Why Silvergate Capital's Stock Dropped 11.4% on Friday

Travis Hoium, The Motley Fool
·1 min read
Why Silvergate Capital's Stock Dropped 11.4% on Friday

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. Unlike most banks, Silvergate has systemic risks from industry players that we may not know about.

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