Here’s what’s happening: smaller banks lack the capital requirements that the “Big Four” and now their large depositors may be planning to move their money to the larger (better capitalized) firms, potentially causing a liquidity scramble whereby the smaller banks have to sell treasuries at a discount and incur significant losses (much like that happened with SVB.)

C-suite Execs at smaller firms are probably analyzing various scenarios and potentially trying to figure out: a) how to hold onto deposits and b) what figures will look like if they lose X, Y, Z% of deposits and how much they’d have to write-off in losses (after raising liquidity through selling fixed income at steep discounts.)