While Silvergate has taken steps to help it navigate the current environment, according to CEO Alan Lane, the company remains “Focused on providing value-added services for its core institutional clients“.
Crisis of confidence
Less than a month after Silvergate Bank reported a massive drop in customer deposits, the parent company of the crypto-currency-focused financial institution, Silvergate Capital Corporation, said on January 17 that a “transformational change” observed in the fourth quarter (Q4) had contributed to “create a crisis of confidence in the entire ecosystem.“This is what triggered the shift to a “risk-free position on digital asset trading platforms“, said the parent company.
As a result of the changing environment, Silvergate said the group incurred a net loss of $1.0 billion in the fourth quarter, or a loss of $33.16 per common share. The fourth-quarter performance contrasts with net income of $40.6 million, or $1.28 per diluted share, in the third quarter of 2022.
As a result of the massive losses in Q4, Silvergate Capital’s latest financial results show that for the full year of 2022, the group had an overall loss of $948.7 million or $30.07 loss per common share.
Silvergate Bank’s stock took a hit after it was revealed that customers of the crypto-currency-focused bank withdrew more than $8 billion in deposits in the fourth quarter alone.
Silvergate remains committed to maintaining a “highly liquid balance sheet.”
As a result, because of this, as well as the bearish conditions that have prevailed in the crypto market since May 2022, Silvergate said it was forced to sell debt securities at a loss of about $718 million. In addition, the bank said it would “take an impairment charge of $196 million” on the blockchain-based payment solution it acquired from Diem.
Commenting on the group’s latest financial results, Silvergate CEO Alan Lane said:
“While we are taking decisive steps to navigate the current environment, our mission has not changed. We believe in the digital asset industry, and we remain focused on providing value-added services for our core institutional clients. To that end, we are committed to maintaining a highly liquid balance sheet with a strong capital position.”