Oak Bank is Safe and Strong
By now, you have undoubtedly heard that federal regulators closed two large banks over the weekend. Both Silicon Valley Bank in California and Signature Bank in New York were taken over by the FDIC. Nothing garners national media attention like a large bank failure. As you probably know, the FDIC has agreed to make all depositors of both banks whole, even if the amount on deposit exceeds the FDIC insurance threshold of $250,000.
We are writing to assure you that the factors leading to the FDIC takeover of these two banks are unique and are not indicative of systemic risk lurking inside the banking industry. Both banks had a unique business model. Silicon Valley Bank catered to high-tech startups and the venture capital firms that support them. Signature Bank was one of the few banks in the country serving the digital firms that form the backbone of the cryptocurrency industry. Both banks made concentrated bets in risky industries and grew exponentially in recent years.
At Oak Bank, we do not serve hi_gh-tech startup companies or the crypto industry. Like most community banks, we have a well-diversified portfolio of local business clients'from many different industries. Our clients are established businesses with capable management teams and proven business models. This provides us with a stable, local and relationship-oriented deposit base and a strong loan portfolio.
Maintaining a strong and well-diversified credit portfolio is our primary objective at Oak Bank. We adhere to several fundamental principles when extending credit. First, we work with clients that are located in nearby communities. We rarely lend money outside of Dane County. Second, we lend to established companies that are profitable and able to generate the cash flow necessary to repay their outstanding credit obligations. Finally, we closely monitor and limit our concentration risk both to individual borrowers and entire industries. This helps ensure that a company or an industry facing economic challenges doesn't create financial stress for Oak Bank. Our financial discipline and conservative approach to credit underwriting may seem stodgy to some, but it ensures that we remain strong and healthy and enables us to sleep soundly at night. We hope that our conservative approach to lending provides you with comfort as well.
Our investment portfolio consists of high-quality securities with very little credit risk. We primarily invest in mortgage-backed securities that are guaranteed by Fannie Mae or Freddie Mac and General Obligation municipal bonds issued by Wisconsin municipalities. We buy every security with the intent to hold it to maturity and we fully expect to receive 100% of our investment back when the securities mature.
Because of our conservative approach, Oak Bank remains extremely strong by any measure. Our earnings are healthy. We have ample liquidity and a strong capital position. The amount of our capital exceeds the regulatory threshold for being Well Capitalized (the highest regulatory classification awarded by our regulators) by nearly 50%. Furthermore, our credit quality remains exceptionally strong. We do not have any non-performing assets and we do not have any loans that are delinquent 30 days or more. Although our credit quality is strong, we continue to maintain a very robust reserve for unexpected credit losses. In fact, the level of our current reserve places us in the 76% percentile of community banks throughout the country.
In summary, Oak Bank continues to be a strong, conservatively managed community bank and a very safe institution for you to maintain your deposit relationship. We hope that this information gives you peace of mind. If you have any questions regarding Oak Bank's financial strength, please feel free to give Bob, Terry or your relationship manager a call. We are proud of our performance and are always happy to discuss it with you.
If you still have concerns and wish to learn more about account titling techniques and other tools at our disposal that might increase the amount of your FDIC coverage, please give us a call.
Thank you for placing your trust in Oak Bank. We sincerely appreciate your relationship.
Bob Gorsuch & Terry Taylor
