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(Reuters) – Silvergate Capital (NYSE:SI) Corp 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 pulled out more than $8 billion in deposits in the last three months of 2022.
Shares of the bank were up nearly 4% in pre-market trading.
The crypto-focused bank had previously announced it would cut its workforce by 40%, or about 200 employees, as it tries to rein in costs amid a deepening crypto downturn.
Silvergate had released a preliminary earnings report Jan. 5, in which it reported total deposits from digital asset customers declining to $3.8 billion at the end of December, compared to $11.9 billion at the end of September. The company sold $5.2 billion of debt securities at a loss of $718 million in the fourth quarter to maintain liquidity.
The dire earnings report shows the extent of the impact on the digital asset industry from the downfall of crypto exchange FTX, which filed for bankruptcy in November after failing to cover customer withdrawals, marking a stunning reversal of fortunes for what was one of the world’s biggest crypto exchanges.
Silvergate had said earlier it had no outstanding loans or investments in FTX, but its shares have shed 69% of their value since the exchange’s meltdown, which sparked a wild crypto sell-off.
Slowing the expansion of its business, La Jolla, California-based Silvergate also said earlier this month it would delay the launch of a blockchain-based payment solution it had purchased from Meta Platforms Inc-backed Diem Group last year.
The bank said it would take an impairment charge of $196 million in the fourth quarter on assets purchased for the payment solution venture.
Founded in 1988, Silvergate ventured into crypto in 2013. The bank counts major exchanges like Coinbase Global Inc and Kraken among its customers.
The bank had also operated a mortgage warehouse business, but announced in December that it would be winding down that division, citing the rising interest rate environment and reduction in mortgage volumes. Company filings show that the bank received $4.3 billion in advances from the Federal Home Loan Bank of San Francisco in the fourth quarter.
