Silvergate Stops Paying Dividends After $1B Loss

California-based Silvergate stopped paying out dividends to preserve its “highly liquid balance sheet,” Bankless Times learned from a press release. The crypto bank announced it was suspending dividend payment on its fixed-rate Series A perpetual preferred stock (5.375%) to preserve capital.

Silvergate’s decision is part of a series of measures to survive crypto winter. The firm emphasized the availability of cash amounts higher than their crypto customer-related deposits.

Silvergate with staggering net loss in last quarter

The company announced a staggering net loss of $1 billion in its Q4 2022 report, published around two weeks ago. They attributed the disastrous performance to the prolonged bear market. It has been the worst in history, seeing traders and investors adopt a low-risk approach over the past year.

In the report, Silvergate CEO Alan Lane noted the bank was still bullish on the crypto market, but was working for a high-liquidity balance sheet with a strong capital position. He stated:

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. The Company’s Board of Directors will re-evaluate the payment of quarterly dividends as market conditions evolve.

Preferred stock lost almost 23% on the news

Friday’s news of suspended dividends provoked significant losses in the common stock and preferred stock prices. Yahoo Finance wrote that the preferred stock lost 22.71%, dropping to $8.85. Common stock fared a bit better, losing 3.76% to $13.58 at the end of trading.

Silvergate’s preferred share and common share prices have lost 60% resp. 87% over the past year.

The bank is taking a number of measures to raise liquidity this month. On January 5, they announced layoffs that affected 40% of their employees, or around 200 people.