Silvergate Capital Corp. reported a $1 billion loss and said it would offboard some non-core digital-asset customers following a quarter that saw a dramatic draw-down in deposits after the collapse of Sam Bankman-Fried’s FTX.
(Bloomberg) — Silvergate Capital Corp. reported a $1 billion loss and said it would offboard some non-core digital-asset customers following a quarter that saw a dramatic draw-down in deposits after the collapse of Sam Bankman-Fried’s FTX.
The La Jolla, California-based bank said the losses stemmed mainly from asset sales it was forced to make following the unraveling of the crypto exchange. Silvergate also said it will eliminate a portion of its digital-asset product portfolio and assess its pipeline of prospective digital-asset customers.
“While we are taking decisive actions to navigate the current environment, our mission has not changed,” Chief Executive Officer Alan Lane said in a statement Tuesday. “We believe in the digital asset industry, and we remain focused on providing value-added services for our core institutional customers.”
Total average deposits for digital-asset customers were $7.3 billion as of Dec. 31, compared to an average of $12 billion in the preceding quarter, according to the statement.
The collapse of FTX sparked a crisis for Silvergate, which held deposits for FTX units and Alameda Research, the trading firm at the heart of the crypto exchange’s downfall. The bank earlier this month said it would fire 40% of its staff after customers withdrew about $8.1 billion of digital-asset deposits in the last three months of 2022, forcing it to sell securities and related derivatives at a loss.
On Tuesday, Silvergate said the sales resulted in a loss of $751.4 million in the quarter, greater than what the bank reported in its preliminary results earlier this month. It also recorded a $134.5 million impairment charge tied to about $1.7 billion of securities it expects to sell in the first quarter of 2023 to reduce borrowings.
Silvergate shares were little changed in early trading in New York. The company’s stock has dipped 91% since the end of 2021.
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