Signature Bank Reports 2018 Fourth Quarter and Year-End Results

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

Net income for the 2018 fourth quarter was $160.8 million, or $2.94 diluted earnings per share, compared with $114.9 million, or $2.11 diluted earnings per share, for the 2017 fourth quarter. The increase in net income for the 2018 fourth quarter, when compared with the same period last year, is primarily the result of an increase in net interest income, fueled by strong average deposit and loan growth as well as an increase in prepayment penalty income, and a decrease in the provision for loan losses attributable to taxi medallion loan write-downs. These factors were partially offset by an increase in non-interest expenses.

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

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

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

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

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

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

Capital

The Bank’s Tier 1 leverage, common equity Tier 1 risk-based, Tier 1 risk-based and total risk-based capital ratios were approximately 9.70 percent, 12.09 percent, 12.09 percent and 13.39 percent, respectively, as of December 31, 2018. Each of these ratios is well in excess of regulatory requirements. The Bank’s strong risk-based capital ratios reflect the relatively low risk profile of the Bank’s balance sheet. The Bank’s tangible common equity ratio remains strong at 9.21 percent. The Bank defines tangible common equity ratio as the ratio of total tangible common shareholders’ equity to total tangible assets.

The Bank declared a cash dividend of $0.56 per share, payable on or after February 15, 2019 to common stockholders of record at the close of business on February 1, 2019. In the fourth quarter of 2018, the Bank paid a cash dividend of $0.56 per share to common stockholders of record at the close of business on November 1, 2018. Additionally, during the 2018 fourth quarter, the Bank repurchased 358,492 shares of common stock for a total of $41.8 million.

Net Interest Income

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

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

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

Provision for Loan Losses

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

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

Non-Interest Income and Non-Interest Expense

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

Non-interest expense for the 2018 fourth quarter was $119.2 million, an increase of $9.2 million, or 8.4 percent, versus $110.0 million reported in the 2017 fourth quarter. The increase was primarily a result of new private client banking teams joining, as well as an increase in costs in our risk management and compliance related activities.

The Bank’s efficiency ratio was 34.94 percent for the fourth quarter of 2018 compared with 33.50 percent for the same period a year ago, and 35.59 percent for the third quarter of 2018.

Loans

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

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

Conference Call

Signature Bank’s management will host a conference call to review results of the 2018 fourth quarter and year-end on Thursday, January 17, 2019, at 10:00 AM ET. All participants should dial 866-359-8135 at least ten minutes prior to the start of the call and reference conference ID #3184218. International callers should dial 901-300-3484.

To hear a live web simulcast or to listen to the archived web cast following completion of the call, please visit the Bank’s web site at www.signatureny.com, click on "Investor Information", then under "Company News," select "Conference Calls," to access the link to the call. To listen to a telephone replay of the conference call, please dial 800-585-8367 or 404-537-3406 and enter conference ID #3184218. The replay will be available from approximately 1:00 PM ET on Thursday, January 17, 2019 through 11:59 PM ET on Monday, January 21, 2019.

About Signature Bank

Signature Bank, member FDIC, is a New York-based full-service commercial bank with 30 private client offices throughout the New York metropolitan area, including those in Manhattan, Brooklyn, Westchester, Long Island, Queens, the Bronx, Staten Island and Connecticut. In 2018, the Bank expanded its footprint on the West Coast with the opening of its first full-service private client banking office in San Francisco. The Bank's growing network of private client banking teams serves the needs of privately owned businesses, their owners and senior managers.

Signature Bank offers a wide variety of business and personal banking products and services. Its specialty finance subsidiary, Signature Financial, LLC, provides equipment finance and leasing. Signature Securities Group Corporation, a wholly owned Bank subsidiary, is a licensed broker-dealer, investment adviser and member FINRA/SIPC, offering investment, brokerage, asset management and insurance products and services.

Signature Bank is ranked the 40th largest bank in the U.S. from nearly 6,000, based on deposits (SNL Financial). The Bank recently earned several third-party recognitions, including: appeared on Forbes' Best Banks in America list for the eighth consecutive year in 2018; and, named Best Business Bank, Best Private Bank and Best Attorney Escrow Services provider by the New York Law Journal in the publication’s annual “Best of” survey for 2018, earning it a place in the New York Law Journal’s Hall of Fame (awarded to companies that have ranked in the “Best of” Survey for at least three of the past four years).

For more information, please visit www.signatureny.com.

This press release and oral statements made from time to time by our representatives contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. You should not place undue reliance on those statements because they are subject to numerous risks and uncertainties relating to our operations and business environment, all of which are difficult to predict and may be beyond our control. Forward-looking statements include information concerning our future results, interest rates and the interest rate environment, loan and deposit growth, loan performance, operations, new private client teams and other hires, new office openings and business strategy, and new products, future dividends and share repurchases. These statements often include words such as "may," "believe," "expect," "anticipate," "intend," "potential," "opportunity," "could," "project," "seek," "should," "will," “would," "plan," "estimate" or other similar expressions. As you consider forward-looking statements, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions that could cause actual results to differ materially from those in the forward-looking statements and can change as a result of many possible events or factors, not all of which are known to us or in our control. These factors include but are not limited to: (i) prevailing economic conditions; (ii) changes in interest rates, loan demand, real estate values and competition, any of which can materially affect origination levels and gain on sale results in our business, as well as other aspects of our financial performance, including earnings on interest-bearing assets; (iii) the level of defaults, losses and prepayments on loans made by us, whether held in portfolio or sold in the whole loan secondary markets, which can materially affect charge-off levels and required credit loss reserve levels; (iv) changes in monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System; (v) changes in the banking and other financial services regulatory environment and (vi) competition for qualified personnel and desirable office locations. Although we believe that these forward-looking statements are based on reasonable assumptions, beliefs and expectations, if a change occurs or our beliefs, assumptions and expectations were incorrect, our business, financial condition, liquidity or results of operations may vary materially from those expressed in our forward-looking statements. Additional risks are described in our quarterly and annual reports filed with the FDIC. You should keep in mind that any forward-looking statements made by Signature Bank speak only as of the date on which they were made. New risks and uncertainties come up from time to time, and we cannot predict these events or how they may affect the Bank. Signature Bank has no duty to, and does not intend to, update or revise the forward-looking statements after the date on which they are made. In light of these risks and uncertainties, you should keep in mind that any forward-looking statement made in this release or elsewhere might not reflect actual results.

SIGNATURE BANK
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
				Three months ended December 31,									Twelve months ended December 31,
(dollars in thousands, except per share amounts)				2018					2017				2018				2017
INTEREST AND DIVIDEND INCOME
Loans held for sale				$	2,658				1,179				10,863				4,334
Loans and leases, net					377,670				316,166				1,389,435				1,191,194
Securities available-for-sale					58,939				51,004				224,012				201,657
Securities held-to-maturity					14,492				14,509				57,930				58,855
Other investments					7,058				4,100				26,680				14,129
	Total interest income				460,817				386,958				1,708,920				1,470,169
INTEREST EXPENSE
Deposits					89,985				50,057				289,248				171,829
Federal funds purchased and securities sold under
agreements to repurchase					5,575				2,367				13,484				9,695
Federal Home Loan Bank borrowings					26,580				11,118				92,628				36,524
Subordinated debt					3,645				3,645				14,573				14,535
	Total interest expense				125,785				67,187				409,933				232,583
Net interest income before provision for loan and lease losses					335,032				319,771				1,298,987				1,237,586
Provision for loan and lease losses					6,441				41,737				162,524				263,297
Net interest income after provision for loan and lease losses					328,591				278,034				1,136,463				974,289
NON-INTEREST INCOME
Commissions					3,416				3,204				13,120				12,299
Fees and service charges					7,845				5,431				28,553				23,557
Net gains on sales of securities					179				700				989				3,963
Net gains on sales of loans					1,605				2,561				6,738				9,218
Other-than-temporary impairment losses on securities:
Total impairment losses on securities					-				(21	)			(2	)			(654	)
Portion recognized in other comprehensive income (before taxes)					-				(11	)			(14	)			21
Net impairment losses on securities recognized in earnings					-				(32	)			(16	)			(633	)
Tax credit investment amortization					(8,540	)			(4,298	)			(30,195	)			(15,821	)
Other Income					1,414				931				4,089				3,458
	Total non-interest income				5,919				8,497				23,278				36,041
NON-INTEREST EXPENSE
Salaries and benefits					77,071				68,384				302,095				273,240
Occupancy and equipment					9,139				7,860				34,311				32,141
Information technology					7,071				5,879				25,732				22,623
FDIC assessment fees					3,751				6,754				25,256				26,996
Professional fees					3,613				2,799				13,698				12,021
Other general and administrative					18,498				18,288				85,186				68,045
	Total non-interest expense				119,143				109,964				486,278				435,066
Income before income taxes					215,367				176,567				673,463				575,264
Income tax expense					54,527				61,701				168,121				188,055
Net income				$	160,840				114,866				505,342				387,209
PER COMMON SHARE DATA
Earnings per share – basic				$	2.94				2.12				9.27				7.17
Earnings per share – diluted				$	2.94				2.11				9.23				7.12
Dividends per common share				$	0.56				-				1.12				-

SIGNATURE BANK
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
				December 31,					December 31,
				2018					2017
(dollars in thousands, except shares and per share amounts)				(unaudited)
ASSETS
Cash and due from banks				$	269,204				290,078
Short-term investments					48,051				45,388
	Total cash and cash equivalents				317,255				335,466
Securities available-for-sale					7,301,604				6,953,719
Securities held-to-maturity (fair value $1,845,198 at December 31, 2018
and $1,983,087 at December 31, 2017)					1,883,533				1,996,376
Federal Home Loan Bank stock					264,877				227,920
Loans held for sale					485,305				432,277
Loans and leases, net					36,193,122				32,416,580
Premises and equipment, net					59,051				61,571
Accrued interest and dividends receivable					141,829				117,070
Other assets					718,240				576,741
	Total assets			$	47,364,816				43,117,720
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest-bearing				$	12,016,197				11,353,038
Interest-bearing					24,362,576				22,086,789
	Total deposits				36,378,773				33,439,827
Federal funds purchased and securities sold under agreements
to repurchase					820,000				790,000
Federal Home Loan Bank borrowings					4,970,000				4,195,000
Subordinated debt					258,174				257,381
Accrued expenses and other liabilities					530,729				403,821
	Total liabilities				42,957,676				39,086,029
Shareholders’ equity
Preferred stock, par value $.01 per share; 61,000,000 shares authorized;
none issued at December 31, 2018 and December 31, 2017					-				-
Common stock, par value $.01 per share; 64,000,000 shares authorized;
55,405,531 shares issued and 55,039,433 outstanding at December 31, 2018;
54,979,213 shares issued and 54,977,971 outstanding at December 31, 2017					554				550
Additional paid-in capital					1,862,896				1,809,642
Retained earnings					2,730,899				2,290,537
Treasury stock, 366,098 shares at December 31, 2018 and 1,242 shares at December 31, 2017					(42,680	)			(171	)
Accumulated other comprehensive loss					(144,529	)			(68,867	)
	Total shareholders' equity				4,407,140				4,031,691
	Total liabilities and shareholders' equity			$	47,364,816				43,117,720

SIGNATURE BANK
FINANCIAL SUMMARY, CAPITAL RATIOS, ASSET QUALITY
(unaudited)
				Three months ended December 31,										Twelve months ended December 31,
(in thousands, except ratios and per share amounts)				2018					2017					2018					2017
PER COMMON SHARE
Net income - basic				$	2.94				$	2.12				$	9.27				$	7.17
Net income - diluted				$	2.94				$	2.11				$	9.23				$	7.12
Average shares outstanding - basic					54,510					54,098					54,406					54,001
Average shares outstanding - diluted					54,631					54,377					54,666					54,418
Book value				$	80.07				$	73.33				$	80.07				$	73.33
SELECTED FINANCIAL DATA
Return on average total assets					1.37	%				1.08	%				1.12	%				0.95	%
Return on average shareholders' equity					14.76	%				11.44	%				11.98	%				10.13	%
Efficiency ratio (1)					34.94	%				33.50	%				36.78	%				34.16	%
Yield on interest-earning assets					3.98	%				3.70	%				3.85	%				3.66	%
Yield on interest-earning assets, tax-equivalent basis (1)(2)					3.99	%				3.71	%				3.85	%				3.67	%
Cost of deposits and borrowings					1.19	%				0.71	%				1.01	%				0.64	%
Net interest margin					2.89	%				3.05	%				2.92	%				3.08	%
Net interest margin, tax-equivalent basis (2)(3)					2.90	%				3.07	%				2.93	%				3.09	%

(1)		See "Non-GAAP Financial Measures" for related calculation.
(2)		Based on the 21 percent U.S. federal statutory tax rate for the 2018 periods presented, and the 35 percent rate for the 2017 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, 2018					September 30, 2018					December 31, 2017
CAPITAL RATIOS
Tangible common equity (4)					9.21	%				9.15	%				9.29	%
Tier 1 leverage (5)					9.70	%				9.67	%				9.72	%
Common equity Tier 1 risk-based (5)					12.09	%				12.16	%				11.99	%
Tier 1 risk-based (5)					12.09	%				12.16	%				11.99	%
Total risk-based (5)					13.39	%				13.47	%				13.32	%
ASSET QUALITY
Non-accrual loans				$	108,654				$	134,197				$	326,918
Allowance for loan and lease losses				$	230,005				$	220,706				$	195,959
Allowance for loan and lease losses to non-accrual loans					211.69	%				164.46	%				59.94	%
Allowance for loan and lease losses to total loans					0.63	%				0.63	%				0.60	%
Non-accrual loans to total loans					0.30	%				0.38	%				1.00	%
Quarterly net charge-offs (recoveries) to average loans, annualized					(0.03	)%				0.00	%				0.48	%

(4)		We define tangible common equity as the ratio of total tangible common equity to total tangible assets (the "TCE ratio"). Tangible common equity is considered to be a non-GAAP financial measure and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. The TCE ratio is a metric used by management to evaluate the adequacy of our capital levels. In addition to tangible common equity, management uses other metrics, such as Tier 1 capital related ratios, to evaluate capital levels. See "Non-GAAP Financial Measures" for related calculation.
(5)		December 31, 2018 ratios are preliminary.

SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)
			Three months ended												Three months ended
			December 31, 2018												December 31, 2017
(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			$	459,354			2,715				2.34	%			436,240			1,420				1.29	%
Investment securities				9,489,265			77,774				3.28	%			9,120,767			68,193				2.99	%
Commercial loans, mortgages and leases (1)(2)				35,423,810			376,280				4.21	%			31,524,498			315,158				3.97	%
Residential mortgages and consumer loans				220,994			2,464				4.42	%			257,324			2,296				3.54	%
Loans held for sale				345,053			2,658				3.06	%			195,823			1,179				2.39	%
Total interest-earning assets				45,938,476			461,891				3.99	%			41,534,652			388,246				3.71	%
Non-interest-earning assets				664,475											617,240
Total assets			$	46,602,951											42,151,892
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand			$	3,611,831			15,583				1.71	%			3,952,056			9,412				0.94	%
Money market				18,478,235			64,610				1.39	%			17,331,981			35,587				0.81	%
Time deposits				1,898,217			9,792				2.05	%			1,598,735			5,058				1.26	%
Non-interest-bearing demand deposits				12,276,668			-				-				11,138,285			-				-
Total deposits				36,264,951			89,985				0.98	%			34,021,057			50,057				0.58	%
Subordinated debt				258,043			3,645				5.65	%			257,251			3,645				5.67	%
Other borrowings				5,286,978			32,155				2.41	%			3,480,120			13,485				1.54	%
Total deposits and borrowings				41,809,972			125,785				1.19	%			37,758,428			67,187				0.71	%
Other non-interest-bearing liabilities
and shareholders' equity				4,792,979											4,393,464
Total liabilities and shareholders' equity			$	46,602,951											42,151,892
OTHER DATA
Net interest income / interest rate spread (1)							336,106				2.80	%						321,059				3.00	%
Tax-equivalent adjustment							(1,074	)										(1,288	)
Net interest income, as reported							335,032											319,771
Net interest margin											2.89	%										3.05	%
Tax-equivalent effect											0.01	%										0.02	%
Net interest margin on a tax-equivalent basis (1)(2)											2.90	%										3.07	%
Ratio of average interest-earning assets
to average interest-bearing liabilities											109.87	%										110.00	%

(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 period ended December 31, 2018 and 35 percent for the period ended December 31, 2017.
(2)		See "Non-GAAP Financial Measures" for related calculation.

SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)
			Twelve months ended												Twelve months ended
			December 31, 2018												December 31, 2017
(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			$	463,799			8,925				1.92	%			462,351			5,017				1.09	%
Investment securities				9,392,563			299,697				3.19	%			8,948,973			269,624				3.01	%
Commercial loans, mortgages and leases (1)(2)				33,972,459			1,383,531				4.07	%			30,299,144			1,184,911				3.91	%
Residential mortgages and consumer loans				230,727			9,719				4.21	%			267,757			10,147				3.79	%
Loans held for sale				374,610			10,863				2.90	%			196,585			4,334				2.20	%
Total interest-earning assets				44,434,158			1,712,735				3.85	%			40,174,810			1,474,033				3.67	%
Non-interest-earning assets				611,430											578,233
Total assets			$	45,045,588											40,753,043
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand			$	3,661,849			52,426				1.43	%			3,864,932			29,915				0.77	%
Money market				17,878,509			207,690				1.16	%			17,086,353			125,014				0.73	%
Time deposits				1,648,433			29,132				1.77	%			1,504,887			16,900				1.12	%
Non-interest-bearing demand deposits				11,954,403			-				-				10,702,062			-				-
Total deposits				35,143,194			289,248				0.82	%			33,158,234			171,829				0.52	%
Subordinated debt				257,748			14,573				5.65	%			256,953			14,535				5.66	%
Other borrowings				5,073,852			106,112				2.09	%			3,143,218			46,219				1.47	%
Total deposits and borrowings				40,474,794			409,933				1.01	%			36,558,405			232,583				0.64	%
Other non-interest-bearing liabilities
and shareholders' equity				4,570,794											4,194,638
Total liabilities and shareholders' equity			$	45,045,588											40,753,043
OTHER DATA
Net interest income / interest rate spread (1)							1,302,802				2.84	%						1,241,450				3.03	%
Tax-equivalent adjustment							(3,815	)										(3,864	)
Net interest income, as reported							1,298,987											1,237,586
Net interest margin											2.92	%										3.08	%
Tax-equivalent effect											0.01	%										0.01	%
Net interest margin on a tax-equivalent basis (1)(2)											2.93	%										3.09	%
Ratio of average interest-earning assets
to average interest-bearing liabilities											109.78	%										109.89	%

(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 period ended December 31, 2018 and 35 percent for the period ended December 31, 2017.
(2)		See "Non-GAAP Financial Measures" for related calculation.

SIGNATURE BANK
NON-GAAP FINANCIAL MEASURES
(unaudited)
Management believes that the presentation of certain non-GAAP financial measures assist 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, and (iv) core net interest margin, tax-equivalent basis excluding loan prepayment penalty income. These non-GAAP measures should not be considered a substitute for GAAP-basis measures and results. We strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.
The following table presents the tangible common equity ratio calculation:

(dollars in thousands)				December 31, 2018			September 30, 2018			December 31, 2017
Consolidated common shareholders' equity				$ 4,407,140			4,237,997			4,031,691
Intangible assets				50,020			43,372			28,643
Consolidated tangible common shareholders' equity (TCE)				$ 4,357,120			4,194,625			4,003,048
Consolidated total assets				$ 47,364,816			45,870,710			43,117,720
Intangible assets				50,020			43,372			28,643
Consolidated tangible total assets (TTA)				$ 47,314,796			45,827,338			43,089,077
Tangible common equity ratio (TCE/TTA)				9.21%			9.15%			9.29%

The following table presents the efficiency ratio calculation:

				Three months ended December 31,									Twelve months ended December 31,
(dollars in thousands)				2018					2017				2018				2017
Non-interest expense (NIE)				$	119,143				109,964				486,278				435,066
Net interest income before provision for loan and lease losses					335,032				319,771				1,298,987				1,237,586
Other non-interest income					5,919				8,497				23,278				36,041
Total income (TI)				$	340,951				328,268				1,322,265				1,273,627
Efficiency ratio (NIE/TI)					34.94	%			33.50	%			36.78	%			34.16	%

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,
				2018					2017				2018				2017
Interest income (as reported)				$	460,817				386,958				1,708,920				1,470,169
Tax-equivalent adjustment					1,074				1,288				3,815				3,864
Interest income, tax-equivalent basis				$	461,891				388,246				1,712,735				1,474,033
Interest-earnings assets				$	45,938,476				41,534,652				44,434,158				40,174,810
Yield on interest-earning assets					3.98	%			3.70	%			3.85	%			3.66	%
Tax-equivalent effect					0.01	%			0.01	%			0.00	%			0.01	%
Yield on interest-earning assets, tax-equivalent basis					3.99	%			3.71	%			3.85	%			3.67	%

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,
				2018				2017				2018				2017				2018				2017
Net interest margin (as reported)				2.89	%			3.05	%			2.87	%			3.04	%			2.92	%			3.08	%
Tax-equivalent adjustment				0.01	%			0.02	%			0.01	%			0.01	%			0.01	%			0.01	%
Margin contribution from loan prepayment penalty income				(0.10	)%			(0.09	)%			(0.03	)%			(0.06	)%			(0.06	)%			(0.07	)%
Core net interest margin, tax-equivalent basis excluding loan prepayment penalty income				2.80	%			2.98	%			2.85	%			2.99	%			2.87	%			3.02	%

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