Silvergate Bank Announces Second Quarter 2012 Earnings Of $1.46 Million

Jul 31, 2012, 15:49 ET from Silvergate Bank

LA JOLLA, Calif., July 31, 2012 /PRNewswire/ -- Silvergate Bank, a San Diego-based bank that specializes in serving small businesses, today announced record quarterly and semi-annual earnings, with second quarter 2012 net income of $1,460,000 and first half 2012 net income of $2,489,000.  The Bank's results are the highest in its 24-year history and represent substantial increases over 2011, with second quarter net income up 89% over the same period last year and six-month net income up 61%.

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In addition to continued growth in its commercial banking platform, Silvergate Bank's second quarter performance highlights included funding $467 million in residential mortgage loans through its warehouse lending division, acquiring $49.1 million in reverse mortgage loans guaranteed by the U.S. Federal Housing Administration, and completing several sales of reverse mortgage loans.  At June 30, 2012, the Bank's capital ratios remained strong – Tier 1 Leverage Capital Ratio was 12.36% and Total Risk-Based Capital Ratio was 17.22%, both substantially exceeding "well capitalized" minimums of 5% and 10%.

"We are pleased to report that net income for the second quarter and first half of 2012 significantly outperformed the preceding quarter and the comparable periods in 2011, and represented the highest quarterly and semi-annual earnings in Silvergate Bank history," said Alan J. Lane, the Bank's president and chief executive officer. "Our well capitalized position ensures our ability to provide clients with innovative services and products to meet their needs today and well into the future."   

Lane added that Silvergate Bank's second quarter highlights also include the opening of a new full-service branch in Carlsbad and the relocation and expansion of its La Mesa branch to a more business-friendly facility. "Enhancing our customers' banking experience is a top priority for us.  These new locations provide more convenient access to banking services for our growing San Diego customer base." 

Financial Performance
The Bank's net income for the second quarter of 2012 was $1,460,000, compared to $1,029,000 for the first quarter of 2012 and $771,000 for the second quarter of 2011, an increase of 89% from the prior year period.  Net income for the first half of 2012 was $2,489,000, compared to $1,544,000 for the first half of 2011, an increase of 61%.  Total assets grew to $560.5 million at June 30, 2012, as compared to $470.5 million at December 31, 2011.  The largest factor in the Bank's asset growth was significantly increased balances in held-for-sale reverse mortgage loans, with more modest increases in other categories of loans held for investment.

The Bank's net interest margin was 4.19% for the second quarter of 2012 and 4.22% for the first half, compared to 2011 figures of 4.68% for the first quarter and 4.38% for the first half.  Net interest income in 2012 was $5.3 million for the second quarter and $10.5 million for the first half, compared to 2011 figures of $3.9 million for the first quarter and $7.4 million for the first half.  These sizeable net interest income improvements in 2012 as compared to 2011 were primarily due to significant increases in interest income and only modest changes in interest expense, the latter resulting in part from the Bank's substantial growth in noninterest bearing demand deposits over the twelve months, from $14.1 million to $39.6 million.  Noninterest income in 2012 increased to $1.3 million for the second quarter and $1.6 million for the first half, as compared to 2011 figures of $601,000 for the second quarter and $1.1 million for the first half; gains on sales of reverse mortgage loans and increased warehouse lending fee income were the largest contributors to these increases.  Noninterest expense in 2012 was $4.1 million for the second quarter and $7.8 million for the first half, compared to 2011 figures of $3.0 million for the first quarter and $5.6 million for the first half; these increases reflect higher employee related and occupancy costs associated with the Bank's growth in staffing, assets, and headquarters and branch office space.

Commenting on the Bank's results, Dennis S. Frank, Chairman, stated, "The record profitability we achieved in the second quarter and first half of the year reflects the diversified revenue streams we have worked to build.  Despite the challenges of a compressed interest rate environment, we have also maintained a net interest margin that exceeds the average for all California commercial banks and supports our ability to serve the needs of our entire range of clients."

Growth in Commercial Banking Platform
The Bank's historically strong profile in commercial real estate lending continued in the second quarter of 2012. Loan fundings of $35.5 million in the quarter increased the Bank's commercial real estate loans to $185.4 million at June 30, 2012, representing increases of 41.7% and 19.9% over the comparable totals of $130.8 million and $154.7 million at June 30, 2011 and December 31, 2011, respectively.  The Bank's expanding deposit franchise has been a key component of the Bank's substantial growth over the past year in total assets and net interest income.  Total deposits have grown by 53% in the past twelve months, with noninterest bearing demand deposits growing by 181%.  The Bank has made a significant investment in opening two new branch offices and relocating a third in the past year.  Despite the significant costs of this expansion, the Bank has generated record 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.  In the second quarter of 2012 the division funded over $467.4 million in loans, bringing its total fundings for the first half of 2012 to $886.6 million, and its cumulative fundings since April 2009 to over $3.7 billion.

Acquisitions and Sales of Reverse Mortgage Loans
The Bank's Reverse Mortgage Lending Division was established in late 2011 to acquire and hold for sale Home Equity Conversion Mortgage ("HECM") loans guaranteed by the U.S. Federal Housing Administration.  The Bank acquired $49.1 million in HECM loans in the second quarter of 2012, bringing its total acquisitions for the first half to $102.7 million.  The Bank's capacity to accumulate and hold these loans on its balance sheet allows it to maximize its opportunities for gains on loan sales while enjoying increased interest income during the period these loans are held for sale.  The Bank completed several sales of HECM loans during the second quarter of 2012.

Capital Ratios
The Bank continues to substantially exceed federal regulatory standards to be characterized as "well-capitalized."  At June 30, 2012 its Tier 1 Leverage Capital Ratio was 12.36% and its Total Risk-Based Capital Ratio was 17.22%.  These ratios exceed the "well-capitalized" minimums for each category of 5% and 10%, respectively, and also exceed the comparable average ratios reported for all FDIC-insured institutions at March 31, 2012, which were 9.20% and 15.52%, respectively. 

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.


 

Silvergate Bank Selected Financial and Operating Data
(Dollars in Thousands – Unaudited)


















Three Months Ended




Six Months Ended



INCOME STATEMENT


June 30,

2012


March 31,

2012


June,

2011


Annual

Change


June 30,

2012


June 30,

2011


Annual

Change
















Interest Income 


$     6,472


$     6,206


$         5,014


29%


$   12,678


$ 9,678


31%

Interest Expense 


1,135


1,043


1,087


4%


2,178


2,248


-3%

Net Interest Income


5,337


5,163


3,927


36%


10,500


7,430


41%

Provision for Loan Losses


50


50


250


-80%


100


350


-71%

Total Noninterest Income


1,344


299


601


124%


1,643


1,134


45%

Total Noninterest Expense


4,116


3,689


2,963


39%


7,805


5,583


40%

Income Before Taxes


2,515


1,723


1,315


91%


4,238


2,631


61%

Income Tax Expense


1,055


694


544


94%


1,749


1,087


61%

     Net Income


$     1,460


$     1,029


$           771


89%


$     2,489


$ 1,544


61%
















Performance Ratios















Net Interest Margin


4.19%


4.37%


4.68%




4.22%


4.38%



Return on Average Assets


1.09%


0.85%


0.90%




0.97%


0.89%



Return on Average Equity


8.83%


6.36%


7.69%




7.61%


7.88%



Efficiency Ratio


61.61%


67.54%


65.43%




64.28%


65.18%



Net Loan Charge-Offs to Average Total Loans

-0.16%


0.47%


0.06%




0.14%


0.07%

































    BALANCE SHEET


June 30,

2012


March 31,

2012


December 31,

2011


September 30,

2011


June 30,

2011


Annual

Change


















Cash and Due from Banks


$   19,179


$   16,280


$       23,438


$        25,532


$     8,200


134%



Investments


74,210


78,670


82,011


85,123


85,435


-13%



     Total Cash & Investments


93,389


94,950


105,449


110,655


93,635


0%



Loans Held for Investment ("HFI")


359,503


358,429


341,210


320,819


261,950


37%



Allowance for Loan Losses


(3,846)


(3,624)


(4,028)


(4,360)


(4,450)


-14%



     Loans HFI, net


355,657


354,805


337,182


316,459


257,500


38%



Loans Held for Sale


98,829


74,058


17,085


200


105


94023%



Real Estate Owned ("REO")


3,925


3,925


3,793


17


73


5277%



Other Assets


8,680


7,270


6,967


7,020


7,450


17%



Total Assets


$ 560,480


$ 535,008


$     470,476


$       434,351


$ 358,763


56%


















Noninterest Bearing Demand Deposits


$   39,630


$   34,804


$       31,530


$        22,428


$   14,113


181%



Interest Bearing Demand Deposits


2,630


1,894


1,800


1,542


1,840


43%



NOW, Money Market, and Savings,Accounts

116,740


108,445


104,333


95,474


82,478


42%



Certificates of Deposit


207,805


185,053


144,982


156,031


141,073


47%



     Total Deposits


366,805


330,196


282,645


275,475


239,504


53%



FHLB Advances and Other Borrowings


122,316


136,823


121,890


103,111


76,254


60%



Other Liabilities


4,722


2,768


2,168


3,793


2,760


71%



    Total Liabilities


493,843


469,787


406,703


382,379


318,518


55%



    Total Shareholder's Equity


66,637


65,221


63,773


51,972


40,245


66%



Total Liabilities and Shareholder's Equity


$ 560,480


$ 535,008


$     470,476


$       434,351


$ 358,763


56%


















Asset Quality Ratios















Noncurrent Loans to Total Loans


1.45%


1.71%


2.94%


3.12%


4.13%





Loss Allowance to Noncurrent Loans


57.97%


49.00%


38.25%


43.55%


41.10%





Allowance for Loan Losses to Loans HFI


1.07%


1.01%


1.18%


1.36%


1.70%





Noncurrent Loans plus REO to Total Assets


1.88%


2.12%


3.04%


2.31%


3.04%




















Capital Ratios















Tier I Leverage Capital Ratio


12.36%


13.39%


15.50%


14.23%


11.74%





Total Risk-Based Capital Ratio


17.22%


17.36%


18.86%


17.20%


16.21%



































 

 

CONTACT: Sandra Grove
Grove Media
858-565-1905
sgrove@grove-media.com

SOURCE Silvergate Bank



RELATED LINKS

http://www.silvergatebank.com