Signature Bank Falls as Troubled Taxi Medallion Loans Increaseby
Signature Bank, a major lender to cab owners, fell the most in two months after saying its portfolio of taxi medallion loans deteriorated in the first quarter.
Signature slid 4.7 percent to $139.93 at 12:32 p.m. in New York, the most intraday since Feb. 11 and the worst performance in the 96-company Standard & Poor’s Midcap Financials Index. The shares have slid 8.6 percent this year.
Lenders have pulled back support for the $15 billion New York City taxi industry, which has been weakened by the emergence of online ride-sharing services including Uber Technologies Inc. The value of a medallion sunk as low as $520,000 in March from $1.1 million in 2013, according to data from the New York City Taxi & Limousine Commission. Signature wrote off about $4.4 million of medallion loans in the first quarter, and expects the portfolio to worsen “for the next couple” of periods, the company said on a call with analysts.
Net income for the three months ended March 31 climbed 25 percent to $104 million, or $1.97 a share, from $83.4 million, or $1.64, a year earlier, the New York-based lender said Wednesday in a statement. Adjusted profit, which excludes some items, was $1.96 a share, beating by one cent the average estimate of 18 analysts surveyed by Bloomberg.
“On the one hand, the company put up a solid quarter,” Joseph Fenech, an analyst at Hovde Group, said in a note to investors. “On the other hand, deterioration in the taxi portfolio is likely to cause some angst, particularly since it’s not yet clear when these issues will begin to level off.”