13 posts tagged with "Finance"

Instant payments have quietly crossed the line from launch to infrastructure. Most of the country can reach a real-time rail now, which was not true a couple of years ago. But from where I sit, having spent a chunk of my career in payments, the milestone is not the interesting part. The interesting part is the gap between being connected to a rail and actually running meaningful volume across it, and the operational weight that real-time quietly piles onto a bank.

I've been thinking about the SVB collapse from the startup side. The banking analysis has been thorough. Duration mismatch, concentrated deposits, digital bank run. But there's another story that hits closer to home. The story of the founders who spent that weekend not knowing if they could pay their teams.

A month out from the SVB collapse, the immediate panic has subsided but the lessons haven't. The biggest one for me is a distinction that sounds simple but changes how I think about risk. SVB was well-capitalized. It ran out of cash. Those are two very different problems.

Silicon Valley Bank failed on Friday in roughly 48 hours. Watching this play out from the inside of the banking industry, what stood out was the speed and how cleanly the mechanics matched what the risk frameworks have always warned about.

Watching what rising rates have done to bank securities portfolios over the past year got me looking into the broader question. Unrealized losses on bonds are one thing. The bigger question is how rate movements affect an entire balance sheet, not just the securities line. That's what interest rate risk actually is, and I've been spending time trying to understand the framework bankers use to manage it.

There's a question that keeps coming up in every conversation about banking strategy. If most transactions happen digitally, what are branches for?

The Fed raised rates again this week, the seventh increase this year. The federal funds rate is now 4.25 to 4.50 percent. That's 425 basis points in nine months. I've been paying more attention to the securities line on the balance sheet lately, and now I'm trying to understand what all these rate hikes actually do to that portfolio.

The first time I sat down with a VC to talk about a raise, I assumed there was some formula behind the valuation number. Some model that spit out what the company was worth. There wasn't. The number on a term sheet is a lot less scientific than most people think, and figuring out how it actually gets set was one of the more useful things I learned raising money.

Schedule RC, the balance sheet section of the public call report, is where a bank lays out what it owns and owes, so I pulled one up to see how it is put together. I've read balance sheets before from my startup days, but a bank's looks different in several ways.

The call report keeps coming up in any conversation about bank financials. I realized I didn't really know what was in it. So I pulled one up.