2014

Silvergate Bank Reports Strong Second Quarter 2013 Earnings

LA JOLLA, Calif., Aug. 1, 2013 /PRNewswire/ -- Silvergate Bank's just released financial results for the quarter and six-month period ended June 30, 2013, show continued strong performance with quarterly income of $1.37 million and first-half net income of $2.76 million.  Total assets were $642.7 million, and the Bank's equity capital grew to an all-time high of $72.5 million.

(Logo: http://photos.prnewswire.com/prnh/20120731/LA49618LOGO)

"We are pleased to report that Silvergate Bank delivered another solid earnings performance in the second quarter of 2013," said Alan J. Lane, the Bank's president and chief executive officer.  "Our capital and asset quality ratios continue to be superior to comparable averages for all FDIC insured banks.  Additionally, our levels of profitability, capital and asset quality all support our ability to continue providing our clients with the innovative products and services they have come to expect from us to help them grow their business."   

At June 30, 2013, Silvergate Bank's Tier 1 Leverage Capital Ratio was 11.49% and Total Risk-Based Capital Ratio was 18.08%, 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, at 1.17% and 1.20%, respectively.   

Further second quarter performance highlights for Silvergate Bank were its funding of $705.3 million in single family mortgage loans through the Bank's Warehouse Lending Division and the acquisition / funding of $85.7 million in U.S. Government insured reverse mortgage loans.  

"Silvergate Bank's sustained profitability from our core commercial banking activities and diversified revenue streams continues to strengthen our capital base and enhance our ability to serve our entire range of clients," said Dennis S. Frank, the Bank's chairman.

According to Lane, the release of Silvergate Bank's mid-year 2013 earnings comes just one month before the Bank celebrates its 25th anniversary. "We value our clients who make this milestone event all the more meaningful," he said.  "We remain fully committed to providing them with the products they need and the personal service they deserve.  We also thank our employees for their dedication to serving our clients and supporting the Bank's success."

Financial Performance

The Bank's net income for the second quarter was $1.37 million, compared to $1.39 million for the prior quarter and $1.46 million for the second quarter last year.  Net income for the first half was $2.76 million, compared to $2.49 million last year.  Total assets were $642.7 million at June 30, 2013, up $4.2 million from the prior quarter and up $82.2 million from the second quarter a year ago.

The Bank's net interest margin was 3.47% for the quarter, compared to 3.41% for the prior quarter and 4.22% for the second quarter last year.  This year-over-year margin decline resulted mainly from a greater decrease in the yield on our earning assets (0.64%) than in our cost of funds (0.03%); the decline in earning asset yield was due primarily to growth in lower yielding assets including cash and reverse mortgage loans.  Net interest income was $5.39 million for the quarter, compared to $5.37 million for the prior quarter and $5.34 million last year. 

Noninterest income was $1.86 million for the quarter, compared to $1.67 million for the prior quarter and $1.34 million last year. Noninterest expense was $5.1 million for the quarter, compared to $4.7 million for the prior quarter and $4.1 million last year.  This year-over-year expense increase reflects the full effect of higher employee and occupancy costs associated with the Bank's growth in staffing, assets and headquarters space, a large portion of which occurred after the second quarter of 2012, including 2013 costs of forming a forward single-family mortgage loan correspondent group to complement the Bank's warehouse and reverse mortgage lending activities.

Commercial Banking Platform

The Bank's strong profile in commercial real estate lending continued in the second quarter of 2013, with commercial real estate loans totaling $201.5 million at June 30, 2013, compared to $190.7 million at June 30, 2012. Total deposits grew by 32% in the past twelve months, with noninterest bearing demand deposits growing by 52%.  Despite the significant costs of opening two new branch offices and relocating a third in the past 24 months, the Bank has generated strong profits due to the ongoing strength of its core commercial lending activities and the expanded residential lending activities it has added in recent years.   

Continued High Volumes of Residential Mortgage Loan Fundings

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 excellent quarter, funding $705.3 million in loans and almost $1.4 billion in the first half of 2013.  In the face of forecasts by the Mortgage Bankers Association of America and others for decreases in 2013 single-family residential loan originations, this division maintained high loan volumes through the first half of 2013 by increasing the number of mortgage banking clients it serves.

Acquisitions and Sales of Reverse Mortgage Loans

In late 2011 the Bank began to acquire Home Equity Conversion Mortgage ("HECM") loans insured by the U.S. Federal Housing Administration, and in mid-2012 the Bank was approved by the Government National Mortgage Association ("Ginnie Mae") to be an issuer of Ginnie Mae HECM backed securities. In the second quarter the Bank acquired and/or funded $85.7 million in HECM loans and completed four HECM loan pool sales and one securitization of HECM loan participations. 

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




Six Months Ended





June 30,


March 31,


June 30,


Annual


June 30,


June 30,


Annual

INCOME STATEMENT


2013


2013


2012


Change


2013


2012


Change












Interest Income 


$     6,688


$   6,733


$    6,472


3%


$  13,421


$12,678


6%

Interest Expense 


1,299


1,362


1,136


14%


2,661


2,178


22%

Net Interest Income


5,389


5,371


5,336


1%


10,760


10,500


2%

Provision for Loan Losses


(42)


50


50


-184%


8


100


-92%

Total Noninterest Income


1,863


1,671


1,344


39%


3,535


1,643


115%

Total Noninterest Expense


5,100


4,680


4,116


24%


9,781


7,805


25%

Income Before Taxes


2,194


2,312


2,514


-13%


4,506


4,238


6%

Income Tax Expense


827


919


1,055


-22%


1,746


1,749


0%

     Net Income


$     1,367


$   1,393


$    1,459


-6%


$    2,760


$  2,489


11%
















Performance Ratios















Net Interest Margin


3.47%


3.41%


4.19%




3.43%


4.22%



Return on Average Assets


0.87%


0.86%


1.09%




0.86%


0.97%



Return on Average Equity


7.55%


7.86%


8.83%




7.70%


7.61%



Efficiency Ratio


70.33%


66.46%


61.61%




68.42%


64.28%



Net Loan Charge-Offs to Average Total Loans

0.00%


0.04%


-0.16%




0.02%


0.14%



































June 30,


March 31,


December 31,


September 30,


June 30,


Annual



BALANCE SHEET


2013


2013


2012


2012


2012


Change


















Cash and Due from Banks


$   26,441


$ 56,396


$  39,352


$  30,323


$  19,179


38%



Investments


71,344


64,491


69,073


72,428


74,210


-4%



     Total Cash & Investments


97,785


120,887


108,425


102,751


93,389


5%



Securitized Loans, at fair value


26,870


26,146


23,838


21,863


-


n/m



Loans Held for Investment ("HFI")


333,872


337,135


375,737


364,730


359,503


-7%



Allowance for Loan Losses


(3,975)


(4,011)


(4,016)


(3,973)


(3,846)


3%



     Loans HFI, net


329,897


333,124


371,721


360,757


355,657


-7%



Loans Held for Sale


176,827


148,549


170,931


131,609


98,829


79%



Real Estate Owned ("REO")


3,511


-


276


4,058


3,925


-11%



Other Assets


7,770


9,811


9,196


8,970


8,680


-10%



Total Assets


$ 642,660


$638,517


$684,387


$ 630,008


$560,480


15%


















Noninterest Bearing Demand Deposits

$   60,377


$ 64,172


$  52,290


$  47,711


$  39,630


52%



Interest Bearing Demand Deposits


3,810


3,497


3,276


2,621


2,630


45%



NOW, Money Market, and Savings Accounts

164,831


162,715


149,275


125,004


116,740


41%



Certificates of Deposit


254,551


259,457


285,703


232,308


207,805


22%



     Total Deposits


483,569


489,841


490,544


407,644


366,805


32%



FHLB Advances and Other Borrowings

58,136


50,144


96,151


127,209


122,316


-52%



Payables under Securitizations


23,947


22,728


23,023


20,645


-


n/m



Other Liabilities


4,420


4,416


4,645


5,320


4,722


-6%



    Total Liabilities


570,072


567,129


614,363


560,818


493,843


15%



    Total Shareholder's Equity


72,588


71,388


70,024


69,190


66,637


9%



Total Liabilities and Shareholder's Equity

$ 642,660


$638,517


$684,387


$ 630,008


$560,480


15%


















Asset Quality Ratios















Nonperforming Loans to Total Loans


1.17%


1.26%


1.10%


1.17%


1.45%





Loss Allowance to Noncurrent Loans


63.14%


62.30%


63.80%


65.47%


57.97%





Allowance for Loan Losses to Loans HFI

1.19%


1.19%


1.07%


1.09%


1.07%





Nonperforming Assets to Total Assets

1.20%


1.01%


0.96%


1.61%


1.88%




















Capital Ratios















Tier I Leverage Capital Ratio


11.49%


11.01%


10.92%


11.61%


12.36%





Total Risk-Based Capital Ratio


18.08%


17.74%


15.68%


16.47%


17.22%





SOURCE Silvergate Bank



RELATED LINKS
http://www.silvergatebank.com

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