Profits at Signature Bank in New York climbed 40% in the fourth quarter when compared with a year earlier, to $160.8 million, as strong loan growth and improved asset quality more than offset higher deposit costs and noninterest expenses.
The $47.4 billion-asset company said that it earned $2.94 per share in the quarter, beating by 14 cents the mean estimates of analysts surveyed by FactSet Research Systems.
Loans, excluding those held for sale, increased 12.2% year over year to $36.2 billion, thanks largely to gains in commercial and industrial loans, including specialty finance. That growth combined with rising interest rates and an overall increase in earning assets to drive a 4.8% increase in net interest income to $335 million.
The net interest margin declined by 17 basis points year over year, however, to 2.9% as net interest expenses nearly doubled to $125.8 million.
Profits were also aided by marked improvement in loan quality. The provision for loan losses was just $6.4 million, a drop of 85% from same period in 2017, when Signature charged off a number of taxi-medallion loans.
Deposits increased 8.8% year over year to $36.8 billion as the company continued to add new teams of bankers in the New York area and in California, which it entered in late 2017. President and CEO Joseph DePaolo said that Signature added eight new client team in 2018 and established that a funds banking division that caters to private equity firms on both coasts.
Noninterest expenses increased 8.4% year over year to $119 million due primarily to higher salary and benefits costs.
