The pension systems for Ohio’s retired public school teachers and service employees had a combined investment loss in the millions with the collapse of Silicon Valley Bank and Signature Bank, but officials from both insist their exposure was limited relative to their overall portfolios.
The State Teachers Retirement System of Ohio held shares of about $27.2 million in SVB on March 8, two days before regulators seized the assets of the Santa Clara, Calif.-based bank.
The School Employees Retirement System of Ohio, which represents nonteaching employees such as bus drivers, food service and maintenance workers, held shares of about $1.5 million in SVB and Signature Bank — about $929,410 in SVB and $636,983 in Signature Bank.
SVB, the nation’s 16th-largest bank, failed after depositors hurried to withdraw money amid anxiety over the bank’s health. It was the second biggest bank failure in U.S. history after the collapse of Washington Mutual in 2008.
It served mostly technology workers and venture capital-backed companies, including some of the industry’s best-known brands.
Signature Bank was the second bank to fail, which it did March 12, roughly 48 hours after the collapse of SVB. Signature was a large commercial lender, but had in recent years gotten into cryptocurrencies as a potential growth business.
After SVB failed, depositors became nervous about Signature Bank’s health due to its high amount of uninsured deposits as well as its exposure to crypto and other tech-focused lending. By the time it was closed by regulators, Signature was the third-largest bank failure in U.S. history.
According to STRS Ohio, it had bought and sold shares of SVB stock since 1999, achieving a net gain of more than $30 million even after the write-downs on March 8. The $27.2 million in shares it had in the bank represented about 0.03 percent of its total fund, according to a post on the system’s website.
“STRS Ohio continues to be a strong pension fund and benefits to STRS Ohio members remain safe,” the site states.
The fund is “designed to weather situations like this” with an investment strategy build on diversification.
“By diversifying across various asset classes, sectors and companies, STRS Ohio can mitigate the impact of unforeseen events like the loss in SVB shares,” the website states.
For the nonteacher pension fund, the loss represents 0.01 percent of its $17 million fund.
“The investments in SVB were made as part of an index replication strategy. This type of strategy replicates a segment of the stock market and the stocks in it are selected because they are part of that market segment. Because of SVB’s importance in handling investment transfers, they were included in that index,” the website states.
It adds, “These holdings represent a small fraction of SERS’ overall investment portfolio. SERS manages a diversified investment portfolio, and our members’ retirement security does not hinge on the success or failure of these firms.”
The Associated Press contributed to this report.
