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Silvergate Capital (NYSE:SI) stock rocketed as much as 27.5% earlier in Tuesday’s session as BTIG analyst Mark Palmer still justified the cryptocurrency-focused bank with a Buy rating even after posting poor Q4 results.
Some of the key takeaways from Silvergate’s (SI) worse-than-expected Q4, stemmed from the broad market downturn, was a significant drop in deposits from the prior quarter and a subsequent climb in the cost of deposits. Also, its Silvergate Exchange network handled almost 50% less in U.S. dollar transfers versus a year before, though USD transfers drifted up 4% sequentially.
Its results for the quarter also included a $751M loss on securities in addition to a $134.5M impairment charge on securities it intends to sell during Q1 to reduce wholesale borrowing. On Jan. 5, SI disclosed its preliminary Q4 results, which included a cost-cutting move to reduce headcount by around 40%.
And given the uncertainty of its future earnings, the company took a 100% valuation allowance on its $342M deferred tax asset balance, Palmer noted, the extent of which was greater than expected reflecting “a very conservative treatment of its DTA even in light of the challenges it faces.”
Meanwhile, SI’s gains from earlier in the session have largely been erased, now up 5.6% at 12:24 p.m. ET. The stock is off some 90% from a year earlier.
Just before SI issued its Q4 earnings, Seeking Alpha contributor Nelson Alves contended that the company is a “prime” takeover target given the losses incurred and the repricing on its stock.
