Crazy Deposit Growth Masked an Unbelievable Quarter for Silvergate Capital
The crypto bank Silvergate Capital (NYSE: SI) had a remarkable run in 2020, generating strong earnings and huge stock price appreciation as several years of hard work investing in the right infrastructure and technology really began to pay off. The bank kept the momentum going in the first quarter of 2021, generating a profit of $12.7 million, which is equivalent to a 0.71% return on average assets (ROAA) and a 9.76% return on average equity (ROAE).
Those numbers are not bad by any means, but for a bank that currently trades around 340% tangible book value, they do mask how truly remarkable of a quarter Silvergate really had. Here's why.
In case you are not familiar, Silvergate is not your typical bank. Silvergate noticed several years ago that cryptocurrencies like Bitcoin (CRYPTO: BTC) would one day be an investable asset, so the bank built its own in-house payments system called the Silvergate Exchange Network (SEN). SEN is a real-time payments network that can clear transactions in U.S. dollars instantly around the clock, 365 days a year, between two users in the network. This is ideal for institutional crypto traders and crypto exchanges because cryptocurrencies trade around the clock.
Source Fool.com
