The collapse of Silicon Valley Bank and fears of contagion that are causing stock prices at other midsized and smaller banks to tumble Monday are taking a toll on those companies' 401(k) plan participants.
For instance, the SVB Financial Group 401(k) and Employee Stock Ownership plan held nearly 19% of its $1.3 billion in assets in company stock as of Dec. 31, 2021, or about $245 million, according its most recently filed Form 5500. The company stock is essentially worthless now after the Federal Deposit Insurance Corp. took over the high-profile venture capital and startup lender on March 10.
SVB's 401(k) plan is not alone in holding company stock. Zions Bancorporation stock is down 36% since March 8. Its 401(k) plan held $415 million in company stock out of a $1.77 billion plan as of Dec. 31, 2021, more than 23% of plan assets.
Several banks have seen precipitous falls in their stock prices over fears of a bank run after SVB fell into receivership. Following a year of equity and bond markets falling in tandem, 401(k) plans are taking an even bigger hit from their company stock funds now.