Signature Bank Corp. in New York said Thursday that it lost $3 million, or 10 cents a share, in the fourth quarter because of a sharp drop in the value of its investment securities and a large increase in its loan-loss provision.
For the year-earlier quarter the $5.85 billion-asset company reported a profit of $8.9 million, or $1.12 a share.
On news of the loss, Signature's stock declined 7.7% Thursday, to $28,95.
Signature postponed its earnings report last month, saying it needed more time to determine the market value of securities in its investment portfolio. On Thursday it wrote down $21.4 million on those securities.
Signature said that the impaired securities included six collateralized debt obligations amortized at $40 million and six asset-backed securities amortized at $23.3 million.
At the end of last year the collateralized debt obligations were valued at $23.2 million and the asset-backed securities were worth $16.8 million.
Higher nonperforming loans also took a toll. In the fourth quarter nonperforming loans rose 112% from a year earlier, to $18.6 million. Signature said two loans were primarily to blame for the increase.
Its loan-loss provision for the fourth quarter jumped 363% from the year-earlier period, to $6.9 million. About $5.5 million of that was for the two loans, it said.
For the year net income fell 18%, to $27.3 million, or 91 cents a share.
Peyton Green, a senior analyst with First Horizon National Corp.'s FTN Midwest Securities Corp., said that Signature's fourth quarter results were "below expectations" even without the markdown on the securities.
Analysts surveyed by Thomson Financial were expecting, on average, earnings per share of 88 cents for the quarter.
The loss "was surprising," Mr. Green said. "But the silver lining was the company's loan growth and deposit growth."
Signature's loans increased 6.5% from the previous quarter, to $2 billion, and core deposits increased 2.8%, to $4.5 billion.
