Silvergate Capital stock soars as Wedbush sees no credit loss from FTX

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Silvergate Capital (NYSE:IF) shares surged 11.4% In Monday’s pre-market trading, Wedbush analyst David Chiaverini, who views the digital asset-focused bank as an outperformer, stressed that Silvergate was not at risk of credit losses linked to collapsed cryptocurrency exchange FTX.

This means that the tangible book value of Silvegate (SI) should not be materially affected,” Chiaverini wrote in a note to clients.

His remarks came after the lender’s CEO noted late last week that Silvergate’s (SI) exposure to FTX was less than 10% of its total digital asset deposits totaling $11.9 billion. , and that its relationship with FTX was limited to deposits only. Recall Friday when FTX filed for Chapter 11 bankruptcy after a week of wild events.

The bad news, however, “is that FTX could represent close to 10% of SI’s core deposits if we assume the high end of SI’s disclosure, and the loss of those deposits should put downward pressure on stocks.” productive assets, which reduces SI’s earning capacity,” the analyst warns.

In turn, Chiaverini lowered its 2022 EPS estimate to $4.30 from $4.50, from the consensus of $4.59, mainly due to lower middle-income asset assumptions. Nonetheless, he felt that Silvergate (SI) had a strong liquidity base to “fund a potentially large level of deposit outflows related to FTX and other crypto market participants.”

Find out why Seeking Alpha contributor Bram de Haas justified the Silvergate stock with a sell rating.

Sallie R. Loera