Signature Bank posted record growth in profits and deposits in the last quarter, but also some red flags.
Covid-19-related loan changes reached 7.1% of its loan portfolio, up from 6.6% in the fourth quarter, Crain’s New York reported.
This is a sign that the mortgage lender’s borrowers are in trouble as the pandemic continues. Signature held $ 3 billion in problematic loans rated “special mention” or “sub-standard,” up from $ 1 billion as of September 30, according to the publication.
Commercial real estate and apartment loans make up more than half of the company’s $ 50 billion portfolio, according to Crain’s. Signature Bank defines amended loans as those for which interest but not principal is paid, and they are not classified as deferred.
The worrying signs are looming as the bank celebrates what CEO Joseph DePaolo called an “incredible quarter” with record profits and growth in deposits, the publication reported.
The bank is involved in the cryptocurrency market, with financial technology firm Circle saying Signature Bank holds billions of deposits linked to USD Coin, the report adds.
Signature Bank’s share price jumped 12% on the quarterly earnings release and has nearly tripled in the past 12 months.
[Crain’s New York] – Cordilia James