The FDIC today released a detailed analysis of the 2023 spring bank failures, finding that depositors with “substantial” uninsured funds were far more likely to run during the stress than insured retail depositors.
The analysis of the Silicon Valley Bank, Signature Bank and First Republic Bank failures provides “a day-by-day look at depositor behavior” around the time of each closure, according to the FDIC. Uninsured deposits comprised nearly three-quarters of deposits at SB and FRB, and 94% of deposits at SVB. Also, all three banks had large concentrations of deposits among a relatively small number of depositors.
The report found that fully insured retail deposits, which were held by the vast majority of depositors at each bank, were far less likely to run. It also found that the largest depositors at all three banks were significantly more likely to leave during the stress compared to other uninsured depositors.
In a statement, FDIC Chairman Travis Hill said that he has long held that regulators need a more sophisticated understanding of deposit behavior.
“This study provides a highly detailed account of deposit flows during the fastest bank runs in U.S. history and deepens our understanding of run dynamics in today’s banking environment,” he said.
