Silvergate Capital(SICP) - 2021 Q4 - Annual Report

Financial Performance - Total consolidated assets increased to $16.0 billion as of December 31, 2021, representing a growth of$10.4 billion or 186.5% from December 31, 2020[128]. - Net income for 2021 reached $78,528 million, representing a 201.5$26,038 million in 2020[265]. - Basic earnings per common share increased to $2.95 in 2021, up from$1.39 in 2020, reflecting a growth of 112.2%[263]. - Total interest income for 2021 was $130,394 million, a significant increase of 63.9$79,590 million in 2020[263]. - Total noninterest income for 2021 was $45,256 million, a substantial rise of 135.9$19,177 million in 2020[263]. - Total noninterest expense increased to $89,120 million in 2021, up from$59,605 million in 2020, marking a rise of 49.5%[263]. - Total comprehensive income for 2021 was $25,570 million, a decrease from$65,673 million in 2020, primarily due to unrealized losses on securities[265]. - The company reported a net income available to common shareholders of $75,512 thousand for 2021, compared to$26,038 thousand in 2020[391]. Asset Management - As of December 31, 2021, the fair value of the company's available-for-sale investment securities portfolio was $8.6 billion, with gross unrealized losses of$58.5 million and gross unrealized gains of $44.8 million[121]. - The company invests 53.9$16,005,495 thousand as of December 31, 2021, up from $5,586,235 thousand in 2020, representing a growth of approximately 187$8.638 billion and $8.625 billion, respectively[316]. Capital and Funding - The company may need to raise additional capital in the future to sustain its growth strategy, although the timing and amounts are currently unknown[128]. - Future capital requirements may lead to substantial dilution for existing shareholders if additional shares are issued[146]. - The company issued 8,000,000 depositary shares of Series A Preferred Stock, raising gross proceeds of$200.0 million, with net proceeds of approximately $193.7 million after expenses[393]. - The company completed a public offering of 4,563,493 shares of Class A common stock at$63.00 per share, raising gross proceeds of $287.5 million and net proceeds of$272.4 million[396]. - The company sold 2,793,826 shares of Class A common stock through an ATM Offering at an average price of $107.38, resulting in net proceeds of$295.1 million[396]. - A subsequent public offering of 3,806,895 shares of Class A common stock was completed at $145.00 per share, generating gross proceeds of$552.0 million and net proceeds of $530.3 million[396]. Risk Management - The company faces risks related to noncompliance with the Bank Secrecy Act and anti-money laundering regulations, particularly concerning its digital currency initiative[137]. - Future regulatory changes regarding digital currencies may significantly impact the company's operations and growth prospects[130]. - The company is subject to operational risks, including potential fraud by employees or third parties, which could lead to financial losses[125]. - The company relies heavily on its executive management team, and the unexpected loss of key personnel could negatively impact its financial condition and operations[126]. - Negative public opinion or reputational damage could adversely affect the company's ability to attract new customers and retain existing ones[127]. Regulatory Compliance - Regulatory capital requirements have become more stringent due to the Dodd-Frank Act, which could limit the company's activities and growth initiatives[133]. - The company is subject to anti-corruption laws, including the U.S. Foreign Corrupt Practices Act (FCPA), which could lead to civil or criminal penalties if not complied with, adversely affecting its financial condition and results of operations[139]. - The monetary policies and regulations of the Federal Reserve significantly influence the company's earnings and growth, with potential adverse effects on its financial condition and results of operations[142]. - As of December 31, 2021, the company no longer qualifies as an "emerging growth company," leading to increased costs and demands on management due to more stringent reporting requirements[143]. Interest Rate Risk - Interest rate risk is a primary component of market risk for the company, with strategies in place to manage exposure through interest rate floors, caps, and swaps[238]. - The company has an asset-sensitive position, meaning rising interest rates would generally have a positive effect on net interest income, while falling rates would have the opposite effect[238]. - Under a static balance sheet scenario, net interest income is projected to increase by 59.71$6,916 thousand, consistent with the previous year, indicating stable credit quality management[259]. - The provision for loan losses was $0 in 2021, compared to$742 million in 2020, indicating a significant improvement in loan loss provisions[263]. - The total allowance for loan losses was $6,916 thousand as of December 31, 2021, with$1,023 thousand attributed to one-to-four family loans and $2,017 thousand to commercial real estate[324]. - The total past due loans as of December 31, 2021, amounted to$894.22 million, with $4.16 million classified as nonaccruing loans[329]. - The Company reported a total of 4,003 nonaccruing loans as of December 31, 2021, compared to 3,080 in the previous year[329]. Shareholder Information - The weighted average common shares outstanding increased to 25,582 million in 2021 from 18,691 million in 2020, reflecting a growth of 37.0$3,016 million in 2021[263]. - The intrinsic value of options exercised was approximately $43.0 million for the year ended December 31, 2021, up from$7.8 million in 2020[372]. - The total unrecognized compensation expense related to nonvested restricted stock unit awards was approximately $2.6 million, expected to be recognized over a weighted-average period of 2.1 years[375].