FREQUENTLY ASKED QUESTIONS (FAQs) ABOUT BANKS
1. Are my deposits in Arizona banks safe?
Yes. In Arizona, all state-chartered and nationally-chartered banks are required to have deposit insurance provided by the Federal Deposit Insurance Corporation (FDIC).
The FDIC —the chief insurer of bank deposits — is an independent agency of the United States government. The FDIC protects against the loss of your deposits if an FDIC-insured bank fails. The basic insurance amount is $100,000 per depositor per insured institution. Certain retirement accounts, such as Individual Retirement Accounts (IRAs), are insured up to $250,000 per depositor per insured bank. This means if you have deposited funds with a bank, up to $100,000 of your deposit and $250,000 of certain retirement accounts are insured against loss.
For additional information regarding FDIC insurance, please see the FDIC's website at www.fdic. gov. The FDIC website has a feature that enables you to calculate insurance coverage (EDIE — Electronic Deposit Insurance Estimator, www.fdic.gov/edie). In addition, the FDIC has a toll-free number (877-275-3342) operated from 8:00 a.m. to 8:00 p.m. (EST) where a customer service representative can be reached to discuss deposit insurance coverage.
Note: The Governor’s website, www.azgovernor.gov, also has a link to the FDIC website.
2. What does it mean when a bank is in receivership?
If a bank fails, it is closed by its primary federal or state regulator. The FDIC is then named as the receiver of the institution. Usually there is an assuming bank which enables the closed bank to be reopened immediately after the failure. In the typical transaction, the deposits – and sometimes the loans – are purchased by the new bank. If the FDIC is unable to obtain an acquirer for the loans, they will be handled by the FDIC, which will continue to market them for sale. For a period of time, borrowers may have to make their loan payments to the FDIC.
3. What is the difference between a receivership and the conservatorship?
The goal of a receivership is the orderly administration of the failed bank’s assets and liabilities. The goal of the conservatorship is to preserve the value of the failed institution as an operating bank until the assets and liabilities can be sold.
4. How are banks chartered and regulated?
Charter
Bank organizers have a choice of a state or federal charter which allows them to open and operate their bank. Organizers that choose to be regulated by the state are chartered by the Arizona Department of Financial Institutions. They can apply for a federal charter with the OCC or the Office of Thrift Supervision (“OTS”). All banks operating in Arizona are insured by the FDIC. All national and savings banks (including Wells Fargo Bank, Bank of America, Chase Bank and Washington Mutual Bank) are supervised by the OCC or the OTS. All bank holding companies are regulated by the Federal Reserve System.
Regulation
State and federal regulators conduct periodic examinations that ensure that the Board of Directors and bank management have adequate policies and procedures in place to operate the bank in a sound and safe manner. Regulators examine for capital adequacy, asset quality, management, earnings, liquidity and sensitivity to market risk. Banks are required to report the condition of their institution in considerable detail within 30 days after the end of each quarter. Those reports are public and can be accessed on the Federal Financial Institution Examination Council (FFIEC) website (www.ffiec.gov).
6. What is included in a bank examination and how often are they conducted?
A typical two-week safety and soundness examination of a state chartered bank assesses the risks facing the individual bank under review. Examiners review:
- A sample of the assets including loans and securities to determine a borrower's ability to repay the debt and the issuer's ability to redeem the security.
- The level of capital and earnings to ensure the adequacy of both to support the growth of the bank.
- The liquidity on the bank's balance sheet to determine that adequate levels exist to operate the bank on a daily basis.
- Compliance with federal and state anti-money laundering regulations.
- The bank's internal controls to prevent internal and external fraud.
All findings of the examination are discussed with management and the Board of Directors. Banks are examined every 12 to 18 months, depending on their condition, the size of their institution and how long they have been open.
7. What is a "Cease & Desist Order?"
A Cease and Desist Order ("Order") is a formal action taken by bank regulators that requires bank management and the Board of Directors to stop certain practices or activities that could hurt the public. If the practices or activities are not stopped by the bank, then the bank regulator can take additional enforcement actions. The Order contains provisions requiring the bank to take specific steps within a period of time to correct all identified deficiencies noted during an examination of an institution. In Arizona, Towne Bank, a state-chartered bank, is currently the subject of an FDIC Order. The Bank is working to comply with the Order. The issuance of an Order does not necessarily mean that a bank is in imminent danger of failure. Banks usually meet the conditions required by the Order.
8. How can I determine if my bank is insured and my deposits are covered?
The Federal Deposit Insurance Corporation (FDIC) has two tools you can use to check on these issues. Using Bank Find, you can determine if your bank is insured, who is the primary regulator, where you can go if you have a complaint, or find out the history of your bank. You can then use FDIC's online calculator - EDIE the Estimator - to determine if your accounts are insured.
9. How can I find reports and data about individual banks?
The FDIC provides detailed information on an institution-level basis in their Institution Directory. This includes comprehensive financial and demographic data for every FDIC-insured institution, including the most recent quarterly financial statements, with performance and condition ratios. Call & Thrift Financial Reports include reports from 2001 to the present for individual banks and savings associations available for viewing and downloading. Taxonomies for bank Call Reports are also available
10. My bank has failed and I want to know if my accounts are insured!
The FDIC has an easy to use tool – Is My Account Fully Insured? – that you can use the first business day after the bank closing. Just select your bank and enter your account number to get the result. You’ll receive additional information depending on the status of your accounts.
11. What resources do I have for information about banks?
Conference of State Bank Supervisors at http://www.csbs.org/about/what/Pages/StateBankingDepartmentLinks.aspx (list of State Banking Departments for all State Chartered Banks)
Office of the Comptroller of the Currency at (800) 613-6743 (National Banks)
Note: Effective July 21, 2011, the Office of Thrift Supervision became part of the Office of the Comptroller of the Currency. The OCC's Consumer Assistance Group assists national bank and federal savings association, or thrift customers; see our OCC/OTS Integration Page for more information
Federal Reserve Board at (888) 851-1920
Federal Deposit Insurance Corporation at (877) 275-3342 (All Federally Insured Banks)
Consumer Financial Protection Bureau at (855) 411-2372
The Consumer Financial Protection Bureau (CFPB) will first begin to handle credit card related complaints. Consumers can contact the CFPB via telephone (855-411-2372) or via the CFPB website (http://www.consumerfinance.gov)
12. How do I find a bank holding company?
http://www2.fdic.gov/idasp/main.asp (FDIC)
http://www.ffiec.gov/nicpubweb/nicweb/SearchForm.aspx (FFIEC)
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07.18.2007