It's more likely that a crisis occurs when the bank's reserves are inadequate to meet the requirements of the Federal Reserve. It is at those moments, when the bank's reserves are dwindling, that cash in the vault of a bank is a life saver. Cash is the bottom line to everything in banking. It should be remembered that for every seven dollars in deposits, one dollar has to be kept in legal reserves. That means either government bonds or other government-supported securities, plus cash in the vault.
Every bank tries to keep the barest minimum of legal reserves.
Having in excess of the legal requirement is unprofitable. The legal reserves of a bank do not produce interest for the bank. The anxiety to maintain the legal reserve requirements becomes critical whenever the Federal Reserve suddenly raises these requirements. This may cause a crisis, not only for small banks. Big banks like Franklin National and Continental Illinois have faced just such a situation.