With a heightened level of interest surrounding banks and deposit insurance, we caught up with Laura Zigler, Director of Treasury Services for Mabrey Bank, to get a primer on what exactly the FDIC does and why it’s important to customers that their bank is a member.
Laura has been the Director of Mabrey’s Treasury Department since 2019 and has been with the bank a total of 16 years. She is well-versed in providing Mabrey’s customers and businesses with the best products to ensure their deposits are safe and well-placed.
1) What is the Federal Deposit Insurance Corporation (FDIC), and how does it protect my money at the bank?
Created during the Great Depression in the 1930s, the Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States government. At the time of its creation, the American financial climate was volatile as panicked customers would put an otherwise healthy bank at risk of failing by taking all of their deposits out of the bank at once.
The FDIC was established to help curtail this behavior, promoting confidence in the U.S. banking system by protecting depositors of insured banks across the nation against the loss of their deposits in the event an insured bank fails.
Mabrey Bank is a proud member of the FDIC.
2) What does the FDIC do when an insured bank fails, and how has it been historically successful?
If an FDIC insured bank fails, the FDIC pays depositors up to the insured limit. The FDIC acts immediately once there has been a bank failure ensuring depositors have access to their funds promptly. History has shown, the FDIC pays insurance within a few days after a bank closing, typically as soon as the next business day.
The depositor can expect a new account to be opened at another FDIC insured bank with a deposit made in an amount equal to the insured balance of their account at the failed bank. Or the FDIC may simply issue a check to each depositor for the insured balance of their account at the failed bank.
If the depositor has funds over the insured FDIC amount, they may still be able to recover funds. Once the bank has failed, the FDIC assumes the position of managing assets, debts and handling claims for deposits in excess of the insured limit. During this process the depositor may recover some portion of their uninsured funds from the proceeds from the sale of the failed banks assets. However, this can take several years by which the depositor would receive periodic payments on their remaining claim.
FDIC insurance is backed by the full faith and credit of the United States government and since they began operations in 1933, no depositor has lost a penny of FDIC-insured deposits.
3) How much does the FDIC insure per depositor?
FDIC coverage amounts will vary due to several factors based on depositor ownership categories. The standard insurance coverage amount is $250,000 per depositor, per insured bank, for each account ownership category.
Depositors may qualify for separate coverage for deposits held in different account ownership categories when all FDIC requirements are met. This means some depositors may qualify for additional coverage at the same FDIC-insured bank.
4) Are there any costs associated with FDIC coverage or restrictions on coverage?
You do not have to purchase deposit insurance. When you open a deposit account in any FDIC-insured bank, you are automatically covered up to $250,000.
It is important to note that there are some types or accounts such as stocks, bonds, municipal bonds, other securities, annuities, insurance products and safe deposit box contents that may not qualify for FDIC insurance.
Since not all deposits may be covered, we recommend if depositors have questions regarding coverage to visit with your banker or go directly to FDIC.gov to find additional deposit insurance information, determine if your Bank is FDIC insured, calculate your coverage by using the electronic deposit insurance estimator (EDIE), as well as find contact information for FDIC assistance. There are deposit insurance experts available at 1-877-ASK-FDIC seven days a week to help with your specific deposit situations.
5) How can I access coverage of my deposits at Mabrey if I exceed the FDIC’s $250,000 limit?
Thanks to Mabrey Bank’s membership in the IntraFi network, you can obtain additional FDIC insurance coverage by placing your funds in a Certificate of Deposit Account Registry Service (CDARS) or Insured Cash Sweep (ICS) account(s) conveniently while still banking at Mabrey.
When we place your funds through the CDARS or ICS service, that deposit is divided into amounts under the standard FDIC insurance maximum of $250,000. The funds are then placed in Certificate of Deposits (using CDARS), Demand Deposit Accounts or Money Market Deposit Accounts (using ICS), at multiple banks. As a result, you can access coverage from many institutions while working directly with just Mabrey Bank.
You will receive one monthly statement from our bank for each service in which you participate, and, as always, your confidential information is protected. For additional information on these programs please visit intrafi.com or contact Mabrey Bank at (888) 272-8866.