Bank Failures: A Historical Perspective

The U.S. banking sector remained relatively stable in 2024, with only two bank failures reported. This marks a decrease from the five failures in 2023, a year notable for the collapse of three large institutions: Silicon Valley Bank and First Republic Bank in California and Signature Bank in New York.

A Historical Context

Since the establishment of the Federal Deposit Insurance Corporation (FDIC) in 1933, the median number of annual bank failures has been seven. This provides an important benchmark for assessing the health of the banking sector over time.

The decline in bank failures in 2024 reflects several factors:

• Tighter Regulations: Lessons learned from high-profile collapses in recent years have prompted more rigorous oversight.

• Stronger Risk Management: Banks have implemented better risk management strategies, particularly regarding liquidity and loan portfolios.

• Economic Stability: Slowing inflation and steady consumer demand have supported overall financial stability, reducing strain on smaller and regional banks.

The Importance of Vigilance

Despite fewer failures, the events of 2023 served as a stark reminder of how quickly financial institutions can falter, particularly under conditions of rising interest rates or sector-specific vulnerabilities. Diversification and due diligence remain critical for both individual and institutional investors to safeguard against potential disruptions in the financial system.

Navigating the financial landscape requires an understanding of the risks and opportunities within the banking sector and beyond. At Stonecrop Wealth Advisors, we monitor these trends to help our clients make informed, value-aligned decisions about their financial futures. Whether you’re concerned about the security of your investments or seeking to diversify your portfolio, our team is here to guide you with personalized strategies that reflect both your values and goals. Contact us at info@stonecropadvisors.com to learn how we can help you build a resilient and prosperous financial plan.