Daily News: October 20, 2017

Signature Bank Back on Track after Taxi Medallion Episode

Signature Bank’s Q3/17 net income was $124.5 million versus $76.1 million for the same quarter in 2016, which included $61.7 million of provision expense for the Chicago taxi medallion portfolio. Excluding this provision expense, net income would have been $113.7 million and non-accrual loans of $24.0 million or eight basis points of total loans.

“While we recognize there have been some near-term challenges for Signature Bank, including the recent impact on our taxi medallion loan portfolio and commercial real estate headwinds, our ability to attract veteran bankers and on-board core clients has continued unabated. We have never veered from the differentiated, relationship-based banking model upon which this institution was founded. Our single-point-of-contact, client-centric approach remains fully intact, allowing us to deliver solid growth – quarter after quarter – albeit not quite at the extraordinary pace of the past few years. However, a slower growth rate for Signature Bank still far outpaces that of our average peer group,” said Joseph J. DePaolo, president and chief executive officer of New York-based Signature Bank.

The bank’s provision for loan losses for Q3/17 was $14.3 million, compared with $187.6 million for Q2/17 and $80.5 million for Q3/16. The elevated provisions in Q2/17 and Q3/16 were predominantly due to the taxi medallion portfolio.

Net charge-offs for Q3/17 were $3.8 million, or 0.05% of average loans on an annualized basis, versus $229.0 million, or 3.04%, for Q2/17 and $100.5 million, or 1.46%, for Q3/16. In addition, $229.7 million of the Q2/17 charge-offs and $98.7 million of the charge-offs in Q3/16 were for taxi medallion loans.

At September 30, 2017, non-accrual loans were $376.9 million, representing 1.21% of total loans and 0.91% of total assets, compared with non-accrual loans of $392.9 million, or 1.29% of total loans, at June 30, 2017 and $162.8 million, or 0.59% of total loans, at September 30, 2016.

Excluding non-accruing loans secured by taxi medallions of $352.9 million, non-accrual loans for the remainder of the entire portfolio are $24.0 million, or eight basis points of total loans. At September 30, 2017, the ratio of allowance for loan and lease losses to total loans was 0.62%, versus 0.60% at June 30, 2017 and 0.74% at September 30, 2016. Additionally, the ratio of allowance for loan and lease losses to non-accrual loans, or the coverage ratio, was 51% for Q3/17 versus 46% for the Q2/17 and 126% for Q3/16.