Silicon Valley Bank is the First Domino to Fall
$Pacific Premier Bancorp (PPBI.US)$The knock-on effect of the Silicon Valley Bank bankruptcy is still widening.
Since Silicon Valley Bank declared bankruptcy, the market has been trying to figure out which other banks are at similar risk. The panic in the market fermented, and the market value of small banks, which were already short of money, further evaporated. Customers concentrated in banks to withdraw cash, which led to increased risk of runs, resulting in a vicious circle.
Already three banks in the US have failed within a week, including the bankruptcy of Silvergate Capital, SVB Financial Group (SIVB) $SVB Financial (SIVB.US)$ and Signature Bank. The collapse of Signature Bank was largely due to the negative impact of the bankruptcy of Silicon Valley Bank, and customers began to concentrate on cash withdrawals, resulting in a run on the bank.
The net interest margin (NIM) of the company before the bankruptcy of Silicon Valley Bank has already hinted that the ratio of net interest income to average total assets in the fourth quarter of last year was only 1.93%, which was higher than 1.83% in the same period last year. The low net interest margin reflected that Silicon Valley Bank The double-whammy environment of rising interest rates and slowing loan growth in the venture capital space is not well positioned.
According to the indicator of net interest margin (NIM), we can screen out 10 banks with the lowest growth in net interest margin last year. These banks may also face the same predicament as Silicon Valley Bank, namely Customers Bancorp Inc. $Customers Bancorp (CUBI.US)$, First Republic Bank $First Republic Bank (FRC.US)$, Sandy Spring Bancorp Inc. $Sandy Spring Bancorp (SASR.US)$， New York Community Bancorp Inc. $New York Community Bancorp (NYCB.US)$， First Foundation Inc. $First Foundation (FFWM.US)$ , Ally Financial Inc. $Ally Financial (ALLY.US)$, Dime Community Bancshares Inc. $Dime Community Bancshares Inc (DCOM.US)$, Pacific Premier Bancorp Inc. $Pacific Premier Bancorp (PPBI.US)$ , Prosperity Bancshares Inc. $Prosperity Bancshares (PB.US)$ , Columbia Financial Inc. $Columbia Financial (CLBK.US)$ ).
As a result, First Republic fell nearly 60% pre-market, even though the company had just raised money from JP Morgan and the Federal Reserve.
At present, the bankruptcy of Silicon Valley Bank will not cause great systemic risks to the entire financial market, but it will have an impact on small banks facing similar situations and affect the liquidity of start-up technology companies.
The outbreak of this incident also made the market expect that the Fed will slow down raising interest rates, resulting in a sharp drop in the yield of the 10-year U.S. Treasury bond and a significant rise in bond prices.
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