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SVB and how to check if your bank deposits will make it?

from the Morning Brew

After Silicon Valley Bank rained volcanic hellfire upon the startup industry, some folks wanted to know: What do I do if my bank fails? Well, what if we told you there’s a way to keep an eye on your bank’s business practices that may make it easier to predict SVB-style mayhem? It all comes down to your bank’s balance sheet. But what’s a balance sheet, and why does it matter to the everyday bank customer?

Balance sheets are essentially financial statements.They cover a gaggle of capital ratios that can give shareholders an idea of a company’s financial health. For example, the asset-to-liability ratio—also known as the quick ratio—helps determine a bank’s solvency or its ability to repay your deposits.

So, where do you find these mystical troves of data? The FDIC has the info for all FDIC-insured banks (WSJ also keeps a log). For example, here’s US Bank. As you can see, in 2022, the bank’s net loans—$381,277—were less than the net deposits of $524,976. That’s a mark of good liquidity. And, in banking, liquidity is a good thing. Unless the liquid in question is, ahem, hellfire pouring from the sky. (Sorry, SVB.)—Lillian

Florin Muresan
Innovator & CEO
Everything In Life Is Touched by Digital Magic. I brought Digital Magic Into The World Through 29 Products I’ve Built and Sold World-Wide

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