Friends, Family, Customers, Colleagues,


The failures of Silicon Valley Bank (SVB) and Signature Bank has rightfully alarmed the market. I expect many of us will be fielding questions from customers, family, and friends about what happened. I will update this when I get a handle on the failure of Signature Bank.

In nutshell, SVB failed because they did not have enough cash to cover customer withdrawals. The seeds of failure were sown years ago. Terrible risk management set the stage for a fast failure.

SVB was a fast-growing bank out of San Francisco, CA. As of March 9, 2023, SVB grew assets to just over $200 billion. They were a commercial bank. Their customers, both on the deposit and loan sides of the balance sheet, were commercial businesses. Like all banks in America, their deposits grew substantially right after the pandemic hit. What SVB did was use those extra deposits to buy long-term bonds and US Treasuries – accounted for as ‘securities’. SVB’s securities portfolio increased by near $100 billion during that time. In hindsight, what these guys did was crazy. They took short-term deposit dollars and bought long-term securities. When the interest rates went up, the value of their securities declined – substantially. When customers withdrew their money, SVB had to sell securities at a loss to come up with the cash to give back to their depositors. Selling securities at a loss reduced the amount of capital in the bank to where they were unable to survive. The implosion of SVB liquidity happened over the course of 48 hours. However, the terrible risk management that broke the bank took place over years. These guys followed the Savings & Loans playbook from the 1980’s – short-term funding for long-term investments. Same strategy – Same result. In my opinion, SVB’s failure was tragically avoidable.

Short and simple — Liquidity is what broke SVB. First Oklahoma Bank has tons of liquidity.

First Oklahoma Bank doesn’t look anything like SVB.

• First Oklahoma Bank has a ton of liquidity – much more than our peers in the industry. As of March 9, 2023, FOB had about $145 million in cash and cash equivalents on hand. In addition, we have off-balance sheet lines of credit of over $250 million which we can draw on if we get in a pinch. Combined, we have over $395 million of liquidity fire power. That is huge! To put that into perspective, we have just over $905 million in deposits today. 1/3rd of our depositors could withdrawal their money and we’d still be open for business. We monitor liquidity daily. We are in great shape when it comes to liquidity.
• We don’t have a huge securities portfolio that is underwater. SVB had over 50% of their assets in securities. We have just under 2% of ours in securities. Unlike SVB, we did not take unnecessary duration risk on the securities we do own. Because the duration is short, we plan on holding the securities to maturity – therefore we won’t realize losses. The total amount of unrealized losses in our securities portfolio is less than $1 million dollars. Not only does First Oklahoma Bank have plenty of capital in the Bank to absorb securities losses, if necessary, our Holding Company has also over $10 million in additional cash to help if need be. Note: unrealized securities losses (specifically accounted for in Additional Other Comprehensive Income – AOCI) is where many banks are experiencing trouble. First Oklahoma Bank do not have an AOCI problem. Interest rate risk is real … and we monitor it constantly.
• First Oklahoma Bank’s depositors do not have a huge concentration of our funding controlled by a small number of customers. 95% of SVB’s funding was from deposits above the FDIC insurance limit. First Oklahoma Bank has nowhere near that amount of funding concentrated in uninsured deposits. As of December 31, 2022, 72% of our deposits were core deposits. This is a good number. Most of our deposits come from long-term retail customers.
• Reports indicate that a significant amount of SVB’s deposits were tied to the venture capital industry. First Oklahoma Bank does not have a concentration of ventured related deposits. As SVB has demonstrated, these types of deposits are volatile.
• It is coming to light that a portion of SVB’s deposits were tied to cryptocurrency. First Oklahoma Bank has $0 crypto related deposit dollars.

FOKB Facts as of March 9, 2023:


• Total Assets of $1.033 Billion.

• Bank equity of $100.5 million before adding our loan loss reserve of roughly $6.5 million.

• Cash/Cash equivalents of approximately $145 million – roughly 14% of total assets. This percentage of on-balance sheet cash/equivalents is above many of our peers.

• Nominal securities portfolio of approx. $20 million. Unrealized losses in the securities portfolio are less than 1% of capital – very nominal and manageable.

• Holding company has over $10 million in cash – or 10x the amount of unrealized losses in the bond portfolio. We have plenty of unencumbered equity to cover shortfalls if necessary.

• In the last 45 days we completed a bank safety and soundness examination and an annual audit. Results from both were excellent.

• Over 70% of our deposit base comes from core deposits.

• Bank has unused off-balance sheet lines of credit of over $250 million that we can draw on if there is a liquidity crunch.

• From a loan quality standpoint, we are very strong. Our Texas ratio is less than 2% – which is OUTSTANDING for a bank of our size.

• First Oklahoma Bank’s loan portfolio is balanced and not overextended in risky areas of lending – ie. under-collateralized lines of credit, oil/gas, or construction/development loans.

• First Oklahoma Bank’s leverage ratio was 9.89 as of February 2023.

• First Oklahoma Bank’s total risk-based capital ratio was 11.8% as of February 2023.

• First Oklahoma Bank is in great shape!!!