Amid a series of developments following the closure of Silicon Valley Bank (SVB) on Friday, the Wyoming Bankers Association says it is ensuring the community banking voice is being heard while it reminds consumers they can bank with confidence at your Wyoming community bank.

On Friday morning, the Federal Deposit Insurance Corporation (“FDIC”) announced the closure of SVB in Santa Clara, California, and said the agency created the Deposit Insurance National Bank of Santa Clara to protect insured depositors.  Similarly, on Sunday, the New York Department of Financial Services closed Signature Bank of New York due to a similar systemic risk exception.  The FDIC will operate Signature Bridge Bank as it markets the institution to potential bidders.

SVB had $213 billion in assets as of Dec. 31 and was the 16th largest bank in the country at the time of its closure.  SVB experienced rapid asset growth of over 200% between 2019 and 2022.  In New York, as of December 31, 2022, Signature Bank had approximately $110.36 billion in total assets and $88.59 billion in total deposits.

It is sad to see any bank fail and for depositors to suffer any uncertainty about the safety of their deposits. What happened with SVB and Signature Bank, however, are incredibly unique situations. These banks were heavily connected to the tech sector, which made them vulnerable to the booms and busts of that sector. For example, less than 10% of the deposits at Silicon Valley Bank were insured as they were very large deposits (largely from venture capitalists that deposited tech investment money in the bank). As such, this bank was not well diversified both on the loan side and the deposit side. In contrast, the FDIC estimates that a large majority of deposits at Wyoming banks are insured. Wyoming banks of all sizes are much more diversified across different business and personal sectors.

The banking system overall and Wyoming banks are safe, sound and resilient. This situation is truly idiosyncratic to SVB. It grew rapidly in the span of 18 months from $50 billion to over $200 billion, which is unheard of. No Wyoming bank has grown like this. So, while Silicon Valley Bank had reached the large bank category, it achieved that status so quickly that the bank was not in the large bank asset size long enough for the regulators to push through all the requirements (like stress testing). A bank needs four consecutive quarters over the asset threshold — and then the bank is subject to a phase-in period. Silicon Valley Bank was still in that phase-in period and not yet subject to full-blown scrutiny.

Nevertheless, this is why it is important to take stock of lessons learned from the SVB closure and the Signature Bank closure. Consumers and small businesses should not only understand the industry’s stability and resiliency, but also understand that not all banks are created equal. In stark contrast to the nation’s largest banks, Wyoming’s community banks operate under an entirely different business model — one that is based locally and is relationship focused. 

The Wyoming Bankers Association reminds consumers they can bank with confidence at their local community bank knowing their money is safe because the FDIC insures it.  FDIC deposit insurance covers each depositor’s account, dollar-for-dollar, up to the insurance limit. 

Since the FDIC was founded 90 years ago, no one has ever lost a penny of FDIC-insured funds.