Magazine article American Banker

Silicon Valley Bancshares Reports Bad-Loan Surprise

Magazine article American Banker

Silicon Valley Bancshares Reports Bad-Loan Surprise

Article excerpt

Loan problems are far from over for $3.9 billion-asset Silicon Valley Bancshares.

The company, whose fourth-quarter profits fell 50% short of Wall Street forecasts because of trouble with loans to start-up technology firms, said Friday that nonperformers climbed unexpectedly fast in the first quarter.

The jump, from $20 million at yearend to $52 million-a six-year highstunned analysts. Early last month the Santa Clara, Calif., company estimated that March 31 nonperformers would total only $31 million.

"It's up to management to get its credibility back with Wall Street," said Lana Chan of CIBC Oppenheimer in New York. "I would like to see more disclosure."

Silicon Valley's stock fell 11%, to $17.875 per share, in heavy trading Friday. At midday Tuesday the stock was trading at $18.

Despite the trouble with its loans, the company managed to post decent first-quarter earnings-$7.8 million, up 2.6% from a year earlier.

The largest of the nonperformers was a $15 million loan to a financial services company. The loan-which has been on Silicon Valley's classified asset list the past few quarters-was deemed nonperforming the last week of the first-quarter.

Others included a pair of $7 million loans-one to a health-care company and another to a television and cable firm.

In a conference call Friday with analysts, Silicon Valley Bank executives stressed that the loans are adequately secured with collateral and reserves and said they do not expect any future charge-offs to affect profits. …

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