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, 2021.
Fourth Quarter 2021 Highlights
- 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 at December
31, 2021, compared to $322.5 million at September 30, 2021, and
$82.5 million at December 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 at September 30, 2021, and 969 at December 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 ended December 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 ended December 31, 2020
- The SEN handled $787.4 billion of U.S. dollar transfers for the
year ended December 31, 2021, compared to $135.7 billion for the
year ended December 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 ended December 31, 2020
Alan Lane, president and chief executive officer of Silvergate,
commented, “2021 was another year of significant growth and
momentum for Silvergate, driven by strong demand for our digital
currency solutions powered by the SEN. Total deposits grew to $14.3
billion at the end of 2021 and our full year net income more than
tripled compared to last year, reflecting growth in both fee income
and net interest income. In the fourth quarter, we grew SEN
utilization and transaction revenue, significantly grew SEN
Leverage lines of credit and increased average deposits from
digital currency customers to a record $13.3 billion. We also
continued to build our stablecoin infrastructure capabilities, and
announced the launch of the EJF Silvergate Venture Fund, an
investment vehicle to support entrepreneurs who will help shape the
future of the digital currency ecosystem. As we look forward to
2022 and beyond, I am excited about the opportunities and areas for
growth that lie ahead as the digital currency industry continues to
evolve.”
As of or for the Three Months
Ended
December 31,
2021
September 30,
2021
December 31,
2020
Financial Highlights
(Dollars in thousands, except per
share data)
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
$
12,776,621
$
5,586,235
Total deposits
$
14,290,628
$
11,662,520
$
5,248,026
Book value per common share
$
46.55
$
33.10
$
15.63
Tier 1 leverage ratio
11.07
%
8.71
%
8.29
%
Total risk-based capital ratio
55.60
%
51.13
%
23.49
%
Year Ended December
31,
2021
2020
Financial Highlights
(Dollars in thousands, except per
share data)
Net income
$
78,528
$
26,038
Net income available to common
shareholders
$
75,512
$
26,038
Diluted earnings per common share
$
2.91
$
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.
(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.
(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.
(4)
Efficiency ratio is calculated by dividing
noninterest expenses by net interest income plus noninterest
income.
Digital Currency Initiative
At December 31, 2021, the Company’s digital currency customers
increased to 1,381 from 1,305 at September 30, 2021, and from 969
at December 31, 2020. At December 31, 2021, prospective digital
currency customer leads in various stages of the customer
onboarding process and pipeline was above 300. For the fourth
quarter of 2021, $219.2 billion of U.S. dollar transfers occurred
on the SEN, a 35% increase from $162.0 billion transfers in the
third quarter of 2021, and an increase of 270% compared to $59.2
billion in the fourth quarter of 2020. Based on digital currency
industry transaction data provided by Coin Metrics, bitcoin and
ether dollar trading volumes increased by 14% during the fourth
quarter of 2021 compared to the third quarter of 2021.
Results of Operations, Quarter Ended December 31,
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 21.0%.
Net interest income on a taxable equivalent basis totaled $40.2
million for the fourth quarter of 2021, compared to $39.0 million
for the third quarter of 2021, and $22.4 million for the fourth
quarter of 2020.
Compared to the third quarter of 2021, net interest income
increased $1.2 million, due to increased interest income, while
interest expense remained flat. Average total interest earning
assets increased by $2.2 billion for the fourth quarter of 2021
compared to the third quarter of 2021, primarily due to increased
interest earning deposits in other banks. The average yield on
interest earning assets decreased from 1.27% for the third quarter
of 2021 to 1.11% for the fourth quarter of 2021, 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.
Compared to the fourth quarter of 2020, net interest income
increased $17.8 million due to increased interest income, with the
largest driver being higher balances of securities, while interest
expense remained relatively flat. Average total interest earning
assets increased by $11.3 billion for the fourth quarter of 2021
compared to the fourth quarter of 2020, due to an increase in
noninterest bearing deposits, which were deployed into securities
and interest earning deposits in other banks. The average yield on
total interest earning assets decreased from 2.89% for the fourth
quarter of 2020 to 1.11% for the fourth quarter of 2021, primarily
due to interest earning deposits in other banks being a greater
percentage of interest earning assets, and lower yields on
securities purchased throughout 2021. Average interest bearing
liabilities decreased $44.3 million for the fourth quarter of 2021
compared to the fourth quarter of 2020, due to lower balances of
interest bearing deposits and reduced FHLB advances in 2021. The
average rate on total interest bearing liabilities increased from
0.87% for the fourth quarter of 2020 to 1.17% for the fourth
quarter of 2021, primarily due to the decrease in lower cost
interest bearing deposits and FHLB advances, which resulted in a
larger proportion of higher cost subordinated debentures as a
percentage of total interest bearing liabilities.
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.
Three Months Ended
December 31, 2021
September 30, 2021
December 31, 2020
Average Outstanding
Balance
Interest Income/
Expense
Average Yield/ Rate
Average Outstanding
Balance
Interest Income/
Expense
Average Yield/ Rate
Average Outstanding
Balance
Interest Income/
Expense
Average Yield/ Rate
(Dollars in thousands)
Assets
Interest earning assets:
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
9,454
2.17
%
1,187,452
6,347
2.12
%
266,158
2,173
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
34,490
777
8.94
%
31,028
195
2.49
%
15,331
255
6.62
%
Total interest earning assets
14,423,290
40,467
1.11
%
12,266,048
39,269
1.27
%
3,116,976
22,664
2.89
%
Noninterest earning assets
295,841
197,477
66,477
Total assets
$
14,719,131
$
12,463,525
$
3,183,453
Liabilities and Shareholders’
Equity
Interest bearing liabilities:
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:
Noninterest bearing deposits
13,377,552
11,305,650
2,732,692
Other liabilities
49,023
50,657
25,143
Shareholders’ equity
1,199,137
1,014,480
287,909
Total liabilities and shareholders’
equity
$
14,719,131
$
12,463,525
$
3,183,453
Net interest spread(4)
(0.06
) %
0.10
%
2.02
%
Net interest income, taxable equivalent
basis
$
40,191
$
38,996
$
22,364
Net interest margin(5)
1.11
%
1.26
%
2.85
%
Reconciliation to
reported net interest income:
Adjustments for taxable equivalent
basis
(1,985
)
(1,333
)
(456
)
Net interest income, as reported
$
38,206
$
37,663
$
21,908
________________________
(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.
(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
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 $11.1
million, a decrease of $3.0 million, or 21.3%, from the third
quarter of 2021. The primary driver of this decrease was a $5.1
million decrease in gain on sale of securities offset by a $1.2
million, or 14.8%, increase in deposit related fees as a result of
higher cash management fees from digital currency related customers
and a $0.9 million increase in other income due to a gain on sale
of other assets.
Noninterest income for the fourth quarter of 2021 increased by
$6.2 million, or 128.0%, compared to the fourth quarter of 2020.
This increase was primarily due to a $5.5 million, or 144.0%,
increase in deposit related fees and a $0.9 million increase in
other income due to a gain on sale of other assets, partially
offset by a $0.3 million, or 27.9% decrease in mortgage warehouse
fee income.
Three Months Ended
December 31,
2021
September 30,
2021
December 31,
2020
(Dollars in thousands)
Noninterest income:
Mortgage warehouse fee income
$
684
$
665
$
949
Deposit related fees
9,378
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 $25.7 million for the fourth quarter
of 2021, an increase of $3.3 million, or 14.8%, compared to the
third quarter of 2021, and an increase of $8.0 million, or 45.6%,
compared to the fourth quarter of 2020. The increase in noninterest
expense compared to prior quarter was primarily due to an increase
in salaries and employee benefits. The increase in noninterest
expense from the fourth quarter of 2020 was primarily driven by an
increase in salaries and employee benefits and increased federal
deposit insurance expense resulting from the significant growth in
digital currency deposits. The increase in noninterest expense from
the prior year was partially offset by a decrease in occupancy and
equipment expense related to a $2.3 million impairment charge
recorded in the fourth quarter of 2020.
Three Months Ended
December 31,
2021
September 30,
2021
December 31,
2020
(Dollars in thousands)
Noninterest expense:
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 $2.2 million for the fourth quarter of
2021, compared to $5.9 million for the third quarter of 2021, and a
benefit of $0.1 million for the fourth quarter of 2020. Our
effective tax rate for the fourth quarter of 2021 was 9.4%,
compared to 20.0% for the third quarter of 2021, and (1.6)% for the
fourth quarter of 2020. The lower effective tax rates for the
fourth quarter of 2021 and 2020, compared to the third quarter of
2021 were due to higher excess tax benefits recognized on the
exercise of stock options and tax-exempt income earned on certain
municipal bonds.
Results of Operations, Year Ended December 31, 2021
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 $26.0 million, or $1.36 per diluted share, for
the comparable period in 2020.
Net interest income for the year ended December 31, 2021 was
$129.3 million, compared to $72.4 million for the same period in
2020. The increase in net interest income was primarily due to a
$50.8 million increase in interest income and a $6.1 million
decrease in interest expense, primarily due to significant growth
in our balance sheet.
Noninterest income for the year ended December 31, 2021 was
$45.3 million, compared to $19.2 million for the same period in
2020. The increase in noninterest income was primarily due to a
$24.6 million increase in fee income from our digital currency
customers and a $1.5 million increase in gain on sale of
securities. 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 ended December 31, 2020.
Noninterest expense was $89.1 million for the year ended
December 31, 2021, compared to $59.6 million for the year ended
December 31, 2020. The increase in noninterest expense was
primarily due to a $12.4 million increase in federal deposit
insurance and a $9.3 million increase in salaries and benefits
expense.
Income tax expense was $6.9 million for the year ended December
31, 2021, compared to $5.2 million for the same period in 2020. Our
effective tax rates for the years ended December 31, 2021 and 2020
were 8.1% and 16.5%, respectively. The decrease in the Company’s
effective tax rate in 2021 was primarily related to higher excess
tax benefit from stock-based compensation and tax-exempt income
earned on certain municipal bonds.
Balance Sheet
Deposits
At December 31, 2021, deposits totaled $14.3 billion, an
increase of $2.6 billion, or 22.5%, from September 30, 2021, and an
increase of $9.0 billion, or 172.3%, from December 31, 2020.
Noninterest bearing deposits totaled $14.2 billion, representing
approximately 99.5% of total deposits at December 31, 2021, an
increase of $2.6 billion from the prior quarter end, and a $9.1
billion increase compared to December 31, 2020. The increase in
total deposits from the prior year quarter end was driven by an
increase in deposits from digital currency exchanges, institutional
investors in digital assets and other fintech related customers.
The Bank’s 10 largest depositors accounted for $6.5 billion in
deposits, or approximately 45.3% of total deposits at December 31,
2021, compared to $5.3 billion in deposits, or approximately 45.6%
of total deposits at September 30, 2021, and $2.5 billion in
deposits, or approximately 47.5% of total deposits at December 31,
2020, substantially all of which are from customers operating in
the digital currency industry.
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 $13.3 billion, with the high and low
daily total digital currency deposit levels during such time being
$16.0 billion and $10.2 billion, respectively, compared to an
average of $11.2 billion during the third quarter of 2021, and high
and low daily deposit levels of $12.6 billion and $9.8 billion,
respectively.
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:
December 31, 2021
September 30, 2021
December 31, 2020
Number of Customers
Total Deposits(1)
Number of Customers
Total Deposits(1)
Number of Customers
Total Deposits(1)
(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
December 31, 2021
September 30, 2021
December 31, 2020
Average Balance
Average Rate
Average Balance
Average Rate
Average Balance
Average Rate
(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 $1.8 billion at December 31, 2021, an increase
of $152.3 million, or 9.4%, from September 30, 2021, and an
increase of $167.8 million, or 10.4%, from December 31, 2020.
December 31,
2021
September 30,
2021
December 31,
2020
(Dollars in thousands)
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
$335.9 million, $254.5 million and $77.2 million of SEN Leverage
loans as of December 31, 2021, September 30, 2021 and December 31,
2020, respectively.
(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 $6.9 million at
December 31, 2021, compared to September 30, 2021 and December 31,
2020. The ratio of the allowance for loan losses to total loans
held-for-investment at December 31, 2021 was 0.77%, compared to
0.85% and 0.92% at September 30, 2021 and December 31, 2020,
respectively.
Nonperforming assets totaled $4.0 million, or 0.03% of total
assets, at December 31, 2021, a decrease of $1.8 million from $5.8
million, or 0.05% of total assets at September 30, 2021.
Nonperforming assets decreased $0.9 million, from $4.9 million, or
0.09%, of total assets, at December 31, 2020.
December 31,
2021
September 30,
2021
December 31,
2020
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 $1.4 billion, or 19.2%,
from $7.2 billion at September 30, 2021, and increased $7.7
billion, or 818.5%, from $939.0 million at December 31, 2020, to
$8.6 billion at December 31, 2021. During the fourth quarter of
2021, the Company purchased $2.7 billion of securities, including
$991.9 million of tax-exempt municipal bonds, $770.7 million of
agency residential mortgage-backed securities, $760.8 million of
agency commercial mortgage-backed securities, $121.5 million of
U.S. agency securities excluding mortgage-backed securities, and
$22.7 million of taxable municipal bonds, bringing total purchases
during 2021 to $9.5 billion. During the fourth quarter of 2021, the
Company sold $1.1 billion of longer duration securities and
recognized an immaterial net gain. In addition, the Company sold
its two LIBOR-based interest rate swap contracts, and the taxable
municipal bond that such swap contracts hedged, in the fourth
quarter of 2021. The realized gain on sale of the interest rate
swap contracts of $0.9 million was recognized in other noninterest
income.
Capital Ratios
At December 31, 2021, the Company’s ratio of common equity to
total assets was 8.84%, compared with 6.88% at September 30, 2021,
and 5.27% at December 31, 2020. At December 31, 2021, the Company’s
book value per common share was $46.55, compared to $33.10 at
September 30, 2021, and $15.63 at December 31, 2020.
At December 31, 2021, the Company had a tier 1 leverage ratio of
11.07%, common equity tier 1 capital ratio of 48.25%, tier 1
risk-based capital ratio of 55.35% and total risk-based capital
ratio of 55.60%.
At December 31, 2021, the Bank had a tier 1 leverage ratio of
10.49%, common equity tier 1 capital ratio of 52.49%, tier 1
risk-based capital ratio of 52.49% and total risk-based capital
ratio of 52.75%. These capital ratios each exceeded the “well
capitalized” standards defined by federal banking regulations of
5.00% for tier 1 leverage ratio, 6.5% for common equity tier 1
capital ratio, 8.00% for tier 1 risk-based capital ratio and 10.00%
for total risk-based capital ratio.
Capital Ratios(1)
December 31,
2021
September 30,
2021
December 31,
2020
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)
December 31, 2021 capital ratios are
preliminary.
Equity Offerings
On December 9, 2021, the Company completed its underwritten
public offering of 3,806,895 shares of Class A common stock at a
price of $145.00 per share, including 496,551 shares of Class A
common stock upon the exercise in full by the underwriters of their
option to purchase additional shares. The aggregate gross proceeds
of the offering were $552.0 million and net proceeds to the Company
were $530.3 million after deducting underwriting discounts and
offering expenses.
Subsequent Event
On January 13, 2021, the Company’s Board of Directors declared a
quarterly dividend payment of $13.44 per share, equivalent to
$0.336 per depositary share, on its Fixed Rate Non-Cumulative
Perpetual Preferred Stock, Series A (the “Series A Preferred
Stock”), for the period covering November 15, 2021 through February
14, 2022, for a total dividend of $2.7 million. The depositary
shares representing the Series A Preferred Stock are traded on the
New York Stock Exchange under the symbol “SI PRA.” The dividend
will be payable on February 15, 2022 to shareholders of record of
the Series A Preferred Stock as of January 28, 2021.
Conference Call and Webcast
The Company will host a conference call on Tuesday, January 18,
2022 at 11:00 a.m. (Eastern Time) to present and discuss fourth
quarter and full year 2021 financial results. The conference call
can be accessed live by dialing 1-844-200-6205 or for international
callers, 1-929-526-1599, entering the access code 199002. A replay
will be available starting at 1:00 p.m. (Eastern Time) on January
18, 2022 and can be accessed by dialing 1-866-813-9403, or for
international callers +44-204-525-0658. The passcode for the replay
is 675337. The replay will be available until 11:59 p.m. (Eastern
Time) on February 1, 2022.
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 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
CONDENSED CONSOLIDATED
STATEMENTS OF FINANCIAL CONDITION
(In Thousands)
(Unaudited)
December 31,
2021
September 30,
2021
June 30, 2021
March 31, 2021
December 31,
2020
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
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share
Data)
(Unaudited)
Three Months Ended
Year Ended
December 31,
2021
September 30,
2021
December 31,
2020
December 31,
2021
December 31,
2020
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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220114005493/en/
Investor Relations: Hunter Stenback / Ashna Vasa
858-200-3782 investors@silvergate.com
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