US - FDIC takes over Silicon Valley Bank - March 10, 2023+ plus Signature & New Republic banks + Heartland Tri-State Bank + Citizen's Bank + Rep. 1st

[sharon sanders]

For Immediate Release


WASHINGTON – Silicon Valley Bank, Santa Clara, California, was closed today by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect insured depositors, the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB). At the time of closing, the FDIC as receiver immediately transferred to the DINB all insured deposits of Silicon Valley Bank.

All insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023. The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.

Silicon Valley Bank had 17 branches in California and Massachusetts. The main office and all branches of Silicon Valley Bank will reopen on Monday, March 13, 2023. The DINB will maintain Silicon Valley Bank’s normal business hours. Banking activities will resume no later than Monday, March 13, including on-line banking and other services. Silicon Valley Bank’s official checks will continue to clear. Under the Federal Deposit Insurance Act, the FDIC may create a DINB to ensure that customers have continued access to their insured funds.

As of December 31, 2022, Silicon Valley Bank had approximately $209.0 billion in total assets and about $175.4 billion in total deposits. At the time of closing, the amount of deposits in excess of the insurance limits was undetermined. The amount of uninsured deposits will be determined once the FDIC obtains additional information from the bank and customers.

Customers with accounts in excess of $250,000 should contact the FDIC toll–free at 1-866-799-0959.

The FDIC as receiver will retain all the assets from Silicon Valley Bank for later disposition. Loan customers should continue to make their payments as usual.

Silicon Valley Bank is the first FDIC–insured institution to fail this year. The last FDIC–insured institution to close was Almena State Bank, Almena, Kansas, on October 23, 2020.


https://www.fdic.gov/news/press-releases/2023/pr23016.html

 

[Pathfinder]

Posted 5 days ago:

SVB@SVB_Financial
Proud to be on @Forbes' annual ranking of America's Best Banks for the 5th straight year and to have also been named to the publication's inaugural Financial All-Stars list.

https://bit.svb.com/3ZFxwyp

1:00 PM · Mar 6, 2023


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Regulators close Silicon Valley Bank in largest failure since financial crisis

David Hollerith, Myles Udland and Dan Fitzpatrick

Fri, March 10, 2023 at 12:26 PM CST
...
The bank had $209 billion in assets and $175.4 billion in deposits. The FDIC, which serves as a backstop for deposits at U.S. banks up to a limit of $250,000, said all insured depositors would have access to their funds "no later" than Monday morning.

Roughly 87% of Silicon Valley Bank's deposits were uninsured as of December 2022, according to its annual report. Uninsured depositors will receive an advance dividend within the next week and a receivership certificate for the remaining out of their uninsured funds, the FDIC said. It could make future dividend payments as it sells Silicon Valley Bank's assets.
...

https://finance.yahoo.com/silicon-va...tsrc=fin-notif

 

[Pathfinder]

When will Silicon Valley Bank depositors get their money back — and will they be made whole? Questions swirl after lender goes down
...
March 11, 2023, 2:05 PM CST
By Rob Wile
...
The bank's funds are currently in the hands of the Federal Deposit Insurance Corporation. Since SVB was an FDIC-insured lender, all who banked with it had their money guaranteed by the federal government — but only up to $250,000.

That's left anyone with more than that amount — totaling 90% of SVB’s deposits — in financial limbo. It's a group that includes Roku, which said it has nearly $500 million with SVB; Roblox, which said it has $150 million with SVB; and numerous others — SVB claimed to have approximately half of all U.S. venture-backed tech and life science companies and more than 2,500 venture capital funds as its customers. Other firms, including Etsy, have already told customers they are facing payment processing delays.

This weekend, the FDIC will attempt to find an entity that will buy SVB outright, said Morgan Ricks, a professor of banking and finance at Vanderbilt University.

But the FDIC has already telegraphed that it does not expect to find such a purchaser, Ricks said, having announced Friday that it intends to issue "receivership certificates" to customers for deposit amounts in excess of $250,000. The FDIC also announced that "as it sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors."

"It gives you the sense FDIC doesn’t place a super high probability on finding a buyer," Ricks said.

If there is no buyer, what happens next? Ricks said customers with uninsured funds will likely eventually see their money — but there is no guarantee they'll get all of it back. The FDIC will commence a liquidation process of assets that SVB valued at more than $200 billion — but the actual dollar amount those assets fetch is likely to be less.
...

https://www.nbcnews.com/news/us-new...-get-money-back-will-made-whole-que-rcna74498

 

[sharon sanders]

Regulators to Hold Auction for Silicon Valley Bank

Buyers for bank are sought in an effort to repay depositors
By Andrew Ackerman

March 12, 2023 2:20 pm ET

https://www.wsj.com/articles/regulators-to-hold-auction-for-silicon-valley-bank-9c05701f

 

[Pathfinder]

Press Release


March 12, 2023

Federal Reserve Board announces it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors


For release at 6:15 p.m. EDT

• Share

To support American businesses and households, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors. This action will bolster the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and credit to the economy.

The Federal Reserve is prepared to address any liquidity pressures that may arise.

The financing will be made available through the creation of a new Bank Term Funding Program (BTFP), offering loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. These assets will be valued at par. The BTFP will be an additional source of liquidity against high-quality securities, eliminating an institution’s need to quickly sell those securities in times of stress.

With approval of the Treasury Secretary, the Department of the Treasury will make available up to $25 billion from the Exchange Stabilization Fund as a backstop for the BTFP. The Federal Reserve does not anticipate that it will be necessary to draw on these backstop funds.

After receiving a recommendation from the boards of the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve, Treasury Secretary Yellen, after consultation with the President, approved actions to enable the FDIC to complete its resolution of Silicon Valley Bank in a manner that fully protects all depositors, both insured and uninsured. These actions will reduce stress across the financial system, support financial stability and minimize any impact on businesses, households, taxpayers, and the broader economy.

The Board is carefully monitoring developments in financial markets. The capital and liquidity positions of the U.S. banking system are strong and the U.S. financial system is resilient.

Depository institutions may obtain liquidity against a wide range of collateral through the discount window, which remains open and available. In addition, the discount window will apply the same margins used for the securities eligible for the BTFP, further increasing lendable value at the window.

The Board is closely monitoring conditions across the financial system and is prepared to use its full range of tools to support households and businesses, and will take additional steps as appropriate.

For media inquiries, please email media@frb.gov or call 202-452-2955

https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312a.htm

 

[Emily]

Recurring nightmare!

https://finance.yahoo.com/news/silicon-valley-bank-exec-lehman-000556735.html
Silicon Valley Bank exec was Lehman Brothers CFO prior to 2008 collapse
Sarah Rumpf
Sat, March 11, 2023 at 6:05 PM CST

Silicon Valley Bank (SVB) executive, Jospeph Gentile, was a former executive of the Lehman Brothers' Global Investment Bank prior to the bank's public collapse in 2008.

Prior to joining SVB as Chief Administrative Officer, Gentile worked as Chief Financial Officer at Lehman Brothers' Global Investment Bank. Gentile left Lehman in 2007, just one year before it went bankrupt in 2008.

"You can't make this up." one Twitter wrote as the internet erupted at the revelation...

"This is truly unusual" another user added.

"It's all starting to make sense now!" another wrote...

 

[sharon sanders]

Watch Live: Biden to deliver remarks in wake of Silicon Valley Bank's collapse


BY MELISSA QUINN

MARCH 13, 2023 / 8:22 AM / CBS NEWS


Washington — President Biden is expected to deliver remarks Monday morning regarding the federal government's efforts to respond to the collapse of Silicon Valley Bank and limit the fallout from its abrupt failure.

The White House said the focus of Mr. Biden's remarks will be "maintaining a resilient banking system and protecting our historic economic recovery." He is set to speak at the White House before traveling to San Diego, California, for a trilateral meeting with Australian Prime Minister Anthony Albanese and British Prime Minister Rishi Sunak.

snip

The Fed also announced it is standing up a new emergency lending program, called the Bank Term Funding Program, "to help assure banks have the ability to meet the needs of all their depositors."

more..

https://www.cbsnews.com/news/trump-i...ecial-counsel/

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If the government insures banks with large unrealized losses it is taking a chance those banks can not pay back what they owe. If those banks are unable to pay those loans back then the US taxpayer takes the loss. This is simple logic.

The FDIC estimated US banks have 620 billion in unrealized losses on their balance sheets:

snip

"What’s happening: Back when interest rates were near zero, US banks scooped up lots of Treasuries and bonds. Now, as the Federal Reserve hikes rates to fight inflation, those bonds have declined in value.

When interest rates rise, newly issued bonds start paying higher rates to investors, which makes the older bonds with lower rates less attractive and less valuable.

The result is that most banks have some amount of unrealized losses on their books.

'The current interest rate environment has had dramatic effects on the profitability and risk profile of banks’ funding and investment strategies,' said FDIC Chairman Martin Gruenberg in prepared remarks at the Institute of International Bankers last week.

“Unrealized losses weaken a bank’s future ability to meet unexpected liquidity needs,” he added.

In other words, banks might find they have less cash on hand than they thought — especially when they need it — because their securities are worth less than they expected.

'Many institutions — from central banks, commercial banks and pension funds — sit on assets that are worth significantly less than reported in their financial statements,' said Jens Hagendorff, a finance professor at King’s College London. 'The resulting losses will be large and need to be financed somehow. The scale of the problem is starting to cause concern.'"

snip

https://www.cnn.com/2023/03/12/inves...ead/index.html

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snip

The financing will be made available through the creation of a new Bank Term Funding Program (BTFP), offering loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. These assets will be valued at par. (This means these treasuries will be valued at their face value - not current market value.)

The current interest rate environment has had dramatic effects on the profitability and risk profile of banks’ funding and investment strategies. First, as a result of the higher interest rates, longer term maturity assets acquired by banks when interest rates were lower are now worth less than their face values. The result is that most banks have some amount of unrealized losses on securities. The total of these unrealized losses, including securities that are available for sale or held to maturity, was about $620 billion at yearend 2022. Unrealized losses on securities have meaningfully reduced the reported equity capital of the banking industry.


https://www.fdic.gov/news/speeches/2...ce=govdelivery

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$620 billion in unrealized losses minus $25 billion link available for lending via the new loan program is a shortfall of $595 billion. Hopefully banks have the full difference covered with other assets like real estate, various financial instruments, stocks, funds, etc. - unless those markets dip and decrease the value of those assets....then the cycle continues downward.

 

[sharon sanders]

Regional banks are seeing flight of deposits to too-big-to-fail megabanks

 

[Emily]

https://www.wsws.org/en/articles/2023/03/14/fufo-m14.html
The bailout of Silicon Valley Bank and the historic crisis of capitalism
Nick Beams
2 hours ago

The collapse of Silicon Valley Bank (SVB)—the second largest bank failure in nominal terms in US history—and the ongoing turbulence in the banking system, raising the prospect of more failures, is another expression of the historic crisis of US and global capitalism.

This deepening rot and decay constitute the underlying driving force of two interconnected developments in US and world politics: the rapid escalation towards a third world war and the ongoing and intensifying assault on the working class in the US and internationally as the ruling classes seek to make it pay for the existential crisis of their outmoded and reactionary private profit system...

 

[sharon sanders]

4 minute read
April 30, 20239:14 PM EDT
Last Updated a min ago

PNC, JPMorgan putting in final bids for First Republic Bank in FDIC auction

By Chris Prentice
, Nupur Anand
and Saeed Azhar
​

NEW YORK, April 30 (Reuters) - PNC Financial Services Group (PNC.N), JPMorgan Chase & Co (JPM.N) and Citizens Financial Group Inc (CFG.N) were among banks that submitted final bids for First Republic Bank (FRC.N) on Sunday in an auction being run by U.S. regulators, sources familiar with the matter said.

The Federal Deposit Insurance Corp had been expected to announce a deal on Sunday night, with the regulator likely to say at the same time that it had seized the lender, three sources previously told Reuters.

As the process dragged into Sunday evening, one source familiar with the situation said the regulators had come back multiple times with requests for bids to be revised and specific criteria to be refined on assets that were being bid. That source said there was a sense a decision was nearing.
​

more....

https://www.reuters.com/business/fi...rst-republic-fdic-auction-sources-2023-04-30/

 

[sharon sanders]

First Republic Bank is taken over by FDIC and sold to JPMorgan in third major bank failure of this year

It's the largest lender to collapse since the 2008 financial crisis — bigger even than Silicon Valley Bank, which went under in March.​

more.... https://www.nbcnews.com/business/bu...c-bank-fdic-takeover-sold-jp-morgan-rcna81437

 

[longshots]

I guess it is good to get alternate views, but "deeping rot and decay" prompted me to go look at the website... wsws.org seems innocuous enough until you visit the site and see it is the World Socialist Web Site... that's sorta like someone from the Ukraine going to pravda.ru to get their war news...

 

[Emily]

They seem like decent people. I think they are Trotskyists. They were too strict about Covid, IMO, but they seemed to mean well and didn't push mandates. They provide a perspective our media misses.

https://www.wsws.org/en/articles/2023/05/04/pnax-m04.html
10 year olds found working at McDonald’s in Louisville, Kentucky
Jane Wise
4 hours ago
Two 10 year olds worked at a McDonald’s restaurant in Louisville, Kentucky, serving customers, cleaning the restaurant and manning the deep fryer, sometimes until 2 a.m. in the morning, according to a report for the Department of Labor (DOL) Wage and Hour Division.

 

[Emily]

First Republic Bank Was A Slush Fund For Uber-Rich Mortgages

Nobody Special Finance

36.3K subscribers

10,066 views Premiered Apr 25, 2023 #firstrepublicbank #bankrun

First Republic Bank is desperately seeking a bag-holder to buy tens of billions of dollar worth of sweetheart mortgages given to some of the wealthiest people in the world to buy some of the most expensive houses ever built. It turns out the bank was little more than a slush fund for Wall Street Executives who knew the losses would eventually be socialized among the public.​

 

[Emily]

https://www.telegraph.co.uk/busines...s-live-news-pacwest-shares-interest-rate-ecb/
PacWest shares plummeted by as much as 60pc in after hours trading in New York amid talks of a rescue for the US regional bank.

The bank has instructed boutique investment bank Piper Sandler to help it explore strategic options including a sale, according to Bloomberg.

Shares in fellow regional US bank Western Alliance also fell by as much as 38pc in after-hours trading as investors remain concerned about the worst banking crisis since 2008...
​

 

[sharon sanders]

Press Release


Dream First Bank, National Association, of Syracuse, Kansas, Assumes All of the Deposits of Heartland Tri-State Bank of Elkhart, Kansas

Friday, July 28, 2023
For Release


WASHINGTON – Heartland Tri-State Bank of Elkhart, Kansas, was closed today by the Kansas Office of the State Bank Commissioner, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect depositors, the FDIC entered into a purchase and assumption agreement with Dream First Bank, National Association, of Syracuse, Kansas, to assume all of the deposits of Heartland Tri-State Bank.

The four branches of Heartland Tri-State Bank will reopen as branches of Dream First Bank, National Association, on Monday, July 31, under normal business hours. This evening and over the weekend, depositors of Heartland Tri-State Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

Depositors of Heartland Tri-State Bank will become depositors of Dream First Bank, National Association, so customers do not need to change their banking relationship in order to retain their deposit insurance coverage. Customers of Heartland Tri-State Bank should continue to use their existing branch until they receive notice from Dream First Bank, National Association, that it has completed systems changes to allow its branch offices to process their accounts as well.

As of March 31, 2023, Heartland Tri-State Bank had approximately $139 million in total assets and $130 million in total deposits. In addition to assuming all of the deposits, Dream First Bank, National Association, agreed to purchase essentially all of the failed bank’s assets.

The FDIC and Dream First Bank, National Association, are also entering into a commercial shared-loss agreement on the loans it purchased of the former Heartland Tri-State Bank. The FDIC as receiver and Dream First Bank, National Association, will share in the losses and potential recoveries on the loans covered by the shared-loss agreement, which is projected to maximize recoveries on the assets by keeping them in the private sector. The agreement is also expected to minimize disruptions for loan customers.

Customers with questions about the transaction should call the FDIC toll-free at 1-866-431-1725. The phone number will be operational this evening until 9:00 p.m. Central Time (CT); on Saturday from 9:00 a.m. to 6:00 p.m. CT; on Sunday from noon to 6:00 p.m. CT; on Monday from 8:00 a.m. to 8:00 p.m. CT; and thereafter from 9:00 a.m. to 5:00 p.m. CT. Interested parties also can visit the FDIC’s website.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $54.2 million. Compared to other alternatives, Dream First Bank, National Association’s, acquisition was the least costly resolution for the DIF, an insurance fund created by Congress in 1933 and managed by the FDIC to protect the deposits at the nation’s banks.

FDIC: PR-58-2023​

https://www.fdic.gov/news/press-releases/2023/pr23058.html

 

[sharon sanders]

Press Release


Iowa Trust & Savings Bank, Emmetsburg, Iowa, Assumes All of the Deposits of Citizens Bank, Sac City, Iowa

Friday, November 3, 2023


For Release


WASHINGTON — Citizens Bank, Sac City, Iowa, was closed today by the Iowa Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect depositors, the FDIC entered into a Purchase and Assumption Agreement with Iowa Trust & Savings Bank, Emmetsburg, Iowa, to assume all of the deposits of Citizens Bank.

The two branches of Citizens Bank will reopen as branches of Iowa Trust & Savings Bank on Monday during normal business hours. This evening and over the weekend, depositors of Citizens Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

Depositors of Citizens Bank will become depositors of Iowa Trust & Savings Bank, so customers do not need to change their banking relationship in order to retain their deposit insurance coverage. Customers of Citizens Bank should continue to use their existing branch until they receive notice from Iowa Trust & Savings Bank that it has completed systems changes to allow its branch offices to process their accounts as well.

As of September 30, 2023, Citizens Bank had approximately $66 million in total assets and $59 million in total deposits. In addition to assuming all of the deposits, Iowa Trust & Savings Bank agreed to purchase essentially all of the failed bank’s assets.

Customers with questions about the transaction should call the FDIC toll-free at 1-866-314-1744. The phone number will be operational this evening until 9:00 p.m. Central Time (CT); on Saturday from 9:00 a.m. to 6:00 p.m. CT; on Sunday from noon to 6:00 p.m. CT; on Monday from 8:00 a.m. to 8:00 p.m. CT; and thereafter from 9:00 a.m. to 5:00 p.m. CT. Interested parties can also visit the FDIC’s website.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $14.8 million. Compared to other alternatives, Iowa Trust & Savings Bank’s acquisition was the least costly resolution for the DIF, an insurance fund created by Congress in 1933 and managed by the FDIC to protect the deposits at the nation’s banks. Citizens Bank is the fifth bank to fail in the nation this year. The last failure in Iowa was Polk County Bank, Johnston, Iowa, on November 18, 2011.

FDIC: PR-91-2023​

https://www.fdic.gov/news/press-releases/2023/pr23091.html

 

[Emily]

I wonder what that one industry was?

https://www.ktiv.com/2023/11/03/bank-sac-city-closes-all-deposits-transferred-other-iowa-bank/
IDOB says during a joint and ongoing examination of the bank, examiners identified significant loan losses that had not previously been identified by the bank. The bank was declared insolvent. The bank had a concentration of out-of-territory and out-of-state loans to one industry and incurred heavy losses on some of those loans.

 

[sharon sanders]

This bank bought the failed Signature Bank -

NY Community Bancorp Flashes a $560 Billion Real Estate Warning for Banks

• Lenders face debt maturities, lower values after thaw in deals
• Multifamily also a focus following change in New York rent law

By Patrick Clark, Natalie Wong, and Diana Li
January 31, 2024 at 6:56 PM EST
Updated on
January 31, 2024 at 9:00 PM EST


The US commercial real estate market has been in turmoil since the onset of the Covid-19 pandemic. But New York Community Bancorp delivered a reminder that some lenders are only just beginning to see the pain.

more... https://www.bloomberg.com/news/arti...s-a-560-billion-real-estate-warning-for-banks

​

 

[sharon sanders]

bump this