North Bay banks reach out to reassure customers after sizable institutions fail

As the president calls for action and banks pumped billions into a Bay Area regional bank whose stock had declined, several North Bay bank and credit union executives have sent messages to depositors citing strong cash reserves, liquidity and other key strengths.

Depositor fears over these recent events, including overall bank stock volatility in some instances, have resulted in thousands of phone calls to local banks in Northern California by those concerned over the status and stability of these institutions.

On Friday, 11 of the largest financial institutions in the country pledged to deposit a combined $30 billion into regional bank First Republic, headquartered in San Francisco and with several North Bay branches, as its stock slipped.

Meanwhile also on Friday, President Biden called on Congress to give regulators more power to claw back salaries of executives of failing banks and levy civil penalties.

The Business Journal asked Exchange Bank President and CEO Troy Sanderson about reports that two failed banks — Silicon Valley Bank and Signature Bank in New York — held millions in accounts that were above the $250,000-per-account level of federal guarantees. (The government later said it would guarantee all funds held by the failed institutions.)

Troy Sanderson
Troy Sanderson

“We have seen a number of new deposit accounts opened recently, but I would not characterize it as a surge,” Sanderson said.

Silicon Valley Bank was a significant player in wine business finance. At the end of last year, 1.6%, or $1.16 billion, of its $74.3 billion in loans were to clients with premium wineries and vineyards, according to a regulatory filing. The wine loan portfolio had grown 3.7% from the third quarter and 17.6% from a year earlier.

But is Santa Rosa-based Exchange Bank seeing more wine industry depositors transferring accounts there?

“We are well-known and trusted within the agriculture community in Sonoma County and have seen some SVB customers move their deposit relationships,” Sanderson said. “We are here to help however we can.”

Federal guarantees beyond the $250,000 per account are not a trend, he added.

“The FDIC has not increased deposit insurance coverage at this time,” Sanderson said. “Others have speculated that they ‘de facto’ raised it when they made a decision to invoke their systematic risk exemption authority for two regional banks. Ultimately, I believe that the Treasury Department, the Federal Reserve, the FDIC and most importantly the White House and Congress will do whatever they need to do to ensure confidence in the already stable U.S. banking system.”

Given the current $250,000-per-account depositor FDIC insurance limit, if large depositors come to Exchange Bank, will they be able to open multiple $250,000 accounts?

“Yes. There are many ways to title deposit accounts to significantly increase already existing FDIC insurance limits,” Sanderson said.

“Should our customers be concerned about maintaining deposits in excess of insurance limits, we have the ability to seamlessly place those deposits with other FDIC insured institutions to ensure coverage of the full amounts.”

Bank of Marin took a different route for communicating with its depositors.

Tim Myers
Tim Myers

“We initiated a customer outreach effort allowing us to connect — personally — with our customers,” said Tim Myers, president and CEO. “Our commercial and retail banking teams have been working diligently to address customers’ concerns about current events in the banking industry and to reinforce the safety and soundness of our bank.”

Like other bank messages, the one from Brian Reed, president and CEO of Summit State Bank, was posted on the Santa Rosa bank’s website:

“Our capital levels are significantly higher than the regulatory requirements for being considered well capitalized. Furthermore, our liquidity remains strong. In addition to our well-diversified deposit base, we continue to have access to over $400 million of available, unused borrowing capacity at the Federal Home Loan Bank and the Federal Reserve Bank.”

He wrote that the bank “stands ready to process transactions and wires, fund loans, answer questions and serve your overall financial needs — as we do every day. For over 40 years, we have successfully navigated various macroeconomic and interest rate environments.”

Umpqua Bank, an Oregon-based bank with 15 North Bay branches, recently merged with the Columbia Banking System (Nasdaq: COLB).

“Despite market volatility, we have a strong, balanced portfolio of industries and businesses and are well diversified from a deposit and liquidity standpoint,” said Corporate Communications Director Kurt Heath.

“On the whole, the past few days represent the overall strengthening of our customer base. We’ve seen account openings from businesses looking to diversify their deposit accounts.”

Tri Counties Bank has about 75 branches in Northern California, including two in the North Bay, in Santa Rosa and Middletown.

“We serve businesses of all sizes. However, more than half of our deposits are from consumer accounts, most with modest balances opened in smaller cities avoiding concentration in any one location or industry,” wrote Richard P. Smith, president, CEO and board chairman.

Credit union member accounts are not insured by the FDIC, but depositors are protected by another government agency. National Credit Union Administration’s National Credit Union Share Insurance Fund insures each account for at least $250,000.

Brett Martinez
Brett Martinez

“We can also provide our members with options for additional coverage beyond the minimum,” said Brett Martinez, president and CEO.

In a statement posted on its website, Marinez wrote, “RCU is structured differently than a bank. Unlike banks, we are not subject to pressures from investors or stockholders to grow large profits or to concentrate on any one industry or segment. We are a not-for-profit cooperative owned by our members and operate solely in the best interest of our members and communities.

“Additionally, our most recent opinion audit from an independent certified public accounting firm confirmed that RCU is strong, stable and well capitalized. We continue to be a safe place to bring your deposits. We are your trusted financial partner.”

Bank of the West has over 500 branches and offices in 24 states, including 16 branches in Napa, Solano, Marin, Sonoma and Lake counties. It officially merged with BMO (Bank of Montreal) Harris Bank on Feb. 1 and will be known only as BMO Bank by year-end.

Sources there report that this combined entity is not affiliated with either SVB or Signature Bank and that deposits are safe and secure. BMO is among the top 10 banks in the U.S., with a diverse array of customers and clients in all 50 states.

Global Finance Magazine ranked BMO as one of the world’s 50 safest banks in 2022. It participates in annual “stress tests” with regulators to ensure the bank is ready to manage the risks associated with major changes in the economy, according to an email message sent to depositors.

Journal Special Correspondent Gary Quackenbush (Gary.Quackenbush@gmail.com) worked at the Wall Street Journal and headed communications departments at AT&T, Pacific Bell and General Cellular Corporation, as well as several Silicon Valley high-tech public relations agencies. He was West Coast editor for Telecommunications Magazine, and later wrote for the Windsor Times and the Sonoma County Farm Bureau.

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