Silvergate, a Californian crypto bank, has suspended dividend payments in order to preserve its “highly liquid balance sheet”.
In a Jan. 27 announcement, the company said it was discontinuing “paying dividends on its 5.375% fixed rate non-cumulative preferred stock, Series A, in order to preserve capital.”
The company specified that it made this decision to cope with the crypto winter, but stressed that it was maintaining a “cash position superior to deposits tied to digital asset clients”.
“This decision reflects the Company’s focus on maintaining a highly liquid balance sheet with a strong capital position as it navigates the recent volatility of the digital asset industry.”
“The company’s Board of Directors will reassess the quarterly dividend payment based on evolving market conditions”the company added.
The announcement comes just 11 days after the company posted a hefty $1 billion net loss in its January 17 Q4 2022 report. Silvergate attributed the poor performance to overall negative market sentiment, which it has seen investors opt for a “risk-off” approach over the past year.
Silvegate CEO Alan Lane used a similar tone to his last announcement in his Q4 report, noting that the company is still optimistic about the crypto space, but intends to maintain “a highly liquid balance sheet with a strong capital position”.
News of Friday’s dividend suspension was met with notable losses in both preferred stock prices (SI-PA) than ordinary ones (AND).
SI-PA price fell 22.71% to $8.85, while SI corrected 3.76% to $13.58 by market close, according to data from Yahoo Finance.
Even enlarging the graph, the negative picture for SI-PA and SI is evident, with shares down by 60% and 87.46% in the last 12 months.
That’s not the only action the company has taken this month to replenish its coffers: On January 5, it announced it had laid off 200 employees – or 40% of its workforce – in an effort to stay afloat.
