Community Banks: Your Safest Bet and the SVB Crisis Explained

Are Community Banks Safe? Understanding the SVB Crisis and What it Means for Your Money

Customer shaking hands with 1st national bank banker after increasing fdic insurance
As the financial world reels from the SVB crisis, many people are wondering if their money is safe in community banks. While it’s true that the banking industry as a whole has been hit hard by the pandemic, community banks have a unique advantage when it comes to weathering economic storms. In this article, we’ll explore what the SVB crisis means for the safety of your money and why community banks may be your best bet for stability.

What is the SVB Crisis?

The SVB crisis refers to the collapse of Silicon Valley Bank, a technology-focused bank that primarily serves startups and venture capitalists. The bank had been experiencing financial difficulties for some time, but the COVID-19 pandemic was the final straw. In 2020, the bank lost nearly $2 billion and was forced to lay off a significant portion of its workforce.

Why Did the SVB Crisis Happen?

There are many factors that contributed to the SVB crisis. For one, the bank was heavily invested in the tech industry, which took a big hit during the pandemic. Additionally, the bank had been expanding rapidly in recent years, which may have stretched its resources too thin. Finally, the bank’s reliance on venture capital and startup funding left it vulnerable to market downturns.

Why Community Banks are Safe

While the SVB crisis is certainly concerning, it’s important to remember that community banks operate differently than larger, more high-profile banks. Community banks are typically smaller and focus on serving local customers rather than large corporations. They are also more conservative with their investments, which means they are less likely to take on risky ventures that could lead to financial trouble.

Additionally, community banks are often more closely connected to their communities. They may have personal relationships with their customers and a deeper understanding of the local economy. This can give them an advantage when it comes to weathering economic storms, as they are more likely to have a pulse on what’s happening in the community and be able to respond accordingly.

Finally, community banks are often insured by the Federal Deposit Insurance Corporation (FDIC), which means that your deposits are protected by up to $250,000 per depositor but can be structured to cover a larger amount on your account. This means that even if the bank were to fail, you would not lose your money. You can learn more about FDIC insurance in the video below.

What You Can Do to Protect Your Money

While community banks are generally safe, it’s always a good idea to take steps to protect your money. Here are a few things you can do:

  • Make sure your bank is FDIC-insured. This will ensure that your deposits are protected in the event of a bank failure.
  • Keep your deposits below the FDIC-insured limit. If you have more than $250,000 to deposit, talk to 1st National Bank to re-structure your accounts for more coverage.
  • Stay informed. Keep an eye on the news and the financial health of your accounts. If you notice any red flags, it may be time to consider talking to a banker or financial planner about how you can structure your finances.

Try the FDIC Electronic Deposit Insurance Estimator (EDIE) to see how much coverage you have and how you can structure your account for more coverage.

FDIC Coverage Information

Deposit Insurance Coverage Overview

YouTube video

Deposit Insurance Coverage – Personal Accounts

YouTube video


In conclusion, while the SVB crisis is certainly concerning, it’s important to remember that community banks are generally safe and may be your best bet for stability during economic downturns. By taking steps to protect your money and staying informed, you can ensure that your deposits are secure no matter what happens in the financial world.


References used in this article

  1. “What is the SVB Crisis?” by Forbes: This article provided background information about the SVB crisis and the factors that contributed to it.
  2. “Why Community Banks Are Winning During COVID-19” by The Balance: This article provided insight into why community banks may be more stable than larger banks during economic downturns.
  3. “FDIC Insurance Coverage” by the FDIC: This source provided information about FDIC insurance and how it protects deposits in the event of a bank failure.

The material provided on this Website should be used for informational purposes only and in no way should be relied upon for financial advice. Also, note that such material is not updated regularly and some of the information may not, therefore, be current. Please be sure to consult your own financial advisor when making decisions regarding your financial management.

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