Recently our team at Finch has heard from organizational leaders who are worried (especially those using regional banks) about the recent collapse of the Silicon Valley Bank (SVB) and what this could entail for their organization’s finances.
We believe this is at least a partially valid concern to be taken seriously, depending on the circumstances of your organization’s banking situation. Consider the following facts:
The ripple effects of SVB’s closure are starting and could lead to a banking crisis. Another (mostly crypto-related) bank called Signature Bank also failed, and First Republic is potentially in trouble.
While we all hope that a banking crisis can be avoided, it’s wise to limit potential risks. Check out the following actions we recommend every organization consider taking to protect their assets.
4 Steps to Protect Your Organization From a Banking Crisis
1. Verify that your bank is FDIC insured
Most banks are insured by the Federal Deposits Insurance Corporation (FDIC) for up to $250,000 per account. However, not every bank is FDIC insured, so it’s a good idea to check with your organization’s bank(s) to make sure they’re covered. In some cases they may even have additional levels of insurance offering coverage beyond the FDIC amounts.
2. Open more bank accounts with other institutions
If your organization has accounts with more than the $250,000 FDIC insured amount, you may want to open separate accounts at different banks so that each has a balance under $250,000. This diversification mitigates the risks to your bank portfolio and ensures that your money will be repaid by the Federal Government in case of a bank failure.
3. Move to a bigger bank
Consider opening a bank account at a larger bank like Chase, Bank of America, or Wells Fargo. Although they might not provide the same services and interest rates as regional banks, bigger banks may be a safer option for your money if events like this happen. Banks that have more than $250b in assets on their balance sheet have greater regulations imposed by the government to operate within.
4. Stay the course and be proactive
For the near future it’s safe to assume that we can anticipate more volatility and disruption. But rather than live in a reactionary mode, each organization should take proactive steps to ensure their finances are safe.
If you’re the leader of a church, take time to explain to your members what steps your leadership is proactively taking, and answer any questions they may have. This will increase trust and encourage them to continue supporting your church’s mission.
Finch Is Here to Help
In uncertain times, it’s helpful to have an expert in your corner.
Let Finch’s experienced team of CPAs and analysts become your trusted financial advisors and help your organization successfully navigate through any economic circumstances.
Corey has 10 years of professional experience in financial planning and analysis. His previous areas of focus involved helping launch the Financial Services department of a large government contractor, where he developed the various reporting and budgeting systems.
Corey also actively manages Shorebird, a Registered Investment Advising firm that focuses on Financial Advising, Planning, and Investment Management for clients. He is also an adjunct finance professor at the University of California, Riverside for their graduate-level programs.
Corey received a B.A. in Business Administration at the California State University, San Bernardino; a Masters in Business Administration and a Masters in Finance from Indiana University’s Kelley School of Business.
Jonathan has more than 7 years of professional experience in corporate taxation and strategy with both public and private companies. His industry experience includes entertainment, church finances, medical device, and technology. Jonathan is also an adjunct professor at the University of California, Riverside (named a Best Business School by Princeton Review and named a Best Undergraduate Business School by Businessweek) and speaks at conferences on topics such as leadership and management.
Jonathan is a graduate of the University of California, Riverside and an MBA candidate at UCLA Anderson School of Management. He is a licensed Certified Public Accountant (CPA) in California.
Jonathan previously worked at PricewaterhouseCoopers, LLP where he specialized in corporate taxation.
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