With the recent concerns over the amount of capital at banks on the West and East Coasts, causing a shutdown due to what is being called a ‘bank failure,’ local Security Savings Bank President and CEO Brad Ray and Midwest Bank President and CEO Chris Gavin ensures what is going on in New York and California is not the case in the Midwest. Under the FDIC, each account that a person holds is insured up to $250,000, per depositor and per insured bank, explains Ray:
“An individual can insure their deposits at any one financial institution for $250,000 and that goes by ownership a little bit too; they may have an account that is owned individually, they may have an account that is owned jointly, they may have a retirement account by that amount, so they may have $750,000 split between those three accounts and each one account would have a maximum of $250,000 coverage from the FDIC. The other thing is for each of our local depositers, they have reasonable access to know what our capital position is; if they do choose to hold more than the FDIC insured limit in your bank, is it safe; is it safe and am I going to have access to it. That is a huge difference compared to what we are seeing happen at these banks on each coast having problems.”
Additionally, as recent rapid rises in interest rates has caused concerns among banking institutions, Gavin says locally credit quality is better than ever:
“From my perspective, the credit quality at Midwestern community banks, hometown banks, is probably never been any better than it is now. We are an ag based economy, a lot of us at least in Western Illinois for sure we are; so we have a very strong banking system locally. That is the really good thing and that is why I think it is just unfortunate. In today’s world with the rapid spread of stories with the internet and social media that people get carried away and it is just unfortunate. You can’t take something that is happening with the big banks or East Coast, West Coast and apply that here. It is not factual. The rapid rise in interest rates has been a stress for banks, but other than that, I think the banks here are as strong as they have ever been.”
At Security Savings Bank, Ray informs roughly 70% of customer deposit dollars are FDIC insured, while 30% is over the $250,000 threshold. Gavin states 76% of customer deposit dollars at Midwest Bank are FDIC insured with 24% above the threshold.
