

 

1,036,203

 

646,449

 

Preferred stock dividends

 

9,125

 

9,125

 

27,375

 

28,762

 

Net income available to common shareholders

$

349,342

 

232,298

 

1,008,828

 

617,687

 

PER COMMON SHARE DATA

 

 

 

 

Earnings per common share - basic

$

5.59

 

3.91

 

16.21

 

10.79

 

Earnings per common share - diluted

$

5.57

 

3.88

 

16.11

 

10.68

 

Dividends per common share

$

0.56

 

0.56

 

1.68

 

1.68

 

 

SIGNATURE BANK

 

 

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

 

 

 

September 30,

December 31,

 

2022

2021

(dollars in thousands, except shares and per share amounts)

(unaudited)

 

ASSETS

 

 

Cash and due from banks

$

11,324,426

 

29,547,574

 

Short-term investments

 

145,495

 

73,097

 

Total cash and cash equivalents

 

11,469,921

 

29,620,671

 

Securities available-for-sale (amortized cost $21,000,568 at September 30, 2022 and $17,398,906 at December 31, 2021); (zero allowance for credit losses at September 30, 2022 and at December 31, 2021)

 

18,469,771

 

17,152,863

 

 

Securities held-to-maturity (fair value $6,806,774 at September 30, 2022 and $4,944,777 at December 31, 2021); (allowance for credit losses $25 at September 30, 2022 and $56 at December 31, 2021)

 

7,576,588

 

4,998,281

 

Federal Home Loan Bank stock

 

118,118

 

166,697

 

Loans held for sale

 

524,871

 

386,765

 

Loans and leases

 

73,840,078

 

64,862,798

 

Allowance for credit losses for loans and leases

 

(464,858

)

(474,389

)

Loans and leases, net

 

73,375,220

 

64,388,409

 

Premises and equipment, net

 

111,457

 

92,232

 

Operating lease right-of-use assets

 

256,458

 

225,988

 

Accrued interest and dividends receivable

 

402,915

 

306,827

 

Other assets

 

2,163,427

 

1,106,694

 

Total assets

$

114,468,746

 

118,445,427

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

Deposits

 

 

Non-interest-bearing

$

37,375,416

 

44,363,215

 

Interest-bearing

 

65,400,098

 

61,769,579

 

Total deposits

 

102,775,514

 

106,132,794

 

Federal funds purchased and securities sold under agreements to repurchase

 

150,000

 

150,000

 

Federal Home Loan Bank borrowings

 

1,454,738

 

2,639,245

 

Subordinated debt

 

571,280

 

570,228

 

Operating lease liabilities

 

286,280

 

254,660

 

Accrued expenses and other liabilities

 

1,540,411

 

857,882

 

Total liabilities

 

106,778,223

 

110,604,809

 

Shareholders’ equity

 

 

Preferred stock, par value $.01 per share; 61,000,000 shares authorized; 730,000 shares issued and outstanding at September 30, 2022 and December 31, 2021

 

7

 

7

 

 

Common stock, par value $.01 per share; 125,000,000 shares authorized; 63,063,150 shares issued and 62,927,326 outstanding at September 30, 2022; 60,729,674 shares issued and 60,631,944 outstanding at December 31, 2021

 

629

 

606

 

Additional paid-in capital

 

4,539,428

 

3,763,810

 

Retained earnings

 

5,201,514

 

4,298,527

 

Accumulated other comprehensive loss

 

(2,051,055

)

(222,332

)

Total shareholders' equity

 

7,690,523

 

7,840,618

 

Total liabilities and shareholders' equity

$

114,468,746

 

118,445,427

 

 

 

SIGNATURE BANK

FINANCIAL SUMMARY, CAPITAL RATIOS, ASSET QUALITY

(unaudited)

 

 

 

 

 

 

 

 

 

 

Three months ended

September 30,

 

Nine months ended

September 30,

(in thousands, except ratios and per share amounts)

2022

 

2021

 

2022

 

2021

PER COMMON SHARE

 

 

 

 

Earnings per common share - basic

$

5.59

 

$

3.91

 

$

16.21

 

$

10.79

 

Earnings per common share - diluted

$

5.57

 

$

3.88

 

$

16.11

 

$

10.68

 

Weighted average common shares outstanding - basic

 

62,440

 

 

59,284

 

 

62,186

 

 

57,152

 

Weighted average common shares outstanding - diluted

 

62,674

 

 

59,745

 

 

62,597

 

 

57,740

 

Book value per common share

$

110.96

 

$

114.97

 

$

110.96

 

$

114.97

 

 

 

 

 

 

SELECTED FINANCIAL DATA

 

 

 

 

Return on average total assets

 

1.24

%

 

0.93

%

 

1.18

%

 

0.95

%

Return on average common shareholders' equity

 

18.42

%

 

13.63

%

 

17.93

%

 

13.44

%

Efficiency ratio (1)

 

31.41

%

 

35.38

%

 

31.25

%

 

36.29

%

Yield on interest-earning assets

 

3.44

%

 

2.17

%

 

2.76

%

 

2.34

%

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

 

3.45

%

 

2.18

%

 

2.77

%

 

2.35

%

Cost of deposits and borrowings

 

1.14

%

 

0.32

%

 

0.62

%

 

0.38

%

Net interest margin

 

2.37

%

 

1.88

%

 

2.19

%

 

1.99

%

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

 

2.38

%

 

1.88

%

 

2.20

%

 

1.99

%

 

 

 

 

 

(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.

 

 

September 30,

2022

June 30,

2022

December 31,

2021

September 30,

2021

CAPITAL RATIOS

 

 

 

 

Tangible common equity (4)

 

6.10

%

 

6.31

%

 

6.02

%

 

6.45

%

Tier 1 leverage (5)

 

8.47

%

 

7.92

%

 

7.27

%

 

7.83

%

Common equity Tier 1 risk-based (5)

 

10.11

%

 

9.99

%

 

9.60

%

 

10.49

%

Tier 1 risk-based (5)

 

10.90

%

 

10.79

%

 

10.51

%

 

11.53

%

Total risk-based (5)

 

11.99

%

 

11.88

%

 

11.76

%

 

12.96

%

 

 

 

 

 

ASSET QUALITY

 

 

 

 

Non-accrual loans

$

185,300

 

$

167,889

 

$

218,295

 

$

165,384

 

Allowance for credit losses for loans and leases (ACLLL)

$

464,858

 

$

445,965

 

$

474,389

 

$

500,862

 

ACLLL to non-accrual loans

 

250.87

%

 

265.63

%

 

217.32

%

 

302.85

%

ACLLL to total loans

 

0.63

%

 

0.62

%

 

0.73

%

 

0.85

%

Non-accrual loans to total loans

 

0.25

%

 

0.23

%

 

0.34

%

 

0.28

%

Quarterly net charge-offs to average loans, annualized

 

0.06

%

 

0.11

%

 

0.22

%

 

0.12

%

 

 

 

 

 

(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.

 

(5)

September 30, 2022 ratios are preliminary.

 

SIGNATURE BANK

NET INTEREST MARGIN ANALYSIS

(unaudited)

 

 

 

 

 

 

 

 

Three months ended

September 30, 2022

Three months ended

September 30, 2021

(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

$

11,841,743

 

70,187

 

2.37

%

29,167,303

11,399

 

0.16

%

Investment securities

 

26,692,621

 

138,746

 

2.08

%

16,579,859

61,925

 

1.49

%

Commercial loans, mortgages and leases

 

73,351,038

 

764,036

 

4.13

%

55,309,881

481,360

 

3.45

%

Residential mortgages and consumer loans

 

114,959

 

1,135

 

3.92

%

144,144

1,187

 

3.27

%

Loans held for sale

 

609,232

 

4,220

 

2.75

%

460,689

1,625

 

1.40

%

Total interest-earning assets (1)

 

112,609,593

 

978,324

 

3.45

%

101,661,876

557,496

 

2.18

%

Non-interest-earning assets

 

1,988,330

 

 

823,307

 

 

Total assets

$

114,597,923

 

 

102,485,183

 

 

INTEREST-BEARING LIABILITIES

 

 

 

 

 

 

Interest-bearing deposits

 

 

 

 

 

 

NOW and interest-bearing demand

$

23,809,493

 

132,226

 

2.20

%

19,884,855

18,261

 

0.36

%

Money market

 

38,511,269

 

144,716

 

1.49

%

39,193,202

29,412

 

0.30

%

Time deposits

 

2,118,538

 

9,094

 

1.70

%

1,823,747

3,599

 

0.78

%

Non-interest-bearing demand deposits

 

38,215,860

 

 

%

29,804,055

 

%

Total deposits

 

102,655,160

 

286,036

 

1.11

%

90,705,859

51,272

 

0.22

%

Subordinated debt

 

571,048

 

6,167

 

4.32

%

569,642

6,167

 

4.33

%

Other borrowings

 

1,622,209

 

10,160

 

2.48

%

2,819,680

17,405

 

2.45

%

Total deposits and borrowings

 

104,848,417

 

302,363

 

1.14

%

94,095,181

74,844

 

0.32

%

Other non-interest-bearing liabilities

 

1,517,872

 

 

918,894

 

 

Preferred equity

 

708,173

 

 

708,173

 

 

Common equity

 

7,523,461

 

 

6,762,935

 

 

Total liabilities and shareholders' equity

$

114,597,923

 

 

102,485,183

 

 

OTHER DATA

 

 

 

 

 

 

Net interest income / interest rate spread (1)

 

$

675,961

 

2.31

%

 

482,652

 

1.86

%

Tax-equivalent adjustment

 

 

(1,971

)

 

 

(1,776

)

 

Net interest income, as reported

 

$

673,990

 

 

 

480,876

 

 

Net interest margin

 

 

2.37

%

 

 

1.88

%

Tax-equivalent effect

 

 

0.01

%

 

 

%

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

 

 

2.38

%

 

 

1.88

%

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

 

 

107.40

%

 

 

108.04

%

(1)

Presented on a tax-equivalent, non-GAAP, basis for municipal leasing and financing transactions recorded in Commercial loans, mortgages and leases using the U.S. federal statutory tax rate of 21 percent for the periods presented.

 

SIGNATURE BANK

NET INTEREST MARGIN ANALYSIS

(unaudited)

 

 

 

 

 

 

 

 

Nine months ended

September 30, 2022

 

Nine months ended

September 30, 2021

(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

$

20,380,482

 

126,673

 

0.83

%

23,379,293

23,179

 

0.13

%

Investment securities

 

25,721,818

 

361,106

 

1.87

%

14,429,186

181,191

 

1.67

%

Commercial loans, mortgages and leases

 

68,928,819

 

1,899,230

 

3.68

%

52,301,338

1,377,883

 

3.52

%

Residential mortgages and consumer loans

 

124,538

 

3,195

 

3.43

%

150,901

3,807

 

3.37

%

Loans held for sale

 

512,145

 

8,397

 

2.19

%

289,334

3,202

 

1.48

%

Total interest-earning assets (1)

 

115,667,802

 

2,398,601

 

2.77

%

90,550,052

1,589,262

 

2.35

%

Non-interest-earning assets

 

1,660,536

 

 

887,206

 

 

Total assets

$

117,328,338

 

 

91,437,258

 

 

INTEREST-BEARING LIABILITIES

 

 

 

 

 

 

Interest-bearing deposits

 

 

 

 

 

 

NOW and interest-bearing demand

$

21,138,343

 

199,393

 

1.26

%

18,162,301

57,760

 

0.43

%

Money market

 

40,517,114

 

225,834

 

0.75

%

34,827,306

93,386

 

0.36

%

Time deposits

 

1,616,414

 

13,153

 

1.09

%

1,818,535

12,578

 

0.92

%

Non-interest-bearing demand deposits

 

41,784,797

 

 

%

25,356,430

 

%

Total deposits

 

105,056,668

 

438,380

 

0.56

%

80,164,572

163,724

 

0.27

%

Subordinated debt

 

570,700

 

18,448

 

4.31

%

672,093

22,900

 

4.54

%

Other borrowings

 

2,162,659

 

39,613

 

2.45

%

2,904,905

52,844

 

2.43

%

Total deposits and borrowings

 

107,790,027

 

496,441

 

0.62

%

83,741,570

239,468

 

0.38

%

Other non-interest-bearing liabilities

 

1,309,110

 

 

841,763

 

 

Preferred equity

 

708,173

 

 

708,088

 

 

Common equity

 

7,521,028

 

 

6,145,837

 

 

Total liabilities and shareholders' equity

$

117,328,338

 

 

91,437,258

 

 

OTHER DATA

 

 

 

 

 

 

Net interest income / interest rate spread (1)

 

$

1,902,160

 

2.15

%

 

1,349,794

 

1.96

%

Tax-equivalent adjustment

 

 

(5,505

)

 

 

(5,190

)

 

Net interest income, as reported

 

$

1,896,655

 

 

 

1,344,604

 

 

Net interest margin

 

 

2.19

%

 

 

1.99

%

Tax-equivalent effect

 

 

0.01

%

 

 

0.00

%

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

 

 

2.20

%

 

 

1.99

%

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

 

 

107.31

%

 

 

108.13

%

(1)

Presented on a tax-equivalent, non-GAAP, basis for municipal leasing and financing transactions recorded in Commercial loans, mortgages and leases using the U.S. federal statutory tax rate of 21 percent for the periods presented.

 

SIGNATURE BANK

NON-GAAP FINANCIAL MEASURES

(unaudited)

This press release contains both financial measures based on GAAP and non-GAAP financial measures where management believes that the presentation of certain non-GAAP financial measures assists investors when comparing results period-to-period in a more consistent manner and provides a better measure of Signature Bank's results. These non-GAAP measures include the Bank's (i) tangible common equity ratio, (ii) efficiency ratio, (iii) yield on interest-earning assets, tax-equivalent basis, (iv) net interest margin, tax-equivalent basis, and (v) pre-tax, pre-provision earnings. 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)

September 30,

2022

June 30,

2022

December 31,

2021

September 30,

2021

Consolidated total shareholders' equity

$

7,690,523

 

8,031,806

 

7,840,618

 

7,679,139

 

Less: Preferred equity

 

708,173

 

708,173

 

708,173

 

708,173

 

Common shareholders' equity

$

6,982,350

 

7,323,633

 

7,132,445

 

6,970,966

 

Less: Intangible assets

 

2,025

 

3,801

 

3,977

 

15,858

 

Tangible common shareholders' equity (TCE)

$

6,980,325

 

7,319,832

 

7,128,468

 

6,955,108

 

 

 

 

 

 

Consolidated total assets

$

114,468,746

 

115,966,803

 

118,445,427

 

107,850,739

 

Less: Intangible assets

 

2,025

 

3,801

 

3,977

 

15,858

 

Consolidated tangible total assets (TTA)

$

114,466,721

 

115,963,002

 

118,441,450

 

107,834,881

 

Tangible common equity ratio (TCE/TTA)

 

6.10

%

6.31

%

6.02

%

6.45

%

The following table presents the efficiency ratio calculation:

 

Three months ended

September 30,

 

Nine months ended

September 30,

(dollars in thousands)

2022

 

2021

 

2022

 

2021

Non-interest expense (NIE)

$

225,461

 

181,243

 

628,887

 

519,653

 

Net interest income before provision for credit losses

 

673,990

 

480,876

 

1,896,655

 

1,344,604

 

Other non-interest income

 

43,751

 

31,367

 

115,817

 

87,436

 

Total income (TI)

$

717,741

 

512,243

 

2,012,472

 

1,432,040

 

Efficiency ratio (NIE/TI)

 

31.41

%

35.38

%

31.25

%

36.29

%

The following table reconciles yield on interest-earning assets to the yield on interest-earning assets on a tax-equivalent basis:

 

Three months ended

September 30,

 

Nine months ended

September 30,

(dollars in thousands)

2022

 

2021

 

2022

 

2021

Interest income (as reported)

$

976,353

 

555,720

 

2,393,096

 

1,584,072

 

Tax-equivalent adjustment

 

1,971

 

1,776

 

5,505

 

5,190

 

Interest income, tax-equivalent basis

$

978,324

 

557,496

 

2,398,601

 

1,589,262

 

Interest-earnings assets

$

112,609,593

 

101,661,876

 

115,667,802

 

90,550,052

 

Yield on interest-earning assets

 

3.44

%

2.17

%

2.76

%

2.34

%

Tax-equivalent effect

 

0.01

%

0.01

%

0.01

%

0.01

%

Yield on interest-earning assets, tax-equivalent basis

 

3.45

%

2.18

%

2.77

%

2.35

%

The following table reconciles net interest margin (as reported) to net interest margin on a tax-equivalent basis:

 

Three months ended

September 30,

 

Nine months ended

September 30,

 

2022

 

2021

 

2022

 

2021

Net interest margin (as reported)

2.37

%

1.88

%

2.19

%

1.99

%

Tax-equivalent adjustment

0.01

%

0.00

%

0.01

%

0.00

%

Net interest margin, tax-equivalent basis

2.38

%

1.88

%

2.20

%

1.99

%

The following table reconciles net income (as reported) to pre-tax, pre-provision earnings:

 

Three months ended

September 30,

 

Nine months ended

September 30,

(dollars in thousands)

2022

 

2021

 

2022

 

2021

Net income (as reported)

$

358,467

241,423

1,036,203

646,449

Income tax expense

 

104,747

85,592

311,373

222,773

Provision for credit losses

 

29,066

3,985

36,009

43,165

Pre-tax, pre-provision earnings

$

492,280

331,000

1,383,585

912,387

 

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