How Pennsylvania banks compare to Silicon Valley Bank

PITTSBURGH (KDKA) - How sudden and surprising was Silicon Valley Bank's failure Friday, even to close observers? One way to answer that question: The bank wasn't mentioned even once in Thursday morning editions of The Wall Street Journal.

Now, as the world woke up Monday morning with concerns about "contagion" referring for the first time in years not to a literal virus but to the possibility of more bank failures, experts and consumers alike are trying to figure out what's next.

First and most important: Anyone with less than $250,000 in any bank account insured by the Federal Deposit Insurance Corporation, or FDIC, is protected even if that person's bank fails. Account holders in that situation at Silicon Valley Bank (SVB) were always going to have full access to their money Monday morning, even before Federal officials announced Sunday night protection for all SVB account holders, regardless of how much is in their accounts.

For anyone wondering how many people have more than $250,000 in a bank account (money that was unprotected at SVB and that remains unprotected at other banks) the answer at most banks– but not at SVB – is not too many.

Just 6% of money on domestic deposit at SVB was protected by FDIC insurance as of Dec. 31, 2022, according to a CBS News analysis of FDIC data. By contrast, at all Pennsylvania-based banks, the equivalent insured-funds figures ranged from 36% at Republic Bank in Philadelphia – six times the SVB figure – to fully 95% at Somerset Trust. In other words, nearly all the money there is under the $250,000 FDIC threshold.

At Pennsylvania's largest bank and America's sixth-largest, Pittsburgh-based PNC Bank, the figure is 55%.

SVB was America's 16th largest bank, ranked by deposits, based on U.S. Federal Reserve data. Republic Bank is the 209th largest. Somerset Trust is the 477th largest.

The equivalent figures for all 71 Pennsylvania deposit banks with branches are in the chart below.

"SVB was unusual in its heavy reliance on uninsured deposits by a concentrated group of VCs [venture-capital firms] and startups," former FDIC Chair Sheila Bair told CBS News Sunday. "Once a few started to run, they encouraged others. Word spread fast."

Pennsylvania's equivalent to the California agency that worked with federal regulators to close Silicon Valley Bank told CBS News in a statement Monday that it "carefully monitors and examines all 104 Pennsylvania chartered banks for capital adequacy, asset quality, management, earnings, liquidity and sensitivity."

"The Department of Banking and Securities is working with the federal regulators and monitoring the situation closely," it said.

Banks profit by taking some of the money on deposit and lending it to other people and businesses, charging them interest. So banks rarely have enough money on hand to give all depositors all their money at once, but that's rarely a problem because depositors rarely demand so much money at once. When they do, it's called a "bank run." Bank runs helped bring about the great depression – which, in turn, led to the creation of the FDIC to restore consumer confidence in banks.

SVB's failure was the second-largest U.S. bank failure in history, behind the 2008 failure of Washington Mutual Bank. Hundreds of American banks failed during the 2008-09 global financial crisis. By contrast, not one American bank failed in all of 2021 and 2022.

On Sunday, a second bank – New York's Signature Bank – failed. Sure enough, just 11% of Signature Bank's money on deposit was FDIC insured, among the lowest figures of any American bank other than SVB's 6%.

As for other "regional banks," as banks such as SVB are often called?

"Most regional banks have a diverse set of depositors: households who remain below insured limits or loyal institutions that have longstanding, multiple-product relationships with the bank," Bair said. "These 'core' deposits are not prone to run."

Here are all Pennsylvania deposit banks with branches, ranked by size and showing the percentage of their deposited funds covered by FDIC insurance, with SVB also listed for comparison:

Source: CBS News analysis of Federal Reserve and FDIC data

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• Pennsylvania
• Silicon Valley Bank