When you first heard about the failure of Silicon Valley Bank in California and Signature Bank in New York, your immediate response was probably … is my money safe? So we’ll state right up front that, yes, absolutely, your money with Taylor Bank is safe.
Your second question was probably: how did this happen? We’ll provide that answer too, because it helps to explain the essential differences between those failed institutions and our safe, secure community bank.
Why is your money safe at Taylor Bank?
- Your deposits up to $250,000 are fully insured by the FDIC. If your spouse has separate accounts with us, those deposits are also insured up to an additional $250,000 (if you have joint accounts, deposits are insured up to $500,000).
- Accounts held in different “ownership categories” are also insured separately. For example, if you have a personal savings account and a Traditional IRA with Taylor Bank, each of those accounts is protected up to $250,000, for a total of up to $500,000.
- Taylor Bank also offers insurance beyond these limits through the IntraFi Network, which allows customers to access multi-million-dollar FDIC protection on larger deposits.
Sounds good, but what exactly is the FDIC?
The Federal Deposit Insurance Corporation is an independent agency created by Congress to maintain stability and public confidence in the nation’s financial system. The FDIC insures deposits, examines financial institutions for safety, and more, with the full backing of the U.S. government.
What is the government saying about the current situation?
A Joint Statement by the Treasury Department, Federal Reserve, and FDIC says: “The U.S. banking system remains resilient and on a solid foundation.” The statement also affirms their “commitment to take the necessary steps to ensure that depositors’ savings remain safe.”
So, what caused these bank failures?
Like bank failures of the past, these were sparked by many depositors seeking to withdraw a lot of money all at once. In other words, a classic bank run. Silicon Valley Bank announced it had to sell certain investments at a significant loss to generate cash it needed, then deposit customers panicked and withdrew $42 billion in one day, leaving the bank with a negative cash balance. A similar situation occurred at Signature Bank, so the government decided to step in.
What did the government do?
The government announced it would protect depositors through the FDIC’s Deposit Insurance Fund, which is funded through fees assessed on financial institutions and interest on government bonds. As a result, none of this expense is being borne by taxpayers. While depositors were protected, bank shareholders and certain unsecured debtholders were not.
How is Taylor Bank different from these two failed banks?
Silicon Valley Bank and Signature Bank both had a high percentage of commercial customers in very high-risk industries. For Silicon Valley Bank, it was largely technology startups and venture capital firms. For Signature Bank, it was commercial real estate and cryptocurrency companies, among others. And both banks had very high levels of deposits that were above FDIC limits and therefore uninsured, which led customers to panic and withdraw funds at the first sign of trouble.
Taylor Bank, on the other hand, is a safe, sound community bank – conservatively operated and highly liquid. In fact, we retain double the minimum capital amount needed to be considered well-capitalized by our regulators. We do not have a large concentration of high-risk clients; our customer base is well-diversified among local consumers and businesses. We do not make risky loans or initiate risky transactions in an attempt to maximize profits; at all times, our goal is to protect our depositors, grow and prosper the communities we serve, and provide a safe and consistent return on investment for our stockholders. For 133 years, through good times and bad, Taylor Bank has been widely recognized as a top performing community bank. And for 130 consecutive quarters we have been independently rated a Five-Star bank by Bauer Financial, the highest rating for safety, soundness, and security.
Of course, times like these can be very unsettling. So it’s important to know that we operate our bank in a highly responsible manner, and your money here is safe. Period. For more information, please contact your local Taylor Bank branch or visit www.FDIC.gov.