Jan 17 (Reuters) – Silvergate Capital Corp (FISHING) reported a net loss of $1 billion in the fourth quarter, after reporting earlier this month that investors spooked by the collapse of crypto exchange FTX withdrew more than $8 billion in deposits over the course of of the last three months of 2022.
Shares of the bank rose nearly 4% in premarket trading.
The crypto-focused bank previously announced that it would reduce its workforce by 40%, or around 200 employees, as it tries to rein in costs amid a growing crypto downturn.
Silvergate had released a preliminary earnings report on January 5, in which it reported a drop in total digital asset customer deposits to $3.8 billion at the end of December, from $11.9 billion at the end of December. september. The company sold $5.2 billion of debt securities with a loss of $718 million in the fourth quarter to maintain liquidity.
The Disastrous Earnings Report Shows the Scale of the Impact on the Digital Assets Industry from the Fall of FTX crypto exchangewhich filed for bankruptcy in November after failing to cover customer withdrawals, marking a stunning reversal of fortune for what was one of the world’s largest crypto exchanges.
Slowing its business expansion, La Jolla, Calif.-based Silvergate also said earlier this month that it would delay the launch of a blockchain-based payment solution. he had bought from Diem Group backed by Meta Platforms Inc last year.
The bank said it would take a $196 million impairment charge in the fourth quarter on assets purchased for the payments solution business.
Founded in 1988, Silvergate ventured into crypto in 2013. The bank has major exchanges like Coinbase Global Inc. (COIN.O) and Kraken among its customers.
The bank had also operated a mortgage warehouse business, but announced in December that it would end that division, citing rising interest rates and reduced mortgage volumes. Company filings show the bank received $4.3 billion in advances from the Federal Home Loan Bank of San Francisco in the fourth quarter.
Reporting by Hannah Lang in Washington; Editing by Andrea Ricci
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