Shares of troubled lender Silvergate (SI) fell 57% on Thursday after the company said late Wednesday it will miss a March 16 deadline to file its already-delayed annual report.
The bank said its team "requires additional time to perform analysis, record journal entries related to subsequent events and to complete management’s evaluation of internal controls over financial reporting."
"The Company is currently analyzing certain regulatory and other inquiries and investigations that are pending with respect to the Company," the company added.
Silvergate shares have collapsed over the last year as the company's entanglements with several crypto firms — including bankrupt exchange FTX, among others — resulted in deposits falling by more than two-thirds in the fourth quarter of last year. In January, the company laid off 40% of its staff. The company later suspended a dividend paid on preferred shares as it sought to shore up cash.
Over the last year, shares of the bank have lost more than 95%.
A spokesperson for Silvergate told Yahoo Finance: "Silvergate is working diligently to file its 10-K as soon as possible and has no further comment at this time."
In Wednesday's notice, the bank said it sold additional debt securities beyond what was previously anticipated in January and February and it expects to record further losses than what was previously disclosed. In January, the company disclosed it took $887 million worth of non-interest losses in the fourth quarter.
The sales are primarily to repay "outstanding advances" it received from the Federal Home Loan Bank of San Francisco, Silvergate said. The bank also needs additional time to complete an "evaluation of the effectiveness of its internal controls over financial reporting" being conducted by its third party accounting firm.
Citing business and regulatory challenges, the company is weighing how much the changes might affect its "ability to continue as a going concern for the twelve months following the issuance of these financial statements," according to the filing.
In late January, a bi-partisan group of U.S. Senators pressed the company to provide answers over whether it was aware its clients FTX misused customer funds. A Reuters report in February said a Silvergate account controlled by Binance.US moved millions of dollars to a company controlled by Binance CEO Changpeng Zhao.
Last week in a joint statement with the Federal Deposit and Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC), the Federal Reserve made a point to highlight the heightened liquidity risks for banks taking on crypto-related clients.
As for its own risks, Silvergate cited “heightened regulatory scrutiny of banking institutions that provide products and services to the digital asset industry," private litigation, and investigations from congressional inquiries, banking regulators and the Justice Department.
Analysts at JPMorgan downgraded the stock to Underweight from Neutral and withdrew their its price target in a note out Thursday, calling the situation "highly unusual" and adding: "The 'run' experienced at Silvergate appears to have been driven by a combination of (1) trust in the overall system being shaken given the collapse of previously trusted players (such as FTX) and (2) short-sellers voicing concerns (primarily on Twitter)."
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