The financial world was sent into shock over the weekend after the failure of Silicon Valley Bank, but banks in Southwest Colorado say they are on firm financial footing.
The Federal Deposit Insurance Corp. announced Friday that it would take over Silicon Valley Bank, a 40-year-old institution based in Santa Clara, California. The bank’s failure is the second-largest in U.S. history, and the largest since the financial crisis of 2008.
At the end of 2022, SVB had $175.4 billion in deposits. It is not clear how much of those deposits remain with the bank and how much are insured and 100% safe.
Despite the national buzz, banks in Southwest Colorado have said the impact of SVB’s collapse has been nonexistent.
First Southwest Bank CEO Kent Curtis said the failure hasn’t created issues in Durango.
He said most of the bank’s depositors are below the $250,000 amount that is covered by the Federal Deposit Insurance Corp.
“The bigger banks are probably at greater risk,” he said.
TBK Bank sent an email alert Sunday night assuring its clients that the bank was strong and stable.
“Our deposit base is stable and diverse, consisting primarily of traditional retail and commercial deposits spread across over 78,000 depositors served by branches in six states,” the email said.
Dolores State Bank President Doug Aiken said the two banks service different clientele. He said the bank is not concerned about what happened with Silicon Valley Bank because his customers are mostly under the insured $250,000 limit and that they conduct their business in the Four Corners.
Silicon Valley Bank was heavily involved in the tech industry all over the country with most of its accounts over the $250,000 amount covered by the FDIC.
“Their (SVB) downfall was that they had invested in long-term securities,” Aiken said. “And as the interest rates increased, the value of those securities decreased. There's an inverse relationship between the market value of a security and the direction that interest rates are going. And so they, when they sold those securities, they had to recognize the loss in market value for those securities and that loss basically wiped out their capital.”
Alpine Bank President Glen Jammaron shared similar sentiments about the SVB situation.
He said Alpine Bank has a diverse base of local customers from a wide range of industries. SVB wasn’t so fortunate.
“I think one of the things bank regulators are always nervous about is concentration of any kind,” Jammaron said.
SVB’s customer base was heavily focused in the tech industries, and anytime there’s an industry concentration like SVB had, there’s significant risk, he said.
This is because if something negatively impacts a specific industry it can cause banks to lose money on their investment.
“We as bankers like to make sure we're diverse in our loan portfolio, and our deposits are from a broad part of the community. So if something happens to one area, it doesn't impact the whole organization,” Jammaron said.
Jammaron added a few customers have contacted the bank concerned about FDIC coverage because of the SVB collapse, and the bank directed them to the FDIC website to show them that their money is safe.
He said the SVB collapse has made some customers uneasy and want to trust a smaller bank with their money.
“We've also seen some folks bring money to us,” Jammaron said.