Rancho Cordova-based bank CEO discusses impact of bank collapse

In the aftermath of the Silicon Valley Bank and Signature Bank collapses, money fears have spread throughout the markets all the way up to the Federal Reserve. But it's also trickled down to more local banks. Two years ago, five-star bank would public becoming the only locally-based bank traded on the major stock exchange. The Rancho Cordova-based bank saw its value, though, drop by 35 million this month. CEO James Beckwith joining us now live. Good morning. Thank you so much for being here.

That's Troubling News. How has all of this impacted you all? Well, from a market perspective, from a bank stock valuation perspective, certainly has impacted us. But no more so than this turmoil has impacted other community banks that operate within Sacramento. So our valuation is really consistent with everybody else's valuation, which is unfortunate. But we hope that it's short-term. Explain for people who may not have been following all of this turmoil exactly what happened to these banks. The big bank run, but in a more modern sense.

What happened at Silicon Valley Bank two weeks ago, $42 billion went out of the bank in one day. So it's not like the old line run on a bank that you would expect where people lining up around the corner to take their money out. It was all done digitally. And that was the velocity of how people can move money around, really impacted them, and fundamentally forced the regulators' hands to take them over. Are you all seeing that? Are you all seeing people now having that fear and then rushing to also take money from your bank? Certainly not take money from our bank. In fact, we've actually added deposits from all this turmoil. But there is concern.

Now it's enabled us to kind of take a step back and reach out to our customers. Explain why we're different. Explain that we're not like Silicon Valley Bank or Signature Bank. We have a diversified funding source. We deploy those deposits, if you will, in a diversified asset base. Silicon Valley Bank was a great organization. But it was what we call in the industry brandy a monoline bank, very concentrated in the tech sector.

And very unfortunate what happened to them. But we're a lot different. We maintain a much higher degree of liquidity on our balance sheet. And so we don't face those pressures. You know, a lot of people watching this morning and they just wonder, is their money, are their investment safe? Well, with us, and I'm going to suggest with other community banks, and I do want to make that distinction, community banks, your money is safe. And we're finding out through conversation with our customers that they are concerned. But through those conversations, we've been able to kind of alleviate their concerns about Five Star Bank and the banking sector taken as a whole.

Yeah, and this is, we know, your first time talking about all of this publicly. We appreciate you being here. Talk to people about how they can make sure they don't lose money. What are the precautions, if there are any, that people should be taking right now? Well, first of all, your deposits are insured up to $250,000 per account. So that's good. Now, there's also an implied guarantee. Now, that's kind of being discussed a lot right now back in Washington, D.

C. Should that deposit insurance be increased? I'm certainly an advocate for it, but we'll see what Congress does and what the White House does with respect to that matter. But over that, you really should do your due diligence. If you're making a big deposit in a financial institution, look at their financial statements. Talk to the people. Ask a series of questions. Start with, how's your liquidity? Do you have enough liquidity on balance sheet? I'm talking about cash on your balance sheet to be able to withstand any type of run or a mini run, if you will.

Ask those questions. Find out how they're doing financially. Where do they get their deposits from? Is it diversified? Sure. Where do they place their assets? Is that diversified? How much risk are they taking on their balance sheet? A lot of good information. You've got to ask those tough questions for sure. Absolutely. James, thank you so much for being here this morning.

We appreciate it. Thank you so much, Brandon. All right, Mike.

Five Star Bank, KCRA, Sacramento, bank, finance, rancho Cordova