Liquidity & Balance Sheet
Uninsured Deposits
Uninsured deposits are balances above the $250,000 FDIC insurance limit. Because depositors stand to lose money if the bank fails, uninsured deposits are the most flight-prone funding, the fuel of the 2023 bank runs.
How is Uninsured Deposits calculated?
Banks with $1 billion or more in total assets report an estimate of uninsured deposits on Schedule RC-O, Memorandum item 2. Expressed as a share of total deposits, it is the uninsured deposit ratio, a direct gauge of how much of the funding base could run in a loss-of-confidence event.
Why does Uninsured Deposits matter?
Uninsured depositors have every incentive to flee at the first sign of trouble, and modern digital banking lets them move in hours. Silicon Valley Bank's extraordinarily high uninsured share turned a securities-loss problem into a same-day run; the metric is now front-and-center in liquidity analysis.
How do you interpret Uninsured Deposits?
Read uninsured deposits as a share of the total and pair it with liquidity and unrealized securities losses. A high uninsured ratio is survivable with ample liquidity and few hidden losses; combined with large HTM/AFS losses and thin liquidity, it is the textbook run-risk profile.
What do Uninsured Deposits levels indicate?
| Range | Label | Interpretation |
|---|---|---|
| < 30% of deposits | Strong | Mostly insured, run-resistant funding base. |
| 30-50% | Adequate | Typical uninsured share for a commercial bank. |
| 50-70% | Watch | Elevated uninsured exposure; liquidity matters more. |
| > 70% | Concern | Very high run risk, as seen at the banks that failed in 2023. |
Worked example
Frequently asked
How much deposit insurance does the FDIC provide?
Standard FDIC insurance covers $250,000 per depositor, per insured bank, per ownership category. Balances above that limit are uninsured and would be at risk if the bank failed.
Why did uninsured deposits matter so much in 2023?
Banks like Silicon Valley Bank had a large majority of deposits uninsured and concentrated among connected customers. When confidence broke, those depositors ran almost instantly, draining liquidity faster than the bank could respond.
Sources
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