State: Small amount of customers in Iowa concerned over bank failures

Published: Mar. 13, 2023 at 7:01 PM CDT
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CEDAR RAPIDS, Iowa (KCRG) - The Iowa Division of Banking said it’s not concerned about state-chartered banks in Iowa failing after two banks failed within the last four days.

According to the Federal Deposit Insurance Corporation (FDIC), Silicon Valley and Signature Bank are the first two banks to close since 2020. The FDIC along with the United States Department of the Treasury and the Federal Reserve said all depositors will have access to all of their money in a statement published Sunday.

Jeff Plagge, who is the Superintendent of Banking for the Iowa Division of Banking, said he believed the guarantee is the reason many customers aren’t concerned about bank failures. He said his department has heard small amounts of customers concerned after it made various amounts of calls to banks throughout the weekend and Monday.

Gene Neighbor, who is the President and CEO at Farmers State Bank, said he received one of those phone calls from state regulators. He said he talked about the way the bank diversifies its assets along with the amount of capital kept within the bank to reassure the small amount of customers, who called him concerned.

Neighbor said national media coverage of bank failures can cause concern where it’s not necessarily warranted.

“The national level hypes it up more than it should be a little bit because they paint banks as the same canvas, but we’re not,” he said. “We’re all different.”

Anne Villamil, who studies monetary policy at the University of Iowa for about 35 years, said banks in Iowa are less likely to fail because they work with a variety of groups and sectors of the economy, while, Silicon Valley Bank catered to a specific group of people in one industry like tech start-ups.