Silvergate Bank Reports Third Quarter 2013 Financial Results

LA JOLLA, Calif., Nov. 5, 2013 /PRNewswire/ -- Silvergate Bank today announced financial results for the quarter and nine-month period ended September 30, 2013, with quarterly income of $1.37 million and nine-month net income of $4.13 million.  Total assets at the end of the quarter were $616.4 million, and the Bank's equity capital was $68.9 million.

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"In an economy that remains sluggish, we are pleased to report that Silvergate Bank delivered another solid earnings performance in the third 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.  Our 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 September 30, 2013, Silvergate Bank's Tier 1 Leverage Capital Ratio was 10.85% and Total Risk-Based Capital Ratio was 19.26%, 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 0.86% and 1.29%, respectively.   

Further third quarter performance figures for Silvergate Bank were its funding of $511.0 million in single family mortgage loans through the Bank's Warehouse Lending Division and the acquisition / funding of $57.5 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.  "The flexibility within our diversified revenue streams has also allowed us to grow our reverse mortgage holdings and maintain solid net interest income even as a nationwide decline in mortgage loan originations has reduced our warehouse loan balances."

Financial Performance

The Bank's net income for the third quarter was $1.37 million, compared to same level for the prior quarter and $2.36 million for the third quarter last year (which was the second highest quarterly income in Bank history).  Net income for the first nine months was $4.13 million, compared to $4.85 million last year.  Total assets were $616.4 million at September 30, 2013, down $26.2 million from the prior quarter and $13.6 million from the third quarter a year ago.  The Bank's equity capital was $68.9 million at September 30, 2013, as compared to $72.6 million at June 30, 2013; this decline reflects the combined effects of the Bank's earnings for the quarter and its payment of a $5 million dividend to its parent firm, Silvergate Capital Corporation.

The Bank's net interest income for the quarter was $6.91 million, compared to $5.39 million for the prior quarter and $5.67 million last year.  These quarterly and year-over-year increases were mainly due to recognition in the third quarter of $1.3 million in interest income from the payoff of a loan acquired at a large discount to its principal balance.  This event also contributed to an increase in the third quarter's net interest margin to 4.39%, compared to 3.47% for the prior quarter and 3.88% for the third quarter last year.

Noninterest income was $0.45 million for the quarter, compared to $1.86 million for the prior quarter and $3.33 million last year, with these declines due mainly to the third quarter's lack of any loan sale gains and a reduction in securitization income.  Nine-month noninterest income was $3.98 million, compared to $4.96 million last year, due to lower levels of loan sale gains and securitization income in the current year.  Noninterest expense was $5.0 million for the quarter, compared to $5.1 million for the prior quarter and $4.8 million last year; nine-month noninterest expense increased to $14.8 million this year from $12.63 million last year, with the largest component of this increase being higher employee-related costs.

Commercial Banking Platform

Commercial real estate loans totaled $175.0 million at September 30, 2013, compared to $196.3 million at September 30, 2012, as third quarter new loan originations were exceeded by loan payoffs.  Total deposits grew by 15% in the past twelve months, with noninterest bearing demand deposits growing by 30%.  Despite the significant costs of opening two new branch offices and relocating a third in the past 27 months, the Bank's profitability has continued to benefit from our core commercial lending operations and the expanded residential lending activities we have added in recent years.   

Continued High Volumes of Residential Mortgage Loan Fundings and Acquisitions

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 quarter.  While a nationwide decrease in mortgage originations reduced the Bank's third quarter volumes from the prior quarter, it still funded $511.0 million in loans, bringing its nine-month total for 2013 to $1.88 billion

In late 2011 the Bank began to acquire Home Equity Conversion Mortgage ("HECM") loans insured by the U.S. Federal Housing Administration.  In the third quarter the Bank acquired and/or funded $57.5 million in HECM loans, bringing its year-to-date total to $183.3 million

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




Nine Months Ended





September 30,


June 30,


September 30,


Annual


September 30,


Annual

INCOME STATEMENT


2013


2013


2012


Change


2013


2012


Change
















Interest Income 


$    8,141


$   6,688


$    6,867


19%


$  21,562


$  19,544


10%

Interest Expense 


1,230


1,299


1,201


2%


3,891


3,379


15%

Net Interest Income


6,911


5,389


5,666


22%


17,671


16,165


9%

Provision for Loan Losses


-


(42)


150


-100%


7


250


-97%

Total Noninterest Income


446


1,863


3,320


-87%


3,980


4,963


-20%

Total Noninterest Expense


5,025


5,100


4,820


4%


14,806


12,625


17%

Income Before Taxes


2,332


2,194


4,016


-42%


6,838


8,253


-17%

Income Tax Expense


965


827


1,656


-42%


2,711


3,405


-20%

     Net Income


$    1,367


$   1,367


$    2,360


-42%


$    4,127


$    4,848


-15%
















Performance Ratios















Net Interest Margin


4.39%


3.47%


3.88%




3.76%


4.09%



Return on Average Assets


0.86%


0.87%


1.59%




0.86%


1.27%



Return on Average Equity


7.41%


7.55%


13.89%




7.60%


9.88%



Efficiency Ratio


68.31%


70.33%


53.64%




68.38%


59.75%



Net Loan Charge-Offs to Average Total Loans

0.01%


0.00%


0.02%




0.02%


0.10%



































September 30,


June 30,


March 31,


December 31,


September 30,


Annual



BALANCE SHEET


2013


2013


2013


2012


2012


Change


















Cash and Due from Banks


$  14,778


$ 26,441


$   56,396


$  39,352


$  30,323


-51%



Investments


73,129


71,344


64,491


69,073


72,428


1%



     Total Cash & Investments


87,907


97,785


120,887


108,425


102,751


-14%



Securitzed Loans, at fair value


27,172


26,870


26,146


23,838


21,863


n/m



Loans Held for Investment ("HFI")


291,449


333,872


337,135


375,737


364,730


-20%



Allowance for Loan Losses


(3,938)


(3,975)


(4,011)


(4,016)


(3,973)


-1%



     Loans HFI, net


287,511


329,897


333,124


371,721


360,757


-20%



Loans Held for Sale


201,723


176,827


148,549


170,931


131,609


53%



Real Estate Owned ("REO")


3,511


3,511


-


276


4,058


-13%



Other Assets


8,612


7,770


9,811


9,196


8,970


-4%



Total Assets


$ 616,436


$ 642,660


$ 638,517


$ 684,387


$ 630,008


-2%


















Noninterest Bearing Demand Deposits


$  61,901


$ 60,377


$   64,172


$  52,290


$  47,711


30%



Interest Bearing Demand Deposits


5,470


3,810


3,497


3,276


2,621


109%



NOW, Money Market, and Savings Accounts

179,485


164,831


162,715


149,275


125,004


44%



Certificates of Deposit


221,459


254,551


259,457


285,703


232,308


-5%



     Total Deposits


468,315


483,569


489,841


490,544


407,644


15%



FHLB Advances and Other Borrowings


49,128


58,136


50,144


96,151


127,209


-61%



Payables under Securitizations


25,148


23,947


22,728


23,023


20,645


n/m



Other Liabilities


4,911


4,420


4,416


4,645


5,320


-8%



    Total Liabilities


547,502


570,072


567,129


614,363


560,818


-2%



    Total Shareholder's Equity


68,934


72,588


71,388


70,024


69,190


0%



Total Liabilities and Shareholder's Equity


$ 616,436


$ 642,660


$ 638,517


$ 684,387


$ 630,008


-2%


















Asset Quality Ratios















Nonperforming Loans to Total Loans


0.86%


0.78%


1.26%


1.10%


1.17%





Loss Allowance to Nonperforming Loans


88.30%


94.73%


62.30%


63.80%


65.47%





Allowance for Loan Losses to Loans HFI


1.35%


1.19%


1.19%


1.07%


1.09%





Nonperforming Assets to Total Assets


1.29%


1.20%


1.01%


0.96%


1.61%




















Capital Ratios















Tier I Leverage Capital Ratio


10.85%


11.49%


11.01%


10.92%


11.61%





Total Risk-Based Capital Ratio


19.26%


18.08%


17.74%


15.68%


16.47%





SOURCE Silvergate Bank



RELATED LINKS
http://www.silvergatebank.com

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