Signature Bank weathered headwinds in its taxi medallion portfolio to post double-digit growth in profits and net interest income during the fourth quarter of 2016.

Net income for the $39 billion-asset bank was $113.9 million, up 10.6% from the fourth quarter of 2015. Earnings per share increased 5%, to $2.11.

Thanks largely to growth in average interest-earning assets, Signature's net interest income for the quarter was $296.8 million, an increase of 10.6% from the prior-year quarter.

Joseph DePaolo, CEO of Signature Bank.
In 2016, Signature raised $320 million of capital from a common stock offering and a further $260 million from a first-ever subordinated debt offering. "These capital raises, along with solid earnings retention, well [position] Signature Bank for future expansion," CEO Joseph DePaolo said Thursday.

This growth was the more notable for having been achieved "despite challenges in our taxi medallion portfolio," said Joseph DePaolo, the New York-based bank's president and CEO.

One sign of how badly Signature's medallion loans suffered in the past year was the bank's fourth-quarter provision for loan losses, which increased by 33.2%, to $22.2 million, from the fourth quarter of 2015. The bank had $13.5 million in chargeoffs, or 0.19% of average loans, in the fourth quarter, compared to only $4.6 million, or 0.08% of average loans, for the period ending December 31, 2015.

But chargeoffs were down significantly from the third quarter, when they amounted to $100.5 million, or 1.46% of average loans.

In a sign that the worst may be over, Signature is preparing to expand. In 2016, it raised $320 million of capital from a common stock offering and a further $260 million from a subordinated debt offering, its first ever.

"These capital raises, along with solid earnings retention, well [position] Signature Bank for future expansion," DePaolo said.

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