Silvergate Capital Corp (SICP)·Q1 2022 Earnings Summary

Executive Summary

• Q1 2022 delivered stronger earnings quality despite a difficult crypto tape: diluted EPS rose to $0.79 (+20% QoQ, +44% YoY), net income available to common increased to $24.7M, and net interest margin expanded to 1.36% as the balance sheet shifted toward higher‑yielding securities .
• Transaction activity softened with SEN transfers down 35% QoQ to $142.3B (vs. +35% QoQ in Q4), but digital currency customers reached 1,503 and average digital currency deposits hit a record $14.7B, underpinning core funding at a 0.00% deposit cost .
• Strategic progress continued: the Diem assets acquisition bolstered stablecoin infrastructure; management also highlighted interest rate leverage (each +25 bps estimated to add ~$23M to 12‑month NII on a static balance sheet) and issued FY22 noninterest expense guidance of ~$130–$140M excluding intangible amortization .
• Estimate context: S&P Global consensus EPS and revenue for Q1 2022 were unavailable via our feed; no beat/miss vs. Street is presented. We attempted to pull consensus and received a mapping error; therefore, estimates are not shown (see Estimates Context) [GetEstimates error; S&P Global disclaimer].

What Went Well and What Went Wrong

• What Went Well

  • Net interest income and margin expansion: NII rose to $50.5M (from $38.2M in Q4) as the securities mix and yields improved; NIM expanded to 1.36% from 1.11% QoQ .
  • Platform/customer growth: digital currency customers increased to 1,503 (from 1,381 in Q4) and average digital currency deposits reached a record $14.7B with 0.00% cost of deposits .
  • Strategic initiative momentum: closed Diem technology asset purchase to enhance stablecoin infrastructure; CEO: “we continued to invest in our strategic initiatives, including stablecoin infrastructure… and the launch of the Euro SEN” .

• What Went Wrong

  • Activity slowdown: SEN transfers declined 35% QoQ to $142.3B as broader crypto spot volumes fell; fee income from digital customers dipped modestly to $8.9M (from $9.3M in Q4) .
  • Higher operating expense run‑rate: noninterest expense rose 9% QoQ to $28.0M driven by headcount and tech/data investments; FY22 opex outlook implies continued elevated spend ($130–$140M, ex‑intangible amortization) .
  • Tangible book pressure from AOCI: book value per share fell to $42.77 (from $46.55 in Q4) as AOCI swung to a $225.9M loss amid rates/securities marks .

Financial Results

Revenue composition (reference)

• “Revenue” defined by management as NII + noninterest income; Q1 2022 “Revenue” was $59.9M .

KPIs and Balance Sheet

Consensus vs. Actual (Q1 2022)

Guidance Changes

Earnings Call Themes & Trends

Note: The Q1 2022 earnings call transcript could not be retrieved due to a system document error; trends below synthesize quarter narratives from press releases/presentations.

Management Commentary

• “We started off 2022 on a strong note… one of the most challenging periods for the broader crypto ecosystem… I remain encouraged by the continued growth we saw in customers, SEN Leverage commitments, and average deposits, which reached a record $14.7 billion… [and] the acquisition of select blockchain-based payment technology assets from the Diem Group, and the launch of the Euro SEN.” — Alan Lane, CEO .
• Rate leverage and balance sheet: 55% of securities were floating‑rate; management estimates ~+$23M NII for each +25 bps over 12 months on a static balance sheet .

Q&A Highlights

• The Q1 2022 earnings call transcript could not be retrieved due to a system document error (“database inconsistency”). As a result, Q&A themes, guidance clarifications, and tone versus prior quarters cannot be verified from the transcript for this recap. We reviewed the 8‑K and the earnings presentation for management’s prepared remarks and outlook .

Estimates Context

• We attempted to pull S&P Global consensus for “Primary EPS Consensus Mean” and “Revenue Consensus Mean” for Q1 2022 but received a mapping error for this ticker; therefore, Street estimates were unavailable in our feed and are not shown. Values retrieved from S&P Global were unavailable due to ticker mapping limitations.
• Implication: Without consensus, we cannot quantify a beat/miss; however, internal “revenue” (NII + noninterest income) was $59.9M and diluted EPS was $0.79 for Q1 2022, which investors may evaluate against recent run‑rate trends and business mix .

Key Takeaways for Investors

• Core earnings quality improved: EPS up QoQ with NIM expansion as asset mix and rate environment turned supportive; rate sensitivity offers incremental upside if hikes persist .
• Network effects intact despite lower volumes: customer adds, record average digital deposits, and expanding SEN Leverage commitments position the platform for rebound when industry activity normalizes .
• Strategic optionality rising: Diem asset acquisition and Euro SEN broaden stablecoin and international payment capabilities, potentially driving new fee pools over time .
• Operating investments are elevated: opex drifted higher and FY22 guide implies continued spend; monitor operating leverage versus revenue growth as volumes recover .
• Balance sheet marks matter: AOCI pressure reduced book value per share; capital ratios remain strong but marks can weigh on tangible equity in a rising‑rate backdrop .
• Activity/volume is the swing factor: SEN transfer dollars correlate closely with BTC/ETH spot volumes; volume normalization is a key catalyst for fee income re‑acceleration .

Sources: Q1 2022 8‑K press release and exhibits and prior quarter 8‑Ks . The Q1 2022 earnings call transcript was unavailable due to a retrieval error.