Silvergate reports $1B net loss in the fourth quarter of 2022
The report highlighted that the average deposits in the fourth quarter were $7.3 billion which was lower than the third quarter which had $12 billion.
Silvergate Bank, which currently faces a class-action lawsuit over its FTX and Alameda dealings, has announced a $1 billion net loss attributable to common shareholders in the fourth quarter of 2022.
In a report published by the United States Securities and Exchange Commission (SEC), the digital asset bank highlighted that it saw significant outflows of deposits in the last quarter of 2022 and made actions to maintain cash liquidity, including wholesale funding and selling debt securities.
The company also pointed out that there’s a “transformational shift” within the digital asset space and noted that a crisis of confidence throughout the ecosystem led customers to take a “risk off” position on crypto trading platforms.
According to the report, the average digital asset customer deposits in the fourth quarter of 2022 was $7.3 billion. This is significantly lower compared to the third quarter of 2022 where deposits were around $12 billion.
Despite the losses, the company noted that it’s taking action to prepare for a sustained period of lower deposits. According to the announcement, Silvergate is managing its expense base and evaluating its product portfolio and customer relationships.
Amid the challenges, Silvergate CEO Alan Lane highlighted that the company still believes in the digital asset industry and remains “committed to maintaining a highly liquid balance sheet with a strong capital position.”
On Jan. 5, the company laid off around 200 employees, which was around 40% of its workforce, as part of its efforts to stay afloat. In addition, the company also shelved plans to launch a digital currency project, writing off $200 million used to purchase technology developed by Facebook.
Reacting to the situation, rating firm Moody’s Investors Service downgraded its rating of Silvergate bank. The rating went from Baa2 which was “lower-medium grade” to Ba1 which was considered “junk.” Apart from this, Moody’s also highlighted that the outlook for both Silvergate Capital and its bank is negative.