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Silvergate Suspends Dividends to Preserve ‘Highly Liquid Balance Sheet’

Silvergate has had a difficult month, with the dividend freeze coming just a few weeks after it announced a $1 billion loss for the fourth quarter of 2022 and laid off 200 employees.

Silvergate, a crypto bank based in California, has suspended dividend payments in order to maintain its “highly liquid balance sheet.”

The company announced on January 27 that it is ceasing “the payment of dividends on its 5.375% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series A, in order to preserve capital.”

The company stated that it made the decision to weather the storm of crypto winter, but it also stated that it still has a “cash position in excess of its digital asset customer-related deposits.”

“This decision reflects the Company’s focus on maintaining a highly liquid balance sheet with a strong capital position as it navigates recent volatility in the digital asset industry.”

“As market conditions evolve, the Company’s Board of Directors will re-evaluate the payment of quarterly dividends,” the company added.

The announcement comes just 11 days after the company reported a $1 billion net loss in its fourth-quarter 2022 report on Jan. 17. Silvergate attributed its poor performance to overall market turpitude, which has seen investors take a “risk-off” approach over the past year.

Silvegate CEO Alan Lane used similar language to the latest announcement in the Q4 report, noting that the company remains bullish on the crypto sector while working to maintain “a highly liquid balance sheet with a strong capital position.”

The suspension of dividends was met with significant losses in both its preferred (SI-PA) and common (SI) stock prices on Friday.

According to Yahoo Finance data, the price of SI-PA fell 22.71% to $8.85, while SI fell 3.76% to $13.58 at market close.

Zooming out also paints a bleak picture for SI-PA and SI, with share prices falling by 60% and 87.46% respectively over the last year.

This is not the company’s first attempt to shore up its finances this month, as it announced on Jan. 5 that it had laid off 200 employees — 40% of its workforce — in order to stay afloat.


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