Silvergate Bank Reports Fourth Quarter And Full Year 2017 Results

LA JOLLA, Calif., Feb. 21, 2018 /PRNewswire/ -- Silvergate Bank today announced financial results for the quarter and fiscal year ended December 31, 2017, with net income of $2.3 million and $8.7 million, respectively.  The Bank's earnings for the fourth quarter and full year were negatively impacted by the tax reform legislation signed into law in December 2017, which resulted in a write down of our deferred tax asset and an increase in tax expense of $1.1 million.  The Bank's total assets increased to $1.9 billion at yearend 2017 from $978.1 million at year end 2016, and shareholder's equity increased to $92.3 million from $85.2 million over the same period.

"We are pleased to report that 2017 was the Bank's twentieth consecutive profitable year and the highest net income year in our history," said Alan Lane, the Bank's chief executive officer.  "We achieved these results while continuing to make substantial investments in technology and people that will improve efficiency and productivity and expand the products and services offered to our business customers."

Financial Performance

The Bank's net income for the fourth quarter of 2017 was $2.3 million, compared to $2.6 million for the third quarter and $2.4 million for the fourth quarter of last year.  For the twelve-month period ending December 31, 2017, net income was $8.7 million, compared to $8.1 million in for the same period in 2016.

The Bank's net interest income for the fourth quarter of 2017 was $13.1 million, compared to $11.3 million for the third quarter and $9.2 million for the fourth quarter of last year.  Net interest income totaled $43.2 million for 2017, an $8.2 million, or 24%, increase over 2016.  This was due to an increase in interest earning assets combined with a decline in interest bearing liabilities.  The Bank's net interest margin for the fourth quarter was 3.57%, compared to 3.70% for the prior quarter, and 3.88% for the fourth quarter last year.  The decrease in the net interest margin over the prior quarters is the result of faster growth in interest earning assets relative to the increase in interest income on those assets.

The Bank's allowance for loan losses at December 31, 2017 was $8.2 million, or 1.17% of loans held for investment.  The Bank's provision for loan losses was $30 thousand for the fourth quarter of 2017 and $263 thousand for the full year, in response to loan growth over these periods.  The Bank experienced net loan recoveries of $56 thousand in the fourth quarter of 2017, compared to $61 thousand in net loan charge-offs in the previous quarter, and $18 thousand in net loan recoveries in the fourth quarter of 2016.

Noninterest income totaled $1.5 million thousand for the fourth quarter, compared to $718 thousand for the prior quarter, and $790 thousand for the fourth quarter of 2016.  The variance over the prior quarter primarily reflects increased fee income from substantial growth in noninterest bearing deposits.  For the year-ended December 31, 2017, the Bank generated $3.4 million of noninterest income, compared to $3.3 million for 2016.

Noninterest expense was $8.9 million for the fourth quarter of 2017, compared to $7.5 million for the prior quarter and $5.8 million for the same period last year.  For the year ended December 31, 2017, noninterest expense was $30.1 million, compared to $23.6 million for 2017.  These increases over prior periods primarily reflect higher compensation expense resulting from strong production activity and increases in total employees as the Bank continued to expand its business banking activities.

"The Bank's success in 2017 was due to substantial growth in noninterest bearing deposits as well as strong loan production from both our local business customers and our national residential loan originators," noted Dennis Frank, the Bank's chairman.

Balance Sheet Activity

The Bank's total loans increased by $20.5 million to $879.7 million at December 31, 2017, compared to $859.2 million at September 30, 2017, and $836.1 million at December 31, 2016.

Loans funded and purchased by the Bank's Mortgage Warehouse Lending Division totaled $982.8 million in the fourth quarter, compared to $1.1 billion in the prior quarter and $1.3 billion in the fourth quarter of 2016.  Total commercial real estate loan balances totaled $375.5 million at December 31, 2017, compared to $369.9 million and $350.8 million at September 30, 2017, and December 31, 2016, respectively.  Residential loan balances totaled $459.8 million at December 31, 2017, compared to $448.1 million and $451.1 million at September 30, 2017, and December 31, 2016, respectively.  Commercial and industrial loan balances totaled $50.7 million at December 2017, compared to $47.3 million and $40.5 million September 30, 2017 and December 31, 2016, respectively.

At December 31, 2017, deposits totaled $1.8 billion, compared to $985.4 million at the prior quarter-end and $769.9 million at December 31, 2016.  At December 31, 2017 noninterest bearing deposits totaled $1.5 billion (representing approximately 83% of total deposits), an increase of $856 million over the prior quarter and $1.3 billion compared to December 31, 2016.  The deposit increase resulted from a combination of growth in our local market as well as significant growth in the Bank's Financial Technology ("Fintech") deposit initiative launched a few years ago.

 At December 31, 2017, Silvergate Bank's Tier 1 Leverage Capital Ratio was 6.33% and Total Risk-Based Capital Ratio was 14.29%, both substantially exceeding "well capitalized" minimums of 5.00% and 10.00%.  At December 31, 2017, the ratios of nonperforming loans to total loans and nonperforming assets to total assets remained low, at 0.51% and 0.36%, respectively.

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 4250 Executive Square, Suite 300, 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

Related Links

http://www.silvergatebank.com