At Wednesday's Fulton Rotary Club meeting, Rotarians heard from the Callaway Bank president and CEO Kim Barnes about the Federal Deposit Insurance Corporation (FDIC) and the impacts recent national events could have in the local community.
She said understanding FDIC can be complicated, but it doesn't have to be.
Barnes said FDIC insurance is currently "$250,000 per depositor per institution per ownership category." She added that an ownership category can range from individual accounts to joint accounts.
Barnes said a lot of people believe that FDIC insurance is per account, when it is not per account.
She said that not everyone's financial situation is alike, and stressed the importance of talking to your banker.
"You're only armed with information if you go get that information. I encourage you to do that," she said.
Barnes discussed the recent collapse of Silicon Valley Bank (SVB) and Signature Bank. She said one of the biggest mistakes SVB made that led to its failure was growing too fast.
In the span of 15 months, SVB doubled in size.
"And they weren't small to begin with. They were 90 billion in assets at the start of that period," Barnes said. "In that short period of time, they doubled in size and they did it by focusing on a niche kind of client."
The niche client SVB focused on was tech startups and the investors who invest in tech startups. This led to little diversity, Barnes added.
She said another mistake that led towards the collapse of SVB was investing money into long-term bonds.
Each quarter, every bank in the country submits a call report that is publicly available. Barnes said looking at SVB's reports is interesting and highlights the risky practices the bank took part in.
"Then you turn your mind to why did the regulators let them do it? Well, your guess is as good as mine because the regulators that I deal with would not have let us do that," Barnes said. "We wouldn't have done it in the first place, because that's not how you do business, but nor would we have been allowed to if we tried."
She said she is worried that local banks like the Callaway Bank will see a backlash from SVB's failure.
Callaway Bank is under $500 million in assets, while SVB was $194 billion in assets.
"So even if it's not us, pick a local bank. Don't pick some of those national guys, they don't need your money. They don't care about you. Local people do," Barnes said.
In 2022, Callaway Bank did $135 million in loans.
"And again, that's your dollars at work. So thank you for keeping your dollars local, we appreciate that very much," she added.