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].
Silvergate Capital(SICP) - 2021 Q1 - Quarterly Report