Californian crypto bank Silvergate has suspended dividend payments to preserve its “highly liquid balance sheet.”
In a January 27 statement, the company stated that it was discontinuing “the payment of dividends on its fixed-rate 5.375% non-cumulative perpetual preferred stock, Series A, in order to preserve capital.”
The company outlined that it made the decision to weather the crypto winter storm, but stressed that it still maintains a “cash position in excess of its customer deposits related to digital assets.”
“This decision reflects the Company’s focus on maintaining a highly liquid balance sheet with a strong capital position while navigating recent volatility in the digital asset industry.”
“The company’s Board of Directors will reassess the quarterly dividend payment as market conditions evolve,” the company added.
The announcement comes just 11 days after the company posted a $1 billion net loss in its fourth quarter 2022 report on Jan. 17. Silvergate attributed its poor performance to sour general market sentiment, which has seen investors take a “risk averse” approach over the past year.
In the fourth quarter report, Silvegate CEO Alan Lane also used similar language to the latest announcement, noting that the company remains bullish on the cryptocurrency sector, but is working to maintain “a highly liquid balance sheet with a strong capital position.
The news of the suspension of dividends on Friday was received with notable losses in the prices of its preferred (SI-PA) and common (SI) shares.
According to data from Yahoo Finance, the price of SI-PA fell 22.71% to USD 8.85, while SI fell 3.76% to USD 13.58 at market close.
With a more detailed view, the picture is also bleak for SI-PA and SI, since the prices have fallen by 60% and 87.46% in the last 12 months.
This is not the only measure that the company has taken to clean up its coffers this month, after it announced on January 5 that it had laid off 200 employees -representing 40% of its staff- in an attempt to stay afloat. .
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