COPYRIGHT, The Republic, Columbus
COLUMBUS, Ind. — Local experts say that the sudden collapse of two large banks in recent days is unlikely to drag down regional banks that operate in Columbus.
Regulators closed California-based Silicon Valley Bank Friday after depositors rushed to withdraw their funds all at once in what was the second-largest bank failure in the nation’s history, The Associated Press reported. Two days later, regulators announced that New York-based Signature Bank had also failed and was being seized.
The collapse of the two banks in a 48-hour span fed fears that more financial institutions could fail, as depositors withdrew savings and investors broadly sold off bank shares on Monday while the federal government raced to reassure Americans that the banking system was secure.
As of 11 a.m. Wednesday, shares of some banks that operate in Columbus — German American Bank, Old National Bank and First Financial Bank — had declined since Friday to varying extents.
Though it is eerily reminiscent of the financial crisis from 15 years ago, it is unlikely that the collapse of those two banks will spread to local banks, in part because they have a different customer base, said Steve Mohler, an assistant professor of management at IUPUC. Silicon Valley Bank and Signature Bank largely catered to the tech industry.
“(The local banks) don’t tend to the same audience, the same target market that those banks do,” Mohler said. “But the basic framework of what happened could very possibly happen here as well.”
For his part, Roger Lee, a senior research analyst with Columbus-based Kirr, Marbach and Co., said the two banks that failed were particularly vulnerable and doesn’t anticipate any runs on banks in Indiana.
“We had a run on two banks that were very vulnerable because they were serving customers that benefited from very low interest rates,” Lee said. “…It’s definitely not a scenario where people need to panic. I think people can just keep banking with their bank as usual. I don’t foresee any of the banks that most people bank with in Indiana going out of business.”
For the complete story, see Friday’s Republic.