Signature Bank in New York reported a record profit in the fourth quarter as strong loan growth more than offset continuing weakness in its portfolio of taxi medallion loans.
The $33.5 billion-asset company said Thursday that it earned $103 million in the quarter that ended Dec. 31, up 27% from the same period in 2014. Earnings per share climbed 26%, to $2.01.
The company attributed the results to strong growth in net interest income fueled by a surge of new loans. Net interest income increased 21% year over year, to $251.7 million, as net loans and leases rose 33.3%, to $23.6 billion.
It achieved the growth despite increasing its loan-loss provision by nearly 120% from a year earlier, to $16.7 million. Signature said it boosted the provision to reserve for the increase in new loans and an uptick in problem taxi medallion credits. Taxi medallion values have fallen in recent years as taxi drivers face increased competition from the likes of Uber and Lyft.
On the expense side, Signature reported a slight increase in interest expense tied to the growth in deposits and a 16% increase in its noninterest expense resulting from costs associated with hiring new teams of lenders.
Despite the higher expenses, Signature's efficiency ratio stood at 31.85% at yearend, compared to 34.1% at the end of 2014.