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Bank closures: What Montanans should know

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Posted at 6:08 PM, Mar 13, 2023

BILLINGS — After a weekend of bank shutdowns on both coasts of the United States, some wonder if the same could happen in their state.

Cary Hegreberg with The Montana Bankers Association said there isn't a concern the same could happen in Montana soon.

“Montana banks are well-capitalized, well-reserved, well-managed,” Hegreberg said Monday. “This happened at a very rapid pace. Once the word, you know, got out that the bank was struggling, people rushed to take their funds out of the bank which exacerbated the problem.”

Nevertheless, at least one depositor in Billings expressed a concern about the ripple effect the closures of Signature Bank in New York and Silicon Valley Bank in California could have in Montana.

“Now the question is, will that happen again, will it be like a domino thing?" said John Robinson, who banks locally in Billings.

Depositors with less than $250,000 in the bank are insured by the Federal Deposit Insurance Corporation (FDIC), meaning they're unlikely to lose money in a bank run. Those who have more than that amount are vulnerable, andsome reports indicate that those depositors were pulling the majority of the capital out of the banks that failed.

Robinson said he hopes a shutdown isn't likely in Billings's future.

“I don’t think it will happen here, no… We have a lot of local credit unions and smaller banks here that shouldn’t have issues,” Robinson said. “I think when you’re talking hundreds of millions of dollars and somebody pulls that out, versus you know if I pulled out the $387 in my checking account, I’m probably not going to cause a run on the bank.”

Bank Closures

A bank run is precisely what Billings financial advisor Gary Buchanan is hoping won't happen here.

“I think it’s going to be rocky for a while because I think the first thing people do often is panic, and I’d suggest you don’t,” Buchanan said.

Buchanan said the businesses Montana banks work with helps him feel secure that a shutdown won't happen here.

“Montana banks in general do not have the exposure to crypto, which took down the two New York banks, and to new IPOs and relatively new high-tech companies. Many that have not earned profits yet,” he said. “Montana banking system is strong, and I think in general Montana banks are stronger.”