Silvergate Capital Suspends Dividend To Save $2.7 Million A Quarter
The end appears to be near for Silvergate Capital (NYSE: SI), whom is focused on providing “innovative financial infrastructure solutions” to the crypto community. The firm this morning suspended a dividend in light of its cash struggles.
As of this morning, payment of dividends on outstanding 5.375% Fixed Rate Non-cumulative Perpetual Preferred Stock, Series A, has been suspended. The move was conducted as a means of preserving capital amid a volatile crypto market while the company attempts to remain “highly liquid.”
The development follows the release of the firms fourth quarter financial results last week, which reported a $1.0 billion net loss, primarily a result of a $885.8 million in losses on securities. Digital asset deposits meanwhile hit a new low, with deposits sinking to just $3.8 billion as of the end of December, down from $11.9 billion at the start of the quarter.
Full financial statements have yet to be released by the firm.
READ: Silvergate Rallies On $1 Billion Net Loss, Further $1.7 Billion In Securities Slated To Be Sold To Cover Debt
The cutting of the dividend on preferred shares suggests significant trouble for the firm, given its paltry impact to the firms balance sheet. The cancellation amounts to just $2.7 million in savings per quarter, or roughly $10.8 million on an annualized basis.
As @Yankeeduke on Twitter suggests, the cancellation suggests the firm is willing to kill any investor goodwill as a means of saving a buck. Noted short seller Marc Cohodes meanwhile suggests that it’s simply all over for the company.
Silvergate meanwhile maintains that its cash position exceeds digital asset customer related deposits, although an updated deposit figure was not provided by the firm.
Silvergate Capital last traded at $14.11 on the NYSE.
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As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.