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Crypto winter is finally catching up with Silvergate, whose unusual business model saw its mostly interest-free deposits zoom while yields on its investments rose. The leading crypto bank gathers demand deposits from exchanges and crypto infrastructure providers that need to be able to tap their cash in a hurry. A boom in deposits, coupled with Federal Reserve tightening and an investment portfolio with more than half its holdings inAs the crypto economy has cooled and leading currency bitcoin’s price has stabilized at a lower level, trading volume has declined.
On a year-over-year basis, Silvergate is still expected to report stunning figures, with net income up 83% to $42.9 million, and earnings per share on the adjusted basis used by Wall Street up to $1.40 from 88 cents a year ago.Securities said Silvergate may not be able to take as much advantage of rising bond-market interest rates as conventional banks because the liquidity needs of its customers require conservative investments.
Silvergate shares rose 5.2% on Monday to $70.65, though it remains far below the $239.26 it crested at in November. This year, the stock is down 55%, compared with a 5% drop for the Invesco KBW Regional Banking ETF.