A run on a Bay Area bank with billions in deposits prompted state regulators to close it Friday, according to court documents.
Santa Clara-based Silicon Valley Bank, which Forbes named last year as one of America's best banks, was shut down by the California Department of Financial Protection and Innovation.
Investors and depositors tried to withdraw $42 billion in deposits Thursday. That left the bank with a negative cash balance of nearly $1 billion Thursday, court documents said.
The run on the bank made it "incapable of paying its obligations as they come due, and the bank is now insolvent," officials with the California Department of Financial Protection and Innovation said in an order taking possession of the bank and its business.
The bank was in sound financial position Wednesday, but it sold U.S. treasuries and mortgage-backed securities that day and suffered a loss of $1.8 billion. That's what prompted customers to try to get their money before they couldn't.
Silicon Valley Bank has 17 branches in California and Massachusetts, including at 2400 Hanover St. in Palo Alto and 2770 Sand Hill Road in Menlo Park. It had more than $175 billion in deposits and $209 billion in assets at the end of the year.
In comparison, Washington Mutual had $307 billion in assets when it failed in September 2008. Washington Mutual and a subsidiary had combined deposits of $188 billion when JP Morgan Chase purchased it that year.
Regulators with the Federal Deposit Insurance Corporation, which insures deposits up to $250,000 for member institutions, said Friday that all insured depositors will have access to their insured deposits no later than Monday.
State regulators appointed the FDIC as receiver of Silicon Valley Bank to ensure insured customers have access to their money. Banking activities at Silicon Valley Bank will resume no later than Monday. That includes online services, federal officials said.
Federal regulators did not know Friday morning how much money Silicon Valley Bank had in uninsured deposits, but regulators will determine that amount when they get more information from the bank and its customers.
Customers with more than $250,000 in deposits at Silicon Valley Bank should get in touch with the FDIC at 866-799-0959. Customers with loans from Silicon Valley Bank should continue to make payments.
Silicon Valley Bank is the first FDIC-insured institution to fail in 2023.
No one from Silicon Valley Bank responded by mid-Friday afternoon to a request for comment.