Shoulder Innovations, Inc.

Good morning. Welcome to the Silvergate Capital Corporation fourth quarter and full year 2020 earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference line will be open for your questions, and instructions will follow at that time. As a reminder, this conference is being recorded. I would now like to turn the call over to Lauren Scott, Investor Relations for Silvergate.

Please go ahead. Thank you, Operator, and good morning, everyone. We appreciate your participation in the Silvergate Capital Corporation fourth quarter and full year 2020 earnings call. With me here today are Alan Lane, our Chief Executive Officer, Tony Martino, our Chief Financial Officer, and Ben Reynolds, Chief Strategy Officer. As a reminder, a telephonic replay of this call will be available through 1159 p.m. Eastern Time on February 4, 2021. Access to the replay is also available on the investor relations section of our website. Additionally, a slide deck to complement today's discussion is available also on the IR section of our website. Before we begin, let me remind everyone that this call may contain certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include remarks about management's future expectations, beliefs, estimates, plans, and prospects. Such statements are subject to a variety of risks, uncertainties, and other factors, including the COVID-19 pandemic, that could cause actual results to differ materially from those indicated or implied by such statements. Such risks and other factors are set forth in our periodic and current reports filed with the Securities and Exchange Commission. We do not undertake any duty to update such forward-looking statements. Additionally, during today's call, we will discuss certain non-GAAP metrics, which we believe are useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with U.S. GAAP. A reconciliation of these non-GAAP measures to the most comparable GAAP measures can be found in our earnings release. Now, I would like to turn the call over to Alan.

Thank you, Lauren, and good morning, everyone. 2020 marked Silvergate Capital Corporation's first full year as a public company and a year of significant growth and momentum for our business. No one could have anticipated the disruption and displacement the challenges of 2020 would bring, but I am grateful and proud of how quickly the Silvergate team adapted to the new environment to provide uninterrupted service to our clients. In addition to testing our resilience, the past year also tested our business and proved the strength of our model. The deliberate strategic moves we have made over the past several years to position Silvergate as critical to the digital currency industry have enabled us to thrive in this digital-first environment. On today's call, we will only discuss our quarterly and annual performance. If you have any questions about our proposed offering of common stock, please refer to our registration statement and preliminary prospectus supplement that were filed with the Securities and Exchange Commission yesterday. Now, moving on to our results. In the fourth quarter, digital currency activity on the Silvergate Exchange Network, or the CEN, continued to escalate rapidly, with a record of 90,000 transactions and over $59 billion in CEN volumes. Transaction dollar volumes of this magnitude represent 62% growth on a sequential basis and demonstrate how the combination of network effects and our scalable platform have led to the rapid adoption of the SEND by the digital currency community. As of year end, we had a total of 969 customers, up over 20% year over year. And our pipeline of potential new digital currency customers remains robust with more than 200 prospects at year end. I'm also excited to provide an update on SEND leverage. which allows Silvergate customers to obtain U.S. dollar-denominated loans collateralized by their investment in Bitcoin. We were prudent in the rollout of the product and tested it over the past year through a pilot program. At the end of the third quarter, we exited the pilot program, making SEND Leverage a more integral part of our growth and monetization of the platform. As of year end, we had approved lines of credit totaling $82.5 million dollars versus $35.5 million at the end of the third quarter. We are in the early stages of scaling SEND leverage and are confident that we have a significant runway for platform revenue growth in the coming years. Deposits from digital currency customers for the quarter grew by $2.9 billion to $5 billion as of December 31, 2020, compared to $2.1 billion as of September 30, 2020. Digital currencies and Bitcoin in particular saw significant price appreciation in the second half of 2020, spurring increased investment by a number of hedge funds and adoption by corporate treasuries and digital-first retail platforms. As more institutional participants adopt digital currencies, there is increased reliance on the CEN global payments platform to move US dollars in real time, 24 hours a day, seven days a week. As we look to 2021 and beyond, I am extremely excited about the opportunities and multiple areas of growth ahead. We consistently listen to our customers and look for innovative ways to solve problems. In fact, most of our product launches have been born out of those conversations. Our latest product offering is the launch of a Bitcoin custody solution for the growing institutional investor community, many of which are already customers of Silvergate and participants in the sense. We see this offering as a natural next step for the business and one that will provide critical financial infrastructure for our customers and our product roadmap. We understand that our customers are looking for greater capital efficiency, increased liquidity, and expanded use cases for stablecoins, to name a few, and we remain excited about our future and the expansion of our platform. With that, I'll turn the call over to Tony to discuss our financials.