Shoulder Innovations, Inc.

Good day and welcome to the Silvergate Capital Corporation first quarter 2021 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one. Please note that this event is being recorded. I would now like to turn the conference over to Lauren Scott at Silvergate Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. We appreciate your participation in the Silvergate Capital Corporation first quarter 2021 earnings call. With me here today are Alan Lane, our Chief Executive Officer, Tony Martino, our Chief Financial Officer, and Ben Reynolds, our Chief Strategy Officer. As a reminder, a telephonic replay of this call will be available through 1159 p.m. Eastern Time on May 4th, 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 in 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 measures, which we believe are useful in evaluating our performance. The presentation of these 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 measure can be found in our earnings release. Now, I'd like to turn the call over to Alan.

Thank you, Lauren, and good morning, everyone. We started 2021 on a very strong note, driven by growing demand for our digital currency solutions powered by the Silvergate Exchange Network, or CEN. In the first quarter, activity on the CEN continued to grow at a record pace with nearly 167,000 transactions and more than $166 billion in CEN volumes, up 84% on a sequential basis. Transaction revenue from digital currency customers increased 87% from last quarter to $7.1 million. The number of customers on the SEND platform expanded to more than 1,100, representing record sequential growth as we added 135 new customers during the quarter. Importantly, our pipeline of potential new digital currency customers remains robust. as we continue to benefit from the strong network effects created by the SEND. Last year, we introduced our collateralized lending product called SEND Leverage, through which institutional investors receive U.S. dollar financing by entering into a loan agreement with Silvergate, and Silvergate uses the SEND to fund the loans. We have seen a great deal of market demand, and as of quarter end, we had approved lines of credit totaling $197 million dollars versus $83 million at the end of the year. We are still in the early stages of scaling SendLeverage, and at the end of March, we announced that Coinbase Custody and Fidelity Digital Assets will be two new custodians holding the borrower's Bitcoin as collateral in a segregated account. We are very excited about these diverse partnerships and the additional partnerships to come, as we create a network of custodians to provide our institutional investor clients with more choice and greater access to capital. As more institutional participants adopt digital currencies, we have also seen an influx of deposits from investors who require the ability to move U.S. dollars in real time 24 hours a day, seven days a week. Average deposits from digital currency customers in the first quarter grew by $3.8 billion to $6.4 billion, compared to an average of $2.6 billion in the fourth quarter of 2020. These continued significant deposit increases, coupled with our plans for further strategic growth, including the expansion of thin leverage, led us to launch an at-the-market, or ATM, equity offering in early March. The ATM program allows Silvergate to raise capital efficiently and only when needed, to support our growth and invest in the development of new products to stay on the forefront of the digital currency industry's evolution. I remain incredibly excited about Silvergate's future, which I will discuss further in a few moments after Tony walks you through our financial results. Tony?