The Bank Slate


Silvergate in California continuing to sell securities

Silvergate Capital in La Jolla, Calif., which lost $1 billion in the fourth quarter amid “a crisis of confidence” in the digital assets industry, continues to sell securities to reduce borrowings.

The $11.4 billion-asset company said in a press release that it has received $1.5 billion of proceeds and recognized $11.4 billion of losses and $5 million of gains from selling securities so far in 2023.

Silvergate sold $5.2 billion of debt securities and related derivatives in the fourth quarter. The sales led to $751.4 million in securities losses and $8.7 million of losses from derivatives. The company also recorded a $134.5 million impairment charge tied to an estimated $1.7 billion of securities it expects to sell in the first quarter to reduce borrowings.

The company said in Tuesday’s release that it is bracing for “a sustained period of lower deposits,” adding that it is “assessing its pipeline of prospective digital asset customers,” offboarding certain noncore clients and eliminating a portion of its product portfolio.

During the fourth quarter, Silvergate had a net loss of 57 digital assets customers, reporting 1,620 clients on Dec. 31. Fee income associated with those clients fell by 16% from the third quarter and 29% from a year earlier, to $6.6 million.

The company lost more than half of its deposits during the fourth quarter. As previously reported, Silvergate sold securities and turned to Federal Home Loan Bank advances to shore up liquidity.

Silvergate previously announced plans to cut 200 jobs, or 40% of its workforce, and table plans for a blockchain-based payment solution. The company also said it had exited the mortgage warehouse business in the fourth quarter.

The company also recorded a large impairment charge in the fourth quarter tied to developed technology assets purchased from the Diem Group.

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