Signature Bank Reports 2019 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, 2019.

Net income for the 2019 fourth quarter was $148.2 million, or $2.78 diluted earnings per share, compared with $160.8 million, or $2.94 diluted earnings per share, for the 2018 fourth quarter. The decrease in net income is mainly the result of a decrease in loan prepayment penalty income, as well as a rise in non-interest expense from the significant investment in new private client banking teams, including over 50 professionals across the Fund Banking Division, the Venture Banking Group and the Specialized Mortgage Servicing Banking Team.

Net interest income for the 2019 fourth quarter rose $3.3 million, or 1.0 percent, to $338.3 million, compared with the fourth quarter of 2018. This increase is primarily due to growth in average interest-earning assets and the stabilization of our net interest margin. Total assets reached $50.62 billion at December 31, 2019, expanding $3.26 billion, or 6.9 percent, from $47.36 billion at December 31, 2018. Average assets for the 2019 fourth quarter reached $50.39 billion, an increase of $3.79 billion, or 8.1 percent, versus the comparable period a year ago.

Deposits for the 2019 fourth quarter increased $1.33 billion, or 3.4 percent, to $40.38 billion at December 31, 2019, while non-interest bearing deposits increased $1.0 billion and represent 32.2 percent of total deposits. Overall deposit growth in 2019 was 11.0 percent, or $4.0 billion, when compared with deposits at the end of 2018. Average total deposits for 2019 were $38.06 billion, growing $2.92 billion, or 8.3 percent, versus average total deposits of $35.14 billion for 2018.

“At Signature Bank, we have never been concerned about reaching and emphasizing milestones because each time we reach one, we are well aware there is always another waiting. Unlike sports, there’s never an offseason in banking. However, this quarter, the Bank reached a milestone worth recognizing – surpassing $50 billion in total assets. In less than 19 years, Signature Bank has grown from $50 million to $50 billion in total assets, purely organically; a feat we believe no other bank has accomplished. We appreciate the efforts put forth by all our colleagues and the loyalty of our clients to reach this important milestone,” noted Joseph J. DePaolo, President and Chief Executive Officer.

“2019 was a strong year for Signature Bank -- one where deposits increased $4.0 billion, loans rose $2.7 billion and earnings increased 17 percent. Additionally, we have laid the necessary groundwork for future growth with the launch of several new businesses and execution of certain key initiatives, including Signet, our blockchain-based payments platform; the official opening of our full-service private client banking office in the heart of downtown San Francisco; the hiring of our Venture Banking Group; the on-boarding of the Specialized Mortgage Servicing Banking Team; and, further advancement of both our Digital Asset Banking Team and Fund Banking Division. We look forward to the positive impact these businesses will have on the Bank’s future operations as well as the ongoing contributions of our existing teams and colleagues,” DePaolo said.

Scott A. Shay, Chairman of the Board, said: “We take this opportunity to thank all of Signature Bank colleagues for their contributions to our reaching the $50 billion threshold in assets. We are gratified on several levels. First, since the Bank has grown without any acquisitions, every depositor made a conscious decision to bank with Signature Bank, based on our service levels and focus on their safety. We continue our depositor-centric focus, which will become even more critical at this later stage of the credit cycle.

“We are also very mindful of the transition away from LIBOR which will impact virtually every financial institution and large parts of other industries. We are preparing for the administrative tasks related to the demise of LIBOR and transition to another index such as SOFR or AMERIBOR^TM (AMBOR). We plan to recommend AMERIBOR to our clients and utilize AMERIBOR whenever our clients agree. As we enter 2020, we look forward to continuing to serve our clients to make their banking easier, their payments faster and their companies more profitable. As for Signature Bank, I believe the best is yet to come,” Shay concluded.

Capital

In the 2019 fourth quarter, the Bank issued $200.0 million of subordinated debt in a public offering. Proceeds from the offering will be used for general corporate purposes, including to repurchase common stock. The Bank’s Tier 1 leverage, common equity Tier 1 risk-based, Tier 1 risk-based and total risk-based capital ratios were approximately 9.60 percent, 11.62 percent, 11.62 percent and 13.32 percent, respectively, as of December 31, 2019. 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 9.34 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 14, 2020 to common stockholders of record at the close of business on January 31, 2020. In the fourth quarter of 2019, the Bank paid a cash dividend of $0.56 per share to common stockholders of record at the close of business on November 1, 2019. Additionally, during the 2019 fourth quarter, the Bank repurchased 722,420 shares of common stock for a total of $89.4 million.

Net Interest Income

Net interest income for the 2019 fourth quarter was $338.3 million, up $3.3 million, or 1.0 percent, when compared with the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $49.56 billion for the 2019 fourth quarter represent an increase of $3.62 billion, or 7.9 percent, from the 2018 fourth quarter. The yield on interest-earning assets for the 2019 fourth quarter fell 12 basis points to 3.87 percent, compared to the fourth quarter of last year.

Average cost of deposits and average cost of funds for the 2019 fourth quarter increased by ten and 7 basis points, to 1.08 percent and 1.26 percent, respectively, versus the comparable period a year ago.

Net interest margin on a tax-equivalent basis for the 2019 fourth quarter was 2.72 percent versus 2.90 percent reported in the 2018 fourth quarter and 2.68 percent in the 2019 third quarter. Excluding loan prepayment penalty income in both quarters, linked quarter core net interest margin on a tax-equivalent basis increased one basis point to 2.67 percent.

Provision for Loan Losses

The Bank’s provision for loan losses for the fourth quarter of 2019 was $9.8 million, an increase of $3.3 million, or 51.5 percent, versus the 2018 fourth quarter.

Net charge-offs for the 2019 fourth quarter were $2.5 million, or 0.03 percent of average loans on an annualized basis, versus $2.9 million, or 0.03 percent of average loans on an annualized basis, for the 2019 third quarter and net recoveries of $2.9 million, or 0.03 percent, for the 2018 fourth quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2019 fourth quarter was $7.3 million, up $1.4 million from $5.9 million reported in the fourth quarter of last year. The increase was driven by a $1.3 million increase in fees and service charges.

Non-interest expense for the 2019 fourth quarter was $138.0 million, an increase of $18.9 million, or 15.8 percent, versus $119.1 million reported in the 2018 fourth quarter. The increase was predominantly due to an increase of $7.2 million in salaries and benefits from the significant hiring of private client banking teams, including 50 plus professionals added for the Fund Banking Division, the Venture Banking Group and the Specialized Mortgage Servicing Banking Team.

The Bank’s efficiency ratio was 39.94 percent for the fourth quarter of 2019 compared with 34.94 percent for the same period a year ago, and 40.2 percent for the third quarter of 2019.

Loans

Loans, excluding loans held for sale, expanded $1.17 billion, or 3.1 percent, during the 2019 fourth quarter to $39.11 billion, versus $37.94 billion at September 30, 2019. Average loans, excluding loans held for sale, reached $38.11 billion in the 2019 fourth quarter, growing $271.2 million, or 0.7 percent, from the 2019 third quarter and $2.46 billion, or 6.9 percent, from the fourth quarter of 2018. For the fifth consecutive quarter, the increase in loans for the quarter was primarily driven by growth in commercial and industrial loans.

At December 31, 2019, non-accrual loans were $57.4 million, representing 0.15 percent of total loans and 0.11 percent of total assets, versus non-accrual loans of $32.5 million, or 0.09 percent of total loans, at September 30, 2019 and $108.6 million, or 0.30 percent of total loans, at December 31, 2018. At December 31, 2019, the ratio of allowance for loan and lease losses to total loans was 0.64 percent, versus 0.64 percent at September 30, 2019 and 0.63 percent at December 31, 2018. Additionally, the ratio of allowance for loan and lease losses to non-accrual loans, or the coverage ratio, was 436 percent for the 2019 fourth quarter versus 746 percent for the 2019 third quarter and 212 percent for the 2018 fourth quarter.

Conference Call

Signature Bank’s management will host a conference call to review results of the 2019 fourth quarter and year-end on Tuesday, January 21, 2020, 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 #3648128. 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 #3648128. The replay will be available from approximately 1:00 PM ET on Tuesday, January 21, 2020 through 11:59 PM ET on Friday, January 24, 2020.

About Signature Bank

Signature Bank, member FDIC, is a New York-based full-service commercial bank with 31 private client offices throughout the New York metropolitan area and Connecticut as well as 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’s 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 recently introduced its revolutionary, blockchain-based digital payments platform, Signet, enabling real-time payments for its commercial clients. The Signet Platform allows the Bank’s commercial clients to make payments in U.S. dollars, 24/7/365, safely and securely, without transaction fees. Signature Bank is the first FDIC-insured bank to launch a blockchain-based digital payments platform, and Signet is the first such platform to be approved for use by the NYS Department of Financial Services.

Signature Bank is one of the top 40 largest bank in the U.S., based on deposits (S&P Global Market Intelligence). The Bank recently earned several third-party recognitions, including: appeared on Forbes' Best Banks in America list for the ninth consecutive year in 2019; and, named number one in the Business Bank, Private Bank and Attorney Escrow Services categories by the New York Law Journal in the publication’s annual “Best of” survey for 2019, 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). The Bank also ranked second nationally in the Business Bank, Private Banking Services and Attorney Escrow Service categories of the National Law Journal’s 2019 “Best of” survey.

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 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)			2019		2018			2019		2018
INTEREST AND DIVIDEND INCOME
Loans held for sale		$	1,325		2,658			4,978		10,863
Loans and leases, net			399,609		377,670			1,579,268		1,389,435
Securities available-for-sale			54,003		58,939			227,535		224,012
Securities held-to-maturity			14,551		14,492			60,843		57,930
Other investments			11,908		7,058			39,052		26,680
	Total interest income		481,396		460,817			1,911,676		1,708,920
INTEREST EXPENSE
Deposits			108,928		89,985			440,730		289,248
Federal funds purchased and securities sold under
agreements to repurchase			733		5,575			14,170		13,484
Federal Home Loan Bank borrowings			28,323		26,580			129,138		92,628
Subordinated debt			5,117		3,645			16,045		14,573
	Total interest expense		143,101		125,785			600,083		409,933
Net interest income before provision for loan and lease losses			338,295		335,032			1,311,593		1,298,987
Provision for loan and lease losses			9,755		6,441			22,636		162,524
Net interest income after provision for loan and lease losses			328,540		328,591			1,288,957		1,136,463
NON-INTEREST INCOME
Commissions			3,673		3,416			14,504		13,120
Fees and service charges			9,174		7,845			32,926		28,553
Net gains on sales of securities			-		179			1,034		989
Net gains on sales of loans			1,957		1,605			10,836		6,738
Other-than-temporary impairment losses on securities:
Total impairment losses on securities			-		-			-		(2	)
Portion recognized in other comprehensive income (before taxes)			-		-			-		(14	)
Net impairment losses on securities recognized in earnings			-		-			-		(16	)
Tax credit investment amortization			(10,084	)	(8,540	)		(38,424	)	(30,195	)
Other Income			2,569		1,414			7,072		4,089
	Total non-interest income		7,289		5,919			27,948		23,278
NON-INTEREST EXPENSE
Salaries and benefits			84,301		77,071			335,054		302,095
Occupancy and equipment			10,357		9,139			42,833		34,311
Information technology			9,410		7,071			36,961		25,732
FDIC assessment fees			2,894		3,751			12,432		25,256
Professional fees			3,996		3,613			14,689		13,698
Other general and administrative			27,065		18,498			87,300		85,186
	Total non-interest expense		138,023		119,143			529,269		486,278
Income before income taxes			197,806		215,367			787,636		673,463
Income tax expense			49,583		54,527			198,710		168,121
Net income		$	148,223		160,840			588,926		505,342
PER COMMON SHARE DATA
Earnings per share – basic		$	2.79		2.94			10.92		9.27
Earnings per share – diluted		$	2.78		2.94			10.87		9.23
Dividends per common share		$	0.56		0.56			2.24		1.12

SIGNATURE BANK
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
		December 31,			December 31,
			2019		2018
(dollars in thousands, except shares and per share amounts)		(unaudited)
ASSETS
Cash and due from banks		$	702,277		269,204
Short-term investments			87,555		48,051
	Total cash and cash equivalents		789,832		317,255
Securities available-for-sale			7,143,864		7,301,604
Securities held-to-maturity (fair value $2,115,541 at December 31, 2019
and $1,845,198 at December 31, 2018)			2,101,970		1,883,533
Federal Home Loan Bank stock			231,339		264,877
Loans held for sale			290,593		485,305
Loans and leases, net			38,859,634		36,193,122
Premises and equipment, net			66,419		59,051
Operating lease right-of-use assets (1)			217,578		-
Accrued interest and dividends receivable			147,527		141,829
Other assets			767,678		718,240
	Total assets	$	50,616,434		47,364,816
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest-bearing		$	13,016,931		12,016,197
Interest-bearing			27,366,276		24,362,576
	Total deposits		40,383,207		36,378,773
Federal funds purchased and securities sold under agreements
to repurchase			150,000		820,000
Federal Home Loan Bank borrowings			4,142,144		4,970,000
Subordinated debt			456,119		258,174
Operating lease liabilities (1)			242,587		-
Accrued expenses and other liabilities			472,554		530,729
	Total liabilities		45,846,611		42,957,676
Shareholders’ equity
Preferred stock, par value $.01 per share; 61,000,000 shares authorized;
none issued at December 31, 2019 and December 31, 2018			-		-
Common stock, par value $.01 per share; 64,000,000 shares authorized;
55,427,631 shares issued and 53,519,644 outstanding at December 31, 2019;
55,405,531 shares issued and 55,039,433 outstanding at December 31, 2018;			554		554
Additional paid-in capital			1,871,571		1,862,896
Retained earnings			3,196,898		2,730,899
Treasury stock, 1,907,987 shares at December 31, 2019 and 366,098 shares
at December 31, 2018			(233,570	)	(42,680	)
Accumulated other comprehensive loss			(65,630	)	(144,529	)
	Total shareholders' equity		4,769,823		4,407,140
	Total liabilities and shareholders' equity	$	50,616,434		47,364,816

(1) Effective January 1, 2019, we adopted ASU 2016-02, Leases (Topic 842) and elected not to restate comparative prior periods, a transition option provided by ASU 2018-11, Leases- Targeted Improvements (Topic 842).

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)		2019	2018		2019	2018
PER COMMON SHARE
Net income - basic		$ 2.79	$ 2.94		$ 10.92	$ 9.27
Net income - diluted		$ 2.78	$ 2.94		$ 10.87	$ 9.23
Average shares outstanding - basic		53,008	54,510		53,774	54,406
Average shares outstanding - diluted		53,234	54,631		54,011	54,666
Book value		$ 89.12	$ 80.07		$ 89.12	$ 80.07
SELECTED FINANCIAL DATA
Return on average total assets		1.17%	1.37%		1.20%	1.12%
Return on average shareholders' equity		12.36%	14.76%		12.83%	11.98%
Efficiency ratio (1)		39.94%	34.94%		39.51%	36.78%
Yield on interest-earning assets		3.85%	3.98%		3.95%	3.85%
Yield on interest-earning assets, tax-equivalent basis (1)(2)		3.87%	3.99%		3.96%	3.85%
Cost of deposits and borrowings		1.26%	1.19%		1.37%	1.01%
Net interest margin		2.71%	2.89%		2.71%	2.92%
Net interest margin, tax-equivalent basis (2)(3)		2.72%	2.90%		2.72%	2.93%

(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, 2019	September 30, 2019		December 31, 2018
CAPITAL RATIOS
Tangible common equity (4)		9.34%	9.51%		9.21%
Tier 1 leverage (5)		9.60%	9.66%		9.70%
Common equity Tier 1 risk-based (5)		11.62%	11.95%		12.11%
Tier 1 risk-based (5)		11.62%	11.95%		12.11%
Total risk-based (5)		13.32%	13.20%		13.41%
ASSET QUALITY
Non-accrual loans		$ 57,355	$ 32,539		$ 108,654
Allowance for loan and lease losses		$ 249,989	$ 242,754		$ 230,005
Allowance for loan and lease losses to non-accrual loans		435.86%	746.04%		211.69%
Allowance for loan and lease losses to total loans		0.64%	0.64%		0.63%
Non-accrual loans to total loans		0.15%	0.09%		0.30%
Quarterly net charge-offs (recoveries) to average loans, annualized		0.03%	0.03%		(0.03)%

(4) We define tangible common equity ratio as the ratio of total tangible common equity to total tangible assets (the "TCE ratio"). 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, 2019 ratios are preliminary.

SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)
	Three months ended							Three months ended
	December 31, 2019							December 31, 2018
(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	$	1,743,038	7,755		1.77	%		459,354	2,715		2.34	%
Investment securities		9,541,382	72,707		3.05	%		9,489,265	77,774		3.28	%
Commercial loans, mortgages and leases (1)(2)		37,903,214	398,935		4.18	%		35,423,810	376,280		4.21	%
Residential mortgages and consumer loans		203,066	2,131		4.16	%		220,994	2,464		4.42	%
Loans held for sale		169,495	1,325		3.10	%		345,053	2,658		3.06	%
Total interest-earning assets		49,560,195	482,853		3.87	%		45,938,476	461,891		3.99	%
Non-interest-earning assets		832,592						664,475
Total assets	$	50,392,787						46,602,951
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand	$	4,722,763	19,727		1.66	%		3,611,831	15,583		1.71	%
Money market		20,183,695	75,138		1.48	%		18,478,235	64,610		1.39	%
Time deposits		2,430,110	14,063		2.30	%		1,898,217	9,792		2.05	%
Non-interest-bearing demand deposits		12,750,429	-		-			12,276,668	-		-
Total deposits		40,086,997	108,928		1.08	%		36,264,951	89,985		0.98	%
Subordinated debt		389,730	5,117		5.25	%		258,043	3,645		5.65	%
Other borrowings		4,460,079	29,056		2.58	%		5,286,978	32,155		2.41	%
Total deposits and borrowings		44,936,806	143,101		1.26	%		41,809,972	125,785		1.19	%
Other non-interest-bearing liabilities
and shareholders' equity		5,455,981						4,792,979
Total liabilities and shareholders' equity	$	50,392,787						46,602,951
OTHER DATA
Net interest income / interest rate spread (1)			339,752		2.61	%			336,106		2.80	%
Tax-equivalent adjustment			(1,457	)					(1,074	)
Net interest income, as reported			338,295						335,032
Net interest margin					2.71	%					2.89	%
Tax-equivalent effect					0.01	%					0.01	%
Net interest margin on a tax-equivalent basis (1)(2)					2.72	%					2.90	%
Ratio of average interest-earning assets
to average interest-bearing liabilities					110.29	%					109.87	%

(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) See "Non-GAAP Financial Measures" for related calculation.

SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)
	Twelve months ended							Twelve months ended
	December 31, 2019							December 31, 2018
(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	$	1,007,237	21,127		2.10	%		463,799	8,925		1.92	%
Investment securities		9,561,736	306,303		3.20	%		9,392,563	299,697		3.19	%
Commercial loans, mortgages and leases (1)(2)		37,449,199	1,575,074		4.21	%		33,972,459	1,383,531		4.07	%
Residential mortgages and consumer loans		212,254	9,463		4.46	%		230,727	9,719		4.21	%
Loans held for sale		152,571	4,978		3.26	%		374,610	10,863		2.90	%
Total interest-earning assets		48,382,997	1,916,945		3.96	%		44,434,158	1,712,735		3.85	%
Non-interest-earning assets		788,789						611,430
Total assets	$	49,171,786						45,045,588
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand	$	4,297,419	82,180		1.91	%		3,661,849	52,426		1.43	%
Money market		19,103,463	299,874		1.57	%		17,878,509	207,690		1.16	%
Time deposits		2,498,190	58,676		2.35	%		1,648,433	29,132		1.77	%
Non-interest-bearing demand deposits		12,155,929	-		-			11,954,403	-		-
Total deposits		38,055,001	440,730		1.16	%		35,143,194	289,248		0.82	%
Subordinated debt		291,532	16,045		5.50	%		257,748	14,573		5.65	%
Other borrowings		5,516,093	143,308		2.60	%		5,073,852	106,112		2.09	%
Total deposits and borrowings		43,862,626	600,083		1.37	%		40,474,794	409,933		1.01	%
Other non-interest-bearing liabilities
and shareholders' equity		5,309,160						4,570,794
Total liabilities and shareholders' equity	$	49,171,786						45,045,588
OTHER DATA
Net interest income / interest rate spread (1)			1,316,862		2.59	%			1,302,802		2.84	%
Tax-equivalent adjustment			(5,269	)					(3,815	)
Net interest income, as reported			1,311,593						1,298,987
Net interest margin					2.71	%					2.92	%
Tax-equivalent effect					0.01	%					0.01	%
Net interest margin on a tax-equivalent basis (1)(2)					2.72	%					2.93	%
Ratio of average interest-earning assets
to average interest-bearing liabilities					110.31	%					109.78	%

(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) 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 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, 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, 2019	September 30, 2019		December 31, 2018
Consolidated common shareholders' equity		$ 4,769,823	4,741,856		4,407,140
Intangible assets		45,907	49,213		50,020
Consolidated tangible common shareholders' equity (TCE)		$ 4,723,916	4,692,643		4,357,120
Consolidated total assets		$ 50,616,434	49,411,756		47,364,816
Intangible assets		45,907	49,213		50,020
Consolidated tangible total assets (TTA)		$ 50,570,527	49,362,543		47,314,796
Tangible common equity ratio (TCE/TTA)		9.34%	9.51%		9.21%

The following table presents the efficiency ratio calculation:
		Three months ended December 31,			Twelve months ended December 31,
(dollars in thousands)		2019	2018		2019		2018
Non-interest expense (NIE)		$ 138,023	119,143		529,269		486,278
Net interest income before provision for loan and lease losses		338,295	335,032		1,311,593		1,298,987
Other non-interest income		7,289	5,919		27,948		23,278
Total income (TI)		$ 345,584	340,951		1,339,541		1,322,265
Efficiency ratio (NIE/TI)		39.94%	34.94%		39.51%		36.78%

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)		2019	2018		2019		2018
Interest income (as reported)		$ 481,396	460,817		1,911,676		1,708,920
Tax-equivalent adjustment		1,457	1,074		5,269		3,815
Interest income, tax-equivalent basis		$ 482,853	461,891		1,916,945		1,712,735
Interest-earnings assets		$ 49,560,195	45,938,476		48,382,997		44,434,158
Yield on interest-earning assets		3.85%	3.98%		3.95%		3.85%
Tax-equivalent effect		0.02%	0.01%		0.01%		0.00%
Yield on interest-earning assets, tax-equivalent basis		3.87%	3.99%		3.96%		3.85%

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,
		2019	2018		2019		2018		2019	2018
Net interest margin (as reported)		2.71%	2.89%		2.67%		2.87%		2.71%	2.92%
Tax-equivalent adjustment		0.01%	0.01%		0.01%		0.01%		0.01%	0.01%
Margin contribution from loan prepayment penalty income		(0.05)%	(0.10)%		(0.02)%		(0.03)%		(0.03)%	(0.06)%
Core net interest margin, tax-equivalent basis excluding loan prepayment penalty income		2.67%	2.80%		2.66%		2.85%		2.69%	2.87%

 

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