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Signature Bank Reports 2021 First Quarter Results

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·30-min read
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  • Net Income for the 2021 First Quarter Was a Record $190.5 Million, or $3.24 Diluted Earnings Per Share, Versus $99.6 Million, or $1.88 Diluted Earnings Per Share, Reported in the 2020 First Quarter

  • Pre-Tax, Pre-Provision Earnings for the 2021 First Quarter Were a Record $272.8 Million, an Increase of $54.3 Million, or 24.9 Percent, Compared with $218.5 Million for the 2020 First Quarter

  • Total Deposits in the First Quarter Grew a Record $10.66 Billion, to $73.97 Billion, While Average Deposits Increased $6.83 Billion. Total Deposits for the Prior Twelve Months Have Grown $31.73 Billion, or 75.1 Percent

  • For the 2021 First Quarter, Loans Increased $2.12 Billion, or 4.3 Percent, to $50.95 Billion. Core Loans (Excluding Paycheck Protection Program Loans) Increased $1.32 Billion. Since the End of the 2020 First Quarter, Core Loans Have Increased 17.8 Percent, or $7.28 Billion

  • Non-Accrual Loans Were $133.7 Million, or 0.26 Percent of Total Loans, at March 31, 2021, Versus $120.2 Million, or 0.25 Percent, at the End of the 2020 Fourth Quarter and $59.0 Million, or 0.14 Percent, at the End of the 2020 First Quarter

  • As of April 15, 2021, COVID-19 Related Non-Payment Deferrals Reduced by $328.2 Million to $982.8 Million Since Year End

  • Significant Excess Cash Balances From Continued Strong Deposit Flows Negatively Impacted Core Net Interest Margin by 58 Basis Points. Net Interest Margin on a Tax-Equivalent Basis was 2.10 Percent, Compared with 2.23 Percent for the 2020 Fourth Quarter and 2.79 Percent for the 2020 First Quarter. Core Net Interest Margin on a Tax-Equivalent Basis Excluding Loan Prepayment Penalty Income Decreased 14 Basis Points to 2.07 Percent, Compared with 2.21 Percent for the 2020 Fourth Quarter

  • Tier 1 Leverage, Common Equity Tier 1 Risk-Based, Tier 1 Risk-Based, and Total Risk-Based Capital Ratios were 8.82 Percent, 10.92 Percent, 12.18 Percent, and 14.41 Percent, Respectively, at March 31, 2021. Signature Bank Remains Significantly Above FDIC "Well Capitalized" Standards. Tangible Common Equity Ratio was 6.92 Percent

  • During the First Quarter, the Bank Raised $707.8 Million of Common Stock in a Public Offering

  • The Bank Declared a Cash Dividend of $0.56 Per Share, Payable on or After May 14, 2021 to Common Shareholders of Record at the Close of Business on May 3, 2021. The Bank Also Declared a Cash Dividend of $12.50 Per Share Payable on or After June 30, 2021 to Preferred Shareholders of Record at the Close of Business on June 18, 2021

  • In the 2021 First Quarter, the Bank On-boarded Three Private Client Banking Teams; Including Two on the West Coast. Additionally, the Bank Added Four Private Client Group Directors to Existing California Teams and Signature Financial Added Seven Executive Sales Officers throughout Its National Footprint

Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, today announced results for its first quarter ended March 31, 2021.

Net income for the 2021 first quarter was $190.5 million, or $3.24 diluted earnings per share, versus $99.6 million, or $1.88 diluted earnings per share, for the 2020 first quarter. The increase in net income for the 2021 first quarter, versus the comparable quarter last year, is primarily the result of an increase in net interest income, fueled by strong average deposit and loan growth, as well as the absence of a higher provision for credit losses booked in the first quarter of 2020, which was predominantly due to the effects of COVID-19 on the U.S. economy. Pre-tax, pre-provision earnings were $272.8 million, representing an increase of $54.3 million, or 24.9 percent, compared with $218.5 million for the 2020 first quarter.

Net interest income for the 2021 first quarter rose $58.2 million, or 16.7 percent to $406.5 million, when compared with the first quarter of 2020. This increase is primarily due to growth in average interest-earning assets. Total assets reached $85.38 billion at March 31, 2021, expanding $32.31 billion, or 60.9 percent, from $53.07 billion at March 31, 2020. Average assets for the 2021 first quarter reached $79.72 billion, an increase of $28.44 billion, or 55.4 percent, versus the comparable period a year ago.

Deposits for the 2021 first quarter increased $10.66 billion or 16.8 percent to $73.97 billion, including non-interest bearing deposit growth of $3.77 billion. Non-interest bearing deposits now represent 30.5 percent of total deposits. Overall deposit growth for the last twelve months was 75.1 percent, or $31.73 billion, when compared with deposits at March 31, 2020. Average deposits for the 2021 first quarter reached $68.81 billion, an increase of $6.83 billion when compared with the prior quarter.

"We kicked off 2021 in an astonishing manner delivering another quarter of record deposit growth of $10.66 billion. This came on the heels of our record deposit growth of nearly $23 billion in 2020. It’s clear that the Bank is firing on all cylinders, including our newest business lines where, once again, each contributed to this quarter’s phenomenal growth. When looking at earnings, we reported another quarter of record net interest income growth, driven by record deposit growth, strong loan growth and record securities purchases. Additionally, we saw record fee income and contained expense growth, which culminated in another quarter of record net income delivering strong results for our shareholders," explained Signature Bank President and Chief Executive Officer Joseph J. DePaolo.

"In retrospect, it’s really not all that surprising to see we delivered another quarter of record earnings and growth as we have done this for the past 20 years. In fact, May 1 marks our 20-year anniversary. Over the years, we have remained true to our founding principles of a team-based, single point-of-contact model that caters to privately owned businesses, their owners and managers. This focused model has distinguished the Bank in the marketplace, and delivered outstanding performance consistently throughout the Bank’s existence. It’s hard to believe that the Bank started with nearly $50 million in assets and grew organically - without any acquisitions - to $85 billion. I would be remiss if I didn’t mention how proud we are of our recently issued 2020 Annual Report, where we highlighted essential frontline healthcare heroes closely associated with our colleagues. We wanted to showcase their unrelenting dedication and sacrifices and personally thank them for their service," DePaolo concluded.

Scott A. Shay, Chairman of the Board, added: "What a difference a year makes. At this time last year, New York was enduring the first brutal wave of COVID-19, which sadly sickened and caused the death of far too many. The economic shutdown also resulted in widespread devastation to many businesses and their employees. Yet New Yorkers continue to show great spirit and drive as things begin to turn around. Thankfully, with the innovation of vaccine makers, we can see the coming reopening of New York without squinting. Many of our clients are getting ready to reopen and do so by being better than ever."

"Throughout this year-long pandemic, Signature Bank kept its focus and remained committed to our sleep-at-night safety for depositors and single point of contact service model. It is no mystery why the Bank has grown so rapidly during this past year. We always scrutinize the financial service horizon to attempt to stay one step ahead of the pack. Our commitment to the still-nascent emerging digital asset space is just one example, as evidenced by the ongoing embracing of our payments platform, Signet™. Change is a constant in banking, and we will remain nimble while never straying from our twin pillars of providing depositor safety and a single point of contact approach to our loyal clients."

Capital

In the 2021 first quarter, the Bank raised $707.8 million of common stock in a public offering. Proceeds from the offering will be used for general corporate purposes, including to support our growth. The Bank’s Tier 1 leverage, common equity Tier 1 risk-based, Tier 1 risk-based, and total risk-based capital ratios were approximately 8.82 percent, 10.92 percent, 12.18 percent, and 14.41 percent, respectively, as of March 31, 2021. 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. Given our robust total risk-based ratio, we redeemed $260.0 million of subordinated debt at a rate of 5.3 percent on April 19, 2021. The Bank’s tangible common equity ratio remains strong at 6.92 percent. The Bank defines tangible common equity ratio as the ratio of tangible common equity to adjusted tangible assets and calculates this ratio by dividing total consolidated common shareholders’ equity by consolidated total assets.

The Bank declared a cash dividend of $0.56 per share, payable on or after May 14, 2021 to common shareholders of record at the close of business on May 3, 2021. The Bank also declared a cash dividend of $12.50 per share payable on or after June 30, 2021 to preferred shareholders of record at the close of business on June 18, 2021. In the first quarter of 2021, the Bank paid a cash dividend of $0.56 per share to common shareholders of record at the close of business on February 1, 2021. The Bank also paid a cash dividend of $14.40 per share to preferred shareholders of record at the close of business on March 19, 2021.

Net Interest Income

Net interest income for the 2021 first quarter was $406.5 million, up $58.2 million, or 16.7 percent, when compared with the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $78.75 billion for the 2021 first quarter represent an increase of $28.25 billion, or 55.9 percent, from the 2020 first quarter. Due to the current low interest rate environment, the yield on interest-earning assets for the 2021 first quarter fell 129 basis points to 2.54 percent, compared with the first quarter of last year.

Average cost of deposits and average cost of funds for the first quarter of 2021 decreased by 64 and 69 basis points, to 0.34 percent and 0.47 percent, respectively, versus the comparable period a year ago.

Net interest margin on a tax-equivalent basis for the 2021 first quarter was 2.10 percent versus 2.79 percent reported in the 2020 first quarter and 2.23 percent in the 2020 fourth quarter. Excluding loan prepayment penalties in both quarters, linked quarter core net interest margin on a tax-equivalent basis decreased 14 basis points to 2.07 percent.

Provision for Credit Losses

The Bank’s provision for credit losses for the first quarter of 2021 was $30.9 million, a decrease of $36.0 million, or 53.8 percent, versus the 2020 first quarter. The decrease in the Bank’s provision for credit losses for the 2021 first quarter was predominantly attributable to improved macroeconomic conditions compared with the same period last year. However, the provision level remained elevated due to the ongoing effects of COVID-19 on the U.S. economy.

Net charge-offs for the 2021 first quarter were $17.9 million, or 0.15 percent of average loans, on an annualized basis, versus $11.4 million, or 0.10 percent, for the 2020 fourth quarter and net charge-offs of $1.7 million, or 0.02 percent, for the 2020 first quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2021 first quarter was $32.7 million, up $18.5 million from $14.2 million reported in the first quarter of last year. The increase was primarily driven by a $6.3 million increase in fees and service charges and a $7.8 million increase in trading income.

Non-interest expense for the first quarter of 2021 was $166.4 million, an increase of $22.4 million, or 15.6 percent, versus $144.0 million reported in the 2020 first quarter. The increase was predominantly due to an increase of $13.0 million in salaries and benefits from the significant hiring of private client banking teams, and operational support to meet the Bank's growing needs.

The Bank’s efficiency ratio improved to 37.9 percent for the 2021 first quarter compared with 39.7 percent for the same period a year ago, and 37.6 percent for the fourth quarter of 2020.

Loans

Loans, excluding loans held for sale, expanded $2.12 billion, or 4.3 percent, during the 2021 first quarter to $50.95 billion, versus $48.83 billion at December 31, 2020. Core loans (excluding Paycheck Protection Program loans) increased $1.32 billion, or 2.8 percent, during the 2021 first quarter to $48.28 billion, versus $46.96 billion at December 31, 2020. Average loans, excluding loans held for sale, reached $49.36 billion in the 2021 first quarter, growing $1.97 billion, or 4.2 percent, from the 2020 fourth quarter and $9.81 billion, or 24.8 percent, from the first quarter of 2020. For the tenth consecutive quarter, the increase in loans was primarily driven by growth in commercial and industrial loans.

At March 31, 2021, non-accrual loans were $133.7 million, representing 0.26 percent of total loans and 0.16 percent of total assets, compared with non-accrual loans of $120.2 million, or 0.25 percent of total loans, at December 31, 2020 and $59.0 million, or 0.14 percent of total loans, at March 31, 2020. At March 31, 2021, the ratio of allowance for credit losses for loans and leases to total loans was 1.02 percent, versus 1.04 percent at December 31, 2020 and 0.87 percent at March 31, 2020. Additionally, the ratio of allowance for credit losses for loans and leases to non-accrual loans, or the coverage ratio, was 390 percent for the 2021 first quarter versus 423 percent for the fourth quarter of 2020 and 603 percent for the 2020 first quarter.

COVID-19 Related Loan Modifications

As of April 15, 2021, total non-payment deferrals were $982.8 million, or 1.9 percent of the Bank’s total loan portfolio, compared with non-payment deferrals of $1.31 billion, or 2.7 percent of total loans, at December 31, 2020, and $11.08 billion, or 24.5 percent of total loans at their peak level as of June 30, 2020. The positive trend is the result of the Bank’s ability to work closely with its clients toward reasonable resolutions.

Non-Payment Modifications

(dollars in millions)

Portfolio Balance
03/31/2021

Balance
04/15/2021

%
of Loan Category

Multi-family

$

15,695

398

2.5

%

Retail

5,541

263

4.7

%

Office

3,874

176

4.5

%

Acquisition, Development, and Construction (ADC)

1,399

8

0.6

%

Industrial

569

3

0.6

%

Hotel

77

%

Land

37

%

Other

289

7

2.4

%

Total Commercial Real Estate

27,480

855

3.1

%

Fund Banking and Venture Banking

12,402

%

Asset Based Lending

348

%

Signature Financial

5,064

14

0.3

%

Traditional Commercial & Industrial

2,486

83

3.3

%

Total Commercial & Industrial

20,301

97

0.5

%

PPP Loans

2,673

%

Consumer and Residential

569

31

5.5

%

Premium, deferred fees, and costs

(69

)

%

Total Loans

$

50,953

983

1.9

%

Additionally, the Bank has made other COVID-19 related modifications that have resulted in the receipt of modified principal and interest payments totaling 7.1 percent of the loan book.

Conference Call

Signature Bank’s management will host a conference call to review results of the 2021 first quarter on Wednesday, April 21, 2021 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 #3598015. 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," "Quarterly Results/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 #3598015. The replay will be available from approximately 1:00 PM ET on Wednesday, April 21, 2021 through 11:59 PM ET on Saturday, April 24, 2021.

About Signature Bank

Signature Bank, member FDIC, is a New York-based full-service commercial bank with 37 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 solution to be approved for use by the NYS Department of Financial Services.

Signature Bank placed 22nd 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 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, our business strategy and the impact of the COVID-19 pandemic on each of the foregoing and on our business overall. These 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. 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, which is having an unprecedented impact on all aspects of our operations, the financial services industry and the economy as a whole. 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.

FINANCIAL TABLES ATTACHED

SIGNATURE BANK

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

Three months ended March 31,

(dollars in thousands, except per share amounts)

2021

2020

INTEREST INCOME

Loans held for sale

$

580

704

Loans and leases

428,981

404,510

Securities available-for-sale

41,875

51,748

Securities held-to-maturity

12,962

14,594

Other investments

7,144

8,258

Total interest income

491,542

479,814

INTEREST EXPENSE

Deposits

57,504

99,739

Federal funds purchased and securities sold under agreements to repurchase

602

748

Federal Home Loan Bank borrowings

17,128

25,212

Subordinated debt

9,801

5,852

Total interest expense

85,035

131,551

Net interest income before provision for credit losses

406,507

348,263

Provision for credit losses

30,872

66,823

Net interest income after provision for credit losses

375,635

281,440

NON-INTEREST INCOME

Commissions

4,003

3,650

Fees and service charges

16,930

10,594

Net gains on sales of loans

7,061

2,735

Other income (loss)

4,707

(2,799

)

Total non-interest income

32,701

14,180

NON-INTEREST EXPENSE

Salaries and benefits

106,051

93,032

Occupancy and equipment

11,773

10,537

Information technology

11,481

10,219

FDIC assessment fees

5,725

2,898

Professional fees

5,142

4,744

Other general and administrative

26,219

22,536

Total non-interest expense

166,391

143,966

Income before income taxes

241,945

151,654

Income tax expense

51,412

52,067

Net income

$

190,533

99,587

Preferred stock dividends

10,512

Net income available to common shareholders

$

180,021

99,587

PER COMMON SHARE DATA

Earnings per common share - basic

$

3.27

1.89

Earnings per common share - diluted

$

3.24

1.88

Dividends per common share

$

0.56

0.56

SIGNATURE BANK

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

March 31,
2021

December 31,
2020

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

(unaudited)

ASSETS

Cash and due from banks

$

19,528,833

12,208,997

Short-term investments

219,476

139,334

Total cash and cash equivalents

19,748,309

12,348,331

Securities available-for-sale (amortized cost $10,635,653 at March 31, 2021

and $8,891,709 at December 31, 2020); (zero allowance for credit losses

at March 31, 2021 and $4 at December 31, 2020)

10,536,991

8,890,417

Securities held-to-maturity (fair value $2,697,797 at March 31, 2021

and $2,329,378 at December 31, 2020); (allowance for credit losses

$51 at March 31, 2021 and December 31, 2020)

2,695,782

2,282,830

Federal Home Loan Bank stock

169,143

171,678

Loans held for sale

337,976

407,363

Loans and leases

50,952,998

48,833,098

Allowance for credit losses for loans and leases

(521,761

)

(508,299

)

Loans and leases, net

50,431,237

48,324,799

Premises and equipment, net

79,668

80,274

Operating lease right-of-use assets

241,308

237,407

Accrued interest and dividends receivable

298,382

277,801

Other assets

843,398

867,444

Total assets

$

85,382,194

73,888,344

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits

Non-interest-bearing

$

22,532,139

18,757,771

Interest-bearing

51,442,440

44,557,552

Total deposits

73,974,579

63,315,323

Federal funds purchased and securities sold under agreements to repurchase

150,000

150,000

Federal Home Loan Bank borrowings

2,764,245

2,839,245

Subordinated debt

829,127

828,588

Operating lease liabilities

270,089

265,354

Accrued expenses and other liabilities

751,751

662,925

Total liabilities

78,739,791

68,061,435

Shareholders’ equity

Preferred stock, par value $.01 per share; 61,000,000 shares authorized;

730,000 shares issued and outstanding at March 31, 2021 and December 31, 2020

7

7

Common stock, par value $.01 per share; 64,000,000 shares authorized;

57,913,798 shares issued and 57,789,813 outstanding at March 31, 2021;

55,520,417 shares issued and 53,564,573 outstanding at December 31, 2020

578

555

Additional paid-in capital

3,072,926

2,583,514

Retained earnings

3,698,195

3,548,260

Treasury stock, zero shares at March 31, 2021 and 1,899,336 shares at

December 31, 2020

(232,531

)

Accumulated other comprehensive loss

(129,303

)

(72,896

)

Total shareholders' equity

6,642,403

5,826,909

Total liabilities and shareholders' equity

$

85,382,194

73,888,344

SIGNATURE BANK

FINANCIAL SUMMARY, CAPITAL RATIOS, ASSET QUALITY

(unaudited)

Three months ended

(in thousands, except ratios and per share amounts)

March 31,
2021

December 31,
2020

March 31,
2020

PER COMMON SHARE

Earnings per common share - basic

$

3.27

$

3.28

$

1.89

Earnings per common share - diluted

$

3.24

$

3.26

$

1.88

Weighted average common shares outstanding - basic

54,998

52,673

52,546

Weighted average common shares outstanding - diluted

55,531

52,970

52,686

Book value per common share

$

102.69

$

95.56

$

88.94

SELECTED FINANCIAL DATA

Return on average total assets

0.97

%

0.96

%

0.78

%

Return on average common shareholders' equity

13.02

%

13.59

%

8.42

%

Efficiency ratio (1)

37.88

%

37.61

%

39.72

%

Yield on interest-earning assets

2.53

%

2.74

%

3.82

%

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

2.54

%

2.75

%

3.83

%

Cost of deposits and borrowings

0.47

%

0.57

%

1.16

%

Net interest margin

2.09

%

2.22

%

2.78

%

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

2.10

%

2.23

%

2.79

%

(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.

March 31,
2021

December 31,
2020

March 31,
2020

CAPITAL RATIOS

Tangible common equity (4)

6.92

%

6.89

%

8.90

%

Tier 1 leverage (5)

8.82

%

8.55

%

9.45

%

Common equity Tier 1 risk-based (5)

10.92

%

9.87

%

11.05

%

Tier 1 risk-based (5)

12.18

%

11.20

%

11.05

%

Total risk-based (5)

14.41

%

13.54

%

12.77

%

ASSET QUALITY

Non-accrual loans

$

133,713

$

120,171

$

59,055

Allowance for loan and lease losses

$

521,761

$

508,299

$

356,274

Allowance for loan and lease losses to non-accrual loans

390.21

%

422.98

%

603.29

%

Allowance for loan and lease losses to total loans

1.02

%

1.04

%

0.87

%

Non-accrual loans to total loans

0.26

%

0.25

%

0.14

%

Quarterly net charge-offs to average loans, annualized

0.15

%

0.10

%

0.02

%

(4)

We define tangible common equity as the ratio of total tangible common equity to total tangible assets (the "TCE ratio"). TCE represents the Company's common shareholders' equity (i.e., total shareholders' equity less preferred equity) less intangible assets. The TCE ratio is considered to be a non-GAAP financial measure and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. The TCE ratio is a metric used by management to evaluate the adequacy of our capital levels. In addition to tangible common equity, management uses other metrics, such as Tier 1 capital related ratios, to evaluate capital levels. See "Non-GAAP Financial Measures" for related calculation.

(5)

March 31, 2021 ratios are preliminary.

SIGNATURE BANK

NET INTEREST MARGIN ANALYSIS

(unaudited)

Three months ended

Three months ended

March 31, 2021

March 31, 2020

(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

$

17,108,914

5,016

0.12

%

1,266,147

4,413

1.40

%

Investment securities

12,147,383

56,965

1.88

%

9,600,884

70,187

2.92

%

Commercial loans, mortgages and leases (1)

49,202,964

429,337

3.54

%

39,363,685

404,364

4.13

%

Residential mortgages and consumer loans

157,302

1,334

3.44

%

187,521

1,649

3.54

%

Loans held for sale

132,092

580

1.78

%

81,806

704

3.46

%

Total interest-earning assets

78,748,655

493,232

2.54

%

50,500,043

481,317

3.83

%

Non-interest-earning assets

971,604

784,289

Total assets

$

79,720,259

51,284,332

INTEREST-BEARING LIABILITIES

Interest-bearing deposits

NOW and interest-bearing demand

$

16,071,916

19,947

0.50

%

5,550,076

20,011

1.45

%

Money market

30,295,092

32,687

0.44

%

20,420,720

67,161

1.32

%

Time deposits

1,788,516

4,870

1.10

%

2,367,145

12,567

2.14

%

Non-interest-bearing demand deposits

20,653,116

%

12,804,321

%

Total deposits

68,808,640

57,504

0.34

%

41,142,262

99,739

0.98

%

Subordinated debt

828,775

9,801

4.73

%

456,237

5,852

5.13

%

Other borrowings

2,982,579

17,730

2.41

%

4,187,423

25,960

2.49

%

Total deposits and borrowings

72,619,994

85,035

0.47

%

45,785,922

131,551

1.16

%

Other non-interest-bearing liabilities

784,921

694,213

Preferred equity

708,019

Common equity

5,607,325

4,804,197

Total liabilities and shareholders' equity

$

79,720,259

51,284,332

OTHER DATA

Net interest income / interest rate spread (1)

408,197

2.07

%

349,766

2.67

%

Tax equivalent adjustment

(1,690

)

(1,503

)

Net interest income, as reported

406,507

348,263

Net interest margin

2.09

%

2.78

%

Tax-equivalent effect

0.01

%

0.01

%

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

2.10

%

2.79

%

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

108.44

%

110.30

%

(1)

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

SIGNATURE BANK
NON-GAAP FINANCIAL MEASURES
(unaudited)

Management believes that the presentation of certain non-GAAP financial measures assists investors when comparing results period-to-period in a more consistent manner and provides a better measure of Signature Bank's results. These non-GAAP measures include the Bank's (i) tangible common equity ratio, (ii) efficiency ratio, (iii) yield on interest-earning assets, tax-equivalent basis, (iv) core net interest margin, tax-equivalent basis excluding loan prepayment penalty income, (v) pre-tax, pre-provision earnings, and (vi) loans and leases to core loans (excluding Paycheck Protection Program loans). 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:

Three months ended March 31,

(dollars in thousands)

2021

2020

Consolidated total shareholders' equity

$

6,642,403

4,763,961

Less: Preferred equity

708,019

Common shareholders' equity

$

5,934,384

4,763,961

Intangible assets

28,630

45,711

Tangible common shareholders' equity (TCE)

$

5,905,754

4,718,250

Consolidated total assets

$

85,382,194

53,074,716

Intangible assets

28,630

45,711

Consolidated tangible total assets (TTA)

$

85,353,564

53,029,005

Tangible common equity ratio (TCE/TTA)

6.92

%

8.90

%

The following table presents the efficiency ratio calculation:

Three months ended March 31,

(dollars in thousands)

2021

2020

Non-interest expense (NIE)

$

166,391

143,966

Net interest income before provision for credit losses

406,507

348,263

Other non-interest income

32,701

14,180

Total income (TI)

$

439,208

362,443

Efficiency ratio (NIE/TI)

37.88

%

39.72

%

SIGNATURE BANK
NON-GAAP FINANCIAL MEASURES
(unaudited)

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

Three months ended March 31,

(dollars in thousands)

2021

2020

Interest income (as reported)

$

491,542

479,814

Tax-equivalent adjustment

1,690

1,503

Interest income, tax-equivalent basis

$

493,232

481,317

Interest-earnings assets

$

78,748,655

50,500,043

Yield on interest-earning assets

2.53

%

3.82

%

Tax-equivalent effect

0.01

%

0.01

%

Yield on interest-earning assets, tax-equivalent basis

2.54

%

3.83

%

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 March 31,

(dollars in thousands)

2021

2020

Net interest margin (as reported)

2.09

%

2.78

%

Tax-equivalent adjustment

0.01

%

0.01

%

Margin contribution from loan prepayment penalty income

(0.03

)

%

(0.08

)

%

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

2.07

%

2.71

%

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

Three months ended March 31,

(dollars in thousands)

2021

2020

Net income (as reported)

$

190,533

99,587

Income tax expense

51,412

52,067

Provision for credit losses

30,872

66,823

Pre-tax, pre-provision earnings

$

272,817

218,477

The following table reconciles loans and leases (as reported) to core loans (excluding Paycheck Protection Program ("PPP") loans):

(dollars in thousands)

March 31,
2021

December 31,
2020

March 31,
2020

Loans and leases (as reported)

$

50,952,998

48,833,098

41,001,156

PPP loans

2,672,816

1,874,447

Core loans (excluding PPP loans)

$

48,280,182

46,958,651

41,001,156

View source version on businesswire.com: https://www.businesswire.com/news/home/20210421005059/en/

Contacts

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

Media Contact:
Susan Turkell Lewis, 646-822-1825
slewis@signatureny.com