Bank Failures Visualized

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A bank fails when it cannot meet its financial obligations to creditors or depositors because it has become insolvent or no longer has enough liquid assets to fulfill its payment obligations.

A bank commonly fails economically when the market value of its assets drops to a value that is less than the market value of its liabilities.

The insolvent bank borrows from other solvent banks or sells its assets at a lower price than its market value to get liquid money to pay its depositors on request. The incapability of the solvent banks to lend liquid money to the insolvent bank causes panic among the depositors as more depositors attempt to take out cash deposits from the bank. The bank cannot fulfill the demands of all of its depositors on time. The regulating government agency may take over a bank if its shareholders’ equity is below the regulatory minimum.

When a bank fails, the Federal Deposit Insurance Corp (FDIC) takes control and will either trade the failed bank to a more solvent bank or take over the bank’s operation. FDIC protects deposits for up to $250,000 per depositor per account.

Since the 1970s, over 90 banks in the United States with US$1 billion or more in assets have failed.

Georgia leads the country by the number of bank failures, with 9 banks shut down in the past year.

Until 1996, in Georgia, a bank couldn’t open branches across county lines, and there were 159 counties in the state, so there were a lot of banks. And three of the top 10 fastest-growing counties were around Atlanta back then, so when the financial crisis hit, it hit the state hard.

The map below, created by Reddit user pm_me_jupiter_photos using FDIC data, shows bank failures by U.S. State since 2000.

The biggest U.S. bank failure was Washington Mutual’s collapse in 2008. At the time, it had about $310 billion in assets. The bank failure was caused by several factors, including a poor housing market and a run on deposits in which clients withdrew $16.7 billion within two weeks.

Here is a chart of the size of bank failures since 2000, created by Pranshu Maheshwari.

The failure of state-chartered commercial Silicon Valley Bank in March 2023 and First Republic Bank in May 2023 were among the latest bank failures.

Below is the visualization of bank failures from 2001 to 2023, including adjustments for inflation created by Reddit user dbacciPBI.

Colors on the graph mean a year of failure.