SI - Earnings call transcript Q4 2021 | Silvergate Capital Corp

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Operator

Good morning or good afternoon, all and welcome to today's Silvergate Capital Corporation Fourth Quarter and Full Year 2021 Earnings Conference Call. My name is Adam and I'll be your operator today. [Operator Instructions] I will now hand you over to Hunter Stenback to begin.

So, Hunter, please go ahead when you are ready.

Hunter Stenback

Thank you, operator and good morning, everyone. in Capital participation XXXX fourth your call. earnings appreciate the Corporation's Silvergate quarter We today Lane, Ben are Officer; here me With Alan our Strategy Financial Chief Tony our Chief Officer; our and Reynolds, Officer. Martino, Executive Chief

our a available will available call Relations on on X, the through of the to of Time be XXXX. Eastern Investor a Access replay website. p.m. replay As reminder, February this telephonic XX:XX is section also

section of is Additionally, IR a available complement discussion deck website. slide on our to today's the

Before set that within that Securities including a other undertake variety certain of results actual other implied such could to statements we Commission. statements. expectations, XXXX. remind the Such indicated not Securities call We this uncertainties future estimates, and and with risks, to update everyone Exchange the duty of Private differ are in management's of beliefs, begin, let Such that COVID-XX and constitute or are factors, me statements. from plans those These subject may current reports forward-looking by contain about prospects. and include forth do Litigation the cause the to risks such statements Reform filed Act statements any our periodic remarks forward-looking pandemic, meaning and materially factors

the Now, over I to like to call would turn Alan.

Alan Lane

in and leader and significant Thank a business Capital you, further Hunter the and fast-growing year Silvergate strength XXXX momentum industry, for demonstrating our as growth Silvergate our was good of morning, everyone. digital We of positioned another model. currency Corporation. the

step on of back quarterly past our results, reflect our into year. like some the I'd take dive I a to Before accomplishments over and

growth to in shareholders to net XXXX million tripled million available and in to $XX.X an fee increase our First, balance significant by nearly driven sheet. full common of XXXX, $XX.X income year income compared

transfers our API-enabled We days ability Exchange XX proprietary time, move using saw day, a in SEN, dollars in hours SEN resulting X a XXXX. our the customers require $XXX Network, to or demand that in week record from of also U.S. real Silvergate billion

Third, million for announced we offering. our finally, Fourth, with capital asset Bitcoin support stablecoin to Leverage, we groundwork the lending infrastructure collateralized and digital growth. two commitments custodians. technology raises to additional $X.X $XXX SEN And lay partnerships our our we completed billion record scaled product, totaling four deposit continued in to

to past, in linear I've As XX our what but won't the months. past of the proud be able noted I'm achieve always growth we have incredibly over been

platform quarter, The customers to turning quarter SEN an our X,XXX to customers the of fourth Now, over increase this on expanded results. XXX number of XXXX. for

of potential pipeline network increased volume of new continue sequential XX% basis. XXX% a robust Our the powerful annual effects $XXX the remains customers by the fourth to SEN. we SEN created digital and on on benefit basis in from an quarter transfer as million currency

correlated currency Ethereum we to As fourth correlated better continued presentation. as XXX% nearly fourth of on to SEN, quarter in million foreign Transaction year X compared and the services. see a you $X.X exchange the increased digital cash Slide on ago, of from customers demand our currency can reflecting for metrics management Bitcoin to revenue trends strong increased both understand and with and how data, According last industry. it's highly volumes is quarter, did we quarter activity with the coin broader continued to dollar the work remained in SEN trading to

option a our of rapid their quarter of demonstrates customers demand and compared from to third end credit the lending collateralized increased $XXX total strong maximize the Turning product's SEN at use last $XXX capital The to to growth significantly of quarter. to powerful commitments Leverage approved SEN case lines Leverage; efficiency. the million from for million

SEN, another billion, same moment. Tony liquidations. $X.X the last the perform during continued Leverage billion Driven deposits an will average and quarter digital year. forced to from and losses $XX.X billion to grew for average during no a with $XX.X the to further X quarter to in date customers currency third demand designed, as SEN by of discuss Additionally, continued record, compared period-end deposits

turn to over I to it Tony, before latest briefly Finally, initiatives. our some discuss wanted I of

in fund for the on launch including we broad real-time technologies of finance, startups investment in which adoption First, are vehicle are early-stage December, payments, is assets EJF Banking-as-a-Service. announced digital joint poised developing and a Ventures Silvergate which focused the entrepreneurs products as In the of are currency ahead about curve digital market. the excited shaping generation the we're of which to Capital, EJF opportunity to ecosystem will of support come the stay future who with next us partnership to allow that

to by brought the wanted important report an depository issued belief update November in our infrastructure stablecoins Silvergate stablecoin that I provide the President's can are within on as on insured an an our Notably, stablecoins role Next, Group prudential institution, federally confirms framework. play regulated as Working initiative. a

we meaningful and to consumers rail world businesses customers payment the We limited-purpose we our and To is XXXX. application this stablecoins to end, allow will us continue believe a become this well the Silvergate that company to New to hold for around trust capital-efficient product believe in manner. to quarter, with positioned deliver will reserves DFS the a dollars that during updated fourth in U.S. York our form stablecoin a

more financial Tony? about growth am extremely now we Tony results before for and I incredibly look accomplished ahead. with product our quarters. we excited opportunities and the to will turn beyond, forward launching I in to regulators as your discuss all to in XXXX. of and areas forward in this have to lie XXXX it an questions. dialogue continue over detail And that that We the proud I'm coming take open look to we our

Tony Martino

or and million up interest same X, was $X.XX interest net Net $X.X Net the or Thank to a both more the quarter third Silvergate in discuss compared to up XX% diluted to compared $XX.X detail to diluted you, available $XX.X per morning, reported growth common last Starting Slide shareholders per $X.XX per basis good million XXXX. on quarter income X.XX%. at interest and or income million everyone. net year. came fourth by share in in Alan period $X.XX of share diluted quarter common was of quarter share fourth I from compared moment, income. in non-interest X% on and which will the year-over-year and up income margin taxable equivalent a last The driven in

during our growth. which in investments These in stablecoin We our benefits invest continue in quarter. non-interest resulted deliberate support services to employee the of and salaries growth the future increase development including strategic initiatives, an expense will in and infrastructure professional

this X%. income our addition, was quarter tax In rate

due recognized income benefits stock of This options the on quarter, tax the tax-exempt to effective and tax rate exercise municipal lower bonds. on higher was

XXXX, Slide driven X. on from at an growth Next, $XX.X increase September exchanges, XXXX, fintech-related billion December Deposits currency digital customers. were institutional at deposits other and in billion by investors digital XX, and $XX.X from assets XX,

mentioned, quarter. were in the billion deposits Alan digital currency $XX.X As average

to to essentially for strategy end at on total as digital customers. last As a weighted deposit by our bearing billion reminder, of than was quarter. deposits and customers Similar low $XX.X billion, of can $XX quarter, continue the deposits of evidenced we the digital total more during quarter currency deposits digital of respectively, fluctuate, billion, from currency $XX.X cost as our and levels representing the gathering our average focus quarter the X. daily the deposit deposits high totaled currency Non-interest XX%

proportion to for continued higher in third driven on fourth X.XX% an quarter. fourth non-interest on in was $XX.X $X last in and compared prior Slide digital million of from Slide basis million, XXX% non-interest expense income quarter NIM Yield quarter of the currency a million, X; was fourth quarter quarter and purchases. Fourth and as $X.X relative due impact assets or securities decrease up in currency and the sequential of of quarter-over-quarter the gain on sale history. $X.X shows Slide X.XX% of fee year. of was to On Turning quarter The for to to of the the on decline yield quarter XXXX. quarter the quarter The prior in year. a X.XX% decrease by digital and margin million non-interest quarter last $X.X up of increase purchases new securities fee on quarter the the million interest highest income fourth securities quarters. the of same to XX lower net in the a XXXX the for the second The the income a from the of year-over-year customers. million increase from in a prior result $X.X cash third securities securities third compared growth was interest as our income from from XX% was $XX.X million reflects rates million of or quarter lower of well $X decreased a throughout fourth X; total

growth expenses benefits increased mentioned and and including continued to earlier, salaries our I year-over-year, by services driven strategic stablecoin initiatives, investments As infrastructure. employee professional drive

XX; a Slide X.XX%. securities $X end of the rebalanced yield to we the with to billion, fourth X.XX% by To third a fourth an duration measured will with objective billion totaled of an purchasing a and yield to management securities part, Turning our billion for take at quarter, maintaining fixed that high-quality corresponding approximately and balance billion. $X.X the and from securities. going $X.X we over $X.X $X up longer Year-over-year, the selling In the sheet variable quarter, end, balance portfolio, of billion and $X.X of quarter portfolio shorter with portfolio. forward of securities of securities rate rate billion in approach of fixed a continue duration increased active

or loan real categories. year-over-year partially relative total to or end not single-family December Overall, at were are the points mortgage in portfolios. originating quality credit December XX, note, portfolio warehouse commercial To up the million $XXX.X driven and loans assets totaled by estate latter decrease estate XX $X in loans portfolios at total decreases two offset increase new at to or were to are paying X as Our compared basis basis XX, these we an loans assets September $X.X XXXX. XX%. total up balances, third our basis, and strong. assets points million On from down million X.X% our leverage relative real the billion, of $XXX.X Nonperforming quarter XXXX, loan total a in three residential remains by XXXX, a

equity let offering Before December. completed moving details the we in of the briefly capital our ratios, on to discuss me

to of after of business the million quarter, shares the equity proceeds $XXX.X and our we effectively During net the expenses. proceeds year the with capitalizing deducting on offering to fourth million and raise continuing million The fourth stock. aligning underwriting issued $XXX of This and sold approximately were marked nearly common and Class growth the A were offering gross our company execute of four our discounts goal initiatives.

order in efficiently forward, remain forefront Going capital currency to to continue to we industry's evaluate opportunities digital evolution. the on will the raise of

well our level, be banking at at ratios the on under the at capital and company was regulations. the excess ratio the XX.XX% XX; Tier Slide with looking minimum bank bank ratio Now in ratio our to X XX.XX% capitalized leverage of X% well considered federal level

of a deposits the reflects and Our in fact and in total held ratio XX% capital liquid that cash of are securities. proportion our highly risk-based large high-grade

driven With decreased Our to questions. in XX.XX% the end quarter, beyond. to Silvergate line and XXXX year exciting XXXX during growth by the deposits loan-to-deposit our our the to any growth and forward look operator open for I ratio like at I quarter. Operator? the to was ask Overall, continuing would an of the for that, in the

Operator

question today our Instructions] Point. go Dave please from Dave, [Operator first from Compass is ahead. Rochester And

Dave Rochester

Hey, guys. morning good

one you potentially limited what And are that? hold What the expecting company are purpose the that expecting guys you on fee that of that? you can mentioned. capture timing on trust a benefit kind for from deposits Just those of you finalizing quick you can

Alan Lane

Dave. Appreciate Yes. those questions,

And in with the it we're evolution of then the couple initiative, onset we clarity go So stablecoin as disclosed limited we ongoing a that with President's now, point. York our tell ago the What DFS of stablecoin some and trust the our there on timing that New the we seeing came thoughts. been to back good public, that application. of purpose can at hold, to as is were support that you way company pandemic ability Working of New on the you being working trust years York report bank's all on in we all addressing the saying stablecoins stablecoins felt participate reengage a visibility Group prospectus we don't and to when had along, this time with we've I how we have if had put the around the that company was out went But DFS.

that. quarter strategy which how would and of for reserves of We've thinking the be the the that's done would we've will we the the updated our -- supporting the fourth And application be so in manage about in, incoming that that part went essentially we're stablecoin. deposits --

not optimistic York that the New part and yet timing launch DFS talk opportunities, is be cetera. that we're a suffice in But income going the to is, about strategy. we're So key something to charter here fee et having able say of to it we trust ready what that XXXX to are

Dave Rochester

appreciate Great, switching there. that the pipeline looking just generally that's over like of customers. just the pipeline color strong, and just back new decks has curious, prior sounds the at been Maybe seeing was to XXX. XXX. really I over It

actually maybe how just attrition, XQ, these seeing understand in in if all of that be to -- does it try around the in And XXX same XQ, any about What's pipeline? actually rate take accounts? growth quarter, XX talk conversion you're the curious, added then per just just to was customer together could in that to if You've would about great. put customers you onboard it the number I XQ. long accounts and

Alan Lane

Sure.

You over questions. those hand and address know to to what, Appreciate it. Ben go ahead it I'll

Ben Reynolds

the Yes. the report accounts, growth customers. seeing existing right. we're new demand And institutional customers. numbers we We the investor and And are yes, growth new from category during you're that from absolutely four and year. strong saw incredible really in customers quarter, really The both strong entire for new

of the year, were last we end at to look close end quarter, as clients. X,XXX X,XXX. So of of when And just the under number we as the the were of you

So speaks platform. see and SEN benefit mean, customers we our up XXX rather customers I the added the from base quarter. of really during to X,XXX think over year the during X,XXX sorry, which a to the from that we

years I topic over other through looking it of number channel was ago. a thing And The this years two XX,XXX. looking is day other on we back. -- that help this at process was total that received implemented over few leads to was I'll we say the had Salesforce was and I It the

you products. that to demand we ours. just And are Those XXX qualified what will so our folks sort the that so And shows referenced ultimately become leads. that does of incredible -- point for really that onboard that believe of number are really is of you -- those and customers

Dave Rochester

So that you high on pipeline about? rate's talked of generally, that really conversion guys kind

Ben Reynolds

right. right. That's That's

Dave Rochester

and it Yes. it terms shrunk that Or And in time to of how average? has today -- long takes onboard what is customers these time? on days, roughly, over

Ben Reynolds

Yes.

three they're disclose of categories, and investors The have their we of that they I a and each And what doing capital. of that have don't customers investor to before tell investing client. would in nature category a we fastest based time just on own institutional time fact takes So is onboard to given what be it that amount is tend the we customers. due diligence takes. to the actual different institutional category other our probably the we you different the And exchanges, do onboard amount the

to who's say I terms have that to a -- have for process. we a take the this optimized in Silvergate And we do in compliance same able we that of first of that would use At want who's thing platform. initiative shortcuts last the time, XXXX. is back and So, we was understand that customer our

same as maintaining onboarding we're as So can. fast that evaluation customers of at and integrity the we the time,

Operator

please go from Chiaverini The from David next Wedbush. ahead. question is David,

David Chiaverini

you initiative looking you follow-up if happen, thanks. to own? may it on about DM were go could strategy your stablecoin like your on it stablecoin related initiative. about talk Hi, the distribution to not a the have I With

Alan Lane

David. Yes,

existing level we're the customers view stablecoins So we in the with just and remittance. we step order currency do working new future thinking of distribution get the hasn't stablecoin already that for that the will retail -- set, being view that way changed. really but about of opportunity in distribution and their the is commerce use where And is our and established around we customers to market And in That we adding channels. be primarily digital existing many have again, opportunity case, who service to trading. the back anticipate really

the DM stablecoin talking have that zooming thinking of strategy, to without our retail happen new customers the And through would potential specifically about dollar-backed a that expect so out really little well largely about And distribution that as changed. just issuer and We would distribution. intend and the existing bit hasn't U.S. customers as that a we be for stablecoin.

David Chiaverini

a getting come extent question to -- if what that for if investors, TAM to CBDC been from would I've this And lower private Great. the were market, Fed-sponsored to stablecoins? and

Alan Lane

Yes.

issue in don't that banking retail? to by Or Silvergate if X-tier then question a U.S. a the if out or dollar system and stablecoin long any direct-to-retail there. disruption the rather CBDC U.S. directly more think going to which thinking better a with be it ask that banking certainly, see about participate it been the time, competing we to likely be the U.S. So CBDC, is that might ecosystem? existing this there's and not likely is community as that is a that to of direct-to-consumer, potentially would ourselves In essentially is stablecoin that we've a issued a and guess would that. positioned contemplate anybody going U.S. I is know, anything for we're I -- than launched you other case, the proposed it

is as of the coming in recently said, might Jerome still and this we're like not rather report he's and that's indicated it's he's to at -- but with that, it's their going Powell's on ready weeks don't talking comments recent we in be it to about proposed to some views about how the all. going about -- even here also Fed We're to comments. for launch posing to look be report sitting it questions open is it what view that to concerned the it's not So, do not XXXX going going come and to out be be going something

to ongoing likely any project CBDC I potential away. has years for that not years; the been is U.S. So dissimilar FedNow think

Operator

ahead. comes question next please from The KBW. Michael, go Michael from Perito

Michael Perito

Hey Alan, Ben, Tony. Good morning.

Alan Lane

Good morning, Ben.

Michael Perito

provide people with -- XXXX. you in mean, business right, to of with, around some crypto a like start, to few seems commentary higher dynamics your further crypto underlying that assets Just you're But like curious willing I for be exiting it growth wrestling around year commentary guys are your pretty outlook strong momentum, there's broad kind if I'm on falling would it rather the values a interest pipeline. higher seems rates, that the some is.

it's bit So XXXX, what could the realizing crypto Silvergate know to you context market if little guys growth opportunity in you more around just will challenging know do provide in a given today? XXXX, view the how you curious what

Alan Lane

Sure.

it Let ended share. with to that outlook Ben probably outlook me stronger if we've see he that to observations, across on products in ended different over XXXX we start the further think spot that then prior has stronger like would But your offer, than any I'll a any I color year. to he we kick and are Mike, a

you a few If was SEN, users about ago. our talking Ben pipeline about of think as minutes just for the

product SEN growth stride. the Leverage hit and to starting of just about think that you If it's

for we that see If about the you think stablecoin. opportunity

experienced add There more be eight an just straight that been comparing consistently future. right. for XXXX. note. all end of that of really you I've if strong what these look going know, some end at just the our the you you volatility. But quarters ongoing we're any color -- -- and not initiative like XXXX up ended that to those pipeline, not don't on we've And be at this, wanted point-in-time the are could we We've are of we've of is the this because fact years. for on -- also to to topics? see is opportunities any we of have you but bullish opportunity such and really on So, said, it's as the We've that I measurements at have end a Ben, do stream the you doing of the the additional to people as excited. the

Ben Reynolds

Thanks, Yes. Alan.

at I quarters then in underlying had market, fell you the were the and the of of November really at a But one price diverse the of November, and end it's hot just was mean, really December only really just finished have we terms sense about two of of quarter, look in $XX,XXX. that as white the the in at the November, So the of if crypto of At sort measure when And tale you $XX,XXX. end look it the finished than off. in October the business we more -- much fourth year this. -- you markets and the Bitcoin Bitcoin year

significant in one pretty span of So the that's a drawdown month.

quarter And at incredible so, SEN deposits had was that grow. the volume, tells when up. to The there average at income -- deposits we of compared even deposits XX metrics underlying, fee the look for is at platform grow. that billion continuing is billion us in is a usage second at The our $X.X with quarter was on to volatility are the up. $XX.X average platform The continuing while that were quarter in average SEN to which sort deposits the

volatility really sort to at the of go was we our we in place about we beyond. key a and we though indicators back underlying, of XXXX quarter, when in performance the Alan's have happened and what there as So finished point, better even to couldn't look think fourth in sort

Michael Perito

short-term be the like just as even for sheet are And also to bit actions, but rates things on then rates of you guess, I And higher around if forward. I enhanced around for thoughts two from the investment guys that. that for particularly general higher lack you your in a XXXX we it expense but like in control. know guidance, some earnings move it, and putting potential it the better more, rates and curious maybe provide positioning your in secondly, for I'd growth are a margin the guys rate conviction some of the the don't you of Thanks feels growth provide further. of took quarter, the expense benefit And just way positioning sounds balance higher

Alan Lane

go to ask here a mute. Tony second. in just get give just off second and jump ahead Yes, in But him to a I'll Mike. to

We did to over are in quarter infrastructure launch securities in we support here of continuing But longer-duration the stablecoin better as during to in out And sell is we in for the a absolutely to turn Tony as and better a rate to pointed is we in what I'll invest positioning shared believe some the you and it our rising what also now. likely XXXX. a comments, our actually to XXXX. press -- release environment

Tony Martino

Yes.

in in securities the we mortgage-backed the rate indicated primarily securities primarily assets duration we longer So fixed securities. prepared in -- most portfolio, were remarks, definitely, that the sold, I my as

moving you the category, time, from decrease the an increase just muni to portfolio. that that duration see add release, At portfolio. shorter be we the category in on shifted the for so tax positioned in press And There rate continue based was same can to exempt we in rates. the to bond to that

there's third look the that during a obviously the perspective, the did when feel and effect we combination in on fourth portfolio. particularly of lag securities from the good the balance with we XXXX at we're you this expense And So perspective, cash really quarters. hiring in impact entering then from a an place

we mentioned, there'll also -- continue support But line. So on continued scale growth not but strategic layer be a of to -- in to invest foundational just as only perspective, to we've from we impact our -- our the mathematical operations. added initiatives said in as again, as our -- our some expense Alan just our the

positioning be those sheet both the So on my comments and expenses. would balance

Operator

next Steven Steven, The from JPMorgan. Alexopoulos ahead. please from comes question go

Steven Alexopoulos

everyone. to customers. up start I Alan, -- to on currency wanted the Hey, I digital first follow wanted good morning,

reported Signature past the or reported And client morning. whereas over saw down few to you if new don't was So you they're why flat They've past seeing they you this do of XX. at over but quarters. sharply client would client they it trend or adds guys, if are you morning. similar this -- you what and their pace increased seeing. reported new few quarters, with I have them, not see I least you look as know guys the for the XXX at What adds, a sort fairly increase to adds are not keep new expected that

Alan Lane

strong clip. visibility et cetera. -- don't we customers, can our as It's his are, Yes. their pipeline comments what types healthy really don't tell that we -- a adding, we're what minutes who have customers of I obviously, any in was is numbers they're we Ben into as is ever sharing All as few you and ago, -- adding at a

this, to other on takes of It's a I onboard to takes on very he type a how thing that takes easy cetera. quite share bit it the we little for so and customers investor It's -- long instance. user, we're adding. et don't non-SEN think on don't bit longer in to the an And depends it fact touched somebody be also But add commented Ben longer and little the would bit it like customer, that a that really add the add other an bucket, to a a exchange. institutional

add I And no Ben the seeing their it mix to that -- the but any But whatsoever he comment I any this Exchange the for has to growth morning. And certainly about want if Silvergate have did network. that see earnings so our demand concerns report you we're possibly it's and we're I'll color? additional Ben, business color. ask seeing and

Ben Reynolds

Yes.

to that going to aren't especially that's going Silvergate exactly questions So add ourselves and accretive I products the the use inbound products we it And that aren't you right. to one I in they're customer you're is; because actually that is to incredible What that are customers offering that what whatnot. was the at accretive this industry, platform to and we is of talking possible bring this think about. network? ask have the this the When

to I look we're And platform because that they're who than not almost we on how to and customer may going may of so it's -- profitability but to want bring terms say deeper strategic in it's services. or very per at don't our the risk ultimately the use that they it's add

is customers -- So it to sake is adding it the adding customers. more just there of than for

Steven Alexopoulos

a Then activity December hot so November then October, trailed up; if white were had quite could bit. follow you indicated off I and

But In is, terms has go up, of desire, at right and adopt the looking go -- as come might crypto, as the bit and and what impacting struggle crypto wondering I we're all know is that on their quite about rates the David to you're pipeline. converting platform. price institutions down asked willingness a

Ben Reynolds

the Appreciate from sophisticated that crypto. no, at quick firms investors, a mean, are answer and not is when about the to as all. we the LPs I out talk And question. capital there institutional are developed relates it that these truly raising Yes. are thesis have

more the think pipeline the going opportunities seeing going like. volatility amount into and that we're in when underlying space, of capital you just and be the the what everyone to we so couldn't And look but that about be the excited looks I there's at that's understands investment

were really, trade and basis So trading price was the away. October, November volumes between December, December difference that the down, down, went

Silvergate, thesis excited looks growth number the So a we and like. But long-term be for for of headwinds the opportunity there of couldn't December. that in about in crypto were what long-term terms more

Operator

from question Canaccord. next line is from Vafi your Joseph, Joseph is The open.

Joseph Vafi

guys, Hey morning. good

that a sequentially. wondering down function more color on book provide drill if just nicely we could SEN grew I of some you might there? thought, was that Leverage. the side the feeling little demand looked It follow-up. outlook And loan a to have then better the was risk quick management there -- a versus you Just like be pretty on what relative I a

Alan Lane

outlook, kind Yes, question. change or like more in It Joe, risk feeling will, not is that really you any appreciate if absolutely comfortable. of our

by and question, more year capital really for management comfortable from really SEN with access -- increasing against it's more is U.S. demand as just are risk Bitcoin. in better for all ongoing the as the today We book. dollars to our customers we've their it you efficiency, our as Leverage borrowing the on And the asked been

And so about healthy excited growth though, really SEN on we have had even the very that you pointed out, for strong one is book we a quite Leverage XXXX, as well. as things sequential that the is we of pipeline this were

last year we disclosing you We because of our it's as made pipeline haven't just only been then million. a on a million on And a borrow might some -- SEN of smaller mining difficult be was borrowers a they fourth might the announced leverage because beginning and are it company little $X at side, other to when quarter see mining company. loan $XXX the the such would

SEN this bottom reasons the to in to confident of And to growth add the the is the support is book. and continue been the we've deposit so Leverage going we continue think on to grow but number line to also And side the of on one it's XXXX. not capital customers only

Joseph Vafi

kind was are I Fidelity get follow-up, And kind a partnership update are Assets contributing as to an could and just they the then of Coinbase large of a of Digital the business? update. if And pretty wondering, relationships I side. you Alan. we How Thanks, with deals know what's just wondering helpful. couple signed kind and custody those of I the evolving? that's how was strategic or there? Okay,

Alan Lane

partners, will. -- because that with all had Anchorage custodial customers our don't are in to SEN the all Bitcoin network seeing effect they're working side appreciate comfortable we engaged that on as well many our question in at holding are custody at have all a Fidelity I we Leverage the Coinbase our we we choice cases, made hoped. And or as just or choose And fully favorite, of if of customer is Yes. already partners. and they've choice, allowing their or really about It at Bitstamp. the you a I

with all so those we've And of got folks. integrations

is to -- And move and don't likely got to do because bitcoin when thing one so when borrow, they the they've our prospect partners. one with already a their comes us it of those have wants to

how held disclosing each with And Bitcoin that we one one is rest that are outstanding so those we we of at collateralized much but that custodians. each loans have by aren't have assured

Operator

from from is Sachs. question Goldman your is open. line Will, Nance next The Will

Will Nance

But think the understand the the to questions mean, response think and bit biggest Hey go of current guys, little of appreciate income. a asked and repositioning came earlier future wanted my better in guys good I trade-off again, drill an hoping delta the morning. income versus quarter this point. to in from the I of was and have ahead my you you have questions. done. I Most securities that kind this expectation I question. about relative taking lower been yield on the securities book at between I portfolio, answered to I and

And how might me wrong us floating rate give how so maybe I'm repositioning, is much about an floating of interest that and of Just fixed I sense mix benefit short-duration XX-XX rates the as to a book. But of think a just rate update on for you could of in builds? composed Correct if the you've that post there. up. and book securities yield talked T us roughly securities go give kind much

Alan Lane

Yes. ago, minutes we about question this But adding the addressing were most portfolio. of that Well, a to I he ask few little on in on. things to wanted talked Tony that securities. to but comment fact more are that was we click sold the just I'm one When double detail muni question securities the mortgage-backed still your Tony of yet, the to bit going a

so so are they is And not what of how the that react to that in are. fact versus the I that things we floating. around those But the thinking context highlight different portfolio, fixed one kind much fixed we've the potential our wanted the to and mark-to-markets investment rates the about sectors, on portfolio changed it's of rising just strategy how of

we're so if rapidly. are preservation the the thinking And on focused rise rates focused on ultimate mark also and earnings. on We're to portfolio capital about

to question. let on me little so details the of bit turn with more Tony your to a ask over comment it to him though, And that,

Tony Martino

Yes, Alan.

sold. Just -- yes I and securities the added more sold had indicated just to, the I guess, securities add some to mortgage-backed my of some actually securities, previous as of comment, we mortgage-backed we than as we that and much

So investment bonds. The mortgage-backed followed in we securities, largest was increase buckets in where quarter. add by the did primary of the municipal the

our not securities for So would had book been $X.X billion. $XX it have of approached the sales, billion

our into has in said, taxable been think as look heading the book, the Alan hasn't but So Clearly, before, all really philosophy we I reduced we're securities QX. overall. flexible good in and as indicated a at the subsectors changed. we duration We remain position

did and do. comment I to And a continue floating skewed a mix so changing depending XX-XX it's and fixed change and this rate last between that's I could on it what we quarter, won't more continually But quote adjustable definitely because to on quarter. number

hopefully, that color. So provides additional

Will Nance

keep super I the significantly, then you I Ben, crypto a the you with it. robust saw SEN. appreciate guess, think I one, more little bit think that's think balances helpful. some think when for down couple And And really guys they No, deposit I pretty maybe commentary inefficient how being clients were on guess actually second quarters Yes. I back ago, prices growth. of I if a gave around I much

more drive, cash you in crypto being SEN about people of of holding the beginning quarter, as we we're kind the transfers into towards kind more see in And of a first do a trading guys potential SEN? trends as types end the wondering, similar the of we and next quarter? of activity of have quarter risk-off lower of kind can seen think and if that Just being like lower of the mode offset

Ben Reynolds

Yes.

So first year, the deposit just We've XXX any are in it's new of all, growth added a customers. for of going pipeline I to without us. XXX We do. there's customers. think of a areas we couple what guidance know This that terms of providing we got deposits of mean, customers.

And we as with, customers be But do, gets venues we to that to grow. so effect know able SEN there's our are will. as continue if as bigger, grows for deposits to more the you then and add customers, we network going to trade the even

past, want want to keep customer because looking miss really don't underlying really and is are some they to of don't going we don't Like with so the board. capital of a kind they're we've volatility. down, deposits customers, the on us, seeing trading about our in up volume they us basis, or that's out And opportunities. we with talked more going per more on And for they care if really that them believe the across

segment. the got the -- got And and segment. retail stablecoin so there's We've that's segment. one We've

to mean, are continue group will that that that we add It's that we customers a market to and do diverse And going grow. not customers of to SEN. so deposits believe using linear whatnot, platform to be conditions. really And we've talked as going the as I continue think about, but have do along as grow deposits said all we we've we despite on are

Operator

question is Moss ahead. Steve, from please Securities. from Steve The next B. Riley go

Steve Moss

of customers up Kind SEN if the Good that of and mix could just size the following you curious on give number? color the network just to you the maybe morning. XXX-plus see pipeline. here, around start in Maybe guys

Alan Lane

and can I'll generally, there in of size We the the disclose just customers types don't pipeline. Alan. in. you -- jump is are this back the But I Steve, typically that tell area that we've and a growth made largest go to back that earlier, is institutional of here in of comment Ben seen investor just kind late the to the of side. demand

and in the not as continued the to say think and as we likely don't -- see in add and growth it's many that about investor bucket out exchange not are the market, that institutional just probably we then if bucket -- but penetrated there, pretty numbers [ph] so that more And the well. other much would cryptocurrency there we have we LOBS you any won't exchanges the large fact likely

Steve Moss

of out for yields maybe taxable of give any end-of-period the just could securities investment Okay. the curious if terms then end-of-period you kind book? And securities around little color book tying in maybe a -- further,

Alan Lane

that Yes. do to -- you I follow-up? want we of don't do any have you that? And detail. Or just a have in Tony, comment should that do on level

Tony Martino

I follow-up. think we that do a in

Steve Moss

All right. you Good very Thank quarter. guys. much,

Alan Lane

Steve. Thanks,

Operator

ahead. today Our George, question is please final Craig-Hallum. go Sutton from George from

George Sutton

sheet. managed guys, up very had a you've picture Obviously, balance conservatively Hi with question. big finish I'll a

a that the putting lot of to to I'm there accelerants -- out capital. could And curious quickly accelerate see raised that that the you capital potentially of are? just governors relatively that what work what You've capital? use any

Alan Lane

appreciate Yes, the George. I question.

talk to managers, briefly, on chance powder was comes advantage just quarter of whether in want a the capital opportunities, growth that growth capital raised organic stablecoin that that it about of bring thinking able take to that both of fact We've fourth the of really much the tried launch support had year as the have through we've throughout that in about through about we haven't our comes whether that acquisition, be dry those We to Ben touched the as well we've talked are to we growth, enough to that to because the a initiative. our we're absolutely as would just touched in grow. increase thinking going we've as ahead as talked about, And stablecoin, initiative reserves as of to deposits and market managing to hoping on, be to as likely result continue about XXXX, we to Leverage deposits SEN prudent XXXX. which thinking believe

contemplate where good as the that such this believe we we be that very in XXXX. deploy -- So in other at capital any here strong very initiatives a we year will good that that effectively for to can point to further that able than spot we have with ratios we ending and guidance we're say the we feel give with growth don't capital

George Sutton

it will leave there. guys. Thanks, I

Alan Lane

-- thank you. you be was realizing question. I was operator I yes, going the this much. think, thank And to the right, said All last you very just

of on sharing multiple appreciate year. strategic with team. a see thank growth opportunity to to coming for your proud day. beyond, diverse our to the currency your And provide ahead to looking We've updates tremendous a and continued in and earnings initiatives continue stream growth we the our support. are results again, testament We're forward to our you great hard Appreciate for I incredibly support questions. Silvergate time quarters. And customers. XXXX looking once work digital of Have anyway, additional solutions the your We're innovative throughout everybody's entire XXXX So built a levers. which the

Silvergate Capital (SICLQ) 18 Jan 222021 Q4 Earnings call transcript