Spent the day discussing Silicon Valley BankSilvergate BankSignature Bank, among others with our customers, partners and friends.

Spent the day discussing <a href="https://www.linkedin.com/company/silicon-valley-bank/">Silicon Valley Bank</a>, <a href="https://www.linkedin.com/company/silvergate-bank/">Silvergate Bank</a>, <a href="https://www.linkedin.com/company/signature-bank_3/">Signature Bank</a>, among others with our customers, partners and friends.

Estimated reading time: 2 minutes

I don’t see the shutdown of SVB by regulators or the self-liquidation of Silvergate as indicators of widespread contagion but there are some characteristics of troubled banks that we ought to be aware of:

(1) Low loan-to-deposits (inefficient balance sheet management) (my friends at ModernFi can assist here)
(2) Large securities portfolios with % movements in 2022 from AFS to HTM
(3a) Declining profitability trends – especially if driven by mark-to-market impacts of securities
OR
(3b) Continuing steady profitability with LITTLE TO NO mark-to-market impacts running through the P&L
(4) Thin and declining capitalization (Tier 1 Capital Ratios – risk adjusted and otherwise) (capital is king)
(5) Squeezed cash/liquid balances (cash is also king!)

These last 2 are saved for last but are absolutely critical.

If you are running that and need some outside sets of eyes,

if you are on the board of directors of that and interested in an independent view,

if you have or are considering long or short positions on a bank,

if you are a customer of a bank and you are curious whether your bank is at risk,

Reach out this weekend. I have fielded multiple calls all day today and would be happy to give a quick and dirty view of your bank.


🔔 Follow Brian on Linkedin: Brian Pillmore

#bank

#svb

#fdic

#alco

#communitybank

#liquidity

#securities

Learn more on this topic

Related Insights

The Numbers that Matter to Banks

The Numbers that Matter to Banks

Revenue Growth It's a key measure of a bank's performance.Higher growth indicates more earnings and potential expansion. Net Interest Margin This KPI reflects the profitability of a bank's core activities. A higher NIM means more profit from lending. Loan to Deposit...

Shattering the Silence on Asset Quality Concerns

Shattering the Silence on Asset Quality Concerns

In a world rocked by economic turbulence - the pandemic, for one - the banking sector finds itself on a tightrope. Balancing asset quality, potential loan defaults, and the integrity of balance sheets has become the new normal. Enter BIAS: Bank Intelligence and Action...

How can technology revolutionize traditional banking?

How can technology revolutionize traditional banking?

While navigating the dynamic landscape of banking and finance, we often come across a common question - How can technology revolutionize traditional banking? The digital revolution is transforming the way we handle our finances. The proliferation of mobile banking and...