Deposit gains hurt third-quarter profits at big banks such as Wells Fargo & Co., but they led to record profits at Signature Bank in New York.
The $13.9 billion-asset company said Tuesday that its net income rose 40%, to $38.3 million, from a year earlier, and earnings per share jumped 26%, to 83 cents, beating the consensus analysts' estimates by three cents.
The increase was driven largely by a 34% jump in net interest income, which Signature said in a news release was fueled by strong core deposit and loan growth. Total deposits increased by nearly 24% year over year, to $11.2 billion, while average loans rose nearly 31%, to nearly $6.3 billion. Signature's net interest margin rose 10 basis points from a year ago, to 3.51%.
The company did increase its loss provision by $12.1 million in the quarter, but that was due primarily to the increase in loans, not weakening asset quality. At Sept. 30, fewer than 0.8% of its loans were not accruing interest.
The company said most of the new loans were commercial real estate and multi-family loans that were underwritten with the bank's "stringent" lending standards.
Signature, which operates 25 branches in the five boroughs of New York, on Long Island, and in Westchester County, remained very well capitalized, with a total risk-based capital ratio of 18.37%.