Banking Sector Update

Wednesday, March 15, 2023

 

What happened?

We know that many of you are following the news regarding Silicon Valley Bank (or “SVB”) and Signature Bank. For those that haven’t heard, regulators shuttered both banks and seized deposits after growing concerns of their financial situation. Over the last couple years, those firms were flush with cash and their deposits flourished. However, following the Fed’s aggressive rate increases over the past year, those deposits shrunk at an exponential pace, forcing the banks to liquidate at a significant realized loss.

What about my CASH exposure specifically?

All cash held in accounts at the Trust Company is invested in a demand deposit program through Reich & Tang, a New York headquartered investment management firm dedicated solely to deposit, liquidity and cash management solutions. This program offers coverage up to $50 million per tax identification number by spreading out the deposits to 150+ participating banks nationwide. Notably, the program has no exposure to SVB or Signature Bank. 

  • Regarding Riverview Bank specifically, we have also attached the most recent communication from Riverview Bank President/CEO Kevin Lycklama.

Over the weekend, the Fed announced extensive new measures to stabilize the banking sector. Our portfolio positioning and diversification philosophy reflect the inevitability of market volatility. As a result, we do not recommend any portfolio changes in response to this scenario.

Many banking relationships are in flux which creates administrative complications and a higher likelihood of bad actors seeking to take advantage of this scenario. Please be vigilant. We recommend paying particular attention to updates and exercising caution before moving capital.

We will continue to monitor the situation. As always, please reach out with any questions and we will do our best to address them expeditiously.

Disclosures

INVESTMENT AND INSURANCE PRODUCTS ARE | NOT FDIC Insured | NOT bank guaranteed | MAY lose value

Riverview Trust Company investments are not insured or guaranteed by the Bank, the Federal Deposit Insurance Corporation or any other government agency. Non-deposit products are subject to investment risks, including possible loss of principal. Past performance does not indicate future results. Asset allocation does not assure or guarantee better performance and cannot eliminate the risk of investment losses.

Riverview Trust Company does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.