Our previous article on the banking crisis looked at Silicon Valley Bank’s (SVB) 2022 10-K to determine the reason for their failure. Our analys

What the Hell is Beeping?

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2023-03-26 15:00:09

Our previous article on the banking crisis looked at Silicon Valley Bank’s (SVB) 2022 10-K to determine the reason for their failure. Our analysis revealed that the bank’s customers had fewer deposits, and its debt portfolio incurred mounting losses due to inadequate risk management. Both of these situations were largely attributed to Silicon Valley Bank’s inability to respond to rising interest rates.

So the next question in the banking crisis of 2023, is this crisis just limited to Silicon Valley Bank? Business media reports that First Republic Bank is next, and that other regional banks are also under pressure. In this article, I will utilize the findings from our previous analysis of Silicon Valley Bank to create a screener to identify other banks that may be in jeopardy.

For the first result, we’ll model by looking at \frac{(Current\ Year\ Deposits – Prior\ Year\ Deposits)}{Prior\ Year\ Deposits} . For the losses on investments, we need to look two items. First, we look at Other Comprehensive Income as a percentage of Deposits or \frac{Other\ Comprehensive\ Income}{Prior\ Year\ Deposits} which will give insight into realized gains or losses as well as unrealized gains or losses on debt held available for sale. Second, we want to review unrealized losses on assets held to maturity which are not part of net income or OCI. Thus, we look at \frac{Unrealized\ Gains/Losses\ on\ HTM\ Securities}{Prior\ Year\ Deposits} . We’ll also want to look at OCI and Net Income.

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