Silvergate CEO said that it made the decision to cope up crypto winter
The news came 11 days after the company reported a big net loss of $1 billion
The dividend cuts came just a few weeks after the company said it would lose $1 billion in Q4 2022 and lay off 200 people.
Silvergate, a crypto bank in California, has stopped paying dividends to keep its "highly liquid balance sheet."
In a Jan. 27 announcement, the company said it was stopping "the payment of dividends on its 5.375% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series A, in order to preserve capital."
The company said that it made the decision so that it could weather the storm of crypto winter. However, it stressed that it still has "cash position in excess of its digital asset customer-related deposits."
"This decision shows that the Company is focused on keeping a strong capital position and a highly liquid balance sheet as it deals with the recent volatility in the digital asset industry."
"As market conditions change, the Company's Board of Directors will re-evaluate the payment of quarterly dividends," the company said.
The news comes only 11 days after the company reported a big net loss of $1 billion in its Q4 2022 report on January 17. Silvergate said that its poor performance was due to the overall bad mood of the market, which has led investors to take less risk over the past year.
Alan Lane, the CEO of Silvergate, said in the Q4 report that the company is still optimistic about the crypto sector but is working to keep "a highly liquid balance sheet with a strong capital position."
When the news that dividends were being stopped came out on Friday, both its preferred (SI-PA) and common (SI) stock prices went down by a lot.
Yahoo Finance says that the price of SI-PA fell by 22.71% to $8.85, while the price of SI fell by 3.76% to $13.58 as the market closed.
The share prices of SI-PA and SI have dropped by 60% and 87.46% over the past year, which also makes things look bad.
This isn't the only thing the company has done this month to shore up its finances. On January 5, it announced that it was letting go of 200 employees, or 40% of its staff, to stay afloat.
