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Silvergate reported strong growth in terms of digital currency customers’ increase last year along with the surge in deposits. The bank is planning to explore other facets and opportunities in the market this year in 2021.
On Wednesday, January 20, crypto bank Silvergate Capital Corporation announced stellar Q4 2020 earnings beating street estimates. The crypto bank reported a net income of $9.1 million (or $0.47 per diluted share) against the net income of $7.1 million in Q4 2019.
Compared to $2.1 billion of crypto deposits in Q3 2020, the deposits for Q4 grew by $2.9 billion to $5.0 billion in total. Also, the bank’s digital currency customers grew to 968 by the end of Q4 2020 against 804 customers by end of Q3 2019. The Q4 2020 result brings an earnings surprise of 11.90%.
Besides, the Silvergate Exchange Network (SEN) also handled a significantly higher number of transactions. By the end of Q4 2020, the network handled 90,763 transactions. This was a massive 530% surge in comparison to 14,400 transactions in Q4 2019. At the same time, the company has reduced its risk-based capital ratio to 23.49% by the end of Q4 2020. This was against the ratio value of 26.90% by the end of Q4 2019. Speaking about the overall growth of the company, Alan Lane, president and chief executive officer of Silvergate, said:
“2020 was a year of significant growth and expansion for our business, with customer growth up more than 20% year-over-year as investment in digital currencies increased among the institutional investor community. Transactions on the SEN in the fourth quarter alone underscore the rapid growth of the platform with 90,763 transactions and over $59 billion in SEN volumes, up 62% from the 2020 third quarter. The SEN continues to be the foundation of the Silvergate suite of products and solutions built to address our customers’ needs.”
Silvergate Growth Plans after Strong Q4 Results
The Silvergate CEO said that with strong growth in the last quarter, he plans to capitalize it further thereby monetizing its payments platform.
“Looking ahead to 2021, I am extremely excited about the multiple paths to continued growth and opportunities to monetize the SEN platform, such as digital asset lending and custodial services,” continued Mr. Lane. “In particular, SEN Leverage, a lending offering that was piloted through the majority of the past year, is now a core Silvergate product that enables customers to obtain US dollar loans collateralized by bitcoin. We anticipate increased demand for this offering over the next year.”
Based on its strong payments network, Silvergate plans to further explore its lending and custody opportunities. To boost further its growth, the bank has also kickstarted 2021 with a $200 million follow-on public offering of its Class A shares.
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