Silicon Valley Bank SIVB - $270 to $30 in 48 hours

[njhowie]

Train wreck weighing on the banking sector.

[Freedom56]

It was $727 in November 2021.

[aja8888]

I'm expecting Yellen to come out now and tell us again how well capitalized and healthy the banking sector is these days.

[Car-Guy]

Quote:

Originally Posted by aja8888 I'm expecting Yellen to come out now and tell us again how well capitalized and healthy the banking sector is these days.

Now that would be scary. Or worse, what if she and Powell (and maybe Dimon) all got together to tell us how healthy and well functioning the financial system is.

[athena53]

The investments I inherited from Dad in late 2021 included about $2,000 of Pac West Bankcorp. I held onto it. Oops. I imagine Dad bought it because a nephew worked there and he had a good impression of the company. (Yes, we are aware of the illegality of trading on inside information and are scrupulous about not communicating anything in that category.)

Glad I didn't buy more.

[Texas Proud]

Quote:

Originally Posted by aja8888 I'm expecting Yellen to come out now and tell us again how well capitalized and healthy the banking sector is these days.

The big banks are very well capitalized...



I am sure there will be some regional or small banks that will go under, there always are when there is financial stress occurs, but back in 2008 it was the big ones that were the problem... they can handle the small ones...


https://www.fdic.gov/bank/historical/bank/

[11522914]

Wow, the ride in some bank stocks and preferreds are nothing short of amazing. I guess this is when you either pick up some much cheaper than yesterday shares or hold off believing this is the canary in the coal mine and sit back and watch.

For instance First Republic Bank FRC closed yesterday at 96.01, quickly dropped today to $46 and now stands at $90. Crazy. I hope somebody is making money with this craziness.

[njhowie]

Quote:

Originally Posted by 11522914 Wow, the ride in some bank stocks and preferreds are nothing short of amazing. I guess this is when you either pick up some much cheaper than yesterday shares or hold off believing this is the canary in the coal mine and sit back and watch. For instance First Republic Bank FRC closed yesterday at 96.01, quickly dropped today to $46 and now stands at $90. Crazy. I hope somebody is making money with this craziness.

Yes - you want to stay away from SIVB and similar, and pick up the strong ones that are being taken for a ride lower today for no other reason.

[yhoomajor]

https://www.cnbc.com/2023/03/10/sili...-deposits.html

Silicon Valley Bank is shut down by regulators, FDIC to protect insured deposits

And we haven't even started seeing the side effects of CMBS (commercial MBS) getting stressed all over US. Would be wary of banks that hold CMBS on their books.

[Earl E Retyre]

Quote:

Originally Posted by yhoomajor https://www.cnbc.com/2023/03/10/sili...-deposits.html Silicon Valley Bank is shut down by regulators, FDIC to protect insured deposits

And this is why it is important to stay within the $250k per depositor FDIC limits

[Texas Proud]

Quote:

Originally Posted by Earl E Retyre And this is why it is important to stay within the $250k per depositor FDIC limits

Just an FYI, there are very few banks that all deposits are not covered... even over $250K... it might take you awhile to get it back but you usually do...

[bmcgonig]

Quote:

Originally Posted by Texas Proud Just an FYI, there are very few banks that all deposits are not covered... even over $250K... it might take you awhile to get it back but you usually do...

Where does the cover over 250 come from?

[NW-Bound]

To be fair, this is nothing like the subprime fiasco. SIVB's trouble stems from the loss of value of its long bonds. Yeah, how can you go wrong holding US Treasuries? It's solid, like the rock of Gibraltar. Right!

The problem with institutional investors is that they cannot deny reality like individual investors and say "You don't lose until you sell". Nope, they have to sell to meet obligations.

And for individual investors, the unrealized loss does not go away. It sits there on your portfolio, even if you try not to look at it.

[Another Reader]

Lots of problems for the small and medium businesses in California that banked with SIVB and can't make payroll today... The ripples will be substantial. The under $250k folks can line up on Monday and get their money out. Guessing the losses for some companies that are well over the limit will force them into bankruptcy.

[MichaelB]

According to its 3Q results (here) most of the customer deposits were in demand deposits, while most of the assets were in “hold to maturity” fixed income. A much smaller share was in loans and “available for sale” securities. They were unprepared for a run. This is not a capitalization issue, it’s a mismatch between assets and liabilities.

[Montecfo]

Quote:

Originally Posted by NW-Bound To be fair, this is nothing like the subprime fiasco. SIVB's trouble stems from the loss of value of its long bonds. Yeah, how can you go wrong holding US Treasuries? It's solid, like the rock of Gibraltar. Right! The problem with institutional investors is that they cannot deny reality like individual investors and say "You don't lose until you sell". Nope, they have to sell to meet obligations. And for individual investors, the unrealized loss does not go away. It sits there on your portfolio, even if you try not to look at it.

yep.

[bmcgonig]

It’s really a simple bank run issue. If the deposits stayed there the assets could theoretically mature and pay off the depositors.

[Go-NoGo]

FT has a very good analysis of the situation at SVB:

https://www.ft.com/content/7cf4eb45-...4-1f0b082ba203

Quote:

SVB is not a canary in the banking coal mine .. First, few other banks have as high a proportion of business deposits as SVB, so their funding costs won’t rise as quickly. At Fifth Third, a typical regional bank, deposit costs only hit 1.05 per cent in the fourth quarter. At gigantic Bank of America, the figure was 0.96 per cent Second, few other banks have as much of their assets locked up in fixed-rate securities as SVB, rather than in floating-rate loans. Securities are 56 per cent of SVB’s assets. At Fifth Third, the figure is 25 per cent; at Bank of America, it is 28 per cent.

Bottom line, SVB had a very large percentage of corporate customers who are very sensitive to interest rate hikes and want the best return on their deposits compared to say, a retail investor. That and the threat of solvency caused a run on the bank and SVB was done.

[jazz4cash]

Quote:

Originally Posted by aja8888 I'm expecting Yellen to come out now and tell us again how well capitalized and healthy the banking sector is these days.

That’s exactly what she should be doing….assuming it is true, of course. Everything I’m hearing says SIVB is not representative of the banking sector. The tiny regional I own is down 2% today.

[W2R]

Quote:

Originally Posted by bmcgonig It’s really a simple bank run issue.

Gee, I hope we don't start having bank runs on many other banks too! I don't expect it, but always looking for worst case scenario.

I have some cash at my bricks & mortar bank, and other cash at a Vanguard MM fund. But, I haven't put any significant amount under my mattress, in mason jars in the kitchen cabinets, or buried in ammo boxes in the back yard.