SBNY
$160.27
Signature Bank
$8.51
5.61%
Earnings Details
4th Quarter December 2020
Thursday, January 21, 2021 5:00:00 AM
Tweet Share Watch
Summary

Signature Bank (SBNY) Reports 4th Quarter Earnings

Signature Bank (SBNY) reported 4th Quarter December 2020 earnings of $3.26 per share on revenue of $512.7 million. The consensus earnings estimate was $2.91 per share on revenue of $419.7 million. Revenue grew 4.9% on a year-over-year basis.

Signature Bank is a full service commercial bank, which offers business and personal banking products and services, as well as investment, brokerage, asset management and insurance products and services through its subsidiary.

Results
Reported Earnings
$3.26
Earnings Whisper
-
Consensus Estimate
$2.91
Reported Revenue
$512.7 Mil
Revenue Estimate
$419.7 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Signature Bank Reports 2020 Fourth Quarter and Year-end Results

  • Net Income for the 2020 Fourth Quarter Was A Record $173.0 Million, or $3.26 Diluted Earnings Per Share, Versus $147.6 Million, or $2.76 Diluted Earnings Per Share, Reported in the 2019 Fourth Quarter. Pre-Tax, Pre-Provision Earnings for the 2020 Fourth Quarter Were $261.5 Million, an Increase of $45.2 Million, or 20.9 Percent, Compared with $216.3 Million for the 2019 Fourth Quarter
  • Net Income for 2020 Was $528.4 Million, or $9.96 Diluted Earnings Per Share, Compared with $586.5 Million or $10.87 Diluted Earnings Per Share in 2019. Pre-Tax, Pre-Provision Earnings for 2020 Were $980.3 Million, an Increase of $136.3 Million, or 16.2 Percent, Compared with $844.0 Million for 2019
  • Total Deposits in the Fourth Quarter Increased a Record $8.98 Billion to $63.32 Billion, While Average Deposits Increased a Record $10.36 Billion, or 20.1 Percent
  • Total Deposits Grew a Record $22.93 Billion, or 56.8 Percent, in 2020. Average Deposits for 2020 Grew to $50.56 Billion, Representing a Record Increase of $12.51 Billion, or 32.9 Percent, Versus $38.06 Billion in 2019
  • For the 2020 Fourth Quarter, Core Loans (Excluding Paycheck Protection Program Loans) Increased a record $2.73 Billion. Since Year-end 2019, Core Loans Increased a Record $7.85 Billion, or 20.1 Percent
  • Non-Accrual Loans Were $120.2 Million, or 0.25 Percent of Total Loans, at December 31, 2020, Versus $81.3 Million, or 0.18 Percent, at the End of the 2020 Third Quarter and $57.4 Million, or 0.15 Percent, at the End of the 2019 Fourth Quarter
  • As of December 31, 2020, the Bank has Entered into COVID-19 Principal and Interest Deferrals of $1.31 Billion
  • Significant Excess Cash Balances From Continued Strong Deposit Flows Impacted Core Net Interest Margin by 46 Basis Points. Net Interest Margin on a Tax-Equivalent Basis was 2.23 Percent, Compared With 2.55 Percent for the 2020 Third Quarter and 2.72 Percent for the 2019 Fourth Quarter. Core Net Interest Margin on a Tax-Equivalent Basis Excluding Loan Prepayment Penalty Income Decreased 31 Basis Points to 2.21 Percent, Compared with 2.52 Percent for the 2020 Third Quarter
  • Tier 1 Leverage, Common Equity Tier 1 Risk-Based, Tier 1 Risk-Based, and Total Risk-Based Capital Ratios were 8.55 Percent, 9.87 Percent, 11.20 Percent, and 13.54 Percent, Respectively, at December 31, 2020. Signature Bank Remains Significantly Above FDIC “Well Capitalized” Standards. Tangible Common Equity Ratio was 6.89 Percent
  • During the Fourth Quarter, the Bank Issued $375.0 Million in Subordinated Debt and Successfully Raised $730.0 Million in a Public Offering of Noncumulative Perpetual Series A Preferred Stock
  • The Bank Declared a Cash Dividend of $0.56 Per Share, Payable on or After February 12, 2021 to Common Stockholders of Record at the Close of Business on February 1, 2021
  • For 2020, 20 Private Client Banking Teams Joined the Bank: Two in New York, Five in San Francisco, and 13 in the Greater Los Angeles Marketplace. The Bank Now Has a Total of 116 Private Client Banking Teams, of Which 23 Are Located on the West Coast

NEW YORK--(BUSINESS WIRE)--Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, today announced results for its fourth quarter ended December 31, 2020.

Net income for the 2020 fourth quarter was $173.0 million, or $3.26 diluted earnings per share, versus $147.6 million, or $2.76 diluted earnings per share, for the 2019 fourth quarter. The increase in net income for the 2020 fourth 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. This is partially offset by an increase in the provision for credit losses of $25.8 million predominantly due to effects of COVID-19 on the U.S. economy. Pre-tax, pre-provision earnings were $261.5 million, representing an increase of $45.2 million, or 20.9 percent, compared with $216.3 million for the 2019 fourth quarter.

Net interest income for the 2020 fourth quarter rose $56.7 million, or 16.8 percent, to $395.0 million, when compared with the fourth quarter of 2019. This increase is primarily due to growth in average interest-earning assets. Total assets reached $73.89 billion at December 31, 2020, expanding $23.30 billion, or 46.0 percent, from $50.59 billion at December 31, 2019. Average assets for the 2020 fourth quarter reached $71.81 billion, an increase of $21.41 billion, or 42.5 percent, versus the comparable period a year ago.

Deposits for the 2020 fourth quarter increased $8.98 billion, or 16.5 percent to $63.32 billion, including non-interest bearing deposit growth of $2.47 billion. Non-interest bearing deposits now represent 29.6 percent of total deposits. Overall deposit growth for the last twelve months was 56.8 percent, or $22.93 billion, when compared with deposits at the end of 2019. Average total deposits for 2020 were $50.56 billion, growing $12.51 billion, or 32.9 percent, versus average total deposits of $38.06 billion for 2019.

"2020 was a year where many worldwide suffered immensely due to the effects of the COVID-19 pandemic. With the distribution of the vaccines, we hope the world will be a safer place soon and look forward to 2021 being a year where we return to normal and all whose lives have been horribly affected can heal. During these difficult times, Signature Bank focused on providing assistance for colleagues and clients alike through several beneficial programs, including PPP, to help them through their struggles. 2020 also marked the time where recent initiatives put forth by the Bank developed into full-fledged businesses as the pandemic did not slow their progress. These new businesses, coupled with efforts emanating from our existing franchise, flourished throughout the year. The Bank saw remarkable record deposit growth and significant record loan growth leading to nearly $1 billion in pretax, pre-provision earnings, which increased 16.1 percent for the year. Furthermore, we strengthened our West Coast presence meaningfully utilizing our core banking model in California. To this end, 17 teams were appointed in Los Angeles and San Francisco in 2020 alone,” explained Signature Bank President and Chief Executive Officer Joseph J. DePaolo.

“Signature Bank enters 2021 as a stronger financial institution through the bolstering of our capital position in excess of $1 billion with the issuance of $375 million in subordinated debt and $730 million in preferred stock. Moreover, we’ve reached asset/liability neutrality by significantly increasing floating rate assets as a percentage of the balance sheet while also notably reducing our commercial real estate concentration. Additionally, we have meaningfully improved our liquidity position through significant record core deposit inflows and reduced borrowings which contributed to a decline in our loan-to-deposit ratio to 77.1 percent. Signature Bank now has a multi-faceted growth profile, with traditional private client banking teams leading the charge in New York, San Francisco and Los Angeles. Further fortifying the Bank’s market position are our multitude of national businesses, including Signature Financial, Asset Based Lending, Fund Banking, Venture Banking, Digital Banking, and Specialized Mortgage Banking Solutions, as well as SignetTM, our state-of-the-art blockchain-based payments platform. We look forward to a healthier 2021 as recovery from the COVID-19 pandemic commences, and life begins to return to normal,” DePaolo concluded.

Scott A. Shay, Chairman of the Board, added: “2020 was a dramatically difficult year from many perspectives. At Signature Bank, sadly, we saw some of our colleagues lose loved ones. The real human toll of COVID-19 was central to many of our activities in 2020 in relation to our colleagues and clients. We are ever mindful that our real assets are those with whom we work every day. Concurrently, during 2020, Signature Bank’s amazing organic growth was widespread across all areas of focus including the aforementioned new businesses. To support our growth, the Bank raised more than $1 billion in capital while remaining focused on credit quality. In difficult times, clients care about the basics, namely good, unbiased advice that puts them and their sleep-at-night safety first and foremost. We provide these levels of comfort through our dedicated bankers, who, throughout 2020, catered to clients at all hours.”

“Additionally, part of being a safe bank amid this landscape is paying close attention to technological advances. We have been at the forefront, as evidenced by the first to launch a blockchain-based payments platform, and we intend to keep it that way. Hence the reason we invested in developing Signet before most investors -- and even our clients -- recognized the emergence of and massive changes in the digital payments economy.”

“As the rapid and safe deployment of vaccines penetrates the nation, we look forward to an end to the pandemic, and the new opportunities that lie ahead,” Shay concluded.

Capital

In the 2020 fourth quarter, the Bank issued $375.0 million of subordinated debt and successfully raised $730.0 million in a public offering of Noncumulative Perpetual Series A Preferred Stock. Proceeds from both offerings 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 8.55 percent, 9.87 percent, 11.20 percent, and 13.54 percent, respectively, as of December 31, 2020. 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 6.89 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 February 12, 2021 to common stockholders of record at the close of business on February 1, 2021. In the fourth quarter of 2020, the Bank paid a cash dividend of $0.56 per share to common stockholders of record at the close of business on November 2, 2020.

Net Interest Income

Net interest income for the 2020 fourth quarter was $395.0 million, up $56.7 million, or 16.8 percent, when compared with the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $70.83 billion for the 2020 fourth quarter represent an increase of $21.27 billion, or 42.9 percent, from the 2019 fourth quarter. Due to the current low interest rate environment, the yield on interest-earning assets for the 2020 fourth quarter fell 112 basis points to 2.75 percent, compared to the fourth quarter of last year.

Average cost of deposits and average cost of funds for the fourth quarter of 2020 decreased 66 and 69 basis points, to 0.42 percent and 0.57 percent, respectively, versus the comparable period a year ago.

Net interest margin on a tax-equivalent basis for the 2020 fourth quarter was 2.23 percent versus 2.72 percent reported in the 2019 fourth quarter and 2.55 percent in the 2020 third quarter. Excluding loan prepayment penalties in both quarters, linked quarter core net interest margin on a tax-equivalent basis decreased 31 basis points to 2.21 percent.

Provision for Credit Losses

The Bank’s provision for credit losses for the fourth quarter of 2020 was $35.6 million, an increase of $25.84 million, or over 100 percent, versus the 2019 fourth quarter. The Bank’s elevated provision for credit losses for the fourth quarter was predominantly attributable to effects of COVID-19 on the U.S. economy. Additionally, the bank adopted CECL on January 1, 2020.

Net charge-offs for the 2020 fourth quarter were $11.4 million, or 0.10 percent of average loans, on an annualized basis, versus $10.5 million, or 0.09 percent, for the 2020 third quarter and net charge-offs of $2.5 million, or 0.03 percent, for the 2019 fourth quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2020 fourth quarter was $24.2 million, up $8.2 million from $16.0 million reported in the fourth quarter of last year. The increase was primarily driven by a $5.5 million increase in fees and service charges.

Non-interest expense for the fourth quarter of 2020 was $157.7 million, an increase of $19.6 million, or 14.2 percent, versus $138.0 million reported in the 2019 fourth quarter. The increase was predominantly due to an increase of $11.4 million in salaries and benefits from the significant hiring of private client banking teams.

The Bank’s efficiency ratio improved to 37.6 percent for the 2020 fourth quarter compared with 39.0 percent for the same period a year ago, and 38.9 percent for the third quarter of 2020.

Loans

Loans, excluding loans held for sale, expanded $2.62 billion, or 5.7 percent, during the 2020 fourth quarter to $48.83 billion, versus $46.21 billion at September 30, 2020. Average loans, excluding loans held for sale, reached $47.39 billion in the 2020 fourth quarter, growing $1.96 billion, or 4.3 percent, from the 2020 third quarter and $9.28 billion, or 24.4 percent, from the fourth quarter of 2019. For the ninth consecutive quarter, the increase in loans was primarily driven by growth in commercial and industrial loans.

At December 31, 2020, non-accrual loans were $120.2 million, representing 0.25 percent of total loans and 0.16 percent of total assets, compared with non-accrual loans of $81.3 million, or 0.18 percent of total loans, at September 30, 2020 and $57.4 million, or 0.15 percent of total loans, at December 31, 2019. At December 31, 2020, the ratio of allowance for credit losses for loans and leases to total loans, was 1.04 percent, versus 1.05 percent at September 30, 2020 and 0.64 percent at December 31, 2019. Additionally, the ratio of allowance for credit losses for loans and leases to non-accrual loans, or the coverage ratio, was 423 percent for the 2020 fourth quarter versus 596 percent for the third quarter of 2020 and 436 percent for the 2019 fourth quarter.

COVID-19 Related Loan Modifications

As of December 31, 2020, total principal and interest deferrals significantly decreased to $1.31 billion, or 2.7 percent of the Bank’s total loan portfolio from 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.

 

 

Principal and Interest Deferrals

(dollars in millions)

Portfolio Balance
12/31/2020

Deferral Balance

%
of Loan Category

Multi-family

$

15,173

615

4.1

%

Retail

5,637

369

6.5

%

Office

3,930

150

3.8

%

Acquisition, Development, and Construction (ADC)

1,367

12

0.9

%

Industrial

574

3

0.5

%

Hotel

77

0.0

%

Land

38

0.0

%

Other

297

10

3.4

%

Total Commercial Real Estate

27,093

1,159

4.3

%

Fund Banking and Venture Banking

11,416

0.0

%

Asset Based Lending

319

0.0

%

Signature Financial

5,046

35

0.7

%

Traditional Commercial & Industrial

2,537

80

3.2

%

Total Commercial & Industrial

19,318

115

0.6

%

PPP Loans

1,874

0.0

%

Consumer and Residential

584

37

6.3

%

Premium, deferred fees, and costs

(36)

0.0

%

Total Loans

$

48,833

1,311

2.7

%

Additionally, the Bank has made other COVID-19 related modifications that have resulted in the receipt of modified principal and interest payments totaling 6.6 percent of the loan book.

Conference Call

Signature Bank’s management will host a conference call to review results of the 2020 fourth quarter on Thursday, January 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 #4079502. 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 #4079502. The replay will be available from approximately 1:00 PM ET on Thursday, January 21, 2021 through 11:59 PM ET on Sunday, January 24, 2021.

About Signature Bank

Signature Bank, member FDIC, is a New York-based full-service commercial bank with 36 private client offices throughout the metropolitan New York area, including those in Connecticut as well as in 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: 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 is one of the top 40 largest banks in the U.S., based on deposits (S&P Global Market Intelligence).

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
December 31,

Twelve months ended
December 31,

(dollars in thousands, except per share amounts)

2020

2019

2020

2019

INTEREST INCOME

 

 

 

 

Loans held for sale

$

1,321

1,325

3,655

4,978

Loans and leases, net

427,018

399,609

1,661,912

1,579,268

Securities available-for-sale

41,886

54,003

186,569

227,535

Securities held-to-maturity

12,675

14,551

55,335

60,843

Other investments

5,658

11,908

24,175

39,052

Total interest income

488,558

481,396

1,931,646

1,911,676

INTEREST EXPENSE

 

 

 

 

Deposits

65,990

108,928

297,349

440,730

Federal funds purchases and securities sold under
agreements to repurchase

595

733

2,742

14,170

Federal Home Loan Bank borrowings

17,420

28,323

85,333

129,138

Subordinated debt

9,570

5,117

27,130

16,045

Total interest expense

93,575

143,101

412,554

600,083

Net interest income before provision for credit losses

394,983

338,295

1,519,092

1,311,593

Provision for credit losses

35,599

9,755

248,094

22,636

Net interest income after provision for credit losses

359,384

328,540

1,270,998

1,288,957

NON-INTEREST INCOME

 

 

 

 

Commissions

3,731

3,673

13,441

14,504

Fees and service charges

14,625

9,174

46,397

32,926

Net (losses) gains on sales of securities

(17)

3,606

1,034

Net gains on sale of loans

3,099

1,957

12,651

10,836

Other income (1)

2,753

1,225

(847)

2,415

Total non-interest income

24,191

16,029

75,248

61,715

NON-INTEREST EXPENSE

 

 

 

 

Salaries and benefits

95,703

84,301

389,125

335,054

Occupancy and equipment

10,934

10,357

44,371

42,833

Information technology

11,420

9,410

43,217

36,961

FDIC assessment fees

3,955

2,894

13,742

12,432

Professional fees

5,355

3,996

18,286

14,689

Other general and administrative

30,284

27,065

105,313

87,300

Total non-interest expense

157,651

138,023

614,054

529,269

Income before income taxes

225,924

206,546

732,192

821,403

Income tax expense (1)

52,915

58,932

203,833

234,917

Net income

$

173,009

147,614

528,359

586,486

Preferred stock dividends

Net income available to common shareholders

$

173,009

147,614

528,359

586,486

PER COMMON SHARE DATA

 

 

 

 

Earnings per common share - basic (1)

$

3.28

2.78

10.00

10.87

Earnings per common share - diluted (1)

$

3.26

2.76

9.96

10.82

Dividends per common share

$

0.56

0.56

2.24

2.24

(1) Effective January 1, 2020, we changed our accounting policy for Low Income Housing Tax Credit ("LIHTC") investments from the equity method to the proportional amortization method as it was determined to be the preferable method. All applicable prior period amounts have been retroactively restated to conform to the new accounting policy.

SIGNATURE BANK

 

 

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

 

 

 

December 31,

 

2020

2019

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

(unaudited)

 

ASSETS

 

 

Cash and due from banks

$

12,208,997

702,277

Short-term investments

139,334

87,555

Total cash and cash equivalents

12,348,331

789,832

Securities available-for-sale (amortized cost $8,894,719 at December 31, 2020 and
$7,186,494 at December 31, 2019); (allowance for credit losses $4 at
December 31, 2020)

8,890,417

7,143,864

Securities held-to-maturity (fair value $2,329,378 at December 31, 2020 and
$2,115,541 December 31, 2019); (allowance for credit losses $51 at December 31,
2020)

2,282,830

2,101,970

Federal Home Loan Bank stock

171,678

231,339

Loans held for sale

407,363

290,593

Loans and leases

48,833,098

39,109,623

Allowance for credit losses for loans and leases

(508,299)

(249,989)

Loans and leases, net

48,324,799

38,859,634

Premises and equipment, net

80,274

66,419

Operating lease right-of-use assets

237,407

217,578

Accrued interest and dividends receivable

277,801

147,527

Other assets (1)

867,444

743,053

Total assets

$

73,888,344

50,591,809

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

Deposits

 

 

Non-interest-bearing

$

18,757,771

13,016,931

Interest-bearing

44,557,552

27,366,276

Total deposits

63,315,323

40,383,207

Federal funds purchased and securities sold under agreements to repurchase

150,000

150,000

Federal Home Loan Bank borrowings

2,839,245

4,142,144

Subordinated debt

828,588

456,119

Operating lease liabilities

265,354

242,587

Accrued expenses and other liabilities

662,925

472,554

Total liabilities

68,061,435

45,846,611

Shareholders' equity

 

 

Preferred stock, par value $.01 per share; 61,000,000 shares authorized,
730,000 shares issued and outstanding at December 31, 2020; and none issued and
outstanding at December 31, 2019

7

Common stock, par value $.01 per share; 64,000.000 shares authorized;
55,520,417 shares issued and 53,564,573 outstanding at December 31, 2020;
55,427,631 shares issued and 53,519,644 outstanding at December 31, 2019

555

554

Additional paid-in capital

2,583,514

1,871,571

Retained earnings (1)

3,548,260

3,172,273

Treasury stock, 1,899,336 shares at December 31, 2020 and 1,907,987 shares at December 31, 2019

(232,531)

(233,570)

Accumulated other comprehensive loss

(72,896)

(65,630)

Total shareholders' equity

5,826,909

4,745,198

Total liabilities and shareholders' equity

$

73,888,344

50,591,809

(1) Effective January 1, 2020, we changed our accounting policy for Low Income Housing Tax Credit ("LIHTC") investments from the equity method to the proportional amortization method as it was determined to be the preferable method. All applicable prior period amounts have been retroactively restated to conform to the new accounting policy.

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)

2020

2019 (6)

2020

2019 (6)

PER COMMON SHARE

 

 

 

 

Earnings per common share - basic

$

3.28

2.78

$

10.00

10.87

Earnings per common share - diluted

$

3.26

2.76

$

9.96

10.82

Weighted average common shares outstanding - basic

52,673

53,008

52,641

53,774

Weighted average common shares outstanding - diluted

52,970

53,234

52,889

54,011

Book value per common share

$

95.56

88.66

$

95.56

88.66

 

 

 

 

 

SELECTED FINANCIAL DATA

 

 

 

 

Return on average total assets

0.96%

1.16%

0.87%

1.19%

Return on average common shareholders' equity

13.59%

12.38%

10.75%

12.85%

Efficiency ratio (1)

37.61%

38.95%

38.51%

38.54%

Yield on interest-earning assets

2.74%

3.85%

3.24%

3.95%

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

2.75%

3.87%

3.25%

3.96%

Cost of deposits and borrowings

0.57%

1.26%

0.75%

1.37%

Net interest margin

2.22%

2.71%

2.55%

2.71%

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

2.23%

2.72%

2.56%

2.72%

(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.

 

December 31,
2020

September 30,
2020

December 31,
2019 (6)

CAPITAL RATIOS

 

 

 

Tangible common equity (4)

 

6.89

%

 

7.75

%

 

9.30

%

Tier 1 leverage (5)

 

8.55

%

 

8.56

%

 

9.55

%

Common equity Tier 1 risk-based (5)

 

9.87

%

 

10.26

%

 

11.56

%

Tier 1 risk-based (5)

 

11.20

%

 

10.26

%

 

11.56

%

Total risk-based (5)

 

13.54

%

 

11.98

%

 

13.26

%

 

 

 

 

ASSET QUALITY

 

 

 

Non-accrual loans

$

120,171

 

$

81,305

 

$

57,355

 

Allowance for loan and lease losses

$

508,299

 

$

484,923

 

$

249,989

 

Allowance for loan and lease losses to non-accrual loans

 

422.98

%

 

596.42

%

 

435.86

%

Allowance for loan and lease losses to total loans

 

1.04

%

 

1.05

%

 

0.64

%

Non-accrual loans to total loans

 

0.25

%

 

0.18

%

 

0.15

%

Quarterly net charge-offs to average loans, annualized

 

0.10

%

 

0.09

%

 

0.03

%

(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 stock shareholders' equity (i.e., total stockholders' 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) December 31, 2020 ratios are preliminary.

 

(6) Effective January 1, 2020, we changed our accounting policy for Low Income Housing Tax Credit ("LIHTC") investments from the equity method to the proportional amortization method as it was determined to be the preferable method. All applicable prior period amounts have been retroactively restated to conform to the new accounting policy.

SIGNATURE BANK

 

 

 

 

 

 

 

NET INTEREST MARGIN ANALYSIS

 

 

 

 

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
December 31, 2020

 

Three Months Ended
December 31, 2019

(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

$

12,511,429

 

3,569

 

0.11

%

 

1,743,038

 

7,755

 

1.77

%

Investment securities

10,631,245

 

56,650

 

2.13

%

 

9,541,382

 

72,707

 

3.05

%

Commercial loans, mortgages and leases (1)

47,223,197

 

427,210

 

3.60

%

 

37,903,214

 

398,935

 

4.18

%

Residential mortgages and consumer loans

162,349

 

1,444

 

3.54

%

 

203,066

 

2,131

 

4.16

%

Loans held for sale

305,885

 

1,321

 

1.72

%

 

169,495

 

1,325

 

3.10

%

Total interest-earning assets

70,834,105

 

490,194

 

2.75

%

 

49,560,195

 

482,853

 

3.87

%

Non-interest-earning assets (2)

972,433

 

 

 

 

808,272

 

 

 

Total assets

$

71,806,538

 

 

 

 

50,368,467

 

 

 

INTEREST-BEARING LIABILITIES

 

 

 

 

 

 

 

Interest-bearing deposits

 

 

 

 

 

 

 

NOW and interest-bearing demand

$

12,362,930

 

19,334

 

0.62

%

 

4,722,763

 

19,727

 

1.66

%

Money market

28,511,134

 

39,934

 

0.56

%

 

20,183,695

 

75,138

 

1.48

%

Time deposits

1,898,286

 

6,722

 

1.41

%

 

2,430,110

 

14,063

 

2.30

%

Non-interest-bearing demand deposits

19,203,186

 

 

%

 

12,750,429

 

 

%

Total deposits

61,975,536

 

65,990

 

0.42

%

 

40,086,997

 

108,928

 

1.08

%

Subordinated debt

808,454

 

9,570

 

4.73

%

 

389,730

 

5,117

 

5.25

%

Other borrowings

2,989,245

 

18,015

 

2.40

%

 

4,460,079

 

29,056

 

2.58

%

Total deposits and borrowings

65,773,235

 

93,575

 

0.57

%

 

44,936,806

 

143,101

 

1.26

%

Other non-interest-bearing liabilities

854,144

 

 

 

 

700,680

 

 

 

Preferred equity

115,818

 

 

 

 

 

 

 

Common equity (2)

5,063,341

 

 

 

 

4,730,981

 

 

 

Total liabilities and shareholders' equity

$

71,806,538

 

 

 

 

50,368,467

 

 

 

OTHER DATA

 

 

 

 

 

 

 

Net interest income / interest rate spread (1)

 

396,619

 

2.18

%

 

 

339,752

 

2.61

%

Tax-equivalent adjustment

 

(1,636)

 

 

 

 

(1,457)

 

 

Net interest income, as reported

 

394,983

 

 

 

 

338,295

 

 

Net interest margin

 

 

2.22

%

 

 

 

2.71

%

Tax-equivalent effect

 

 

0.01

%

 

 

 

0.01

%

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

 

 

2.23

%

 

 

 

2.72

%

Ratio of average interest-earning assets

 

 

 

 

 

 

 

to average interest-bearing liabilities

 

 

107.69

%

 

 

 

110.29

%

(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.

 

(2) Effective January 1, 2020, we changed our accounting policy for Low Income Housing Tax Credit ("LIHTC") investments from the equity method to the proportional amortization method as it was determined to be the preferable method. All applicable prior period amounts have been retroactively restated to conform to the new accounting policy.

SIGNATURE BANK

 

 

 

 

 

 

 

NET INTEREST MARGIN ANALYSIS

 

 

 

 

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended
December 31, 2020

 

Twelve Months Ended
December 31, 2019

(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

$

5,887,909

 

11,748

 

0.20

%

 

1,007,237

 

21,127

 

2.10

%

Investment securities

9,812,898

 

254,331

 

2.59

%

 

9,561,736

 

306,303

 

3.20

%

Commercial loans, mortgages and leases (1)

43,612,057

 

1,661,455

 

3.81

%

 

37,449,199

 

1,575,074

 

4.21

%

Residential mortgages and consumer loans

175,560

 

6,742

 

3.84

%

 

212,254

 

9,463

 

4.46

%

Loans held for sale

196,948

 

3,655

 

1.86

%

 

152,571

 

4,978

 

3.26

%

Total interest-earning assets

59,685,372

 

1,937,931

 

3.25

%

 

48,382,997

 

1,916,945

 

3.96

%

Non-interest-earning assets (2)

920,531

 

 

 

 

764,837

 

 

 

Total assets

$

60,605,903

 

 

 

 

49,147,834

 

 

 

INTEREST-BEARING LIABILITIES

 

 

 

 

 

 

 

Interest-bearing deposits

 

 

 

 

 

 

 

NOW and interest-bearing demand

$

8,783,053

 

67,948

 

0.77

%

 

4,297,419

 

82,180

 

1.91

%

Money market

23,924,076

 

191,353

 

0.80

%

 

19,103,463

 

299,874

 

1.57

%

Time deposits

2,132,466

 

38,048

 

1.78

%

 

2,498,190

 

58,676

 

2.35

%

Non-interest-bearing demand deposits

15,722,196

 

 

%

 

12,155,929

 

 

%

Total deposits

50,561,791

 

297,349

 

0.59

%

 

38,055,001

 

440,730

 

1.16

%

Subordinated debt

545,031

 

27,130

 

4.98

%

 

291,532

 

16,045

 

5.50

%

Other borrowings

3,804,585

 

88,075

 

2.31

%

 

5,516,093

 

143,308

 

2.60

%

Total deposits and borrowings

54,911,407

 

412,554

 

0.75

%

 

43,862,626

 

600,083

 

1.37

%

Other non-interest-bearing liabilities

750,691

 

 

 

 

685,008

 

 

 

Preferred equity

29,112

 

 

 

 

 

 

 

Common equity (2)

4,914,693

 

 

 

 

4,600,200

 

 

 

Total liabilities and shareholders' equity

$

60,605,903

 

 

 

 

49,147,834

 

 

 

OTHER DATA

 

 

 

 

 

 

 

Net interest income / interest rate spread (1)

 

1,525,377

 

2.50

%

 

 

1,316,862

 

2.59

%

Tax-equivalent adjustment

 

(6,285)

 

 

 

 

(5,269)

 

 

Net interest income, as reported

 

1,519,092

 

 

 

 

1,311,593

 

 

Net interest margin

 

 

2.55

%

 

 

 

2.71

%

Tax-equivalent effect

 

 

0.01

%

 

 

 

0.01

%

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

 

 

2.56

%

 

 

 

2.72

%

Ratio of average interest-earning assets

 

 

 

 

 

 

 

to average interest-bearing liabilities

 

 

108.69

%

 

 

 

110.31

%

 

 

 

 

 

 

 

 

(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.

 

(2) Effective January 1, 2020, we changed our accounting policy for Low Income Housing Tax Credit ("LIHTC") investments from the equity method to the proportional amortization method as it was determined to be the preferable method. All applicable prior period amounts have been retroactively restated to conform to the new accounting policy. .

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:

(dollars in thousands)

December 31,
2020

September 30,
2020

December 31,
2019 (1)

Consolidated total shareholders' equity

$

5,826,909

4,983,199

4,745,198

Less: Preferred equity

708,019

Common shareholders' equity

$

5,118,890

4,983,199

4,745,198

Intangible assets

32,301

43,768

45,907

Tangible common shareholders' equity (TCE)

$

5,086,589

4,939,431

4,699,291

 

 

 

 

Consolidated total assets

$

73,888,344

63,760,313

50,591,809

Intangible assets

32,301

43,768

45,907

Consolidated tangible total assets (TTA)

$

73,856,043

63,716,545

50,545,902

Tangible common equity ratio (TCE/TTA)

6.89%

7.75%

9.30%

The following table presents the efficiency ratio calculation:

 

 

Three months ended
December 31,

 

Twelve months ended
December 31,

(dollars in thousands)

2020

2019 (1)

 

2020

2019 (1)

Non-interest expense (NIE)

$

157,651

138,023

 

614,054

529,269

Net interest income before provision for credit losses

394,983

338,295

 

1,519,092

1,311,593

Other non-interest income

24,191

16,029

 

75,248

61,715

Total income (TI)

$

419,174

354,324

 

1,594,340

1,373,308

Efficiency ratio (NIE/TI)

37.61%

38.95%

 

38.51%

38.54%

(1) Effective January 1, 2020, we changed our accounting policy for Low Income Housing Tax Credit ("LIHTC") investments from the equity method to the proportional amortization method as it was determined to be the preferable method. All applicable prior period amounts have been retroactively restated to conform to the new accounting policy.

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

 

 

Three months ended
December 31,

 

Twelve months ended
December 31,

(dollars in thousands)

2020

2019

 

2020

2019

Interest income (as reported)

$

488,558

481,396

 

1,931,646

1,911,676

Tax-equivalent adjustment

 

1,636

1,457

 

6,285

5,269

Interest income, tax-equivalent basis

$

490,194

482,853

 

1,937,931

1,916,945

Interest-earnings assets

$

70,834,105

49,560,195

 

59,685,372

48,382,997

 

 

 

 

 

 

Yield on interest-earning assets

 

2.74%

3.85%

 

3.24%

3.95%

Tax-equivalent effect

 

0.01%

0.02%

 

0.01%

0.01%

Yield on interest-earning assets, tax-equivalent basis

 

2.75%

3.87%

 

3.25%

3.96%

The following table reconciles net interest margin (as reported) to core net interest margin on a tax-equivalent basis excluding loan prepayment penalty income:

 

Three months ended
December 31,

Three months ended
September 30,

Twelve months ended,
December 31,

(dollars in thousands)

2020

2019

2020

2019

2020

2019

Net interest margin (as reported)

2.22%

2.71%

2.54%

2.67%

2.55%

2.71%

Tax-equivalent adjustment

0.01%

0.01%

0.01%

0.01%

0.01%

0.01%

Margin contribution from loan prepayment penalty income

(0.02)%

(0.05)%

(0.03)%

(0.02)%

(0.07)%

(0.03)%

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

2.21%

2.67%

2.52%

2.66%

2.49%

2.69%

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

 

 

Three months ended
December 31,

 

Twelve months ended
December 31,

(dollars in thousands)

2020

2019 (1)

 

2020

2019 (1)

Net income (as reported)

$

173,009

 

147,614

 

 

528,359

 

586,486

 

Income tax expense

52,915

 

58,932

 

 

203,833

 

234,917

 

Provision for credit losses

35,599

 

9,755

 

 

248,094

 

22,636

 

Pre-tax, pre-provision earnings

$

261,523

 

216,301

 

 

980,286

 

844,039

 

(1) Effective January 1, 2020, we changed our accounting policy for Low Income Housing Tax Credit ("LIHTC") investments from the equity method to the proportional amortization method as it was determined to be the preferable method. All applicable prior period amounts have been retroactively restated to conform to the new accounting policy.

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

 

 

 

 

(dollars in thousands)

December 31,
2020

September 30,
2020

December 31,
2019

Loans and leases (as reported)

$

48,833,098

 

46,212,092

 

39,109,623

 

PPP loans

 

1,874,447

 

1,985,357

 

 

Core loans (excluding PPP loans)

$

46,958,651

 

44,226,735

 

39,109,623

 

 

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

Source: Signature Bank