Why Silvergate Capital's Stock Dropped 11.4% on Friday
Shares of crypto bank Silvergate Capital (NYSE: SI) dropped as much as 11.4% in early trading on Friday after suspending its preferred stock dividend. Shares ended the day down almost 4% after a recovery in late trading.
In a press release before the market opened, management said they were suspending dividend payments on 5.375% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series A. This is a form of equity that pays a dividend, so there's an obligation to pay the dividend, but it's not as burdensome as debt.
The move comes as investors are seeing customers flee Silvergate Capital, which could turn into a run on the bank. Management wants to preserve liquidity, which is the right thing to do but shows what a weak financial position it's in.
Source Fool.com
