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.
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