Silvergate Capital ( NYSE: SI ) stock tumbled 41% in Thursday premarket trading after the crypto-focused banks said it's cutting headcount by ~40% , will streamline its product portfolio, will reassess customer relationships, and is taking a $196M impairment charge as customers withdrew deposits in Q4. The company also said it started utilizing wholesale funding due to the customer withdrawals. Then, in order to accommodate sustained lower deposit levels and maintain a highly liquid balance sheet, the company sold debt securities for cash proceeds, it said. The crypto-focused bank made the moves after the collapse of cryptocurrency FTX exacerbated volatility in crypto markets and made investors more wary of the asset class. "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 CEO Alan Lane. The company will cut ~200 jobs, or 40% of its headcount and estimates a charge of $8M for costs associated with the cuts. After conducting an impairment analysis of the company's intangible assets, Silvergate ( SI ) will take an impairment charge of $196M in Q4 related to developed technology assets purchased from the Diem Group The company now believes that the launch of a blockchain-based payment solution is no longer imminent, though it will continue to seek opportunities to realize value from the Diem technology assets. The company exited its mortgage warehouse lending product in Q4 2022 and will take a restructuring charge of $4M in Q4 2022, primarily related to severance and employee benefits. It will also streamline its product portfolio in coming weeks. The Silvergate Exchange Network Platform (SEN) continues to operating 24/7 with average daily volume totaling $1.3B in Q4 vs. $1.2B in Q3. At Dec. 31, 2022, SEN Leverage commitments dropped to $1.1B vs. $1.5B at Sept. 30. Average Q4 2022 outstanding balance of SEN Leverage loans was $328M vs. $308M in Q3. Silvergate ( SI ) total deposits from digital asset customers declined to $3.8B at Dec. 31, vs. $11.9B at Sept. 30, 2022. As of Dec. 31, ~$150M of Silvergate's deposits were from customers that have filed for bankruptcy. Developing... check back for updates. Conference call at 8:00 AM ET.
