Silvergate suspends dividends to preserve ‘highly liquid balance sheet’

January has been a rough month for Silvergate, with the dividend halts coming just a few weeks after it announced a Q4 2022 loss of $1 billion and laid off 200 employees.

California-based crypto bank Silvergate has suspended dividend payouts to preserve its “highly liquid balance sheet.”

In a Jan. 27 announcement, the firm stated that it is halting “the payment of dividends on its 5.375% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series A, in order to preserve capital.”

The company outlined that it made the decision to weather the storm of crypto winter but stressed that it still maintains 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.”

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

The announcement comes just 11 days after the company posted a hefty $1 billion net loss in its Q4 2022 report on Jan. 17. Silvergate attributed its poor performance to the overall sour market sentiment, which has seen investors opt for a “risk-off” approach over the past year. 

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

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

According to data from Yahoo Finance, the price of SI-PA dropped by 22.71% to $8.85, while SI declined by 3.76% to sit at $13.58 by market close.

Zooming out also paints a grim picture for SI-PA and SI, with the share prices declining by 60% and 87.46% over the past 12 months.

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This is not the only action the firm has taken to shore up its coffers this month, after it announced on Jan. 5 that it had laid off 200 employees — representing 40% of its headcount — in a bid to keep afloat.