A number of regional banks across the country took huge hits to their stock values on Monday as a result of the failure of Silicon Valley Bank (SVB) last week.
The bank was taken over on Friday by the FDIC which put $175 billion in customer deposits into its control. SVB’s failure was the 2nd largest in U.S. history and the largest since the 2008 recession. In a joint statement on Sunday, the Federal Reserve, Treasury, and Federal Deposit Insurance Corp. vowed that all depositors would be paid back in full. That support didn’t stop the KBW Regional Banking Index from sinking by as much as 12 percent during the day Monday as investors and depositors rushed to withdraw money, fearing that other banks would follow suit.
First Republic Bank and Western Alliance Bancorp were among the hardest hit, dropping 79 percent and 85 percent respectively. PacWest Bancorp also saw a record low 60 percent drop. Locally, Eastern Bank has seen its stock fall 25 percent from last Wednesday evening to Monday’s close. Independent Bank Corp (the parent of Rockland Trust) suffered a 13 percent drop in the same period.
Local banks are reporting that they are doing fine despite the chaos in the stock market. Chief Marketing Officer of Salem Five Joe Bartolotta said that many customers had called the bank regarding their deposits, and that the bank is “absolutely fine,” citing their 168 year history.
“The two most recent bank failures, they got into areas that we would never dream of getting involved in,” he said. “Silicon Valley Bank was only founded 40 years ago, Signature Bank was founded 20 years ago, they were relative newcomers. We were founded in 1855, we’ve been through the Great Depression and multiple recessions. We know how to take care of people’s money.”
Bartolotta also stated that a number of SVB customers have called Salem Five asking about transferring their money, some of whom have already begun that process.
“We’re getting customers from Silicon Valley Bank calling to inquire about moving their money over, so it’s certainly been an interesting time,” he said. “In fact some of it already did move over prior to the bank’s failure,”
Despite its stock seeing a significant decline in the past week, Senior Vice President of Public Relations and Communications of Eastern Bank Andrea Goodman said in a statement that “We remain confident in the banking industry as well as our own position of strength,” and that the bank has been informing customers that its status remains strong.
“Like so many others in the industry, we’ve been sharing information with customers, especially around our well diversified customer base, our strong capital position, and our strong liquidity position,” said Goodman. “We’re proud of our 200 year history of serving the banking needs of both consumers and businesses, while supporting our communities and leading during challenging times. Serving customers with excellent service is always our top priority, and our team of 2,100 colleagues – many who live and work locally in Lynn and the North Shore – are here to assist.”
In a statement, Rockland Trust CEO Jeffrey Tengel ensured customers that their money would be fine because the company is “managed for the long-term by prioritizing sustainable banking practices.”
“I would like to underline that Rockland Trust has been supporting our local businesses and communities since 1907,” he said. “Rockland Trust’s priority to build and nurture meaningful customer relationships has led to a deep and diversified customer base. We are in a strong financial position.”
Likewise Institution for Savings CEO Michael Jones expressed confidence in a prepared statement:
“Our financial model and conservative business strategy are very different than what you have heard and read in headlines this past weekend. We are a strong, thriving mutual bank that serves our depositors, not stockholders. We are a proud member of the Depositors Insurance Fund (DIF). All depositors are insured by the Federal Deposit Insurance Corporation (FDIC) up to at least $250,000. All deposits above the FDIC limit are insured in full by the DIF.”