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California-based crypto bank Silvergate has suspended dividend payments to maintain a “highly liquid balance sheet”.
In a Jan. 27 announcement, the company stated that it was discontinuing “dividend payments on Fixed Rate 5.375% Non-Cumulative Perpetual Preferred Stock, Series A, to preserve capital.”
The company elaborated that it made the decision so it can weather the crypto winter storm, but emphasized that it still maintains “a cash position exceeding deposits regarding its digital asset customers.”
“This decision reflects the Company’s focus on maintaining a highly liquid balance sheet with a strong capital position due to the recent volatility in the digital asset industry.”
“The Company’s Board of Directors will re-evaluate the quarterly dividend payout as market conditions develop,” the company added.
The announcement comes just 11 days after the company posted a $1 billion net loss in its Q4 2022 report on January 17. over the past year.
In the Q4 report, Silvegate CEO Alan Lane also used similar language to the latest announcement, noting that the company remains bullish on the crypto sector but is working to maintain a “highly liquid balance sheet with a strong capital position.”
News of the deferred dividend on Friday was met with notable losses in both preferred (SI-PA) and common (SI) stock prices.
According to data from Yahoo Finance, the price of SI-PA fell 22.71% to $8.85, while SI fell 3.76% to $13.58 at market close.
Zoom out also paints a grim picture for SI-PA and SI, with share prices down 60% and 87.46% over the last 12 months.
Related: US home loan banks lend billions of dollars to crypto banks: Report
This isn’t the only action the company has taken to shore up its coffers this month, having announced on January 5 that it had laid off 200 employees – representing 40% of its workforce – in a bid to stay afloat.
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