Silvergate Bank Reports Second Quarter 2014 Results

LA JOLLA, Calif., Aug. 6, 2014 /PRNewswire/ -- Silvergate Bank today announced financial results for the quarter and six-month period ended June 30, 2014 with net income of $1.51 million and $2.45 million, respectively.  The Bank's total assets increased to $734.1 million and equity grew to $72.7 million.

"We are pleased to announce Silvergate Bank's second quarter earnings and growth over the prior quarter which further extends our record of consistently profitable performance," said Alan J. Lane, the Bank's president and chief executive officer. "Our asset quality has historically been superior to peers, and our diligent efforts to continue to improve asset quality since the economic downturn have led to our lowest level of nonperforming assets relative to total assets in seven years.  Our high 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 businesses."  

At June 30, 2014, Silvergate Bank's Tier 1 Leverage Capital Ratio was 10.32% and Total Risk-Based Capital Ratio was 15.48%, 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 0.58% and 0.51%, respectively.   

"Our core commercial banking activities have continued to grow and our diversified revenue streams generate solid profitability in spite of the continued slowdown in residential lending nationwide," said Dennis S. Frank, Bank chairman. "These revenue streams allow us to re-invest our earnings into growing our business banking presence in San Diego as we continue to add new products and services to meet the lending and deposit needs of our clients." 

Financial Performance

The Bank's net income for the second quarter was $1.51 million, compared to $943,000 for the prior quarter and $1.37 million for the second quarter last year.  Net income for the first half of 2014 was $2.45 million, compared to $2.76 million last year.  Total assets at the end of the quarter increased to $734.1 million, up $9.24 million due to increased balances in mortgage warehouse loans, commercial real estate loans, construction loans and single-family residential mortgage loans. 

The Bank's net interest income for the quarter was $5.48 million, compared to $4.66 million for the prior quarter and $5.39 million in the second quarter of last year. The Bank's net interest margin for the second quarter was 3.16%, compared to 3.12% for the prior quarter, and 3.47% for the second quarter last year. The Bank's margin improved over the prior quarter due to growth in average interest earning assets; however, yields on those assets declined during the period at a faster pace than reductions in interest paid on total deposits and borrowings. The Bank continues to replace higher cost maturing time deposits with lower cost deposits and short-term borrowings to match the re-pricing characteristics of the loan portfolio.

Noninterest income was $2.58 million for the second quarter, compared to $1.63 million for the prior quarter, and $1.86 in last year's second quarter.  Noninterest income for the period included a $1.4 million gain on the sale of a foreclosed real estate property as nonperforming assets continue to decline and core noninterest income grew compared to the prior quarter due to increased gain on sale of loans and mortgage warehouse fees.  Noninterest expense was $5.55 million for the quarter, compared to $4.76 million for the prior quarter and $5.10 million last year, as general and administrative costs grew to facilitate the Bank's asset growth.

Balance Sheet Activity

Loans funded and purchased by the Bank's Mortgage Warehouse Lending Division totaled $616.6 million for the second quarter and $989.5 million for the first half of 2014. Mortgage warehouse loan balances totaled $138.5 million at June 30, 2014. Commercial real estate loan balances grew 12% to $219.0 million at June 30, 2014 compared to $195.1 million as of March 31, 2014 reflecting the Bank's continuing active role in commercial real estate financing. Residential loan balances, including reverse mortgages, declined 17% to $231.1 million compared to $278.5 million as of March 31, 2014 due to loan sales in the quarter.

Total deposits grew by 6% for the second quarter. Year-to-date the bank has experienced growth in deposits of 16%, or $64 million, excluding the sale of the Bank's Lancaster branch office in the first quarter. At June 30, 2014, deposits totaled $472.1 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, and La Mesa.  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.

SOURCE Silvergate Bank