2014

Silvergate Bank Reports 16th Consecutive Profitable Year

LA JOLLA, Calif., Feb. 5, 2014 /PRNewswire/ -- Silvergate Bank today announced financial results for the fourth quarter and year ended December 31, 2013.  Full year net income of $5.40 million was the second highest in the Bank's history, and 2013 was the Bank's sixteenth consecutive profitable year.  Total assets at the end of the year were $641.1 million, and the Bank's equity capital was $70.3 million.

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"We are pleased to report that in 2013 Silvergate Bank further extended its record of consistently profitable performance," said Alan J. Lane, the Bank's president and chief executive officer.  "We also continued to maintain capital and asset quality ratios superior to comparable averages for all FDIC insured banks.  These strengths are the foundation of our ability to provide clients with the products and services they have come to expect from us to help support and grow their business."   

At December 31, 2013, Silvergate Bank's Tier 1 Leverage Capital Ratio was 11.42% and Total Risk-Based Capital Ratio was 18.40%, both substantially exceeding 'well capitalized' minimums of 5% and 10%.  The Bank's ratios of nonperforming loans to total loans and nonperforming assets to total assets both remained low, declining to 0.69% and 1.14%, respectively.   

"Silvergate Bank is proud to have achieved its 16th consecutive year of profitability, with core banking activities and diversified revenue streams continuing to generate income supporting our operations and ability to serve our entire range of clients," said Dennis S. Frank, the Bank's chairman.  

Financial Performance

The Bank's net income for the fourth quarter was $1.27 million, compared to $1.37 million for the prior quarter and $2.54 million for the fourth quarter last year.  Net income for the year was $5.40 million, compared to $7.39 million last year, with the decrease mainly due to reduced noninterest income.  Total assets were $641.1 million at December 31, 2013, down 6% from the prior year-end.  The Bank's equity capital was $70.3 million at December 31, 2013, compared to $70.0 million at year-end 2012, with the Bank's 2013 earnings covering its payment during the year of a $5 million dividend to its parent firm, Silvergate Capital Corporation.

The Bank's net interest income for the quarter was $4.86 million, compared to $6.91 million for the prior quarter and $6.00 million last year.  These quarterly and year-over-year decreases were due to the prior quarter's recognition of $1.3 million in nonrecurring interest income on the payoff of a loan acquired at a large discount, and 2012's fourth quarter representing the highest income quarter in the Bank's history.  Net interest margin for the fourth quarter was 3.19%, compared to 4.39% for the prior quarter (which included the nonrecurring income noted above – 3.53% excluding that income), and 3.81% for the fourth quarter last year.  Net interest income for 2013 was $22.5 million, up slightly from last year's $22.2 million, and full year net interest margin was 3.62% (3.36% excluding nonrecurring income), compared to 4.01% last year.

Benefiting from increased loan sales, noninterest income was $1.65 million for the fourth quarter, compared to $0.45 million for the prior quarter, and $3.02 in last year's fourth quarter (which was among the Bank's best ever).  Full year noninterest income was $5.63 million, compared to $7.98 million last year, with this decrease due to lower levels of loan sale gains and securitization income in 2013.  Noninterest expense was $4.73 million for the quarter, compared to $5.03 million for the prior quarter and $4.66 million last year; full year noninterest expense increased to $19.53 million this year from $17.28 million last year, with the largest part of this increase being higher employee-related costs.

Commercial Banking Platform

Commercial real estate loans totaled $180.8 million at December 31, 2013, compared to $200.9 million at December 31, 2012; as a 15% increase in loan originations for the year was exceeded by loan payoffs.  Total deposits declined by 8% for the year, comparable to the Bank's 6% reduction in total assets, but noninterest bearing demand deposits continued to grow, increasing by 9%.  Despite the significant costs of opening two new branch offices and relocating a third since mid-2011, the Bank's profitability has continued to benefit from its core commercial lending operations and the expanded residential lending activities added in recent years.   

Continued High Volumes of Residential Mortgage Loan Fundings, Acquisitions, and Sales

The Bank's Mortgage Warehouse Lending Division, established in April 2009 to meet the credit needs of mortgage bankers that originate single-family residential mortgage loans, had another good year.  The division funded $2.33 billion in loans in 2013, down only slightly from $2.36 billion in loans in 2012, even though nationwide mortgage loan originations decreased by approximately 14% in 2013 according to the Mortgage Bankers Association of America. 

In late 2011 the Bank began to acquire Home Equity Conversion Mortgage ("HECM") loans insured by the U.S. Federal Housing Administration.  In 2013 the Bank acquired and/or funded $210.1 million in HECM loans, and completed HECM sales or securitizations totaling $137.2 million, which contributed significantly to the Bank's noninterest income for the year.

Agreement Signed to Sell the Bank's Lancaster Branch Office

In December 2013 the Bank announced that it entered into an agreement for the sale of its branch office in Lancaster, California, to Americas United Bank, a community bank headquartered in Glendale, California.  Assuming required approvals from state and federal banking authorities are obtained and the sale is completed in the first half of 2014, this transaction will allow the Bank to reduce costs and better focus on its core geography in the greater San Diego County area.

About Silvergate Bank
Silvergate Bank is a San Diego-based bank that specializes in meeting the needs of small businesses through a comprehensive offering of lending products and personalized banking services.  Silvergate Bank opened in 1988 and is a subsidiary of Silvergate Capital Corporation.  Bank branches are located in Carlsbad, Escondido, La Jolla, La Mesa, and Lancaster.  Silvergate Bank's headquarters office is located at 4275 Executive Square, Suite 800, La Jolla, CA 92037.  The Bank's website is www.silvergatebank.com

Statements concerning future performance, developments or events, expectations for growth and income forecasts, and any other guidance on future periods, constitute forward-looking statements that are subject to a number of risks and uncertainties.  Actual results may differ materially from stated expectations.  When used in this release, the words or phrases such as "will continue," "is anticipated," "estimate," "expect," "projected," "believe," "seeking," or similar expressions, are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Readers should not place undue reliance on the forward-looking statements, which reflect views only as of the date hereof.  Neither Silvergate Capital Corporation nor Silvergate Bank undertakes any obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.


CONTACT:

Sandra Grove


Grove Media


858-565-1905


sgrove@grove-media.com

 

Silvergate Bank Selected Financial and Operating Data

(Dollars in Thousands - Unaudited)




Three Months Ended




Twelve Months Ended





December 31,


September 30,


December 31,


Annual


December 31,


Annual

INCOME STATEMENT


2013


2013


2012


Change


2013


2012


Change
















Interest Income 


$         6,022


$          8,141


$         7,351


-18%


$       27,583


$26,896


3%

Interest Expense 


1,167


1,230


1,342


-13%


5,057


4,722


7%

Net Interest Income


4,855


6,911


6,009


-19%


22,526


22,174


2%

Provision for Loan Losses


-


-


50


-100%


8


300


-97%

Total Noninterest Income


1,646


446


3,016


-45%


5,627


7,979


-29%

Total Noninterest Expense


4,726


5,025


4,655


2%


19,532


17,280


13%

Income Before Taxes


1,775


2,332


4,320


-59%


8,613


12,573


-31%

Income Tax Expense


506


965


1,778


-72%


3,217


5,183


-38%

     Net Income


$         1,269


$          1,367


$         2,542


-50%


$         5,396


$  7,390


-27%
















Performance Ratios















Net Interest Margin


3.19%


4.39%


3.81%




3.62%


4.01%



Return on Average Assets


0.83%


0.86%


1.59%




0.85%


1.31%



Return on Average Equity


7.28%


7.41%


14.38%




7.52%


10.97%



Efficiency Ratio


72.70%


68.31%


51.58%




69.38%


57.31%



Net Loan Charge-Offs to Average Total Loans

0.01%


0.03%


0.00%




0.02%


0.07%



































December 31,


September 30,


June 30,


March 31,


December 31,


Annual



BALANCE SHEET


2013


2013


2013


2013


2012


Change


















Cash and Due from Banks


$       18,507


$        14,778


$       26,441


$  56,396


$       39,352


-53%



Investments


69,466


73,129


71,344


64,491


69,073


1%



     Total Cash & Investments


87,973


87,907


97,785


120,887


108,425


-19%



Securitzed Loans, at fair value


27,918


27,172


26,870


26,146


23,838


n/m



Loans Held for Investment ("HFI")


366,536


291,449


333,872


337,135


375,737


-2%



Allowance for Loan Losses


(3,927)


(3,938)


(3,975)


(4,011)


(4,016)


-2%



     Loans HFI, net


362,609


287,511


329,897


333,124


371,721


-2%



Loans Held for Sale


150,739


201,723


176,827


148,549


170,931


-12%



Real Estate Owned ("REO")


3,559


3,511


3,511


-


276


1189%



Other Assets


8,349


8,613


7,770


9,811


9,196


-9%



Total Assets


$     641,147


$      616,437


$     642,660


$638,517


$     684,387


-6%


















Noninterest Bearing Demand Deposits


$       56,892


$        61,901


$       60,377


$  64,172


$       52,290


9%



Interest Bearing Demand Deposits


5,998


5,470


3,810


3,497


3,276


83%



NOW, Money Market, and Savings Accounts

195,115


179,485


164,831


162,715


149,275


31%



Certificates of Deposit


195,729


221,459


254,551


259,457


285,703


-31%



     Total Deposits


453,734


468,315


483,569


489,841


490,544


-8%



FHLB Advances and Other Borrowings


85,000


49,128


58,136


50,144


96,151


-12%



Payables under Securitizations


27,390


25,148


23,947


22,728


23,023


n/m



Other Liabilities


4,736


4,913


4,420


4,416


4,645


2%



    Total Liabilities


570,860


547,504


570,072


567,129


614,363


-7%



    Total Shareholder's Equity


70,287


68,933


72,588


71,388


70,024


0%



Total Liabilities and Shareholder's Equity


$     641,147


$      616,437


$     642,660


$638,517


$     684,387


-6%


















Asset Quality Ratios















Nonperforming Loans to Total Loans


0.69%


0.86%


0.78%


1.26%


1.10%





Loss Allowance to Nonperforming Loans


105.10%


88.30%


94.73%


62.30%


63.80%





Allowance for Loan Losses to Loans HFI


1.08%


1.35%


1.19%


1.19%


1.07%





Nonperforming Assets to Total Assets


1.14%


1.29%


1.20%


1.01%


0.96%




















Capital Ratios















Tier I Leverage Capital Ratio


11.42%


10.85%


11.49%


11.01%


10.92%





Total Risk-Based Capital Ratio


18.40%


19.26%


18.08%


17.74%


15.68%





SOURCE Silvergate Bank



RELATED LINKS
http://www.silvergatebank.com

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