New Bank Already Established; SVB And Grapevine, Texas — March 12, 2023

Updates

Later, 6:35  p.m. CT: link here.

Later, 2:32 p.m. CT: link here. 

Original Post

This is an AP national story.

https://apnews.com/article/svb-fed-bonds-rates-banks-inflation-a24b28b3caeede91c76cd120aa9b7966.

Best story so far updating situation --- five minutes old --- when posted about 8:00 a.m. CT, march 12, 2023.

New bank already established to manage SVB assets.

And look who among the first to spot a problem: company in our home town — Grapevine, Texas.

I can't make this stuff up.

From the linked AP article:

As part of the seizure, California bank regulators and the FDIC transferred the bank’s assets to a newly created institution — the Deposit Insurance Bank of Santa Clara. The new bank will start paying out insured deposits on Monday. Then the FDIC and California regulators plan to sell off the rest of the assets to make other depositors whole.

There was unease in the banking sector all week, with shares tumbling by double digits. Then news of Silicon Valley Bank’s distress pushed shares of almost all financial institutions even lower Friday.

The failure arrived with incredible speed. Some industry analysts suggested Friday that the bank was still a good company and a wise investment. Meanwhile, Silicon Valley Bank executives were trying to raise capital and find additional investors. However, trading in the bank’s shares was halted before stock market’s opening bell due to extreme volatility.

Shortly before noon, the FDIC moved to shutter the bank. Notably, the agency did not wait until the close of business, which is the typical approach. The FDIC could not immediately find a buyer for the bank’s assets, signaling how fast depositors cashed out.

 Now, the Grapevine, TX, angle:

Bill Tyler, director of operations for TWG Supply in Grapevine, Texas, said he first realized something was wrong when his employees texted him at 6:30 a.m. Friday to complain that they did not receive their paychecks.

TWG, which has just 18 employees, had already sent the money for the checks to a payroll services provider that used Silicon Valley Bank. Tyler was scrambling to figure out how to pay his workers.

“We’re waiting on roughly $27,000,” he said. “It’s already not a timely payment. It’s already an uncomfortable position. I don’t want to ask any employees, to say, ‘Hey, can you wait until mid-next week to get paid?’”