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SILVERGATE BANK REPORTS THIRD QUARTER 2017 RESULTS

Nov 13, 2017
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LA JOLLA, CA, November 07, 2017 – Silvergate Bank today announced financial results for the quarter ended September 30, 2017, with net income of $2.6 million.  The Bank’s total assets increased to $1.2 billion from $978.1 million at year end 2016 and total shareholder’s equity grew to $90.6 million at September 30, 2017.

“We are pleased to report strong earnings for the third quarter of 2017,”said Alan Lane, the Bank’s chief executive officer.  “We continue to invest in technology and people that allow Silvergate to offer innovative products and services to our business customers.” 

Financial Performance

The Bank’s net income for the third quarter of 2017 totaled $2.6 million, compared to $2.2 million in the second quarter, and $2.1 million for the third quarter last year.  For the nine months ended September 30, 2017, net income totaled $6.5 million, compared to $5.7 million for the same period in 2016. 

The Bank’s net interest income for the third quarter of 2017 was $11.3 million, compared to $9.9 million for the prior quarter and $9.1 million for the third quarter last year.  The Bank’s net interest margin for the third quarter was 3.70%, compared to 4.10% for the second quarter, and 3.86% for the same period in 2016.  The decrease from 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 was $8.1 million, or 1.16% of loans held for investment at September 30, 2017.  During the third quarter of 2017, the Bank’s provision for loan losses totaled $209 thousand, as the Bank added to the loan loss allowance based on estimated losses resulting from the recent hurricane activity.  The Bank had net charge-offs of $61 thousand in the third quarter of 2017, compared to no net charge-offs in the prior quarter, and $3 thousand in charge-offs with no recoveries in the third quarter of 2016. 

Noninterest income totaled $718 thousand for the quarter ended September 30, 2017, compared to $704 thousand for the prior quarter, and $833 thousand for the same quarter last year.  The variance over the prior quarter reflects increased fee income from deposit and loan growth.  For the first nine months of 2017, noninterest income totaled $2.0 million, compared to $2.5 million for the same period in 2016.

Noninterest expense was $7.5 million for the third quarter of 2017, compared to $7.0 million for the prior quarter and $6.2 million for the third quarter last year.  For the nine-month period ended September 30, 2017, noninterest expense was $21.3 million, compared to $17.8 million for the first nine months last year.  The increase over the prior periods reflects higher compensation and professional services expenses resulting from deposit growth, strong production activity and an increase in total employees as the Bank continues to expand its business banking activities.
 
“The third quarter’s net income was supported by continued strong loan production at good yields,” noted Derek Eisele, the Bank’s president.  

Balance Sheet Activity
The Bank’s total loans increased by $17.1 million to $859.2 million at September 30, 2017, compared to $842.1 million at June 30, 2017, and $834.2 million at September 30, 2016.

Loans funded and purchased by the Bank’s Mortgage Warehouse Lending Division totaled $1.1 billion in the third quarter, compared to $1.0 billion in the prior quarter and $1.4 billion in the third quarter of 2016.  Total commercial real estate loan balances totaled $369.9 million at September 30, 2017, compared to $371.4 million and $346.5 million at June 30, 2017, and September 30, 2016, respectively.  Single family residential loan balances totaled $448.1 million at September 30, 2017, compared to $431.1 million and $462.2 million at June 30, 2017, and September 30, 2016, respectively.  

At September 30, 2017, deposits totaled $985.4 million, compared to $969.4 million at the prior quarter-end and $769.2 million at September 30, 2016.  At September 30, 2017, noninterest bearing deposits totaled $610.2 million (representing approximately 62% of total deposits), an increase of $159.3 million over the prior quarter and $471.9 million compared to September 30, 2016.  These large deposit increases resulted from a combination of growth in our local markets as well as significant growth in the Bank’s Financial Technology deposit initiative.

At September 30, 2017, Silvergate Bank’s Tier 1 Leverage Capital Ratio was 7.44% and Total Risk-Based Capital Ratio was 14.98%, both substantially exceeding “well capitalized” minimums of 5.00% and 10.00%.  At September 30, 2017, the ratios of nonperforming loans to total loans and nonperforming assets to total assets remained low, at 0.53% and 0.43%, 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.