Silvergate Capital(SICP) - 2022 Q1 - Quarterly Report

Financial Performance - For the three months ended March 31, 2022, net income was $27.4 million, an increase from$21.4 million for the same period in 2021, representing a 28.5% year-over-year growth [126]. - Net interest income for the three months ended March 31, 2022, was $50.5 million, up from$38.2 million in the previous year, reflecting a 32.5% increase [126]. - Noninterest income was $9.5 million for the three months ended March 31, 2022, compared to$11.1 million in the same period of 2021, showing a decline of 14.5% [126]. - Basic earnings per common share increased to $0.79 for the three months ended March 31, 2022, compared to$0.67 for the same period in 2021, a growth of 17.9% [126]. - Net income for the three months ended March 31, 2022, was $27.4 million, an increase of 28.0$21.4 million for the three months ended December 31, 2021 [132]. - Net interest income increased by $12.3 million, contributing to the overall net income growth [132]. Asset and Liability Management - Total assets decreased to$15.8 billion as of March 31, 2022, from $16.0 billion as of December 31, 2021 [128]. - Total deposits decreased to$13.4 billion from $14.3 billion [128]. - The Tier 1 leverage ratio decreased to 9.68$16,133,249 thousand with an income of $54,343 thousand, yielding 1.37$16,633,548 thousand, demonstrating growth in the company's financial base [137]. - Interest bearing liabilities totaled $163,620 thousand, with a net interest spread of 0.52$745,340 million, with commercial and industrial loans comprising 58.3% of the total, up from 37.6% in December 2021 [162]. - Total net loans held-for-investment decreased to $739,014 million from$887,304 million, indicating a significant reduction in the loan portfolio [162]. - The company reported an allowance for loan losses of $4,442 million as of March 31, 2022, down from$6,916 million in the previous period [162]. - Nonaccrual loans decreased to $3.6 million, or 0.49$4.0 million, or 0.45% of total loans, at December 31, 2021 [170]. - The company maintains a disciplined lending approach to manage nonperforming assets, which has resulted in sound asset quality [167]. Deposits and Funding - Noninterest bearing deposits totaled $13.3 billion, representing approximately 99.5$14.7 billion, compared to an average of $10.2 billion during the three months ended December 31, 2021 [184]. - The Bank's 10 largest depositors accounted for$6.5 billion in deposits, or approximately 48.2% of total deposits at March 31, 2022 [184]. - As of March 31, 2022, the Company had $800 million of outstanding FHLB advances and an additional$1.2 billion in available borrowing capacity from the FHLB [186]. Interest Rate Risk Management - The Company is managing interest rate risk through interest rate floors and caps, aiming to mitigate exposure in a declining rate environment [195]. - The Asset Liability Committee regularly reviews the sensitivity of assets and liabilities to interest rate changes, ensuring compliance with policy limits [195]. - Interest rate risk is assessed using quarterly simulations to evaluate the impact of changing interest rates on net interest income [198]. - The bank employs interest rate floors and caps to hedge against interest rate risk, managing exposure through its Asset Liability Committee [195]. Operational Efficiency - The efficiency ratio improved to 46.74% for the three months ended March 31, 2022, down from 52.08% in the same period of 2021, indicating better operational efficiency [126]. - Noninterest expense increased by $2.4 million or 9.2$1.7 million or 12.5% due to a 10.9% increase in average full-time equivalent employees, from 265 to 294 [151].