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 Signet^TM, 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.

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

Contacts

Investor Contact:

Eric R. Howell, Senior Executive Vice President –

Corporate & Business Development

646-822-1402, ehowell@signatureny.com
Media Contact:

Susan Turkell Lewis, 646-822-1825,

slewis@signatureny.com

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