THE RIPPLE EFFECT OF SVB SVB experienced a liquidity crunch. In a matter of hours, as the word spread and depositors made a run for their cash, the bank became insolvent. The FDIC exists to provide both confidence and a backstop to depositors, but their coverage is limited to $250,000. Any amount above that is uninsured. What percentage of deposits at SVB were uninsured? Not 75%. Not 85%. Not even 90%. S&P Global Market Intelligence clocked their uninsured deposits at 93.8% of total deposits at the end of 2022. After the collapse, the FDIC immediately expanded its coverage to all deposits at SVB. You are left to ponder if the FDIC would have been so kind to your regional bank down the street. When comparing your community or regional bank to SVB (a bank with powerful business and
9. First Priority Bank ($825 million in assets) 10. Corn Belt Bank and Trust Com - pany ($347 million in assets) Too big to fail? Only one was in the S&P 500: Washington Mutual. By comparison, Silicon Valley Bank (SVB), a recent bank failure, had $209 billion in assets on Dec. 31, 2022. The banking industry has and is changing. According to the FDIC, in 2000, there were 8,315 commercial banks; by the end of 2020, there were only 4,379. With increased regulation post-2008 came increased costs associated with running a bank. To survive, a bank must be of a certain size, which entails additional pressure on community banks. All this adds up to one word: consolidation.
In addition, 507 banks reportedly went under between 2008-2014. Most of us couldn’t name but two or three of them. Still, the big ones catch the headlines. Here are the top 10 bank failures of the 2008 financial crisis. 1. Washington Mutual ($307 billion in assets) 2. IndyMac Bank ($32 billion in assets) 3. Colonial Bank ($25 billion in assets) 4. Guaranty Bank ($13 billion in assets) 5. First National Bank of Nevada ($3.4 billion in assets) 6. ANB Financial ($2.1 billion in assets) 7. Silver State Bank ($2 billion in assets) 8. Integrity Bank ($1.1 billion in assets)
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