SI Silvergate Capital Corporation

By Will Feuer

Silvergate Capital Corp. said it lost over $1 billion in the fourth quarter as a series of high-profile bankruptcies rocked the cryptocurrency world and sparked a flood of withdrawals at the bank.

The digital currency-focused bank posted a loss of $1.05 billion, compared with a profit of $18.4 million in the same period a year earlier. On a per-share basis, the company lost $33.16, compared with a profit of 66 cents a year earlier.

Stripping out one-time items, adjusted earnings came to 48 cents a share. Analysts surveyed by FactSet were expecting adjusted earnings of 66 cents a share.

The company said it saw significant outflows of deposits during the quarter and that it has taken steps to shore up liquidity, including laying off about 40% of its staff. Silvergate said it expects a sustained period of lower deposits in the industry.

"While we are taking decisive actions to navigate the current environment, our mission has not changed. We believe in the digital asset industry," Chief Executive Alan Lane said. "To that end, we are committed to maintaining a highly liquid balance sheet with a strong capital position."

Noninterest costs surged more than 800% in the quarter, mostly due to a $196.2 million impairment charge that the company said it booked because it has determined that the launch of a blockchain-based payment solution is no longer imminent.

Total deposits as of Dec. 31 totaled $6.3 billion, cut by more than half from three months earlier, the company said.

Silvergate said it sold $5.2 billion of debt securities during the quarter, taking a $751.4 million loss on the sale. It also booked a $134.5 million impairment charge tied to $1.7 billion worth of securities it expects to sell in the current quarter to reduce borrowings.

The company said all of its securities that were previously marked as held-to-maturity have been transferred to available-for-sale. Its total securities portfolio decreased to $5.7 billion as of Dec. 31.

Write to Will Feuer at Will.Feuer@wsj.com

(END) Dow Jones Newswires

January 17, 2023 07:07 ET (12:07 GMT)

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