Silvergate Capital Corporation Announces Fourth Quarter and Full Year 2019 Results

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Silvergate Capital Corporation (“Silvergate” or “Company”) (NYSE:SI) and its wholly-owned subsidiary, Silvergate Bank (“Bank”), today announced financial results for the period ended December 31, 2019.

Fourth Quarter 2019 Financial Highlights

  • Successfully completed the Company’s initial public offering of 824,605 shares of common stock sold by the Company and 2,508,728 shares sold by selling shareholders on November 12, 2019. On November 18, 2019, the underwriters exercised in full their over-allotment option to purchase an additional 499,999 shares from the selling shareholders.
  • Net income for the quarter was $3.6 million, or $0.19 per diluted share, compared to net income of $6.7 million, or $0.36 per diluted share, for the third quarter of 2019, and net income of $8.0 million, or $0.44 per diluted share, for the fourth quarter of 2018
  • Digital currency customers grew to 804 at December 31, 2019 compared to 756 at September 30, 2019, and 542 at December 31, 2018
  • The Silvergate Exchange Network (“SEN”) handled 14,400 transactions in the fourth quarter as compared to 12,312 transactions in the third quarter of 2019 and 4,977 transactions in the fourth quarter of 2018
  • The SEN handled $9.6 billion of U.S. dollar transfers in the fourth quarter as compared to $10.4 billion in the third quarter of 2019, and $3.9 billion in the fourth quarter of 2018
  • Digital currency customer related fee income for the quarter was $1.4 million, compared to $1.6 million for the third quarter of 2019, and $0.7 million for the fourth quarter of 2018
  • Book value per share was $12.38 at December 31, 2019, compared to $12.92 at September 30, 2019, and $10.73 at December 31, 2018

Full Year 2019 Financial Highlights

  • Net income for the year ended December 31, 2019 was $24.8 million, or $1.35 per diluted share, compared to net income of $22.3 million, or $1.31 per diluted share for the year ended December 31, 2018
  • The SEN handled 46,063 transactions for the year ended December 31, 2019 as compared to 7,869 for the year ended December 31, 2018
  • The SEN handled $32.7 billion of U.S. dollar transfers for the year ended December 31, 2019 as compared to $8.3 billion for the year ended December 31, 2018
  • Digital currency customer related fee income for the year ended December 31, 2019 was $4.9 million compared to $2.0 million for the year ended December 31, 2018

Alan Lane, president and chief executive officer of Silvergate, commented, “Our fourth quarter results were in line with our expectations and highlighted by the continued strong growth of the SEN which added 48 digital currency customers in the fourth quarter, bringing our total customers to 804 at the end of the year. The SEN’s strong adoption can also be seen in the network’s digital currency transactions which rose 17% sequentially from the third quarter. While the price of bitcoin was volatile in the fourth quarter, impacting digital fee income and U.S. dollar volumes, we remain confident in the growth outlook for the SEN given our strong customer pipeline and increased SEN transaction volumes combined with the many opportunities that we see to expand the SEN’s product offerings to further drive digital currency fee income growth. One such initiative, recently announced, is SEN Leverage which will allow our customers to obtain U.S. dollar loans collateralized by bitcoin. SEN Leverage further enhances the competitive advantage and network effect of our global payments platform and demonstrates Silvergate’s leadership in providing banking services for the digital currency industry.”

 

 

As of or for the Three Months Ended

 

 

December 31,

2019

 

September 30,

2019

 

December 31,

2018

 

 

 

 

 

 

 

Financial Highlights

 

(Dollars in thousands, except per share data)

Net income

 

$

 

3,598

 

 

$

 

6,656

 

 

$

 

8,020

 

Diluted earnings per share

 

$

 

0.19

 

 

$

 

0.36

 

 

$

 

0.44

 

Return on average assets (ROAA)(1)

 

 

0.67

%

 

 

1.20

%

 

 

1.37

%

Return on average equity (ROAE)(1)

 

 

6.08

%

 

 

11.78

%

 

 

16.90

%

Net interest margin(1)(2)

 

 

2.97

%

 

 

3.39

%

 

 

3.59

%

Cost of deposits(1)(3)

 

 

0.84

%

 

 

0.50

%

 

 

0.08

%

Cost of funds(1)(3)

 

 

0.94

%

 

 

0.59

%

 

 

0.14

%

Efficiency ratio(4)

 

 

72.81

%

 

 

59.93

%

 

 

61.12

%

Total assets

 

$

 

2,128,127

 

 

$

 

2,136,844

 

 

$

 

2,004,318

 

Total deposits

 

$

 

1,814,654

 

 

$

 

1,848,095

 

 

$

 

1,783,005

 

Book value per share

 

$

 

12.38

 

 

$

 

12.92

 

 

$

 

10.73

 

Tier 1 leverage ratio

 

 

11.04

%

 

 

10.43

%

 

 

9.00

%

Total risk-based capital ratio

 

 

26.45

%

 

 

25.97

%

 

 

25.77

%

 

 

Year Ended December 31,

 

 

2019

 

2018

 

 

 

 

 

Financial Highlights

 

(Dollars in thousands, except per share data)

Net income

 

$

 

24,846

 

 

$

 

22,333

 

Diluted earnings per share

 

$

 

1.35

 

 

$

 

1.31

 

Return on average assets (ROAA)

 

 

1.19

%

 

 

1.11

%

Adjusted return on average assets (ROAA)(5)

 

 

1.00

%

 

 

1.11

%

Return on average equity (ROAE)

 

 

11.54

%

 

 

13.47

%

Adjusted return on average equity (ROAE)(5)

 

 

9.71

%

 

 

13.47

%

Net interest margin(2)

 

 

3.47

%

 

 

3.49

%

Cost of deposits(3)

 

 

0.43

%

 

 

0.10

%

Cost of funds(3)

 

 

0.54

%

 

 

0.17

%

Efficiency ratio(4)

 

 

60.52

%

 

 

62.59

%

Adjusted efficiency ratio(4)(5)

 

 

64.63

%

 

 

62.59

%

_______________________

(1)

Data has been annualized.

(2)

Net interest margin is a ratio calculated as annualized net interest income divided by average interest earning assets for the same period.

(3)

Cost of deposits and cost of funds increased beginning in the second quarter of 2019 due to the cost of a hedging strategy discussed in

“Balance Sheet —Securities” in more detail below.

(4)

Efficiency ratio is calculated by dividing noninterest expenses by net interest income plus noninterest income.

(5)

In March 2019, the Bank completed the sale of its San Marcos branch and business loan portfolio which generated a pre-tax gain on sale of $5.5 million, or $3.9 million after tax, which significantly positively impacted net income, diluted earnings per share, ROAA, ROAE and efficiency ratio during the first quarter of 2019. See “Non-GAAP Financial Measures” for further information and reconciliation of these metrics.

Digital Currency Initiative

At December 31, 2019, our digital currency customers increased to 804 from 756 at September 30, 2019, and from 542 at December 31, 2018. At December 31, 2019, we had 242 prospective digital currency customer leads in various stages of our customer onboarding process and pipeline. There were 14,400 transactions on the SEN for the three months ended December 31, 2019, resulting in 46,063 transactions on the SEN for the year ended December 31, 2019.

In addition, for the three months ended December 31, 2019, $9.6 billion of U.S. dollar transfers occurred on the SEN, bringing total U.S. dollar transfers on the SEN to $32.7 billion for the year ended December 31, 2019.

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

2019

 

September 30,

2019

 

December 31,

2018

 

December 31,

2019

 

December 31,

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in millions)

# SEN Transactions

 

 

14,400

 

 

 

12,312

 

 

 

4,977

 

 

 

46,063

 

 

 

7,869

 

$ Volume of SEN Transfers

 

$

 

9,607

 

 

$

 

10,425

 

 

$

 

3,911

 

 

$

 

32,733

 

 

$

 

8,270

 

 

Results of Operations, Quarter Ended December 31, 2019

Net Interest Income and Net Interest Margin Analysis

Net interest income totaled $15.6 million for the fourth quarter of 2019, compared to $18.4 million for the third quarter of 2019, and $20.9 million for the fourth quarter of 2018.

Compared to the third quarter of 2019, net interest income decreased $2.8 million due to an increase in interest expense as a result of premium expense associated with calling and reissuing brokered certificates of deposits at lower rates, and a decrease in interest earning assets driven primarily by a decrease in average balances of interest earning deposits in other banks and securities. In addition, the Federal Open Market Committee lowered the federal funds rate in both the third and fourth quarter of 2019, reducing the yields on Bank interest earning deposits and securities. This was partially offset by an increase in average loans, primarily due to an increase in mortgage warehouse loan balances.

Compared to the fourth quarter of 2018, net interest income decreased $5.2 million due to a $213.0 million decrease in average interest earning assets, a $302.4 million increase in average interest bearing liabilities, and a 205 basis point increase in the rates on interest bearing liabilities. Average interest earning assets decreased primarily due to a decrease in interest earning deposits offset by an increase in securities and loans. The decrease in interest earning deposits was primarily due to the investment of such funds in higher yielding securities and loans. The increase in securities resulted from purchases of fixed-rate commercial mortgage-backed securities and adjustable rate residential mortgage-backed securities, while the increase in loans was primarily driven by an increase in mortgage refinancing, increased mortgage warehouse loan demand, and increased production of multi-family residential loans, offsetting a decrease in loans related to the sale of the business loan portfolio in the first quarter of 2019. Yields on earning assets benefited from the increase in securities relative to interest earning deposits in other banks and an increase in interest income primarily due to increased mortgage warehouse loan balances. The increase in rates on interest bearing deposits was primarily due to the issuance of callable brokered certificates of deposits, which were used to fund fixed-rate commercial mortgage-backed securities, both associated with a hedging strategy which is discussed in further detail under “Balance Sheet—Securities.” Noninterest bearing deposits generated by the digital currency initiative are primarily invested in securities and interest earning deposits.

Net interest margin for the fourth quarter of 2019 was 2.97%, compared to 3.39% for the third quarter of 2019, and 3.59% for the fourth quarter of 2018. The decrease in the net interest margin compared to the third quarter of 2019 was driven by an increase in interest expense due to premium expense associated with calling and reissuing brokered certificates of deposits at lower rates. The yield on interest earning assets declined 11 basis points due primarily to reductions in the federal funds rate during the third and fourth quarters of 2019, which was partially offset by increased balances of higher yielding mortgage warehouse loans. The net interest margin decrease from the fourth quarter of 2018 was primarily due to increased interest expense from the new callable brokered certificates of deposits associated with the hedging strategy.

 

 

Three Months Ended

 

 

December 31, 2019

 

September 30, 2019

 

December 31, 2018

 

 

Average

Outstanding

Balance

 

Interest

Income/

Expense

 

Average

Yield/

Rate

 

Average

Outstanding

Balance

 

Interest

Income/

Expense

 

Average

Yield/

Rate

 

Average

Outstanding

Balance

 

Interest

Income/

Expense

 

Average

Yield/

Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest earning deposits in other

banks

 

$

 

165,685

 

 

$

 

685

 

 

1.64

%

 

$

 

234,606

 

 

$

 

1,183

 

 

2.00

%

 

$

 

1,091,391

 

 

$

 

6,220

 

 

2.26

%

Securities

 

 

905,399

 

 

 

6,117

 

 

2.68

%

 

 

935,263

 

 

 

6,510

 

 

2.76

%

 

 

309,360

 

 

 

2,316

 

 

2.97

%

Loans(1)(2)

 

 

1,008,987

 

 

 

13,076

 

 

5.14

%

 

 

979,283

 

 

 

13,574

 

 

5.50

%

 

 

892,947

 

 

 

12,743

 

 

5.66

%

Other

 

 

10,744

 

 

 

234

 

 

8.64

%

 

 

10,742

 

 

 

121

 

 

4.47

%

 

 

10,140

 

 

 

322

 

 

12.60

%

Total interest earning assets

 

 

2,090,815

 

 

 

20,112

 

 

3.82

%

 

 

2,159,894

 

 

 

21,388

 

 

3.93

%

 

 

2,303,838

 

 

 

21,601

 

 

3.72

%

Noninterest earning assets

 

 

46,708

 

 

 

 

 

 

 

45,306

 

 

 

 

 

 

 

14,124

 

 

 

 

 

Total assets

 

$

 

2,137,523

 

 

 

 

 

 

$

 

2,205,200

 

 

 

 

 

 

$

 

2,317,962

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing deposits

 

$

 

449,985

 

 

$

 

3,793

 

 

3.34

%

 

$

 

438,277

 

 

$

 

2,385

 

 

2.16

%

 

$

 

226,688

 

 

$

 

401

 

 

0.70

%

FHLB advances and other

borrowings

 

 

85,451

 

 

 

419

 

 

1.95

%

 

 

43,642

 

 

 

289

 

 

2.63

%

 

 

6,371

 

 

 

93

 

 

5.79

%

Subordinated debentures

 

 

15,815

 

 

 

270

 

 

6.77

%

 

 

15,810

 

 

 

271

 

 

6.80

%

 

 

15,800

 

 

 

244

 

 

6.13

%

Total interest bearing liabilities

 

 

551,251

 

 

 

4,482

 

 

3.23

%

 

 

497,729

 

 

 

2,945

 

 

2.35

%

 

 

248,859

 

 

 

738

 

 

1.18

%

Noninterest bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest bearing deposits

 

 

1,335,186

 

 

 

 

 

 

 

1,468,992

 

 

 

 

 

 

 

1,873,690

 

 

 

 

 

Other liabilities

 

 

16,274

 

 

 

 

 

 

 

14,400

 

 

 

 

 

 

 

7,123

 

 

 

 

 

Shareholders’ equity

 

 

234,812

 

 

 

 

 

 

 

224,079

 

 

 

 

 

 

 

188,290

 

 

 

 

 

Total liabilities and shareholders’

equity

 

$

 

2,137,523

 

 

 

 

 

 

$

 

2,205,200

 

 

 

 

 

 

$

 

2,317,962

 

 

 

 

 

Net interest spread(3)

 

 

 

 

 

0.59

%

 

 

 

 

 

1.58

%

 

 

 

 

 

2.54

%

Net interest income

 

 

 

$

 

15,630

 

 

 

 

 

 

$

 

18,443

 

 

 

 

 

 

$

 

20,863

 

 

 

Net interest margin(4)

 

 

 

 

 

2.97

%

 

 

 

 

 

3.39

%

 

 

 

 

 

3.59

%

________________________

(1)

Loans include nonaccrual loans and loans held-for-sale, net of deferred fees and before allowance for loan losses.

(2)

Interest income includes amortization of deferred loan fees, net of deferred loan costs.

(3)

Net interest spread is the difference between interest rates earned on interest earning assets and interest rates paid on interest bearing

liabilities.

(4)

Net interest margin is a ratio calculated as annualized net interest income divided by average interest earning assets for the same period.

Provision for Loan Losses

The Company recorded no provision for loan losses for the fourth quarter of 2019, compared to reversals of the provision for loan losses of $0.9 million for the third quarter of 2019, and $1.7 million for the fourth quarter of 2018. The reversal in the third quarter of 2019 was due to improvements in qualitative factors related to the loan portfolio and the continued low charge-off rates. The reversal in the fourth quarter of 2018 was primarily due to reclassifying $125.2 million in loans held-for-investment as loans held-for-sale in connection with the Company’s November 2018 agreement to sell the Bank’s business loan portfolio.

Noninterest Income

Noninterest income for the fourth quarter of 2019 was $3.1 million, an increase of $0.5 million, or 20.4%, from the third quarter of 2019. The primary driver of this increase was a $0.7 million gain on sale of securities which is discussed in further detail under “Balance Sheet—Securities.”

Noninterest income for the fourth quarter of 2019 increased by $1.1 million, or 57.2%, compared to the fourth quarter of 2018. This increase was driven by a $0.7 million, or 90.6%, increase in deposit related fees, along with the $0.7 million gain on sale of securities, partially offset by a decrease in service fees related to off-balance sheet deposits. Deposit related fees increased primarily due to increases in cash management, foreign exchange, and SEN related fees associated with our digital currency initiative.

 

 

Three Months Ended

 

 

December 31,

2019

 

September 30,

2019

 

December 31,

2018

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

Noninterest income:

 

 

 

 

 

 

Mortgage warehouse fee income

 

$

 

388

 

 

$

 

373

 

 

$

 

353

 

Service fees related to off-balance sheet deposits

 

 

183

 

 

 

283

 

 

 

739

 

Deposit related fees

 

 

1,487

 

 

 

1,657

 

 

 

780

 

Gain on sale of loans, net

 

 

235

 

 

 

248

 

 

 

12

 

Gain (loss) on sale of securities, net

 

 

740

 

 

 

(16

)

 

 

Other income

 

 

97

 

 

 

54

 

 

 

107

 

Total noninterest income

 

$

 

3,130

 

 

$

 

2,599

 

 

$

 

1,991

 

Noninterest Expense

Noninterest expense totaled $13.7 million for the fourth quarter of 2019, an increase of $1.0 million compared to the third quarter of 2019, and a decrease of $0.3 million compared to the fourth quarter of 2018.

Noninterest expense increased from the prior quarter due to increases in salaries and employee benefits, professional services and other general and administrative expense.

Noninterest expense decreased from the fourth quarter of 2018 due to lower professional services and federal deposit insurance expense offset by increases in salaries and employee benefits, communications and data processing and other general and administrative expense.

 

 

Three Months Ended

 

 

December 31,

2019

 

September 30,

2019

 

December 31,

2018

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

Noninterest expense:

 

 

 

 

 

 

Salaries and employee benefits

 

$

8,773

 

 

$

8,277

 

 

$

8,563

 

Occupancy and equipment

 

861

 

 

892

 

 

840

 

Communications and data processing

 

1,149

 

 

1,298

 

 

939

 

Professional services

 

1,198

 

 

889

 

 

2,132

 

Federal deposit insurance

 

33

 

 

39

 

 

152

 

Correspondent bank charges

 

323

 

 

288

 

 

249

 

Other loan expense

 

122

 

 

47

 

 

221

 

Other real estate owned expense (recovery)

 

90

 

 

75

 

 

(15

)

Other general and administrative

 

1,111

 

 

806

 

 

887

 

Total noninterest expense

 

$

13,660

 

 

$

12,611

 

 

$

13,968

 

Income Tax Expense

Income tax expense was $1.5 million for the fourth quarter of 2019, compared to $2.6 million for the third quarter of 2019, and $2.5 million for the fourth quarter of 2018. Our effective tax rate for the fourth quarter of 2019 was 29.5%, compared to 28.3% for the third quarter of 2019, and 24.1% fourth quarter of 2018. The effective tax rate for the fourth quarter of 2019 was impacted by higher blended state taxes and lower excess benefit from stock-based compensation compared to the fourth quarter of 2018.

Results of Operations, Year Ended December 31, 2019

Net income for the year ended December 31, 2019 was $24.8 million, or $1.35 per diluted share, compared to $22.3 million, or $1.31 per diluted share, for 2018.

Net interest income for the year ended December 31, 2019 was $71.0 million, compared to $69.6 million for the same period in 2018. Our increased net interest income was primarily due to an $8.3 million increase in interest income partially offset by a $6.9 million increase in interest expense. The increase in interest income was due to both an increase in average earning assets and higher yields on those assets, driven in part by an increase in higher yielding securities and a reduction in lower yielding interest earning deposits, which offset higher rates on interest bearing deposits as a result of the new callable brokered certificates of deposits associated with the Company’s hedging strategy.

Noninterest income for the year ended December 31, 2019 was $15.8 million, compared to $7.6 million for 2018. The increase in total noninterest income was primarily due to the increase in fee income from our digital currency customers and a $5.5 million gain on a branch sale that occurred in the first quarter of 2019. Digital currency customer related fee income for the year ended December 31, 2019 was $4.9 million as compared to $2.0 million for the year ended December 31, 2018.

Noninterest expense was $52.5 million for the year ended December 31, 2019, compared to $48.3 million for the year ended December 31, 2018. The increase in noninterest expense was primarily due to increases in salaries and benefits and communications and data processing expenses relating to our organic growth, as we have expanded operational infrastructure and implemented our plan to build an efficient, technology-driven global payments platform with significant capacity for growth.

Income tax expense was $9.8 million for the year ended December 31, 2019, compared to income tax expense of $8.1 million for 2018. Our effective tax rate for 2019 and 2018 was 28.3% and 26.5%, respectively.

Balance Sheet

Deposits

At December 31, 2019, deposits totaled $1.8 billion, a decrease of $33.4 million, or 1.8%, from September 30, 2019, and an increase of $31.6 million, or 1.8%, from December 31, 2018. Noninterest bearing deposits totaled $1.3 billion (representing approximately 74.0% of total deposits) at December 31, 2019, a decrease of $50.8 million from the prior quarter end and a $238.1 million decrease compared to December 31, 2018. The decrease in total deposits from the prior quarter reflects changes in deposit levels of our digital currency customers. The increase in total deposits from December 31, 2018 reflects an increase of $325.0 million in callable brokered certificates of deposit associated with our hedging strategy, offset by decreases from our digital currency customers and a $74.5 million decrease from the sale of our San Marcos branch in the first quarter of 2019.

The weighted average cost of deposits for the fourth quarter of 2019 was 0.84%, compared to 0.50% for the third quarter of 2019, and 0.08% for the fourth quarter of 2018. The increase in the weighted average cost of deposits compared to the third quarter of 2019 and the fourth quarter of 2018 was driven by the addition of new callable brokered certificates of deposit associated with a hedging strategy and the accelerated premium expense associated with the call and reissuance of brokered certificates of deposit in the fourth quarter of 2019, as discussed under “Balance Sheet—Securities.”

 

 

Three Months Ended

 

 

December 31, 2019

 

September 30, 2019

 

December 31, 2018

 

 

Average

Balance

 

Average

Rate

 

Average

Balance

 

Average

Rate

 

Average

Balance

 

Average

Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

Noninterest bearing demand accounts

 

$

 

1,335,186

 

 

 

 

$

 

1,468,992

 

 

 

 

$

 

1,873,690

 

 

 

Interest bearing accounts:

 

 

 

 

 

 

 

 

 

 

 

 

Interest bearing demand accounts

 

 

50,095

 

 

0.13

%

 

 

47,945

 

 

0.14

%

 

 

52,169

 

 

0.13

%

Money market and savings accounts

 

 

83,199

 

 

1.00

%

 

 

81,941

 

 

1.00

%

 

 

138,381

 

 

0.70

%

Certificates of deposit:

 

 

 

 

 

 

 

 

 

 

 

 

Brokered certificates of deposit

 

 

314,262

 

 

4.49

%

 

 

303,524

 

 

2.81

%

 

 

 

 

Other

 

 

2,429

 

 

1.23

%

 

 

4,867

 

 

1.33

%

 

 

36,138

 

 

1.51

%

Total interest bearing deposits

 

 

449,985

 

 

3.34

%

 

 

438,277

 

 

2.16

%

 

 

226,688

 

 

0.70

%

Total deposits

 

$

 

1,785,171

 

 

0.84

%

 

$

 

1,907,269

 

 

0.50

%

 

$

 

2,100,378

 

 

0.08

%

Demand for new deposit accounts is generated by our banking platform for innovators that includes the SEN, which is enabled through our proprietary API and online banking system. These tools enable our clients to grow their business and scale operations.

The following table sets forth a breakdown of our digital currency customer base and the deposits held by such customers at the dates noted below:

 

 

December 31, 2019

 

September 30, 2019

 

December 31, 2018

 

 

Number of

Customers

 

Total

Deposits

 

Number of

Customers

 

Total

Deposits

 

Number of

Customers

 

Total

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in millions)

Digital currency exchanges

 

80

 

 

$

529

 

 

69

 

 

$

546

 

 

37

 

 

$

618

 

Institutional investors

 

489

 

 

430

 

 

468

 

 

504

 

 

363

 

 

577

 

Other customers

 

235

 

 

286

 

 

219

 

 

247

 

 

142

 

 

274

 

Total(1)

 

804

 

 

$

1,246

 

 

756

 

 

$

1,297

 

 

542

 

 

$

1,470

 

________________________

(1)

Total deposits may not foot due to rounding.

Loan Portfolio

Total loans held-for-investment were $670.8 million at December 31, 2019, a decrease of $27.4 million, or 3.9%, from September 30, 2019, and an increase of $71.3 million, or 11.9%, from December 31, 2018.

 

 

December 31,

2019

 

September 30,

2019

 

December 31,

2018

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

Real estate loans:

 

 

 

 

 

 

One-to-four family

 

$

 

193,367

 

 

$

 

212,440

 

 

$

 

190,885

 

Multi-family

 

 

81,233

 

 

 

77,901

 

 

 

40,584

 

Commercial

 

 

331,052

 

 

 

322,733

 

 

 

309,655

 

Construction

 

 

7,213

 

 

 

3,986

 

 

 

3,847

 

Commercial and industrial

 

 

14,440

 

 

 

14,563

 

 

 

8,586

 

Consumer and other

 

 

122

 

 

 

76

 

 

 

150

 

Reverse mortgage

 

 

1,415

 

 

 

1,629

 

 

 

1,742

 

Mortgage warehouse

 

 

39,247

 

 

 

61,856

 

 

 

41,586

 

Total gross loans held-for-investment

 

 

668,089

 

 

 

695,184

 

 

 

597,035

 

Deferred fees, net

 

 

2,724

 

 

 

2,997

 

 

 

2,469

 

Total loans held-for-investment

 

 

670,813

 

 

 

698,181

 

 

 

599,504

 

Allowance for loan losses

 

 

(6,191

)

 

 

(6,191

)

 

 

(6,723

)

Total loans held-for-investment, net

 

$

 

664,622

 

 

$

 

691,990

 

 

$

 

592,781

 

Total loans held-for-sale

 

$

 

375,922

 

 

$

 

311,410

 

 

$

 

350,636

 

Loans held-for-sale included $365.8 million, $306.7 million and $211.0 million of mortgage warehouse loans at December 31, 2019, September 30, 2019, and December 31, 2018, respectively.

Asset Quality and Allowance for Loan Losses

At December 31, 2019, our allowance for loan losses remained unchanged at $6.2 million compared to September 30, 2019, and $6.7 million at December 31, 2018. The ratio of the allowance for loan losses to gross loans held-for-investment at December 31, 2019 was 0.93%, compared to 0.89% and 1.13% at September 30, 2019 and December 31, 2018, respectively.

Nonperforming assets totaled $6.0 million, or 0.28% of total assets, at December 31, 2019, a decrease of $0.8 million from $6.8 million, or 0.32% of total assets at September 30, 2019. Nonperforming assets decreased $2.3 million, from $8.3 million, or 0.42% of total assets, at December 31, 2018.

 

 

December 31,

2019

 

September 30,

2019

 

December 31,

2018

 

 

 

 

 

 

 

Asset Quality

 

(Dollars in thousands)

Nonperforming Assets:

 

 

 

 

 

 

Nonperforming loans

 

$

 

5,909

 

 

$

 

6,707

 

 

$

 

8,303

 

Troubled debt restructurings

 

$

 

1,791

 

 

$

 

1,840

 

 

$

 

514

 

Other real estate owned, net

 

$

 

128

 

 

$

 

81

 

 

$

 

31

 

Nonperforming assets

 

$

 

6,037

 

 

$

 

6,788

 

 

$

 

8,334

 

 

 

 

 

 

 

 

Asset Quality Ratios:

 

 

 

 

 

 

Nonperforming assets to total assets

 

 

0.28

%

 

 

0.32

%

 

 

0.42

%

Nonperforming loans to gross loans(1)

 

 

0.88

%

 

 

0.96

%

 

 

1.39

%

Nonperforming assets to gross loans and other real estate owned(1)

 

 

0.90

%

 

 

0.98

%

 

 

1.40

%

Net charge-offs (recoveries) to average total loans(1)

 

 

0.01

%

 

 

0.01

%

 

 

(0.01

)%

Allowance for loan losses to gross loans(1)

 

 

0.93

%

 

 

0.89

%

 

 

1.13

%

Allowance for loan losses to nonperforming loans

 

 

104.77

%

 

 

92.31

%

 

 

80.97

%

________________________

(1)

Loans exclude loans held-for-sale at each of the dates presented.

Securities

Securities available-for-sale decreased $12.2 million, or 1.3%, from $909.9 million at September 30, 2019, and increased $540.6 million, or 151.3%, from $357.2 million at December 31, 2018, to $897.8 million at December 31, 2019. The Company’s securities portfolio has grown substantially due to the implementation of a hedging strategy and the purchase of high quality available-for-sale securities. In March 2019, the Bank implemented a hedging strategy that includes purchases of interest rate floors and commercial mortgage-backed securities, primarily funded by callable brokered certificates of deposit. This hedging strategy is intended to reduce the Company’s exposure to a decline in earnings in a declining interest rate environment with a minimal negative impact on current earnings. At December 31, 2019, the Company had purchased $400.0 million in notional amount of interest rate floors, $350.4 million in fixed-rate commercial mortgage-backed securities and issued $325.0 million of callable brokered certificates of deposit related to the hedging strategy. The callable brokered certificates of deposit had an unamortized premium of $2.6 million and have an average maturity of 4.6 years as of December 31, 2019. These certificates of deposit are initially callable within three to six months after issuance, and monthly thereafter. The call dates for all callable brokered certificates of deposit are from December 2019 through March 2020. In the fourth quarter the Company called $237.5 million of callable brokered certificates of deposit and reissued new callable brokered certificates of deposit at lower rates. The premium expense associated with calling these certificates was $1.6 million. This premium expense will be offset in the future as a result of the newly issued certificates at lower rates. During the fourth quarter of 2019 the Company sold $10.0 million of fixed-rate commercial mortgage-backed securities and realized a gain on sale of $0.7 million, which partially offset the premium expense associated with calling the brokered certificates of deposit. The Company reinvested the proceeds from the $10.0 million fixed-rate commercial mortgage-backed securities sale into a new $10.0 million fixed-rate commercial mortgage-backed security.

Capital Ratios

At December 31, 2019, the Company’s ratio of common equity to total assets was 10.86%, compared with 10.79% at September 30, 2019, and 9.54% at December 31, 2018. At December 31, 2019, the Company’s book value per share was $12.38, compared to $12.92 at September 30, 2019, and $10.73 at December 31, 2018.

At December 31, 2019, the Company had a tier 1 leverage ratio of 11.04%, common equity tier 1 capital ratio of 24.07%, tier 1 capital ratio of 25.76% and total capital ratio of 26.45%.

At December 31, 2019, the Bank had a tier 1 leverage ratio of 10.52%, common equity tier 1 capital ratio of 24.55%, tier 1 capital ratio of 24.55% and total capital ratio of 25.24%. These capital ratios each exceeded the “well capitalized” standards defined by federal banking regulations of 5.00% for tier 1 leverage ratio, 6.5% for common equity tier 1 capital ratio, 8.00% for tier 1 capital ratio and 10.00% for total capital ratio.

Capital Ratios(1)

 

December 31,

2019

 

September 30,

2019

 

December 31,

2018

The Company

 

 

 

 

 

 

Tier 1 leverage ratio

 

11.04

%

 

10.43

%

 

9.00

%

Common equity tier 1 capital ratio

 

24.07

%

 

23.57

%

 

23.10

%

Tier 1 risk-based capital ratio

 

25.76

%

 

25.28

%

 

24.96

%

Total risk-based capital ratio

 

26.45

%

 

25.97

%

 

25.77

%

Common equity to total assets

 

10.86

%

 

10.79

%

 

9.54

%

The Bank

 

 

 

 

 

 

Tier 1 leverage ratio

 

10.52

%

 

10.01

%

 

8.51

%

Common equity tier 1 capital ratio

 

24.55

%

 

24.30

%

 

23.68

%

Tier 1 risk-based capital ratio

 

24.55

%

 

24.30

%

 

23.68

%

Total risk-based capital ratio

 

25.24

%

 

25.00

%

 

24.50

%

________________________

(1)

December 31, 2019 capital ratios are preliminary.

Conference Call and Webcast

The Company will host a conference call on Wednesday, January 29, 2020 at 11:00 a.m. (Eastern Time) to present and discuss fourth quarter and full year 2019 results. The conference call can be accessed live by dialing 1-877-407-4018 or for international callers, 1-201-689-8471, and requesting to be joined to the Silvergate Capital Corporation Fourth Quarter and Full Year 2019 Earnings Conference Call. A replay will be available starting at 2:00 p.m. (Eastern Time) on January 29, 2020 and can be accessed by dialing 1-844-512-2921, or for international callers, 1-412-317-6671. The passcode for the replay is 13698055. The replay will be available until 11:59 p.m. (Eastern Time) on February 12, 2020. Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the investor relations section of the Company’s website at https://ir.silvergatebank.com. The online replay will remain available for a limited time beginning immediately following the call.

About Silvergate

Silvergate Capital Corporation is a registered bank holding company for Silvergate Bank, headquartered in La Jolla, California. Silvergate Bank is a commercial bank that opened in 1988, has been profitable for 22 consecutive years, and has focused its strategy on creating the banking platform for innovators, especially in the digital currency industry, and developing product and service solutions addressing the needs of entrepreneurs. The Company’s assets consist primarily of its investment in the Bank and the Company’s primary activities are conducted through the Bank. The Company is subject to supervision by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). The Bank is subject to supervision by the California Department of Business Oversight, Division of Financial Institutions and, as a Federal Reserve member bank, the Federal Reserve. The Bank’s deposits are insured up to legal limits by the Federal Deposit Insurance Corporation.

Forward Looking Statements

Statements in this earnings release may constitute forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,” “projection,” “forecast,” “goal,” “target,” “would,” “aim” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry and management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. The inclusion of these forward-looking statements should not be regarded as a representation by us or any other person that such expectations, estimates and projections will be achieved. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. For information about other important factors that could cause actual results to differ materially from those discussed in the forward-looking statements contained in this release, please refer to the Company’s public reports filed with the U.S. Securities and Exchange Commission. Any forward-looking statement speaks only as of the date of this earnings release, and we do not undertake any obligation to publicly update or review any forward-looking statement, whether because of new information, future developments or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for us to predict their occurrence. In addition, we cannot assess the impact of each risk and uncertainty on our business or the extent to which any risk or uncertainty, or combination of risks and uncertainties, may cause actual results to differ materially from those contained in any forward-looking statements.

SILVERGATE CAPITAL CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(In Thousands)

(Unaudited)

 

 

December 31,

2019

 

September 30,

2019

 

June 30,

2019

 

March 31,

2019

 

December 31,

2018

ASSETS

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

1,579

 

 

$

4,098

 

 

$

2,036

 

 

$

3,865

 

 

$

4,177

 

Interest earning deposits in other banks

 

132,025

 

 

156,160

 

 

339,325

 

 

529,159

 

 

670,243

 

Cash and cash equivalents

 

133,604

 

 

160,258

 

 

341,361

 

 

533,024

 

 

674,420

 

Securities available-for-sale, at fair value

 

897,766

 

 

909,917

 

 

920,481

 

 

462,330

 

 

357,178

 

Securities held-to-maturity, at amortized cost

 

 

 

 

 

63

 

 

70

 

 

73

 

Loans held-for-investment, net of allowance for loan

losses

 

664,622

 

 

691,990

 

 

684,410

 

 

611,175

 

 

592,781

 

Loans held-for-sale, at lower of cost or fair value

 

375,922

 

 

311,410

 

 

235,834

 

 

234,067

 

 

350,636

 

Federal home loan and federal reserve bank stock, at

cost

 

10,264

 

 

10,264

 

 

10,264

 

 

10,264

 

 

9,660

 

Accrued interest receivable

 

5,950

 

 

5,875

 

 

6,296

 

 

5,474

 

 

5,770

 

Other real estate owned, net

 

128

 

 

81

 

 

112

 

 

31

 

 

31

 

Premises and equipment, net

 

3,259

 

 

3,224

 

 

3,276

 

 

3,195

 

 

3,656

 

Operating lease right-of-use assets

 

4,571

 

 

4,927

 

 

5,280

 

 

4,476

 

 

 

Derivative assets

 

23,440

 

 

30,885

 

 

25,698

 

 

3,392

 

 

999

 

Low income housing tax credit investment

 

954

 

 

981

 

 

1,008

 

 

1,015

 

 

1,044

 

Deferred tax asset

 

 

 

 

 

 

 

3,153

 

 

3,329

 

Other assets

 

7,647

 

 

7,032

 

 

7,951

 

 

19,728

 

 

4,741

 

Total assets

 

$

2,128,127

 

 

$

2,136,844

 

 

$

2,242,034

 

 

$

1,891,394

 

 

$

2,004,318

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

Noninterest bearing demand accounts

 

$

1,343,667

 

 

$

1,394,433

 

 

$

1,549,886

 

 

$

1,452,191

 

 

$

1,525,922

 

Interest bearing accounts

 

470,987

 

 

453,662

 

 

388,764

 

 

146,573

 

 

152,911

 

Deposits held-for-sale

 

 

 

 

 

 

 

 

 

104,172

 

Total deposits

 

1,814,654

 

 

1,848,095

 

 

1,938,650

 

 

1,598,764

 

 

1,783,005

 

Federal home loan bank advances

 

49,000

 

 

20,000

 

 

 

 

 

 

 

Other borrowings

 

 

 

 

 

53,545

 

 

57,135

 

 

 

Notes payable

 

3,714

 

 

4,000

 

 

4,286

 

 

4,286

 

 

4,857

 

Subordinated debentures, net

 

15,816

 

 

15,813

 

 

15,809

 

 

15,806

 

 

15,802

 

Operating lease liabilities

 

4,881

 

 

5,237

 

 

5,581

 

 

4,762

 

 

 

Accrued expenses and other liabilities

 

9,026

 

 

13,085

 

 

9,415

 

 

9,504

 

 

9,408

 

Total liabilities

 

1,897,091

 

 

1,906,230

 

 

2,027,286

 

 

1,690,257

 

 

1,813,072

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

 

 

 

Class A common stock

 

178

 

 

167

 

 

166

 

 

166

 

 

166

 

Class B non-voting common stock

 

9

 

 

12

 

 

12

 

 

12

 

 

12

 

Additional paid-in capital

 

132,138

 

 

125,573

 

 

125,599

 

 

125,684

 

 

125,665

 

Retained earnings

 

92,310

 

 

88,712

 

 

82,056

 

 

76,900

 

 

67,464

 

Accumulated other comprehensive income (loss)

 

6,401

 

 

16,150

 

 

6,915

 

 

(1,625

)

 

(2,061

)

Total shareholders’ equity

 

231,036

 

 

230,614

 

 

214,748

 

 

201,137

 

 

191,246

 

Total liabilities and shareholders’ equity

 

$

2,128,127

 

 

$

2,136,844

 

 

$

2,242,034

 

 

$

1,891,394

 

 

$

2,004,318

 

SILVERGATE CAPITAL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Per Share Data)

(Unaudited)

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

2019

 

September 30,

2019

 

December 31,

2018

 

December 31,

2019

 

December 31,

2018

Interest income

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

 

13,076

 

 

$

 

13,574

 

 

$

 

12,743

 

 

$

 

51,445

 

 

$

 

48,100

 

Securities

 

 

6,117

 

 

 

6,510

 

 

 

2,316

 

 

 

20,161

 

 

 

7,332

 

Other interest earning assets

 

 

685

 

 

 

1,183

 

 

 

6,220

 

 

 

8,723

 

 

 

16,606

 

Dividends and other

 

 

234

 

 

 

121

 

 

 

322

 

 

 

706

 

 

 

714

 

Total interest income

 

 

20,112

 

 

 

21,388

 

 

 

21,601

 

 

 

81,035

 

 

 

72,752

 

Interest expense

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

3,793

 

 

 

2,385

 

 

 

401

 

 

 

7,713

 

 

 

1,787

 

Federal home loan bank advances

 

 

374

 

 

 

172

 

 

 

 

 

546

 

 

 

19

 

Notes payable and other

 

 

45

 

 

 

117

 

 

 

93

 

 

 

747

 

 

 

408

 

Subordinated debentures

 

 

270

 

 

 

271

 

 

 

244

 

 

 

1,072

 

 

 

915

 

Total interest expense

 

 

4,482

 

 

 

2,945

 

 

 

738

 

 

 

10,078

 

 

 

3,129

 

Net interest income before provision for loan losses

 

 

15,630

 

 

 

18,443

 

 

 

20,863

 

 

 

70,957

 

 

 

69,623

 

Reversal of provision for loan losses

 

 

 

 

(858

)

 

 

(1,675

)

 

 

(439

)

 

 

(1,527

)

Net interest income after provision for loan losses

 

 

15,630

 

 

 

19,301

 

 

 

22,538

 

 

 

71,396

 

 

 

71,150

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

Mortgage warehouse fee income

 

 

388

 

 

 

373

 

 

 

353

 

 

 

1,473

 

 

 

1,505

 

Service fees related to off-balance sheet deposits

 

 

183

 

 

 

283

 

 

 

739

 

 

 

1,637

 

 

 

2,422

 

Deposit related fees

 

 

1,487

 

 

 

1,657

 

 

 

780

 

 

 

5,302

 

 

 

2,435

 

Gain on sale of loans, net

 

 

235

 

 

 

248

 

 

 

12

 

 

 

828

 

 

 

711

 

Gain (loss) on sale of securities, net

 

 

740

 

 

 

(16

)

 

 

 

 

724

 

 

 

Gain on sale of branch, net

 

 

 

 

 

 

 

 

5,509

 

 

 

Other income

 

 

97

 

 

 

54

 

 

 

107

 

 

 

281

 

 

 

490

 

Total noninterest income

 

 

3,130

 

 

 

2,599

 

 

 

1,991

 

 

 

15,754

 

 

 

7,563

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

8,773

 

 

 

8,277

 

 

 

8,563

 

 

 

33,897

 

 

 

29,898

 

Occupancy and equipment

 

 

861

 

 

 

892

 

 

 

840

 

 

 

3,638

 

 

 

3,091

 

Communications and data processing

 

 

1,149

 

 

 

1,298

 

 

 

939

 

 

 

4,607

 

 

 

3,088

 

Professional services

 

 

1,198

 

 

 

889

 

 

 

2,132

 

 

 

4,605

 

 

 

6,050

 

Federal deposit insurance

 

 

33

 

 

 

39

 

 

 

152

 

 

 

415

 

 

 

1,230

 

Correspondent bank charges

 

 

323

 

 

 

288

 

 

 

249

 

 

 

1,191

 

 

 

1,163

 

Other loan expense

 

 

122

 

 

 

47

 

 

 

221

 

 

 

412

 

 

 

419

 

Other real estate owned expense (recovery)

 

 

90

 

 

 

75

 

 

 

(15

)

 

 

170

 

 

 

27

 

Other general and administrative

 

 

1,111

 

 

 

806

 

 

 

887

 

 

 

3,543

 

 

 

3,348

 

Total noninterest expense

 

 

13,660

 

 

 

12,611

 

 

 

13,968

 

 

 

52,478

 

 

 

48,314

 

Income before income taxes

 

 

5,100

 

 

 

9,289

 

 

 

10,561

 

 

 

34,672

 

 

 

30,399

 

Income tax expense

 

 

1,502

 

 

 

2,633

 

 

 

2,541

 

 

 

9,826

 

 

 

8,066

 

Net income

 

 

3,598

 

 

 

6,656

 

 

 

8,020

 

 

 

24,846

 

 

 

22,333

 

Basic earnings per share

 

$

 

0.20

 

 

$

 

0.37

 

 

$

 

0.45

 

 

$

 

1.38

 

 

$

 

1.35

 

Diluted earnings per share

 

$

 

0.19

 

 

$

 

0.36

 

 

$

 

0.44

 

 

$

 

1.35

 

 

$

 

1.31

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

Basic

 

 

18,336

 

 

 

17,840

 

 

 

17,817

 

 

 

17,957

 

 

 

16,543

 

Diluted

 

 

18,779

 

 

 

18,246

 

 

 

18,257

 

 

 

18,385

 

 

 

17,023

 

Non-GAAP Financial Measures

The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these adjusted measures, this presentation may not be comparable to other similarly titled adjusted measures reported by other companies.

This earnings release includes certain non-GAAP financial measures for the year ended December 31, 2019 in order to present our results of operations for that period on a basis consistent with our historical operations. On November 15, 2018, the Company and the Bank entered into a purchase and assumption agreement with HomeStreet Bank to sell the Bank’s retail branch located in San Marcos, California and business loan portfolio to HomeStreet Bank. This transaction, which was completed in March 2019, generated a pre-tax gain on sale of $5.5 million. Management believes that these non-GAAP financial measures provide useful information to investors that is supplementary to the Company’s financial condition, results of operations and cash flows computed in accordance with GAAP.

 

 

Year Ended

December 31,

 

 

2019

 

2018

 

 

 

 

 

 

 

(Dollars in thousands)

Net income

 

 

 

 

Net income, as reported

 

$

24,846

 

 

$

22,333

 

Adjustments:

 

 

 

 

Gain on sale of branch, net

 

(5,509

)

 

 

Tax effect(1)

 

1,574

 

 

 

Adjusted net income

 

$

20,911

 

 

$

22,333

 

 

 

 

 

 

Noninterest income / average assets(2)

 

 

 

 

Noninterest income

 

$

15,754

 

 

$

7,563

 

Adjustments:

 

 

 

 

Gain on sale of branch, net

 

(5,509

)

 

 

Adjusted noninterest income

 

10,245

 

 

7,563

 

Average assets

 

2,082,007

 

 

2,008,853

 

Noninterest income / average assets, as reported

 

0.76

%

 

0.38

%

Adjusted noninterest income / average assets

 

0.49

%

 

0.38

%

 

 

 

 

 

Return on average assets (ROAA)(2)

 

 

 

 

Adjusted net income

 

$

20,911

 

 

$

22,333

 

Average assets

 

2,082,007

 

 

2,008,853

 

Return on average assets (ROAA), as reported

 

1.19

%

 

1.11

%

Adjusted return on average assets

 

1.00

%

 

1.11

%

 

 

 

 

 

Return on average equity (ROAE)(2)

 

 

 

 

Adjusted net income

 

$

20,911

 

 

$

22,333

 

Average equity

 

215,338

 

 

165,820

 

Return on average equity (ROAE), as reported

 

11.54

%

 

13.47

%

Adjusted return on average equity

 

9.71

%

 

13.47

%

 

 

 

 

 

Efficiency ratio

 

 

 

 

Noninterest expense

 

$

52,478

 

 

$

48,314

 

Net interest income

 

70,957

 

 

69,623

 

Noninterest income

 

15,754

 

 

7,563

 

Total net interest income and noninterest income

 

86,711

 

 

77,186

 

Adjustments:

 

 

 

 

Gain on sale of branch, net

 

(5,509

)

 

 

Adjusted total net interest income and noninterest income

 

81,202

 

 

77,186

 

Efficiency ratio, as reported

 

60.52

%

 

62.59

%

Adjusted efficiency ratio

 

64.63

%

 

62.59

%

________________________

(1)

Amount represents the total income tax effect of the adjustment, which is calculated based on the applicable marginal tax rate of 28.58%.

(2)

Data has been annualized.

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