Ann: Completion of Call Notice with LDA Capital, page-23

Lots of parallels? Really?
Silicon Bank:
Why did it collapse?
The collapse happened for multiple reasons, including a lack of diversification and a classic bank run, where many customers withdrew their deposits simultaneously due to fears of the bank's solvency. Many of SVB's depositors were startup companies. They deposited large amounts of cash from investors because tech was in high demand during the pandemic, said Jay Jung, founder and managing partner of Embarc Advisors.
Lack of diversification
Silicon Valley Bank invested a large amount of bank deposits in long-term U.S. treasuries and agency mortgage-backed securities. However, bonds and treasury values fall when interest rates increase.When the Federal Reserve hiked interest rates in 2022 to combat inflation, SVB's bond portfolio started to drop.
SVB would have recovered its capital if they held those bonds until their maturity date.Silicon Valley Bank used to lend out money in short durations. However, in 2021, they shifted to long-term securities such as treasuries for more yield, and they did not protect their liabilities with short-term investments for quick liquidations. They were insolvent for months because they could not liquidate their assets without a large loss.
When economic factors hit the tech sector, many bank customers withdrew money as venture capital started drying up. SVB didn't have the cash on hand to liquidate these deposits because they were tied up in long-term investments.
They started selling their bonds at a significant loss, which caused distress to customers and investors.Within 48 hours after disclosing the sale of assets, the bank collapsed.Bank runWhen SVB announced their $1.75 billion capital raising on March 6, people became alarmed the bank was short on capital. Word spread quickly on social media accounts such as Twitter and WhatsApp inducing panic that the bank didn’t have enough funds.
Customers started to withdraw money in waves. SVB's stock plummeted by 60% on March 7 after its capital raising announcement. Some people are saying the bank run was Twitter-fueled.
California regulators shut the bank down on March 8 and placed SVB under the FDIC.