Silvergate Capital reducing headcount by 40%

Silvergate is taking several actions to ensure the business is resilient and to manage its expense base going forward, in response to recent industry turmoil and the corresponding impact on Silvergate’s balance sheet. The company is reducing headcount by approximately 200 employees, or 40%. Impacted employees were notified on January 4, 2023. The company estimates aggregate costs associated with this reduction in force of approximately $8M, primarily consisting of severance payments, employee benefits and related costs, and expects to incur the majority of these charges in 1Q23. Silvergate exited its mortgage warehouse lending product in 4Q22. As a result, the company will incur a restructuring charge of approximately $4M in 4Q22, primarily related to severance and employee benefits. Over the coming weeks, the company intends to streamline its product portfolio to reduce complexity. Given the current level of industry uncertainty, the Company remains committed to maintaining a highly liquid balance sheet with minimal credit exposure and a strong capital position. Silvergate will take an impairment charge of $196M in 4Q22 related to developed technology assets purchased from the Diem Group. This charge reflects the Company’s belief that the launch of a blockchain-based payment solution by Silvergate is no longer imminent. The company will continue to seek opportunities to realize value from these technology assets.