Crypto-focused Bank Silvergate Posts $1 Billion Net loss

Paigambar Mohan Raj
Source: Studio Paradise

Silvergate Capital Corporation, and its wholly-owned subsidiary Silvergate Bank, released its earnings report for Q4 of 2022. The crypto-focused bank reported a net loss of $1 billion in the fourth quarter of 2022. The report noted that the firm lost $33.16 per common share. Meanwhile, the firm had a net income of $40.6 million, or $1.28 per diluted share.

The number of digital asset customers with crypto exposure fell to 1620 as of December 31st, 2022, compared to 1677 on September 30th, 2022. Nonetheless, the number of crypto customers is still higher than that of December 31st, 2021, when it was 1381.

Furthermore, the crypto bank’s exchange network (SEN) processed transfers worth $117.1 billion in Q4 2022. This accounts for a 4% increase, compared to $112.6 billion in the third quarter of 2022. The revenue from crypto customer-related fees for the quarter was $6.6 million, down from the third quarter of 2022’s $7.9 million. The amount has significantly dropped from the fourth quarter of 2021, which was $9.3 million.

The average client deposit for digital assets in the fourth quarter of 2022 was $7.3 billion, down from $12.0 billion in the third quarter.

The Crypto Bank’s woes getting worse?

The latest financial report comes amid the bank’s most recent layoff of employees. The organization announced that it has let go of 40% of its workforce in an attempt to cut costs. The crypto bank is taking steps to maintain a strong business. These steps entail modifying its spending basis, which also includes making future appraisals of its clientele and product line.

Additionally, the bank has experienced a decline in cryptocurrency deposits of $8 billion. The flurry of withdrawals has had a significant influence on share prices, as they drop by nearly 46%.

Moreover, finance giant JPMorgan downgraded the bank to “neutral.” According to JPMorgan, Silvergate Capital’s Q4 deposit outflows were higher than anticipated, which will have an impact on the company’s long-term profitability. The price goal was decreased from $30 to $14.