Silvergate Capital Corporation Announces Fourth Quarter and Full Year 2020 Results

Rhea-AI Summary

Silvergate Capital Corporation (NYSE:SI) reported strong financial results for Q4 2020, achieving a net income of $9.1 million ($0.47/share), up from $7.1 million in Q3 2020. The Silvergate Exchange Network (SEN) saw a remarkable 33% increase in transactions, totaling 90,763, and handled $59.2 billion in dollar transfers, a 62% rise. Full-year net income increased to $26 million, while digital currency deposits surged to $5 billion. Despite a growth in outstanding loan deferrals to 8.5%, risk-based capital ratios decreased. CEO Lane expressed optimism about growth opportunities, particularly in digital asset lending.

Positive

• Net income for Q4 2020 increased to $9.1 million, up 28% from Q3 2020.
• Transactions on the SEN rose to 90,763 in Q4, a 33% increase from Q3 2020.
• SEN handled $59.2 billion in dollar transfers in Q4, a 62% increase sequentially.
• Digital currency deposits grew by $2.9 billion to $5.0 billion in Q4 2020.
• Full-year net income for 2020 was $26 million, an increase from $24.8 million in 2019.

Negative

• Outstanding loan deferrals increased to 8.5% of total gross loans held-for-investment.
• Total risk-based capital ratio decreased to 23.49% from 24.68% in Q3 2020.

Silvergate Capital Corporation (“Silvergate” or “Company”) (NYSE:SI) and its wholly-owned subsidiary, Silvergate Bank (“Bank”), today announced financial results for the three and twelve months ended December 31, 2020.

Fourth Quarter 2020 Financial Highlights

• Net income for the quarter was $9.1 million, or $0.47 per diluted share, compared to net income of $7.1 million, or $0.37 per diluted share, for the third quarter of 2020, and net income of $3.6 million, or $0.19 per diluted share, for the fourth quarter of 2019
• The Silvergate Exchange Network (“SEN”) handled 90,763 transactions in the fourth quarter of 2020, an increase of 33%, compared to 68,361 transactions in the third quarter of 2020, and an increase of 530% compared to 14,400 transactions in the fourth quarter of 2019
• The SEN handled $59.2 billion of U.S. dollar transfers in the fourth quarter, an increase of 62% compared to $36.7 billion in the third quarter of 2020, and an increase of 516% compared to $9.6 billion in the fourth quarter of 2019
• Digital currency customer related fee income for the quarter was $3.8 million, compared to $3.3 million for the third quarter of 2020, and $1.4 million for the fourth quarter of 2019
• Digital currency customers grew to 969 at December 31, 2020, compared to 928 at September 30, 2020, and 804 at December 31, 2019
• Digital currency deposits grew by $2.9 billion to $5.0 billion as of December 31, 2020, compared to $2.1 billion as of September 30, 2020
• At December 31, 2020, outstanding loan deferrals related to COVID-19 were 8.5% of total gross loans held-for-investment compared to 4.4% at September 30, 2020 and 15.5% at June 30, 2020
• Book value per share was $15.63 at December 31, 2020, compared to $15.18 at September 30, 2020, and $12.38 at December 31, 2019
• The Company’s total risk-based capital ratio was 23.49% at December 31, 2020, compared to 24.68% at September 30, 2020 and 26.90% at December 31, 2019
• The Company’s tier 1 leverage ratio was 8.29% at December 31, 2020, compared to 10.36% at September 30, 2020 and 11.23% at December 31, 2019

Full Year 2020 Financial Highlights

• Net income for the year ended December 31, 2020 was $26.0 million, or $1.36 per diluted share, compared to net income of $24.8 million, or $1.35 per diluted share for the year ended December 31, 2019
• The SEN handled 230,815 transactions for the year ended December 31, 2020 as compared to 46,063 for the year ended December 31, 2019
• The SEN handled $135.7 billion of U.S. dollar transfers for the year ended December 31, 2020 as compared to $32.7 billion for the year ended December 31, 2019
• Digital currency customer related fee income for the year ended December 31, 2020 was $11.1 million compared to $4.9 million for the year ended December 31, 2019

Alan Lane, president and chief executive officer of Silvergate, commented, “2020 was a year of significant growth and expansion for our business, with customer growth up more than 20% year-over-year as investment in digital currencies increased among the institutional investor community. Transactions on the SEN in the fourth quarter alone underscore the rapid growth of the platform with 90,763 transactions and over $59 billion in SEN volumes, up 62% from the 2020 third quarter. The SEN continues to be the foundation of the Silvergate suite of products and solutions built to address our customers’ needs.”

“Looking ahead to 2021, I am extremely excited about the multiple paths to continued growth and opportunities to monetize the SEN platform, such as digital asset lending and custodial services,” continued Mr. Lane. “In particular, SEN Leverage, a lending offering that was piloted through the majority of the past year, is now a core Silvergate product that enables customers to obtain US dollar loans collateralized by bitcoin. We anticipate increased demand for this offering over the next year.”

		As of or for the Three Months Ended
		December 31, 2020				September 30, 2020				December 31, 2019
Financial Highlights		(Dollars in thousands, except per share data)
Net income

FAQ

What were Silvergate Capital's fourth quarter 2020 earnings?

Silvergate Capital reported a net income of $9.1 million, or $0.47 per diluted share, for Q4 2020.

How many transactions did the Silvergate Exchange Network handle in Q4 2020?

The Silvergate Exchange Network handled 90,763 transactions in Q4 2020.

What was the total dollar volume handled by the SEN in Q4 2020?

The SEN handled $59.2 billion in U.S. dollar transfers during Q4 2020.

How much did digital currency deposits grow by in Q4 2020?

Digital currency deposits grew by $2.9 billion to $5.0 billion as of December 31, 2020.

What outlook did Silvergate Capital's CEO provide for 2021?

CEO Alan Lane expressed optimism about growth, particularly in digital asset lending and custodial services.