The Muncy Bank and Trust Company Senior Vice President/CFO Joseph K. O’Neill, Jr., left, and President/CEO Robert J. Glunk, right, stand in the lobby of their South Williamsport office. KAREN VIBERT-KENNEDY/Sun-Gazette
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Local banks and lenders assured customers their investments and savings are safe.
Several bank presidents and a credit union president and CEO spoke to the Sun-Gazette and offered statements in light of the risky liquidity failures for Silicon Valley and Signature banks in California.
International financial institutions such as Credit Suisse also are not for local bank customers to be concerned over.
“Our customers are your farmers, small businesses, towns and neighbors,” said Rob J. Glunk, president and CEO of Muncy Bank and Trust Co.
Conversely, these California lending institutions invested heavily into technology start-ups and cryptocurrency, which had very concentrated deposits.
“About 90% of their business went uninsured,” said Joe O’Neill, CFO with Muncy Bank and Trust Co.
Muncy Bank and Trust Co. is the “inverse” of these banks that received bailouts when they failed, he said.
“We want to reassure you that Muncy Bank is well capitalized, stable and strong,” Glunk said of the nine offices from Avis in the west to Dewart in the east.
Founded in 1893, 130 years ago this year, Muncy Bank has a long and stable presence in the community and pursues a much different business model than both banks that had failures.
“We operate as a traditional community bank, serving you and your neighbors,” Glunk said. “Our diverse depositors are local and so are our loan customers,” he said.
“Most of our assets are in loans that are primarily secured by commercial and residential real estate within the market area we serve,” he said.
The California banks were heavily tied into non-diverse customers in the venture capital arena and had a very concentrated deposit base, Glunk said.
“We do not have any direct exposure to either institution,” he said.
The affirmation of his words can be seen in the historical context as well. The bank has weathered recessions, great recessions, The Great Depression and more recent recessionary periods.
Additionally, the Commonwealth of Pennsylvania has a strong banking system, Glunk said.
Also operating with a completely different business model than those of Silicon Valley lending institutions is Woodlands Bank.
“In light of the recent events relating to the failures of Silicon Valley Bank and Signature Bank, it’s important to recognize that the business model of Woodlands Bank, like many other solid, community banks, is one that does not lend itself to the issues that precipitated these failures,” said Jim Conklin, chairman, president and CEO of Woodlands Bank.
The banks that were recently bailed out, “catered to high-risk industries which experienced significant volatility in the rapidly rising interest rate environment of the past year,” Conklin said.
Conversely, Woodlands Bank, and other well-managed community banks, such as Jersey Shore State Bank, have a broad range of commercial customers across many industries and consumer customers that span the markets served, many of whom are loyal in their banking relationship.
For customers concerned about the wavering each day and reports on the Wall Street Journal, Fox Business, CNBC and other financial media sources, the business models of traditional community banks are focused on strong risk management principles, which includes a diversification of customers.
In addition, the local banks have balance sheet management practices that do not allow for the types of asset/liability mismatches, which were a major driver of these unfortunate events, according to Conklin.
Moreover, Conklin noted, “this is not a systemic problem like what was experienced during the banking crisis of 2007 and 2008.”
The word “contagion,” may sound frightening, giving images of a disease spreading that is uncontrolled.
However, the fact is that community banking remains strong in terms of financial performance, liquidity and capital.
Still, painting a large brush on all banks and listening to conspiracy theorists rather than local professional lenders is a concern to the bank executive.
“My hope is that the reputations of banks like Woodlands Bank do not get tarnished once again by the actions of those who have a much different approach to banking and finance,” Conklin said.
The same thoughts hold true for Jersey Shore State Bank officials and its valued customers.
Penns Woods Bancorp Inc., the holding company for Jersey Shore State Bank and Luzerne Bank, is a community bank organization that maintains its focus on banking operations within its market footprint.
The company maintains a capital position of being well capitalized as defined by regulatory standards.
“We maintain a diverse funding mixture, centered on in-market deposit accounts, that does not rely on a single or handful of customers,” said Brian Knepp, president and CFO of Penns Woods Bancorp Inc.
“The funding provided by these accounts is utilized to fund a mix of loans within our market that primarily have real estate collateral whether retail or commercial based.
“Providing additional liquidity sources is our access to national funding sources such as the Federal Home Loan Bank of Pittsburgh and our correspondent banking relationships that are spread across the country.
“With our focus on lending within our community, we maintain an investment portfolio that only comprises approximately 10% of total assets and serves as an additional source of liquidity.”
Horizon Federal Credit Union said when situations like this arise, it further cements that not all banks and credit unions are equal.
According to Justin Howard, Horizon Federal Credit Union president and CEO, not all financial institutions behave and act the same.
“When you examine Horizon, what you find is a credit union that is focused on long-term stability for our local communities and members — not short-term profits for shareholders,” Howard said.
“We practice sound investment practices, diversify our risks, and maintain a healthy liquidity position with our cash flow,” he said.
“We’ve never lost sight of what’s important, and that is honest, local banking for the 11-county region we serve. And like the FDIC for banks, we are equally protected at the same level by the NCUA Share Insurance Fund.”
“When you examine why these banks failed, you also have to consider how they prepared for economic downturns,” Howard said.
“This isn’t the first economic shift, and it won’t be the last,” he said.
“At Horizon, we pride ourselves on being well-managed and protected when things turn, and we’ll be equally prepared for when economic conditions improve,” he said.
Howard’s advice, in the event of future bailouts and liquidity issues, is for anyone who has concerns about the safety of their money to simply ask.
“Do a little research (on) how your bank or credit union operates,” he said.
“You can reach out to your bank or credit union or even talk to a trusted advisor, such as a financial advisor or tax professional,” Howard remarked.
In the end, it’s important to realize not all financial institutions are the same, he said.
“Our missions, values, and the types of decisions we make are all different. Do your banking with those that align with your own beliefs and values,” he said.
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