CEO of Lodi-based bank says industry is stable

Last Friday, Silicon Valley Bank collapsed after its customer base, fearful about uncertainty over the bank’s financial outlook, made a run on deposits.

Facing a liquidity crisis, the bank was shut down and taken over by the government.

The bank was the 16th largest in the country, and Friday’s collapse was the biggest failure for a financial institution in more than a decade.

Steinwert said Lodi-based F&M isn’t in the same predicament, and won’t be, because it has been proactively preparing for the current state of the economy for about a year and a half.

“We saw this at the beginning of 2021,” he said. “We knew inflation would be high and that interest rates would go up. We repositioned our security portfolio so rising rates wouldn’t destroy the bank.”

In addition, Steinwert said the bank incurred no debt and limited loans to its local customers — comprised mostly of farmers and businesses owners — and not to venture capitalists or cryptocurrency companies like some institutions have done in recent years.

“Some (banks) didn’t think inflation would take off, and others didn’t think it would rise this much and didn’t anticipate a yield curve,” he said. “And now those banks are suffering.”

Since last week’s collapse, Steinwert said F&M has had new customers walk through the front doors to open new accounts. He said the inflow of money into the bank is gaining momentum.

“We haven’t seen any deposit outflow,” he said. “We’ve had a great amount of deposit inflow because of the way we have conservatively run the bank. We have 1,300 families that are customers with the bank, and they’ve all had good returns on their investments. That’s left us in good shape.”

The unraveling of SVB began last Wednesday, when it announced it suffered a $1.8 billion after-tax loss and needed to raise more capital to address depositor concerns.

Shortly thereafter, high-profile venture capital firms advised their portfolio companies to pull money from the bank.

Steinwert said F&M reached out to its customers over the last few days to ensure their money would remain secure, and added more people might begin turning to community banks as their primary financial institutions.

“We’re starting to see a trend to move money from regional banks and into local community ones,” he said. “Regardless of the state of the economy, our bank will be a true community bank to support the community’s needs, and our farmers’ needs.”