A Community Bank Stance on Recent Bank Closures

We're Not Chasing the "Shiny Penny"...

A Blog Post Written by Scott Huedepohl | CSB President & CEO 

Scott HuedepohlThere has been a lot happening in the world of banking the past few days. Over the weekend the FDIC closed several failing banks. This is something we saw a lot of in the last big recession. I’m sure most of you remember that period where there were many banks failing, even here locally. 

I’m a lover of old movies. One of my favorites is “It’s a Wonderful Life” with Jimmy Stewart based on the Bailey Building and Loan (like a bank today) back in the depression. 

The movie made it really easy to understand as he explained to his customers that we take the deposits from one customer and loan them to another customer in the same town. That's what we've done for a long time at Community State Bank (CSB). It's funny to say, but we at CSB are really kind of boring. When things go wrong, boring isn’t bad…in fact it’s good. Let me try to explain.

For 125 years now, through many wars, recessions, and even the great depression, CSB has continued to operate. Over the years there have been new ideas of what banks should do to chase profits, and many banks have done them. I call it the "shiny penny". Many banks can’t help themselves when the newest "shiny penny" comes at them. They have to grab it.

In the recent years there are some banks (including Silicon Valley Bank in California that failed) that are not afraid to bet their depositors' and investors' money on that "shiny penny". In this case, Silicon Valley grew wildly fast, paying above market rates on deposits, and then making investments and loans that put those at risk. 

Once they got the deposits in (SVB grew from $50 billion to $200 billion in 18 months) they started investing heavily in things such as start-up green energy technology and in things like cryptocurrencies. Both of these have turned out to be disastrous decisions for them. When you are investing someone else’s money, some banks don’t seem to care as much. 

So, for 125 years we have been "Steady Eddie". We have not funded our bank with wholesale funding (broker CD’s for example). We haven’t set out to attract deposits and loans all over the world. We haven’t made investments in things that we shouldn’t, and we watch our loan portfolio closely. We talk about partnerships with our customers and our model is just that. If we don’t know anything about “a great investment”, we pass on it. We have built this bank on respect and trust and plan to continue that for a long time. 

Are we the sexiest bank in America? Nope. Can you call us and talk to us about your concerns, goals, and dreams? Absolutely, yes. Are we there when things get tough? You bet. 

We have seen this situation many times over the past 125 years. Our goal is to take care of you, our customers and community partners. Not some investor thousands of miles away. We have no interest in betting your money on a "shiny penny".

If you've already chosen us as your local financial partner...THANK YOU! If you're looking for a bank that cares about you and not the "shiny penny"... You've found us! We'd love to chat with you. 

Scott Huedepohl
President and CEO
Community State Bank