What Does the News About Silicon Valley Bank Mean for You?
Posted On: March 14, 2023 in: News & Releases
by Park Bank
As you’ve probably heard, news recently broke that Silicon Valley Bank (SVB) the country’s 16th largest bank; failed. This represents the largest bank failure since the 2008 financial crisis, and the second largest bank failure in United States history.
Many clients and the general community may be asking questions on what this means for The Park Bank, and in particular “are my deposits safe?” What happened was a unique situation. Deep concentrations in the technology sector, speculative lending and investment practices, and an aggressive risk position in crypto currency ultimately led to the failure. Truth be told, there are few financial institutions within the nation’s banking network that have exposure like SVB, Signature Bank, or Silvergate Capital Corp.
Wisconsin banks are safe, sound, and resilient. The overall banking system remains strong, and Park Bank’s liquidity and capital positions have us prepared to thrive and grow well into the future. We were chartered 57 years ago and intend to serve this community and our clients for many years to come.
If you have any questions or concerns, don’t hesitate to contact your banker, or reach out to us at 608.278.2801.
FAQs
Q: Is my money safe?
A: Yes, clients’ deposits are protected by FDIC insurance. In the 88-year history of the FDIC, no one has ever lost a penny of an insured deposit.
Q: How much of my money is insured?
A: The FDIC insures up to $250,000 in eight separate account categories per depositor per bank. The FDIC is completely funded by the banking industry.
Q: Where does the FDIC get the money to make sure consumers money is safe?
A: Every bank pays risk-based premiums every quarter to support the fund. The FDIC insurance fund and all of the agency’s costs come entirely from premiums paid by banks.
Q: How does Silicon Valley Bank differ from Wisconsin Banks?
A: SVB was heavily connected to the tech sector, which made it vulnerable to the booms and busts of that sector. Less than 10% of their deposits were insured as they were very large deposits (largely from venture capitalists that deposited tech investment money in the bank). In contrast, the FDIC estimates that over 66% of deposits at Wisconsin Banks are insured. Because SVB was heavily connected to the tech sector – both on the loan and deposit side – it was not well diversified. This is a stark difference from Wisconsin banks of all sizes, which are much more diversified across different business and personal sectors.
FDIC RESOURCES: