Shoulder Innovations, Inc.

good morning or good afternoon all and welcome to today's silvergate capital corporation fourth quarter and full year 2021 earnings conference call my name is adam and i'll be your operator today if you'd like to ask a question during the q a portion of today's call you may do so by pressing star 1 on your telephone keypad i will now hand you over to hunter stand back to begin so hunter please go ahead when you were ready thank you operator and good morning everyone we appreciate your participation in the silvergate capital corporation fourth quarter 2021 earnings call

With me here today are Alan Lang, 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 February 1st, 2022. 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 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. Now, I would like to turn the call over to Alan.

Thank you, Hunter, and good morning, everyone. 2021 was another year of significant growth and momentum for Silvergate Capital Corporation. We further positioned Silvergate as a leader in the fast-growing digital currency industry, demonstrating the strength of our business and our model. Before I dive into our quarterly results, I'd like to take a step back and reflect on some of our accomplishments over the past year. First, full-year 2021 net income available to common shareholders of $75.5 million nearly tripled compared to 2020 driven by an increase in fee income to 35.8 million dollars and significant growth in our balance sheet we also saw record demand from our customers that require the ability to move us dollars in real time 24 hours a day seven days a week using our api enabled proprietary silvergate exchange network or sen resulting in $787 billion of SEND transfers in 2021. Third, we scaled SEND leverage, our Bitcoin collateralized lending product, to $571 million in commitments and announced partnerships with two additional digital asset custodians. Fourth, we continued to lay the groundwork for our stablecoin infrastructure technology offering. And finally, we completed four capital raises totaling $1.3 billion to support our record deposit growth. As I've noted in the past, our growth won't always be linear, but I'm incredibly proud of what we have been able to achieve over the past 12 months. Now, turning to our fourth quarter results, the number of customers on the SEND platform expanded to 1,381 this quarter, an increase of over 400 customers for 2021. our pipeline of potential new digital currency customers remains robust as we continue to benefit from the powerful network effects created by the SEND. SEND transfer volume of $219 billion in the fourth quarter increased 35% on a sequential basis and 270% on an annual basis. As we did last quarter, we continued to work with Coinmetrics to better understand how SEND activity is correlated to the broader industry. According to its data, both Bitcoin and Ethereum dollar trading volumes increased in the fourth quarter and remained highly correlated with trends on the SEND, as you can see on slide five of our presentation. Transaction revenue from digital currency customers of $9.3 million in the fourth quarter increased nearly 146% compared to a year ago. reflecting continued strong demand for cash management and foreign currency exchange services. Turning to SEND leverage, total approved lines of credit increased significantly from last quarter to $571 million compared to $323 million at the end of the third quarter. The rapid growth of SEND leverage commitments demonstrates the product's powerful use case and strong demand from our customers or a collateralized lending option to maximize their capital efficiency. Additionally, SEND leverage continued to perform as designed with zero losses to date and no forced liquidations. Driven by continued demand for the SEND, average deposits from digital currency customers grew to $13.3 billion, another record, compared to an average of $11.2 billion during the third quarter and $2.6 billion during the same quarter last year. Tony will discuss period-end deposits further in a moment. Finally, before I turn it over to Tony, I wanted to briefly discuss some of our latest initiatives. First, in December, we announced the launch of EJF Silvergate Ventures Fund, which is a joint investment vehicle focused on early-stage startups which are developing technologies that are poised for broad adoption in finance, including real-time payments, digital assets, and banking as a service. In partnership with EJF Capital, we're excited about the opportunity to support entrepreneurs who are shaping the future of the digital currency ecosystem, which will allow us to stay ahead of the curve as the next generation of products come to market. Next, I wanted to provide an update on our stablecoin infrastructure initiative. Notably, the report on stablecoins issued by the President's Working Group in November confirms our belief that as an insured depository institution, Silvergate can play an important role as stablecoins are brought within a federally regulated prudential framework. We continue to believe that stablecoins will become a meaningful payment rail for businesses and consumers around the world. And Silvergate is well positioned to deliver this product to our customers in 2022. To this end, during the fourth quarter, we updated our application with the New York DFS to form a limited purpose trust company that we believe will allow us to hold U.S. dollar stablecoin reserves in a capital efficient manner. We continue to have an open dialogue with our regulators and look forward to launching this product in the coming quarters. I'm incredibly proud of all that we accomplished in 2021. And as we look forward to 2022 and beyond, I am extremely excited about the opportunities and areas for growth that lie ahead. I will now turn it over to Tony to discuss our financial results in more detail before we take your questions. Tony.