PHOENIX — If you don't work for a start-up tech company or invest in one, chances are you've never heard of Silicon Valley Bank. But your tax dollars helped bring the bank to Arizona.
Here are three things to know about the California-based bank that collapsed over the weekend, the largest bank failure since the Great Recession:
What is Silicon Valley Bank?
It's not like the consumer-focused banks most Arizonans rely on. SVB is a unique bank with a single mission.
"That's what's so significant and unusual about this particular bank," Andrew Ross Sorkin. co-anchor of CNBC's "Squawk Box" said in an interview Monday.
"The depositors, for the most part, weren't just mom-and-pops."
Many of the bank's customers' were significant start-up tech companies. Some had the financial backing of billionaires, such as Peter Thiel.
For start-ups funded by venture capital, the bank could provide hard-to-get services like a line of credit.
"You heard very vocally from them all weekend pressing the government to bail them out," Sorkin said.
The Biden Administration is bailing out the bank's depositors, not the SVB executives or shareholders.
"That means that small businesses, especially in Silicon Valley, that were making payroll for tech startups, they don't have to worry about the fact that they had a million or two in SVB," said Professor Dennis Hoffman, of the Office of the University Economist at Arizona State University.
"If they didn't do that, folks in at that size level would be moving that money to different financial institutions. It would have created this contagion around the country that would not have been healthy for the banking system."
The depositors are based worldwide, including high-profile names such as Roku, Roblox, and the cryptocurrency firm Circle, which parked $3 billion in coin reserves at SVB.
The bank's new chief executive officer, former Fannie Mae CEO Tim Mayopoulos, as well as other bank executives, have been active on social media, assuring clients they are conducting "business as usual."
Mayopoulos says he was part of the leadership team at Fannie Mae in the wake of the 2008 financial crisis.
What's SVB's connection to Arizona?
Eleven years ago, the bank opened an office at Tempe's Hayden Ferry. The bank's sign is prominently displayed atop an office high-side along Loop 202.
The office served largely as an operations center.
The latest data available, from the Arizona Commerce Authority, shows the bank had 590 employees here as of 2019. Their average salary was more than $100,000 a year.
A 300-employee expansion was announced in 2019 but may have been scratched because of the COVID pandemic.
What's your connection to SVB?
All of us are connected to SVB -- with our tax dollars.
According to the ACA, SVB received up to $5.8 million in state incentives:
- $4 million in grants in 2012 and 2014 for creating 550 jobs
- Up to $1.8 million in tax credits for what's called "quality jobs." It's not known whether SVB claimed the credits.
The Biden Administration is seeking a buyer for Silicon Valley Bank.
Bloomberg News reported the Federal Deposit Insurance Corporation is offering SVB employees 45 days of employment. After 45 days, the employees will be let go.
It's possible Arizona hasn't seen the last of SVB, and the hundreds of workers laid off haven't seen the last of their jobs.
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