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, 2022.
Net income for the 2022 second quarter was a record $339.2 million, or $5.26 diluted earnings per share, versus $214.5 million, or $3.57 diluted earnings per share, for the 2021 second quarter. The increase in net income for the 2022 second quarter, versus the comparable quarter last year, is primarily the result of an increase in net interest income, fueled by strong average deposit, loan and securities growth, as well as higher interest rates. Pre-tax, pre-provision earnings were a record $476.7 million, representing an increase of $168.2 million, or 54.5 percent, compared with $308.6 million for the 2021 second quarter.
Net interest income for the 2022 second quarter reached $649.1 million, up $191.9 million, or 42.0 percent, when compared with the 2021 second quarter. This increase is primarily due to growth in average interest-earning assets and higher prevailing market interest rates. Total assets reached $115.97 billion at June 30, 2022, an increase of $19.08 billion, or 19.7 percent, from $96.89 billion at June 30, 2021. Average assets for the 2022 second quarter reached $118.85 billion, an increase of $26.99 billion, or 29.4 percent, compared with the 2021 second quarter.
Deposits for the 2022 second quarter decreased $5.04 billion to $104.12 billion, including a non-interest bearing deposit reduction of $5.31 billion, which brings our non-interest bearing mix to 39.8 percent of deposits at June 30, 2022. Overall deposit growth for the last twelve months was 21.7 percent, or $18.56 billion. Average deposits for the 2022 second quarter reached $106.68 billion, an increase of $816.8 million when compared with the prior quarter.
“Very few banks achieve strong shareholder returns while delivering long-term growth at a pace like that of Signature Bank. Year after year, we consistently do both because we remain focused on what we do best: attracting experienced, banking teams and developing new national businesses. While we cannot control the ebb and flow of macro-economic cycles, our ability to overcome obstacles and continuously build our franchise value is based on the deep experience of our colleagues. These veteran bankers are experts and the expansion of their books of business directly results in diversification of our balance sheet. We have employed this same organic growth strategy since our inception when the Bank commenced with just 12 New York area-based teams. Our commitment to this strategy is highlighted by the recent onboarding of our Health Care Banking and Finance Team. The 137 teams and business lines added to our banking network throughout our 21-year history are responsible for transforming Signature Bank into an institution spanning numerous deposit and lending businesses across a national footprint,” noted Joseph J. DePaolo, Signature Bank President and Chief Executive Officer.
“This quarter we once again delivered record earnings of $339.2 million, realizing our strongest growth in pre-provision net revenue of 54 percent, compared with same period last year. We credit this meaningful growth in earnings to all of our business lines, collectively, as there is no single one which has brought us to this point. As we look ahead, we will continue to take advantage of the abundant team onboarding opportunities which exist across our entire footprint and rely upon our proven approach to organic growth to continue to drive earnings, despite some unsettling times,” DePaolo concluded.
Scott A. Shay, Chairman of the Board, added: “We built Signature Bank for times of volatility and uncertainty like those of today. Accordingly, our clients have come to continually appreciate our strong balance sheet, which emphasizes depositor safety more than anything else. Our investment portfolio is built around low-risk highly liquid securities, and our lending efforts are also centered around lower risk arenas. This depositor safety-first philosophy led to us being the only bank in the U.S. with more than $4 billion in assets to escape the Great Financial Crisis without a down year in earnings. In times like these, we are able to seize opportunities that build our business as we endeavor to onboard new clients and attract new teams. We have always stayed firm on serving our clients through our relationship-based, single-point-of-contact team approach, which has become the hallmark of our enterprise. These are among the reasons we believe Signature Bank will continue to grow and prosper.”
Net Interest Income
Net interest income for the 2022 second quarter was $649.1 million, an increase of $191.9 million, or 42.0 percent, when compared with the same period last year, primarily due to growth in average interest-earning assets and higher prevailing market interest rates. Average interest-earning assets of $116.99 billion for the 2022 second quarter represent an increase of $26.01 billion, or 28.6 percent, from the 2021 second quarter. Due to higher interest rates across all of our asset classes, the yield on interest-earning assets for the 2022 second quarter increased 29 basis points to 2.66 percent, compared to the second quarter of last year.
Average cost of deposits and average cost of funds for the second quarter of 2022 increased by 13 and 8 basis points, to 0.40 percent and 0.46 percent, respectively, versus the comparable period a year ago.
Net interest margin on a tax-equivalent basis for the 2022 second quarter was 2.23 percent versus 2.02 percent reported in the 2021 second quarter and 1.99 percent in the 2022 first quarter.
Provision for Credit Losses
The Bank’s provision for credit losses for the second quarter of 2022 was $4.2 million, compared with $2.7 million for the 2022 first quarter and $8.3 million for the 2021 second quarter. The decrease in the provision for credit losses for the 2022 second quarter, compared to the same quarter last year, was predominantly attributable to improved macroeconomic conditions in our multi-family commercial real estate portfolio compared with the same period last year.
Net charge offs for the 2022 second quarter were $19.7 million, or 0.11 percent of average loans, on an annualized basis, versus $17.8 million, or 0.11 percent, for the 2022 first quarter and net charge offs of $15.3 million, or 0.12 percent, for the 2021 second quarter.
Non-Interest Income and Non-Interest Expense
Non-interest income for the 2022 second quarter was $37.7 million, up $14.3 million when compared with $23.4 million reported in the 2021 second quarter. The increase was primarily driven by a $8.2 million increase in fees and service charges and a $6.7 million increase in other income, including foreign currency activity, as well as mark-to-market gains related to our non-hedging derivatives.
Non-interest expense for the second quarter of 2022 was $210.0 million, an increase of $38.0 million, or 22.1 percent, versus $172.0 million reported in the 2021 second quarter. The increase was predominantly due to an increase of $20.0 million in salaries and benefits from the hiring of private client banking teams, national banking practices, and operational personnel, as well as consulting and professional fees related to various new projects initiated to support the growing needs of our clients.
Despite the significant team hiring and operational investment, the Bank’s efficiency ratio improved to 30.6 percent for the 2022 second quarter compared with 35.8 percent for the same period a year ago, and 31.8 percent for the first quarter of 2022.
Loans
Loans, excluding loans held for sale, grew $5.60 billion, or 8.4 percent, during the second quarter of 2022 to $72 billion, compared with $66.40 billion at March 31, 2022. Average loans, excluding loans held for sale, reached $68.67 billion in the 2022 second quarter, growing $3.57 billion, or 5.5 percent, from the 2022 first quarter and $16.19 billion, or 30.9 percent, from the 2021 second quarter.
At June 30, 2022, non-accrual loans were $167.9 million, representing 0.23 percent of total loans and 0.14 percent of total assets, compared with non-accrual loans of $177.8 million, or 0.27 percent of total loans, at March 31, 2022 and $136.1 million, or 0.25 percent of total loans, at June 30, 2021. The ratio of allowance for credit losses for loans and leases to total loans at June 30, 2022 was 0.62 percent, versus 0.69 percent at March 31, 2022 and 0.94 percent at June 30, 2021. Additionally, the ratio of allowance for credit losses for loans and leases to non-accrual loans, or the coverage ratio, was 266 percent for the 2022 second quarter versus 259 percent for the first quarter of 2022 and 378 percent for the 2021 second quarter.
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 7.92 percent, 9.96 percent, 10.76 percent, and 11.85 percent, respectively, as of June 30, 2022. 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 declared a cash dividend of $0.56 per share, payable on or after August 12, 2022 to common stockholders of record at the close of business on July 29, 2022. The Bank also declared a cash dividend of $12.50 per share payable on September 30, 2022 to preferred shareholders of record at the close of business on September 16, 2022. In the second quarter of 2022, the Bank paid a cash dividend of $0.56 per share to common stockholders of record at the close of business on April 29, 2022. The Bank also paid a cash dividend of $12.50 per share to preferred shareholders of record at the close of business on June 17, 2022.
About Signature Bank
Signature Bank, member FDIC, is a New York-based full-service commercial bank with 38 private client offices throughout the metropolitan New York area, as well as those in Connecticut, 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; and, 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 placed 19th on S&P Global’s list of the largest banks in the U.S., based on deposits.
For more information, please visit https://www.signatureny.com/.
