Silvergate Capital Corporation Announces Second Quarter 2021 Results
Silvergate Capital Corporation (NYSE:SI) reported strong financial results for Q2 2021, posting a net income of $20.9 million, or $0.80 per diluted share, up from $12.7 million in Q1 2021. The Silvergate Exchange Network (SEN) facilitated a record $239.6 billion in U.S. dollar transfers, a 44% increase from Q1 2021. Digital currency customer deposits rose to $11.1 billion, a 62.4% quarter-over-quarter growth. However, total loans decreased by 8.4% compared to the previous quarter. The company completed a $300 million equity offering, generating net proceeds of $295.1 million.
- Net income increased to $20.9 million in Q2 2021 from $12.7 million in Q1 2021.
- SEN recorded $239.6 billion in U.S. dollar transfers, a 44% increase from Q1 2021.
- Digital currency customer deposits rose to $11.1 billion, growing by 62.4% QoQ.
- Digital currency customer base grew to 1,224, from 1,104 in Q1 2021.
- Completed $300 million equity offering, netting $295.1 million.
- Total loans decreased by 8.4% from $1.6 billion in Q1 2021 to $1.5 billion.
- Net interest margin fell to 1.16% from 1.33% in Q1 2021, and 3.14% year-over-year.
Silvergate Capital Corporation (“Silvergate” or “Company”) (NYSE:SI) and its wholly-owned subsidiary, Silvergate Bank (“Bank”), today announced financial results for the three and six months ended June 30, 2021.
Second Quarter 2021 Highlights
-
Net income for the quarter was
$20.9 million , or$0.80 per diluted share, compared to net income of$12.7 million , or$0.55 per diluted share, for the first quarter of 2021, and net income of$5.5 million , or$0.29 per diluted share, for the second quarter of 2020 -
The Silvergate Exchange Network (“SEN”) handled
$239.6 billion of U.S. dollar transfers in the second quarter of 2021, an increase of44% compared to$166.5 billion in the first quarter of 2021, and an increase of968% compared to$22.4 billion in the second quarter of 2020 -
The SEN handled 137,947 transactions in the second quarter of 2021, a decrease of
17% compared to 166,772 transactions in the first quarter of 2021, and an increase of242% compared to 40,286 transactions in the second quarter of 2020 -
Digital currency customer related fee income for the quarter was
$11.3 million , compared to$7.1 million for the first quarter of 2021, and$2.4 million for the second quarter of 2020 - Digital currency customers grew to 1,224 at June 30, 2021, compared to 1,104 at March 31, 2021, and 881 at June 30, 2020
-
Digital currency customer deposits grew by
$4.3 billion to$11.1 billion as of June 30, 2021, compared to$6.8 billion as of March 31, 2021 -
Completed previously announced
$300 million at-the-market (ATM) equity offering, which resulted in a total issuance of 2,793,826 shares of Class A common stock for net proceeds of$295.1 million after deducting commissions and expenses
Alan Lane, president and chief executive officer of Silvergate, commented, “It is an exciting time to be at Silvergate, and the second quarter was no exception. We nearly doubled pre-tax income compared to the prior quarter, driven by strong demand for our growing suite of digital currency related solutions powered by the Silvergate Exchange Network (SEN). In the second quarter of 2021, we continued to add new customers to the platform, grew network volume to a record
“In addition, we continued to build our stablecoin infrastructure capabilities, including our announcement to be the exclusive issuer of U.S. dollar backed stablecoins known as Diem USD,” continued Mr. Lane. “We believe stablecoins present a massive and unique opportunity, and with the development of an appropriate regulatory framework have the potential to become an alternative payment rail for customers around the world.”
|
|
As of or for the Three Months Ended |
||||||||||
|
|
June 30,
|
|
March 31,
|
|
June 30,
|
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|
|
|
|
|
|
|
||||||
Financial Highlights |
|
(Dollars in thousands, except per share data) |
||||||||||
Net income |
|
$ |
20,935 |
|
|
$ |
12,710 |
|
|
$ |
5,466 |
|
Diluted earnings per share |
|
$ |
0.80 |
|
|
$ |
0.55 |
|
|
$ |
0.29 |
|
Return on average assets (ROAA)(1) |
|
0.77 |
% |
|
0.71 |
% |
|
1.02 |
% |
|||
Return on average equity (ROAE)(1) |
|
10.40 |
% |
|
9.76 |
% |
|
8.72 |
% |
|||
Net interest margin(1)(2) |
|
1.16 |
% |
|
1.33 |
% |
|
3.14 |
% |
|||
Cost of deposits(1)(3) |
|
0.00 |
% |
|
0.00 |
% |
|
0.37 |
% |
|||
Cost of funds(1)(3) |
|
0.01 |
% |
|
0.02 |
% |
|
0.42 |
% |
|||
Efficiency ratio(4) |
|
50.69 |
% |
|
63.03 |
% |
|
65.03 |
% |
|||
Total assets |
|
$ |
12,289,476 |
|
|
$ |
7,757,152 |
|
|
$ |
2,340,713 |
|
Total deposits |
|
$ |
11,371,556 |
|
|
$ |
7,002,371 |
|
|
$ |
1,670,909 |
|
Book value per share |
|
$ |
32.84 |
|
|
$ |
28.75 |
|
|
$ |
14.36 |
|
Tier 1 leverage ratio |
|
7.91 |
% |
|
9.68 |
% |
|
11.57 |
% |
|||
Total risk-based capital ratio |
|
48.00 |
% |
|
54.79 |
% |
|
25.54 |
% |
|||
________________________
(1) |
|
Data has been annualized. |
(2) |
|
Net interest margin is a ratio calculated as annualized net interest income, on a fully taxable equivalent basis for interest income on tax-exempt securities using the federal statutory tax rate of |
(3) |
|
Cost of deposits and cost of funds for the second quarter of 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. |
(4) |
|
Efficiency ratio is calculated by dividing noninterest expenses by net interest income plus noninterest income. |
Digital Currency Initiative
At June 30, 2021, the Company’s digital currency customers increased to 1,224 from 1,104 at March 31, 2021, and from 881 at June 30, 2020. At June 30, 2021, prospective digital currency customer leads in various stages of the customer onboarding process and pipeline remained above 200. There were 137,947 transactions on the SEN for the second quarter of 2021, a decrease of
|
|
Three Months Ended |
||||||||||
|
|
June 30,
|
|
March 31,
|
|
June 30,
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(Dollars in millions) |
||||||||||
# SEN Transactions |
|
137,947 |
|
|
166,772 |
|
|
40,286 |
|
|||
$ Volume of SEN Transfers |
|
$ |
239,589 |
|
|
$ |
166,506 |
|
|
$ |
22,423 |
|
Results of Operations, Quarter Ended June 30, 2021
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
Net interest income on a taxable equivalent basis totaled
Compared to the first quarter of 2021, net interest income increased
Compared to the second quarter of 2020, net interest income increased
Net interest margin for the second quarter of 2021 was
|
|
Three Months Ended |
||||||||||||||||||||||||||||||||||
|
|
June 30, 2021 |
|
March 31, 2021 |
|
June 30, 2020 |
||||||||||||||||||||||||||||||
|
|
Average
|
|
Interest
|
|
Average
|
|
Average
|
|
Interest
|
|
Average
|
|
Average
|
|
Interest
|
|
Average
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
(Dollars in thousands) |
||||||||||||||||||||||||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Interest earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Interest earning deposits in other banks |
|
$ |
5,603,397 |
|
|
$ |
1,599 |
|
|
|
0.11 |
% |
|
$ |
4,450,110 |
|
|
$ |
1,279 |
|
|
|
0.12 |
% |
|
$ |
168,297 |
|
|
$ |
405 |
|
|
|
0.97 |
% |
Taxable securities |
|
2,937,659 |
|
|
8,324 |
|
|
|
1.14 |
% |
|
850,558 |
|
|
3,592 |
|
|
|
1.71 |
% |
|
690,810 |
|
|
4,123 |
|
|
|
2.40 |
% |
||||||
Tax-exempt securities(1) |
|
698,149 |
|
|
3,953 |
|
|
|
2.27 |
% |
|
270,711 |
|
|
2,146 |
|
|
|
3.21 |
% |
|
231,232 |
|
|
1,996 |
|
|
|
3.47 |
% |
||||||
Loans(2)(3) |
|
1,541,373 |
|
|
17,158 |
|
|
|
4.46 |
% |
|
1,559,989 |
|
|
16,597 |
|
|
|
4.31 |
% |
|
1,008,242 |
|
|
11,710 |
|
|
|
4.67 |
% |
||||||
Other |
|
29,394 |
|
|
466 |
|
|
|
6.36 |
% |
|
15,331 |
|
|
143 |
|
|
|
3.78 |
% |
|
13,224 |
|
|
200 |
|
|
|
6.08 |
% |
||||||
Total interest earning assets |
|
10,809,972 |
|
|
31,500 |
|
|
|
1.17 |
% |
|
7,146,699 |
|
|
23,757 |
|
|
|
1.35 |
% |
|
2,111,805 |
|
|
18,434 |
|
|
|
3.51 |
% |
||||||
Noninterest earning assets |
|
121,288 |
|
|
|
|
|
|
72,155 |
|
|
|
|
|
|
51,776 |
|
|
|
|
|
|||||||||||||||
Total assets |
|
$ |
10,931,260 |
|
|
|
|
|
|
$ |
7,218,854 |
|
|
|
|
|
|
$ |
2,163,581 |
|
|
|
|
|
||||||||||||
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Interest bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Interest bearing deposits |
|
$ |
97,463 |
|
|
$ |
35 |
|
|
|
0.14 |
% |
|
$ |
117,228 |
|
|
$ |
46 |
|
|
|
0.16 |
% |
|
$ |
190,394 |
|
|
$ |
1,652 |
|
|
|
3.49 |
% |
FHLB advances and other borrowings |
|
44 |
|
|
— |
|
|
|
0.00 |
% |
|
— |
|
|
— |
|
|
|
— |
|
|
78,266 |
|
|
44 |
|
|
|
0.23 |
% |
||||||
Subordinated debentures |
|
15,836 |
|
|
252 |
|
|
|
6.38 |
% |
|
15,832 |
|
|
245 |
|
|
|
6.28 |
% |
|
15,821 |
|
|
267 |
|
|
|
6.79 |
% |
||||||
Total interest bearing liabilities |
|
113,343 |
|
|
287 |
|
|
|
1.02 |
% |
|
133,060 |
|
|
291 |
|
|
|
0.89 |
% |
|
284,481 |
|
|
1,963 |
|
|
|
2.78 |
% |
||||||
Noninterest bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Noninterest bearing deposits |
|
9,980,680 |
|
|
|
|
|
|
6,526,555 |
|
|
|
|
|
|
1,611,972 |
|
|
|
|
|
|||||||||||||||
Other liabilities |
|
29,586 |
|
|
|
|
|
|
30,911 |
|
|
|
|
|
|
15,070 |
|
|
|
|
|
|||||||||||||||
Shareholders’ equity |
|
807,651 |
|
|
|
|
|
|
528,328 |
|
|
|
|
|
|
252,058 |
|
|
|
|
|
|||||||||||||||
Total liabilities and shareholders’ equity |
|
$ |
10,931,260 |
|
|
|
|
|
|
$ |
7,218,854 |
|
|
|
|
|
|
$ |
2,163,581 |
|
|
|
|
|
||||||||||||
Net interest spread(4) |
|
|
|
|
|
0.15 |
% |
|
|
|
|
|
0.46 |
% |
|
|
|
|
|
0.73 |
% |
|||||||||||||||
Net interest income, taxable equivalent basis |
|
|
|
$ |
31,213 |
|
|
|
|
|
|
|
$ |
23,466 |
|
|
|
|
|
|
|
$ |
16,471 |
|
|
|
|
|||||||||
Net interest margin(5) |
|
|
|
|
|
1.16 |
% |
|
|
|
|
|
1.33 |
% |
|
|
|
|
|
3.14 |
% |
|||||||||||||||
Reconciliation to reported net interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Adjustments for taxable equivalent basis |
|
|
|
(830 |
) |
|
|
|
|
|
|
(451 |
) |
|
|
|
|
|
|
(419 |
) |
|
|
|
||||||||||||
Net interest income, as reported |
|
|
|
$ |
30,383 |
|
|
|
|
|
|
|
$ |
23,015 |
|
|
|
|
|
|
|
$ |
16,052 |
|
|
|
|
|||||||||
________________________
(1) |
|
Interest income on tax-exempt securities is presented on a taxable equivalent basis using the federal statutory tax rate of |
(2) |
|
Loans include nonaccrual loans and loans held-for-sale, net of deferred fees and before allowance for loan losses. |
(3) |
|
Interest income includes amortization of deferred loan fees, net of deferred loan costs. |
(4) |
|
Net interest spread is the difference between interest rates earned on interest earning assets and interest rates paid on interest bearing liabilities. |
(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. |
Provision for Loan Losses
The Company did not record a provision for loan losses for the second quarter of 2021 or for the first quarter of 2021, compared to a provision of
Noninterest Income
Noninterest income for the second quarter of 2021 was
Noninterest income for the second quarter of 2021 increased by
|
|
Three Months Ended |
|||||||||||
|
|
June 30,
|
|
March 31,
|
|
June 30,
|
|||||||
|
|
|
|
|
|
|
|||||||
|
|
(Dollars in thousands) |
|||||||||||
Noninterest income: |
|
|
|
|
|
|
|||||||
Mortgage warehouse fee income |
|
$ |
753 |
|
|
$ |
954 |
|
|
$ |
450 |
|
|
Service fees related to off-balance sheet deposits |
|
— |
|
|
— |
|
|
7 |
|
|
|||
Deposit related fees |
|
11,308 |
|
|
7,124 |
|
|
2,438 |
|
|
|||
Gain on sale of securities, net |
|
— |
|
|
— |
|
|
2,556 |
|
|
|||
Loss on sale of loans, net |
|
— |
|
|
— |
|
|
(56 |
) |
|
|||
Other income |
|
8 |
|
|
12 |
|
|
39 |
|
|
|||
Total noninterest income |
|
$ |
12,069 |
|
|
$ |
8,090 |
|
|
$ |
5,434 |
|
|
Noninterest Expense
Noninterest expense totaled
|
|
Three Months Ended |
||||||||||
|
|
June 30,
|
|
March 31,
|
|
June 30,
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(Dollars in thousands) |
||||||||||
Noninterest expense: |
|
|
|
|
|
|
||||||
Salaries and employee benefits |
|
$ |
10,260 |
|
|
$ |
10,990 |
|
|
$ |
9,002 |
|
Occupancy and equipment |
|
599 |
|
|
614 |
|
|
894 |
|
|||
Communications and data processing |
|
1,796 |
|
|
1,621 |
|
|
1,313 |
|
|||
Professional services |
|
2,594 |
|
|
1,717 |
|
|
1,105 |
|
|||
Federal deposit insurance |
|
3,844 |
|
|
2,296 |
|
|
182 |
|
|||
Correspondent bank charges |
|
812 |
|
|
497 |
|
|
347 |
|
|||
Other loan expense |
|
280 |
|
|
174 |
|
|
99 |
|
|||
Other general and administrative |
|
1,334 |
|
|
1,697 |
|
|
1,030 |
|
|||
Total noninterest expense |
|
$ |
21,519 |
|
|
$ |
19,606 |
|
|
$ |
13,972 |
|
Income Tax Expense (Benefit)
Income tax benefit was
Balance Sheet
Deposits
At June 30, 2021, deposits totaled
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 second 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:
|
|
June 30, 2021 |
|
March 31, 2021 |
|
June 30, 2020 |
|||||||||||||||
|
|
Number of
|
|
Total
|
|
Number of
|
|
Total
|
|
Number of
|
|
Total
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
(Dollars in millions) |
|||||||||||||||||||
Digital currency exchanges |
|
93 |
|
|
$ |
5,395 |
|
|
85 |
|
|
$ |
2,993 |
|
|
64 |
|
|
$ |
601 |
|
Institutional investors |
|
771 |
|
|
3,986 |
|
|
695 |
|
|
2,166 |
|
|
566 |
|
|
577 |
|
|||
Other customers |
|
360 |
|
|
1,734 |
|
|
324 |
|
|
1,634 |
|
|
251 |
|
|
331 |
|
|||
Total |
|
1,224 |
|
|
$ |
11,114 |
|
|
1,104 |
|
|
$ |
6,793 |
|
|
881 |
|
|
$ |
1,509 |
|
________________________
(1) |
|
Total deposits may not foot due to rounding. |
The weighted average cost of deposits for the second quarter of 2021 and for the first quarter of 2021 was
|
|
Three Months Ended |
|||||||||||||||||||
|
|
June 30, 2021 |
|
March 31, 2021 |
|
June 30, 2020 |
|||||||||||||||
|
|
Average
|
|
Average
|
|
Average
|
|
Average
|
|
Average
|
|
Average
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
(Dollars in thousands) |
|||||||||||||||||||
Noninterest bearing demand accounts |
|
$ |
9,980,680 |
|
|
— |
|
|
$ |
6,526,555 |
|
|
— |
|
|
$ |
1,611,972 |
|
|
— |
|
Interest bearing accounts: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest bearing demand accounts |
|
27,303 |
|
|
0.12 |
% |
|
42,197 |
|
|
0.13 |
% |
|
44,643 |
|
|
0.14 |
% |
|||
Money market and savings accounts |
|
69,527 |
|
|
0.15 |
% |
|
74,318 |
|
|
0.16 |
% |
|
66,598 |
|
|
0.39 |
% |
|||
Certificates of deposit: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Brokered certificates of deposit |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
77,717 |
|
|
8.11 |
% |
|||
Other |
|
633 |
|
|
0.63 |
% |
|
713 |
|
|
0.57 |
% |
|
1,436 |
|
|
0.84 |
% |
|||
Total interest bearing deposits |
|
97,463 |
|
|
0.14 |
% |
|
117,228 |
|
|
0.16 |
% |
|
190,394 |
|
|
3.49 |
% |
|||
Total deposits |
|
$ |
10,078,143 |
|
|
0.00 |
% |
|
$ |
6,643,783 |
|
|
0.00 |
% |
|
$ |
1,802,366 |
|
|
0.37 |
% |
Loan Portfolio
Total loans, including net loans held-for-investment and loans held for sale, were
|
|
June 30,
|
|
March 31,
|
|
June 30,
|
|||||||||
|
|
|
|
|
|
|
|||||||||
|
|
(Dollars in thousands) |
|||||||||||||
Real estate loans: |
|
|
|
|
|
|
|||||||||
One-to-four family |
|
$ |
144,247 |
|
|
|
$ |
171,045 |
|
|
|
$ |
216,038 |
|
|
Multi-family |
|
67,704 |
|
|
|
74,003 |
|
|
|
72,007 |
|
|
|||
Commercial |
|
272,948 |
|
|
|
287,411 |
|
|
|
316,815 |
|
|
|||
Construction |
|
5,481 |
|
|
|
5,172 |
|
|
|
10,822 |
|
|
|||
Commercial and industrial(1) |
|
204,279 |
|
|
|
118,598 |
|
|
|
24,707 |
|
|
|||
Reverse mortgage and other |
|
1,364 |
|
|
|
1,346 |
|
|
|
1,552 |
|
|
|||
Mortgage warehouse |
|
49,897 |
|
|
|
76,014 |
|
|
|
155,308 |
|
|
|||
Total gross loans held-for-investment |
|
745,920 |
|
|
|
733,589 |
|
|
|
797,249 |
|
|
|||
Deferred fees, net |
|
1,151 |
|
|
|
1,717 |
|
|
|
3,062 |
|
|
|||
Total loans held-for-investment |
|
747,071 |
|
|
|
735,306 |
|
|
|
800,311 |
|
|
|||
Allowance for loan losses |
|
(6,916 |
) |
|
|
(6,916 |
) |
|
|
(6,763 |
) |
|
|||
Loans held-for-investment, net |
|
740,155 |
|
|
|
728,390 |
|
|
|
793,548 |
|
|
|||
Loans held-for-sale(2) |
|
748,577 |
|
|
|
897,227 |
|
|
|
321,835 |
|
|
|||
Total loans |
|
$ |
1,488,732 |
|
|
|
$ |
1,625,617 |
|
|
|
$ |
1,115,383 |
|
|
________________________
(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
|
|
June 30,
|
|
March 31,
|
|
June 30,
|
||||||
|
|
|
|
|
|
|
||||||
Asset Quality |
|
(Dollars in thousands) |
||||||||||
Nonperforming Assets: |
|
|
|
|
|
|
||||||
Nonperforming loans |
|
$ |
7,508 |
|
|
$ |
5,333 |
|
|
$ |
4,528 |
|
Troubled debt restructurings |
|
$ |
1,437 |
|
|
$ |
1,484 |
|
|
$ |
1,620 |
|
Other real estate owned, net |
|
— |
|
|
— |
|
|
$ |
51 |
|
||
Nonperforming assets |
|
$ |
7,508 |
|
|
$ |
5,333 |
|
|
$ |
4,579 |
|
|
|
|
|
|
|
|
||||||
Asset Quality Ratios: |
|
|
|
|
|
|
||||||
Nonperforming assets to total assets |
|
0.06 |
% |
|
0.07 |
% |
|
0.20 |
% |
|||
Nonperforming loans to gross loans(1) |
|
1.01 |
% |
|
0.73 |
% |
|
0.57 |
% |
|||
Nonperforming assets to gross loans and other real estate owned(1) |
|
1.01 |
% |
|
0.73 |
% |
|
0.57 |
% |
|||
Net charge-offs (recoveries) to average total loans(1) |
|
0.00 |
% |
|
0.00 |
% |
|
0.00 |
% |
|||
Allowance for loan losses to gross loans(1) |
|
0.93 |
% |
|
0.94 |
% |
|
0.85 |
% |
|||
Allowance for loan losses to nonperforming loans |
|
92.12 |
% |
|
129.68 |
% |
|
149.36 |
% |
|||
________________________
(1) |
|
Loans exclude loans held-for-sale at each of the dates presented. |
Coronavirus Disease 2019 (“COVID-19”) Update
In April 2020, the Company implemented a short-term loan modification program for customers impacted financially by the COVID-19 pandemic to provide temporary relief to certain borrowers who meet the program’s qualifications. Due to the fluid nature of COVID-19, this program has been evolving in order to provide maximum relief to bank borrowers. As of June 30, 2021, the remaining loans in deferral due to COVID-19 are as follows:
|
|
Loan Balance
|
|
Percentage of
|
|||
|
|
|
|
|
|||
|
|
(Dollars in thousands) |
|||||
COVID-19 related modifications: |
|
|
|
|
|||
Real estate loans: |
|
|
|
|
|||
One-to-four family |
|
$ |
245 |
|
|
0.0 |
% |
Commercial industry sectors: |
|
|
|
|
|||
Retail |
|
10,620 |
|
|
1.4 |
% |
|
Hospitality |
|
4,562 |
|
|
0.6 |
% |
|
Office |
|
7,985 |
|
|
1.1 |
% |
|
Total commercial |
|
23,167 |
|
|
3.1 |
% |
|
Total modifications outstanding |
|
$ |
23,412 |
|
|
3.1 |
% |
Securities
Securities available-for-sale increased
Equity Offerings
On March 9, 2021, the Company entered into an equity distribution agreement pursuant to which the Company could issue and sell, from time to time, up to an aggregate gross sales price of
Capital Ratios
At June 30, 2021, the Company’s ratio of common equity to total assets was
At June 30, 2021, the Company had a tier 1 leverage ratio of
At June 30, 2021, the Bank had a tier 1 leverage ratio of
Capital Ratios(1) |
|
June 30,
|
|
March 31,
|
|
June 30,
|
|||
The Company |
|
|
|
|
|
|
|||
Tier 1 leverage ratio |
|
7.91 |
% |
|
9.68 |
% |
|
11.57 |
% |
Common equity tier 1 capital ratio |
|
46.75 |
% |
|
53.03 |
% |
|
23.32 |
% |
Tier 1 risk-based capital ratio |
|
47.61 |
% |
|
54.23 |
% |
|
24.86 |
% |
Total risk-based capital ratio |
|
48.00 |
% |
|
54.79 |
% |
|
25.54 |
% |
Common equity to total assets |
|
7.08 |
% |
|
9.20 |
% |
|
11.45 |
% |
The Bank |
|
|
|
|
|
|
|||
Tier 1 leverage ratio |
|
7.86 |
% |
|
9.50 |
% |
|
10.92 |
% |
Common equity tier 1 capital ratio |
|
47.29 |
% |
|
53.24 |
% |
|
23.48 |
% |
Tier 1 risk-based capital ratio |
|
47.29 |
% |
|
53.24 |
% |
|
23.48 |
% |
Total risk-based capital ratio |
|
47.69 |
% |
|
53.80 |
% |
|
24.17 |
% |
________________________
(1) |
|
June 30, 2021 capital ratios are preliminary. |
Conference Call and Webcast
The Company will host a conference call on Tuesday, July 20, 2021 at 11:00 a.m. (Eastern Time) to present and discuss second quarter 2021 financial results. The conference call can be accessed live by dialing 1-844-378-6480 or for international callers, 1-412-317-1088, and requesting to be joined to the Silvergate Capital Corporation Second Quarter 2021 Earnings Conference Call. A replay will be available starting at 1:00 p.m. (Eastern Time) on July 20, 2021 and can be accessed by dialing 1-877-344-7529, or for international callers 1-412-317-0088. The passcode for the replay is 10158012. The replay will be available until 11:59 p.m. (Eastern Time) on August 3, 2021.
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 (NYSE: 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
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
|
||||||||||||||||||||
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
||||||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and due from banks |
|
$ |
52,859 |
|
|
$ |
16,422 |
|
|
$ |
16,405 |
|
|
$ |
15,152 |
|
|
$ |
13,777 |
|
Interest earning deposits in other banks |
|
4,415,458 |
|
|
4,315,100 |
|
|
2,945,682 |
|
|
182,330 |
|
|
185,667 |
|
|||||
Cash and cash equivalents |
|
4,468,317 |
|
|
4,331,522 |
|
|
2,962,087 |
|
|
197,482 |
|
|
199,444 |
|
|||||
Trading securities |
|
26,998 |
|
|
1,990 |
|
|
— |
|
|
— |
|
|
— |
|
|||||
Securities available-for-sale, at fair value |
|
6,176,778 |
|
|
1,717,418 |
|
|
939,015 |
|
|
944,161 |
|
|
951,094 |
|
|||||
Loans held-for-sale, at lower of cost or fair value |
|
748,577 |
|
|
897,227 |
|
|
865,961 |
|
|
665,842 |
|
|
321,835 |
|
|||||
Loans held-for-investment, net of allowance for loan losses |
|
740,155 |
|
|
728,390 |
|
|
746,751 |
|
|
735,857 |
|
|
793,548 |
|
|||||
Federal home loan and federal reserve bank stock, at cost |
|
29,460 |
|
|
14,851 |
|
|
14,851 |
|
|
14,839 |
|
|
13,499 |
|
|||||
Accrued interest receivable |
|
24,505 |
|
|
9,432 |
|
|
8,698 |
|
|
7,385 |
|
|
7,700 |
|
|||||
Premises and equipment, net |
|
1,604 |
|
|
1,758 |
|
|
2,072 |
|
|
3,122 |
|
|
3,326 |
|
|||||
Derivative assets |
|
39,454 |
|
|
34,442 |
|
|
31,104 |
|
|
34,138 |
|
|
35,770 |
|
|||||
Other assets |
|
33,628 |
|
|
20,122 |
|
|
15,696 |
|
|
17,747 |
|
|
14,497 |
|
|||||
Total assets |
|
$ |
12,289,476 |
|
|
$ |
7,757,152 |
|
|
$ |
5,586,235 |
|
|
$ |
2,620,573 |
|
|
$ |
2,340,713 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
||||||||||
Deposits: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Noninterest bearing demand accounts |
|
$ |
11,290,638 |
|
|
$ |
6,889,281 |
|
|
$ |
5,133,579 |
|
|
$ |
2,164,326 |
|
|
$ |
1,563,136 |
|
Interest bearing accounts |
|
80,918 |
|
|
113,090 |
|
|
114,447 |
|
|
116,782 |
|
|
107,773 |
|
|||||
Total deposits |
|
11,371,556 |
|
|
7,002,371 |
|
|
5,248,026 |
|
|
2,281,108 |
|
|
1,670,909 |
|
|||||
Federal home loan bank advances |
|
— |
|
|
— |
|
|
— |
|
|
10,000 |
|
|
360,000 |
|
|||||
Subordinated debentures, net |
|
15,838 |
|
|
15,834 |
|
|
15,831 |
|
|
15,827 |
|
|
15,823 |
|
|||||
Accrued expenses and other liabilities |
|
31,575 |
|
|
25,326 |
|
|
28,079 |
|
|
29,877 |
|
|
25,876 |
|
|||||
Total liabilities |
|
11,418,969 |
|
|
7,043,531 |
|
|
5,291,936 |
|
|
2,336,812 |
|
|
2,072,608 |
|
|||||
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
||||||||||
Preferred stock |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|||||
Class A common stock |
|
265 |
|
|
248 |
|
|
188 |
|
|
186 |
|
|
184 |
|
|||||
Class B non-voting common stock |
|
— |
|
|
— |
|
|
1 |
|
|
1 |
|
|
3 |
|
|||||
Additional paid-in capital |
|
697,070 |
|
|
551,798 |
|
|
129,726 |
|
|
132,647 |
|
|
132,479 |
|
|||||
Retained earnings |
|
151,993 |
|
|
131,058 |
|
|
118,348 |
|
|
109,229 |
|
|
102,169 |
|
|||||
Accumulated other comprehensive income |
|
21,179 |
|
|
30,517 |
|
|
46,036 |
|
|
41,698 |
|
|
33,270 |
|
|||||
Total shareholders’ equity |
|
870,507 |
|
|
713,621 |
|
|
294,299 |
|
|
283,761 |
|
|
268,105 |
|
|||||
Total liabilities and shareholders’ equity |
|
$ |
12,289,476 |
|
|
$ |
7,757,152 |
|
|
$ |
5,586,235 |
|
|
$ |
2,620,573 |
|
|
$ |
2,340,713 |
|
SILVERGATE CAPITAL CORPORATION
|
||||||||||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||||||||||
|
|
June 30,
|
|
March 31,
|
|
June 30,
|
|
June 30,
|
|
June 30,
|
||||||||||||||
Interest income |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Loans, including fees |
|
$ |
17,158 |
|
|
|
$ |
16,597 |
|
|
|
$ |
11,710 |
|
|
|
$ |
33,755 |
|
|
|
$ |
24,831 |
|
Taxable securities |
|
8,324 |
|
|
|
3,592 |
|
|
|
4,123 |
|
|
|
11,916 |
|
|
|
10,171 |
|
|||||
Tax-exempt securities |
|
3,123 |
|
|
|
1,695 |
|
|
|
1,577 |
|
|
|
4,818 |
|
|
|
1,625 |
|
|||||
Other interest earning assets |
|
1,599 |
|
|
|
1,279 |
|
|
|
405 |
|
|
|
2,878 |
|
|
|
1,129 |
|
|||||
Dividends and other |
|
466 |
|
|
|
143 |
|
|
|
200 |
|
|
|
609 |
|
|
|
321 |
|
|||||
Total interest income |
|
30,670 |
|
|
|
23,306 |
|
|
|
18,015 |
|
|
|
53,976 |
|
|
|
38,077 |
|
|||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Deposits |
|
35 |
|
|
|
46 |
|
|
|
1,652 |
|
|
|
81 |
|
|
|
5,703 |
|
|||||
Federal home loan bank advances |
|
— |
|
|
|
— |
|
|
|
44 |
|
|
|
— |
|
|
|
271 |
|
|||||
Subordinated debentures and other |
|
252 |
|
|
|
245 |
|
|
|
267 |
|
|
|
497 |
|
|
|
573 |
|
|||||
Total interest expense |
|
287 |
|
|
|
291 |
|
|
|
1,963 |
|
|
|
578 |
|
|
|
6,547 |
|
|||||
Net interest income before provision for loan losses |
|
30,383 |
|
|
|
23,015 |
|
|
|
16,052 |
|
|
|
53,398 |
|
|
|
31,530 |
|
|||||
Provision for loan losses |
|
— |
|
|
|
— |
|
|
|
222 |
|
|
|
— |
|
|
|
589 |
|
|||||
Net interest income after provision for loan losses |
|
30,383 |
|
|
|
23,015 |
|
|
|
15,830 |
|
|
|
53,398 |
|
|
|
30,941 |
|
|||||
Noninterest income |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Mortgage warehouse fee income |
|
753 |
|
|
|
954 |
|
|
|
450 |
|
|
|
1,707 |
|
|
|
832 |
|
|||||
Service fees related to off-balance sheet deposits |
|
— |
|
|
|
— |
|
|
|
7 |
|
|
|
— |
|
|
|
77 |
|
|||||
Deposit related fees |
|
11,308 |
|
|
|
7,124 |
|
|
|
2,438 |
|
|
|
18,432 |
|
|
|
4,204 |
|
|||||
Gain on sale of securities, net |
|
— |
|
|
|
— |
|
|
|
2,556 |
|
|
|
— |
|
|
|
3,753 |
|
|||||
(Loss) gain on sale of loans, net |
|
— |
|
|
|
— |
|
|
|
(56 |
) |
|
|
— |
|
|
|
450 |
|
|||||
Gain on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
925 |
|
|||||
Other income |
|
8 |
|
|
|
12 |
|
|
|
39 |
|
|
|
20 |
|
|
|
124 |
|
|||||
Total noninterest income |
|
12,069 |
|
|
|
8,090 |
|
|
|
5,434 |
|
|
|
20,159 |
|
|
|
10,365 |
|
|||||
Noninterest expense |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Salaries and employee benefits |
|
10,260 |
|
|
|
10,990 |
|
|
|
9,002 |
|
|
|
21,250 |
|
|
|
17,957 |
|
|||||
Occupancy and equipment |
|
599 |
|
|
|
614 |
|
|
|
894 |
|
|
|
1,213 |
|
|
|
1,801 |
|
|||||
Communications and data processing |
|
1,796 |
|
|
|
1,621 |
|
|
|
1,313 |
|
|
|
3,417 |
|
|
|
2,574 |
|
|||||
Professional services |
|
2,594 |
|
|
|
1,717 |
|
|
|
1,105 |
|
|
|
4,311 |
|
|
|
2,090 |
|
|||||
Federal deposit insurance |
|
3,844 |
|
|
|
2,296 |
|
|
|
182 |
|
|
|
6,140 |
|
|
|
305 |
|
|||||
Correspondent bank charges |
|
812 |
|
|
|
497 |
|
|
|
347 |
|
|
|
1,309 |
|
|
|
720 |
|
|||||
Other loan expense |
|
280 |
|
|
|
174 |
|
|
|
99 |
|
|
|
454 |
|
|
|
221 |
|
|||||
Other general and administrative |
|
1,334 |
|
|
|
1,697 |
|
|
|
1,030 |
|
|
|
3,031 |
|
|
|
2,179 |
|
|||||
Total noninterest expense |
|
21,519 |
|
|
|
19,606 |
|
|
|
13,972 |
|
|
|
41,125 |
|
|
|
27,847 |
|
|||||
Income before income taxes |
|
20,933 |
|
|
|
11,499 |
|
|
|
7,292 |
|
|
|
32,432 |
|
|
|
13,459 |
|
|||||
Income tax (benefit) expense |
|
(2 |
) |
|
|
(1,211 |
) |
|
|
1,826 |
|
|
|
(1,213 |
) |
|
|
3,600 |
|
|||||
Net income |
|
20,935 |
|
|
|
12,710 |
|
|
|
5,466 |
|
|
|
33,645 |
|
|
|
9,859 |
|
|||||
Basic earnings per share |
|
$ |
0.81 |
|
|
|
$ |
0.56 |
|
|
|
$ |
0.29 |
|
|
|
$ |
1.40 |
|
|
|
$ |
0.53 |
|
Diluted earnings per share |
|
$ |
0.80 |
|
|
|
$ |
0.55 |
|
|
|
$ |
0.29 |
|
|
|
$ |
1.37 |
|
|
|
$ |
0.52 |
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Basic |
|
25,707 |
|
|
|
22,504 |
|
|
|
18,672 |
|
|
|
24,114 |
|
|
|
18,670 |
|
|||||
Diluted |
|
26,102 |
|
|
|
23,010 |
|
|
|
19,106 |
|
|
|
24,565 |
|
|
|
19,112 |
|
|||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20210720005288/en/
FAQ
What were Silvergate Capital's Q2 2021 financial results?
How much did SEN handle in Q2 2021?
What is the growth of digital currency deposits for SI as of June 30, 2021?
How many digital currency customers does Silvergate have as of June 30, 2021?
What was the impact of the equity offering on Silvergate's capital?
