Why is Silvergate Bank still listed on the NYSE?

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Silvergate Bank announced its voluntary liquidation and said that it would soon be closing as a bank — so why is it still trading on the New York Stock Exchange (NYSE) and worth approximately $2 a share?

The reality is, getting delisted from an exchange isn’t a particularly uncommon occurrence. In fact, five companies have been delisted from the NYSE so far this year — four voluntarily and one for cause.

The reason for Silvergate’s continued listing lies in how the NYSE decides whether to delist an entity. Put simply, the bank doesn’t meet the requirements.

To remain listed on the NYSE, a company must:

have 300 or more shareholders.
have 200,000 or more shares.
have a market cap above $1 million.
ensure the financial condition of the company cannot be impaired.

Silvergate, though going through a voluntary liquidation, more than fulfils these criteria. Fifteen million shares moved over the past 90 days, with 31 million shares outstanding, 97% institutional ownership, and a market cap between $60 to $65 million.

However, the NYSE reserves the right to delist a company when it sees fit, similar to how restaurants in the US reserve the right to refuse service to anyone. Reasons for delisting can include, but aren’t limited to:

The issuer of the security ceases as an operational company (operational being the subjective word).
Liquidation of the issuer has been authorized (Silvergate is indeed going through liquidation).
Authoritative advice suggests that the underlying asset is valueless.
The issuer doesn’t pay listing fees to the NYSE.

Simply put: Silvergate is still trading on a major exchange, unlike Silicon Valley Bank or Signature Bank, because it wasn’t involuntarily liquidated and placed into bankruptcy protection, it was voluntarily liquidated, isn’t undervalued, and still has ample liquidity and demand for shares (short or long, doesn’t matter).

What’s more, there’s apparently still a debate as to what fair value is for Silvergate.

As options expire, depositors are made whole, and bank assets and liabilities are sold off to bidders, expect to see an announcement for a delisting. But for now, there’s no reason for the NYSE to delist the bank that’s in the process of wrapping up.

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