Bank Strength and Liquidity in the Current Environment

On March 10, 2023, the FDIC closed Silicon Valley Bank headquartered in Santa Clara, Calif. While SVB’s circumstances led to the second largest bank collapse in U.S. history, we want to assure you that SVB’s business model was unique to its organization and focused on Crypto Currency and Tech Start-Ups, neither activities found at FirstCapital Bank of Texas.

FirstCapital Bank (FCB) is a traditional bank with a diverse loan portfolio and a granular deposit base

  • Silicon Valley Bank’s (SVB) average deposit size was over $4 million
  • FCB’s average deposit size is $67 thousand
  • The amount of deposits that are not insured by the FDIC or by securities in our investment portfolio is only 44% of our total deposits
    • 97% of SVB’s deposit accounts had balances over $250k (the FDIC insurance limit)

FCB is well capitalized

  • SVB had a tangible common equity / tangible assets ratio (TCE/TA) of 5.6%
  • FCB has a TCE/TA ratio of 10.4%

FCB can absorb investment losses in their investment portfolio, even though it should never have to

  • If SVB had to realize all their losses in the investment portfolio, it would have taken their TCE/TA ratio to (0.1%)
  • If FCB realized all of the losses in our available for sale portfolio, our TCE/TA ratio would still be greater than 10%
    • This is more than most large money center banks currently have in TCE/TA

FCB is very liquid

  • FCB has established lines with the Federal Home Loan Bank and others such that we could raise $389 million in borrowings overnight, which is roughly 50% of our uninsured and unsecured deposit portfolio
    • In 2023, FCB expects to have $23 million in investments and $390 million in loans that mature and could be used to manage the balance sheet. This could be used to fund loan growth, manage any deposit runoff and pay off any other debt
    • Our investment portfolio produces $600 thousand of cash flows per month or $7 million a year in addition to $43 million slated to mature in the next 12 months
    • $112 million in loans payments will be made in 2023

FCB is highly profitable and conservative in our investment philosophy

  • Our bank has traditionally maintained high levels of liquidity and our investment portfolio has a weighted average life of only 2.5 years
  • Treasury and Agency bonds, which are the highest quality investments, make up 77% of our investment portfolio
  • FCB profits provide additional strength and cash generation.  Our company had record earnings of $37 million in 2022