After two well-known banks failed in recent days, a number of banks and credit unions that service the Newtown area took action to reassure consumers.
Local financial institutions advised customers this week not to panic and assured the public their finances were safe.
After Silicon Valley Bank in California and Signature Bank in New York collapsed, anxiety grew over the weekend. There was concern that the failure of the two sizable banks could have a systemic impact and result in other bank failures. Silicon Valley Bank was a popular bank with venture capitalists, tech, and startup companies. Signature Bank was a large funding source for cryptocurrency companies.
The Federal Deposit Insurance Corp. and Federal Reserve will completely protect deposits at both failed banks, according to the nation’s top bank regulators.
“No losses will be borne by the taxpayers. Let me repeat that: No losses will be borne by the taxpayers. Instead, the money will come from the fees that banks pay into the Deposit Insurance Fund,” President Joe Biden said Monday.
First National Bank and Trust Company of Newtown President and CEO Daniel J. Schaffer said in a letter to customers that they are a community bank and are different than the two failed banks.
“These institutions had concentrations in tech start-ups, venture capitalist and hedge funds, and cryptocurrencies,” he said. “We rely on a well-diversified funding base comprised of local customers and businesses. The bank has very little reliance on Certificates of Deposits and no borrowed funds.”
Jeane Vidoni, president and CEO of Penn Community Bank, wrote to customers that her bank is strong and secure.
“In times like these, our mutual structure offers an advantage for our organization and our customers. In addition to being better capitalized than most banks, since we aren’t publicly traded, we are not beholden to shareholders and have the freedom to put the needs of our customers first in everything we do. That means we can make decisions locally and with long-term goals in mind, not short-term profits,” she said.
Vidoni said the bank, which formed from the 2014 merger of First Savings Bank of Perkasie and Bristol Borough-based First Federal of Bucks County, has survived for 150 years due to “resilience, dedication and sound business practices.”
William Penn Bank, which is headquartered in Bristol Borough, said the institution’s capital leverage ratio as of the end of 2022 was three times the minimum required by regulators.
Penn Community Bank, First National Bank and Trust Company of Newtown, and William Penn Bank are among Bucks County’s oldest and largest banks.
Univest Bank and Trust Company executives Jeffrey Schweitzer and Michael Keim assured customers there money is safe and is defined as “well capitalized” under current regulations.
WSFS, the largest Philadelphia regionally-headquartered bank, has more than $19.9 billion in assets on its books and manages $64.5 billion in assets. The company assured customers they will not face the same fate as Silicon Valley Bank and Signature Bank.
“WSFS is financially strong, well capitalized and has access to ample liquidity. Our diversified business model, solid asset quality performance and sound underwriting positions us well to support our Customers and Communities,” a message from the company said.
“WSFS does not have any exposure to Silicon Valley Bank or Signature Bank. You should feel confident that WSFS has been here for more than 191 years, and we are well positioned for the future,” the statement added.
Inspire Federal Credit Union President and CEO Jim Merrill said that institution is a “thriving financial cooperative” where deposits are backed by the National Credit Union Administration up to $250,000.
“Our Balance Sheet and specifically our investment portfolio, is structured much different than both of these banks. As a member-owned financial institution, our interests are much better aligned with making decisions to benefit you, the member, not corporate shareholders, and the pressure to return dividends and profits to stockholders,” Merrill said.
“Inspire Federal Credit Union is adequately diversified and well-capitalized, by our regulator’s definition,” Merrill added.
Police and Fire Federal Credit Union, which has locations in Bucks County, issued a notice that they have a “very strong balance sheet” with $1.9 billion of cash at the Federal Reserve Bank.
Prior to the past week, the last bank failures in the country were in October 2020. Both banks were much smaller and the two that failed recently.
William Chittenden, an associate professor of finance at Texas State University, advised Americans not too panic due to the collapse of the banks, according to an article published by The Conversation.
“The good news is that most banks currently have enough capital to absorb these losses – however large – in part because of efforts taken by the Fed after the 2008 financial crisis to ensure financial firms can weather any storm,” Chittenden said. “So rest easy for now, the banking system is sound.”