Silvergate, the crypto-focused bank, announced on Tuesday that it experienced a $1 billion net loss attributable to common shareholders in the fourth quarter of 2022.
In a report released by the U.S. Securities and Exchange Commission (SEC), Silvergate said that it also saw “significant” outflows of deposits. The average customer deposit in the fourth quarter of 22 was $7.3 billion, down from $12 billion in the third quarter of the same year.
Silvergate said that the main reason for the outflows was a “crisis of confidence” that the crypto industry is currently experiencing. The bank said that events like the bankruptcy of FTX, together with lower digital asset prices in general, made investors shift to a “risk off” position.
However, Silvergate still believes in the crypto industry. The bank’s CEO Allan Lane said that the company remains “focused” and maintains a” highly liquid balance sheet”.
“While we are taking decisive actions to navigate the current environment, our mission has not changed. We believe in the digital asset industry, and we remain focused on providing value-added services for our core institutional customers. To that end, we are committed to maintaining a highly liquid balance sheet with a strong capital position,” he said.
The decisive actions Lane is referring to included wholesale funding and the sale of debt securities to accommodate “sustained lower deposit levels”. On top of that, Silvergate cut its workforce by around 40% or 200 employees.
Silvergate is also managing its expense base and evaluating its product portfolio and customer relationships going forward.
Silvergate is perhaps the largest crypto-focused bank in the world. Its substantial losses in the last quarter of 2022 are indicative of what crypto companies are currently going through.