Just like its residents, Nevada’s banks are strong and resilient with a long history of serving the Silver State. The U.S. banking system as a whole is an economic engine, with many pistons working simultaneously to power communities and our state.
Phyllis Gurgevich
With that in mind, here are things Nevadans should consider while managing their banking relationship.
Market turbulence
The recession taught many lessons and Nevada’s bankers embraced them to manage risk and economic pressures, ensuring that they adjust appropriately as the market changes. Banks adjusted underwriting practices when approving a loan and follow strict regulatory guidelines to keep monies flowing through the economy. Deposits in banks foster economic development across our communities by turning into outbound loans. In Nevada, banking customers are diverse and reflect the broader local economies served by a bank, not a single industry.
As we've seen, failures can happen. Thankfully, bank closures are rare. Traditional banking is well-regulated, well-capitalized and well-managed against risk, including rising interest rates. The experienced bank management teams and clear regulatory environment by state and federal agencies help drive the engine through economic cycles. As federal government leaders and regulators have reiterated in recent months, the vast majority of U.S. banks operating today are solid and not facing risk of failure.
FDIC insurance
Consumers should feel confident knowing their bank account is backed by the FDIC, whose mission is to promote confidence and stability in the nation’s financial system. Since the FDIC was founded in 1933, no depositor has lost one penny of FDIC-insured funds. While this insurance is rarely used, it can provide peace of mind for depositors. This “fund” is actually self-funded by the banking industry. Banks pay into the fund to create protection for depositors when needed.
As most people know, $250,000 is the coverage threshold for insurance. But it is a depositor’s unique portfolio that will truly determine how much is insured, and it may exceed that number. Visit the FDIC online tool to help determine your personal threshold on the “Electronic Deposit Insurance Estimator” (EDIE).
Still have questions or concerns about your deposits? Talk to your banker. It may be that you could restructure your deposits or perhaps use a sweep account or similar tool to reduce risk. You may have heard suggestions about moving from checking and savings accounts into money markets. While money markets can play a role in a person’s overall financial planning, money market funds may not be insured. Banks have tools to ensure their customers’ deposits are safe, beyond the basic threshold. Before making changes to how you manage your finances, talk with your banker or seek the services of a professional financial adviser. Look for professionals who are also fiduciaries, meaning they have a legal and professional obligation to act in their clients’ best financial interest.
Community reinvestment
Another piston in the economic engine is how our banks reinvest in the community. The Community Reinvestment Act (CRA) is a law intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income (LMI) neighborhoods, consistent with safe and sound banking operations. Banks are evaluated by the FDIC to see if they are meeting the needs of its community, based on the size of the bank. This evaluation identifies banks' activities, which must have one of the following as its primary purpose: Affordable housing,; community services targeted to low- and moderate income individuals; activities that promote economic development; activities that revitalize or stabilize LMI geographies.
So, in addition to the depository and lending relationships with customers, banks are a backbone for the community safety net around our state. They are investing in programs and organizations that make Nevada a wonderful place to live. This is another piston in the engine that promotes economic opportunity and financial mobility for all Nevadans.
Banking choices
The wide variety of banks, from large national to small community banks and to the mid-sized regionals in between, make the U.S. banking system the envy of the world. When choosing a bank relationship for you or your business, there are many factors to consider. Compare rates, fees, access and account types. Then look for features you’ll use most — from the number of branches or ATMs to mobile apps or a personal banker relationship. If you have questions about your bank’s performance, you can ask the bank directly and also ask to review their regulatory performance. Exams and ratings are made public on the regulator’s website, and your bank can tell you who their primary regulator is. Remember, your deposits matter to the overall economic engine — but you can choose the vehicle and how much fuel to use.
Navigating finances, particularly in turbulent times, can be unnerving. It’s important to stay vigilant with your banking choices and to keep the engine running. Rest assured that local bankers are here to help Nevadans reach their financial goals. No matter how large or small your account might be, if you’ve never had a personal relationship with a banker, now is a great time to develop one.
Phyllis Gurgevich is the president and CEO of Nevada Bankers Association, which is the united voice of Nevada’s diverse banking and trust company industry.