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Silvergate Capital positions itself as a crypto bank and continues to grow its digital asset business.
Ozan KoseAFP via Getty Images
Silvergate capital
showed continued strength in the second quarter of 2022, with the financial group positioning itself as a “crypto bank” reporting record revenues despite a crash in digital assets.
Silvergate (ticker: SI) achieved a net income of 38.6 million dollars in the June quarter, and gave earnings per share of 1.13 dollars. Wall Street had expected earnings of 84 cents per share for the quarter, based on estimates from analysts asked by
Fact set
.
Net income increased from $ 27.4 million in the previous quarter and $ 20.9 million a year ago.
Shares in Silvergate rose 20% on Tuesday.
While the growth in the number of cryptocurrencies slowed slightly, Silvergate continued to add customers in this key segment, reaching 1,585 customers at the end of June, up from 1,503 at the end of March. Customer-related fee income in digital currency fell to $ 8.8 million from $ 8.9 million in the previous quarter and $ 11.3 million a year ago.
“Silvergate had another strong quarter in light of the challenging backdrop facing the broader digital currency ecosystem,” Alan Lane, Silvergate’s president and CEO, said in a statement.
While the crypto-lending industry in general has come under severe stress, Silvergate said that their Leverage solutions – which provide institutional access to loans in US dollars with the security of
Bitcoin
– so no losses or liquidations. Borrowed commitments increased to $ 1.4 billion at the end of June, up from $ 1.1 billion at the end of the previous quarter.
The Silvergate Exchange Network, the bank’s immediate internal bank transfer network, handled $ 191.3 billion in US dollar transfers during the three months to the end of June, up 34% from the previous quarter.
“Our platform was built to support our customers in this relatively incipient industry during periods of high volumes, market volatility and transformation, and performed as designed throughout the quarter,” said Lane. “Our balance sheet is optimized for client liquidity and risk management practices are at the forefront of all aspects of our business.”
Amid a dramatic route that has hit digital asset markets, Silvergate’s average cryptocurrency deposits fell to $ 13.8 billion in the second quarter from $ 14.7 billion in the first three months of 2022. Bitcoin has just reached its worst quarter since 2011 – a year in which they crossed the $ 1 mark for the first time – and the total market value of the crypto area has fallen to $ 1 trillion from almost $ 3 trillion eight months ago.
Cryptocracy has not done any services for the Silvergate stock. Even after the best day with a price increase of almost nine months, the shares in the group have fallen more than 47% this year.
But Wall Street is still positive on Silvergate. Eight out of nine analysts surveyed by FactSet have a Buy rating on the stock; an analyst rates it on Hold. The average target price of the stock among this group of analysts is $ 124.50, which indicates gains of 60% from the current price.
Write to Jack Denton at [email protected]
