Signature Bank reports record loan growth, profits in 4Q

Signature Bank reports record loan growth, profits in 4Q
Written by Publishing Team

New York’s Signature Bank posted record loan growth in the fourth quarter as demand from commercial borrowers exceeded the bank’s expectations.

The $118.5 billion bank said Tuesday that net loans, excluding Paycheck Protection Program credits, $6.3 billion, or 11%, from the previous quarter, well above the $4 billion that executives had previously expected.

At the end of the year, loans totaled $64 billion, up 33% from the previous year.

President and CEO Joseph DePaulo, while speaking with analysts during the earnings call, described it as an “amazing year of growth.”

He said the growth extended to the bank’s East Coast and California operations and included strong gains in its portfolio of loans to private equity firms and venture capital as these firms boosted their investments. The bank also reported gains in mortgage loans and commercial real estate loans.

The explosive growth pushed net income last quarter to a record $272 million, up 13% from the previous quarter and 57% from a year earlier. Earnings per share increased 12% from the third quarter and 33% from a year earlier to $4.34. The EPS result beat the average estimate of $3.97 among analysts polled by FactSet Research Systems.

DePaolo said intense hiring efforts during the year helped drive growth. The bank brought on eight banking teams in 2021, including two in New York and four in the West Coast.

Total securities in the fourth quarter rose 22% from the previous quarter and 91% from the previous year to more than $20 billion.

Signature did not set a specific target for loan growth for next year, but said it expects continued expansion, buoyed in part by new teams and the expectation of continued economic growth. The company estimated that loans and investment securities combined would increase from $3 billion to $7 billion in the first quarter and between $4 billion and $7 billion over each of the following three quarters.

Fourth-quarter net interest income increased 11% sequentially and 36% sequentially to $535.9 million.

Meanwhile, deposits increased 11% from the previous quarter and more than 60% from a year earlier to $106 billion.

The bank’s net interest margin increased 3 basis points during the quarter to 1.91% but was 31 basis points lower than a year earlier. With markets now expecting the Federal Reserve to raise interest rates several times this year to help curb inflation, Signature said its margin should rise this year. The Fed has indicated that increases will come by 25 basis points.


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