- Silvergate Capital Corp suspends dividend on its preferred stock.
- Wedbush Securities analyst reiterates his neutral rating at “SI”.
- Silvergate shares are currently down more than 85% since mid-August.
Silvergate Capital Corp closed down 5.0% on Friday after the crypto bank halted a dividend on its preferred stock.
Silvergate is trying to preserve capital
Troubled digital currency services company cuts payouts to preserve capital Its Press release reads:
This result reflects the company’s focus on maintaining a highly liquid balance sheet with a strong capital position. The company continues to maintain a cash position in excess of its digital asset customer-related deposits.
The California-based company confirmed that its board will reassess the quarterly fee once market conditions improve.
Silvergate shares have lost more than 85% since mid-August, partly related to the FTX decline. As a result, the billionaire investor Cathy Wood Completely snapped out of it at the start of the new year.
Will Silvergate buy the stock?
According to a Wedbush Securities analyst, suspending the Series A preferred stock dividend will make things more difficult for this financial infrastructure solutions company in the long run.
Reiterating his “neutral” rating on Silvergate shares on Friday, David Chiaverini said:
We believe this move will raise Silvergate’s cost of capital as Silvergate attempts to tap the capital markets for future capital raises. A new fixed income or preferred issue will require a higher coupon.
His $13 price objective on the stock suggests no upside. In January, Silvergate Capital Corp said average deposits from digital asset clients fell 39% to $7.3 billion in its fourth quarter. Coin Journal reported here.