In an effort to reset its business after a massive run on deposits last quarter, San Diego crypto-bank Silvergate Capital has slashed 181 jobs at its local headquarters.
The bank filed Worker Adjustment and Retraining Notification Act paperwork with the state employment officials detailing the local job cuts, which the bank announced last week. They amounted to 40 percent of its total workforce.
The layoffs span the organization, from underwriting to client services, business development to loan administration, information technology to human resources. About two dozen of the jobs eliminated were senior level. The chief credit officer and chief anti-money laundering and sanctions officer also were let go, according to the WARN filing.
“Throughout 2022, we increased employee headcount at a rapid rate in an effort to keep up with our growing business and serve our customers effectively,” said Chief Executive Alan Lane in a conference call with analysts last week. “It has since become clear that we need to manage expenses to account for the economic realities facing our business and the industry today.”
Silvergate, a state-chartered bank, specializes in providing financial infrastructure to the cryptocurrency trading industry. It has been pummeled in recent months by several crypto industry failures and bankruptcies — culminating in the high-profile collapse of FTX and resulting in fraud charges against founder Samuel Bankman-Fried.
Over the past year, Silvergate’s shares have tumbled from the $136 per share range to Thursday’s closing price of $13.75 — a 90 percent drop.
Both FTX and its sister firm Alameda Research were customers of Silvergate. In the fourth quarter, the bank saw its deposits plunge from $11.9 billion to $3.8 billion, which amounts to a 70 percent decline.
“Part of the reasons we’ve had to cut as deep as we have on the expense side is a reflection of where deposits settled out in the fourth quarter,” said Lane.
The bank invested deposits in liquid debt securities, some of which it expected to hold to maturity. Instead, it was forced to sell quickly to meet depositor withdrawal demands.
The result was a $718 million loss in the fourth quarter. It also has unrealized losses of $300 million on a group of government and agency-backed securities held for sale.
At the end of the year, Silvergate held total cash and equivalents of $4.6 billion, which exceeds deposits remaining from its crypto customers.
Silvergate expects to take an $8 million charge for severance and job-seeking assistance for laid-off workers. The bank will provide additional details of its financial situation when it releases official fourth-quarter results on Jan. 17.
U-T staff writer Natallie Rocha contributed to this report.