Hard working wage earners who try to save their money with local banks are rightfully concerned when they see national headlines about banks failing. Over the past couple of weeks Silicon Valley Bank in California and Signature Bank in New York have raised the eyebrows of depositors all over the nation with announcements of their failures. How does this relate locally to folks right here in the Delta who have trusted their deposits to banks for decades? “I don’t believe that local depositors are in any danger,” said Andy Sanders, Executive Vice President of Planters Bank. “Community banks are well-capitalized and don’t get into risky business.”
Sanders explained that banks take deposits and invest them in different short term and long term products. Some products take one, three, five or in the case of some bonds, tens of years to mature.
“What happened in the case of SVB and Signature bank is that investments were made in long term products,” Sanders explained. “The depositors wanted access to their money but it was tied up in long term investments. The banks couldn’t convert the investments to cash quickly and the depositors made a run on the banks.”
In addition to forgoing investments that are risky in industries such as tech start up firms, local banks also have FDIC insurance protecting depositors’ funds. “The vast majority of our deposits qualify for FDIC insurance up to $250,000,” Sanders said. “And there are ways to actually get more than $250,000 through beneficiaries and consumer deposits.”
Sanders said that the situation precipitated by bank failures on each coast over the past couple of weeks has prompted “the feds to offer loans on long term investments.” He also said that as the federal government raises interest rates that the value of long term investments in these two big banks also lose value. But as far as the banks in downtown Greenville, Greenwood, Indianola, Cleveland and other Delta cities, Sanders said, “Our consumer depositors can be assured about the soundness of local banks.”
