Safe and Sound

Signature Bank

New York, NY
4
Star Rating
Signature Bank is an FDIC-insured bank founded in 2001 and currently headquartered in New York, NY. Regulatory filings show the bank having equity of $3.80 billion on assets of $40.72 billion, as of June 30, 2017.

U.S. bank customers have $33.17 billion on deposit at 32 offices in multiple states run by 1,251 full-time employees. With that footprint, the bank has amassed loans and leases worth $30.53 billion, including real estate loans of $25.57 billion.

Overall, Bankrate believes that, as of June 30, 2017, Signature Bank exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three important criteria Bankrate used to evaluate U.S. banks.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial stability, capital is valuable. It acts as a cushion against losses and as protection for accountholders when a bank is struggling financially. When it comes to safety and soundness, the more capital, the better.
On our test to measure the adequacy of a bank's capital, Signature Bank received a score of 10 out of a possible 30 points, below the national average of 13.38.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. Signature Bank's Tier 1 capital ratio was 11.68 percent, above the 6 percent level regulators consider adequate, but less than the national average of 25.16 percent. The higher the capital ratio, the better the bank will be able to stand up to financial headwinds.

Overall, Signature Bank held equity amounting to 9.33 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test is intended to estimate how the bank's capitalization and allocated loan loss reserves could be affected by troubled assets, such as unpaid mortgages.

Having extensive holdings of these types of assets may eventually force a bank to use capital to cover losses, reducing its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning money, reducing earnings and increasing the risk of a failure in the future.

Signature Bank scored 36 out of a possible 40 points on Bankrate's asset quality test, lower than the national average of 37.62.

A helpful indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 1.30 percent of Signature Bank's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's above the national average of 1.04 percent.

Banks keep a reserve to handle problem assets known as an "allowance for loan and lease losses." Comparing the that reserve's size to the total amount of at-risk loans can be a handy indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Signature Bank's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its safety and soundness. Earnings can be retained by the bank, increasing its capital buffer, or be used to deal with problematic loans, likely making the bank better able to withstand economic trouble. Banks that are losing money, however, are less able to do those things.

Signature Bank scored 16 out of a possible 30 on Bankrate's test of earnings, less than the national average of 16.52.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one key measure of a bank's earnings. Signature Bank's most recent annualized quarterly return on equity was 7.94 percent, below the national average of 9.28 percent.

The bank earned net income of $147.9 million on total equity of $3.80 billion for the twelve months ended June 30, 2017. The bank reported an annualized return on average assets, or ROA, of 0.74 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 percent.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.