Line of Credit 
Print FormatSilvergate Capital Corporation Announces Fourth Quarter 2021 Results
-
Net income for the quarter was
$21.4 million , compared to$23.5 million for the third quarter of 2021, and$9.1 million for the fourth quarter of 2020 -
Net income available to common shareholders for the quarter was
$18.4 million , or$0.66 per diluted common share, compared to net income of$23.5 million , or$0.88 per diluted share, for the third quarter of 2021, and net income of$9.1 million , or$0.47 per diluted share, for the fourth quarter of 2020 -
The Silvergate Exchange Network (“SEN”) handled
$219.2 billion of U.S. dollar transfers in the fourth quarter of 2021, an increase of 35% compared to$162.0 billion in the third quarter of 2021, and an increase of 270% compared to$59.2 billion in the fourth quarter of 2020 -
Total SEN Leverage commitments were
$570.5 million atDecember 31, 2021 , compared to$322.5 million atSeptember 30, 2021 , and$82.5 million atDecember 31, 2020 -
Digital currency customer related fee income for the quarter was
$9.3 million , compared to$8.1 million for the third quarter of 2021, and$3.8 million for the fourth quarter of 2020 -
Digital currency customers grew to 1,381 at
December 31, 2021 , compared to 1,305 atSeptember 30, 2021 , and 969 atDecember 31, 2020 -
Average digital currency customer deposits grew to
$13.3 billion during the fourth quarter of 2021, compared to$11.2 billion during the third quarter of 2021 -
Completed
$552.0 million equity offering, resulting in a total issuance of 3,806,895 shares of Class A common stock, for net proceeds of$530.3 million after deducting underwriting discounts and offering expenses
Full Year 2021 Highlights
-
Net income for the year ended
December 31, 2021 was$78.5 million compared to$26.0 million for the year endedDecember 31, 2020 -
Net income available to common shareholders for the year ended
December 31, 2021 was$75.5 million , or$2.91 per diluted common share, compared to net income of$26.0 million , or$1.36 per diluted share for the year endedDecember 31, 2020 -
The SEN handled
$787.4 billion of U.S. dollar transfers for the year endedDecember 31, 2021 , compared to$135.7 billion for the year endedDecember 31, 2020 -
Digital currency customer related fee income for the year ended
December 31, 2021 was$35.8 million , compared to$11.1 million for the year endedDecember 31, 2020
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As of or for the Three Months Ended |
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Financial Highlights |
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(Dollars in thousands, except per share data) |
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Net income |
|
$ |
21,391 |
|
|
$ |
23,492 |
|
|
$ |
9,119 |
|
Net income available to common shareholders |
|
$ |
18,375 |
|
|
$ |
23,492 |
|
|
$ |
9,119 |
|
Diluted earnings per common share |
|
$ |
0.66 |
|
|
$ |
0.88 |
|
|
$ |
0.47 |
|
Return on average assets (ROAA)(1) |
|
|
0.50 |
% |
|
|
0.75 |
% |
|
|
1.14 |
% |
Return on average common equity (ROACE)(1) |
|
|
7.25 |
% |
|
|
10.45 |
% |
|
|
12.60 |
% |
Net interest margin(1)(2) |
|
|
1.11 |
% |
|
|
1.26 |
% |
|
|
2.85 |
% |
Cost of deposits(1) |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
0.01 |
% |
Cost of funds(1) |
|
|
0.01 |
% |
|
|
0.01 |
% |
|
|
0.04 |
% |
Efficiency ratio(4) |
|
|
52.08 |
% |
|
|
43.20 |
% |
|
|
65.87 |
% |
Total assets |
|
$ |
16,005,495 |
|
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$ |
12,776,621 |
|
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$ |
5,586,235 |
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Total deposits |
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$ |
14,290,628 |
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$ |
11,662,520 |
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$ |
5,248,026 |
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Book value per common share |
|
$ |
46.55 |
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$ |
33.10 |
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$ |
15.63 |
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Tier 1 leverage ratio |
|
|
11.07 |
% |
|
|
8.71 |
% |
|
|
8.29 |
% |
Total risk-based capital ratio |
|
|
55.60 |
% |
|
|
51.13 |
% |
|
|
23.49 |
% |
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Year Ended |
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2021 |
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2020 |
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Financial Highlights |
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(Dollars in thousands, except per share data) |
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Net income |
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$ |
78,528 |
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$ |
26,038 |
|
Net income available to common shareholders |
|
$ |
75,512 |
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$ |
26,038 |
|
Diluted earnings per common share |
|
$ |
2.91 |
|
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$ |
1.36 |
|
Return on average assets (ROAA) |
|
|
0.66 |
% |
|
|
1.03 |
% |
Return on average common equity (ROACE) |
|
|
9.32 |
% |
|
|
9.78 |
% |
Net interest margin(2) |
|
|
1.20 |
% |
|
|
3.00 |
% |
Cost of deposits(3) |
|
|
0.00 |
% |
|
|
0.27 |
% |
Cost of funds(3) |
|
|
0.01 |
% |
|
|
0.32 |
% |
Efficiency ratio(4) |
|
|
51.06 |
% |
|
|
65.11 |
% |
________________________
| (1) | Data has been annualized. |
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| (2) | Net interest margin is a ratio calculated as net interest income, on a fully taxable equivalent basis for interest income on tax-exempt securities using the federal statutory tax rate of 21.0%, divided by average interest earning assets for the same period. |
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| (3) | Cost of deposits and cost of funds for 2020 includes interest expense and accelerated premium amortization expense related to callable brokered certificates of deposit that were called during the second quarter of 2020. |
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| (4) | Efficiency ratio is calculated by dividing noninterest expenses by net interest income plus noninterest income. |
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Digital Currency Initiative
At
Results of Operations, Quarter Ended
Net Interest Income and Net Interest Margin Analysis (Taxable Equivalent Basis)
The Company’s securities portfolio includes tax-exempt municipal bonds with tax-exempt income from these securities calculated and presented below on a taxable equivalent basis. Net interest income, net interest spread and net interest margin are presented on a taxable equivalent basis to consistently reflect income from taxable securities and tax-exempt securities based on the federal statutory tax rate of 21.0%.
Net interest income on a taxable equivalent basis totaled
Compared to the third quarter of 2021, net interest income increased
Compared to the fourth quarter of 2020, net interest income increased
Net interest margin for the fourth quarter of 2021 was 1.11%, compared to 1.26% for the third quarter of 2021, and 2.85% for the fourth quarter of 2020. The decrease in the net interest margin compared to the third quarter of 2021 was primarily due to lower yields on recently purchased securities and, to a lesser extent, interest earning deposits in other banks being a greater percentage of interest earning assets. The decrease in the net interest margin compared to the fourth quarter of 2020 was primarily due to a higher proportion of interest earning deposits as a percentage of total interest earning assets, as well as lower yields on securities due to a declining interest rate environment.
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Three Months Ended |
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Average
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Interest
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Average
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Average
|
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Interest
|
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Average
|
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Average
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Interest
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Average
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(Dollars in thousands) |
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Assets |
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Interest earning assets: |
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Interest earning deposits in other banks |
|
$ |
5,282,661 |
|
$ |
2,166 |
|
|
0.16 |
% |
|
$ |
4,104,776 |
|
$ |
1,755 |
|
|
0.17 |
% |
|
$ |
689,385 |
|
$ |
314 |
|
|
0.18 |
% |
Taxable securities |
|
|
5,735,932 |
|
|
10,178 |
|
|
0.70 |
% |
|
|
5,449,202 |
|
|
14,000 |
|
|
1.02 |
% |
|
|
671,209 |
|
|
3,548 |
|
|
2.10 |
% |
Tax-exempt securities(1) |
|
|
1,728,862 |
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|
9,454 |
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|
2.17 |
% |
|
|
1,187,452 |
|
|
6,347 |
|
|
2.12 |
% |
|
|
266,158 |
|
|
2,173 |
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|
3.25 |
% |
Loans(2)(3) |
|
|
1,641,345 |
|
|
17,892 |
|
|
4.32 |
% |
|
|
1,493,590 |
|
|
16,972 |
|
|
4.51 |
% |
|
|
1,474,893 |
|
|
16,374 |
|
|
4.42 |
% |
Other |
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|
34,490 |
|
|
777 |
|
|
8.94 |
% |
|
|
31,028 |
|
|
195 |
|
|
2.49 |
% |
|
|
15,331 |
|
|
255 |
|
|
6.62 |
% |
Total interest earning assets |
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14,423,290 |
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|
40,467 |
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|
1.11 |
% |
|
|
12,266,048 |
|
|
39,269 |
|
|
1.27 |
% |
|
|
3,116,976 |
|
|
22,664 |
|
|
2.89 |
% |
Noninterest earning assets |
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|
295,841 |
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|
197,477 |
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|
66,477 |
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Total assets |
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$ |
14,719,131 |
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$ |
12,463,525 |
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$ |
3,183,453 |
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Liabilities and Shareholders’ Equity |
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Interest bearing liabilities: |
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Interest bearing deposits |
|
$ |
77,564 |
|
$ |
27 |
|
|
0.14 |
% |
|
$ |
76,898 |
|
$ |
26 |
|
|
0.13 |
% |
|
$ |
114,782 |
|
$ |
47 |
|
|
0.16 |
% |
FHLB advances and other borrowings |
|
|
12 |
|
|
— |
|
|
0.00 |
% |
|
|
1 |
|
|
— |
|
|
0.00 |
% |
|
|
7,098 |
|
|
— |
|
|
0.00 |
% |
Subordinated debentures |
|
|
15,843 |
|
|
249 |
|
|
6.24 |
% |
|
|
15,839 |
|
|
247 |
|
|
6.19 |
% |
|
|
15,829 |
|
|
253 |
|
|
6.36 |
% |
Total interest bearing liabilities |
|
|
93,419 |
|
|
276 |
|
|
1.17 |
% |
|
|
92,738 |
|
|
273 |
|
|
1.17 |
% |
|
|
137,709 |
|
|
300 |
|
|
0.87 |
% |
Noninterest bearing liabilities: |
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|
|
|
|
|
|
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|
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|
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Noninterest bearing deposits |
|
|
13,377,552 |
|
|
|
|
|
|
11,305,650 |
|
|
|
|
|
|
2,732,692 |
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|
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Other liabilities |
|
|
49,023 |
|
|
|
|
|
|
50,657 |
|
|
|
|
|
|
25,143 |
|
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Shareholders’ equity |
|
|
1,199,137 |
|
|
|
|
|
|
1,014,480 |
|
|
|
|
|
|
287,909 |
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Total liabilities and shareholders’ equity |
|
$ |
14,719,131 |
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|
|
|
|
$ |
12,463,525 |
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|
|
|
|
$ |
3,183,453 |
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|
|
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Net interest spread(4) |
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|
|
|
|
(0.06 |
) % |
|
|
|
|
|
0.10 |
% |
|
|
|
|
|
2.02 |
% |
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Net interest income, taxable equivalent basis |
|
|
|
$ |
40,191 |
|
|
|
|
|
|
$ |
38,996 |
|
|
|
|
|
|
$ |
22,364 |
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|
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Net interest margin(5) |
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|
|
|
|
1.11 |
% |
|
|
|
|
|
1.26 |
% |
|
|
|
|
|
2.85 |
% |
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Reconciliation to reported net interest income: |
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Adjustments for taxable equivalent basis |
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|
(1,985 |
) |
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|
|
|
(1,333 |
) |
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|
(456 |
) |
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Net interest income, as reported |
|
|
|
$ |
38,206 |
|
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|
|
|
|
$ |
37,663 |
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|
|
|
|
|
$ |
21,908 |
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________________________
| (1) | Interest income on tax-exempt securities is presented on a taxable equivalent basis using the federal statutory tax rate of 21.0% for all periods presented. |
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| (2) | Loans include nonaccrual loans and loans held-for-sale, net of deferred fees and before allowance for loan losses. |
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| (3) | Interest income includes amortization of deferred loan fees, net of deferred loan costs. |
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| (4) | Net interest spread is the difference between interest rates earned on interest earning assets and interest rates paid on interest bearing liabilities. |
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| (5) | Net interest margin is a ratio calculated as annualized net interest income, on a taxable equivalent basis, divided by average interest earning assets for the same period. |
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Provision for Loan Losses
The Company did not record a provision for loan losses for the fourth quarter of 2021, the third quarter of 2021, or for the fourth quarter of 2020 as a result of management’s assessment of the level of the allowance for loan losses relative to the size and composition of the loan portfolio, among other factors.
Noninterest Income
Noninterest income for the fourth quarter of 2021 was
Noninterest income for the fourth quarter of 2021 increased by
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Three Months Ended |
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(Dollars in thousands) |
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Noninterest income: |
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Mortgage warehouse fee income |
|
$ |
684 |
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$ |
665 |
|
$ |
949 |
Deposit related fees |
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|
9,378 |
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|
8,171 |
|
|
3,844 |
Gain on sale of securities, net |
|
|
56 |
|
|
5,182 |
|
|
— |
Other income |
|
|
937 |
|
|
24 |
|
|
55 |
Total noninterest income |
|
$ |
11,055 |
|
$ |
14,042 |
|
$ |
4,848 |
Noninterest Expense
Noninterest expense totaled
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Three Months Ended |
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(Dollars in thousands) |
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Noninterest expense: |
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Salaries and employee benefits |
|
$ |
13,815 |
|
$ |
10,729 |
|
$ |
9,637 |
Occupancy and equipment |
|
|
728 |
|
|
523 |
|
|
3,044 |
Communications and data processing |
|
|
1,862 |
|
|
1,793 |
|
|
1,443 |
Professional services |
|
|
2,994 |
|
|
2,471 |
|
|
1,163 |
Federal deposit insurance |
|
|
3,100 |
|
|
4,297 |
|
|
658 |
Correspondent bank charges |
|
|
634 |
|
|
572 |
|
|
410 |
Other loan expense |
|
|
364 |
|
|
299 |
|
|
45 |
Other general and administrative |
|
|
2,159 |
|
|
1,655 |
|
|
1,225 |
Total noninterest expense |
|
$ |
25,656 |
|
$ |
22,339 |
|
$ |
17,625 |
Income Tax Expense (Benefit)
Income tax expense was
Results of Operations, Year Ended
Net income available to common shareholders for the year ended
Net interest income for the year ended
Noninterest income for the year ended
Noninterest expense was
Income tax expense was
Balance Sheet
Deposits
At
Our continued growth has been accompanied by significant fluctuations in the level of our deposits, in particular our deposits from customers operating in the digital currency industry, as our customers in this industry typically carry higher balances over the weekend to take advantage of the 24/7 availability of the SEN, and carry lower balances during the business week. The Bank’s average total digital currency customer deposits during the fourth quarter of 2021 amounted to
Demand for new deposit accounts is generated by the Company’s banking platform for innovators that includes the SEN, which is enabled through Silvergate’s proprietary API, and other cash management solutions. These tools enable Silvergate’s customers to grow their businesses and scale operations. The following table sets forth a breakdown of the Company’s digital currency customer base and the deposits held by such customers at the dates noted below:
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Number of
|
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Total
|
|
Number of
|
|
Total
|
|
Number of
|
|
Total
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(Dollars in millions) |
|||||||||||||
Digital currency exchanges |
|
94 |
|
$ |
8,288 |
|
94 |
|
$ |
6,759 |
|
76 |
|
$ |
2,479 |
Institutional investors |
|
894 |
|
|
4,220 |
|
830 |
|
|
3,344 |
|
607 |
|
|
1,811 |
Other customers |
|
393 |
|
|
1,603 |
|
381 |
|
|
1,365 |
|
286 |
|
|
749 |
Total |
|
1,381 |
|
$ |
14,111 |
|
1,305 |
|
$ |
11,468 |
|
969 |
|
$ |
5,039 |
________________________
| (1) | Total deposits may not foot due to rounding. |
|
The weighted average cost of deposits for the fourth quarter of 2021 and for the third quarter of 2021 was 0.00%, compared to 0.01% for the fourth quarter of 2020.
|
|
Three Months Ended |
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|
|
Average
|
|
Average
|
|
Average
|
|
Average
|
|
Average
|
|
Average
|
||||||
|
|
|
|
|
|
|
|
|
|
|
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|
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(Dollars in thousands) |
||||||||||||||||
Noninterest bearing demand accounts |
|
$ |
13,377,552 |
|
— |
|
|
$ |
11,305,650 |
|
— |
|
|
$ |
2,732,692 |
|
— |
|
Interest bearing accounts: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest bearing demand accounts |
|
|
7,660 |
|
0.05 |
% |
|
|
8,597 |
|
0.05 |
% |
|
|
41,968 |
|
0.17 |
% |
Money market and savings accounts |
|
|
69,364 |
|
0.14 |
% |
|
|
67,735 |
|
0.14 |
% |
|
|
71,871 |
|
0.15 |
% |
Certificates of deposit |
|
|
540 |
|
0.73 |
% |
|
|
566 |
|
0.70 |
% |
|
|
943 |
|
0.84 |
% |
Total interest bearing deposits |
|
|
77,564 |
|
0.14 |
% |
|
|
76,898 |
|
0.13 |
% |
|
|
114,782 |
|
0.16 |
% |
Total deposits |
|
$ |
13,455,116 |
|
0.00 |
% |
|
$ |
11,382,548 |
|
0.00 |
% |
|
$ |
2,847,474 |
|
0.01 |
% |
Loan Portfolio
Total loans, including net loans held-for-investment and loans held for sale, were
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|
(Dollars in thousands) |
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Real estate loans: |
|
|
|
|
|
|
||||||
One-to-four family |
|
$ |
105,098 |
|
|
$ |
119,817 |
|
|
$ |
187,855 |
|
Multi-family |
|
|
56,751 |
|
|
|
54,636 |
|
|
|
77,126 |
|
Commercial |
|
|
210,136 |
|
|
|
250,295 |
|
|
|
301,901 |
|
Construction |
|
|
7,573 |
|
|
|
6,046 |
|
|
|
6,272 |
|
Commercial and industrial(1) |
|
|
335,862 |
|
|
|
254,624 |
|
|
|
78,909 |
|
Reverse mortgage and other |
|
|
1,410 |
|
|
|
1,385 |
|
|
|
1,495 |
|
Mortgage warehouse |
|
|
177,115 |
|
|
|
128,975 |
|
|
|
97,903 |
|
Total gross loans held-for-investment |
|
|
893,945 |
|
|
|
815,778 |
|
|
|
751,461 |
|
Deferred fees, net |
|
|
275 |
|
|
|
883 |
|
|
|
2,206 |
|
Total loans held-for-investment |
|
|
894,220 |
|
|
|
816,661 |
|
|
|
753,667 |
|
Allowance for loan losses |
|
|
(6,916 |
) |
|
|
(6,916 |
) |
|
|
(6,916 |
) |
Loans held-for-investment, net |
|
|
887,304 |
|
|
|
809,745 |
|
|
|
746,751 |
|
Loans held-for-sale(2) |
|
|
893,194 |
|
|
|
818,447 |
|
|
|
865,961 |
|
Total loans |
|
$ |
1,780,498 |
|
|
$ |
1,628,192 |
|
|
$ |
1,612,712 |
|
________________________
| (1) |
Commercial and industrial loans includes |
|
| (2) | Loans held-for-sale are comprised entirely of mortgage warehouse loans for all periods presented. |
|
Asset Quality and Allowance for Loan Losses
The allowance for loan losses was unchanged at
Nonperforming assets totaled
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
Asset Quality |
|
(Dollars in thousands) |
||||||||||
Nonperforming Assets: |
|
|
|
|
|
|
||||||
Nonaccrual loans |
|
$ |
4,007 |
|
|
$ |
5,781 |
|
|
$ |
4,918 |
|
Troubled debt restructurings |
|
$ |
1,713 |
|
|
$ |
1,867 |
|
|
$ |
1,525 |
|
Other real estate owned, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Nonperforming assets |
|
$ |
4,007 |
|
|
$ |
5,781 |
|
|
$ |
4,918 |
|
|
|
|
|
|
|
|
||||||
Asset Quality Ratios: |
|
|
|
|
|
|
||||||
Nonperforming assets to total assets |
|
|
0.03 |
% |
|
|
0.05 |
% |
|
|
0.09 |
% |
Nonaccrual loans to total loans(1) |
|
|
0.45 |
% |
|
|
0.71 |
% |
|
|
0.65 |
% |
Net charge-offs (recoveries) to average total loans(1) |
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
0.00 |
% |
Allowance for loan losses to total loans(1) |
|
|
0.77 |
% |
|
|
0.85 |
% |
|
|
0.92 |
% |
Allowance for loan losses to nonaccrual loans |
|
|
172.60 |
% |
|
|
119.63 |
% |
|
|
140.63 |
% |
________________________
| (1) | Loans exclude loans held-for-sale at each of the dates presented. |
|
Securities
Securities available-for-sale increased
Capital Ratios
At
At
At
Capital Ratios(1) |
|
|
|
|
|
|
|||
The Company |
|
|
|
|
|
|
|||
Tier 1 leverage ratio |
|
11.07 |
% |
|
8.71 |
% |
|
8.29 |
% |
Common equity tier 1 capital ratio |
|
48.25 |
% |
|
40.98 |
% |
|
21.53 |
% |
Tier 1 risk-based capital ratio |
|
55.35 |
% |
|
50.80 |
% |
|
22.88 |
% |
Total risk-based capital ratio |
|
55.60 |
% |
|
51.13 |
% |
|
23.49 |
% |
Common equity to total assets |
|
8.84 |
% |
|
6.88 |
% |
|
5.27 |
% |
The Bank |
|
|
|
|
|
|
|||
Tier 1 leverage ratio |
|
10.49 |
% |
|
8.24 |
% |
|
8.22 |
% |
Common equity tier 1 capital ratio |
|
52.49 |
% |
|
48.04 |
% |
|
22.71 |
% |
Tier 1 risk-based capital ratio |
|
52.49 |
% |
|
48.04 |
% |
|
22.71 |
% |
Total risk-based capital ratio |
|
52.75 |
% |
|
48.37 |
% |
|
23.32 |
% |
________________________
| (1) |
|
|
Equity Offerings
On
Subsequent Event
On
Conference Call and Webcast
The Company will host a conference call on
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.silvergate.com. The online replay will remain available for a limited time beginning immediately following the call.
About Silvergate
Silvergate Capital Corporation (SI) is the leading provider of innovative financial infrastructure solutions and services for the growing digital currency industry. The Company’s real-time payments platform, known as the Silvergate Exchange Network, is at the heart of its customer-centric suite of payments, lending and funding solutions serving an expanding class of digital currency companies and investors around the world. Silvergate is enabling the rapid growth of digital currency markets and reshaping global commerce for a digital currency future.
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.
Further, given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and how the economy may be reopened. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: the demand for our products and services may decline, making it difficult to grow assets and income; if the economy is unable to fully reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; our allowance for loan losses may increase if borrowers experience financial difficulties, which will adversely affect our net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; as the result of the decline in the Federal Reserve Board’s target federal funds rate to near 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income; our cyber security risks are increased as the result of an increase in the number of employees working remotely; and FDIC premiums may increase if the agency experiences additional resolution costs.
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 (SI) CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In Thousands) (Unaudited) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
||||||
Cash and due from banks |
|
$ |
208,193 |
|
|
$ |
168,628 |
|
$ |
52,859 |
|
$ |
16,422 |
|
$ |
16,405 |
Interest earning deposits in other banks |
|
|
5,179,753 |
|
|
|
3,615,860 |
|
|
4,415,458 |
|
|
4,315,100 |
|
|
2,945,682 |
Cash and cash equivalents |
|
|
5,387,946 |
|
|
|
3,784,488 |
|
|
4,468,317 |
|
|
4,331,522 |
|
|
2,962,087 |
Trading securities, at fair value |
|
|
— |
|
|
|
— |
|
|
26,998 |
|
|
1,990 |
|
|
— |
Securities available-for-sale, at fair value |
|
|
8,625,259 |
|
|
|
7,234,216 |
|
|
6,176,778 |
|
|
1,717,418 |
|
|
939,015 |
Loans held-for-sale, at lower of cost or fair value |
|
|
893,194 |
|
|
|
818,447 |
|
|
748,577 |
|
|
897,227 |
|
|
865,961 |
Loans held-for-investment, net of allowance for loan losses |
|
|
887,304 |
|
|
|
809,745 |
|
|
740,155 |
|
|
728,390 |
|
|
746,751 |
Federal home loan and federal reserve bank stock, at cost |
|
|
34,010 |
|
|
|
34,010 |
|
|
29,460 |
|
|
14,851 |
|
|
14,851 |
Accrued interest receivable |
|
|
40,370 |
|
|
|
32,154 |
|
|
24,505 |
|
|
9,432 |
|
|
8,698 |
Premises and equipment, net |
|
|
3,008 |
|
|
|
1,483 |
|
|
1,604 |
|
|
1,758 |
|
|
2,072 |
Derivative assets |
|
|
34,056 |
|
|
|
37,210 |
|
|
39,454 |
|
|
34,442 |
|
|
31,104 |
Other assets |
|
|
100,348 |
|
|
|
24,868 |
|
|
33,628 |
|
|
20,122 |
|
|
15,696 |
Total assets |
|
$ |
16,005,495 |
|
|
$ |
12,776,621 |
|
$ |
12,289,476 |
|
$ |
7,757,152 |
|
$ |
5,586,235 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
||||||
Deposits: |
|
|
|
|
|
|
|
|
|
|
||||||
Noninterest bearing demand accounts |
|
$ |
14,213,472 |
|
|
$ |
11,586,318 |
|
$ |
11,290,638 |
|
$ |
6,889,281 |
|
$ |
5,133,579 |
Interest bearing accounts |
|
|
77,156 |
|
|
|
76,202 |
|
|
80,918 |
|
|
113,090 |
|
|
114,447 |
Total deposits |
|
|
14,290,628 |
|
|
|
11,662,520 |
|
|
11,371,556 |
|
|
7,002,371 |
|
|
5,248,026 |
Subordinated debentures, net |
|
|
15,845 |
|
|
|
15,841 |
|
|
15,838 |
|
|
15,834 |
|
|
15,831 |
Accrued expenses and other liabilities |
|
|
90,186 |
|
|
|
26,179 |
|
|
31,575 |
|
|
25,326 |
|
|
28,079 |
Total liabilities |
|
|
14,396,659 |
|
|
|
11,704,540 |
|
|
11,418,969 |
|
|
7,043,531 |
|
|
5,291,936 |
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
||||||
Preferred stock |
|
|
2 |
|
|
|
2 |
|
|
— |
|
|
— |
|
|
— |
Class A common stock |
|
|
304 |
|
|
|
265 |
|
|
265 |
|
|
248 |
|
|
188 |
Class B non-voting common stock |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
Additional paid-in capital |
|
|
1,421,592 |
|
|
|
891,611 |
|
|
697,070 |
|
|
551,798 |
|
|
129,726 |
Retained earnings |
|
|
193,860 |
|
|
|
175,485 |
|
|
151,993 |
|
|
131,058 |
|
|
118,348 |
Accumulated other comprehensive (loss) income |
|
|
(6,922 |
) |
|
|
4,718 |
|
|
21,179 |
|
|
30,517 |
|
|
46,036 |
Total shareholders’ equity |
|
|
1,608,836 |
|
|
|
1,072,081 |
|
|
870,507 |
|
|
713,621 |
|
|
294,299 |
Total liabilities and shareholders’ equity |
|
$ |
16,005,495 |
|
|
$ |
12,776,621 |
|
$ |
12,289,476 |
|
$ |
7,757,152 |
|
$ |
5,586,235 |
SILVERGATE CAPITAL CORPORATION (SI) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Data) (Unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
Year Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest income |
|
|
|
|
|
|
|
|
|
|
||||||
Loans, including fees |
|
$ |
17,892 |
|
$ |
16,972 |
|
$ |
16,374 |
|
|
$ |
68,619 |
|
$ |
54,732 |
Taxable securities |
|
|
10,178 |
|
|
14,000 |
|
|
3,548 |
|
|
|
36,094 |
|
|
17,465 |
Tax-exempt securities |
|
|
7,469 |
|
|
5,014 |
|
|
1,717 |
|
|
|
17,301 |
|
|
5,062 |
Other interest earning assets |
|
|
2,166 |
|
|
1,755 |
|
|
314 |
|
|
|
6,799 |
|
|
1,639 |
Dividends and other |
|
|
777 |
|
|
195 |
|
|
255 |
|
|
|
1,581 |
|
|
692 |
Total interest income |
|
|
38,482 |
|
|
37,936 |
|
|
22,208 |
|
|
|
130,394 |
|
|
79,590 |
Interest expense |
|
|
|
|
|
|
|
|
|
|
||||||
Deposits |
|
|
27 |
|
|
26 |
|
|
47 |
|
|
|
134 |
|
|
5,807 |
Federal home loan bank advances |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
336 |
Subordinated debentures and other |
|
|
249 |
|
|
247 |
|
|
253 |
|
|
|
993 |
|
|
1,083 |
Total interest expense |
|
|
276 |
|
|
273 |
|
|
300 |
|
|
|
1,127 |
|
|
7,226 |
Net interest income before provision for loan losses |
|
|
38,206 |
|
|
37,663 |
|
|
21,908 |
|
|
|
129,267 |
|
|
72,364 |
Provision for loan losses |
|
|
— |
|
|
— |
|
|
153 |
|
|
|
— |
|
|
742 |
Net interest income after provision for loan losses |
|
|
38,206 |
|
|
37,663 |
|
|
21,755 |
|
|
|
129,267 |
|
|
71,622 |
Noninterest income |
|
|
|
|
|
|
|
|
|
|
||||||
Mortgage warehouse fee income |
|
|
684 |
|
|
665 |
|
|
949 |
|
|
|
3,056 |
|
|
2,539 |
Deposit related fees |
|
|
9,378 |
|
|
8,171 |
|
|
3,844 |
|
|
|
35,981 |
|
|
11,341 |
Gain on sale of securities, net |
|
|
56 |
|
|
5,182 |
|
|
— |
|
|
|
5,238 |
|
|
3,753 |
Gain on sale of loans, net |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
354 |
Gain on extinguishment of debt |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
925 |
Other income |
|
|
937 |
|
|
24 |
|
|
55 |
|
|
|
981 |
|
|
265 |
Total noninterest income |
|
|
11,055 |
|
|
14,042 |
|
|
4,848 |
|
|
|
45,256 |
|
|
19,177 |
Noninterest expense |
|
|
|
|
|
|
|
|
|
|
||||||
Salaries and employee benefits |
|
|
13,815 |
|
|
10,729 |
|
|
9,637 |
|
|
|
45,794 |
|
|
36,493 |
Occupancy and equipment |
|
|
728 |
|
|
523 |
|
|
3,044 |
|
|
|
2,464 |
|
|
5,690 |
Communications and data processing |
|
|
1,862 |
|
|
1,793 |
|
|
1,443 |
|
|
|
7,072 |
|
|
5,406 |
Professional services |
|
|
2,994 |
|
|
2,471 |
|
|
1,163 |
|
|
|
9,776 |
|
|
4,460 |
Federal deposit insurance |
|
|
3,100 |
|
|
4,297 |
|
|
658 |
|
|
|
13,537 |
|
|
1,172 |
Correspondent bank charges |
|
|
634 |
|
|
572 |
|
|
410 |
|
|
|
2,515 |
|
|
1,533 |
Other loan expense |
|
|
364 |
|
|
299 |
|
|
45 |
|
|
|
1,117 |
|
|
326 |
Other general and administrative |
|
|
2,159 |
|
|
1,655 |
|
|
1,225 |
|
|
|
6,845 |
|
|
4,525 |
Total noninterest expense |
|
|
25,656 |
|
|
22,339 |
|
|
17,625 |
|
|
|
89,120 |
|
|
59,605 |
Income before income taxes |
|
|
23,605 |
|
|
29,366 |
|
|
8,978 |
|
|
|
85,403 |
|
|
31,194 |
Income tax expense (benefit) |
|
|
2,214 |
|
|
5,874 |
|
|
(141 |
) |
|
|
6,875 |
|
|
5,156 |
Net income |
|
|
21,391 |
|
|
23,492 |
|
|
9,119 |
|
|
|
78,528 |
|
|
26,038 |
Dividends on preferred stock |
|
|
3,016 |
|
|
— |
|
|
— |
|
|
|
3,016 |
|
|
— |
Net income available to common shareholders |
|
$ |
18,375 |
|
$ |
23,492 |
|
$ |
9,119 |
|
|
$ |
75,512 |
|
$ |
26,038 |
Basic earnings per common share |
|
$ |
0.67 |
|
$ |
0.89 |
|
$ |
0.49 |
|
|
$ |
2.95 |
|
$ |
1.39 |
Diluted earnings per common share |
|
$ |
0.66 |
|
$ |
0.88 |
|
$ |
0.47 |
|
|
$ |
2.91 |
|
$ |
1.36 |
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
||||||
Basic |
|
|
27,527 |
|
|
26,525 |
|
|
18,744 |
|
|
|
25,582 |
|
|
18,691 |
Diluted |
|
|
27,744 |
|
|
26,766 |
|
|
19,349 |
|
|
|
25,922 |
|
|
19,177 |
https://cts.businesswire.com/ct/CT?id=bwnews&sty=20220114005493r1&sid=acqr8&distro=nx&lang=en" style="width:0;height:0" />
View source version on businesswire.com: https://www.businesswire.com/news/home/20220114005493/en/
Source: Silvergate Capital Corporation (SI)
