• Silvergate, a crypto-friendly bank, announced it has suspended dividend payment on its preferred stock.
• The move is to help preserve capital following the effects of recent turbulence across the crypto ecosystem.
• Following the news, shares of parent company Silvergate Capital (NYSE:SI) fell more than 11% in early morning trading.
Crypto-friendly bank Silvergate has announced the suspension of dividend payment on its series A preferred stock. The move comes shortly after the company reported a $1 billion loss in the fourth quarter and also cut its staff by 20% amid the crypto bear market and impact of FTX collapse.
Silvergate, which has been providing banking services to crypto-related businesses since 2013, says the decision is in order to “maintain a highly liquid balance sheet with a strong capital position as it navigates recent volatility in the digital asset industry.” The company added that its Board of Directors will re-examine the payment of quarterly dividends at a later date.
The news of the dividend suspension sent shockwaves through the stock market with Silvergate Capital (NYSE:SI) shares falling more than 11% in early morning trading. The company’s shares had previously been doing quite well, with a decent run up to $20.49 in mid-December before the crypto-craze that followed the launch of Bitcoin futures on the CME pushed them to a high of $33.30 on January 11th.
However, the crypto bear market and the collapse of FTX was too much for the crypto bank which has since seen its shares decline sharply. While the suspension of dividends may have been a necessary move for Silvergate to preserve capital, it is unlikely to be welcomed by shareholders who were hoping for a return on their investments.
It remains to be seen if Silvergate will be able to weather the current storm and resume dividend payment on its series A preferred stock. For now, investors will have to wait and see how the company’s fortunes evolve over the coming months.