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Banking & Finance

Silicon Valley Bank Failure’s Impact Felt In Wilmington

By Jenny Callison, posted Mar 10, 2023
Normally, a butterfly flapping its wings in Silicon Valley would not set off flutters in the Wilmington market. But the failure on Friday of a key financial institution there has sent tremors through the banking industry nationwide, with many bank stocks sliding.
 
Silicon Valley Bank, a lender to some of the biggest names in the technology world, became the second-largest bank to fail in U.S. history after depositors demanded their funds back.
 
“Once a darling of the banking business, Silicon Valley Bank collapsed at warp speed after it announced a big loss on its bondholdings and plans to shore up its balance sheet, tanking its stock and sparking widespread customer withdrawals,” according to the Wall Street Journal.
 
Stock prices of other banks and related companies around the country also fell.
 
Shares of Wilmington-based Live Oak Bank dropped 8.3% on Thursday to $30.51. As of Friday market's close, its stock was trading at $28.55, down 6.42%.

Wilmington-based nCino, a banking software company that spun out of Live Oak Bank, saw its shares drop 6.5% Thursday to $24.60. Its stock was trading at $23.11 at Friday's market close, down 6.36%.
 
As of press time Friday, Live Oak and nCino officials had not responded to a request for comment.
 
The local companies are not alone. Share prices of Wells Fargo, Truist, United Bank and Bank of America, among others, have declined since news of Silicon Valley Bank’s turbulence became widely known.
 
On Wednesday, Silicon Valley Bank announced plans to raise cash. Depositors began withdrawing their money, and the bank’s efforts to raise additional funds or sell itself failed.
 
The FDIC made its takeover known with a news release Friday.
 
“Silicon Valley Bank, Santa Clara, California, was closed today by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect insured depositors, the FDIC created the Deposit Insurance National Bank of Santa Clara (DINB). At the time of closing, the FDIC as receiver immediately transferred to the DINB all insured deposits of Silicon Valley Bank.”
 
Observers say that Silicon Valley Bank’s demise is part of the overall technology shakeup, with tech companies across the country tightening their belts and laying off employees. In January, nCino, which creates and supplies software for financial institutions, announced a layoff of 7% of its workforce, reflecting the broader trend.

NOTE: This version of the story reflects Live Oak and nCino share prices as of the close of business Friday.
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