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Signature Bank Reports 2015 Third Quarter Results

October 20, 2015 5:00 AM

NEW YORK--(BUSINESS WIRE)-- Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, today announced results for its third quarter ended September 30, 2015. Net income for the 2015 third quarter reached a record $96.2 million, or $1.88 diluted earnings per share, versus $76.8 million, or $1.52 diluted earnings per share, for the 2014 third quarter. The record net income for the 2015 third quarter, versus the comparable quarter last year, is primarily due to an increase in net interest income, fueled by record deposit growth and record loan growth. These factors were partially offset by an increase in non-interest expenses.

Net interest income for the 2015 third quarter reached $250.0 million, up $44.7 million, or 21.8 percent, when compared with the 2014 third quarter. This increase is primarily due to growth in average interest-earning assets. Total assets reached $31.92 billion at September 30, 2015, an increase of $5.97 billion, or 23.0 percent, from $25.95 billion at September 30, 2014. Average assets for the 2015 third quarter reached $31.19 billion, an increase of $5.82 billion, or 22.9 percent, compared with the 2014 third quarter.

Deposits for the 2015 third quarter rose a record $2.16 billion, or 8.8 percent, to $26.61 billion at September 30, 2015. When compared with deposits at September 30, 2014, overall deposit growth for the last twelve months was 24.8 percent, or $5.29 billion. Excluding short-term escrow and brokered deposits of $4.40 billion at the end of the 2015 third quarter and $3.40 billion at the end of the 2015 second quarter, core deposits increased $1.15 billion for the quarter. Average deposits for the 2015 third quarter reached $26.10 billion, an increase of $1.54 billion, or 6.3 percent.

“Once again, Signature Bank delivered another quarter of record setting performance as exemplified by both record deposit and loan growth as well as record earnings. The Bank’s disciplined approach to client centric banking allows us to continue to flourish while meeting the rigors of the unprecedented current regulatory environment,” said Joseph J. DePaolo, President and Chief Executive Officer.

“The way Signature Bank differentiates itself in client care does not go unnoticed. For example, this quarter, the Bank was ranked the Best Business Bank and the Best Attorney Escrow Services Provider by the New York Law Journal readers. Since the New York Law Journal, a leading trade publication for the legal market in New York, introduced its reader survey six years ago, the Bank has continually secured the top spot or ranked within the top three positions in each category in which it was named. Law firms encompass a meaningful part of our client mix, and this ranking is a testament to the fact that the Bank truly stands out amongst professional services organizations, such as law firms. While some of the other rankings we recently achieved signify the strength and quality of the Bank, this -- perhaps most importantly -- is a direct result of the opinions of our clients about our service and the commitment our banking teams pride themselves on delivering. This is ultimately reflected in our financial performance, just as it was this quarter and has been since our inception,” DePaolo concluded.

Scott A. Shay, Chairman of the Board, commented: “At Signature Bank, depositor safety has always been paramount. Therefore, after a long period of low interest rates and high valuations across many asset segments, we stay vigilant in maintaining our credit standards, despite actions of others in the marketplace. We actualize this through our sound understanding and appropriate risk-return pricing as well as ensuring a strong control environment. With asset markets still at high absolute levels, heightened volatility and uncertainty of interest rates, we remain as cautious as ever with respect to depositors’ and shareholders’ funds rather than attempt to stretch for that last basis point. We will continue our focus on safety with the strong belief that this is truly what leads to the best long-term value for shareholders.”

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 8.95 percent, 11.58 percent, 11.58 percent, and 12.34 percent, respectively, as of September 30, 2015. 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 8.84 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.

Net Interest Income

Net interest income for the 2015 third quarter was $250.0 million, an increase of $44.7 million, or 21.8 percent, versus the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $30.81 billion for the 2015 third quarter represent an increase of $5.79 billion, or 23.1 percent, from the 2014 third quarter. Yield on interest-earning assets for the 2015 third quarter decreased 11 basis points, to 3.64 percent, compared with the 2014 third quarter. This decrease was primarily attributable to prolonged low interest rates.

Average cost of deposits and average cost of funds for the third quarter of 2015 decreased by six and eight basis points, respectively, versus the 2014 third quarter to 0.40 percent and 0.46 percent. These decreases were predominantly due to prolonged low interest rates.

Net interest margin for the 2015 third quarter was 3.22 percent versus 3.25 percent reported in the same period a year ago. On a linked quarter basis, net interest margin decreased five basis points. Excluding loan prepayment penalties in both quarters, linked quarter core margin decreased six basis points to 3.11 percent. Three basis points of the linked quarter decrease was due to an increase in average cash balances of approximately $213.6 million stemming from record deposit growth coupled with a difficult market for securities reinvestment.

Provision for Loan Losses

The Bank’s provision for loan losses for the third quarter of 2015 was $11.4 million, compared with $9.0 million for the 2015 second quarter and $7.7 million for the 2014 third quarter. The increase was largely due to an increase in loan growth and additional reserves for taxi medallion loans.

Net charge-offs for the 2015 third quarter were $5.5 million, or 0.10 percent of average loans on an annualized basis, versus $2.6 million, or 0.05 percent, for the 2015 second quarter and $1.5 million, or 0.04 percent, for the 2014 third quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2015 third quarter was $7.9 million, down $200,000 when compared with $8.1 million reported in the 2014 third quarter.

Non-interest expense for the third quarter of 2015 was $86.2 million, an increase of $11.9 million, or 16.0 percent, versus $74.3 million reported in the 2014 third quarter. The increase was primarily a result of the addition of new private client banking teams and our continued investment in Signature Financial, as well as an increase in costs in our risk management and compliance related activities.

The Bank’s efficiency ratio improved to 33.4 percent for the 2015 third quarter versus 34.8 percent for the comparable period last year. The improvement was primarily due to growth in net interest income.

Loans

Loans, excluding loans held for sale, grew a record $1.70 billion, or 8.3 percent, during the third quarter of 2015 to $22.23 billion, compared with $20.53 billion at June 30, 2015. At September 30, 2015, loans accounted for 69.6 percent of total assets, versus 68.5 percent at the end of the 2015 second quarter and 63.8 percent at the end of 2014 third quarter. Average loans, excluding loans held for sale, reached $21.38 billion in the 2015 third quarter, growing $1.40 billion, or 7.0 percent, from the 2015 second quarter and $5.54 billion, or 34.9 percent, from the 2014 third quarter. The increase in loans for the quarter was primarily driven by growth in commercial real estate and multi-family loans.

At September 30, 2015, non-accrual loans were $59.6 million, representing 0.27 percent of total loans and 0.19 percent of total assets, compared with non-accrual loans of $41.6 million, or 0.20 percent of total loans, at June 30, 2015 and $24.4 million, or 0.15 percent of total loans, at September 30, 2014. At September 30, 2015, the ratio of allowance for loan and lease losses to total loans was 0.82 percent, versus 0.86 percent at June 30, 2015 and 0.95 percent at September 30, 2014. Additionally, the ratio of allowance for loan and lease losses to non-accrual loans, or the coverage ratio, was 307 percent for the 2015 third quarter versus 426 percent for the second quarter of 2015 and 642 percent for the 2014 third quarter.

Conference Call

Signature Bank’s management will host a conference call to review results of the 2015 third quarter on Tuesday, October 20, 2015, 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 #50148126. 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 #50148126. The replay will be available from approximately 1:00 PM ET on Tuesday, October 20, 2015 through 11:59 PM ET on Friday, October 23, 2015.

About Signature Bank

Signature Bank, member FDIC, is a New York-based full-service commercial bank with 29 private client offices throughout the New York metropolitan area, including those in Manhattan, Brooklyn, Westchester, Long Island, Queens, the Bronx, Staten Island and Connecticut. 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 was named the Best Bank in America by Forbes for 2015 and ranked third on leading trade journal Bank Director’s 2015 Bank Performance Scorecard for banks with assets between $5 and $50 billion.

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. 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 endedSeptember 30,

Nine months endedSeptember 30,

(dollars in thousands, except per share amounts) 2015 2014 2015 2014
INTEREST AND DIVIDEND INCOME
Loans held for sale $ 1,291 710 2,399 2,030
Loans and leases, net 216,928 168,382 604,889 473,354
Securities available-for-sale 46,966 48,433 143,333 144,548
Securities held-to-maturity 16,445 17,593 50,213 52,460
Other short-term investments 1,364 1,395 3,715 3,955
Total interest income 282,994 236,513 804,549 676,347
INTEREST EXPENSE
Deposits 26,375 23,980 75,978 68,420
Federal funds purchased and securities sold under
agreements to repurchase 3,163 4,170 10,465 12,956
Federal Home Loan Bank borrowings 3,489 3,097 9,345 9,522
Total interest expense 33,027 31,247 95,788 90,898
Net interest income before provision for loan and lease losses 249,967 205,266 708,761 585,449
Provision for loan and lease losses 11,384 7,672 28,228 23,497
Net interest income after provision for loan and lease losses 238,583 197,594 680,533 561,952
NON-INTEREST INCOME
Commissions 2,615 2,926 8,077 8,045
Fees and service charges 5,424 4,792 16,350 14,414
Net gains (losses) on sales of securities 250 (40 ) 871 4,816
Net gains on sales of loans 882 1,401 5,894 3,304
Other-than-temporary impairment losses on securities:
Total impairment losses on securities (366 ) (387 ) (1,659 ) (3,624 )
Portion recognized in other comprehensive income (before taxes) 246 127 977 2,310
Net impairment losses on securities recognized in earnings (120 ) (260 ) (682 ) (1,314 )
Other losses (1,196 ) (764 ) (2,749 ) (1,657 )
Total non-interest income 7,855 8,055 27,761 27,608
NON-INTEREST EXPENSE
Salaries and benefits 58,709 49,859 171,545 145,412
Occupancy and equipment 6,722 5,629 18,970 16,733
Data processing 4,275 3,636 12,196 11,607
FDIC assessment fees 3,855 3,202 11,323 9,109
Professional fees 1,866 1,666 7,324 5,589
Other general and administrative 10,748 10,280 31,426 28,829
Total non-interest expense 86,175 74,272 252,784 217,279
Income before income taxes 160,263 131,377 455,510 372,281
Income tax expense 64,038 54,572 185,433 156,987
Net income $ 96,225 76,805 270,077 215,294
PER COMMON SHARE DATA
Earnings per share – basic $ 1.89 1.54 5.33 4.44
Earnings per share – diluted $ 1.88 1.52 5.27 4.37
SIGNATURE BANK
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
September 30, December 31,
2015 2014
(dollars in thousands, except shares and per share amounts) (unaudited)
ASSETS
Cash and due from banks $ 259,461 274,247
Short-term investments 28,541 24,831
Total cash and cash equivalents 288,002 299,078
Securities available-for-sale 6,265,047 6,073,459

Securities held-to-maturity (fair value $2,170,758 at September 30, 2015

and $2,222,177 at December 31, 2014) 2,139,800 2,208,551
Federal Home Loan Bank stock 99,280 86,338
Loans held for sale 598,792 548,297
Loans and leases, net 22,048,962 17,693,316
Premises and equipment, net 41,925 40,996
Accrued interest and dividends receivable 88,310 79,687
Other assets 350,406 288,918
Total assets $ 31,920,524 27,318,640
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest-bearing $ 8,144,654 7,064,959
Interest-bearing 18,466,641 15,555,316
Total deposits 26,611,295 22,620,275
Federal funds purchased and securities sold under agreements
to repurchase 755,000 715,000
Federal Home Loan Bank borrowings 1,495,163 1,335,163
Accrued expenses and other liabilities 237,389 151,964
Total liabilities 29,098,847 24,822,402
Shareholders’ equity
Preferred stock, par value $.01 per share; 61,000,000 shares authorized;
none issued at September 30, 2015 and December 31, 2014 - -
Common stock, par value $.01 per share; 64,000,000 shares authorized;
51,930,104 shares issued and 50,900,849 shares outstanding at September 30, 2015;
51,398,685 shares issued and 50,317,609 shares outstanding at December 31, 2014 509 503
Additional paid-in capital 1,390,484 1,348,661
Retained earnings 1,404,027 1,133,950
Treasury stock, at cost; 41,646 shares at September 30, 2015 and none
at December 31, 2014 (5,765 ) -
Net unrealized gains on securities, net of tax 32,422 13,124
Total shareholders' equity 2,821,677 2,496,238
Total liabilities and shareholders' equity $ 31,920,524 27,318,640
SIGNATURE BANK
FINANCIAL SUMMARY, CAPITAL RATIOS, ASSET QUALITY
(unaudited)

Three months endedSeptember 30,

Nine months endedSeptember 30,

(in thousands, except ratios and per share amounts) 2015 2014 2015 2014
PER COMMON SHARE
Net income - basic $ 1.89 $ 1.54 $ 5.33 $ 4.44
Net income - diluted $ 1.88 $ 1.52 $ 5.27 $ 4.37
Average shares outstanding - basic 50,888 50,000 50,685 48,539
Average shares outstanding - diluted 51,264 50,529 51,209 49,307
Book value $ 55.43 $ 47.73 $ 55.43 $ 47.73
SELECTED FINANCIAL DATA
Return on average total assets 1.22 % 1.20 % 1.22 % 1.20 %
Return on average shareholders' equity 13.83 % 12.99 % 13.58 % 13.70 %
Efficiency ratio (1) 33.42 % 34.82 % 34.32 % 35.44 %

Efficiency ratio excluding net gains on sales of securities and net impairment losses on securities recognized in earnings (1) (2)

33.44 % 34.77 % 34.33 % 35.65 %
Yield on interest-earning assets 3.64 % 3.75 % 3.69 % 3.83 %
Cost of deposits and borrowings 0.46 % 0.54 % 0.48 % 0.56 %
Net interest margin 3.22 % 3.25 % 3.25 % 3.31 %
(1) The efficiency ratio is calculated by dividing non-interest expense by the sum of net interest income before provision for loan and lease losses and non-interest income.
(2) The efficiency ratio excluding net gains on sales of securities and net impairment losses on securities recognized in earnings 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. This ratio is a metric used by management to evaluate the performance of the Bank's core business activities.

September 30,2015

June 30,2015

December 31,2014

September 30,2014

CAPITAL RATIOS
Tangible common equity (3) 8.84 % 9.01 % 9.14 % 9.25 %
Tier 1 leverage 8.95 % 9.16 % 9.25 % 9.45 %
Common equity Tier 1 risk-based (4) 11.58 % 11.85 % - -
Tier 1 risk-based 11.58 % 11.85 % 13.49 % 15.49 %
Total risk-based 12.34 % 12.63 % 14.39 % 16.51 %
ASSET QUALITY
Non-accrual loans $ 59,648 $ 41,615 $ 21,008 $ 24,394
Allowance for loan and lease losses $ 182,951 $ 177,086 $ 164,392 $ 156,598
Allowance for loan and lease losses to non-accrual loans 306.72 % 425.53 % 782.52 % 641.95 %
Allowance for loan and lease losses to total loans 0.82 % 0.86 % 0.92 % 0.95 %
Non-accrual loans to total loans 0.27 % 0.20 % 0.12 % 0.15 %
Quarterly net (charge-offs) recoveries to average loans, annualized (0.10 )% (0.05 )% 0.00 % (0.04 )%
(3) We define tangible common equity as the ratio of tangible common equity to adjusted tangible assets (the "TCE ratio") and calculate this ratio by dividing total consolidated common shareholders' equity by consolidated total assets (we had no intangible assets at any of the dates presented above). 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.
(4) As part of the final rules implementing Basel III regulatory capital reforms, a new common equity Tier 1 risk-based capital ratio was added to existing minimum capital requirements as of January 1, 2015.
SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)
Three months ended Three months ended
September 30, 2015 September 30, 2014

(dollars in thousands)

AverageBalance

InterestIncome/Expense

AverageYield/Rate

AverageBalance

InterestIncome/Expense

AverageYield/Rate

INTEREST-EARNING ASSETS
Short-term investments $ 514,760 315 0.24 % 605,583 365 0.24 %
Investment securities 8,482,932 64,460 3.04 % 8,254,260 67,056 3.25 %
Commercial loans, mortgages and leases 21,057,887 213,820 4.03 % 15,502,799 165,011 4.22 %
Residential mortgages and consumer loans 326,280 3,108 3.78 % 344,217 3,371 3.89 %
Loans held for sale 427,382 1,291 1.20 % 312,307 710 0.90 %
Total interest-earning assets 30,809,241 282,994 3.64 % 25,019,166 236,513 3.75 %
Non-interest-earning assets 384,117 355,720
Total assets $ 31,193,358 25,374,886
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand $ 2,432,951 2,522 0.41 % 1,362,643 1,326 0.39 %
Money market 14,355,641 21,188 0.59 % 12,137,541 19,485 0.64 %
Time deposits 982,019 2,665 1.08 % 1,133,656 3,169 1.11 %
Non-interest-bearing demand deposits 8,325,949 - - 6,025,238 - -
Total deposits 26,096,560 26,375 0.40 % 20,659,078 23,980 0.46 %
Borrowings 2,084,836 6,652 1.27 % 2,184,716 7,267 1.32 %
Total deposits and borrowings 28,181,396 33,027 0.46 % 22,843,794 31,247 0.54 %
Other non-interest-bearing liabilities
and shareholders' equity 3,011,962 2,531,092
Total liabilities and shareholders' equity $ 31,193,358 25,374,886
OTHER DATA
Net interest income / interest rate spread 249,967 3.18 % 205,266 3.21 %
Net interest margin 3.22 % 3.25 %
Ratio of average interest-earning assets
to average interest-bearing liabilities 109.32 % 109.52 %
SIGNATURE BANK
NET INTEREST MARGIN ANALYSIS
(unaudited)
Nine months ended Nine months ended
September 30, 2015 September 30, 2014
(dollars in thousands)

AverageBalance

InterestIncome/Expense

AverageYield/Rate

AverageBalance

InterestIncome/Expense

AverageYield/Rate

INTEREST-EARNING ASSETS
Short-term investments $ 431,443 782 0.24 % 314,798 554 0.24 %
Investment securities 8,516,240 196,479 3.08 % 8,123,208 200,409 3.29 %
Commercial loans, mortgages and leases 19,614,462 595,607 4.06 % 14,513,826 463,328 4.27 %
Residential mortgages and consumer loans 329,958 9,282 3.76 % 345,812 10,026 3.88 %
Loans held for sale 280,214 2,399 1.14 % 314,768 2,030 0.86 %
Total interest-earning assets 29,172,317 804,549 3.69 % 23,612,412 676,347 3.83 %
Non-interest-earning assets 349,403 361,775
Total assets $ 29,521,720 23,974,187
INTEREST-BEARING LIABILITIES
Interest-bearing deposits
NOW and interest-bearing demand $ 2,050,853 6,108 0.40 % 1,163,036 3,348 0.38 %
Money market 13,919,401 61,797 0.59 % 11,194,327 55,501 0.66 %
Time deposits 958,960 8,073 1.13 % 1,186,684 9,571 1.08 %
Non-interest-bearing demand deposits 7,759,218 - - 5,640,917 - -
Total deposits 24,688,432 75,978 0.41 % 19,184,964 68,420 0.48 %
Borrowings 1,979,075 19,810 1.34 % 2,566,474 22,478 1.17 %
Total deposits and borrowings 26,667,507 95,788 0.48 % 21,751,438 90,898 0.56 %
Other non-interest-bearing liabilities
and shareholders' equity 2,854,213 2,222,749
Total liabilities and shareholders' equity $ 29,521,720 23,974,187
OTHER DATA
Net interest income / interest rate spread 708,761 3.21 % 585,449 3.27 %
Net interest margin 3.25 % 3.31 %
Ratio of average interest-earning assets
to average interest-bearing liabilities 109.39 % 108.56 %
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) net income and diluted earnings per share excluding the after tax effect of net gains on sales of securities and net impairment losses on securities recognized in earnings, (ii) tangible common equity ratio, (iii) efficiency ratio excluding net gains on sales of securities and net impairment losses on securities recognized in earnings, and (iv) core net interest margin 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 a reconciliation of net income and diluted earnings per share (as reported) to net income and diluted earnings per share excluding the after tax effect of gains from the sales of securities and net impairment losses on securities recognized in earnings:

Three months endedSeptember 30,

Nine months endedSeptember 30,

(dollars in thousands, except per share amounts) 2015 2014 2015 2014
Net income (as reported) $ 96,225 76,805 270,077 215,294
Net (gains) losses on sales of securities (250 ) 40 (871 ) (4,816 )
Net impairment losses on securities recognized in earnings 120 260 682 1,314
Tax effect 52 (125 ) 77 1,480
Net income - excluding after tax effect of net (gains) losses on sales of securities
and net impairment losses on securities recognized in earnings $ 96,147 76,980 269,965 213,272
Diluted earnings per share (as reported) $ 1.88 1.52 5.27 4.37
Net (gains) losses on sales of securities - - (0.01 ) (0.10 )
Net impairment losses on securities recognized in earnings - 0.01 0.01 0.03
Tax effect - - - 0.03
Diluted earnings per share - excluding after tax effect of net (gains) losses on sales
of securities and net impairment losses on securities recognized in earnings $ 1.88 1.53 5.27 4.33
The following table reconciles net interest margin (as reported) to core net interest margin excluding loan prepayment penalty income:

Three months endedSeptember 30,

Nine months endedSeptember 30,

2015 2014 2015 2014
Net interest margin (as reported) 3.22 % 3.25 % 3.25 % 3.31 %
Margin contribution from loan prepayment penalty income (0.11 )% (0.11 )% (0.10 )% (0.12 )%
Core net interest margin - excluding loan prepayment penalty income 3.11 % 3.14 % 3.15 % 3.19 %

Signature Bank

Investor Contact:

Eric R. Howell, 646-822-1402

Executive Vice President – Corporate & Business Development

[email protected]

or

Media Contact:

Susan J. Lewis, 646-822-1825

[email protected]

Source: Signature Bank

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