NEW YORK--(BUSINESS WIRE)--Signature Bank (Nasdaq: SBNY), a New York-based full-service commercial bank, today announced results for its second quarter ended June 30, 2020.

Net income for the 2020 second quarter was $117.2 million, or $2.21 diluted earnings per share, versus $147.3 million, or $2.71 diluted earnings per share, for the 2019 second quarter. The decrease in net income for the 2020 second quarter, versus the comparable quarter last year, is due to an increase in the provision for credit losses of $87.6 million predominantly due to effects of COVID-19 on the U.S. economy. Pre-tax, pre-provision earnings were $247.9 million, representing an increase of $36.5 million, or 17.3 percent, compared with $211.4 million for the 2019 second quarter.

Net interest income for the 2020 second quarter reached $387.1 million, up $60.9 million, or 18.6 percent, when compared with the 2019 second quarter. This increase is primarily due to growth in average interest-earning assets. Total assets reached $60.35 billion at June 30, 2020, an increase of $11.47 billion, or 23.5 percent, from $48.88 billion at June 30, 2019. Average assets for the 2020 second quarter reached $57.66 billion, an increase of $8.90 billion, or 18.3 percent, compared with the 2019 second quarter.

Deposits for the 2020 second quarter rose a record $7.99 billion to $50.23 billion at June 30, 2020. When compared with deposits at June 30, 2019, overall deposit growth for the last twelve months was 33.8 percent, or $12.69 billion. Average deposits for the 2020 second quarter reached $47.37 billion, a record increase of $6.23 billion.

“The best way to address the future COVID-19 economic uncertainty is by executing in the present. We are working tirelessly to assist our clients through these most difficult times. To this end, we’ve been rewarded by their dedication to our bankers and Signature Bank, which led to, by far, our greatest growth quarter ever. By controlling what we can amid this tumultuous environment – through a commitment to our single-point-of-contact model and ongoing execution of our diversification strategy – we believe we are well positioned to navigate this difficult landscape, and to ultimately excel,” explained Signature Bank President and Chief Executive Officer Joseph J. DePaolo.

“The record quarterly deposit growth emanated from all facets of the Bank, including our well-established private client banking teams and business units, our blockchain-based payments platform, Signet™, the recently formed Digital Banking Group, Fund Banking Division, Venture Banking Group and Specialized Mortgage Servicing Banking Team as well as our latest West Coast expansion efforts. Additionally, this quarter we saw record loan growth, both with and without the Payroll Protection Program (PPP) loans. This occurred while we also continued our asset diversification strategy - by furthering Commercial and Industrial lending - primarily through the Fund Banking Division, and selectively growing our commercial real estate portfolio. Perhaps, most importantly, the best reflection of the quarter’s strong results can be evidenced in our reduction of payment deferrals. As of July 15th, of the loans that had their payment deferral come due after three months, we’ve seen 60 percent of the loans resume payment status,” DePaolo concluded.

“These unprecedented times reveal the strength of our client relationships. As with the 2007-2009 financial crisis -- first and foremost -- clients must be confident in knowing they have a trusted advisor, such as a bank that will leave no stone unturned when supporting them; one which ensures sleep-at-night safety for their funds. Signature Bank has proven its place as this type of institution, time and again; possibly more so now than ever. Our private client bankers and senior management team have been in constant contact with clients as the current economic situation unfolded and unexpectedly impacted their businesses. Furthermore, we put forth a major effort on behalf of our clients, working closely with them on the PPP process to enable eligibility for accessing these funds. We are extremely proud of our colleagues’ dedication, as they worked diligently to get this right. Clients noticed and appreciated this level of performance, which further validated how Signature Bank is a safe repository for their hard-earned monies and a fortress for their funds. We know we are better together and prosper as our clients prosper,” explained Scott A. Shay, Chairman of the Board.

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 8.76 percent, 10.40 percent, 10.40 percent, and 12.13 percent, respectively, as of June 30, 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 7.99 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 August 14, 2020 to common stockholders of record at the close of business on July 31, 2020. In the second 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 May 4, 2020.

Net Interest Income

Net interest income for the 2020 second quarter was $387.1 million, an increase of $60.9 million, or 18.6 percent, versus the same period last year, primarily due to growth in average interest-earning assets. Average interest-earning assets of $56.46 billion for the 2020 second quarter represent an increase of $8.51 billion, or 17.8 percent, from the 2019 second quarter. Yield on interest-earning assets for the 2020 second quarter decreased 59 basis points to 3.44 percent, compared to the second quarter of last year.

Average cost of deposits and average cost of funds for the second quarter of 2020 decreased by 63 and 69 basis points, to 0.56 percent and 0.73 percent, respectively, versus the comparable period a year ago.

Net interest margin on a tax-equivalent basis for the 2020 second quarter was 2.77 percent versus 2.74 percent reported in the 2019 second quarter and 2.79 percent in the 2020 first quarter. Excluding loan prepayment penalties in both quarters, linked quarter core net interest margin on a tax-equivalent basis decreased two basis points to 2.69 percent. The 2020 second quarter net interest margin was negatively affected by 15 basis points due to significant excess cash balances driven by record deposit growth.

Provision for Credit Losses

The Bank’s provision for credit losses for the second quarter of 2020 was $93.0 million, compared with $66.8 million for the 2020 first quarter and $5.4 million for the 2019 second quarter. The Bank’s elevated provision for credit losses for the second quarter was predominantly attributable to effects of COVID-19 on the U.S. economy. Additionally, this is the second quarter since the bank adopted CECL on January 1, 2020.

Net charge offs for the 2020 second quarter were $4.6 million, or 0.04 percent of average loans, on an annualized basis, versus $1.7 million, or 0.02 percent, for the 2020 first quarter and net recoveries of $3.7 million, or 0.04 percent, for the 2019 second quarter.

Non-Interest Income and Non-Interest Expense

Non-interest income for the 2020 second quarter was $12.7 million, down $4.3 million when compared with $17.0 million reported in the 2019 second quarter. Non-interest expense for the second quarter of 2020 was $151.9 million, an increase of $20.0 million, or 15.2 percent, versus $131.9 million reported in the 2019 second quarter. The increase was predominantly due to a rise of $14.6 million in salaries and benefits from the significant hiring for the new national business initiatives, coupled with the addition of 15 private client banking teams on the West Coast during the first half of 2020.

The Bank’s efficiency ratio improved to 38.0 percent for the 2020 second quarter compared with 38.4 percent for the same period a year ago, and 39.7 percent for the first quarter of 2020.

Loans

Loans, excluding loans held for sale, grew a record $4.20 billion, or 10.2 percent, during the second quarter of 2020 to $45.20 billion, compared with $41.00 billion at March 31, 2020. Average loans, excluding loans held for sale, reached $42.73 billion in the 2020 second quarter, growing $3.18 billion, or 8.0 percent, from the 2020 first quarter and $4.91 billion, or 13.0 percent, from the 2019 second quarter. For the seventh consecutive quarter, the increase in loans was primarily driven by growth in commercial and industrial loans, led by capital call facilities to private equity funds.

At June 30, 2020, non-accrual loans were $46.9 million, representing 0.10 percent of total loans and 0.08 percent of total assets, compared with non-accrual loans of $59.0 million, or 0.14 percent of total loans, at March 31, 2020 and $41.3 million, or 0.11 percent of total loans, at June 30, 2019. The ratio of allowance for credit losses for loans and leases to total loans at June 30, 2020 was 0.98 percent, versus 0.87 percent at March 31, 2020 and 0.64 percent at June 30, 2019. Additionally, the ratio of allowance for credit losses for loans and leases to non-accrual loans, or the coverage ratio, was 947 percent for the 2020 second quarter versus 603 percent for the first quarter of 2020 and 593 percent for the 2019 second quarter.

About Signature Bank

Signature Bank, member FDIC, is a New York-based full-service commercial bank with 32 private client offices throughout the New York metropolitan area including Greenwich, Conn. as well as in San Francisco and Charlotte, N.C. 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’s revolutionary, blockchain-based digital payments platform, Signet™, allows the Bank’s commercial clients to make real-time 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 banks 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 10th consecutive year in 2020; 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 both the 2019 and 2020 National Law Journal’s “Best of” survey.

For more information, please visit https://www.signatureny.com/.