ATLANTA – Georgia’s banks are in a strong position in the wake of the failure of two large American banks this month, the deputy commissioner of the state agency that oversees banks said Tuesday.
“The state of banking overall in this country is very strong, and that’s especially the case in the state of Georgia,” Bo Fears of the Georgia Department of Banking and Finance told the state Senate’s banking committee.
The problems that caused the collapse of Signature Bank and Silicon Valley Bank (SVB) do not plague Georgia banks, Fears said, pointing to three major distinctions between the failed banks and Georgia’s banks.
First, SVB and Signature’s business was heavily concentrated in the high-tech industry. The banks were focused on serving fintech (financial technology) companies, venture capitalists who supported fintech, and cryptocurrency companies, Fears said.
“In Georgia, we don’t have that concentration,” he said. “We’re much more diversified. I’m unaware of any Georgia state-chartered bank that even banks a crypto-company.”
Second, 90% or more of SVB and Signature Bank’s deposits were uninsured, Fears said. No Georgia bank comes close to approaching that very high level of uninsured deposits, he said.
Third, like most banks, SVB and Signature were heavily invested in securities.
“When the interest rates were relatively flat, that was fine,” Fears said. “But within the last year, when there have been the interest rate raises, that’s created unrealized losses – so essentially paper losses in the bond portfolio.”
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