Silvergate Capital (NYSE:SI) saw its shares plummet, following two downgrades from analysts on the back of new financial fillings from the company. JPMorgan moved the stock to underperform from neutral, citing future challenges ahead after the firm cited a warning that it may not be able to meet its financial obligations without liquidating in the next year. Canaccord Genuity downgraded the stock to hold from buy, saying the firm has been managed well but it wants to move to the sidelines while the dust from the recent filling settles.
Silvergate also revealed new losses in connection with other-than-temporary impairment on its securities portfolio. The bank in turn could be less than well-capitalized, it said. Recall it had already posted a nearly $1B loss for Q4 as deposits withdrawals ramped up in the face of crypto exchange FTX's collapse.
J.P. Morgan analyst Steven Alexopoulos downgraded SI to Underweight from Neutral as the bank evaluates the impact that these events have on its ability to continue as a going concern.
Canaccord analyst Joseph Vafi also cut shares of Silvergate to Hold from from Buy in response to the bank's notice. SI noted it had paid down around $4.3 Billion of short-term borrowings it had with the Federal Home Loan Bank, "which will reduce bank liquidity materially," according to a note written to clients.
Media reports had warned investors back in October 2022 that SI was at high risk of performing badly due to negative EPS revisions and slowing momentum.
SI was bruised $6.21, or 45.9%, to $7.32.
