Silvergate Bank Reports Second Quarter 2016 Results
LA JOLLA, Calif., Aug. 8, 2016 /PRNewswire/ -- Silvergate Bank today announced financial results for the quarter ended June 30, 2016, with net income of $1.7 million. The Bank's total assets increased to $979.6 million from $952.7 million at the end of the first quarter of 2016.
"We continued to see strong growth in our residential lending activities, as home refinance activity picked up in the second quarter," said Alan Lane, the Bank's chief executive officer. "Our operating results reflect the strong partnerships we've developed with both our local business customers and our national residential loan originators. We continue to focus on strengthening and expanding these relationships."
Financial Performance
The Bank's net income for the second quarter of 2016 totaled $1.7 million, compared to $1.9 million in the first quarter and $3.1 million in the second quarter of last year. For the six-month period ending June 30, 2016, net income totaled $3.6 million, compared to $4.2 million for the same period in the prior year. Last year's second quarter and six-month period ending June 30, 2015 included one-time gains of $1.1 million.
The Bank's net interest income for the second quarter of 2016 was $8.5 million, compared to $8.1 million in the first quarter and $8.9 million during the second quarter of last year. The Bank's net interest margin for the second quarter was 3.76%, compared to 3.71% in the first quarter, and 3.87% during the same period last year. The increase in the net interest margin from the prior quarter reflects an increase in higher yielding loan balances over the prior periods. The decline in the net interest margin from last year's second quarter primarily reflects a decline in average loan balances during the period.
The Bank's provision for loan losses totaled $497,000 in the second quarter of 2016, compared to $322,000 in the first quarter and $660,000 during the second quarter of last year. The Bank added to its allowance for loan losses during the quarter in response to strong loan growth and the continued expansion of its commercial lending activities. The Bank experienced $8,000 in charge-offs with no recoveries during the second quarter of 2016 compared to zero charge-offs or recoveries in the first quarter.
Noninterest income totaled $652,000 for the quarter ended June 30, 2016, compared to $1.0 million in the first quarter, and $2.5 million during the second quarter of 2015. The decrease from the prior quarters primarily reflects a decrease in the gain on sale of loans during the quarter. Noninterest expense was $5.8 million for the second quarter of 2016, compared to $5.7 million in the first quarter and $5.6 million during the same quarter last year. The increase reflects higher compensation expense resulting from strong production activity and an increase in total employees as the Bank continues to expand its business banking activities.
"The second quarter net income was supported by continued strong loan production at good yields," noted Dennis Frank, the Bank's chairman. "We continue to invest our resources to expand our core commercial banking operations while providing innovative products and outstanding service to our customers."
Balance Sheet Activity
The Bank's total loan balances increased by $30.5 million during the second quarter of 2016 to $817.5 million. Loans funded and purchased by the Bank's Mortgage Warehouse Lending Division totaled $1.2 billion for the second quarter, compared to $884.9 million in the first quarter and $1.2 billion during the second quarter of 2015.
Total commercial real estate loan balances increased 13.98% over last quarter, totaling $317.7 million at June 30, 2016, compared to $278.5 million and $205.9 million as of March 31, 2016, and June 30, 2015, respectively. Residential loan balances totaled $327.1 million at June 30, 2016, compared to $299.7 million and $422.4 million at March 31, 2016, and June 30, 2015, respectively.
At June 30, 2016, deposits totaled $720.8 million, compared to $645.3 million at the prior quarter-end and $629.3 million at June 30, 2015. Deposit balances increased by 11.7% compared to prior quarter and 14.5% compared to June 30, 2015.
At June 30, 2016, Silvergate Bank's Tier 1 Leverage Capital Ratio was 9.20% and Total Risk-Based Capital Ratio was 13.75%, both substantially exceeding "well capitalized" minimums of 5.00% and 10.00%. Two of the Bank's asset quality ratios improved; nonperforming loans to total loans decreased from 0.54% in the prior quarter to 0.33%, and nonperforming assets to total assets decreased from 0.59% in the prior quarter to 0.37%.
About Silvergate Bank
Silvergate Bank is a San Diego-based bank that specializes in meeting the needs of businesses and residential loan producers 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 and a loan production office is located in Seal Beach in Orange County. 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: Alan Lane
858-362-6300
SOURCE Silvergate Bank
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