Not a day goes go by that banking competition does not seem to ratchet higher.

In the latest sign of more pricing competition, Signature Bank offered investors a sneak peak at the money market rate war today, and it’s not pretty.

Joseph J. DePaolo, president & CEO of Signature (ticker: SBNY), which has about $17 billion of total assets, was asked by Bank of America Merrill Lynch why Signature has “dialed down” its money market rate. Signature’s average money market rate stood at 78 basis points at the end of 2012, compared to 98 basis points at yearend 2011. Interestingly, the total money market balance at Signature climbed to $8.1 billion last year from $7.2 billion.

DePaolo said competition for money market accounts is fierce.

… Our competitors have a retail component and so the large institutions in particular can give clients 20 to 25 basis points. You know that old adage 20% of the clients give 80% of the profits. Those are the types of clients that we target at each of those institutions, and they command and require a higher rate. So when we see them coming from the Citibanks, from the Chases, from the HSBCs, they are not getting 25 basis points, they are getting 75 basis points or somewhere near that.

Signature, therefore, made a conscious decision to avoid the pricing competition.

So we bring the clients over and we try not to do cliff diving with their rates. We try to take them down slowly, like we did [last] quarter from 82 to 78 basis points. We started off December with 77 basis points, and we started to drop rates actually last week, this week and towards the beginning of February. So we are going to be able to continue to drop that slowly.

However, the market for retail money market accounts is “anywhere between 80 and 85” basis points, he said. “Again, that’s what they are advertising and we have to be cognizant of that,” he added.

Interestingly, Signature, which positions itself as a “private” bank in New York, appears to have been able to stay above the pricing fray. Here’s how:

Everyone looks at that rate; I think the best thing to do is to look at the efficiency ratio because we don’t have the experience of the retail. We don’t have the retail locations which have a significantly higher cost in leasing and rental cost. We don’t have the advertising and marketing cost. So we get the better clients and pay them a little bit more and that affects on them. But clearly, when you look at our efficiency ratio, [it] bodes well for us because we don’t have all those extra costs.

Signature’s efficiency ratio increased to 37.24% last year from 35.39%.