2024 Journal of Community Bank Case Studies

FIRST PLACE: Commonwealth University of Pennsylvania

a few days, resulting in insufficient liquidity to fulfill their obligations. At the time of failure, each of these banks held over $100 billion in assets, shocking and disrupting the banking industry. In addition to liquidity concerns, regulators are now increasingly focused on capital planning and risk management strategies. However, FCCB, like most community banks, employs a relationship-based business model that provides a source of strength when compared to larger banks, as its deposits are closely tied to the connections the bank forms with its customer base. The collapse of these three banks resulted from several uninsured depositors withdrawing funds within a short span of time. In general, the Federal Deposit Insurance Corporation (FDIC) insures customer deposits up to $250,000 per account. Customers with deposits exceeding this limit are uninsured depositors. However, in March of 2023, regulators announced that the depositors of SVB and Signature Bank would be paid in full. Two months later, at the fall of First Republic, the FDIC entered into an agreement with JPMorgan Chase Bank to assume the third failed bank’s deposits. In the aftermath, the Federal Reserve Board created the Bank Term Funding Program (BTFP) to provide support to banks. This program was implemented to prevent further bank failures, allowing banks to take out one-year loans that ensured sufficient cash to repay depositors. At the time of failure, SVB held $218 billion in assets, Signature Bank held $110 billion, and First Republic Bank held $229 billion (Bowman 1). In contrast (as mentioned in Part I.4), FCCB

Even though FCCB has maintained a ratio consistently

higher than that of its peers, the bank is still within optimal ranges in most years.

holds about $2.97 billion in assets. Given its smaller size, FCCB holds less uninsured deposits. According to Randy Black, FCCB’s CEO, “FCCB is at 22% unpledged, uninsured deposits, versus Silicon Valley Bank, which had [roughly] 90%”. According to CFO Steve Guillaume, FCCB also works with the Insured Cash Sweep network to provide depositors with additional insurance above and beyond the $250,000 FDIC limit. In the aftermath of the closures, FCCB reached out to depositors to inform and reassure them that their money was safe and insured (Black). As a community bank, FCCB values customer connections highly, and even in challenging times, the bank refers to core values when managing risk. In fact, FCCB’s deposits are less likely to be withdrawn in high volumes, because they are tied to close relationships. According to Governor Bowman, “[a]fter the recent bank failures ... [c]ommunity bank deposits remained relatively stable because their deposit base is closely tied to established relationships in their communities” (Bowman 1). In short, FCCB is much different from the banks that failed in 2023: it’s

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