NC pension fund had millions invested in two failed banks. Will it get the money back?

Like companies across the state, North Carolina’s pension fund had millions of dollars invested in two recently failed banks.

The North Carolina Retirement System had $10.1 million in Silicon Valley Bank stock and another $7.8 million in Signature Bank stock, the Department of State Treasurer confirmed Wednesday. Bank runs contributed to the collapses of Silicon Valley Bank (SVB) on Friday and Signature on Sunday.

While the combined $17.9 million investments represent a sliver of the state’s overall retirement system value, Treasury spokesperson Frank Lester said “we are unsure at this time” if the money will be recovered.

The North Carolina Retirement System includes four major retirement programs, the largest being the Teachers’ and State Employees’ Retirement System, as well as multiple smaller pension funds. Each month, the overall system pays roughly $600 million to around 350,000 people.

As of March 10, the system was valued at $110.6 billion.

Speaking to The News & Observer on Wednesday, State Treasurer Dale Folwell said his department didn’t directly buy SVB or Signature stocks but instead invested in index funds that contained the banks’ shares. The state controls index funds in-house and through outside asset managers like BlackRock.

Folwell noted the total exposure to SVB and Signature “equates to less than .01% of the value of the retirement plan.” He assured the bank collapses will in no way affect the state’s distribution of benefits.

“We obviously wish that we’d had less exposure, but glad we didn’t have more,” he said.

North Carolina wasn’t the only state to have its pension fund exposed to the two banks. The California Public Employees Retirement Fund reportedly had $67 million in SVB stock and around $11 million of Signature shares.

On Sunday, the U.S. Treasury Department announced it would guarantee all deposits in these failed banks, easing concerns of local startups and larger companies that had their money stuck in accounts.

Whether shareholders in these two formerly public companies will see any part of their investments returned is less clear. When detailing its bank depositor safeguards on Sunday, the federal government said “shareholders and certain unsecured debtholders will not be protected.”

“I’m expecting the worst, hoping for the best,” Folwell said.

Bank failures spark NC political fight

The collapse of Silicon Valley Bank, in particular, has become a topic of national political wrangling, with heated exchanges extending into the next race for North Carolina state treasurer.

On Monday, Democratic State Rep. Wesley Harris, who represents parts of south Charlotte, announced he would run for the position in 2024.

The North Carolina Republican Party criticized Harris on Twitter the next day, writing, “NC should reject #Silicon_Valley_Bank-style leadership for the NC Treasurer’s Office.” On Wednesday, Harris retorted if anyone exhibited “#SiliconValleyBank leadership” it was Folwell for investing state dollars in the company.

Folwell, a Republican, told WRAL last year he was considering a run for governor.

This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work.

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