It's Not Crypto That's Causing Banks To Suffer This Week

With Silvergate Capital (SI) stating that it was winding down operations and voluntarily dissolving its bank, the market appears to be fascinated, for better or worse, with determining what, if any, crypto exposure U.S. institutions have.

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The quick answer appears to be, not much, but banks have their own set of issues.

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Signature Bank, a commercial bank located in New York City with a limited crypto exposure, is down approximately 15% this week to a new low on its crypto exposure. Analysts are attempting to distinguish between Silvergate, a bank that was a key participant in the crypto industry, and other banks that had a passing interest in crypto.

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"Signature is Not Silvergate," PiperSandler analyst Mark Fitzgibbon wrote in a note this morning, noting that Signature's crypto deposits are close to 15% of deposits versus the vast majority of deposits at Silvergate, and that Signature's balance sheet is approximately ten times the size of Silvergate's.

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"As a result, they have a lot of different deposit verticals to fall back on," Fitzgibbon explained.

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That is a distinction without a difference at this time. Banks have also been under significant pressure from another source: fears about the Fed raising interest rates for an extended period of time have resulted in concerns about weaker economic activity, exposure to commercial real estate, and increased deposit fees.

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Under such conditions, big regional banks like as PNC, MTB, Zions Bank, and Comerica are trading at or near 52-week lows this week. Crypto is merely a minor element of a much larger set of concerns.

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This week's regional banks:

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• MTB                            - 8%
• Regions Financial       - 8%
• KeyCorp                      - 6%
• Fifth Third                   - 7%