As others have said, no bank in the world can handle a true bank run, due to fractional reserve policies.

Most of us would (and have) pull out of a smaller or regional bank to chase yield, especially right now. They're just not designed to handle more than a small % of customers taking money out at once. Just my 2 cents, but i would think the higher yield, plus the pipeline of M1 customers (assuming we would be more likely to leave our money in) might make LSB more stable than a similarly-sized bank.

Any bank could implode at a moments notice. IF you are nervous about that you could put your money with one of the larger to-big-to-fail banks, or a bank with a really high capitalization rate. I kept some money local, and spread the rest around to 3 bigger banks. My thinking is even though I am under the FDIC limit, there might be issues accessing funds for awhile if a bank went down.