Silvergate Grows Reverse Mortgage Business for Near-Record Earnings

Silvergate Bank announced near-record earnings Tuesday, citing $53.5 million in reverse mortgage purchases as making a strong contribution to the bank’s bottom line.

The La Jolla, Califonia-based bank reported net income of $1.0 million for the first quarter of 2012, up 33% from $773,000 in the first quarter of 2011.

“The largest factor in the Bank’s asset growth was significantly increased balances in held-for-sale reverse mortgage loans, with more modest increases in almost all other categories of loans held for investment,” the company stated in a press release.

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The company made a quiet entry into reverse mortgages in late 2011 to acquire and hold for sale FHA-insured reverse mortgage loans.

“Reverse mortgage loans have become an increasingly attractive financial resource for homeowners at least 62 years of age,” the company stated. “After acquiring $15.6 million in such loans in December 2011, the division increased its loan purchases to $53.5 million during the first quarter of 2012. These adjustable rate, government guaranteed loans strengthen the Bank’s asset quality and improve its liquidity position.”

Silvergate had not returned a request for comment as of press time.

Written by Elizabeth Ecker

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  • Is the bank only purchasing adjustable rate HECMs?   Per the company statement:  “These adjustable rate, government guaranteed loans strengthen the Bank’s asset quality and improve its liquidity position.”  This is an odd statement since fixed rate HECMs compose an ever greater proportion of endorsed Standards.

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