SILICON VALLEY BANK: BARGAIN BUY OR A BANKRUPT?

On March 8, 2023, Andrew, a fund manager at a US investment firm, was shocked to hear about
California- based Silicon Valley Bank’s (SVB) USD 1.8 billion losses on the sale of its bond investments.
Later that same day, Andrew also saw SVB’s announcement of an offer to raise capital for USD 2.25
billion2.3 . The bond loss had an immediate effect on SVB’s share price, which fell by a massive 66 per
cent the next day.4 The share price of SVB, the main subsidiary of SVB Financial Group (SVBFG), was
expected to fall further in the coming days. Andrew was also surprised to learn that just a few days prior,
SVB was the 16th largest bank in the United States5, with Forbes ranking it as one of America’s best
banks for the year 2023.6 In his fifteen-year career, Andrew had never witnessed such a substantial fall of
a prominent bank, except for the failure of Washington Mutual in 2008.7 While bank defaults and losses
were not uncommon, Andrew wondered how a well-known mid-size bank like SVB could get itself into
such a financial disaster.

Many of Andrew’s clients believed that SVB’s core fundamentals were still sound and were keen to
invest at the current market price of USD 267—or lower if the price continued to fall. They argued that
even though both the NASDAQ and SVB’s shares had fallen in the previous year 2022 (Exhibit 1), the
company held long-term growth potential. But Andrew’s clients sought his quick advice on whether SVB
was still a good investment option at the current valuation or if the bank was doomed to fail. SVB group
also had some non-bank-operating units, including SVB Capital, an investment firm, and SVB Securities,
a brokerage firm. To answer his clients’ queries, Andrew decided to identify the reasons behind SVB’s
financial crisis and examine its financial statements to estimate if there were any signs of financial
distress. Since his observations from the reported financials could only give subjective verification,
Andrew decided to use an objective probabilistic model, the probability of financial distress (PFD),8 to
estimate the solvency position of the bank.

HISTORY OF SVB

SVB was founded in Santa Clara, California, in 1983,9 although its website stated. “There are many ways
to describe us. ‘Bank’ is just one”10. SVB claimed to be a financial partner of the innovation economy
because it specialized in financing and banking for half the venture capital-backed start-up companies.11
So, SVB was aptly named as it held funds for hundreds of tech companies operating in Silicon Valley and
played a significant role in their industries.
Page 2

SVB had emerged as one of the most favoured banks in the tech sector by providing finance to start-up
companies, which most banks would not provide because of the higher risk. Building strong relationships
around the venture capital community, SVB believed in understanding and trusting its clients. Therefore,
start-ups and technology funds had parked most of their funds with SVB, which encompassed 67 per cent
of SVB’s liabilities.12 By the start of the pandemic in 2020, deposits had skyrocketed, and by December
31, 2022, SVB held USD 211 billion in assets and USD 173 billion in deposits as liabilities (Exhibit 2).

FINANCIAL PERFORMANCE

In comparison to earlier years, SVB’s financial statements13 for 2021–2022 clearly showed the impact of
frequently rising interest rates. Asset growth slowed severely in the year 2022, as tech sector activity
slowed in the rising interest rate environment. In the second half of 2022, the reduced business activity in
the tech sector meant that venture capital firms’ investments had also slowed. Further, the rising interest
rates raised concerns about the US economy. Likewise, reduced business activity led to slower inflows
into SVB, which caused demand deposits to fall by 36 per cent between 2021 and 2022 (see Exhibit 2).
As clients withdrew more cash to fund their own operations, SVB had to resort to short-term borrowings
to fund these demands. SVB’s short-term borrowings increased by 190 per cent between 2021 and 202214
(Exhibit 2). Due to rising interest rates and increased borrowings, the total interest expense went up by
980 percent, between the years 2021 and 2022. 15 Likewise, the decline in non-interest income by 37 per
cent and the increase in non-interest expenses by 18 per cent caused SVB’s operating profit to decline by
20 per cent in 2022 (see Exhibit 3).

By the end of 2022, SVB’s held to maturity (HTM) portfolio, as a percentage of its total securities, was
78 per cent, nearly double the large banking organization’s16 average. Overall, in 2022, the financial
situation was increasingly tougher for SVB.

NEARING A CRISIS?

Post-pandemic, and in response to rising inflation levels, the Federal Reserve raised interest rates seven17
times between March and December 2022 (see Exhibit 5). With the sharp rise in interest rates, in 2022,
the bond market plunged.18 As a result, SVB’s holdings, dominated primarily by US Treasury bonds and
long-term mortgage securities,19 devalued considerably20. Rising interest also impacted the start-up
community, as their ability to raise funds was getting costlier. And to keep their businesses running, tech
sector companies were forced to withdraw their funds from SVB, resulting in a massive rush on SVB for
short-term withdrawals.21

While most of the Silicon Valley start-ups that had deposited hundreds of millions of dollars with SVB
now had no surety of cash availability at SVB and rushed to withdraw their deposits22, SVB was short of
funds. SVB did not have enough cash to take care of its capital requirements—dubbed “the Lehman
Moment for the Start-up World”—which kicked off a perfect storm. With panicked depositors
withdrawing cash and investors pulling out of its stock on a large scale, SVB’s share price crashed by a
record 60 per cent in a single day,23 creating ripples across the investment world and pushing SVB to the
brink of collapse.24 Eighty-five per cent of the deposits at SVB were uninsured since they were higher
than the threshold level of USD 250,000, the maximum amount at which deposit insurance was provided
by Federal Deposit Insurance Corporation.25 Since the bank was unable to meet the withdrawal demands
of its depositors, this situation further exacerbated the crisis. It was expected that within a few days, the
ripple effect of the SVB bank collapse would be felt across the US banking industry26.

Andrew discovered that SVB did not have a full-time chief risk officer for 8 months in 202227,
compounding its risk management woes. The long-term investments and accounting method for recording
its long-term
Page 3

investments also contributed to SVB’s crisis. To maximize its yield, SVB invested nearly 75 per cent of
its deposits (USD 80 billion)28 in US Treasury securities and mortgage-backed securities (MBS),29 with
long- dated maturities. These securities had low credit risk but high-interest rate risk, with an average
duration of about six years30. Besides, they were accounted as HTM assets, meaning that they would be
recorded at amortized cost31 and not at fair value. SVB’s balance sheet for the year 2022 reflected USD
91.3 billion as HTM assets, while the fair value was only USD 76.2 billion.32 The rise in interest rates did
play a role in SVB’s financial distress, but Andrew was convinced that this was not the primary cause of
its failure. Substantial investments in MBS and SVB’s accounting rules also played a major role. Hence,
Andrew decided to delve deeper and identify the other possible reasons.

DOMINO EFFECT

The unexpected turn of events at SVB was likely to have an immediate impact on the financial services
industry.33 Many prominent technology companies relied on SVB for crucial financial services like
lending, cash management, and investment banking, and SVB has played a critical role in financing
innovative and high-growth companies within the sector. With SVB’s current condition, these companies
could face difficulty in securing the necessary financing to sustain their innovation and growth. SVB’s
losses of USD
1.8 billion and the subsequent call for raising money signalled an extreme shortage of funds at SVB.34
Being a major player in the banking industry, SVB had established relationships with numerous banks
and financial institutions worldwide and its failure could have geopolitical ramifications, affecting
companies and governments globally, particularly in the technology sector35.

TASK AT HAND

SVB was an unusual case of how a successful, large, and solvent bank could witness such a crisis in one
day. Andrew wondered, were there any red flags that had0 signalled this downfall? Did the bank miss any
risk management factors? Did SVB missed clear warnings of distress? To answer his investors’ queries
and concerns, Andrew decided to analyze SVB on two fronts: a subjective analysis of the operational
aspects and its shortcomings in risk management and internal controls; and an objective analysis of its
financial statements to ascertain if the distress was evident, leading to bankruptcy. To assess the
bankruptcy risk, Andrew intended to use the PFD model that quantifies a company’s bankruptcy risk in
the upcoming year.

THE PFD MODEL

John Campbell, Jens Hilscher, and Jan Szilagyi developed a logit probability model based on eight
explanatory variables.36 PFD was different from other financial distress models like the Altman Z score (a
classic financial distress estimation model). Since the Z score considered factors like working capital for
computation, it does not apply to banks and financial institutions that typically did not have current assets
and current liabilities.37 Hence, Andrew believed that using PFD for the SVB bankruptcy prediction
would be suitable. The variables he used for the PFD estimation were as follows:

• net income to market total assets

• total liabilities to market total assets
• cash to market total assets
• excess return compared to the S&P 500 (i.e., market index)
• standard deviation of daily returns over the past three months
Page 4

• relative size
• market-to-book equity ratio
• the log of the stock price, capped at log (15)

The formula to compute the logit probability of financial distress (LPFD) was:

LPFD = -20.12 * NIMTAAVG + 1.60 * TLMTA – 7.88 * EXRETAVG + 1.55 * SIGMA – 0.005 * RSIZE – 2.27 *
CASHMTA + 0.070 * MB – 0.09 * PRICE – 8.87 --- eq. n (1)

To compute the PFD, Andrew divided exp (LPFD) by one plus exp (LPFD), where “exp” represented the
exponential function. This PFD assessed the likelihood that a firm would go bankrupt during the next
twelve months, based on its current financial situation. Exhibit 6 provided the information necessary to
calculate the variables in the PFD equation.
Page 5

EXHIBIT 1: SVB AND NASDAQ COMPOSITE INDEX

(JANUARY 1, 2022, TO MARCH 8, 2023)

800 18000

16000

USD in thousands ('000) (NASDAQ)

700
USD in hundreds ('00) (SVB)

14000
600
12000
500
10000
400
8000
300
6000
200
4000
100 2000

0 0
2/2/2022

3/7/2022

4/6/2022

5/9/2022

6/9/2022

1/4/2023

2/6/2023
1/18/2022

2/17/2022

3/22/2022

4/22/2022

5/24/2022

6/27/2022
7/13/2022
7/28/2022
8/12/2022
8/29/2022
9/14/2022
9/29/2022

12/1/2022

1/20/2023

2/22/2023
10/14/2022
10/31/2022
11/15/2022

12/16/2022
SVB NASDAQ

Note: Daily movements of SBV and NASDAQ Index from January 1, 2022, to March 8, 2023.
Source: Prepared by case authors from data collected from Yahoo Finance, n. d., accessed October 20, 2023,
https://finance.yahoo.com/quote/SIVBQ/history?period1=1640995200&period2=1678233600.
Page 6

EXHIBIT 2: BALANCE SHEET (2021 AND 2022) (USD IN BILLIONS)

Particulars December 31, % change

2022 2021
Assets
Cash and cash equivalents 13.803 14.58
Available-for-sale securities, at fair value 26.069 27.22
Held-to-maturity securities 91.321 98.19
Non-marketable and other equity securities 2.664 2.543
Total investment securities 120.054 127.9 -6.18
Loans, amortized cost 74.25 66.27
Allowance for credit losses: loans ˗0.636 ˗0.422
Net loans 73.614 65.854 11.78
Premises and equipment 0.394 0.27
Goodwill 0.375 0.375
Other intangible assets, net 0.136 0.16
Lease right-of-use assets 0.335 0.313
Accrued interest receivable 3.082 1.791
Total assets 211.79 211.3
Liabilities and total equity
Liabilities:
Noninterest-bearing demand deposits 80.753 125.85 ˗35.83
Interest-bearing deposits 92.356 63.352 45.78
Total deposits 173.109 189.2 ˗8.51
Short-term borrowings 13.565 0.071 190.06
Lease liabilities 0.413 0.388
Other liabilities 3.041 2.467
Long-term debt 5.37 2.57 108.95
Total liabilities 195.498 194.69
SVBFG stockholders' equity: 16.295 16.609
Total liabilities and total equity 211.79 211.3

Note: SVBFG = Silicon Valley Bank Financial Group.

Source: Prepared by the case authors based on SVB balance sheets. SVB Financial Group, Form 10-K 2021, n. d.,
accessed October 22, 2023, https://d18rn0p25nwr6d.cloudfront.net/CIK-0000719739/a4d73acb-d9f8-4272-a4f7-
885ca051dde6.pdf; SVB Financial Group, Form 10-K 2022, n. d., accessed October 22, 2023,
https://d18rn0p25nwr6d.cloudfront.net/CIK- 0000719739/4b031df0-621a-429e-95ec-1ba5f88b029d.pdf.
Page 7

EXHIBIT 3: INCOME STATEMENTS (2021 & 2022) (USD IN BILLIONS)

Income statement Year ended December 31 % change

Particulars 2022 2021
Interest income:
Loans 3,208 1.966
Investment securities:
Taxable 2.113 1.199
Non-taxable 0.14 0.106
Federal funds sold; securities purchased under
agreements to resell and other short-term
investment securities 0.212 0.018
Total interest income 5.673 3.289
Interest expense:
Deposits 0.862 0.062
Borrowings 0.326 0.048
Total interest expense 1.188 0.11 980.00
Net interest income 4.485 3.179
Provision for credit losses 0.42 0.123
Net interest income after provision for credit losses 4.065 3.056 33.02
Non-interest income:
Gains (losses) on investment securities, net ˗0.285 0.761
Wealth management and trust fees 0.083 0.044
Foreign exchange fees 0.285 0.262
Credit card fees 0.15 0.131
Deposit service charges 0.126 0.112
Lending related fees 0.094 0.076
Letters of credit and standby letters of credit fees 0.057 0.051
Investment banking revenue 0.42 0.459
Commissions 0.098 0.079
Other 0.166 0.128
Total non-interest income 1.728 2.738 -36.89
Non-interest expense:
Compensation and benefits 2.293 2.015
Professional services 0.48 0.392
Premises and equipment 0.269 0.178
Net occupancy 0.101 0.083
Business development and travel 0.085 0.024
FDIC and state assessments 0.075 0.048
Merger-related charges 0.05 0.129
Other 0.268 0.201
Total non-interest expense 3.621 3.07 17.95
Income before income tax expense 2.172 2.724 ˗20.26
Income tax expense 0.563 0.651
Net income before noncontrolling interests and dividends 1.609 2.073
Net loss (income) attributable to noncontrolling interests 0.063 ˗0.24
Preferred stock dividends (USD) ˗163 ˗63
Net income available to common stockholders (USD) 1,509 1,770

Note: FDIC = Federal Deposit Insurance Corporation.

Source: Prepared by the case authors based on SVB balance sheets. SVB Financial Group, Form 10-K 2021, n. d.,
accessed October 22, 2023, https://d18rn0p25nwr6d.cloudfront.net/CIK-0000719739/a4d73acb-d9f8-4272-a4f7-
885ca051dde6.pdf; SVB Financial Group, Form 10-K 2022, n. d., accessed October 22, 2023,
https://d18rn0p25nwr6d.cloudfront.net/CIK- 0000719739/4b031df0-621a-429e-95ec-1ba5f88b029d.pdf.
Page 8

EXHIBIT 4: SHORT-TERM DEBT INTEREST RATES

Particulars 2022 2021

Weighted average interest rate during the year: % %
Short-term FHLB advances 3.72 —
Federal funds purchased 0.97 0.13
Securities sold under agreements to repurchase 1.86 0.05
Other short-term borrowings 3.73 0.30

Note: FHLB = Federal Home Loan Bank.

Source: Prepared by the case authors based on SVB balance sheets retrieved from the SVBFG website. SVB Financial
Group, Form 10-K 2021, n. d., accessed October 22, 2023, https://d18rn0p25nwr6d.cloudfront.net/CIK-
0000719739/a4d73acb-d9f8- 4272-a4f7-885ca051dde6.pdf; SVB Financial Group, Form 10-K 2022, n. d., accessed October
22, 2023, https://d18rn0p25nwr6d.cloudfront.net/CIK-0000719739/4b031df0-621a-429e-95ec-1ba5f88b029d.pdf.

EXHIBIT 5: FEDERAL RATE CHANGES (MARCH 2022 TO MARCH 2023)

FOMC meeting Federal funds rate

March 22, 2023 4.75% to 5.00%
February 1, 2023 4.50% to 4.75%
December 14, 2022 4.25% to 4.50%
November 2, 2022 3.75% to 4.00%
September 21, 2022 3.00% to 3.25%
July 27, 2022 2.25% to 2.50%
June 16, 2022 1.50% to 1.75%
May 5, 2022 0.75% to 1.00%
March 17, 2022 0.25% to 0.50%

Note: FOMC = Federal Open Market Committee; BPS = basis points.

Source: Prepared by case authors, based on Michael Adams, “Federal Funds Rate History 1990 to 2023,” Forbes, March
21, 2024, https://www.forbes.com/advisor/investing/fed-funds-rate-history/.
 Page 9

EXHIBIT 6: DATA FOR ESTIMATING PFD

S. Latest 2nd 3rd 4th

Variables Score
no. Quarter Latest Latest Latest
1 NIMTAAVG
Dec-22 Sep-22 Jun-22 Mar-22
Net income 305 418 353 533 Sum of quarterly weights
multiplied by quarterly values
Market value (equity) 13,020 20,140 23,530 33,550 of ratios.
Total liabilities 195,498 197,057 198,113 203,995
Weights 0.5333 0.2666 0.1333 0.0666
TLMTA
2 Total liabilities / market total assets (i.e., total liabilities + quarterly market cap of equity)
CASHMTA
3 Cash and cash equivalent of the current year / market total assets
4 EXRETAVG
Month Count SVB NASDAQ Factor
Feb-23 0 300.69 12,006.00 0.2201
Jan-23 1 232.17 10,569.29 0.1747 Factor adjusted excess return
Dec-22 2 231.69 11,461.50 0.1386 of SVB compared to the
Nov-22 3 235.66 10,475.29 0.1100 benchmark index (NASDAQ)
for the past twelve months
Oct-22 4 341.34 10,652.41 0.0873
(i.e., February 2022 to
Sep-22 5 400.22 11,630.82 0.0693 February 2023). Estimate
Aug-22 6 398.55 12,657.56 0.0550 monthly returns of SVB and
Jul-22 7 393.58 11,127.85 0.0437 NASDAQ; difference to find
the excess monthly return and
Jun-22 8 492.47 12,012.35 0.0347 multiply with monthly factors
May-22 9 491.39 12,144.66 0.0275 and summate to find the value.
Apr-22 10 562.04 14,261.45 0.0218
Mar-22 11 603.58 13,313.42 0.0173
Feb-22 12 580.53 14,098.12 —
SIGMA
Estimate the standard deviation of daily returns of SVB share prices over the past three months (i.e.,
5 December 2022 to end of February 2023)
RSIZE
6 Log ratio of SVB market capitalization to that of the NASDAQ index for the latest period (i.e., March 2023)
Market value
SVB 6.28 NASDAQ 26.73
MB
7 Market value to book value ratio (MB) is USD 285, BV is 270 as on March 2023
PRICE
8 Log15 of stock price of SVB (March 7, 2023) is USD 285
LPFD
LPFD =-20.12 * NIMTAAVG + 1.6 * TLMTA - 7.88 * EXRETAVG + 1.55 * SIGMA - 0.005 * RSIZE - 2.27 *
CASHMTA + 0.07 * MB - 0.09 * PRICE - 8.87
PFD
Exp (LPFD) / (1+Exp (LPFD));
A probability nearer to 1 indicates risk of bankruptcy in the next 12 months with the current financials

Note: PFD = probability of financial distress; NIMTAAVG = net income to market total assets; TLMTA = total liabilities to market total assets; CASHMTA =
cash to market total assets; EXRETAVG = excess return compared to the S&P 500; SIGMA = standard deviation of daily returns over the past three
months; RSIZE = relative size; MB = market value to book ratio; LPFD = logit probability of financial distress; Exp = exponent.
Source: Prepared by authors based on information from secondary sources: SVB market value (market capital) retrieved from “SVB Financial Group,”
CompaniesMarketCap.com, n. d., accessed October 22, 2023, https://companiesmarketcap.com/svb-financial/marketcap/; net income retrieved from
“Important Information – Q4 2022 Earnings,” SVB, n. d., accessed October 22, 2023, https://ir.svb.com/financials/quarterly-results/default.aspx; monthly
SVB share prices and NASDAQ index values retrieved from “SVB Financial Group,” Yahoo Finance, n. d., accessed October 24, 2023,
https://finance.yahoo.com/quote/SIVBQ/history.
Page 10

ENDNOTES
1
This case has been written on the basis of published sources only. Consequently, the interpretation and perspectives presented
in this case are not necessarily those of the Silicon Valley Bank or any of its employees.
2
All dollar amounts are in US dollars unless otherwise specified
3
Joshua Franklin and Antoine Gara, “Silicon Valley Bank Launches $2.25bn Share Sale to Shore Up Capital Base,” Financial
Times, March 8, 2023, https://www.ft.com/content/f55df9d1-386a-4643-8194-095228741054.
4
Peter Cohan, “Pre-Halt, Silicon Valley Bank Stock Plunged 87%. Why? What to Do?,” Forbes, March 10, 2023,
https://www.forbes.com/sites/petercohan/2023/03/10/pre-halt-silicon-valley-bank-stock-plunged-87-why-what-to-
do/?sh=26bb3855c3e3.
5
Amanda Hetler, “Silicon Valley Bank Collapse Explained: What You need to Know,” Tech Target, April, 20, 2023,
https://www.techtarget.com/whatis/feature/Silicon-Valley-Bank-collapse-explained-What-you-need-to-know
6
Rachel Rabkin Peachman, “America’s Best Banks in Each State,” Forbes, June 20, 2023,
https://www.forbes.com/lists/best- in-state-banks/?sh=aab2424709e4.
7
Kimberly Amadeo, “Washington Mutual and How It Went Bankrupt,” The Balance, October 12, 2021,
https://www.thebalancemoney.com/washington-mutual-how-wamu-went-bankrupt-3305620.
8
GuruFocus, “New Calculation: The Probability of Financial Distress,” NASDAQ, December 5, 2017,
https://www.nasdaq.com/articles/new-calculation-probability-financial-distress-2017-12-05.
9
Amanda Hetler, “Silicon Valley Bank Collapse Explained: What You Need to Know,” Tech Target, April, 20, 2023,
https://www.techtarget.com/whatis/feature/Silicon-Valley-Bank-collapse-explained-What-you-need-to-know.
10
Failed Silicon Valley Bank Was Everything, All At Once For Tech Startups. Michael Tobin and Hannal Miller. March 10,
20204. https://www.ndtv.com/world-news/what-silicon-valley-bank-meant-to-startups-investor-lender-networker-3856209
11
Bloomberg, “How Silicon Valley Bank Served Tech Industry and Beyond,” The Times of India, March 11, 2023,
https://timesofindia.indiatimes.com/business/international-business/how-silicon-valley-bank-served-tech-industry-and-
beyond/articleshow/98561042.cms?from=mdr.
12
Jack Milligan, “An Ecosystem of One: How SVB Financial Became the Venture Capital Industry’s Leading Bank,” Bank
Director, 1st Quarter, 2022, 17, https://www.svb.com/contentassets/466600f7f44349c8b6e7e9a28bf168e1/bank-director-
magazine-january-2022.pdf.
13
SVB’s financial statements, a a subsidiary of SVBFG, were published under the SVBFG. See “Review of the Federal
Reserve’s Supervision and Regulation of Silicon Valley Bank - April 2023,” Federal Reserve, n. d., accessed April 3, 2024,
https://www.federalreserve.gov/publications/2023-April-SVB-Evolution-of-Silicon-Valley-Bank.htm.
14
“Important Information – Q4 2022 Earnings,” SVB, n. d., accessed April 3, 2024, https://ir.svb.com/financials/quarterly-
results/default.aspx.
15
Statistica Research Department, November 6, 2023, Inflation rate and Federal Reserve interest rate monthly in the United
States from January 2018 to September 2023, https://www.statista.com/statistics/1312060/us-inflation-rate-federal-reserve-
interest-rate-monthly/
16
“Review of the Federal Reserve’s Supervision and Regulation of Silicon Valley Bank - April 2023, October 3, 2023.
https://www.federalreserve.gov/publications/2023-April-SVB-Evolution-of-Silicon-Valley-
Bank.htm#:~:text=As%20of%20year%2Dend%202022%2C%20SVBFG's%20securities%20portfolio%20as%20a,58.
17
“The Case for Carry in 2023,” SVB, March 28, 2024, https://www.svb.com/market-insights/market-analysis/the-case-for-carry-
in-2023/.
18
Sagar Lele, “Lessons Learned: The Collapse of SVB and What Retail Investors Can Do to Protect Their Portfolios,” The
Economic Times, March 18, 2023, https://economictimes.indiatimes.com/markets/stocks/news/lessons-learned-the-collapse-
of-svb-and-what-retail-investors-can-do-to-protect-their-portfolios/articleshow/98751644.cms?from=mdr.
19
Howard Marks, “Lessons from Silicon Valley Bank,” Oak Tree Capital, April 17, 2023,
https://www.oaktreecapital.com/insights/memo/lessons-from-silicon-valley-bank.
20
How SVB Was Doomed by a Bad Bet on Mortgage Securities and the Fed’s Rate Hikes. April 10, 2024.
https://www.barrons.com/articles/svb-silicon-valley-bank-rates-securities-693c931c
21
“The Silicon Valley Bank Collapse Explained,” School of Law, University of Washington, March 20, 2023,
https://www.law.uw.edu/news-events/news/2023/svb-
collapse#:~:text=Over%20a%20period%20of%20just,after%20Washington%20Mutual's%20in%202008.
22
Amanda Hetler, “Silicon Valley Bank Collapse Explained: What You Need to Know,” Tech Target, April, 20, 2023,
https://www.techtarget.com/whatis/feature/Silicon-Valley-Bank-collapse-explained-What-you-need-to-know.
23
Sunhil Dhawan, “Bank Run: SVB Stock Trading Halted after Tanking 60% on Thursday,” Financial Express, March 10,
2023, https://www.financialexpress.com/business/investing-abroad-bank-run-svb-stock-price-falls-over-40-in-pre-market-
after- tanking-60-on-thursday-3004993/.
24
“US Bank Stocks Crash: Panic at Silicon Valley Bank, 60% Value Lost amid Desperate Capital Raise Attempt,” Financial
Express, March 10, 2023, https://www.financialexpress.com/business/banking-finance-us-bank-stocks-crash-panic-at-
silicon- valley-bank-60-value-lost-amid-desperate-capital-raise-attempt-3004305/.
25
FDIC stands for Federal Deposit Insurance Corporation. FDIC is an independent federal agency insuring deposits in U.S.
banks and thrifts in the event of bank failures. Most of SVB deposits are not insured. See Andrew R. Chow, “More than 85%
of Silicon Valley’s Bank’s Deposits Were Not Insured. Here’s What That Means for Customers,” Time, March 10, 2023,
https://time.com/6262009/silicon-valley-bank-deposit-insurance/.
26
Arjun Kharpal, “ SVB’s failure will have a ripple effect across technology ‘for years to come”, CNBC , March 14, 2023,
https://www.cnbc.com/2023/03/15/svbs-failure-will-have-a-ripple-effect-across-technology-for-years.html
Page 11

27
US regulator cites 'terrible' risk management for Silicon Valley Bank failure. Pete Schroeder. January 24, 2024.
https://www.reuters.com/markets/us/us-regulators-face-sharp-questions-congress-over-bank-collapses-2023-03-28/
28
Marks, “Lessons.”
29
A bank lends the loans and then sells them at a discount to be packaged as MBSs to investors as a type of collateralized
bond. See Julia Kagan, “Mortgage-Backed Securities (MBS): Definition and Types of Investment,” Investopedia, October 19,
2023, https://www.investopedia.com/terms/m/mbs.asp.
30
Silicon Valley Bank: A Failure in Risk Management. Clifford Rosi. January 28, 2024. https://www.garp.org/risk-
intelligence/market/silicon-valley-bank-031423
31
“What Is Amortized Cost?,” Vintti, December 21, 2023, https://www.vintti.com/blog/what-is-amortized-cost/.
32
Sandy Peters, “The SVB Collapse: FASB Should Eliminate ‘Hide-‘Til-Maturity’ Accounting,” CFA Institute, March 13, 2023,
https://blogs.cfainstitute.org/marketintegrity/2023/03/13/the-svb-collapse-fasb-should-eliminate-hide-til-maturity-accounting/.
33
Michael Barron, “Effects of the Silicon Valley Bank Collapse,” Global Edge, March 21, 2023,
https://globaledge.msu.edu/blog/post/57251/effects-of-the-silicon-valley-bank-colla.
34
Saumya, “SVB Crisis: What Are Its Implications on the Economy and Markets?,” Jagran Josh, March 14, 2023,
https://www.jagranjosh.com/general-knowledge/svb-crisis-implications-on-economy-and-markets-1678699322-1.
35
Effects of the Silicon Valley Bank Collapse. Michael Barron. March 10, 2024.
https://globaledge.msu.edu/blog/post/57251/effects-of-the-silicon-valley-bank-colla
36
John Y. Campbell, Jens Hilscher, and Jan Szilagyi, “In Search of Financial Distress,” The Journal of Finance LXIII, no. 6
(2008, December): 2899–2939, https://scholar.harvard.edu/files/campbell/files/campbellhilscherszilagyi_jf2008.pdf.
37
GuruFocus, “New Calculation.”