May 23, 2024

Fears Silicon Valley Bank collapse could topple First Republic Bank next, as shares slump 40% in a month and investors voice concerns over losses on its investments

Fears Silicon Valley Bank collapse could hit First Republic Bank

First Republic Bank, the the 16th largest in the US, saw its shares plummet 50 percent on Friday. The concern was due to the collapse of similarly-positioned Silicon Valley Bank.

  • Silicon Valley Bank was taken over by the government on Friday morning – the largest bank failure since Washington Mutual’s fall in 2008
  • The bank’s demise is a combination of a difficult economic environment and rising interest rates: it remains to be seen whether a savior can be found
  • Now investors are concerned about First Republic Bank, whose share price plummeted 50 percent on Friday

Fears were mounting on Friday for the future of First Republic Bank, after the collapse on Friday of Silicon Valley Bank and the resulting ripple effect.

Silicon Valley Bank, the 14th largest in the United States, specialized in supporting tech businesses and has been hard-hit by both the economic conditions and inflation.

On Friday it was taken into government control, and executives are hoping that another financial institution will step in to keep the bank afloat.

Other banks were rattled by the demise of Silicon Valley Bank – among them First Republic, the 16th largest, whose shares plummeted 50 percent on Friday, before closing 15 percent down.

First Republic issued a statement in the late morning seeking to calm investors, pointing to its ‘continued safety and stability and strong capital and liquidity positions.’ 

First Republic told jittery investors that their deposits were safe.

‘Sources beyond a well-diversified deposit base include over $60 billion of available, unused borrowing capacity at the Federal Home Loan Bank and the Federal Reserve Bank,’ they said. 

Regarding its financial position, First Republic said it ‘has consistently maintained a strong capital position with capital levels significantly higher than the regulatory requirements for being considered well-capitalized.’ 

The Federal Deposit Insurance Corporation (FDIC) seized SVB’s assets on Friday after depositors – mostly tech workers and start-up firms – triggered a run on the bank following the shock announcement of a $1.8bn loss.

With around $209bn in assets, SVB is the second-largest bank failure in US history after the 2008 collapse of Washington Mutual, which had $434bn in assets when it collapsed. 

The crash could decimate the tech sector as many start-ups use SVB as their sole account and creditor.

Investors are only insured up to $250,000 and as well as tech firms, many Silicon Valley workers use the bank for their personal cash flow and mortgages.

NY-based entrepreneur Brad Hargreaves warned that the failure of SVB would have a ‘massive impact on the tech ecosystem.’ 

‘SVB was not just a dominant player in tech but were highly integrated in some nontraditional ways. A few things we’ll see in the coming days or weeks,’ he tweeted.

‘One, SVB was incredibly integrated into the lives of many founders. Not just their startup’s bank & lender, but also provided personal mortgages and other financial services. A whole mess for FDIC (or the eventual buyer) to unwind. 

‘Two, any ‘uninsured’ balances at SVB – those above $250K – are in jeopardy. FDIC plans to pay them out ‘as it sells the assets of SVB’. Lots of startups exclusively banked with SVB as this was a covenant of their debt!’

Hargreaves said many CEOs were faced with a tough choice yesterday, either pull your cash and go into default on your debt or risk losing everything if the bank failed.

‘Many chose to hold tight as SVB’s outright failure seemed outlandish. Now they may not be able to make payroll next week,’ he said. 

‘Unpaid wages pierce the corporate veil, so boards are *incredibly* sensitive to employing workers they may not be able to pay. Expect mass layoffs later today, Monday at latest.’

SVB’s stock price plunged 66 percent in pre-market before trading was suspended. 

Police were called to a branch in Manhattan after dozens of desperate depositors showed up to try and pull their funds out. 

The FDIC said on Friday that customers would have full access to their insured deposits – maximum $250,000 – no later than Monday morning.

The federal agency said it will pay uninsured depositors an advance dividend within the next week. 

As the FDIC sells off the bank’s assets, future dividend payments may be made for the uninsured funds.

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Bannon: Big Tech Digital Nomads Need Deplorables’ For Ball-out


Roku has one-fourth of its cash at collapsed Silicon Valley Bank

Streaming giant says it isn’t sure if it can recover its cash from collapsed bank

Roku has one-fourth of its cash at collapsed Silicon Valley Bank

Roku has more than one-fourth of its cash at failed Silicon Valley Bank – mainly in uninsured deposits.

SAN JOSE — Roku has more than one-fourth of its cash at failed Silicon Valley Bank — mainly in uninsured deposits — a disquieting disclosure by the tech titan that hints at wider woes due to the bank’s stunning collapse.

The streaming giant said it’s not sure when — or if — it will get back its deposited cash at Silicon Valley Bank, Roku revealed in a regulatory filing Friday with the Securities and Exchange Commission.

“The company has total cash and cash equivalents of approximately $1.9 billion as of March 10, 2023,” Roku reported in the SEC filing. “Approximately $487 million is held at Silicon Valley Bank.”

That represents an estimated 26% of Roku’s cash and cash equivalents balance as of March 10, the company said.

“The company’s deposits with Silicon Valley Bank are largely uninsured,” Roku stated in the SEC document.

San Jose-based Roku said it wasn’t immediately certain of its ability to recoup its deposits.

“At this time, the company does not know to what extent the company will be able to recover its cash on deposit at Silicon Valley Bank.” the tech company stated in the regulatory disclosure.

About $1.4 billion of Roku’s cash and equivalents are spread across several large financial institutions.

Experts were concerned that the collapse of Silicon Valley Bank, with its deep ties to the tech, biotech and health care industries, would unleash severe cash flow problems on tech startups.

Roku’s disclosure, however, was a reminder that some large tech companies might face considerable financial challenges arising from the meltdown of Silicon Valley Bank.

The FDIC, or Federal Deposit Insurance Corp., swooped in to seize control of Silicon Valley Bank on Friday morning and closed the doors of the failed finance firm.

The federal regulatory body insures deposits of up to $250,000. The amount in an account that exceeds the $250,000 threshold isn’t insured by the FDIC.

“Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds,” the FDIC stated in its announcement about the bank’s shutdown. “As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.”

These future payments, however, appear to reside in a murky area. The payment amounts — and procedures — weren’t precisely defined by the FDIC. This could create a major area of uncertainty for uninsured depositors.

Even worse, some reports suggested that 93% of the deposits at Silicon Valley Bank weren’t insured by the banking regulatory agency.

Despite the murky outlook for the fate of the uninsured deposits, Roku remained optimistic that it still had enough cash to continue operating for the foreseeable future.

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“CONSERVATIVES, I’M SORRY”; Popular Author Admits She Was Wrong About January 6th After Tucker Carlson Bombshells

On Thursday evening, author Naomi Wolf wrote a lengthy Substack post apologizing to conservatives after she openly admitted that she fell for the January 6th propaganda that was spewed by the liberal media.

There is no way to avoid this moment. The formal letter of apology. From me. To Conservatives and to those who “put America first” everywhere,” she began.

“It’s tempting to sweep this confrontation with my own gullibility under the rug — to “move on” without ever acknowledging that I was duped, and that as a result I made mistakes in judgement, and that these mistakes, multiplied by the tens of thousands and millions on the part of people just like me, hurt millions of other people like you all, in existential ways,” she added.

That last paragraph is crucial, because she didn’t have to write this letter. She could have walked the other way. But she is owning up to it in a big way, which is more than what can be said for a lot of people out there who were wrong about that fateful day in January of 2021.

“I owe you a full-throated apology,” she continued. “I believed a farrago of lies. And, as a result of these lies, and my credulity — and the credulity of people similarly situated to me – many conservatives’ reputations are being tarnished, on false bases,” she added.

She then ends with this beautiful “mic drop” moment, revealing all of the lies she had been told by the media:

Jan 6 has become, as the DNC intended it to become, after the fact, a “third rail”; a shorthand used to dismiss or criminalize an entire population and political point of view.

Peaceful Republicans and conservatives as a whole have been demonized by the story told by Democrats in leadership of what happened that day.

So half of the country has been tarred by association, and is now in many quarters presumed to consist of chaotic berserkers, anti-democratic rabble, and violent upstarts, whose sole goal is the murder of our democracy.

Republicans, conservatives, I am sorry.

I also believed wholesale so much else that has since turned out not to be as I was told it was by NPR, MSNBC and The New York Times.

—-

Because of lies such as these in legacy media — lies which I and millions of others believed — half of our nation’s electorate was smeared and delegitimized, and I myself was misled.

It damages our nation when legacy media put words in the mouths of Presidents and former Presidents, and call them traitors or criminals without evidence.

It damages our country when we cannot tell truth from lies. This is exactly what tyrants seek — an electorate that cannot know what is truth and what is falsehood.

Through lies, half of the electorate was denied a fair run for its preferred candidate.

I don’t like violence. I do believe our nation’s capitol must be treated as a sacred space.

I don’t like President Trump (Do I not? Who knows? I have been lied to about him so much for so long, I can‘t tell whether my instinctive aversion is simply the habituated residue of years of being on the receiving end of lies).

But I like the liars who are our current gatekeepers, even less.

The gatekeepers who lie to the public about the most consequential events of our time — and who thus damage our nation, distort our history, and deprive half of our citizenry of their right to speak, champion and choose, without being tarred as would-be violent traitors – deserve our disgust.

I am sorry the nation was damaged by so much untruth issued by those with whom I identified at the time.

I am sorry my former “tribe” is angry at a journalist for engaging in —- journalism.

I am sorry I believed so much nonsense.

Though it is no doubt too little, too late —

Conservatives, Republicans, MAGA:

I am so sorry.

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