LA JOLLA, Calif.--(BUSINESS WIRE)--Silvergate Capital Corporation (“Silvergate” or “Company”) (NYSE:SI) and its wholly-owned subsidiary, Silvergate Bank (“Bank”), today announced financial results for the three months ended June 30, 2020.
Second Quarter 2020 Financial Highlights
- Net income for the quarter was $5.5 million, or $0.29 per diluted share, compared to net income of $4.4 million, or $0.23 per diluted share, for the first quarter of 2020, and net income of $5.2 million, or $0.28 per diluted share, for the second quarter of 2019
- Digital currency customers grew to 881 at June 30, 2020 compared to 850 at March 31, 2020, and 655 at June 30, 2019
- The Silvergate Exchange Network (“SEN”) handled 40,286 transactions in the second quarter of 2020, an increase of 28% compared to 31,405 transactions in the first quarter of 2020, and 12,254 transactions in the second quarter of 2019
- The SEN handled $22.4 billion of U.S. dollar transfers in the second quarter, an increase of 29% compared to $17.4 billion in the first quarter of 2020, and $8.6 billion in the second quarter of 2019
- Digital currency customer related fee income for the quarter was $2.4 million, compared to $1.7 million for the first quarter of 2020, and $1.1 million for the second quarter of 2019
- Book value per share was $14.36 at June 30, 2020, compared to $13.11 at March 31, 2020, and $12.04 at June 30, 2019
- The Company’s total risk-based capital ratio was 25.54% at June 30, 2020, compared to 26.05% at March 31, 2020 and 26.57% at June 30, 2019
Alan Lane, president and chief executive officer of Silvergate, commented, “As our team continues to support our customers and constituents of the Bank in our new normal environment, our priority remains the safety and health of our employees and customers. As an industry innovator and leader, our infrastructure has allowed for a seamless transition during the evolving pandemic, positioning Silvergate for continued success in a digital world. We also remain confident in the credit quality of our loan portfolio given the Bank’s conservative underwriting standards and the low to moderate loan-to-value ratios across our commercial, multi-family and residential real estate portfolios which were in the low- to mid-50% range as of June 30, 2020. In fact, 27% of the loans by dollar volume that were modified as a result of hardship from the pandemic have already resumed payments as of July 15, 2020, which bodes well for the second half of the year.”
Mr. Lane continued, “Our success is also evident in our second quarter expansion of our digital payments platform, known as the Silvergate Exchange Network or SEN, and our growth in the related fee income, up 41% compared to the 2020 first quarter and 119% compared to the 2019 second quarter. Digital currency customers expanded to 881 from 850 in the first quarter of the year, while we maintained a robust pipeline of more than 200 potential customers. As we continue to grow both our digital currency customers and their utilization of the SEN, the network effect and competitive moat of our global payments platform further expands. As part of this, I am very pleased with the expansion of our newest product, SEN Leverage, which during the quarter expanded our bitcoin collateralized loans to $22.5 million in approved credit from $12.5 million in the first quarter. We are pleased with the product’s performance and see it as a potentially strong growth driver for Silvergate.”
|
|
As of or for the Three Months Ended |
||||||||||
|
|
June 30,
|
|
March 31,
|
|
June 30,
|
||||||
|
|
|
|
|
|
|
||||||
Financial Highlights |
|
(Dollars in thousands, except per share data) |
||||||||||
Net income |
|
$ |
5,466 |
|
|
$ |
4,393 |
|
|
$ |
5,156 |
|
Diluted earnings per share |
|
$ |
0.29 |
|
|
$ |
0.23 |
|
|
$ |
0.28 |
|
Return on average assets (ROAA)(1) |
|
1.02 |
% |
|
0.79 |
% |
|
1.03 |
% |
|||
Return on average equity (ROAE)(1) |
|
8.72 |
% |
|
7.14 |
% |
|
10.04 |
% |
|||
Net interest margin(1)(2) |
|
3.14 |
% |
|
2.86 |
% |
|
3.56 |
% |
|||
Cost of deposits(1)(3) |
|
0.37 |
% |
|
0.87 |
% |
|
0.28 |
% |
|||
Cost of funds(1)(3) |
|
0.42 |
% |
|
0.94 |
% |
|
0.43 |
% |
|||
Efficiency ratio(4) |
|
65.03 |
% |
|
67.98 |
% |
|
64.50 |
% |
|||
Total assets |
|
$ |
2,340,713 |
|
|
$ |
2,310,708 |
|
|
$ |
2,242,034 |
|
Total deposits |
|
$ |
1,670,909 |
|
|
$ |
2,002,957 |
|
|
$ |
1,938,650 |
|
Book value per share |
|
$ |
14.36 |
|
|
$ |
13.11 |
|
|
$ |
12.04 |
|
Tier 1 leverage ratio |
|
11.57 |
% |
|
10.98 |
% |
|
11.11 |
% |
|||
Total risk-based capital ratio |
|
25.54 |
% |
|
26.05 |
% |
|
26.57 |
% |
|||
| ___________________________ | ||
(1) |
|
Data has been annualized. |
(2) |
|
Net interest margin is a ratio calculated as annualized 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) |
|
Cost of deposits and cost of funds increased beginning in the second quarter of 2019 due to callable brokered certificates of deposit that were issued as part of the hedging strategy discussed in “Balance Sheet —Deposits” in more detail below. During the first and second quarters of 2020 all brokered certificates of deposit were called and the unamortized premium expense was fully written-off. |
(4) |
|
Efficiency ratio is calculated by dividing noninterest expenses by net interest income plus noninterest income. |
Digital Currency Initiative
At June 30, 2020, the Company’s digital currency customers increased to 881 from 850 at March 31, 2020, and from 655 at June 30, 2019. At June 30, 2020, Silvergate had over 200 prospective digital currency customer leads in various stages of the customer onboarding process and pipeline. There were a record 40,286 transactions on the SEN for the second quarter of 2020, an increase of 28% compared to 31,405 transactions for the first quarter of 2020. In addition, for the second quarter of 2020, $22.4 billion of U.S. dollar transfers occurred on the SEN, another quarterly record and a 29% increase from the first quarter of 2020.
|
|
Three Months Ended |
||||||||||
|
|
June 30,
|
|
March 31,
|
|
June 30,
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(Dollars in millions) |
||||||||||
# SEN Transactions |
|
40,286 |
|
|
31,405 |
|
|
12,254 |
|
|||
$ Volume of SEN Transfers |
|
$ |
22,423 |
|
|
$ |
17,372 |
|
|
$ |
8,625 |
|
Results of Operations, Quarter Ended June 30, 2020
Net Interest Income and Net Interest Margin Analysis (Taxable Equivalent Basis)
In 2020, the Company has made multiple purchases of tax-exempt municipal bonds. Tax-exempt income from these securities is calculated 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 $16.5 million for the second quarter of 2020, compared to $15.5 million for the first quarter of 2020, and $17.6 million for the second quarter of 2019.
Compared to the first quarter of 2020, net interest income increased $1.0 million due to a decrease of $2.6 million in interest expense offset by a decrease of $1.6 million in interest income.
Average total interest earning assets decreased by $67.1 million for the second quarter of 2020 compared to the first quarter of 2020, primarily due to decreases in interest earning deposits in other banks and loans, offset by a modest increase in securities. The yield on interest earning assets was impacted by the federal funds rate reductions in March 2020, with lower yields on deposits in other banks, taxable securities, and mortgage warehouse loans. The impact of lower yields was partially offset by income from our investments in tax-exempt municipal bonds.
Average interest bearing liabilities decreased $240.2 million for the second quarter of 2020 compared to the first quarter of 2020, due to calling the remaining balance of brokered certificates of deposit. The average rate paid on total interest bearing liabilities decreased from 3.51% for the first quarter of 2020 to 2.78% for the second quarter of 2020, primarily due to lower rates paid on both brokered certificates of deposit and FHLB advances and other borrowings. In addition, the accelerated premium expense associated with calling brokered certificates of deposit was $1.2 million in the second quarter of 2020, compared to $2.1 million in the first quarter of 2020.
Compared to the second quarter of 2019, net interest income decreased $1.1 million, due to a decrease of $1.0 million in interest income and an increase of $0.1 million in interest expense. Average total interest earning assets increased by $130.6 million for the second quarter of 2020 compared to the second quarter of 2019, due to increases in securities and loans offset by decreases in interest earning deposits in other banks. The average yield on total interest earning assets decreased from 3.94% for the second quarter of 2019 to 3.51% for the second quarter of 2020, primarily due to lower yields on interest earning deposits in other banks, securities and loans. The lower yields were due to declines in federal funds rate and LIBOR, which was partially offset by the impact of interest rate floors which were put in place during 2019. Average interest bearing liabilities decreased $62.3 million for the second quarter of 2020 compared to the second quarter of 2019 due to calling the remaining balance of brokered certificates of deposit. The average rate on total interest bearing liabilities increased from 2.20% for the second quarter of 2019 to 2.78% for the second quarter of 2020, primarily due to the impact of calling the remaining outstanding balance of brokered certificates of deposits, and the acceleration of the related premium expense.
Net interest margin for the second quarter of 2020 was 3.14%, compared to 2.86% for the first quarter of 2020, and 3.56% for the second quarter of 2019. The increase in the net interest margin compared to the first quarter of 2020 was driven by a decrease in interest expense due to lower rates and lower premium expense associated with calling brokered certificates of deposits. The net interest margin decrease from the second quarter of 2019 was primarily due to the impact of lower federal funds rates and LIBOR, partially mitigated by decreased FHLB borrowings and the combined effects associated with the hedging strategy, which included the impacts of reducing the balance of the callable brokered certificates of deposit, along with the benefit derived from the interest rate floors.
|
|
Three Months Ended |
|||||||||||||||||||||||||||||||
|
|
June 30, 2020 |
|
March 31, 2020 |
|
June 30, 2019 |
|||||||||||||||||||||||||||
|
|
Average
|
|
Interest
|
|
Average
|
|
Average
|
|
Interest
|
|
Average
|
|
Average
|
|
Interest
|
|
Average
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
(Dollars in thousands) |
|||||||||||||||||||||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Interest earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Interest earning deposits in other banks |
|
$ |
168,297 |
|
|
$ |
405 |
|
|
0.97 |
% |
|
$ |
234,356 |
|
|
$ |
724 |
|
|
1.24 |
% |
|
$ |
530,325 |
|
|
$ |
3,058 |
|
|
2.31 |
% |
Taxable securities |
|
690,810 |
|
|
4,123 |
|
|
2.40 |
% |
|
902,165 |
|
|
6,048 |
|
|
2.70 |
% |
|
579,464 |
|
|
4,501 |
|
|
3.12 |
% |
||||||
Tax-exempt securities(1) |
|
231,232 |
|
|
1,996 |
|
|
3.47 |
% |
|
6,611 |
|
|
61 |
|
|
3.71 |
% |
|
— |
|
|
— |
|
|
— |
|
||||||
Loans(2)(3) |
|
1,008,242 |
|
|
11,710 |
|
|
4.67 |
% |
|
1,024,982 |
|
|
13,121 |
|
|
5.15 |
% |
|
860,682 |
|
|
11,684 |
|
|
5.45 |
% |
||||||
Other |
|
13,224 |
|
|
200 |
|
|
6.08 |
% |
|
10,746 |
|
|
121 |
|
|
4.53 |
% |
|
10,743 |
|
|
229 |
|
|
8.55 |
% |
||||||
Total interest earning assets |
|
2,111,805 |
|
|
18,434 |
|
|
3.51 |
% |
|
2,178,860 |
|
|
20,075 |
|
|
3.71 |
% |
|
1,981,214 |
|
|
19,472 |
|
|
3.94 |
% |
||||||
Noninterest earning assets |
|
51,776 |
|
|
|
|
|
|
49,307 |
|
|
|
|
|
|
28,440 |
|
|
|
|
|
||||||||||||
Total assets |
|
$ |
2,163,581 |
|
|
|
|
|
|
$ |
2,228,167 |
|
|
|
|
|
|
$ |
2,009,654 |
|
|
|
|
|
|||||||||
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Interest bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Interest bearing deposits |
|
$ |
190,394 |
|
|
$ |
1,652 |
|
|
3.49 |
% |
|
$ |
441,682 |
|
|
$ |
4,051 |
|
|
3.69 |
% |
|
$ |
270,360 |
|
|
$ |
1,194 |
|
|
1.77 |
% |
FHLB advances and other borrowings |
|
78,266 |
|
|
44 |
|
|
0.23 |
% |
|
67,229 |
|
|
263 |
|
|
1.57 |
% |
|
60,639 |
|
|
443 |
|
|
2.93 |
% |
||||||
Subordinated debentures |
|
15,821 |
|
|
267 |
|
|
6.79 |
% |
|
15,818 |
|
|
270 |
|
|
6.87 |
% |
|
15,807 |
|
|
267 |
|
|
6.78 |
% |
||||||
Total interest bearing liabilities |
|
284,481 |
|
|
1,963 |
|
|
2.78 |
% |
|
524,729 |
|
|
4,584 |
|
|
3.51 |
% |
|
346,806 |
|
|
1,904 |
|
|
2.20 |
% |
||||||
Noninterest bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Noninterest bearing deposits |
|
1,611,972 |
|
|
|
|
|
|
1,436,062 |
|
|
|
|
|
|
1,445,529 |
|
|
|
|
|
||||||||||||
Other liabilities |
|
15,070 |
|
|
|
|
|
|
19,900 |
|
|
|
|
|
|
11,371 |
|
|
|
|
|
||||||||||||
Shareholders’ equity |
|
252,058 |
|
|
|
|
|
|
247,476 |
|
|
|
|
|
|
205,948 |
|
|
|
|
|
||||||||||||
Total liabilities and shareholders’ equity |
|
$ |
2,163,581 |
|
|
|
|
|
|
$ |
2,228,167 |
|
|
|
|
|
|
$ |
2,009,654 |
|
|
|
|
|
|||||||||
Net interest spread(4) |
|
|
|
|
|
0.73 |
% |
|
|
|
|
|
0.20 |
% |
|
|
|
|
|
1.74 |
% |
||||||||||||
Net interest income, taxable equivalent basis |
|
|
|
$ |
16,471 |
|
|
|
|
|
|
$ |
15,491 |
|
|
|
|
|
|
$ |
17,568 |
|
|
|
|||||||||
Net interest margin(5) |
|
|
|
|
|
3.14 |
% |
|
|
|
|
|
2.86 |
% |
|
|
|
|
|
3.56 |
% |
||||||||||||
Reconciliation to reported net interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Adjustments for taxable equivalent basis |
|
|
|
(419 |
) |
|
|
|
|
|
(13 |
) |
|
|
|
|
|
— |
|
|
|
||||||||||||
Net interest income, as reported |
|
|
|
$ |
16,052 |
|
|
|
|
|
|
$ |
15,478 |
|
|
|
|
|
|
$ |
17,568 |
|
|
|
|||||||||
| ___________________________ | ||
(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 a provision for loan losses of $0.2 million for the second quarter of 2020, compared to $0.4 million provision for the first quarter of 2020, and $0.2 million for the second quarter of 2019. The provision for the second quarter was based on modest increases in loans held-for-investment, Silvergate’s historically strong credit quality and minimal loan charge-offs, and the low to moderate loan-to-value margins in the Company's commercial, multi-family and one-to-four family real estate loans held-for-investment portfolios, as evidenced by weighted average loan-to-value ratios in the low- to mid-50% range. Although there is significant uncertainty in the current economic environment due to the impact of the COVID-19 pandemic, the Company believes the relatively low to moderate loan-to-value ratios, along with only modest exposure to the retail and hospitality sectors, provides lower probability of loss in the event of defaults in the Company’s loan portfolio. The Company has worked closely with its borrowers throughout the pandemic and 27% of borrowers who initially were granted loan deferrals have resumed payments on their borrowings as of July 15, 2020. The Company will continue to monitor trends in its portfolio segments for any known or probable adverse conditions.
Noninterest Income
Noninterest income for the second quarter of 2020 was $5.4 million, an increase of $0.5 million, or 10.2%, from the first quarter of 2020. The primary drivers of this increase were an increase of $1.4 million in gains on sale of securities and a $0.6 million, or 38.1%, increase in deposit related fees, partially offset by a decrease of $0.6 million in gains on sale of loans and no gain on extinguishment of debt during the quarter compared to $0.9 million in the first quarter of 2020. Deposit related fees from digital currency customers were $2.4 million for the second quarter of 2020, an increase of $0.7 million, or 40.7% compared to $1.7 million for the first quarter of 2020.
Noninterest income for the second quarter of 2020 increased by $3.3 million, or 152.3%, compared to the second quarter of 2019. This increase was primarily due to the gain on sale of securities of $2.6 million and a $1.3 million, or 108.2%, increase in deposit related fees, partially offset by a $0.4 million decrease in service fees related to off-balance sheet deposits. Deposit related fees from digital currency customers increased $1.3 million, or 118.8%, to $2.4 million compared to $1.1 million for the second quarter of 2019.
|
|
Three Months Ended |
||||||||||
|
|
June 30,
|
|
March 31,
|
|
June 30,
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(Dollars in thousands) |
||||||||||
Noninterest income: |
|
|
|
|
|
|
||||||
Mortgage warehouse fee income |
|
$ |
450 |
|
|
$ |
382 |
|
|
$ |
346 |
|
Service fees related to off-balance sheet deposits |
|
7 |
|
|
70 |
|
|
412 |
|
|||
Deposit related fees |
|
2,438 |
|
|
1,766 |
|
|
1,171 |
|
|||
Gain on sale of securities, net |
|
2,556 |
|
|
1,197 |
|
|
— |
|
|||
(Loss) gain on sale of loans, net |
|
(56 |
) |
|
506 |
|
|
156 |
|
|||
Gain on extinguishment of debt |
|
— |
|
|
925 |
|
|
— |
|
|||
Other income |
|
39 |
|
|
85 |
|
|
69 |
|
|||
Total noninterest income |
|
$ |
5,434 |
|
|
$ |
4,931 |
|
|
$ |
2,154 |
|
Noninterest Expense
Noninterest expense totaled $14.0 million for the second quarter of 2020, an increase of $0.1 million compared to the first quarter of 2020, and an increase of $1.3 million compared to the second quarter of 2019.
Noninterest expense increased from the prior quarter due to increases in salaries and employee benefits and communications and data processing, and professional services, partially offset by a decrease in other general and administrative expense.
Noninterest expense increased from the second quarter of 2019 due to increases in salaries and employee benefits, communications and data processing and other general and administrative expense, partially offset by decreases in occupancy and equipment expense.
|
|
Three Months Ended |
||||||||||
|
|
June 30,
|
|
March 31,
|
|
June 30,
|
||||||
|
|
|
|
|
|
|
||||||
|
|
(Dollars in thousands) |
||||||||||
Noninterest expense: |
|
|
|
|
|
|
||||||
Salaries and employee benefits |
|
$ |
9,002 |
|
|
$ |
8,955 |
|
|
$ |
8,082 |
|
Occupancy and equipment |
|
894 |
|
|
907 |
|
|
1,012 |
|
|||
Communications and data processing |
|
1,313 |
|
|
1,261 |
|
|
1,123 |
|
|||
Professional services |
|
1,105 |
|
|
985 |
|
|
1,073 |
|
|||
Federal deposit insurance |
|
182 |
|
|
123 |
|
|
168 |
|
|||
Correspondent bank charges |
|
347 |
|
|
373 |
|
|
301 |
|
|||
Other loan expense |
|
99 |
|
|
122 |
|
|
118 |
|
|||
Other real estate owned expense |
|
— |
|
|
— |
|
|
5 |
|
|||
Other general and administrative |
|
1,030 |
|
|
1,149 |
|
|
839 |
|
|||
Total noninterest expense |
|
$ |
13,972 |
|
|
$ |
13,875 |
|
|
$ |
12,721 |
|
Income Tax Expense
Income tax expense was $1.8 million for the second quarter of 2020, compared to $1.8 million for the first quarter of 2020, and $1.7 million for the second quarter of 2019. Our effective tax rate for the second quarter of 2020 was 25.0%, compared to 28.8% for the first quarter of 2020, and 24.7% for the second quarter of 2019. The lower effective tax rate during the second quarter of 2020 when compared to the first quarter of 2020 was due to tax-exempt income earned on certain municipal bonds.
Results of Operations, Six Months Ended June 30, 2020
Net income for the six months ended June 30, 2020 was $9.9 million, or $0.52 per diluted share, compared to $14.6 million, or $0.80 per diluted share, for 2019.
Net interest income for the six months ended June 30, 2020 was $31.5 million, compared to $36.9 million for the same period in 2019. The decrease in net interest income was primarily due to a $1.5 million decrease in interest income and a $3.9 million increase in interest expense.
Noninterest income for the six months ended June 30, 2020 was $10.4 million, compared to $10.0 million for the same period in 2019. The increase in total noninterest income was primarily due to the increase in fee income from our digital currency customers, a $3.8 million gain on sale of securities offset by the $5.5 million gain on a branch sale that occurred in the first quarter of 2019. Digital currency customer related fee income for the six months ended June 30, 2020 was $4.1 million as compared to $2.0 million for the six months ended June 30, 2019.
Noninterest expense was $27.8 million for the six months ended June 30, 2020, compared to $26.2 million for the six months ended June 30, 2019. The increase in noninterest expense was primarily due to increases in salaries and benefits and other general and administrative expenses.
Income tax expense was $3.6 million for the six months ended June 30, 2020, compared to income tax expense of $5.7 million for 2019. Our effective tax rate for the six months ended June 30, 2020 and 2019 was 26.7% and 28.1%, respectively.
Balance Sheet
Deposits
At June 30, 2020, deposits totaled $1.7 billion, a decrease of $332.0 million, or 16.6%, from March 31, 2020, and a decrease of $267.7 million, or 13.8%, from June 30, 2019. Noninterest bearing deposits totaled $1.6 billion (representing approximately 93.6% of total deposits) at June 30, 2020, a decrease of $182.1 million from the prior quarter end and a $13.3 million increase compared to June 30, 2019. The decrease in total deposits from the prior quarter was driven by a decrease in deposit levels from digital currency customers as the continued volatility in digital currency prices, primarily bitcoin, resulted in the deployment of U.S. dollar deposits held at the bank into digital currency asset classes and a $141.3 million decrease from calling the brokered certificates of deposit in the second quarter of 2020. The decrease in total deposits from June 30, 2019 includes a net decrease of $248.2 million in callable brokered certificates of deposit associated with the hedging strategy, partially offset by an increase in deposit levels related to the Company’s digital currency customers.
The weighted average cost of deposits for the second quarter of 2020 was 0.37%, compared to 0.87% for the first quarter of 2020, and 0.28% for the second quarter of 2019. The decrease in the weighted average cost of deposits compared to the first quarter of 2020 was driven by lower accelerated premium expense associated with calling all remaining brokered certificates of deposit in the second quarter of 2020, when compared to the first quarter of 2020 and an increase in noninterest bearing deposits. When compared to the second quarter of 2019, the increase in weighted average cost of deposits was due to the accelerated premium resulting from calling the outstanding brokered certificates of deposit offset by lower coupon interest expense on those deposits and higher noninterest bearing deposits in the second quarter of 2020 compared to 2019.
|
|
Three Months Ended |
|||||||||||||||||||
|
|
June 30, 2020 |
|
March 31, 2020 |
|
June 30, 2019 |
|||||||||||||||
|
|
Average
|
|
Average
|
|
Average
|
|
Average
|
|
Average
|
|
Average
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
(Dollars in thousands) |
|||||||||||||||||||
Noninterest bearing demand accounts |
|
$ |
1,611,972 |
|
|
— |
|
|
$ |
1,436,062 |
|
|
— |
|
|
$ |
1,445,529 |
|
|
— |
|
Interest bearing accounts: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interest bearing demand accounts |
|
44,643 |
|
|
0.14 |
% |
|
51,551 |
|
|
0.13 |
% |
|
47,879 |
|
|
0.14 |
% |
|||
Money market and savings accounts |
|
66,598 |
|
|
0.39 |
% |
|
81,670 |
|
|
0.97 |
% |
|
77,293 |
|
|
0.83 |
% |
|||
Certificates of deposit: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Brokered certificates of deposit |
|
77,717 |
|
|
8.11 |
% |
|
306,828 |
|
|
5.02 |
% |
|
129,354 |
|
|
2.97 |
% |
|||
Other |
|
1,436 |
|
|
0.84 |
% |
|
1,633 |
|
|
0.99 |
% |
|
15,834 |
|
|
1.53 |
% |
|||
Total interest bearing deposits |
|
190,394 |
|
|
3.49 |
% |
|
441,682 |
|
|
3.69 |
% |
|
270,360 |
|
|
1.77 |
% |
|||
Total deposits |
|
$ |
1,802,366 |
|
|
0.37 |
% |
|
$ |
1,877,744 |
|
|
0.87 |
% |
|
$ |
1,715,889 |
|
|
0.28 |
% |
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 cash management solutions. These tools enable Silvergate’s clients to grow their business 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, 2020 |
|
March 31, 2020 |
|
June 30, 2019 |
|||||||||||||||
|
|
Number of
|
|
Total
|
|
Number of
|
|
Total
|
|
Number of
|
|
Total
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
(Dollars in millions) |
|||||||||||||||||||
Digital currency exchanges |
|
64 |
|
|
$ |
601 |
|
|
61 |
|
|
$ |
599 |
|
|
49 |
|
|
$ |
653 |
|
Institutional investors |
|
566 |
|
|
577 |
|
|
541 |
|
|
715 |
|
|
428 |
|
|
569 |
|
|||
Other customers |
|
251 |
|
|
331 |
|
|
248 |
|
|
379 |
|
|
178 |
|
|
242 |
|
|||
Total |
|
881 |
|
|
$ |
1,509 |
|
|
850 |
|
|
$ |
1,693 |
|
|
655 |
|
|
$ |
1,463 |
|
Contacts
Investor Relations Contact:
Jamie Lillis / Shannon Devine
(858) 200-3782
investors@silvergate.com
Read full story here