Signature Bank

Welcome to Signature Bank's 2022 Third Quarter Results Conference Call. Hosting the call today from Signature Bank are Joseph J. DiPaolo, President and Chief Executive Officer, Eric R. Hollow, Senior Executive Vice President and Chief Operating Officer, and Steven Wyrumski, Senior Vice President and Chief Financial Officer. Today's call is being recorded. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. We ask that while you pose your question, you please pick up your handset to allow optimal sound quality. Lastly, if you should require operator assistance, please press star zero. It is now my pleasure to turn the floor over to Susan Turkel, Corporate Communications for Signature Bank. You may begin.

Good morning, and thank you for joining us today for the Signature Bank 2022 Third Quarter Results Conference Call. Before I hand the call over to President and CEO Joseph DiPaolo, Please note that comments made on this call by the Signature Bank management team may include forward-looking statements that can differ materially from actual results. For a complete discussion, please review the disclaimer in our earnings presentation dealing with forward-looking information. The presentation accompanying management's remarks can be found on the company's investor relations site at investor.signatureny.com. Now, I'd like to turn the call over to Joe.

Thank you, Susan. I will provide some overview into the core of the results, and then my colleagues Eric and Steve will review the bank's financial performance in greater detail. Eric, Steve, and I will address your questions at the end of our remarks. An important part of Signature Bank's success over the years has been our focus on what we can control, hiring banking teams and expanding our relationships with our clients. What continues to set us apart from our competitors is our ability to identify and lift out experienced teams and national banking practices that exhibit superior talent. And the proof of this lies with the number of strong relationships that our bankers forge with their clients over time. Although this is the most challenging deposit environment in our careers, Because we stay true to our core discipline, signature bank often emerges as a stronger institution in the wake of challenging macroeconomic backdrops. If we cannot control external forces, such as those driven by monetary policy, we prefer to judge our performance by the metrics we can control. such as growth in client relationships and banking teams. This quarter, we expanded our franchise with the addition of more than 1,000 new client-business relationships across the institution. We are excited about the momentum we have in cultivating new relationships today because we know that they are the ones that will continue to bear fruit tomorrow. As Warren Buffett once said, someone is sitting in the shade today because someone planted a tree a long time ago. This is the basis on which we operate and remain committed to the long term of our clients and our franchise. We will not be distracted by the short term. This is not a sprint. It is a marathon. Now let's take a look at earnings. Pre-tax pre-provision earnings for the 2022 third quarter were a record $492 million, an increase of $161 million, or 49%, compared with the $331 million for the 2021 third quarter. That's a good quarter. Net income for the 2022 third quarter increased $117 million, or 48%. Forty-eight percent. $358 million or $5.57 per share compared with $241 million or $3.88 per share. Now, that's a very good quarter. Forty-nine percent and 48%. I do want to make a note that, in fact, we have passed the $1 billion mark in net income in the first three quarters of 2022, and we believe that that's something that should be recognized by those that work within our institution. That's a good quarter. The increase in net income was predominantly driven by the strong growth in net interest income, which was fueled by solid asset growth of $7 billion over the last 12 months, as well as the rise in interest rates and the utilization of the excess cash. All of these factors combined, as well as our spit test execution across all of our businesses, led to a record return on common equity of 18.4% and a strong return on average assets of 1.24%. And that's a good quarter. Now let's take a look at deposits. With the frequency and severity of the rate increases, the deposit environment remains challenging. Total deposits decreased $1.3 billion, or 1%, to $103 billion this quarter. This is meaningful, as many expected us to have decreases beyond $1.3 billion. This decline was predominantly driven by deposit outflows of $3 billion of digital deposits. As expected, the rest of our franchise was positive this quarter, but that would be close to $1.7 billion. with contributions coming from specialized mortgage banking solutions, the fund banking division, the West Coast, and our venture banking group. Remember, it is a sprint, not a marathon. It's not a sprint. It is a marathon. Excuse me. During the quarter, non-interest-bearing deposits decreased $4 billion to $37 billion. The decline in VDA was mostly driven by the decrease in digital trading. which is non-interest-bearing. This led clients to take the balances off of SIDNET because there was less trading and to put it in interest-bearing accounts. That led to the decline. Despite the decline, non-interest-bearing deposits remain at a relatively high 36% of total deposits. Since the end of the 2021 third quarter, deposits increased 7.2 billion, or 8%, and average deposits increased 24.9 billion. Our loan-to-deposit ratio now stands at 72%, which is up from 61% one year ago. Now I'd like to turn the call over to Eric.