Silvergate (SI) Is A Stock To Monitor For Onshore Crypto Fiat Banking

Crypto stock pure-play for onshore crypto-fiat banking
Shares price the company at an over 15x trailing price/earnings ratio
Silvergate's 483 crypto clients now average roughly 3.5M in deposits
Crytpo and Bitcoin Market Cap Story of Day

Crytpo and Bitcoin Market Cap Story of Day

CRYPTO MOVERS AND PRICES

 

 

CRYPTO STORY OF THE DAY

It Has Been 4 Trading Days Since Crypto-Friendly US-Based Bank Silvergate Capital Was Listed The New York Stock Exchange (NYSE: SI) - The Firm's Shares Have Risen ~13% Since The Issue - We Provide Context And Insights

Silvergate is a 25-year-old firm that, up until 2-years ago, was considered a Californian real estate bank. The shares IPO'd at $12 and closed yesterday at ~13.50. The company's S1 shows the degree to which they've pivoted their focus to 'digital assets.' At the time of the filing, over 55% of the bank's deposits were held on behalf of crypto companies. The bank boasts 483 digital asset clients up from just over 100 in FY17 with 1.7B in deposits, up 180% YoY. The shares currently imply a +250M market cap with the firm selling a ~15% equity stake in the IPO.

 

Crypto Takeaway: Silvergate is the only example of a US-based bank that has completely pivoted to crypto. The company's S1 barely mentions any other business activities and their 483 crypto clients now average roughly 3.5M in deposits. From a scale perspective, the company's ~2B in deposits do not even place them in the Top 250 largest banks in America. Having accumulated considerable market share in the crypto landscape over the past 2-years, the company's plans now describe expansions within fintech and other 'hard-to-bank' sectors as their primary growth plans. At current levels, the shares price the company at an over 15x trailing price/earnings ratio. While offered at a higher valuation than major money centers, in spite of the 'crypto angle,' the shares are about priced in line with other specialty banks that have sector focuses with growth prospects. We'll be consistently monitoring SI as part of our broader crypto watch-list as the shares are essentially a pure-play on, onshore crypto-fiat banking.

About the Author

FRNT Financial is an Institutional Brokerage which offers clients a variety of products along with research & analytics in the crypto-space.