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Banks Assure Mainers Their Money Is Safe After 2 Failures

Large banks are assuring their customers that the recent failures of Silicon Valley Bank and Signature Bank of New York aren’t likely to affect the average resident as Maine banks don’t have much reliance on venture capital or cryptocurrency clients.

(TNS) — Several large Maine banks and financial services companies are sending emails to customers reassuring them that their money is safe after the failures of two U.S. banks this week.

Camden National Bank and Kennebec Savings Bank, each of which has been in business for close to 150 years, informed customers that their money is safe and secure with federal insurance in place.

"We have persevered through World Wars, the Great Depression, the dotcom bubble, the Great Recession, the financial crisis of 2008 and COVID-19, all as a safe haven for people's money," Kennebec Savings President and CEO Andrew Silsby wrote.

The bank failures aren't likely to affect the average Mainer because they had unusual aspects to them, including a customer base made up heavily of venture capital industry companies, said Jessamyn Norton, chief investment officer at Portland-based financial services company Spinnaker Trust, which sent out its own notice to reassure clients.

Federal regulators were quick to step in after news of the failures of Silicon Valley Bank late last week and Signature Bank of New York over the weekend. The Federal Reserve Board said Sunday that it would safeguard deposits, even those exceeding the $250,000 Federal Deposit Insurance Corp. protected ceiling for deposits.

President Joe Biden, addressing the nation before the stock markets opened on the East Coast on Monday morning, assured Americans that they would not foot the bill for the failures.

Concerns still persist among customers and the banking industry about whether more banks will fail and whether savings and investments are safe. The Justice Department has opened an investigation into the collapse of Silicon Valley Bank and the actions of its senior executives, The Washington Post reported. Several investors also filed a class action complaint in federal court against the bank and its executives.

Silicon Valley Bank, which has three locations in Massachusetts but none in Maine, had a high percentage of venture capital industry depositors who were withdrawing funds the past couple years as venture investments cooled off, Norton said. Signature Bank, one of the few to serve the cryptocurrency industry, failed because customers lost confidence in the bank's operations.

Although former U.S. Rep. Barney Frank, D- Massachusetts, has served on the board of Signature, the failure of Silicon Valley Bank made bigger waves in the market because of the technology titans that had parked money there. Peter Thiel, the first outside investor in Facebook and a partner in San Francisco-based Founders Fund, had his fund and investment companies pull millions of dollars out of the bank before it descended into chaos last Thursday, Bloomberg News reported.

That followed a warning by influential blogger Byrne Hobart, who in a Twitter post in late February warned of the bank's financial problems. Because many of the bank's problems stemmed from reduced deposits related to venture capital shortfalls and poor investments, most businesses with money at small community banks should not be worried, said management consultant Jason Hendren of Florida.

"As a hedge, [business] owners with excess cash should diversify their banking relationships and have a second account at a large institution with enough cash to cover at least one payroll and accounts payable cycle," he said.

Maine banks typically aren't exposed to the risks of the failed banks, including too much reliance on venture capital or cryptocurrency clients, Norton said.

" Maine banks are conservative and don't have that type of bank deposit concentration," she said. "They serve regular Maine companies and families, so customers should be fine."

(c)2023 the Bangor Daily News (Bangor, Maine) Distributed by Tribune Content Agency, LLC.
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