Local banks, credit union: big differences between them and failed banks

Published: Mar. 14, 2023 at 5:55 PM EDT
Email This Link
Share on Pinterest
Share on LinkedIn

WATERTOWN, New York (WWNY) - National headlines revolve around banking after the failure of Signature Bank in New York and Silicon Valley Bank, or SVB in California.

It turns out that the type of banking those institutions did isn’t remotely close to what banks in the north country do, meaning local financial institutions aren’t worried and they say their customers shouldn’t be either.

“We’re making mortgage loans on the St. Lawrence River and Watertown, New York. They’re making cryptocurrency bets all over the world. Just totally different models,” said Watertown Savings Bank President Mark Lavarnway.

Signature Bank and SVB invested in tech startups, cryptocurrency, and bonds. That recipe caused problems when customers wanted their money and the banks didn’t have the liquidity to cover themselves.

At Watertown Savings Bank, Lavarnway says that type of banking isn’t done here in the north country.

“Right or wrong, those investments didn’t work out for them. That’s the difference between us and theirs,” he said.

Both Watertown Savings bank and Carthage Savings Bank have been operating for over 100 years, so their systems are time-tested.

Carthage Savings Bank CEO Dale Klock says their smaller size also provides a greater sense of security.

“We talk to our larger customers on a regular basis. We know their cash flow needs into the future so we can protect our own cash flow needs,” he said.

SUNY Potsdam business administration professor Greg Gardener says the bank closures shouldn’t have much of an effect on your average north country resident

“We’ll get through this. The financial community will have some reaction to it but I think the average person on the street is not going to notice,” he said.

We also reached out to Northern Credit Union. In a statement, Chief Financial Officer Nathan Hunter said, “No one has ever lost a single penny of insured share deposits within the credit union system. As a not-for-profit financial institution, Northern has historically invested excess funds in very low to no risk options, such as overnight advances and guaranteed government securities.”