|
By Ann Brown
Sept. 15, 2008 -- Nevada's Silver
State Bank became the 11th bank to fail this
year. The Federal Deposit Insurance Corp. transferred
most of Silver State's deposits to Nevada State
Bank, a unit of Zions Bancorp, a Salt Lake City
bank with $55 billion assets. Silver State Bank
had $2 billion in assets and $1.7 billion in
deposits as of June 30.
This bank failure was on the
heels of the demise of Integrity Bank of Alpharetta,
Ga., leaving many to wonder about the security
of their own banks and bank accounts.
Regions Bank of Birmingham, Ala. assumed $34.4
million of Integrity Bank's $1.1 billion assets.
The bank, which has $974 million in insured
and uninsured deposits in 23,000 accounts, fell
due to real-estate lending woes.
In July, California-based mortgage
lender IndyMac Bancorp Inc., with $32 billion
in assets, became the largest thrift to fail
in U.S. history. Columbian Bank was the first
bank to fail in Kansas since 1993. The list
goes on and on. And, according to the FDIC,
the number of troubled U.S. banks jumped from
90 to 117, the highest level in nearly five
years.
It seems like every month a
bank closure is being announced, most stemming
from the housing and mortgage crisis. So how
do you protect your accounts?
Be proactive by checking out
your financial institution, says FDIC spokesperson
LaJuan Williams-Dickerson. The FDIC's Website
has financial reports from every FDIC-insured
institution. The agency insures deposits less
than $100,000. FDIC insurance doesn't, however,
cover annuities, bonds, life insurance policies,
mutual funds or stocks. Some retirement accounts,
such as IRAs and 401(k)s, are insured to $250,000
per person.
You can also research the financial
stability of your bank through various independent
companies, most for a small fee. Among them
are: Veribank, Bauerfinancial.com, AM Best,
and Creativeinvest.com. Bankrate.com has a rating
system that consumers can access for free. The
data used to compile the ratings come from the
quarterly call report filings of institutions,
and each rating is based on an institution's
capitalization, asset quality, earnings, and
liquidity," says Bankrate's senior financial
analyst Greg McBride.
To check into the financial
stability of your credit union, visit the National
Credit Union Administration's Website. "The
NCUA Website provides information for Credit
Union members and share insurance, explains
how your accounts are federally insured, and
the coverage," says Washington-based financial
consultant Christine Holmes-Mason.
What indicators trigger signs
of an impending closure? One sign that a bank
is on the verge of going under is poor ratings
from a rating agency or analyst. But according
to small business banking consultant Curtis
Gregory, president of CJG Management Concepts
L.L.C., "That's a tough question and I'm
sure there are many analysts that can fill up
pages with information on this subject matter.
In my opinion it is better to divert that energy
around understanding your rights as a consumer,
how you are protected, and what to do, as opposed
to trying to project the next bank failure."
If your bank does fail, and
you have less than $100,000 in a deposit account,
"there is nothing to do," Williams-Dickerson
says. "The deposit will be assumed by another
institution. As long as you are within the FDIC
insurance limits...your money is fully protected.
In the overwhelming majority of failures, the
FDIC is able to find another bank to step in
and take over the operations. In those cases,
consumers have full access to their insured
money the next business day. If the FDIC is
unable to find a buyer, within 48 hours checks
will be mailed out to customers for the insured
amount of their deposits."
If there is more than $100,000
in an account, a customer should contact the
FDIC at the unique toll-free number provided
for each failure, or they can log onto the FDIC
Website the Monday following the failure. The
FDIC's Electronic Deposit Insurance Estimator
(EDIE) can help customers determine whether
or not their funds are fully covered.
The FDIC is also responsible for settling uninsured
deposit accounts with the failed bank. If the
failed bank is acquired by another bank, then
I would direct you to the takeover bank, Gregory
advises.
"Deposits in excess of
the FDIC limit are unlikely to be fully recouped.
Investors become creditors of the corporation
and they may receive payouts as assets are liquidated,"
says Bankrate's McBride.
You can also protect yourself
by structuring your accounts, says Williams-Dickerson.
"Structure accounts to maximize coverage,"
she says. If you have more than $100,000 at
any one depository institution, the FDIC recommends
using EDIE to help determine whether or not
their funds are fully covered." Another
option is to have accounts at multiple banks.
Deposit-placement services, known as Certificate
of Deposit Account Registry Services, can help
consumers and businesses put money in multiple
institutions through one bank, all the while
just getting one monthly bank statement.
National Small Business Association
board chair, Marilyn Landis, advises "Be
sure you have online service for all your accounts
with your bank. If you get notice that your
bank has suddenly closed, you can go online
to determine the current status of all your
accounts on that day -- balances at that moment,
checks still outstanding, etc. In most cases
another bank will pick up your accounts -- in
the interim you will want to know which vendors
to contact to avoid payment questions and you
will want a record to use to be sure the new
bank correctly records your accounts." |
