Important Message to our Customers!
Late last week and over the weekend, the financial system experienced a couple large bank failures – Silicon Valley Bank (based out of California) and Signature Bank (based out of New York). These situations are ever evolving, and the FDIC and other government entities are acting as quickly and effectively as they can to provide calm and rationality in the financial markets. Both banks were very large banks with large concentrations in high-risk areas – SVB was over $200 billion in assets focused on banking venture capital start-ups primarily in the tech industry and Signature Bank was over $100 billion with a high concentration of lending in the cryptocurrency market (which has had its own struggles in recent months).
We as a small community bank are different than these two very high-profile situations and here’s how:
Our deposits are nearly 100% insured by the FDIC.
SVB’s deposits were 90% uninsured. Our balance sheet is very different than SVB’s balance sheet. We are about as plain and simple as a bank balance sheet can be.
Our management is financially conservative.
SVB was focused on risky start-up companies in the high-tech world and deposits were primarily very large from Venture Capital funds and their related companies. Signature Bank was focused on the very high-risk cryptocurrency market.
We have a strong 120-year history of financially conservative management of the bank that has helped it to weather the storms of the Great Depression, the Great Recession, and even a world-wide pandemic!
Our customer base is diversified.
SVB Bank had basically zero diversification. It is not a secret that we have a large concentration in our loans and deposit portfolios in agriculture (the oldest industry known to mankind), but we also serve many small businesses in other industries as well as many retail consumers.
Our growth is sustainable.
SVB growth was beyond reasonable. Our growth has been slow and steady over the years.
Our liquidity position is strong.
SVB Banks’ liquidity was too low and not managed properly. We have cash on hand to meet our depositors’ daily needs, and we have established access to additional funding if needed. Our contingency funding plan was recently tested and updated and is in a good position.
Our tools provide liquidity guidance.
We have tools that provide us guidance on ensuring liquidity. SVB did not manage their liquidity or concentrations thoughtfully.
Our depositors with us are insured by the FDIC.
• The FDIC insures up to $250,000 per depositor, per institution and per ownership category. Ownership category (individual, joint, ITF/POD, etc) is the key for some customers who have more the $250,000 on deposit with us.
• EDIE – the FDIC insurance calculator can be used to review your accounts. https://edie.fdic.gov/calculator.html
Call us anytime!! We are here to help you and answer any questions!
published on 03/14/2023