Signature Bank in New York reported record profits in the first quarter as strong growth in earning assets more than offset rising expenses and a shrinking net interest margin.

Net income at Signature increased 28.7% to $133.9 million. Earnings per share rose 25.8% to $2.48 per share, or 38 cents above the estimates of analysts compiled by FactSet Research Systems.

Signature President and CEO Joseph J. DePaolo attributed the results to strong growth in assets, loans and deposits. Interest-earning assets rose 15.9% to $39.1 billion in the first quarter, while total assets climbed 15.4% to $40.3 billion.

Net interest income increased 8.4% to $301.8 million, due largely to a 20% increase in average loans, to $30.2 billion, year over year. The net interest margin fell to 3.14% from 3.32% in the same period last year.

Total deposits increased 17.2% year over year, to nearly $33 billion.

Joseph DePaolo, president and CEO of Signature Bank
Joseph DePaolo is Signature Bank's president and CEO. He was among the bank's founders in 2000.

Signature took a $19.6 million provision for loan losses in the first quarter, compared with $19.8 million last year. The bank charged off $9.2 million in loans in the first quarter, most of which were for taxi medallions. Taxi loans also made up the vast majority of $225.9 million in nonaccrual loans that Signature recorded in the first quarter.

Though Signature has been plagued by losses in its taxi medallion portfolio, largely tied to the Chicago market, those loans still make up a small proportion of its overall portfolio. Net chargeoffs in the first quarter represented 0.13% of average loans, and nonaccrual loans made up 0.75% of total loans.

Noninterest income increased 16.5% to $9.9 million in the first quarter. The company said that was the result of growth in most noninterest income categories and was partially offset by an increase in losses from the additional amortization of low-income housing tax credit investments.

Noninterest expenses increased 11.8% to $103.2 million, driven largely by the addition of new private client banking teams and an increase in costs associated with risk management and compliance. Earlier this week, the bank also announced the addition of a new four-person team based out of its White Plains, N.Y., office. That team, led by Michael Maloney and Nick Mucilli, joined Signature from Sterling National Bank and specializes in working with businesses in Westchester County, N.Y.

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