• JPMorgan and Canaccord Genuity have both downgraded their ratings for Silvergate Bank due to doubts about its solvency.
• The bank has delayed the filing of its annual report, and JPMorgan has also withdrawn its price target on the stock.
• Silvergate’s tangible book value was cut by more than half after it realized a loss of $886 million from selling underwater securities.
Silvergate Bank Downgraded By JPMorgan, Canaccord
JPMorgan and Canaccord Genuity have both downgraded their ratings for Silvergate Bank due to doubts about its solvency. JPMorgan cut its rating on the stock to „underweight“ from „neutral“ and withdrew its price target. Canaccord Genuity changed its rating to „hold“ from „buy,“ reducing their price target for the stock to $9 from $25.
Delay in Annual Report Filing
The crypto bank announced it would delay the filing of its annual report on Wednesday, sending its stock price plunging. The filing stated that the company is currently analyzing certain regulatory and other inquiries and investigations that are pending with respect to the Company, adding an additional two weeks before completion of the 10-K report for 2022.
Significant Losses From Selling Underwater Securities
In the recent quarter Silvergate realized a $886 million loss from selling underwater securities, resulting in the bank’s tangible book value being cut by more than half to $12.93 a share. This reflects that the company is facing continued liquidity challenges according to analysts at JPMorgan led by Steven Alexopoulos.
Impact On Share Price
Silvergate’s shares fell 47% to $7.18 in premarket trading following this news, which highlights how important liquidity is when assessing companies‘ ability to remain solvent going forward.
These downgrades show that investors are increasingly concerned about Silvergate’s ability to remain solvent going forward as it continues evaluating certain regulatory and other inquiries into its practices along with ongoing losses from selling underwater securities impacting liquidity levels significantly.