top of page

Market Commentary: Bank Troubles

Kris Venezia, Market Analyst

Banking crisis is never a fun phrase to bring up, but there have been some concerns recently with parts of the banking system.

It started with Silicon Valley Bank. They had a bank run which means people were going to the bank pulling funds, and eventually, SVB could no longer meet the withdrawal requests.

Signature Bank was then shut down by regulators. The bank had become popular with crypto firms.

And then, in Europe, Credit Suisse was forced to sell themselves to UBS at a discount.

Each of the banks above had specific risks that don't necessarily apply to all banks. Silicon Valley Bank and Signature Bank were lending to a specific group of clients which allowed the bank run to happen very quickly. Credit Suisse had made some poor decisions over the last several years, and there had already been a lack of confidence with that bank.

However, there is a larger concern that the bank problems spread. There are reports that people are withdrawing funds from small and mid-sized banks. Even if those banks are in okay shape, if a bank run is large enough, it will put those financial institutions at risk.

The final issue is a lot of the assets banks hold have lost value in the last one or two years. With their asset values down, it adds to risks when major withdraws happen.

Regulators have stepped in quickly and in a huge way. The thinking is they will be able to contain the problems to the banks listed above, but we'll have to see

Daryl Eckman, President

This is something that has happened in the past. Right now, it does not appear like something that will continue to develop and spread, although it would not completely shock me if there was a little more spread.

If you look at Silicon Valley Bank, you can see some of the mistakes they made. They were lending to a very specific group of people.

We don't feel like it's a major concern right now. The portfolios mainly hold U.S. Treasuries when it comes to fixed income. The Treasuries are backed by the U.S. government. If you are concerned about your portfolio, you can check your statements.

We have received phone calls, I've even been stopped in casual conversation about it.

There was a time in the past when the government did have to step up and back stop parts of the banking system. The FDIC had to ask Congress for more funding to backstop deposits.

Like I said earlier, at this point, the banking crisis is confined to very specific institutions. We don't see any concerns for clients currently.

Clint Carpenter


bottom of page