Why Did SVB Fail? The 2023 Bank Run, Explained With Its Own Numbers

SVB failed because it combined two weaknesses that each looked survivable on its own. It had invested most of a deposit boom in long-term Treasury and mortgage bonds bought when rates were low, and those bonds lost value when rates rose in 2022. And its deposits came from a concentrated group of technology and venture-backed firms, almost all above the FDIC insurance limit, who could move money in minutes and talked to each other. When SVB sold bonds at a loss and said it needed new capital, those depositors ran. The Federal Reserve’s own review called it “a textbook case of mismanagement” and also faulted its supervisors (Federal Reserve, April 2023).

Scope. This page covers Silicon Valley Bank (failed March 10, 2023), with Signature Bank and First Republic as follow-on cases, using SVB’s audited 2022 annual report and regulators’ reviews. It does not rate any bank today or say whether to buy or sell bank shares. How runs spread in general, with other episodes, is in how financial crises spread. Education, not advice.

The bank grew from $71 billion of assets at the end of 2019 to over $211 billion in 2021 (Federal Reserve review). Deposits flowed in faster than it could lend, so it bought securities. Its 2022 annual report shows where the money sat on December 31, 2022 (SVB 10-K):

The accounting matters. Bonds a bank labels “held to maturity” are carried at cost, because the bank says it will not sell them; only “available for sale” bonds are marked to market in equity. AFS securities were carried on the balance sheet at their $26.1 billion fair value; the $28.6 billion figure is their cost basis. SVB’s $15.2 billion HTM gap was disclosed in the notes, but it did not reduce the $16.0 billion of reported equity. The figures are for the holding company; the FDIC’s bank-level figures for the same date were about $209.0 billion of assets and $175.4 billion of deposits (FDIC).

On the funding side, SVB reported in its regulatory call reports that 94% of its domestic deposits were uninsured at the end of 2022 (FDIC, 2024). The GAO found that uninsured deposits had been 70–80% of SVB’s total assets in 2018–2022, against a median of 31–41% for 19 peer banks (GAO). Why those bonds fell in price when rates rose is shown with a worked table in how the bond market works.

On Wednesday, March 8, 2023, SVB said it had sold $21 billion of securities at a $1.8 billion loss and planned to raise capital (GAO; Barr testimony). Selling turned a loss already reflected in equity into a realized earnings loss and told depositors the cushion was thin. On Thursday, March 9, depositors withdrew $42 billion, and the bank expected about $100 billion more on Friday (Federal Reserve working paper). California’s Department of Financial Protection and Innovation closed it on March 10 and appointed the FDIC as receiver. Fed Vice Chair for Supervision Barr wrote that social media and a networked depositor base “may have fundamentally changed the speed of bank runs”.

On Sunday, March 12, 2023, the Treasury Secretary, on the recommendation of the FDIC and Fed boards and after consulting the President, approved a systemic risk exception so the FDIC could protect all depositors of SVB and of Signature Bank, closed the same day. Shareholders and certain unsecured debtholders were not protected, and losses to the Deposit Insurance Fund are recovered from banks through a special assessment (joint statement). The Fed opened the Bank Term Funding Program, which lent to banks for up to a year against Treasury and agency securities valued at par (Federal Reserve).

The “at par” feature mattered most. A bank could borrow $100 against a bond with a market value of $85, so it did not have to sell and book the loss. It bought time; it did not make the loss go away. The Fed’s balance-sheet response in that week is covered in how financial crises spread, and how deposits are created and move between banks in how money is created.

Every number below comes from the 10-K filed on February 24, 2023, two weeks before the run, and the FDIC’s summary of the call reports. The arithmetic is reproducible.

The all-bank column uses the FDIC’s Quarterly Banking Profile for the fourth quarter of 2022 (FDIC): $620.4 billion of unrealized losses ($340.9 billion HTM, $279.5 billion AFS) against $2,207.3 billion of equity. The AFS loss is counted in full here even though part of it, after tax, was already in reported equity, so the 110% slightly overstates the extra hit; the HTM line alone is the cleaner comparison. Either way, SVB’s paper losses were about the size of its whole capital cushion, roughly four times the industry ratio, and almost all of its funding could leave without notice.

None of these checks predicts a failure or its date. They show how much damage a loss of confidence could do. Listed banks publish the numbers in their 10-K and 10-Q; quarterly figures are unaudited.

For your own cash, the protection is mechanical: FDIC insurance covers $250,000 per depositor, per insured bank, per ownership category (FDIC). Balances above that relied on the March 2023 emergency decision, which is not guaranteed to repeat. Options for large balances are compared in where to park large cash, and brokerage protection in SIPC coverage for large accounts. Bank stocks as a group can be followed through the financial sector ETF page.

No. US banks together held $620.4 billion of unrealized securities losses at the end of 2022, and the vast majority did not fail; a bank whose depositors stay can hold its bonds until they repay at par. Losses become fatal when funding leaves faster than the bank can raise cash without selling. A bank with large paper losses but mostly insured, granular retail deposits is in a different position from SVB, and a bank with many uninsured deposits but short-dated assets is too. Reading either number alone, or calling a bank “the next SVB” from one ratio, overstates the risk.

Limitations. These are hindsight checks on one case. Annual figures are at least six weeks old when published, and a run can happen within a quarter. Holding-company and bank-level numbers differ (above). Uninsured-deposit estimates are the banks’ own. Rules and supervisory practice have changed since 2023, and the Fed’s review said stricter supervisory and regulatory requirements might not have prevented the failure but would likely have made SVB more resilient. For the whole system around a bank, see how the financial system works.