EX-99.1 2 ex991si2q22earningsrelease.htm EX-99.1 Document
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Exhibit 99.1
Silvergate Capital Corporation Announces Second Quarter 2022 Results
La Jolla, CA, July 19, 2022 -- Silvergate Capital Corporation (“Silvergate” or “Company”) (NYSE:SI) and its wholly-owned subsidiary, Silvergate Bank (“Bank”), today announced financial results for the three and six months ended June 30, 2022.
Second Quarter 2022 Highlights
•Net income for the quarter was $38.6 million, compared to $27.4 million for the first quarter of 2022, and $20.9 million for the second quarter of 2021
•Net income available to common shareholders for the quarter was $35.9 million, or $1.13 per diluted common share, compared to net income of $24.7 million, or $0.79 per diluted share, for the first quarter of 2022, and net income of $20.9 million, or $0.80 per diluted share, for the second quarter of 2021
•Digital currency customers grew to 1,585 at June 30, 2022, compared to 1,503 at March 31, 2022, and 1,224 at June 30, 2021
•The Silvergate Exchange Network (“SEN”) handled $191.3 billion of U.S. dollar transfers in the second quarter of 2022, an increase of 34% compared to $142.3 billion in the first quarter of 2022, and a decrease of 20% compared to $239.6 billion in the second quarter of 2021
•Total SEN Leverage commitments increased to $1.4 billion at June 30, 2022, compared to $1.1 billion at March 31, 2022, and $258.5 million at June 30, 2021
•Digital currency customer related fee income for the quarter was $8.8 million, compared to $8.9 million for the first quarter of 2022, and $11.3 million for the second quarter of 2021
•Average digital currency customer deposits were $13.8 billion during the second quarter of 2022, compared to $14.7 billion during the first quarter of 2022

Alan Lane, president and chief executive officer of Silvergate, commented, “Silvergate had another strong quarter in light of the challenging backdrop facing the broader digital currency ecosystem. I am proud of our results as we achieved record net income available to common shareholders of $35.9 million and saw some of the highest daily dollar transfer volumes ever on the Silvergate Exchange Network (SEN). In addition, we saw continued demand for our SEN Leverage product, with no losses or forced liquidations."
“Overall, our platform was built to support our clients in this relatively nascent industry during periods of high volumes, market volatility and transformation, and performed as designed throughout the quarter. Our balance sheet is optimized for client liquidity and risk management practices are at the forefront in all aspects of our business to ensure we are prepared for any market environment. I remain confident in our trajectory throughout the second half of 2022, while continuing to invest in our strategic initiatives,” Lane added.
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As of or for the Three Months Ended
June 30,
2022		March 31,
2022		June 30,
2021
Financial Highlights(Dollars in thousands, except per share data)
Net income$38,605 $27,386 $20,935 
Net income available to common shareholders$35,917 $24,698 $20,935 
Diluted earnings per common share$1.13 $0.79 $0.80 
Return on average assets (ROAA)(1)
0.90 %0.60 %0.77 %
Return on average common equity (ROACE)(1)
10.99 %6.87 %10.40 %
Net interest margin(1)(2)
1.96 %1.36 %1.16 %
Cost of deposits(1)
0.00 %0.00 %0.00 %
Cost of funds(1)
0.03 %0.01 %0.01 %
Efficiency ratio(3)
38.30 %46.74 %50.69 %
Total assets
$15,847,656 $15,798,013 $12,289,476 
Total deposits
$13,500,720 $13,396,162 $11,371,556 
Book value per common share
$38.86 $42.77 $32.84 
Tier 1 leverage ratio
10.10 %9.68 %7.91 %
Total risk-based capital ratio
44.03 %45.01 %43.15 %
________________________
(1)Data has been annualized.
(2)Net interest margin is a ratio calculated as net interest income, on a fully taxable equivalent basis for interest income on tax-exempt securities using the federal statutory tax rate of 21.0%, divided by average interest earning assets for the same period.
(3)Efficiency ratio is calculated by dividing noninterest expenses by net interest income plus noninterest income.

Digital Currency Initiative
At June 30, 2022, the Company’s digital currency customers increased to 1,585 from 1,503 at March 31, 2022, and from 1,224 at June 30, 2021. At June 30, 2022, prospective digital currency customer leads in various stages of the customer onboarding process and pipeline were above 300. For the second quarter of 2022, $191.3 billion of U.S. dollar transfers occurred on the SEN, a 34% increase from $142.3 billion transfers in the first quarter of 2022, and a decrease of 20% compared to $239.6 billion in the second quarter of 2021. Based on digital currency industry transaction data provided by Coin Metrics, bitcoin and ether dollar trading volumes increased by 6% during the second quarter of 2022 compared to the first quarter of 2022.

Results of Operations, Quarter Ended June 30, 2022
Net Interest Income and Net Interest Margin Analysis (Taxable Equivalent Basis)
The Company’s securities portfolio includes tax-exempt municipal bonds with tax-exempt income from these securities calculated and presented below on a taxable equivalent basis. Net interest income, net interest spread and net interest margin are presented on a taxable equivalent basis to consistently reflect income from taxable securities and tax-exempt securities based on the federal statutory tax rate of 21.0%.
Net interest income on a taxable equivalent basis totaled $74.5 million for the second quarter of 2022, compared to $54.0 million for the first quarter of 2022, and $31.2 million for the second quarter of 2021.
Compared to the first quarter of 2022, net interest income increased $20.5 million due to increased interest income, driven by higher yields across all interest earning asset categories, offset slightly by increased interest expense. Average total interest earning assets decreased by $0.9 billion for the second quarter of 2022 compared to the first quarter of 2022, primarily due to decreased interest earning deposits in other banks due in part to lower average deposits and increased securities balances. The average yield on interest earning assets increased from 1.37% for the first quarter of 2022 to 1.99% for the second quarter of 2022, with the most significant impacts due to higher yields on securities and loans. Average interest bearing liabilities increased $318.2 million for the second quarter of 2022 compared to the first quarter of 2022, due to
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increased FHLB advances. The average rate on total interest bearing liabilities increased from 0.85% for the first quarter of 2022 to 0.87% for the second quarter of 2022, primarily due to an increase in interest rates on FHLB borrowings.
Compared to the second quarter of 2021, net interest income increased $43.3 million due to increased interest income, with the largest driver being higher securities balances, offset slightly by increased interest expense. Average total interest earning assets increased by $4.4 billion for the second quarter of 2022 compared to the second quarter of 2021, primarily due to increased securities balances funded primarily by the growth in digital currency related deposits and reallocation of interest earning deposits in other banks. The average yield on total interest earning assets increased from 1.17% for the second quarter of 2021 to 1.99% for the second quarter of 2022, primarily due to a higher proportion of securities and a lower proportion of interest earning deposits in other banks as a percentage of interest earning assets, as well as higher yields on securities, loans and interest earning deposits in other banks. Average interest bearing liabilities increased $368.4 million for the second quarter of 2022 compared to the second quarter of 2021, due to increased FHLB advances. The average rate on total interest bearing liabilities decreased from 1.02% for the second quarter of 2021 to 0.87% for the second quarter of 2022, primarily due to a higher proportion of lower cost FHLB borrowings as a percentage of interest bearing liabilities.
Net interest margin for the second quarter of 2022 was 1.96%, compared to 1.36% for the first quarter of 2022, and 1.16% for the second quarter of 2021. The increase in net interest margin compared to the first quarter of 2022 was primarily due to higher yields on adjustable rate securities and loans reflecting the increasing interest rate environment. The increase in net interest margin compared to the second quarter of 2021 was primarily due to a higher proportion of securities and a lower proportion of interest earning deposits in other banks as a percentage of interest earning assets, as well as higher yields on securities, loans and interest earning deposits in other banks.
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Three Months Ended
June 30, 2022March 31, 2022June 30, 2021
Average
Outstanding
Balance		Interest
Income/
Expense
Average
Yield/
Rate
Average
Outstanding
Balance		Interest
Income/
Expense		Average
Yield/
Rate		Average
Outstanding
Balance		Interest
Income/
Expense		Average
Yield/
Rate
(Dollars in thousands)
Assets
Interest earning assets:
Interest earning deposits in other banks$1,458,173 $3,008 0.83 %$3,067,054 $1,385 0.18 %$5,603,397 $1,599 0.11 %
Taxable securities9,058,960 30,986 1.37 %8,492,768 17,779 0.85 %2,937,659 8,324 1.14 %
Tax-exempt securities(1)
2,992,038 18,759 2.51 %2,887,072 16,689 2.34 %698,149 3,953 2.27 %
Loans(2)(3)
1,689,852 22,054 5.23 %1,644,604 18,287 4.51 %1,541,373 17,158 4.46 %
Other58,852 719 4.90 %41,751 203 1.97 %29,394 466 6.36 %
Total interest earning assets15,257,875 75,526 1.99 %16,133,249 54,343 1.37 %10,809,972 31,500 1.17 %
Noninterest earning assets729,378 500,299 121,288 
Total assets$15,987,253 $16,633,548 $10,931,260 
Liabilities and Shareholders’ Equity
Interest bearing liabilities:
Interest bearing deposits$68,128 $2 0.01 %$76,663 $21 0.11 %$97,463 $35 0.14 %
FHLB advances and other borrowings397,810 796 0.80 %71,111 70 0.40 %44 — 0.00 %
Subordinated debentures15,850 243 6.15 %15,846 252 6.45 %15,836 252 6.38 %
Total interest bearing liabilities481,788 1,041 0.87 %163,620 343 0.85 %113,343 287 1.02 %
Noninterest bearing liabilities:
Noninterest bearing deposits13,951,397 14,781,601 9,980,680 
Other liabilities49,550 36,770 29,586 
Shareholders’ equity1,504,518 1,651,557 807,651 
Total liabilities and shareholders’ equity
$15,987,253 $16,633,548 $10,931,260 
Net interest spread(4)
1.12 %0.52 %0.15 %
Net interest income, taxable equivalent basis$74,485 $54,000 $31,213 
Net interest margin(5)
1.96 %1.36 %1.16 %
Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis(3,939)(3,505)(830)
Net interest income, as reported$70,546 $50,495 $30,383 
________________________
(1)Interest income on tax-exempt securities is presented on a taxable equivalent basis using the federal statutory tax rate of 21.0% for all periods presented.
(2)Loans include nonaccrual loans and loans held-for-sale, net of deferred fees and before allowance for loan losses.
(3)Interest income includes amortization of deferred loan fees, net of deferred loan costs.
(4)Net interest spread is the difference between interest rates earned on interest earning assets and interest rates paid on interest bearing liabilities.
(5)Net interest margin is a ratio calculated as annualized net interest income, on a taxable equivalent basis, divided by average interest earning assets for the same period.
Provision for Loan Losses
The Company recorded no provision for loan losses for the second quarter of 2022, compared to a reversal of provision for loan losses of $2.5 million for the first quarter of 2022, and no provision for the second quarter of 2021. The reversal in the first quarter of 2022 was due to the changes in loan product and segment mix in the portfolio, including the net impact of the sale of real estate loans, partially offset by an increase in SEN Leverage loans.
Noninterest Income
Noninterest income for the second quarter of 2022 was $9.2 million, a decrease of $0.2 million, or 2.5%, from the first quarter of 2022. The primary reasons for this decrease were a $0.4 million decrease in other income due to a gain on sale of other assets of $0.4 million for the first quarter of 2022 and a $0.2 million, or 1.8%, decrease in deposit related fees which remained relatively flat, offset by a $0.4 million decrease in loss on sale of securities.
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Noninterest income for the second quarter of 2022 decreased by $2.9 million, or 23.7%, compared to the second quarter of 2021. This decrease was primarily due to a $2.5 million, or 22.1%, decrease in deposit related fees as a result of lower cash management fees from digital currency related customers.
Three Months Ended
June 30,
2022		March 31,
2022		June 30,
2021
(Dollars in thousands)
Noninterest income:
Deposit related fees$8,808 $8,968 $11,308 
Mortgage warehouse fee income555 651 753 
Loss on sale of securities, net(199)(605)— 
Other income50 436 8 
Total noninterest income$9,214 $9,450 $12,069 
Noninterest Expense
Noninterest expense totaled $30.6 million for the second quarter of 2022, an increase of $2.5 million, or 9.0%, compared to the first quarter of 2022, and an increase of $9.0 million, or 42.0%, compared to the second quarter of 2021. The increase in noninterest expense compared to the prior quarter was primarily due to an increase in salaries and benefits expense attributable to increased headcount as part of organic growth as well as increases in professional services and occupancy and equipment costs, all of which support the Company’s strategic initiatives. Other general and administrative expenses decreased from the first quarter of 2022 primarily due to a $1.6 million reversal of the provision for off-balance sheet commitments due to a change in estimate related to bitcoin collateralized SEN Leverage commitments. The increase in noninterest expense from the second quarter of 2021 was primarily driven by an increase in salaries and employee benefits attributable to increased headcount as well as increases in occupancy and equipment, communications and data processing and professional services, all of which support organic growth and the Company’s strategic initiatives. This was partially offset by a decrease in federal deposit insurance expense due to a lower growth rate in deposit levels.
Three Months Ended
June 30,
2022		March 31,
2022		June 30,
2021
(Dollars in thousands)
Noninterest expense:
Salaries and employee benefits$16,356 $15,544 $10,260 
Occupancy and equipment1,063 586 599 
Communications and data processing2,967 2,762 1,796 
Professional services6,280 2,954 2,594 
Federal deposit insurance1,495 1,762 3,844 
Correspondent bank charges801 828 812 
Other loan expense682 384 280 
Other general and administrative908 3,198 1,334 
Total noninterest expense$30,552 $28,018 $21,519 
Income Tax Expense (Benefit)
Income tax expense was $10.6 million for the second quarter of 2022, compared to $7.0 million for the first quarter of 2022, and a benefit of $2,000 for the second quarter of 2021. Our effective tax rate for the second quarter of 2022 was 21.5%, compared to 20.4% for the first quarter of 2022, and zero for the second quarter of 2021. The tax expense and effective tax rate for the first and second quarter of 2022 were impacted by significant increases in tax-exempt income earned on certain municipal bonds compared to the second quarter of 2021. In addition, the lower effective tax rate for the second quarter of 2021 was due to higher excess tax benefits recognized on the exercise of stock options.
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Balance Sheet
Deposits
At June 30, 2022, deposits totaled $13.5 billion, an increase of $104.6 million, or 0.8%, from March 31, 2022, and an increase of $2.1 billion, or 18.7%, from June 30, 2021. Noninterest bearing deposits totaled $13.4 billion, representing approximately 99.5% of total deposits at June 30, 2022, an increase of $112.5 million from the prior quarter end, and a $2.1 billion increase compared to June 30, 2021.
Our continued growth has been accompanied by significant fluctuations in the levels of our deposits, in particular our deposits from customers operating in the digital currency industry. The Bank’s average total deposits from digital currency customers during the second quarter of 2022 amounted to $13.8 billion, with the high and low daily totals of these deposit levels during such time being $17.6 billion and $12.6 billion, respectively, compared to an average of $14.7 billion during the first quarter of 2022, and high and low daily deposit levels of $16.2 billion and $13.2 billion, respectively.
Demand for new deposit accounts is generated by the Company’s banking platform for innovators that includes the SEN, which is enabled through Silvergate’s proprietary API, and other cash management solutions. These tools enable Silvergate’s customers to grow their businesses and scale operations. The following table sets forth a breakdown of the Company’s digital currency customer base and the deposits held by such customers at the dates noted below:
June 30, 2022March 31, 2022June 30, 2021
Number of Customers
Total Deposits(1)
Number of Customers
Total Deposits(1)
Number of Customers
Total Deposits(1)
(Dollars in millions)
Digital currency exchanges102 $8,133 96 $7,960 93 $5,395 
Institutional investors1,017 3,293 966 3,109 771 3,986 
Other customers466 1,879 441 2,126 360 1,734 
Total1,585 $13,304 1,503 $13,195 1,224 $11,114 
________________________
(1)Total deposits may not foot due to rounding.
The weighted average cost of deposits for the second quarter of 2022, the first quarter of 2022 and the second quarter of 2021 was 0.00%.
Three Months Ended
June 30, 2022March 31, 2022June 30, 2021
Average
Balance
Average
Rate
Average
Balance
Average
Rate
Average
Balance
Average
Rate
(Dollars in thousands)
Noninterest bearing demand accounts$13,951,397 — $14,781,601 — $9,980,680 — 
Interest bearing accounts:
Interest bearing demand accounts3,250 0.00 %5,531 0.07 %27,303 0.12 %
Money market and savings accounts64,456 0.01 %70,632 0.11 %69,527 0.15 %
Certificates of deposit422 0.95 %500 0.81 %633 0.63 %
Total interest bearing deposits68,128 0.01 %76,663 0.11 %97,463 0.14 %
Total deposits$14,019,525 0.00 %$14,858,264 0.00 %$10,078,143 0.00 %
Loan Portfolio
Total loans, including net loans held-for-investment and loans held-for-sale, were $1.5 billion at June 30, 2022, a decrease of $209.4 million, or 12.5%, from March 31, 2022, and a decrease of $22.0 million, or 1.5%, from June 30, 2021.
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June 30,
2022		March 31,
2022		June 30,
2021
(Dollars in thousands)
Real estate loans:
One-to-four family$82,671 $94,161 $144,247 
Multi-family8,827 9,368 67,704 
Commercial69,637 80,279 272,948 
Construction— — 5,481 
Commercial and industrial(1)
302,610 434,960 204,279 
Reverse mortgage and other1,110 1,137 1,364 
Mortgage warehouse136,485 125,435 49,897 
Total gross loans held-for-investment601,340 745,340 745,920 
Deferred fees, net(2,227)(1,884)1,151 
Total loans held-for-investment599,113 743,456 747,071 
Allowance for loan losses(4,442)(4,442)(6,916)
Loans held-for-investment, net594,671 739,014 740,155 
Loans held-for-sale(2)
872,056 937,140 748,577 
Total loans$1,466,727 $1,676,154 $1,488,732 
________________________
(1)Commercial and industrial loans includes $302.6 million, $435.0 million and $203.4 million of SEN Leverage loans as of June 30, 2022, March 31, 2022 and June 30, 2021, respectively.
(2)Loans held-for-sale includes $872.1 million, $914.2 million and $748.6 million of mortgage warehouse loans as of June 30, 2022, March 31, 2022 and June 30, 2021, respectively.
Asset Quality and Allowance for Loan Losses
The allowance for loan losses was unchanged from $4.4 million at June 30, 2022, compared to March 31, 2022 and down from $6.9 million at June 30, 2021. The ratio of the allowance for loan losses to total loans held-for-investment at June 30, 2022 was 0.74%, compared to 0.60% and 0.93% at March 31, 2022 and June 30, 2021, respectively.
Nonperforming assets totaled $3.8 million, or 0.02% of total assets, at June 30, 2022, an increase of $0.1 million from $3.6 million, or 0.02% of total assets at March 31, 2022. Nonperforming assets decreased $3.7 million, from $7.4 million, or 0.06%, of total assets at June 30, 2021.
June 30,
2022		March 31,
2022		June 30,
2021
Asset Quality(Dollars in thousands)
Nonperforming Assets:
Nonaccrual loans$3,724$3,632$7,444
Troubled debt restructurings
$1,619$1,703$1,437
Other real estate owned, net
$45——
Nonperforming assets
$3,769$3,632$7,444
Asset Quality Ratios:
Nonperforming assets to total assets
0.02 %0.02 %0.06 %
Nonaccrual loans to total loans(1)
0.62 %0.49 %1.00 %
Net charge-offs (recoveries) to average total loans(1)
0.00 %0.00 %0.00 %
Allowance for loan losses to total loans(1)
0.74 %0.60 %0.93 %
Allowance for loan losses to nonaccrual loans119.28 %122.30 %92.91 %
________________________
(1)Loans exclude loans held-for-sale at each of the dates presented.
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Securities
The total securities portfolio decreased $0.4 billion, or 3.3%, from $12.2 billion at March 31, 2022, and increased $5.6 billion, or 90.5%, from $6.2 billion at June 30, 2021, to $11.8 billion at June 30, 2022. As of June 30, 2021, there were $3.1 billion of securities classified as held-to-maturity.
Capital Ratios
At June 30, 2022, the Company’s ratio of common equity to total assets was 7.76%, compared with 8.56% at March 31, 2022, and 7.08% at June 30, 2021. At June 30, 2022, the Company’s book value per common share was $38.86, compared to $42.77 at March 31, 2022, and $32.84 at June 30, 2021.
At June 30, 2022, the Company had a tier 1 leverage ratio of 10.10%, common equity tier 1 capital ratio of 38.36%, tier 1 risk-based capital ratio of 43.91% and total risk-based capital ratio of 44.03%.
At June 30, 2022, the Bank had a tier 1 leverage ratio of 10.04%, common equity tier 1 capital ratio of 43.66%, tier 1 risk-based capital ratio of 43.66% and total risk-based capital ratio of 43.78%. These capital ratios each exceeded the “well capitalized” standards defined by federal banking regulations of 5.00% for tier 1 leverage ratio, 6.5% for common equity tier 1 capital ratio, 8.00% for tier 1 risk-based capital ratio and 10.00% for total risk-based capital ratio.
Capital Ratios(1)
June 30,
2022		March 31,
2022		June 30,
2021
The Company
Tier 1 leverage ratio10.10 %9.68 %7.91 %
Common equity tier 1 capital ratio38.36 %38.97 %42.03 %
Tier 1 risk-based capital ratio43.91 %44.84 %42.80 %
Total risk-based capital ratio44.03 %45.01 %43.15 %
Common equity to total assets7.76 %8.56 %7.08 %
The Bank
Tier 1 leverage ratio10.04 %9.51 %7.88 %
Common equity tier 1 capital ratio43.66 %44.28 %42.51 %
Tier 1 risk-based capital ratio43.66 %44.28 %42.51 %
Total risk-based capital ratio43.78 %44.45 %42.87 %
________________________
(1)June 30, 2022 capital ratios are preliminary.
Subsequent Event
On July 11, 2022, the Company’s Board of Directors declared a quarterly dividend payment of $13.44 per share, equivalent to $0.336 per depositary share, on its Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series A (the “Series A Preferred Stock”), for the period covering May 15, 2022 through August 14, 2022, for a total dividend of $2.7 million. The depositary shares representing the Series A Preferred Stock are traded on the New York Stock Exchange under the symbol “SI PRA.” The dividend will be payable on August 15, 2022 to shareholders of record of the Series A Preferred Stock as of July 29, 2022.
Conference Call and Webcast
The Company will host a conference call on Tuesday, July 19, 2022 at 11:00 a.m. (Eastern Time) to present and discuss second quarter 2022 financial results. The conference call can be accessed live by dialing 1-844-200-6205 or for international callers, 1-929-526-1599, entering the access code 200185. A replay will be available starting at 1:00 p.m. (Eastern Time) on July 19, 2022 and can be accessed by dialing 1-866-813-9403, or for international callers +44-204-525-0658. The passcode for the replay is 449932. The replay will be available until 11:59 p.m. (Eastern Time) on August 2, 2022.
Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the investor relations section of the Company's website at https://ir.silvergate.com. The online replay will remain available for a limited time beginning immediately following the call.
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About Silvergate
Silvergate Capital Corporation (NYSE: SI) is the leading provider of innovative financial infrastructure solutions and services for the growing digital currency industry. The Company’s real-time payments platform, known as the Silvergate Exchange Network, is at the heart of its customer-centric suite of payments, lending and funding solutions serving an expanding class of digital currency companies and investors around the world. Silvergate is enabling the rapid growth of digital currency markets and reshaping global commerce for a digital currency future.
Forward Looking Statements
Statements in this earnings release may constitute forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,” “projection,” “forecast,” “goal,” “target,” “would,” “aim” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry and management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. The inclusion of these forward-looking statements should not be regarded as a representation by us or any other person that such expectations, estimates and projections will be achieved. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. For information about other important factors that could cause actual results to differ materially from those discussed in the forward-looking statements contained in this release, please refer to the Company's public reports filed with the U.S. Securities and Exchange Commission.
While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: changes in general economic, political, or industry conditions; geopolitical concerns, including the ongoing war in Ukraine; the magnitude and duration of the COVID-19 pandemic and related variants and mutations and their impact on the global economy and financial market conditions and our business, results of operations, and financial condition; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Board of Governors of the Federal Reserve System; inflation/deflation, interest rate, market, and monetary fluctuations; volatility and disruptions in global capital and credit markets; the transition away from USD LIBOR and uncertainty regarding potential alternative reference rates, including SOFR; competitive pressures on product pricing and services; success, impact, and timing of our business strategies, including market acceptance of any new products or services; the impact of changes in financial services policies, laws, and regulations, including those concerning taxes, banking, securities, digital currencies and insurance, and the application thereof by regulatory bodies; cybersecurity threats and the cost of defending against them, including the costs of compliance with potential legislation to combat cybersecurity at a state, national, or global level; and other factors that may affect our future results.
Any forward-looking statement speaks only as of the date of this earnings release, and we do not undertake any obligation to publicly update or review any forward-looking statement, whether because of new information, future developments or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for us to predict their occurrence. In addition, we cannot assess the impact of each risk and uncertainty on our business or the extent to which any risk or uncertainty, or combination of risks and uncertainties, may cause actual results to differ materially from those contained in any forward-looking statements.

Investor Relations Contact:
Hunter Stenback / Ashna Vasa
858-200-3782
investors@silvergate.com

Source: Silvergate Capital Corporation
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SILVERGATE CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In Thousands)
(Unaudited)
June 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021		June 30,
2021
ASSETS
Cash and due from banks$256,378 $207,304 $208,193 $168,628 $52,859 
Interest earning deposits in other banks1,637,410 1,178,205 5,179,753 3,615,860 4,415,458 
Cash and cash equivalents1,893,788 1,385,509 5,387,946 3,784,488 4,468,317 
Trading securities, at fair value— — — — 26,998 
Securities available-for-sale, at fair value8,686,307 9,463,494 8,625,259 7,234,216 6,176,778 
Securities held-to-maturity, at amortized cost3,131,321 2,751,625 — — — 
Loans held-for-sale, at lower of cost or fair value872,056 937,140 893,194 818,447 748,577 
Loans held-for-investment, net of allowance for loan losses 594,671 739,014 887,304 809,745 740,155 
Other investments63,456 61,719 34,010 34,010 29,460 
Accrued interest receivable72,463 62,573 40,370 32,154 24,505 
Premises and equipment, net3,328 1,678 3,008 1,483 1,604 
Intangible assets190,455 189,977 — — — 
Derivative assets104,995 46,415 34,056 37,210 39,454 
Other assets234,816 158,869 100,348 24,868 33,628 
Total assets$15,847,656 $15,798,013 $16,005,495 $12,776,621 $12,289,476 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest bearing demand accounts$13,436,017 $13,323,535 $14,213,472 $11,586,318 $11,290,638 
Interest bearing accounts64,703 72,627 77,156 76,202 80,918 
Total deposits13,500,720 13,396,162 14,290,628 11,662,520 11,371,556 
Federal home loan bank advances
800,000 800,000 — — — 
Subordinated debentures, net15,852 15,848 15,845 15,841 15,838 
Accrued expenses and other liabilities
107,865 39,507 90,186 26,179 31,575 
Total liabilities14,424,437 14,251,517 14,396,659 11,704,540 11,418,969 
Commitments and contingencies
Preferred stock
2 2 2 2 — 
Class A common stock316 316 304 265 265 
Class B non-voting common stock(1)
— — — — — 
Additional paid-in capital
1,554,627 1,553,547 1,421,592 891,611 697,070 
Retained earnings
254,475 218,558 193,860 175,485 151,993 
Accumulated other comprehensive (loss) income(386,201)(225,927)(6,922)4,718 21,179 
Total shareholders’ equity1,423,219 1,546,496 1,608,836 1,072,081 870,507 
Total liabilities and shareholders’ equity$15,847,656 $15,798,013 $16,005,495 $12,776,621 $12,289,476 
________________________
(1)Effective June 14, 2022, Class B non-voting common stock was cancelled and its authorized shares reallocated to Class A common stock following a shareholder approved amendment to the Company’s articles of incorporation.
10

SILVERGATE CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)
Three Months EndedSix Months Ended
June 30,
2022		March 31,
2022		June 30,
2021		June 30,
2022		June 30,
2021
Interest income
Loans, including fees$22,054 $18,287 $17,158 $40,341 $33,755 
Taxable securities30,986 17,779 8,324 48,765 11,916 
Tax-exempt securities14,820 13,184 3,123 28,004 4,818 
Other interest earning assets3,008 1,385 1,599 4,393 2,878 
Dividends and other719 203 466 922 609 
Total interest income71,587 50,838 30,670 122,425 53,976 
Interest expense
Deposits2 21 35 23 81 
Federal home loan bank advances and other796 70 — 866 — 
Subordinated debentures243 252 252 495 497 
Total interest expense1,041 343 287 1,384 578 
Net interest income before provision for loan losses
70,546 50,495 30,383 121,041 53,398 
Reversal of provision for loan losses— (2,474)— (2,474)— 
Net interest income after provision for loan losses
70,546 52,969 30,383 123,515 53,398 
Noninterest income
Deposit related fees8,808 8,968 11,308 17,776 18,432 
Mortgage warehouse fee income555 651 753 1,206 1,707 
Loss on sale of securities, net(199)(605)— (804)— 
Other income50 436 8 486 20 
Total noninterest income9,214 9,450 12,069 18,664 20,159 
Noninterest expense
Salaries and employee benefits16,356 15,544 10,260 31,900 21,250 
Occupancy and equipment1,063 586 599 1,649 1,213 
Communications and data processing2,967 2,762 1,796 5,729 3,417 
Professional services6,280 2,954 2,594 9,234 4,311 
Federal deposit insurance1,495 1,762 3,844 3,257 6,140 
Correspondent bank charges801 828 812 1,629 1,309 
Other loan expense682 384 280 1,066 454 
Other general and administrative908 3,198 1,334 4,106 3,031 
Total noninterest expense30,552 28,018 21,519 58,570 41,125 
Income before income taxes
49,208 34,401 20,933 83,609 32,432 
Income tax expense (benefit)10,603 7,015 (2)17,618 (1,213)
Net income
38,605 27,386 20,935 65,991 33,645 
Dividends on preferred stock
2,688 2,688 — 5,376 — 
Net income available to common shareholders
$35,917 $24,698 $20,935 $60,615 $33,645 
Basic earnings per common share$1.14 $0.79 $0.81 $1.93 $1.40 
Diluted earnings per common share$1.13 $0.79 $0.80 $1.92 $1.37 
Weighted average common shares outstanding:
Basic31,635 31,219 25,707 31,428 24,114 
Diluted31,799 31,401 26,102 31,601 24,565 
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