Acquired Failed Banks

Banks that have failed and been acquired by an existing bank have posted the following information:


1. Deposits with the old bank will be insured separately from deposits with the new bank.

2. CD customers can withdrawal early with no penalty.

Does anyone know if there are time limits on this? Eventually, won't your deposits be mingled for FDIC insurance purposes? Can you wd w/o a penalty until the CD matures? Will the new bank have you execute a new CD deposit agreement w/in the first few months?

It's been awhile since I had to deal with this, but I believe the time period is 6 months that accounts are insured separately. As far as CD's I think the waived penalty was anytime up to maturity.

Merger of Insured Banks

What happens to my coverage if I have deposits at two insured banks that merge?
When two or more insured banks merge, the deposits from the assumed bank continue to be insured separately for at least six months after the merger. This grace period gives a depositor the opportunity to restructure his or her accounts, if necessary.

CDs from the assumed bank are separately insured until the earliest maturity date after the end of the six-month grace period. CDs that mature during the six-month period and are renewed for the same term and in the same dollar amount (either with or without accrued interest) continue to be separately insured until the first maturity date after the six-month period. If a CD matures during the six-month grace period and is renewed on any other basis, it would be separately insured only until the end of the six-month grace period.

Thanks to you both!

On the CD portion, customers are allowed penalty free withdrawals until the funds are claimed. Generally, this could be when any transaction occurs, when renewed/extended or when a new CD account is opened.

But also understand that the acquiring bank is not bound by the CD interest terms of the failed institution and can reprice/lower the rate immediately.