Market Perspective


As you may have read the US Government intervened last evening and announced plans to backstop all the depositors in both Silicon Valley Bank and Signature Bank.  Furthermore, the Federal Reserve announced a new Bank Term Funding Program aimed at promoting market stability in the wake of the closures of Silicon Valley Bank and Signature Bank.  The Fed, Treasury and FDIC have committed to make all depositors of Silicon Valley Bank and Signature Bank whole.

Silicon Valley Bank primarily served venture capital backed companies.  More specifically, Silicon Valley Bank served as a partner for approximately 50% of venture backed tech and life sciences companies.  Signature Bank on the other hand was another crypto-friendly institution and the next biggest one next to Silvergate, which announced its impending liquidation last week.

We view the backstops and Bank Term Funding Program as positive news that will help provide broad assurance about the stability of financial markets. For the very near-term and the week ahead it’s going to be about how fear and economics play out.  If market participants and investors feel Silicon Valley Bank and Signature Bank are isolated events, then the fear and contagion driven selling will abate.  And if that happens then it’s all back to the Fed and inflation.

Throughout our long history, Grove Bank & Trust has maintained a balance sheet comprised of high quality assets and a very strong capital base.  Our capital ratios are well above the regulatory standard of Well-Capitalized, the highest classification issued by banking regulators.  Our liquidity is strong with ample cash reserves and significant borrowing capacity.  Our focus is to preserve and grow our client’s assets as if they were our own, which demands we remain stable, reliable, and available in all types of market conditions.

Regardless of the uncertainty that comes with investing, it’s of paramount importance to stress that Grove Bank & Trust’s investment management philosophy, process and discipline focuses on companies with strong balance sheets and strong free cash flow, as well as management teams that have great risk control through difficult times.  That philosophy, process, and discipline along with being diversified across and within asset classes has served our clients well over time and we expect it to continue to do so moving forward.

As always, please do not hesitate to contact us should you have any questions or concerns regarding this matter or any other aspect of your account relationship.  We welcome your comments and feedback. We sincerely appreciate your business and pledge our ongoing efforts to provide you with the level of service you expect and deserve.