Silvergate, a California-based cryptocurrency bank, temporarily halted dividend distributions to protect its “very liquid balance sheet.”
The company stated on January 27 that it would suspend “the payment of dividends on its 5.375% fixed-rate non-cumulative perpetual preferred shares, Series A, in order to conserve capital.” This information was provided in a statement made that day.
The firm said it concluded that it needed to weather the crypto winter storm in order to survive, but stressed that it still maintains a “cash position in excess of its digital asset customer-related deposits.”
As the company navigates the current turmoil in the digital asset business, “this move underscores the company’s goal of maintaining a highly liquid balance sheet with a strong capital position.”
According to another company statement, “The Company’s Board of Directors will reassess the quarterly dividend payment as market circumstances develop.”
The statement comes just 11 days after the corporation reported a significant net loss of $1 billion in its quarterly report for the fourth quarter of 2022 on January 17. The negative attitude of the broader market, which has led investors to take a “risk-off” over the course of the past year, was what Silvergate said was to blame for the company’s dismal performance.
Alan Lane, CEO of Silvegate, noted in the fourth quarter report that the company remains bullish on the cryptocurrency sector, but is working to maintain “a highly liquid balance sheet with a strong capital position.” This language is very similar to the language used in the most recent announcement.
The company’s preferred (SI-PA) and regular (SI) stock prices fell significantly after the announcement that dividend payments would be suspended on Friday.
The SI-PA price fell 22.71% to $8.85 at the time of the market close, while the SI price fell 3.76% to settle at $13.58. These figures come from data provided by Yahoo Finance.
Looking at the big picture, SI-PA and SI also paint a grim picture, with their share prices falling 60% and 87.46%, respectively, over the past year.
After announcing on January 5 that it has laid off 200 people, representing 40% of its employment, in an effort to stay afloat, the company has not taken it as the only step it has taken this month to shore up its coffers. . Instead, it has also taken this measure.