SI WACC - Weighted Average Cost of Capital

The WACC of Silvergate Capital Corp (SI) is 10.3%.

The Cost of Equity of Silvergate Capital Corp (SI) is 8.30%.

The Cost of Debt of Silvergate Capital Corp (SI) is 63.90%.

	Range	Selected
Cost of equity	6.90% - 9.70%	8.30%
Tax rate	26.20% - 27.00%	26.60%
Cost of debt	7.00% - 120.80%	63.90%
WACC	6.8% - 13.8%	10.3%

WACC

SI WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	0.66	0.86

Additional risk adjustments	0.0%	0.5%
Cost of equity	6.90%	9.70%

Tax rate	26.20%	27.00%
Debt/Equity ratio	0.06	0.06
Cost of debt	7.00%	120.80%

After-tax WACC	6.8%	13.8%


Selected WACC	10.3%

SI's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for SI:

cost_of_equity (8.30%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.66) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.