Silvergate Capital in La Jolla, Calif., warned that recent securities sales will negatively affect its regulatory capital levels and could lead to the company and its bank becoming “less than well-capitalized.”
The $11.4 billion-asset Silvergate said in a filing seeking more time to file its annual report that it sold securities at a loss in January and February “primarily to repay in full the company’s outstanding advances from the Federal Home Loan Bank of San Francisco.”
Silvergate said it is evaluating how the securities sales, and associated losses, could impact “its ability to continue as a going concern for the 12 months following the issuance of its financial statements.” The company also said it is reevaluating its businesses and strategies.
“The company is currently analyzing certain regulatory and other inquiries and investigations that are pending with respect to the company,” the filing said. “The company’s independent registered public accounting firm is also requesting detailed information relating to such matters and the company is responding to such requests.”
The company loss $948.7 million in the fourth quarter after it sold securities as a loss to offset a massive outflow of deposits tied to the crypto industry. It also borrowed from the FHLB system, laid off 40% of its staff and eventually suspended paying dividends on a series of preferred stock.