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.
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.