SI - Earnings call transcript Q2 2022 | Silvergate Capital Corp

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Operator

Hello, everyone, and welcome to the Silvergate Capital Corporation Second Quarter 2022 Earnings Conference Call. My name is Victoria and I will be coordinating your call today. [Operator Instructions] I'll now pass over to Hunter Stenback to begin. Please go ahead.

Hunter Stenback

Thank you, operator, and good morning, everyone. in Capital participation XXXX second your call. earnings appreciate the Corporation 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, August 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

million in detail. common this per increase by $XX.X rate from and as Silvergate second this, results income $XX.X touch asset our rising Thank last our on digital last highlight Tony you you, million, am record Hunter, increased we quarter, revenue environment, which backdrop EPS In XX% our and increase in important to proud facing $XX.X I of to benefited million more quarter diverse net streams, the interest of results challenging ecosystem. quarter like from since of income Silvergate. an to strong with broader XX% it's am good share first differentiates available to compared morning, share, will net everyone. of light I the shareholders an especially the pleased $X.XX quarter. Driven delivered Notably, of today. the of times of interest what quarter

built periods relatively high ago. this our in volumes, this platform technology market of that or XXX started since and clients was highly underpins The transformation, Network during scalable volumes we're just XX/X, times as platform seeing industry, volatility won't nascent market support offering to many significant and industry SEN, We've Our Silvergate operates our Exchange our banking today. the serves experienced we and be last. sure critical And volatility I'm eight years this infrastructure. over high like

the it liquidity. of customer experience we influenced deposits was increasing of and volatility, the and and peak creation In this which manage volumes fact, ever how informed SEN

practices for optimized at in is sheet the risk and balance Our business. forefront aspects all management are liquidity client of our

bank, ensures market As take regulated management our well seriously, compliance environment. and risk we for any we a are prepared robust framework

we to take disciplined innovation. a Finally, approach

value of done, for new the also franchise customers, is our that products As introduce our solve we and problems always have while our risk. goal managing increase to

more to of our provide detail bit metrics. Now I'd like key a on some

the in the have According to continue Coin both industry. understand Metrics asset we the correlated quarters, volume with relatively saw with sequential an dollar Metrics we digital quarter, trends, the its volumes these trading the second basis. SEN increase As the of of broader volumes on to activity some were Average quarter, daily Despite transfer trading work past second the over to how Ethereum done flat. XX% billion, $XXX ever last quarter. during significant quarter during of a and highest declined range quarter were deposits better with on compared to Bitcoin deposits Coin few throughout data, $XX.X than deposits SEN is deposits high of of digital saw within higher $XX.X impacted to the collapse in $XX.X said, billion customers that significant was the billion currency of end We the a second to platforms. $XX.X in from the average period of digital from QX. the asset billion that billion, broader a in was which quarter ecosystem dislocation That part occurred low caused of by we by various believe

added of our robust last clients increase not second the these of digital the model management average half since consistent added However, customers, of second framework. to the risk compared to most We as we our the customers in per continue increased X,XXX to events, adding bring XXX platform. XXXX, a that in when decline a The an power same of quarter, customers but on high quarter of with quarter focus value the any and during the year. quality experience as loss currency over result clients XX quarter, Silvergate the clients a our QX capital our deposits over testament or number did of to

pipeline over of digital remains with new Our currency customers prospects. potential robust XXX

product, growing billion to continued Leverage, to product for to $X.X end compared with billion of XX% the our Bitcoin strong collateralized $X.X total demand saw Turning the we SEN quarter. at lending first the approved commitments

million Leverage $XXX In million of balance $XXX of quarter an during a and outstanding addition, the balances we SEN experienced with range million. average $XXX outstanding between

forced loans Leverage or our losses expected of all performed no SEN liquidations. as with Importantly,

As pay and of the week. their collateral with a day, design, additional reminder, these as comply agreement, the pledge our loans loan Bitcoin customers days down ability a XX or terms a to draw, by to over-collateralized hours have X are

stablecoin an provide Finally, our on I to want infrastructure update initiative.

Diem over acquired you stablecoin our to year. progress Tony amidst to from review own to of our in results the in quarter providing our months. take asset second industry. on more detail questions. our extremely in to January your assets we it launch proud I forward updates challenging Tony? payment the technology blockchain-based Group, in the are this U.S. in financial still we accomplishments half our environment the digital before I'm we in the turn look We initiative now dollar-backed of that to track on the forward look further I'll on select coming this Following XXXX. announcement updating

Tony Martino

XXXX. Thank or first X morning, million with of you, the overall $X.XX to $XX.X results. a compared asset diluted remained which relatively to detail in per Silvergate increased to will I Starting financial income, record $XX.X the $XX.X per a available compared million common the of shareholders more interest second million and XX% from in the $XX.X driven Despite year Slide good digital key XX% by diluted assets and net reported compared our quarter same up to Alan, industry, to quarter share Total and and environment $XX.X $X.XX on challenging or higher everyone. second quarter share of up was in on. quarter stable ago, discuss the compared to quarter second XXXX. common quarter million quarter in Revenue per of later the diluted up prior share $X.XX or of first net the XX% income billion

currency as down the Next X, quarter, on in to digital Slide quarter. compared mentioned, billion deposits were $XX.X X% customer last Alan average

was high currency in of and previous in our believe digital of and fluctuate customers reiterate, we which can $XX.X by quarter broader of deposits our efficient respectively, occurred of digital Similar significant quarters, deposits zero, result As to by the evidenced dislocation $XX.X levels as a the strategy. digital the that our this impacted the deposit from ecosystem, wide digital throughout deposits billion currency quarter. billion, low range cost essentially average during was currency reflecting quarters, daily total To asset was various of collapse platforms. part previous weighted gathering deposit for significantly

Net Slide first X, quarter to margin first was prior in to quarter the million X.XX% rising second of the year. the second last for in the and interest loans. from million was to The quarter XXXX, rate NIM the compared rate the rising we to in X.XX% quarter, quarter net $XX.X by an the in benefited $XX.X was driven million and Turning securities quarter increase compared second the of interest income benefiting from as the $XX.X and second increase compared environment, of environment. quarter X.XX%

the a first a with at X.XX% X.XX%. from the $XX.X quarter, Year-over-year totaled Our for slightly down securities of quarter, billion securities of end of the yield billion portfolio with corresponding $XX.X second balance yield increased of billion. $X.X

balance income We and to measured continue a sheet an to environment, with objective this risk. mitigating in high-quality approach net of maintaining management rate bolster while an take active portfolio to rising securities

million basis, loans total portfolio. on $XX down X%. the were to a or Moving On year-over-year loan

the prior The While and mortgage we multi-family loans SEN at last last estate, million. period to losses $X.X year, allowance certain as real the loan same increased commercial real construction quarter. balances from reminder, warehouse a unchanged for remained estate and sold compared quarter Leverage

to categories. lending As continuing past, we these down pay our and originating we’ve not portfolios real said are the in in new estate loans are

currently last discussed continues rate quarter, in environment. Silvergate rising we to well-positioned hikes. further for As rate be are we a operating

XX, approximately of were As XXXX, rate. of our XX% June securities floating

floating a XX% month XX Leverage a assuming mortgage a increase and a substantial held were for you approximately estimated basis Additionally, period. our income of interest interest million over current our positive loans sense rate, To floating and investment are of and approximately loans SEN our majority of warehouse rate. give balance interest shock, sheet XX is net static $XX sensitivity, point rate to rate

was quarter up salaries strategic expense $X the in second to decrease the the relatively million professional due XXXX employee $X.X year-over-year trading expense to growth was compared to X. was to million broader to volumes and and in continued our quarter. Slide decline related shows and for by increases the initiatives primarily million, Slide Non-interest services million, the as is of expenses, compared $XX.X to fees, deposit-related first increase compared of quarter basis quarter The the investments flat income last XX% quarter. of a quarter non-interest Turning $X.X in non-interest quarter from lower year. across or $X.X prior the industry. benefits driven the million which X in result for in during prior prior year same of on a non-interest income primarily of a and The

strategic will our to of and to growth second We year the investments make initiatives. support throughout continue half the

this in of expect expenses million for $XXX million, to As the $XXX the to a would our another Operator? Overall, excited range I'm questions. to amortization. strong and line continue the operator I With intentional result, year volatility, of approximately to open we XXXX market for like any rest to growth excluding the ask year. continue quarter to full be throughout was operating the despite Silvergate, any that, up

Operator

[Operator Instructions].

as question Steven go Please first from Alexopoulos ahead. JPMorgan. comes Our

Steven Alexopoulos

to Wanted question. a start picture with big

really a Lot play Voyager. And the of right? Celsius, this And seeing we're to if quarter. out with negative time look, were There into it's prices Terra, happened seeing responding is before, while all So drop it's effects, in the to first in There how the crypto customers news right? space. are institutions in Curious the ecosystem? we your sharp was in appetite in you any the slowdown institutional the more ecosystem. this? go them, are spillover

Alan Lane

And any is, the get borne what but pipeline. institutions out that's as where over and Yes, we years to not the the while We're and by last years the of prospects in you the experienced to several is, to for just a ready they're I it are know, short really last the number the over added think the takes of trade. not quite point this think slowdown, clients answer we've number the in quarter, no. quarter, of I plus who seeing still combination

internally. And a they the so, might initial thesis other excuse start the such with start space me, then and Silvergate others the and to the watching parties approvals a they interacting to it for seek trade approval want they and And developing with. additional or start then who initial they -- need starts while with as then they -- the

up. And of gotten so And that are looking haven't institutional yet the there's pullback an think players many as ramp big a in at opportunity. this I

long the that's winded answer. So,

Steven Alexopoulos

Alan, call. longer you've than been in this probably anybody the on ecosystem

your what's How the deposits know we going are they're to and might for right? guess, what what I this growth -- do, But Because it's at volatile. this know so half? best to out stage, second right? deposit play could Given see tough in

Alan Lane

I what any And deposits been stability pullback of prices, volume, in make a we can Yes. a there's in see ecosystem. we've our assets. typically and history base, we price deposits, volumes downs. to in see things deposit the flatten not then SEN. the just And this transaction see periods when Bitcoin when this during down significant have on we for what to our digital a of is And in But in to I've about we historically important is Steve, the how long it's grown back try this have players turn seen they then customers think high prices see the volumes, periods grow. I'm customers high and when to offramp click typically because seen other how in talking learned time for out. our use we've our the as volatility, onramp rising institutional ago, double shrink, prior way not ecosystem. the to the do of we growth second look predictions start and go But SEN recently, it's around, draw and in our is

exchange their about to talked then customers the keep you think about encourage the to cetera. investors, for know, the whether and customers et platform only that's they as run an institutional SEN need their -- in liquidity our so they we've on And We this conversations. business, way prior what and

typically but so, of the that draw don't of volume see we I expecting. lot periods transaction downs was big And a these see during think we everybody volatility,

Of to looking divest. platform the predict is course, invest as they're future. a said operating We can the we sure past. so whether I in serve at position to And that customers to try that don't XX/X, outset, that's our make to have they're and really liquidity the we strong we looking or whether try just that the

Operator

Perfect.

take at We question will coming our from Sachs. Nance now Will Goldman next

Will Nance

question range follow daily mean, trends. in quarter volatility I the balances the wanted just given the up to of deposit I in wide Steve's the that a this of clearly of all quarter, we on kind saw on quarter.

kind throughout throughout see you One deposits? a you get provide think I just us that trends volatility saw the Y, What on in that more help if color cadence most wondering more just crypto of questions about that of deposits we little is just future to the -- so Z when happening X, was and in the your space? of And the quarter, and impacts common the in the of it'll we just drove quarter? the particular how how events there anything ecosystem, like in think could was maybe kind bit that

Alan Lane

to he your is thinks Yes. Well, color, already addressed and of previous I've any maybe see Ben, additional maybe question, -- part Thanks. it to the answer in if the this since turn has over to question. he I'll relevant

Ben Reynolds

Thanks the for Yes. Will. question,

and XXst to just I Bitcoin sort set the on think at basis, level use $XX,XXX. June, of a was price was the Bitcoin period March roughly; end at price on end we of that of if as look the the $XX,XXX Bitcoin a price, about of proxy and

still they at the fourth about the incredible year. down first second underlying deterioration if of if but up were to the during so seen And the of compare to on we've quarter, were they quarter. look the you you the you market quarter overall Also the for quarter, compare, and volumes them compared value XX%

we know get some in the that, or of who bluechip as out is and saw company. firms saw of were opportunities related of collapse the And in question, our were quarter, driven of going customers the different to it's have to trading have going But the the arbitrage we're what different take the trying in second those product the balance for out customers Silvergate the platforms. to mentioned, and time really to and what to know space to half put to more of second we look maybe our the the that see. bluechip work in ecosystem, they in exactly underlying advantage the certainly And a that that the during who sheets opportunities, strategies and positions we SEN is in trade, as benefits your Alan trends how and So directly that. assets and us there arbitrage can all space did was difficult of firms are to

of And system a should tremendous I be think But -- on a of folks difficult fact second can quarter. that. next could just that potential be what shock sort is see is in yet and the the say we've so And what anchor the been period the could -- turmoil. all of it's that we what the outcome what really in results very through you have the to

we So the products the good built, feel really about platform our built about management risk that that practices. we've we've about and liquidity and

good to we going ability deliver what's know to overall, to hard feel But our deposits. for customers. so, And with our about happen

Will Nance

guess in the commitments. commitments, I Got quarter. growth on the decline very the balances despite nice average And it. question that. Leverage balances. heard a Appreciate Super in SEN during I And then on Obviously commentary helpful. just the the the

there, you levels to you about thinking kind and concentration of all for originate the a think Leverage relative ability I are question of that, commitments how about So, on commitments but going off how capital about I'm the good SEN to are or kind alternatives balance new of thinking sheet just update general forward? overall like any

Alan Lane

I'll take Yes. and back this in Will. one, step

not. in and when control Leverage, long-term. terms around again, pleased SEN don't we Leverage with over And customers as Ben use couldn't our And have his any when over customers their are management, of be they in that, the know on way have ended do again, our the what we the how way they risk more SEN we're with product the But has product performed are lines is on we of bullish that them very the are So actually we to comments who performed, Bitcoin in place risk potential areas our tide rehypothecate borrowers, that institutional order metaphor when in having popped the don't borrowers, up the with collateral, to about have increasing the custodians collateral network broader goes conversations we everybody choose have and of to there’s a at for looking from old support knows in the fact we ecosystem as some been are loans them. the out, that of the with.

so, to management this that. launched had slow. intend you're think terms going for concentration now is it, percentage give will years that have go as question, level. And now I is we extend capital this. and a it of this performs two high in way we initially going comfort concentration of see crazy what But as increasing we Bitcoin the we more the digital and the product prudent -- asset of an our said last -- the that base. to don't level, been does -- risk as many us saying before. about as go about don't we But I'll product get is use to the continue your our think a and to our we that restate multiples, XX/X. to this in thought with multiples -- asset. We to just capital and ever since I've just specifically it were And bearer that data, take trades It initially we a back we times

then is our when sell up to lock to to, have customers be lending should access best our so, we so we And the need one of custodial done. that we we their think that Bitcoin ever have this Bitcoin some partners, with of able

customers. they us of want that's force are we additional have their pay other liquidate always because any had areas in collateral the And loans business, that in our down stated to have proactively. when access earlier yet of we with And position. their an we to they not As for pledged they over-collateralized our comments,

are going this So, very about excited product forward. we

Operator

at question Our Michael next KBW. comes Perito from

Michael Perito

just -- the to but the to wanted dead horse not deposits. on beat I here,

growth the obviously, of quarter, deposits all I'm little funds around we it's been And of commentary but or second, maybe some forget about we forward. conversations for you deposit can as these hedge and was things breakout. correlated minute think general, lot for I crypto the a pipeline disclose if what be perception just crypto that right, the there talking I asset opportunities there's intra lot these more launch could and the guys time? in meaningful really you the But guys over the kind the -- are a the opportunities think of of investment I a growth seeing assets, less you difficult of doing just crypto moving spend and about some just are guide -- volatility, necessarily hedge forward, to still that give that was think wondering maybe you're exchanges, I aren't digital be is could some that and was corporations, you maybe some guys vehicles about a wondering how tech performance funds little numbers us projects, big just just a opportunities exchanges. the But but of if for having, a with if

Alan Lane

to well Yes, a for Mike, market kick over as going I'm color. to that Ben one bit more little

Ben Reynolds

Yes. Thanks Mike. for question, the

I the saw that areas attention the So in stablecoins. area some of one quarter during we of mean was the

for past do the to payments talked has and kind being -- which the is used we've or need in the commerce to in we And other assets case stable used assets you blockchain potentially than in that the the really in promises the about be believe remittance, going we acquired of the from value, Diem, that to ability be if payments. that has ability commercial use for have and itself a in speculative it's technology more are for As the with digital setting different nature. Bitcoin totally

for yield in we any as do in models the on space. issuer deposits. -- growth as we and the building That and U.S. continue that a today out interest business think the in Those on dollar are to and not rely technology projects said pay backed -- potential this to a said regulated that bank earning past, those that deposits. we've fully we as and later the see stablecoin continue system, launching a year, so, And I about we payment think we driver continue that to

looked of to pay reserves an outflow these seen we've issuers point as the stablecoin for to as going rates on have actually risen we've they've from year stuck not as we're a interest deposits. this and and bit So, of

So, the account there's blockchain. the stable Silvergate on bank to go about the that, XX/X and a dollars continue want for is about We a we network medium as that's to ultimately don't and to into projects. here. ability of issuers and those the a using think away. point get going SEN excited we dollars takes What couple puts long-term. existing like will technology and for that to really be We transactional this the are to those bank future, But look payments. in think deposits that And drive we between

Michael Perito

As this to is impacted managing to continue move might and might about mix try could book? near you the And quarter the quarter kind that here? asset some for on the other rates quick because the the were of how of levels forward to XX that a lower that provide obviously was that have could the color earning work quarter normalize in you little Or in future? keep balances money mix, put any basis guys there $XX thinking wondering a But in presumably NIM to versus if million follow-up balance the just bit on basis. and securities mix the then lower points Tony, of at moving light, cash down every continue book, in some BOM the just for absolute change sheet fluctuations cash the higher, you're asset the an think guys it that earning just helped on fair

Tony Martino

Yes. Thanks Mike. for the question,

did put of As to lot a you work indicated, the we liquidity quarter. during

contribution. a definitely that's So

depend think evolution will mix on balance of sheet. the Looking out, the I the

interest pretty the in term where to was the earning quarter. at the consistent of is forward, last it short profile assets Going

got are we've rates. of floating at of at our our XX% securities XX% So rates, floating loans

slightly risk the So in short the on income but amount, asset increasing as that well increase. The significant rates and we're long the will a might put by scale things interest a net part as evolve going And in some derivatives we that's sensitive term. protecting is potentially term, as interest forward of in quite [decreasing] definitely place. some downside in

-- going think we've happen. guidance the on on it's give and we're talked proactive managing deposits, to pretty on it's to difficult So as But to again, I predict what's sheet. balance the

to we try we plan and nimble just So forward. flexible stay stay as

Operator

Our Securities. Shaw comes Fargo from next question Jared Wells at

Jared Shaw

you any updates be from rest and year? with rollout then the going May in we looking to stablecoin us the milestones the initiative, whether during that quarter, what terms for the it's federal of on the this if happened share of could regulators, should forward be at

Alan Lane

you Ben? And don't appreciate But by be the we comment some going just a track launch. year. any end are in on to prior to Ben are that of by give I'm Silvergate still stablecoin over to turn would into it know we're Yes, that question. little what a second. as issued of bit getting of specific would a market mentioned, typically see or this on those work we for Ben But conversations the streams the that don't on with that regulators process. milestones update I can of things. And maybe there just kinds the an in

Ben Reynolds

Thanks, Yes. Alan.

won't what did that be and the milestones that the as when rolled see with we SEN that's roll way the is roll ultimately we can to as this mentioned, way out out when rolled a yes, providing first XXXX, look with And scale, that we rolling it to So, SEN and to it out back be consistent the scale we in best through along do anything. Alan way. as we guidance XXXX. to we the do with in Leverage out you as success or a demonstrate it in we really pilot, think will of pilot part We out fastest

sort of was equivalents. the think U.S. the U.S. other I dollar-backed things backed U.S. stablecoins aren't that and world algorithms apparent other became and assets dollars quarter reserved that stablecoins or and fully between demand one or might that in of to this dollar supply the be curves difference by

stablecoin politicians a for to are the as token are compliant, very that that we that -- fully in to more because regulators, sure safe issuer, educated way manner so, invested as that a said the a the dollar continue this environment we stablecoin in the And within that stablecoins holders a as they those back. reserves beginning, to is offer in overall, become able looking the and Silvergate fact which is where sound Silvergate when on makes differences from the positive we bring to be think get are have

that we working So, that's I a mentioned, what stablecoin on and as the for half. dollar-backed design past -- continue XXXX. the for we think year launching positive committed in to be have And Alan U.S. have overall to we a a been

Jared Shaw

Great. what just guess finally, in a I you Thanks. then little and duration color And looking on this terms purchased there? give of quarter that you and were yield could for securities just are

Tony Martino

securities the during we size million quarter, $XXX we sold portfolio there, the given of Actually, securities. in purchased and million $XX Sure. about about of

to of So very in activity portfolio. the size the small relation

the no rate, rate end weighted as of previously, the portfolio. XX% rate mix fixed versus of consistent again, remained floating around life to average And to So indicated first the real quarter. floating I change the of at

Operator

go Manan Please Stanley. ahead. from Our at next comes question Gosalia Morgan

Manan Gosalia

Hi. Good morning.

seeing see deposit clients you Or you there bit in typically Any margin follow-up you given and putting little said grew time think maybe just growth on trade, on we volatility from more take get to just you So, that a you I growth, volatility in probably to new potential are the customer the are follows mentioned just customer work, being to customers quarter. seeing quite this what the the until the what new with to new customers, new ready money recent given bit? you nicely that watchful clients a either in growth given space? and more new interest that lag? opportunity just is to waiting changes this of a Are seeing

Alan Lane

really that versus each different, compare appreciate the with about coming is likely to -- because network, own when past, other to to just to their activity in I the from of customer timetable. experienced us own participants because they we question trying are new their is question. each each while customer a strategy. think and Yes. what customers we customers connected difficult are They It's new to answer, the on coming in SEN they they be with move in want have

we of to just confidence, years, current as the the still over be time earlier, we number number of up actively and a the certainly grow. you over experience quarter, at difficult SEN ecosystem. number of is but quarters onboarding, will in going than SEN right plus versus transactions, snapshot to prospects the given transaction clients that The some definitely generally the continue client base volume into so over to periods during gives it in look volatility because And the there's added should us months. stages said who it's past, compare rather it really when much are of time this so of unfortunately, the the various and just volatility, in But in this engaged weeks

Manan Gosalia

Have or Leverage, the SEN product we've rates portfolio? in you seeing the on in size limits with, you any you're and to about that the that charge on that the given Bitcoin thinking are or the dealing just you are limits portfolio? the any seen, made that how interest on that putting LTVs volatility any you And underwriting then revisions on you're customers or or

Alan Lane

engaged color And some of customers provide color a question. might in set making -- we I'm But how we underwrite. to which turn is going appropriately. that to over second to your a we we're address believe changes not types additional answer short this to up those product We questions. with, any some we're of the I'll then Ben on provide little bit just to different that Yes, more the

now of been pilot into about Before volatility the And the probably beginning million in then essentially of than large where launch, swings launched we -- mentioned, years have In the the X.X outstanding at we Bitcoin, the the the had and the designed we the versus that we trueup, historic looking launched of time that first XXXX, this commitments a had any require billion. as $XXX when LTVs, the we in a even product year, rates the for prices, we interest again a X.X entire pilot we specifically went margin first less asset, and how in nine might and collateral pilot, AKA coverage, levels all to at ran in Ben one terms call. months. talking volatility, of underlying volatility that the after the inform we

using the we're the you So types talk this product. And very a product? are different Ben, little we've want who confident with bit to the customers, of up way about do set

Ben Reynolds

sure Yes, thing.

it even Bitcoin the a add everyone I in was drawn. it the sort was familiar client treasury were really perspective, treasury is radar, case case wanted of to of additional on a there their This that XXXX, that back and put large we earlier management. was loan, year the the And and management through case we product we a around able term that -- a balance sheet futures was the the really a the was on make particular the there were to lot from trade. around launched with then that fully folks term basis to and loan. loan So, markets use arbitraging use think, our back When wasn't use -- spot in market was trading primary

we the way have, so and -- a to their to that as continue while product is through try an process to the still is creates managing it that same talk in so understand always risk. to return, deliver customers, them which And and we are, to what outsized our needs go

were really seen outstandings felt that so million, quarter really during any or in above XXX were And I the we million, above good XXX when we've quarter shift say early about balances that. wouldn't the

on interest typically we're variable reminder, a and rates As X% rates. X% that their charging and between

we fact risk And that And really profile were quarter. good we return excited million so the the XXX about. about growing the there, in earlier above and feel was it

sort XXX to in, actually or is of about close million decreased the the they happened that some the industry balances and excited events of participants end which various the quarter were fact at crept liquidity we the were of from contagion where quarter. during As million, to XXX

think a on they risk risk is want put I broader when its where industry sort off. catching we're to So and and the stage reevaluating take breath at of

think and during I so quarter. saw that you in the commitments -- the growth And in

comments, as about So we if we're in this can where and his we're And to. performed couldn't over-collateralized we holding we more it we collateral Alan earlier mentioned product. some expected. these excited be It as need loans the liquidate -- of are significantly always

of feet hopefully that clients their figure them out should -- second So risk underneath outstandings we get want as and half the think up in they our put kind ramp to will where on.

And couldn't its be so performance. with more we overall pleased

Operator

Our next question comes Wedbush from David at Securities. Chiaverini

David Chiaverini

to may initiative. follow already up had stablecoin feel a you such the been I Do regulatory enough able the regulatory any provided additional without even pilot on thanks. Hi, has guidance be you that updates? launch

Alan Lane

Yes. Dave, I'll take this one.

the was of we've belief now, permissible. permissible. legally indicated is our institutions. -- be discussed this we report to fact -- that in President's year of, Xst goes stablecoins the so? down we started for perspective for in legal guidance November issued that insured engaged we XXXX from that that Working would it reinforced years last conclusion couple report And depository that be the issuing is in back with a the And So as us at it path Group on regulators by it legally And legally there analysis, this of the of preference to fact came fact the in issued did past, we own permissible a stablecoin do looking the and to

And design cetera. so who needed? don't about to use is it there believe -- in the guidance regulatory terms going additional is in all pilot, We the so. the that's product, It's the of of really et

engaged we product. specific with regulators on that believe there guidance don't is And things needed. the as we working so those and design are we that our But are any that's all we are certainly

to guidance based We it's as that comes out today. that forward moving we the in will issued. exists take guidance are But continue the the into account market on

David Chiaverini

follow-up higher helpful. out your considered great. been question getting rate then That's is, Very in rate A is some rates? to I've my of on swapping sensitivity. lock And sensitivity have that you

Alan Lane

turn sorry, ahead. Tony, that to I'm Tony. I'll over Yes. Yes. go

Tony Martino

will we previous disclosure Sorry. my would have past add derivatives in the Yes. rate David, in part said the we yes, we comments, to like as used forward risk. strategy of going the manage But to continue I consider them Q. -- with certainly interest and we

forward, but definitely will case the provide disclosure risk. rate to we So, going manage interest

question. the thanks So, for

Operator

question next comes go at from Riley Steve Moss B. Please Our Securities. ahead.

Steve Moss

had curious color asked. But maybe following of been your Most lines -- any any on of entrants or competitive environment, on hear As what if clients the up of clients kind any splitting just are would are pressures you've my more deposit seeing into helpful. space, have there? questions Any sensitive balances banks along the other more fees? be you those coming just

Alan Lane

Yes. is answer short no. The

seen haven't on We any pressure fees.

and that second of we quarter should kind I market quarter think significant one that stress thing of stress the acknowledge all a volatility. -- is was

They they think fortunately, And very risk. really in already, how don't Network much XXX we reliant so XX/X, thing managing the they this the were focused were with for are much own the of add on I whom equally as how on are I participant provides. Exchange they with. Silvergate attracts they that create the counterparty do Every but that value have paying new they earning we our network important, because were so, only now then their for other time fees? And network another do said the is to in mean, interest them, uptime And value have customer, effect. much we create to or we very customers a focused on network, people every counterparties not trade business. Silvergate

have candidly stress. and SEN the the -- this these be a lost, that one you are being that’s participant sometimes And things so, this and liquidity, participant. in there's you get highest when in But if most periods is this market access where ecosystem that want to of the ecosystem, Silvergate fact of the to you a at

Operator

Vafi Our Joseph at Canaccord. next comes question from

Joseph Vafi

test of Good morning, and to model here see the Nice the quarter shining. volatility. amidst it nice coming out stress

SEN the kind at sense own your follow-up. stablecoin you're of integrate stablecoin? stablecoin own make Just more half I point a roadmap. kind blockchain have SEN to able here And to relates some to a to here SEN as the on second if question it And does the and the your to going it of SEN maybe be enable of in the to especially quick the rollout your tightly

Alan Lane

Yes, that? Ben to question, really Ben, an ask SEN, distinction as ahead currently do ahead important which to not on the But this. appreciate it yes, and to Joe, comment I take I'm is just to and and go you is want relates blockchain. going go the a it

Ben Reynolds

the Joe. for Yes. Thanks question,

driven as that So, we've solutions customers. our said we by really before, are the build

businesses that for for for can as add customers talking solve can informs at. them, roadmap for looking we're solutions we SEN we're problems how their how the the really and them, our value we we're with the So understanding and and blockchain that

as of made acquisition ability the globe. to, certainly see and blockchain you based As in first we payment the systems the benefits value alluded the around the we to quarter, XX/X transfer

users is explained payment benefit the benefits the need the of of transfer we about be customer I and in Silvergate that future, systems, the to that about to the to -- Silvergate Alan over One you blockchain is about the continue is to think the value of around really think think to ability participate. important. we great order the something a systems SEN things the think XX/X as But globe to future

that So, to customers talking do we're looking area, but at us for our more about. something to definitely and that in work

Joseph Vafi

quarter. -- end from the management model coming the And that management Was really your there least your any out to then you at risk there the any other well volatility? quarterly did any updates the all, provide in this where to did just else color -- methodology tweak at learnings of -- risk anything

Alan Lane

gone thing and the draw we constantly kind little the update One to hour price as we've again, act everybody cause any cetera. a is, our anything answer Bitcoin-only. XX risk seen market XX since probably a hours, that the of downtime live call protocol the XX is management for in so tweaks that no. it’s since processes reasons at experience is one -- and constantly to of period, Bitcoin us XXXX. make didn't But has has we've since back have the down at all. -- have not the Joe, XXXX, historical before a been We the to short operating price been volumes aware period, but we And since far would the significant are the how so And calmed have of of and done again over bit aside the tweaks does is hour Bitcoin et has how downs Yes, this make into zero on whatsoever. the we any market itself putting got looking price a second, the the with ecosystem. performs,

Bitcoin roughly blocks everything's just continues generating protocol the hum every So to along, XX minutes, working.

are And our to And constantly sure so practices make look risk from certainly action. our at that want price we management perspective, we sound.

there's far no been to need changes whatsoever. any make so And

Operator

Sutton George from at comes Craig-Hallum Capital. question final Our

George Sutton

of Thank you. move underline And Bitcoin just market. didn't points, Alan. million the and to XXX really of traded, your just some

So that's impressive. pretty

the So X.X million, X of relative significant your percentage services the Can quarter-over-quarter those grew talk project? professional sequentially. to million to deployment you about obviously stablecoin from dollars

Alan Lane

Tony over it Yes. turn Thanks George. bit going dive into to question, a more. expenses the to the to for little I'm

Tony Martino

the change. costs a the the said, But a There's certainly it's the it's question, big for grand increase element there's thanks think of of Yes, into scheme invest you George. there. stablecoin other don't series fees factors up. professional of move Actually of fees. going for a is to combination things, a recruiting -- relatively But to as on infrastructure things like costs of P&L. kind as continue other did legal also scale we in and continue significant and But the we project. overall But used things we've around third-party

a the biggest stablecoin in infrastructure. And is so there. things there's But bunch of certainly component

George Sutton

creating obviously lastly, crypto Okay. dramatic dramatic losers. Thank then this you. And environment is winners and

product I'm winning in build your side really ecosystem? up You're transactional box of driven the a of on And clearly you're curious Thanks. looking opportunities to company. much these out how this thinking or the environment Ben revenue had side. the for being mentioned,

Alan Lane

that long of demonstrated the a on the the the we to view, in we've Leverage. term launch SEN as past this comment of SEN launch Euro I'll SEN, ask the just That's by take saying Yes, George. fair very question. but I'm Ben the development of it, a start by year, to going earlier

we latest with an NFTs, typically DeFi come market relates not that a about Ben as do don't color we So as a just the hottest how bank. years chasing our stay as what thing we're ICOs, in little can it bit such we can in go it. overview, or provide on lane the more that really few and might -- think as ago to a or we maybe But

Ben Reynolds

Yes.

that our add between to sort integrations to the targets. get -- products what the the that. in So, really do on lens possibilities, there number will, of things existing fair different could have problems product the strategy at wanting what to looks we and said a customers, we us, M&A and you tight might acquisition what we consistent look we changed. for product that continue the as we do of past, And with at be our do we are you George, or acquisitions through to offer really solve hasn't understanding are if of suite we for and mentioned,

reality that. not just blockchain to and the same. there opportunities I is think many the whatnot. to do us, that. assets of really looking things that think in nonetheless, were But I good for we be But open that the continue of remains the we so, earlier The that acquired strategy And a out at year kind example to there’s

of And half the expect different year. second the in anything so, don't really

Operator

would concludes final pass This any Alan back now to over you. to our Thank remarks. Q&A for session. like I Lane

Alan Lane

you. joining Thank all right. today. All And us for you thank

on look times in And the quarters. we updates quarter the hard move Thank that continuing lie are continued to as to delivering you sharing forward to a we for challenging I'd excited many call, incredibly to backdrop. about our will XXXX, valuable we approach said proud take the have like team have coming today's solutions amidst Silvergate management, opportunities a through at this thank and customers. of day. we our their As results for our with you, remainder are continue ahead prudent while great to of additional and innovate. we a We risk work,

Operator

everybody for today's call. joining Thank

disconnect. now may You

Silvergate Capital (SICLQ) 19 Jul 222022 Q2 Earnings call transcript