Information Regarding Recent FDIC Insurance Coverage Changes

Temporary Liquidity Guarantee Program

MidWestOne Bank will participate in the Federal Deposit Insurance Corporation’s temporary liquidity guarantee program beyond the initial 30-day program offered by all banks within the FDIC.

This will allow the Bank to offer customers 100 percent deposit protection for non-interest bearing deposit transaction accounts regardless of dollar amount.  Non-interest bearing deposit transaction accounts are usually payment-processing accounts, such as payroll accounts used by businesses, which often exceed the current maximum limit of $250,000. The liquidity guarantee program can be voluntarily offered by banks to customers through the end of 2009.

There is no cost to customers to receive the additional FDIC insurance.

FAQ Regarding the Temporary Liquidity Guarantee Program

What is the Additional Coverage on Deposits?

The FDIC will provide full deposit insurance coverage for non-interest bearing deposit transaction accounts, regardless of dollar amount. FDIC notes that these are mainly payment processing accounts, such as payroll accounts used by businesses, which frequently exceed the current maximum limit of $250,000.

Are all financial institutions offering this additional coverage?

No.  Participation in this program is optional for financial institutions.  While banks may opt out of the program prior to November 12, 2008, MidWestOne Bank has opted to participate. The program provides unlimited coverage for all non-interest bearing deposits, and is currently in place through December 31, 2009.

How Long Does the Coverage Last?

The guarantee is temporary and will expire at the end of 2009 (as will the expanded coverage of all accounts to $250,000).

 

Emergency Economic Stabilization Act

On October 3, 2008, President George W. Bush signed the Emergency Economic Stabilization Act of 2008, which temporarily raises the basic limit on federal deposit insurance coverage from $100,000 to $250,000 per depositor. The temporary increase in deposit insurance coverage became effective immediately upon the President's signature. The legislation provides that the basic deposit insurance limit will return to $100,000 on December 31, 2009.

The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States government that protects against the loss of insured deposits if an FDIC-insured bank or savings association fails. FDIC deposit insurance is backed by the full faith and credit of the United States government. Since the FDIC was established, no depositor has ever lost a single penny of FDIC-insured funds.

FDIC insurance covers funds in deposit accounts, including checking and savings accounts, money market deposit accounts and certificate of deposit (CDs). FDIC insurance does not, however, cover other financial products and services that insured banks may offer, such as stocks, bonds, mutual fund shares, life insurance policies, annuities or municipal securities.

There is no need for depositors to apply for FDIC insurance or even to request it.  Coverage is automatic.

To ensure funds are fully protected, depositors should understand their deposit insurance coverage limits. The FDIC provides separate insurance coverage for deposits held in different ownership categories such as single accounts, joint accounts, Individual Retirement Accounts (IRAs) and trust accounts.

Basic FDIC Deposit Insurance Coverage Limits*

Coverage Category Coverage Limits (Up To) Description
Single Accounts $250,000 per owner**
(formerly $100,000)		 Deposit accounts owned by one person and/or sole proprietor. All single accounts at the same insured bank are added together and the total is insured up to $250,000.
Joint Accounts

$250,000 per owner**
(formerly $100,000)

 Deposit accounts owned by two or more people. If all owners have equal rights to withdraw money from a joint account, each person’s shares of all joint accounts at the same insured bank are added together and the total is insured up to $250,000.
IRAs/Other Retirement Accounts $250,000 per owner Deposit accounts owned by one person and titled in the name of that person’s retirement plan. IRAs (Traditional, Roth, SEPP, SIMPLE plans), 457 Deferred Compensation plans, Keoghs and self directed Defined Contribution plans are insured separately from single accounts. All deposits that an individual has in any of the qualifying retirement plans are added together and the total is insured up to $250,000.
Revocable Trust Accounts

Account owner receives $250,000 in coverage per beneficiary**
(formerly $100,000)

 Deposits held in either Payable On Death (POD) accounts or living trust accounts. (Note: determining coverage for living trust accounts can be complicated and requires very detailed information about the FDIC’s insurance rules. Clients with questions about a living trust account should contact the FDIC at 1‐877‐275‐3342 for more info).
Corporation, Partnership and Unincorporated Association Accounts

$250,000 per separate company or organization**
(formerly $100,000)

 Deposit accounts owned by incorporated organizations, unincorporated businesses with co‐owners or non‐commercial businesses such as religious, educational, charitable, or social organizations. Accounts are insured up to $250,000. Separate incorporated organizations under the same parent “holding” corporation would be insured individually up to $250,000.

 

*These deposit insurance coverage limits refer to the total of all deposits that an account holder (or account holders) has at each FDIC-insured bank. The listing above shows only the most common ownership categories that apply to individual and family deposits, and assumes that all FDIC requirements are met.

**The legislation authorizing the increase in deposit insurance coverage limits makes the change effective October 3, 2008, through December 31, 2009.

The information provided is for educational purposes only. Consult your tax advisor. If you have questions about FDIC coverage limits and requirements, please visit www.myFDICinsurance.gov, call toll-free 1-877-ASK-FDIC, or call your local MidWestOne Bank.

 

Certificate of Deposit Account Registry Service (CDARS):
MidWestOne Bank offers an additional program for customers with depository insurance needs that exceed the coverage provided by the FDIC, known as the Certificate of Deposit Account Registry Service (CDARS). Click here for more details.