Mar 17, 2023 4 min read

Local banking officials say residents should rest assured about the safety of their deposits in local community banks in the wake of recent failures in California and New York, explaining those failures were unique situations involving banking that catered to specialized industries.

Community Bank, Washington Financial Bank, and CHROME Federal Credit Union were among the banks that sent letters to their customers notifying them that those shutdowns will not impact their operations.

Washington Financial Bank President and CEO Michael Chaido said despite the national buzz, the impact of the collapse of Silicon Valley Bank in California and New York-based Signature Bank is non-existent here.

“This doesn’t affect us or our depositors, or anyone in Southwestern Pennsylvania at all,” said Chaido.

In the letter to customers, Chaido wrote, “The failed banks were heavily invested primarily in two areas: venture capital and cryptocurrency. Washington Financial is well diversified with respect to its account base. We have no exposure to the crypto markets and do not invest in projects in which there is a substantial element of risk.”

Regulators took control of the banks last week. The collapse of SVB, the nation’s 16th-largest bank, was the second-largest bank failure in U.S. history, while Signature’s was the third-largest.

Closer to home, banks are reassuring depositors their money will be there when they need it, and that the banking system, as a whole, is just fine.

They say area banks are on sound financial footing because they have a diverse base of local customers from a wide range of industries, and safer portfolios than the tech banks. If something happens to one area, it doesn’t impact the whole organization.

“I’d reiterate that deposits are safe, and we have well-run banks in Southwestern Pennsylvania with good leadership teams and good, stable markets,” said John Montgomery, President and CEO of Community Bank. “What happened with SVB and Signature has nothing to do with Southwestern Pennsylvania.”

Chuck Trump, President and CEO of First Federal Savings and Loan of Greene County, shared similar sentiments about the SVB situation.

“Silicon Valley Bank specialized in tech and venture capital banking that carries an element of risk far beyond any that small banking carries,” said Trump.

In addition, local bankers noted most of their bank’s depositors are below the $250,000 amount that is covered by the Federal Deposit Insurance Corp. Most of Silicon Valley Bank’s accounts were over the $250,000 amount covered by the FDIC.

In its letter to customers, CHROME stated, “CHROME is federally insured by the National Credit Union Administration (NCUA). Your accounts are protected by the National Credit Union Share Insurance Fund and insured up to at least $250,000 per individual account.”

Chaido also noted that the failed banks had limited access to capital markets in troubled times, and in the case of Silicon Valley Bank, mismanagement of its investment portfolio limited its ability to liquidate securities to meet capital needs.

Washington Financial Bank’s statement said, “While Washington Financial Bank also maintains an investment portfolio, we are conservative in the management of that portfolio, particularly with respect to interest rate risks, so similar issues are mitigated.”

Community Bank’s Ben Brown, Executive Vice President, also noted that local banks have served the community for decades – Community Bank, for 123 years, Washington Financial for 124, First Federal of Greene for nearly 100 years, and CHROME for 52 years – and while they have enjoyed growth, they have avoided the explosive growth that contributed to SVB’s collapse.

“We have a good, stable bank here that grows at a stable pace and we don’t take risks. We grow at the right pace and a pace that makes sense,” said Brown. “We have 123 years of history here, through the Great Depression, world wars, dot-com busts and booms; we’re very comfortable with our stability.”