The Recession Got Me, But I Am Insured

I woke up this morning to a message about one of my banks. I have CDs at New Frontier Bank, a bank located about an hour and a half north of Denver. The bank has gone into FDIC receivership and is now controlled by Bank of the West. The FDIC is paying out insured deposits and the bank will close permanently on May 8th.

What does that mean for me and most other customers? To me, it means I will get a check in the mail for my CDs. The bank site, now an FDIC message until Monday, provides a link to detailed FDIC information.

Like IndyMac and Washington Mutual, the bank closed for several days before opening back up for customers to transfer assets.

Because my entire accounts at the bank have a value below the current $250,000 FDIC insurance limit, I am safe. I will get 100% of my CDs sent to me as a check this week. I will need to deposit the checks soon so they clear by the May 8th deadline.

Checks for insured CDs and insured IRAs will be sent to your mailing address on record with New Frontier Bank. These will be mailed on Monday, April 13, 2009 and you should receive these checks by the end of the week.

For joint accounts, the limit is $500,000 for FDIC insurance. For individuals, it remains $250,000. This limit was recently increased from $100,000 to put Americans at ease.

Over the limit, there is an order of receivership of bank assets. The FDIC lists it as follows:

  1. Depositors
  2. General Unsecured Creditors
  3. Subordinated Debt
  4. Stockholders

So, if you are a stockholder or subordinated debt holder, you are probably going to get nothing back. General unsecured creditors might get lucky and get something. Generally, not even all depositors will be given their entire deposit back. That is why the bank had to close in the first place.

Did anyone else deal with a bank closure? Did you get all of your money back? Do you have any questions about the process? I am happy to answer questions in the comments.