The Deposit Run Table

“The only liquidity (banks) have in a crisis is the liquidity you bring to the crisis. So you better have some.”

Phil Green, CEO Frost Bank, March 10, 2023

Sometimes you can Google until you rub off a fingerprint and not find an answer to what you’re researching. A friend passed along the following anecdote I loved but could not verify. (That’s a QI disclaimer.) Born in 1833, Thomas Claiborne ‘T.C.’ Frost founded what would, in 1899, receive a national charter to become my hometown of San Antonio’s Frost Bank. Here’s the here-say part I’d love any of you to verify if you can. It’s said that during the banking run of 1907, Frost’s son, Thomas C. Frost, stacked cash on a conference table. He then told depositors, “There it is. But if you take it, don’t ever come back.” Apparently, a visitor to the family’s home saw the original “Deposit Run Table,” a cherished keepsake. During the Great Financial Crisis (GFC), Frost refused to take Troubled Asset Relief Program bailout funds. According to the bank’s current CEO, Phil Green, the bank today has only loaned out 40% of its deposit base and maintains 20% of its deposit base in a checking account with the Federal Reserve.

Sadly, even prudent banks can be subject to runs. As detailed in yesterday’s Quill, the smallest banks with the lowest insured deposit coverage ratios are also one and the same with those whose loan books are the most concentrated in commercial real estate (CRE) loans.