A lot has been said and written regarding the recent bank failures of Silicon Valley and Signature Bank. I’ve been asked a couple of times about my thoughts so I wanted to share with everyone.
I’ve been in banking for almost 30 years, lived through 2008-2010 financial crisis when multiple banks were closed weekly, and these two are quite unique comparatively. Most banks fail because they make bad loans. These banks had a series of things go wrong, but bad loans don’t appear to be the major cause of collapse.
Silicon Valley Bank had $42 billion, yes BILLION, withdrawn in one day. That’s a run on a bank the industry has never seen before and couldn’t be mitigated. I don’t think any bank in the world could survive that same situation. There is no doubt they ignored some basic banking fundamentals which started the run, but that one event alone was enough to close the bank.
Both banks had large concentrations of customers and deposits. Both had deep ties to technology and cryptocurrencies and were primarily commercial banks.
How does all of this relate to your credit union?
American Southwest Credit Union primarily serves consumers. We are owned by our members. We opened in 1954 and have been serving Cochise County (and four others now) for 69 years. We are here to stay. Over 75% of our loans and deposits are to and from consumers. These are you, your neighbors, friends, and family. The other 25% is to smaller businesses that you know and love. Some you even own. We have no ties at all to volatile cryptocurrency.
We are also a not-for-profit organization with a volunteer board. We need to make a profit to continue serving you and bring you new products and services, but maximizing profit isn’t our primary business purpose. For banks, profits can be their primary focus. What this really means to you is, we won’t put the organization at risk to make $2 when we can make $1 and do the right things, for the right reasons, and protect our members and communities. We have multiple audits each year to keep us on track. Our most recent state audit earlier this year was stellar. We have never been in a stronger position than we are right now.
If you have less than $250,000 on deposit with ASCU, you are fully insured and have nothing to worry about. If you want to keep more on hand than that, come see us. We can help you structure your deposits in a way to increase the amount insured. We also have more capital than uninsured deposits.
Here is another big difference between ASCU and all the other places you could choose to bank. I’m happy to talk to any of our members. Please feel free to call our main line to make an appointment. I doubt many, if any, other financial institutions provide direct communication with the executive team as we do.
The last thing I’ll say is “Thank you” for being a member. I appreciate it. Everyone here at American Southwest Credit Union takes seriously the trust you place in us by being a member. In my opinion you couldn’t be banking with a better, or safer, organization.
Jay Williamson
CEO/President, American Southwest Credit Union