‘The circumstances at Silicon Valley Bank and Signature Bank were unique and unrelated to New Hampshire’s banking industry,’ writes NH Bankers Association president
Where you keep your money is an intensely personal matter. Once you’ve established your banking relationships, you likely don’t give it much additional thought. Understandably, the past two weeks may have caused you to think more about your bank.
The recent failures of Silicon Valley Bank and Signature Bank have some wondering, could that happen here?
While we can and should learn from this moment, it is important for everyone to know two things. First, America’s banking system is the strongest and most diverse in the world. Last week, the Financial Stability Oversight Council noted that the U.S. banking system remains “sound and resilient.” Second, New Hampshire’s banks are strong, diverse, well capitalized, liquid, and as always, ready to serve you and our communities.
The circumstances at SVB and Signature Bank were unique and unrelated to New Hampshire’s banking industry.
Michael Barr, of the Federal Reserve Board of Governors charged with leading the SVB review, termed what happened a “textbook case of mismanagement.” He also noted inadequate risk management and internal controls that struggled to keep pace with the growth of the bank.
A significant number of their depositors were from the venture capital and startup sector, and FDIC Chair Martin Gruenberg added that both SVB and Signature Bank had a significant volume of uninsured deposits (90 percent and 88 percent, respectively). He also noted the accumulation of losses in the banks’ government securities portfolios.
‘Strong relationships’
The health and resiliency of banks in New Hampshire stands in stark contrast. Importantly, New Hampshire economist Brian Gottlob recently reported that 78 percent of deposits at New Hampshire banks are fully insured, while their percentage of assets invested in government securities stands at only 10.5 percent vs. 51.77 percent by SVB.
The bulk of New Hampshire bank depositors have balances under $250,000, and are fully protected at our FDIC-insured banks. However, even for funds over $250,000, banks offer services providing additional protection. Just like additional insurance for your car or home, you can opt for additional insurance to protect your funds.
I encourage you to speak with your local banker about your options — they stand ready to answer questions about how your funds are protected, offer additional ways to do so, and help you restructure your funds, where needed. The FDIC even has a calculator known as EDIE, which estimates how much of your funds are insured.
Trust is built on strong relationships, and providing excellent banking services is only part of the story. New Hampshire’s banks are deeply committed to giving back to communities, and partnering with you in life’s important moments, large and small. Daily, our community banks support countless organizations with charitable contributions, service on nonprofit boards and volunteering their time at local events.
Last October, during our NH Banks Give Back event, 29 banks participated through 409 charitable events, with over 2,000 volunteers donating 2,893 hours of service and $538,946 to local nonprofit and community organizations in just one month.
Our bank employees are your friends and neighbors that have worked hard to earn and maintain the trust of our communities. Similarly, our bank trustees are thoughtful and reliable community leaders with years of practical business experience. Many of our local banks have been a fixture in our cities and towns for more than 100 years with a daily mission of improving our lives and supporting our needs.
Like any failure in life or business, it’s appropriate to review what happened and find ways to learn, grow and improve. We welcome the opportunity to speak with depositors, business and elected leaders and regulators to achieve those goals. We also look forward to sharing the good news about New Hampshire’s strong and wonderfully diverse banking system, containing large and small banks; local, regional and national banks; banks that focus on commercial or residential lending; shareholder banks; and mutual banks who do not have shareholders and whose depositors are considered owners of the bank.
The strength of New Hampshire’s banks is captured by that diversity, by the thousands of exceptional Granite Staters who work for our banks, and by a foundation of trust built on decades of principled, dedicated service, all of which helps maintain and grow our vibrant economy that is the envy of the region.
Kristy Merrill is president of the NH Bankers Association.
