Silvergate Capital Corp (NYSE:SI) shares are plunging Thursday morning after the company announced select preliminary fourth-quarter financial metrics and provided a business update, which includes reducing headcount by 40%.
What Happened: Silvergate said recent bankruptcies across the crypto industry have sparked a cautious stance from customers. As a result, Silvergate's total digital asset deposits declined to $3.8 billlion in the fourth quarter from $11.9 billion in the third quarter.
As of Dec. 31, approximately $150 million of Silvergate's deposits were from customers that have filed for bankruptcy.
"In response to the rapid changes in the digital asset industry during the fourth quarter, we took commensurate steps to ensure that we were maintaining cash liquidity in order to satisfy potential deposit outflows, and we currently maintain a cash position in excess of our digital asset related deposits," said Alan Lane, CEO of Silvergate.
In order to prepare for the anticipated transformation in the digital asset space, Silvergate is recalibrating its expense base and evaluating its product portfolio and customer relationships. Silvergate also decided to cut 40% of its workforce.
Silvergate said it exited its mortgage warehouse lending product in the fourth quarter and will incur a restructuring charge of approximately $4 million.
Silvergate believes these changes will enable the company to "continue to serve its core customers in a responsible and profitable manner."
SI Price Action: Silvergate is hitting new 52-week lows on Thursday.
The stock was down 45.9% at $11.92 at time of publication.
Photo: Eivind Pedersen from Pixabay.