Signature Bank hit a milestone in the third quarter as strong demand for commercial loans – especially from private equity firms – helped push total assets above the 100 mark. billions of dollars.
The New York-based bank said on Tuesday that its fund banking division’s total lending was up 31% from just three months earlier to $ 21.2 billion, and its portfolio of equity company loans -investment and venture capital had increased by nearly 130% since the third of last year. trimester.
The breakneck pace of growth within the specialist unit, combined with a sharp decline in its allowance for loan losses, resulted in a 74% increase in the bank’s profits in the third quarter compared to the same period per year. last, at $ 241.4 million. Signature’s earnings per share of $ 3.88 was 16 cents higher than the average estimates of analysts polled by FactSet Research Systems.
On a conference call about the bank’s third-quarter results, President and CEO Joseph DePaolo said the growth of the funds’ banking division in particular was a combination of borrowers pulling lines of credit. existing credit and seeking new loans. Signature Bank has expanded its fund banking and venture banking division in recent years, and the company has been a significant differentiator for Signature at a time when lending demand in the banking industry was lackluster.
Signature executives said that despite higher than expected loan growth in the third quarter, they still expect global lending to grow another $ 1.5 billion to $ 2 billion this quarter. .
Growth in the loan portfolio pushed Signature’s total assets up more than 11% in the quarter from just three months earlier, to $ 107.8 billion. Year over year, total assets are up nearly 70%, and all of the growth has been organic. Signature has never made an acquisition in its 20-year history.
Crossing the $ 100 billion asset mark means Signature will be required to submit resolution plan to the Federal Deposit Insurance Corp., outlining how it would be unwound if it failed, although DePaolo said he would likely have another year to do so.
“Our banking models are quite simple and straightforward,” he said. “It really shouldn’t be difficult for us to get together. “
Net interest income before allowance for bad debts jumped 24% year over year to $ 480.9 million. Signature recorded an allowance for credit losses of $ 4 million in the third quarter, compared to $ 52.7 million in the same quarter last year.
Net write-offs were $ 17.3 million, or 0.12% of average loans, from $ 10.5 million, or 0.09%, in the same quarter last year.
Non-interest income increased nearly 30% to $ 31.4 million, while non-interest expense increased 13% to $ 181.2 million, largely because Signature hired additional private banking teams and operational support.
Deposits increased 76% year-on-year to $ 95.6 billion in the third quarter. Signature’s blockchain-based payment platform, Signet, has largely contributed to the growth of non-interest-bearing deposits. Seal allows the settlement of payments in real time between businesses via blockchain and requires depositors to hold a minimum balance of $ 250,000.