Silvergate Stock Plunges 31% as Crypto Bank Delays SEC Financial Report

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Silvergate Capital Corporation, the parent company of Silvergate Bank, on Wednesday delayed filing its annual 10-K report with the U.S. Securities and Exchange Commission, telling the agency it “needs more time ” to allow an independent accounting firm to carry out certain audit procedures.

In the filing, Silvergate also cited “a number of circumstances” that will “negatively impact” the timing of the 10-K report.

These include the sale of additional investment securities “beyond what was previously expected and disclosed in the company’s earnings release”, as well as the sale of additional debt securities in January and February 2023. , from which Silvergate “expects to record further losses”.

According to Silvergate, “these additional losses will negatively impact the regulatory capital ratios of the company and its wholly-owned subsidiary, Silvergate Bank. […] and could cause the Company and the Bank to be less well capitalized. »

Silvergate (SI) stock was trading at $13.53 at the closing bell on Wednesday but plunged as much as 31.7% on news in after-hours trading, plunging well into below $10.

Silvergate will reevaluate its strategy

Silvergate reported a net loss of $1 billion as well as a decline in customer deposits of around $14 billion in the last quarter of 2022, citing the “expected reduction in bank deposits of digital assets” alongside chaos in industry-wide.

The bank’s deposits were rocked following the collapse of FTX, prompting it to tap Federal Home Loan Bank (FHLB) for a $4.3 billion loan in January and sold about $5.2 billion in debt securities, according to company filings.

Silvergate, which has been the subject of a class action lawsuit alleging it directly aided FTX’s fraudulent activities in December, is also one of the most shorted stocks on Wall Street, with up to 71% of all company shares available to investors. buy and sell being short positions, according to MarketWatch.

In its Wednesday filing with the SEC, Silvergate also said it is “currently analyzing certain ongoing regulatory and other inquiries and investigations relating to the company.”

Silvergate added that it is now “reassessing its business and strategies in light of the business and regulatory challenges it currently faces.”

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