Moody's Investors Service downgraded Silvergate Capital ( NYSE: SI ) long-term issuer to Ca from B3 and its non-cumulative preferred stock to C from Caa3, all in non-investment-grade territory. The long-term issuer rating for its bank subsidiary Silvergate Bank also dropped to Ca from B3, while its long-term deposit rating was cut to C from Caa3. The bank's baseline credit assessment was reduced to caa3 from b2. In addition, the ratings may be cut further. "The ratings downgrade is driven by the company's 1 March announcement that it is evaluating its ability to continue as a going concern and that it is unable to timely file its annual report," Moody's said. In addition, Silvergate ( SI ) realized additional investment losses, which had previously been recorded as other-than-temporary impairment of securities, when it sold some additional investment securities to fully repay its outstanding Federal Home Loan Bank advances. "Another driver of the ratings action was governance," the Moody's note said. The delay in filing the annual report, "the asset and liability mismatch leading to higher-than-expected realized losses while selling investment securities, the potential for no longer being deemed well-capitalized, and rising legal and regulatory risks highlight significant governance deficiencies." "The caa3 BCA reflects our expectation that the company will continue to experience further declines in deposits forcing it to continue selling securities, potentially at further losses," Moody's added. Silvergate ( SI ) stock gained 0.9% in Friday regular session trading after a 57% plunge on Thursday. In Friday after-hours trading, the stock slipped 1.7%. On Thursday, Silvergate ( SI ) stock tanked after the company said it was evaluating the impact of recent events on its ability to continue as a going concern.
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