Silvergate Capital Corporation 

Silvergate Capital Corporation (NYSE: SI) is a holding company for Silvergate Bank (the Bank), which provides commercial banking, commercial and residential real estate financing, mortgage warehouse lending, and commercial business lending. Furthermore, the Bank offers a diverse range of deposit products and services. The Bank's Silvergate Exchange Network (SEN) is a near-instantaneous payment network for participants in the digital currency sector and a platform for developing new products and services. 

Key Highlights 

• Robust Financial Performance: The company witnessed a growth of 63.83% in total interest income to USD 130.39 million during FY21 (ending December 31, 2021) from USD 79.59 million during FY20. Interest income from loans accounted for 52.62% of the total interest income in FY21, with the rest coming from investment securities and deposits. Growth in the interest income can be accredited to an increase of USD 152.31 million in average loan balances, which stood at USD 1.78 billion as of December 31, 2021. Interest expenses decreased to USD 1.13 million in FY21 vs USD 7.23 million in FY20, due to 32.58% decline in the Interest bearing accounts. Net income for FY21 surged 201.59% YoY and stood at USD 78.53 million compared to USD 26.04 million in FY20. 
• Decline in NPAs: As of December 31, 2021, the company’s Nonperforming Assets (NPA) reduced to USD 4.01 million from USD 4.92 million on December 31, 2020. 
• Strategic Collaboration: On December 16, 2021, SI and EJF Capital LLC, a global institutional alternative asset management firm, launched the EJF Silvergate Ventures Fund, a joint investment vehicle focused on early-stage fintech companies digital currencies and payments, as well as banking and specialty finance technology. 
• Strong Loan and Deposit Growth: In FY21, its loan and deposit growth were 18.8% and 172.3%, compared to an industry median of 9.1% and 20.2%.  

Valuation Methodology: Price/Book Value Multiple Based Relative Valuation 

(Analysis by Kalkine Group) 

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation: 

The company robust financial performance, growth in loan and deposits, current valuation, and technical indicators, we believe the decent business fundamentals are adequately reflected at current trading levels, which has helped stock to recover from recent lows. Hence, we recommend a "Sell" rating on the stock at the closing price of USD 127.20, as of February 09, 2022. 

Three-Year Technical Price Chart (February 09, 2022). Analysis by Kalkine Group 

* The reference data in this report has been partly sourced from REFINITIV. 

* All forecasted figures and industry information have been taken from REFINITIV.