Signature Bank Reports Record Q4 Loan and Earnings Growth

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Signature Bank in New York posted record loan growth in the fourth quarter as demand from commercial borrowers far exceeded the bank’s expectations.

The $118.5 billion asset bank said Tuesday that net lending, excluding Paycheck Protection Program credits, climbed $6.3 billionor 11%, from the prior quarter, well above the $4 billion executives had previously projected.

At the end of the year, total loans stood at $64 billion, up 33% from the previous year.

President and CEO Joseph DePaolospeaking to analysts on an earnings call, called it “a year of amazing growth.”

He said the growth extended to the bank’s East Coast and California operations and included strong gains in its portfolio of loans to private equity and venture capital firms as those companies increased their investments. The bank also posted gains in mortgages and commercial real estate loans.

The blistering growth lifted fourth-quarter net income to a record $272 million, up 13% from the prior quarter and 57% from a year earlier. Earnings per share rose 12% from the third quarter and 33% from a year earlier to $4.34. The EPS result beat the average estimate of $3.97 among analysts polled by FactSet Research Systems.

DePaolo said aggressive hiring efforts during the year helped drive growth. The bank recruited eight banking teams in 2021, including two in New York and four on the West Coast.

Total holdings in the fourth quarter were up 22% from the prior quarter and 91% from a year earlier to over $20 billion.

Signature did not specify a specific loan growth target for the coming year, but said it expects continued expansion, supported in part by the new teams, and continued economic growth anticipated. The company estimated that loans and securities combined would increase by $3 billion to $7 billion in the first quarter and by $4 billion to $7 billion in each of the following three quarters.

Fourth quarter net interest income increased 11% from the prior quarter and 36% from a year ago to $535.9 million.

Deposits, meanwhile, were up 11% from the prior quarter and more than 60% from a year earlier to $106 billion.

The bank’s net interest margin rose 3 basis points in the quarter to 1.91%, but was 31 basis points lower than a year earlier. With markets now expecting the Federal Reserve to raise interest rates multiple times this year to help curb inflation, Signature said its margin is expected to rise this year. The Fed has signaled that the increases will come in 25 basis point increments.

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