Silicon Valley Bancshares Second Quarter 1995 Net Income up 78% from prior year

Business Wire, July 25, 1995

SANTA CLARA, Calif.--(BUSINESS WIRE)--July 25, 1995--Silicon Valley Bancshares (the Company), parent company of Silicon Valley Bank, today announced net income of $4.0 million for the three months ended June 30, 1995, a 77.6% increase from the $2.2 million earned in the second quarter of 1994.

Earnings per share amounted to $0.44 in the second quarter of 1995, a 67.9% increase compared to the $0.26 earned in the comparable 1994 period.

For the first half of 1995, net income amounted to $7.3 million, or $0.81 per share, versus $4.0 million, or $0.47 per share, for the first half of 1994. When adjusted for the effects of warrant income and securities losses, the Company earned approximately $0.76 per share in the first six months of 1995 compared to $0.41 in the prior year comparable period.

"The intense pace of technology stock offerings in the first half of 1995 has had a two-pronged effect on Silicon Valley Bancshares. First, it has resulted in over $70 million of loan balance payoffs by our client base, which has reduced our loans outstanding compared to the first quarter of 1995 as well as the 1994 year-end total," said John C. Dean, President and Chief Executive Officer of Silicon Valley Bancshares. "But secondly, on the positive side, it has enabled us to exercise a number of stock warrants from clients that completed initial public offerings (IPOs) in 1995, supplementing our pre-tax earnings with $1.8 million in warrant income during the first half of 1995. We anticipate these trends will continue during the second half of 1995."

Loans, net of unearned income, were $659.3 million at June 30, 1995, down from $696.6 million at March 31, 1995, and $703.8 million at December 31, 1994.

Net interest income was $18.4 million for the second quarter of 1995, a 28.4% increase compared to the $14.3 million for the prior year second quarter. The increase in net interest income was the result of a 16.6% increase in average interest-earning assets over the same quarter last year, coupled with a reduction in average nonaccrual loans and higher market interest rates.

Total noninterest income rose 135.1% to $2.5 million in the second quarter of 1995 from $1.1 million in the prior year second quarter. Due to increased IPO activity, income from the disposition of client warrants rose substantially to $1.6 million during the 1995 second quarter, compared to $0.8 million for the comparable 1994 period. This income was partially offset by losses from the sale of investment securities of $0.4 million during the 1995 second quarter, down from $0.9 million in the 1994 second quarter. All sales of investment securities were conducted as a normal component of the Company's interest rate risk and liquidity management activities.

Noninterest expense increased 19.9% to $12.4 million in the second quarter of 1995, compared to $10.4 million in the comparable 1994 period. Increases in salaries and benefits, and occupancy expense resulting from the Company's move into a new headquarters building, were partially offset by decreases in other real estate owned (OREO) costs. Full-time equivalent staff rose to 336 as of June 30, 1995, compared to 289 a year earlier.

For the second quarter of 1995, return on average assets (ROA) was 1.5%, versus 1.0% in the 1994 second quarter. Return on average equity (ROE) was 18.4% in the second quarter of 1995, compared to 12.5% in the 1994 second quarter. In the first half of 1995, ROA was 1.4% and ROE was 17.4%, versus 0.8% and 11.0%, respectively, for the first half of 1994. The Company's efficiency ratio improved to 63.2% in the second quarter of 1995, versus 66.5% in the 1994 second quarter.

Nonperforming loans decreased to $13.2 million, or 2.0% of total loans, at June 30, 1995, from $31.8 million, or 5.4% of total loans, a year earlier. The allowance for loan losses was $22.5 million, or 3.4% of total loans and 170.6% of nonperforming loans, at June 30, 1995, compared to $25.0 million, or 4.2% of total loans and 78.6% of nonperforming loans, at the end of the 1994 second quarter.

Total shareholders' equity was $92.2 million at June 30, 1995, compared to $71.6 million a year prior. At June 30, 1995, the Company's total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage ratios were 11.3%, 10.0% and 8.7%, respectively, exceeding the regulatory risk-based capital requirements for "well-capitalized" institutions.

Silicon Valley Bank serves emerging and middle market growth companies with a focus on industry specialization. The Bank remains committed to its focus on the technology and life science industries, while identifying and capitalizing on opportunities to serve other industries with unique financial needs.

The Bank operates offices throughout the Silicon Valley: San Jose; Santa Clara; Palo Alto; and 3000 Sand Hill Road, Menlo Park, the center of the venture capital community in California. Other regional offices include Newport Beach, California; San Diego, California; Wellesley, Massachusetts; and Beaverton, Oregon. -0-