Silvergate Capital Corporation (SI) Q3 2021 Earnings Conference Call October 19, 2021 11:00 AM ET Company Participants Hunter Stenback - Investor Relations Alan Lane - President & Chief Executive Officer Tony Martino - Chief Financial Officer Ben Reynolds - Chief Strategy Officer Conference Call Participants Michael Perito - KBW Ken Zerbe - Morgan Stanley Joseph Vafi - Canaccord Genuity Will Nance - Goldman Sachs Dave Rochester - Compass Point David Chiaverini - Wedbush Securities Operator Good day and welc ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ending June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to __________________ Commission file number 001-39123 SILVERGATE CAPITAL CORPORATION (Exact name of registrant as specif ...

Silvergate Capital Corporation (SI) Q2 2021 Earnings Conference Call July 20, 2021 11:00 AM ET Company Participants Hunter Stenback - Investor Relations Alan Lane - Chief Executive Officer Tony Martino - Chief Financial Officer Ben Reynolds - Chief Strategy Officer Conference Call Participants Joseph Vafi - Canaccord Michael Perito - KBW Mike Del Grosso - Compass Point Will Nance - Goldman Sachs David Chiaverini - Wedbush Securities George Sutton - Craig-Hallum Eugene Koysman - Barclays Ryan Todd - The Bloc ...

Financial Performance - For the three months ended March 31, 2021, net income was $12.71 million, compared to $4.39 million for the same period in 2020, representing a 189% increase[108]. - Interest income increased to $23.31 million, up from $20.06 million in the prior year, reflecting a growth of 11.2%[108]. - Noninterest income rose to $8.09 million, compared to $4.93 million in the same period last year, marking a 64% increase[108]. - Basic earnings per share increased to $0.56, compared to $0.24 in the same period last year, reflecting a growth of 133%[108]. - Net income for the three months ended March 31, 2021, was $12,710 thousand, a significant increase of 189.3% from $4,393 thousand in the same period of 2020[113]. - Net interest income rose to $23,015 thousand for the three months ended March 31, 2021, reflecting a 48.7% increase from $15,478 thousand in the prior year[113]. - Noninterest income increased by 64.1% to $8,090 thousand compared to $4,931 thousand for the same period in 2020[113]. Asset Growth - Total assets increased to $7,757,152 thousand as of March 31, 2021, up from $5,586,235 thousand on December 31, 2020, representing a growth of 38.9%[110]. - Total deposits reached $7,002,371 thousand, up from $5,248,026 thousand, marking a growth of 33.4%[110]. - Total assets increased to $7.8 billion as of March 31, 2021, compared to $5.6 billion as of December 31, 2020, while shareholders' equity rose by $419.3 million or 142.5% to $713.6 million[136]. - Interest earning deposits in other banks increased from $2.9 billion at December 31, 2020, to $4.3 billion at March 31, 2021, driven by growth in total deposits exceeding growth in total loans and securities[137]. - Securities available-for-sale increased by $778.4 million or 82.9%, from $939.0 million at December 31, 2020, to $1.7 billion at March 31, 2021[140]. Operational Efficiency - The efficiency ratio improved to 63.03%, down from 67.98% in the prior year, indicating enhanced operational efficiency[108]. - Noninterest expense increased by $5.7 million or 41.3% for the three months ended March 31, 2021, compared to the same period in 2020, primarily due to increases in salaries and employee benefits, professional services, and federal deposit insurance[134]. - Salaries and employee benefits rose by $2.0 million or 22.7%, attributed to an increase in cost per full-time equivalent employee, with the average full-time equivalent employees increasing from 210 to 219[134]. Loan Portfolio and Quality - The allowance for loan losses to nonperforming loans ratio was 129.68% as of March 31, 2021, compared to 138.82% a year earlier, indicating improved asset quality[110]. - Nonperforming assets to total assets ratio decreased to 0.07% from 0.09%, indicating enhanced asset quality[110]. - The total net loans held-for-investment decreased to $728.4 million at March 31, 2021, from $746.8 million at December 31, 2020[146]. - Nonperforming loans rose to $5.3 million, or 0.73% of total loans, at March 31, 2021, compared to $5.0 million, or 0.66% of total loans, at December 31, 2020[148]. - The allowance for loan losses at March 31, 2021, was $6.9 million, representing 0.94% of loans held-for-investment, compared to $6.6 million or 0.96% at March 31, 2020[164]. Digital Currency Initiatives - The number of Silvergate Exchange Network (SEN) transactions reached 166,772, a significant increase from 31,405 transactions in the same period last year, representing a growth of 431%[106]. - The volume of SEN transfers amounted to $166.51 million, compared to $17.37 million in the previous year, indicating a growth of 855%[106]. - The digital currency initiative remains a key growth strategy, leveraging the SEN to attract new customers and expand existing relationships[102]. - The company had over 200 prospective digital currency customer leads as of March 31, 2021, indicating strong demand for its services[103]. - The company’s SEN Leverage product is considered unique in the digital currency industry, enhancing client relationships and potential revenue growth[144]. Capital and Liquidity - Shareholders' equity increased by $419.3 million to $713.6 million at March 31, 2021, primarily due to equity offerings that raised $441.1 million[177]. - The Company issued 5,860,858 shares of Class A common stock, resulting in net proceeds of $423.5 million after underwriting discounts[177]. - The Bank maintained a Tier 1 leverage ratio of 9.68% and a common equity tier 1 capital ratio of 53.03% as of March 31, 2021, exceeding regulatory requirements[179]. - The Company had $4.3 billion in cash and cash equivalents, ensuring sufficient liquidity to fund loans and meet cash needs[176]. - The Company has the right to defer interest payments on subordinated debentures for up to five years, providing additional liquidity flexibility[177]. Interest Rate Risk Management - The bank employs interest rate floors, caps, and swaps to hedge against interest rate risks, particularly in a declining rate environment[183]. - The Asset Liability Management Committee regularly reviews the sensitivity of assets and liabilities to interest rate changes, ensuring compliance with policy limits[183]. - The cumulative gap ratio to total earning assets was 98.53% as of March 31, 2021, indicating a high level of asset sensitivity[187]. - The bank's interest rate risk simulations utilize both static and dynamic models to assess the impact of interest rate changes on net interest income[186]. - Management can adjust asset and liability durations to manage interest rate sensitivity effectively[186].

Financial Data and Key Metrics Changes - Silvergate reported Q1 2021 net income of $12.7 million or $0.55 per diluted share, up from $9.1 million or $0.47 per diluted share in Q4 2020, and up from $4.4 million or $0.23 per diluted share in Q1 2020 [13][14] - Average deposits from digital currency customers grew by $3.8 billion to $6.4 billion compared to an average of $2.6 billion in Q4 2020 [12][16] - Net interest margin was 1.33% for Q1 2021, down from 2.85% in Q4 2020 and 2.86% in Q1 2020 [18] Business Line Data and Key Metrics Changes - Transaction revenue from digital currency customers increased to $7.1 million, up 87% sequentially and up 317% year-over-year [8][20] - Non-interest income for Q1 2021 was $8.1 million, an increase of $3.2 million or 67% from the prior quarter [19] - Total loans at March 31, 2021, were $1.6 billion, up $12.9 million or 4.8% compared to Q4 2020, and up $511.2 million or nearly 46% compared to Q1 2020 [23] Market Data and Key Metrics Changes - The Silvergate Exchange Network (SEN) saw nearly 167,000 transactions and more than $166 billion in volumes, up 84% sequentially [7] - The number of customers on the SEN platform expanded to more than 1,100, with 135 new customers added during the quarter [8] Company Strategy and Development Direction - Silvergate aims to expand its SEN Leverage product and create a network of digital asset custody partners to enhance capital flexibility for customers [10][30] - The company is focused on providing critical infrastructure for stablecoin offerings and cash management solutions for digital currency deposit customers [30] Management's Comments on Operating Environment and Future Outlook - Management expressed excitement about the future of Silvergate, highlighting the rapid growth of the digital currency industry and the opportunities it presents [31] - The management noted that the pipeline of potential new digital currency customers remains robust, indicating strong future growth potential [8][30] Other Important Information - The company launched an at-the-market equity offering in early March to raise capital efficiently for growth and product development [12] - Non-performing assets totaled $5.3 million or 7 basis points relative to total assets at March 31, 2021, a decrease from 9 basis points at the end of Q4 2020 [24] Q&A Session Summary Question: Can you expand on the partnerships with Fidelity and Coinbase? - Management highlighted the creation of a network of custodians to offer customers more choice and reduce risks associated with moving digital assets [34][35] Question: What is the outlook for the loan portfolio and liquidity position? - Management indicated a focus on growing the loan portfolio, particularly through SEN Leverage and mortgage warehouse lending, while maintaining a strong liquidity profile [42][44] Question: What are the drivers behind the strong growth in digital currency-related fees? - The growth was attributed to increased cash management fees and higher transaction volumes on the SEN, with expectations for future growth from stablecoin initiatives [51][52] Question: How does Silvergate fit into the broader digital currency ecosystem? - Silvergate serves as a transactional bank for regulated stablecoin issuers, providing critical infrastructure for minting and burning stablecoins [76][78] Question: What is the competitive landscape like for Silvergate? - Management noted that while there are occasional inquiries from banks about entering the space, the competitive advantage remains with the SEN and its network effects [70][72]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to __________________ Commission file number 001-39123 SILVERGATE CAPITAL CORPORATION (Exact name of registrant as specified in its charter) Mar ...

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Silvergate Capital Corporation (SI) Q2 2020 Earnings Conference Call July 27, 2020 11:00 AM ET Company Participants Shannon Devine – Investor Relations Alan Lane – President and Chief Executive Officer Tony Martino – Chief Financial Officer Ben Reynolds – Executive Vice President and Director-Corporate Development-Silvergate Bank Conference Call Participants Joseph Vafi – Canaccord Michael Perito – KBW Eugene Koysman – Barclays Ryan Todd – The Block Research Operator Good morning, and welcome to the Silverg ...

Silvergate Capital Corporation (SI) Q1 2020 Earnings Conference Call April 29, 2020 11:00 AM ET Company Participants Shannon Devine - Investor Relations Alan Lane - President & Chief Executive Officer Tony Martino - Chief Financial Officer Ben Reynolds - Executive Vice President & Director of Corporate Development Conference Call Participants Joseph Vafi - Canaccord Eugene Koysman - Barclays Michael Schiavone - KBW Ryan Todd - The Block Research Operator Good morning and welcome to the Silvergate Capital Co ...

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