“You shouldn’t have to go to 12 banks or 20 banks or whatever for your deposits.”

West shares plunged 15 percent as fears of contagion spread. Even the big banks like JPMorgan and RBC saw their share prices fall, though in the mid-single digits.

Like the rest of the business, entertainment banking is split between the conglomerates and the independents. Companies like Disney and NBCUniversal have banking agreements with the biggest banks, such as JPMorgan and Bank of America. That can give those entertainment giants a layer of stability.

But not everyone has that option. That’s why smaller studios and independents often turn to specialist bankers as they seek financing for their projects. And even if a bank run has been prevented, the threat facing independent Hollywood’s preferred banking partners is real and may get more acute as time goes on. As SVB’s failure showed, businesses that rely on regional bank partners for payroll or daily expenses cannot necessarily count on that money being there. The federal government guaranteed the deposits this time, but unless there is further legislation to raise the FDIC insurance limit of $250,000, there might not be a guarantee next time. “You shouldn’t have to go to 12 banks or 20 banks or whatever for your deposits,” Frank says, adding that he “wished” Congress raised the FDIC limits when it passed DoddFrank. “I tried. I was outvoted.

“You should be able to put that in one or two banks and have it guaranteed enough for you to meet your payroll, to meet your operating expenses for at least a couple of months,” he adds.

The risk was evident after SVB’s collapse. BuzzFeed said most of its cash was at SVB, while Roku kept nearly half a billion dollars at the bank. Hudson Pacific, the studio lot giant that operates 90 soundstages globally, said in a filing that 11 of its 900 clients “collectively occupying approximately 2 percent of the company’s in-service office square footage have letters of credit issued by SVB and/or its affiliates” and that it was working with its tenants to replace those letters with new ones from other banks.

“When you’re running a business of a reasonable scale, you’re going to be flushing in and out millions of dollars a day — that’s just the nature of being in business, that’s the nature of cash management,” says David Offenberg, associate professor of finance at Loyola Marymount.

The end result may be that businesses move more deposits out of some regional or specialist banks and toward perceived safe havens. “If I had $1 at a regional bank, I’d be pulling it out and bringing it to a ‘too big to fail’ bank,” says Matthew Tuttle, the CEO of Tuttle Capital Management. “Even if I’m convinced my deposit is covered, do I want that hassle? Do I want to have to wait even two days to get my money?”

Indeed, Eric Fulton, a business manager who works with Hollywood clients, says they are thinking about just that. “I think the larger portion of anyone’s cash should be held in one of the more secure, larger banks like RBC/City National,” he notes. “They may have a branch that specializes in entertainment, but as a comparison to their overall holdings, it’s not significant enough to put their clients at risk.”

As it stands, the Kelly Coffey-led City National may be a big beneficiary of the chaos. Thanks to its ownership by RBC (and its status as the other big player on Broadway), the bank is already seeing inflows from clients. Since the

SVB failure, several general managers on Broadway whose productions banked with Signature were considering or in the process of moving accounts to City National. Those with longerrunning productions or shows with bigger bank balances were also considering diversifying their holdings by putting capital returns or reserves in money market accounts at one of the big banks and moving the day-to-day accounts to City National.

Broadway business already was largely split between Signature Bank and City National, which has been a multiyear sponsor of the Tony Awards. Both banks had specialized teams that handled relationships with the Broadway community. Several insiders say they could not imagine working with a larger bank due to the specialized nature of the business and the lack of attention they felt they would receive. And another source speculates that specialist entertainment bankers at Signature or elsewhere could find landing pads at banks willing to explore lending to the sector.

Even with the new federal guarantees, Broadway clients are still concerned about the fate of Signature and whether it’ll find a buyer. Producers also have to consider their fiduciary duty to investors. “The money is safe right now, which is most important at the end of the day, but you need to be able to transact business and you need to do it with a degree of confidence and surety,” says Robert Fried, partner at accounting firm Withum, Smith and Brown, who works with many theater clients.

But the impact of the bank failures will be felt elsewhere in Hollywood as well, even for the specialist banks that make it through the current moment.

“Even the ones that survive, I think risk-taking will suffer,” Tuttle says. “Whereas before, if I’m the CEO of a regional bank, I’m incentivized to take risk. I take risk, we make money, stock price goes up, I get a big bonus, everybody’s happy.

“Now, I think they’re going to rein in a lot of that,” he adds. “A lot of industries, the smaller, more speculative types of things that regional banks were more willing to lend on, I think those guys are going to suffer. And so, for the [entertainment industry], this is not a good thing.”

In other words, tighter banking regulations combined with lower deposits could reduce the appetite for risk by regional banks, and riskier bets (like film or theatrical financing) could be less welcome than they once were. “This is a real wake-up call,” Tuttle says. “And I think this is going to change behaviors; that’s not going to be good for smaller banks.” Nor will it be ideal for small or midsize entertainment companies, which may find it harder to secure financing or loans for their productions.

Still, there is some optimism for the financial sector. In the end, the government stepped up to make the depositors at SVB and Signature whole, and there seems to be meaningful movement to raise the FDIC insurance limit, at least for commercial accounts. “There is an advantage to a bank that specializes in your work, and with the guarantee of deposits in place, I think it’s OK,” Frank says. “The problem you have, of course, is if you are a big business, you’ve got to keep obviously more than $250,000 in cash available.”

Not to mention the unique role that specialists play — which keeps a sector of entertainment business alive — may not jell with the culture at larger banks.

Even if policies change, the bank runs that shuttered SVB and Signature are also a product of their moment in time. “One of the biggest problems that the banking industry faces is social media,” says business manager John McIlwee. “Information spreads like wildfire, whether it’s factual or not, and people panic.”

Moody’s on March 14 downgraded the U.S. banking sector, citing a “rapid deterioration in the operating environment” that could spell trouble for banks with high amounts of uninsured depositors and unrealized securities losses. It’s an environment that puts smaller banks at greater risk. And Hollywood will have no choice but to grapple with whatever comes next.

Coffey