LA JOLLA, Calif.--(BUSINESS WIRE)--Silvergate Bank (the “Bank”) today announced its financial results for the three months and six months ended June 30, 2011. Highlights included:
- Increased earnings by 7% over the first quarter of 2010 and by 14% over the first half of 2010;
- Exceeded $2 billion in cumulative fundings of residential mortgage warehouse loans since program launch in April 2009, with second quarter fundings of $267 million bringing fundings for the first half of 2011 to $466 million;
- Opened new Escondido branch office;
- Received preliminary approval in July for $12.4 million preferred stock investment from the U.S. Treasury through its Small Business Lending Fund, with plans to use the proceeds of this investment to further support lending to small businesses in the communities we serve; and
- Remained “well-capitalized” under federal regulatory standards, with ratios superior to recent industry averages.
“Silvergate Bank continued to deliver solid financial results in the second quarter and first half of 2011 in both absolute terms and as compared to its results in the comparable periods of 2010,” stated Alan J. Lane, President and Chief Executive Officer. “In the face of a weakening economy and continuing challenges in real estate markets, our performance is reflective of the committed efforts of all of our employees and the loyalty of our customers.”
Financial Performance
The Bank’s net income for the second quarter of 2011 was $771,000, compared to $722,000 for the second quarter of 2010, an increase of 7%. For the first six months of 2011, net income was $1,544,000, compared to $1,354,000 for the first half of 2010, an increase of 14%. Total assets were $358.8 million at June 30, 2011 as compared to $344.9 million at March 31, 2011 and $370.5 million at December 31, 2010; the decline from yearend 2010 was primarily due to reduced balances of mortgage warehouse loans attributable to lower seasonal loan funding patterns and more rapid loan turnover, with the Bank increasing these balances during the second quarter.
In the low interest rate environment that has continued to prevail, the Bank’s net interest margin increased to 4.79% for the second quarter, and its net interest margin of 4.44% for the first six months of 2011 was slightly above its 4.40% for the first six months of 2010. Net interest income for the second quarter of 2011 was $3,927,000 as compared to $3,780,000 for second quarter of 2010, as the Bank’s reduced costs of deposits and borrowings exceeded the decline it experienced in income on interest earning assets. The Bank’s noninterest income in the second quarter of 2011 was 48% greater than in the second quarter of 2010, with this increase due mainly to gains on sales of SBA loans, which totaled $427,000 during the first six months of 2011. Noninterest income in the first half of 2011 was almost double its level in the first half of 2010, benefiting both from the second quarter’s results and gains from securities sales in the first quarter. First half results also benefited from a $675,000 decline in the Bank’s provision for loan losses, based in large part on a $685,000 decline in loan charge offs in the first half of 2011 as compared to the first half of 2010.
Commenting on the Bank’s results, Dennis S. Frank, Chairman, stated, “Our improved earnings performance in the first half of 2011 further enhances our capabilities to deliver deposit and lending products and services to businesses and individuals throughout our communities.”
Increased Fundings of Residential Mortgage Loans
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 three months ended June 30, 2011 it funded over 1,000 loans in the total amount of $267 million, bringing its loan fundings for the first half of 2011 to $466 million, and its total fundings since April 2009 to just under $2.0 billion, with the Bank exceeding the $2.0 billion cumulative funding level during July 2011.
New Escondido Branch Opened
On June 13, 2011 the Bank opened a new branch at 128 North Broadway in Escondido, California, at the intersection with East Valley Parkway and across from the Escondido City Hall. Vice President and Branch Manager Jill Brierton leads a team of five experienced commercial bankers who staff this branch and will be working with customers throughout North San Diego County that the Bank can conveniently serve from this spacious new branch. The opening of this branch is an important milestone in the Bank’s commitment to expanding its service capabilities throughout San Diego County.
Preliminary Approval for $12.4 Million Investment from U.S. Treasury Small Business Lending Fund
In July 2011 the Bank’s parent firm, Silvergate Capital Corporation (“Silvergate”), received preliminary approval from the U.S. Department of the Treasury for participation in the Small Business Lending Fund, through which the Treasury would purchase $12.4 million of senior preferred stock in Silvergate, subject to the Treasury’s customary due diligence and satisfaction of certain closing conditions. This program was authorized by Congress in 2010 to provide funding to qualified community banks to encourage small business lending and thus help create jobs and promote economic growth. Assuming this investment is completed in the third quarter of 2011, at least 90% of the $12.4 million would be contributed as Tier 1 Capital to the Bank, further enhancing the capital resources the Bank devotes to its commitment to delivering “Business Banking, Redefined.”
Capital Ratios
The Bank continues to exceed all regulatory standards for it to be characterized as “well-capitalized.” At June 30, 2011 its Tier 1 Leverage Capital Ratio was 11.74% and its Total Risk-Based Capital Ratio was 16.21%. These ratios exceed the “well-capitalized” minimums for each category of 5% and 10%, respectively, and also exceed the comparable average ratios for all FDIC-insured institutions at March 31, 2011, which were 9.14% and 15.54%, respectively. The Bank’s capital ratios reflect a $1.258 million capital contribution in March 2011 from the Bank’s parent firm, which in March agreed to sell to a private investor approximately $4 million in common stock. The first portion of this transaction involved the $1.258 million noted above. The sale of additional common stock to this investor to complete its total purchase commitment is subject to the receipt of regulatory clearances and satisfaction of other closing conditions.
About Silvergate Capital Corporation and Silvergate Bank
Silvergate Capital Corporation (“Silvergate”) is the parent company of Silvergate Bank, a California chartered commercial bank. Silvergate was formed in October 1986 and the Bank commenced operations in August 1988. As of June 30, 2011 Silvergate had total assets of $358.7 million. Silvergate and the Bank are headquartered in La Jolla, California, with Bank branches in La Jolla, La Mesa, Escondido, and Lancaster, California.
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 | |||||||||||||||||||||||||||
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(Dollars in Thousands – Unaudited) |
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| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||
| June 30, | March 30, | June 30, | Annual | June 30, | June 30, | Annual | |||||||||||||||||||||
| INCOME STATEMENT | 2011 | 2011 | 2010 | Change | 2011 | 2010 | Change | ||||||||||||||||||||
| Interest Income | $ | 5,014 | $ | 4,664 | $ | 5,249 | -4 | % | $ | 9,678 | $ | 10,439 | -7 | % | |||||||||||||
| Interest Expense | 1,087 | 1,161 | 1,469 | -26 | % | 2,248 | 2,990 | -25 | % | ||||||||||||||||||
| Net Interest Income | 3,927 | 3,503 | 3,780 | 4 | % | 7,430 | 7,449 | 0 | % | ||||||||||||||||||
| Provision for Loan Losses | 250 | 100 | 425 | -41 | % | 350 | 1,025 | -66 | % | ||||||||||||||||||
| Total Noninterest Income | 601 | 533 | 406 | 48 | % | 1,134 | 590 | 92 | % | ||||||||||||||||||
| Total Noninterest Expense | 2,963 | 2,620 | 2,531 | 17 | % | 5,583 | 4,707 | 19 | % | ||||||||||||||||||
| Income Before Taxes | 1,314 | 1,316 | 1,230 | 7 | % | 2,631 | 2,307 | 14 | % | ||||||||||||||||||
| Income Tax Expense | 543 | 543 | 508 | 7 | % | 1,087 | 953 | 14 | % | ||||||||||||||||||
| Net Income | $ | 771 | $ | 773 | $ | 722 | 7 | % | $ | 1,544 | $ | 1,354 | 14 | % | |||||||||||||
| Performance Ratios | |||||||||||||||||||||||||||
| Net Interest Margin | 4.79 | % | 4.11 | % | 4.48 | % | 4.44 | % | 4.40 | % | |||||||||||||||||
| Return on Average Assets | 0.90 | % | 0.88 | % | 0.82 | % | 0.89 | % | 0.77 | % | |||||||||||||||||
| Return on Average Equity | 7.69 | % | 8.08 | % | 8.17 | % | 7.88 | % | 7.75 | % | |||||||||||||||||
| Efficiency Ratio | 65.44 | % | 64.92 | % | 60.46 | % | 65.19 | % | 58.55 | % | |||||||||||||||||
| Net Loan Charge-Offs to Average Loans | 0.06 | % | 0.08 | % | 0.09 | % | 0.07 | % | 0.64 | % | |||||||||||||||||
| June 30, | March 30, | December 31, | September 30, | June 30, | Annual | ||||||||||||||||||||||
| BALANCE SHEET | 2011 | 2011 | 2010 | 2010 | 2010 | Change | |||||||||||||||||||||
| Cash and Due from Banks | $ | 8,200 | $ | 23,572 | $ | 33,199 | $ | 20,663 | $ | 21,766 | -62 | % | |||||||||||||||
| Investment Securities | 81,681 | 74,242 | 63,896 | 67,689 | 68,264 | 20 | % | ||||||||||||||||||||
| Total Cash & Investments | 89,881 | 97,814 | 97,095 | 88,352 | 90,030 | 0 | % | ||||||||||||||||||||
| Loans | 262,055 | 240,843 | 266,993 | 285,844 | 274,946 | -5 | % | ||||||||||||||||||||
| Allowance for Loan Losses | (4,450 | ) | (4,237 | ) | (4,183 | ) | (3,784 | ) | (3,847 | ) | 16 | % | |||||||||||||||
| Loans, net | 257,605 | 236,606 | 262,810 | 282,060 | 271,099 | -5 | % | ||||||||||||||||||||
| Real Estate Owned | 73 | 81 | 156 | 3,457 | 3,195 | -98 | % | ||||||||||||||||||||
| Other Assets | 11,204 | 10,427 | 10,397 | 10,710 | 10,310 | 9 | % | ||||||||||||||||||||
| Total Assets | $ | 358,763 | $ | 344,928 | $ | 370,458 | $ | 384,579 | $ | 374,634 | -4 | % | |||||||||||||||
| Noninterest Bearing Demand Deposits | $ | 14,113 | $ | 13,208 | $ | 10,911 | $ | 12,454 | $ | 8,675 | 63 | % | |||||||||||||||
| Money Market, NOW, and Savings | 84,319 | 85,934 | 99,636 | 85,133 | 77,423 | 9 | % | ||||||||||||||||||||
| Certificates of Deposit | 141,072 | 150,003 | 159,672 | 165,339 | 169,454 | -17 | % | ||||||||||||||||||||
| Total Deposits | 239,504 | 249,145 | 270,218 | 262,926 | 255,552 | -6 | % | ||||||||||||||||||||
| FHLB Advances and Other Borrowings | 76,254 | 54,030 | 59,650 | 83,274 | 81,657 | -7 | % | ||||||||||||||||||||
| Other Liabilities | 2,760 | 2,242 | 3,003 | 1,832 | 1,668 | 65 | % | ||||||||||||||||||||
| Total Liabilities | 318,518 | 305,417 | 332,871 | 348,032 | 338,877 | -6 | % | ||||||||||||||||||||
| Total Shareholder's Equity | 40,245 | 39,511 | 37,587 | 36,547 | 35,757 | 13 | % | ||||||||||||||||||||
| Total Liabilities and Shareholder's Equity | $ | 358,763 | $ | 344,928 | $ | 370,458 | $ | 384,579 | $ | 374,634 | -4 | % | |||||||||||||||
| Asset Quality Ratios | |||||||||||||||||||||||||||
| Nonperforming Loans to Total Loans | 4.13 | % | 2.64 | % | 2.33 | % | 2.37 | % | 2.60 | % | |||||||||||||||||
| Loss Allowance to Nonperforming Loans | 41.10 | % | 66.71 | % | 67.12 | % | 55.92 | % | 53.77 | % | |||||||||||||||||
| Allowance for Loan Losses to Loans | 1.70 | % | 1.76 | % | 1.57 | % | 1.32 | % | 1.40 | % | |||||||||||||||||
| Nonperforming Assets to Total Assets | 3.04 | % | 1.86 | % | 1.72 | % | 2.66 | % | 2.76 | % | |||||||||||||||||
| Capital Ratios | |||||||||||||||||||||||||||
| Tier I Leverage Capital Ratio | 11.74 | % | 11.16 | % | 10.04 | % | 9.79 | % | 10.02 | % | |||||||||||||||||
| Total Risk-Based Capital Ratio | 16.21 | % | 17.95 | % | 16.00 | % | 14.31 | % | 14.71 | % | |||||||||||||||||