In financial documents filed Friday, Roku disclosed that it had approximately $487 million held by Silicon Valley Bank, the Northern California financial powerhouse that failed this week, sending shockwaves throughout the region’s economy.
That number, Roku said, represents approximately 26% of its cash and cash equivalents, and the company will be able meet its pending financial obligations for at least “the next 12 months and beyond.”
Santa Clara-based Silicon Valley Bank was closed on Friday by the California Department of Financial Protection and Innovation, a spectacular and rapid end to what had for decades been one of the pillars of financing in the white hot tech industry economy.
It’s a complex and still developing story but what’s known is that on Wednesday, the bank told investors it needed to raise just over $2 billion to offset $1.8 billion in losses it incurred from investments in mortgage-backed securities, which were devalued thanks to the Fed’s decision to raise interest rates.
The next day, in what one investor described as “a hysteria-induced bank run,” dozens of SVB’s venture capital clients — urged on by, among others, a venture capital fund founded by billionaire Peter Thiel — started pulling their assets from the bank.
These customers ultimately withdrew a staggering $42 billion by the end of the day, according to California regulatory filings, and as a result SVB was left with a negative cash balance of $958 million. Regulators shut the bank down and seized its assets on Friday morning. In all, the bank’s journey from Silicon Valley institution to the second biggest bank failure in U.S. history took less than 48 hours.
The bank and its assets are now held by the Federal Deposit Insurance Corporation; FDIC insures all bank deposits in the United States up to $250,000, and the agency said Friday that all insured customers should expect to regain access to their money by Monday, March 13.
But there’s a bigger problem for bank customers left holding the bag. S&P Global Market Intelligence estimates that only 2.7% of the bank’s deposits were at or below that $250,000 threshold.
However, FDIC is likely to find a buyer for the bank and its assets, which may resolve the problems faced by customers who held much larger deposits. Despite being declared insolvent, Silicon Valley Bank still had hundreds of billions of dollars in other assets — $212 billion as of December 31, though likely somewhat less by now.
But the FDIC is mandated to recover the maximum amount possible. Bloomberg noted that there’s a good chance the bank and its assets could sell for more than the total amount of uninsured deposits.
In its filing Friday, Roku said as of Friday, it had “total cash and cash equivalents of approximately $1.9 billion,” and that “approximately $1.4 billion of the Company’s cash and cash equivalents is distributed across multiple large financial institutions.” As a result, Roku said, “notwithstanding the closure of SVB, the company continues to believe that its existing cash and cash equivalents balance and cash flow from operations will be sufficient to meet its working capital, capital expenditures, and material cash requirements from known contractual obligations for the next 12 months and beyond.”