I saw this story a couple of months ago. I might have even posted it.
This is a story everyone needs to be made aware of. There are limits to FDIC insurance. And NO notice is given when a bank closes. The only suggestion of an impending bank closure comes from reported news about that bank.
Below is an FDIC summary of this case, followed by an FDIC press release.
Metropolitan Bank Failure-FDIC SummaryI. Introduction
On February 2, 2007, Metropolitan Savings Bank, Pittsburgh, Pennsylvania was closed by the State of Pennsylvania, Department of Banking and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed....
The FDIC has compiled the following information which should help answer many of your questions.
II. Press Release
The FDIC has issued a press release (PR-9-2007) about the institution’s closure....
III. Acquiring Financial Institution
All insured deposit accounts have been transferred to Allegheny Valley Bank of Pittsburgh, Pennsylvania ("assuming institution") and will be available immediately. Your bank will re-open during regular business hours at the former Metropolitan Savings Bank.
Principal and interest on insured accounts, through February 2, 2007, are fully insured by the FDIC, up to the insurance limit of $100,000. You will receive full payment for your insured account. Certain entitlements and different types of accounts may be insured for more than the $100,000 limit.
IRA funds are insured separately from other types of accounts, up to a $250,000 limit.
If it is determined that you have uninsured funds, the FDIC will generate and mail to you a Receiver Certificate. This certificate entitles you to share proportionately in any funds recovered through the disposal of the assets of Metropolitan Savings Bank. This means that you may eventually recover some of your uninsured funds.
All accounts that exceed the $100,000 insurance limit, and/or all accounts that appear to be related and exceed this limit, are reviewed by the FDIC to determine their ownership and insurance coverage. If it appears that you have potentially uninsured funds, an FDIC Claims Agent will contact you, by either telephone or mail, regarding your account(s). Or, you may call 1-(877) 289-2088 and arrange a personal meeting with a Claims Agent.
Your transferred deposits will be separately insured from any accounts you may already have at Allegheny Valley Bank of Pittsburgh for six months after the failure of Metropolitan Savings Bank. Checks that were drawn on Metropolitan Savings Bank that did not clear before the institution closed will be honored. You may speak to an FDIC representative regarding deposit insurance by calling: 1-(877) 289-2088, Monday through Friday 8:00 am to 6:00 pm EST, Saturday 8:00 am to 5:00pm EST, and Sunday 12:00 pm to 5:00 pm EST.
You may withdraw your funds from any transferred account without an early withdrawal penalty until you enter into a new deposit agreement with Allegheny Valley Bank of Pittsburgh by either making a deposit to or a withdrawal from your account, provided the deposits are not pledged as collateral for loans....
IV. Banking Services
You may continue to use the services to which you previously had access, such as automatic teller machines, safe deposit boxes, night deposit boxes, wire services, etc.
Your checks will be processed as usual. All outstanding checks will be paid against your available insured balance(s) as if no change had occurred. Allegheny Valley Bank of Pittsburgh will contact you soon regarding any changes in the terms of your account. If you have a problem with a merchant refusing to accept your check, please contact Allegheny Valley Bank of Pittsburgh, Customer Service Department, at 1-412-781-0318. An account representative will clear up any confusion about the validity of your checks....
V. Loan Customers
If you had a loan with Metropolitan Savings Bank, you should continue to make your payments as usual. The terms of your loan will not change under the terms of the loan contract because they are contractually agreed to in your promissory note with the failed institution. Checks should be made to your former bank and sent to the same address until further notice.
VI. Possible Claims Against the Failed Institution
Claims against failed financial institutions occur when bills sent to the institution remain unpaid at the time of failure. Shortly after the failure, the FDIC sends notices directly to all known service providers to explain the claim filing process.
Please note: there are time limits for filing a claim, as specified in the notice....
Federal Deposit Insurance Corporation
Receiver: Metropolitan Savings Bank
Attention: Claims Department, DRR
1910 Pacific Avenue
Dallas, Texas 75201
VII.
Priority of Claims In accordance with Federal law, allowed claims will be paid, after administrative expenses, in the following order of priority:
Depositors
General Unsecured Creditors
Subordinated Debt
Stockholders "
It's encouraging that Depositors are 1st on the list of claims to be paid out. This contrasts with a Corporate bankruptcy, that usually pays employee pension claims last, AFTER paying the "priority" claims (i.e., Corporate creditors).
________________Press Release"FDIC Approves the Assumption of the Insured Deposits of Metropolitan Savings Bank, Pittsburgh, Pennsylvania
FOR IMMEDIATE RELEASE
February 2, 2007 Media Contact:
David Barr (202) 898-6992
dbarr@fdic.gov
The Board of Directors of the Federal Deposit Insurance Corporation (FDIC) today approved the assumption of the insured deposits of Metropolitan Savings Bank, Pittsburgh, Pennsylvania, by Allegheny Valley Bank of Pittsburgh, Pittsburgh, Pennsylvania.
Metropolitan Savings, with total assets of approximately $15.8 million at the end of the third quarter 2006, was closed today by the Pennsylvania Department of Banking, and the FDIC was named receiver.
Allegheny Valley has agreed to assume approximately $12.0 million of insured deposits of the failed bank. At the time of closure, Metropolitan Savings had approximately $1.2 million in deposits in 70 accounts that potentially exceed the federal deposit insurance limit.
The failed bank's sole office will reopen Monday as a branch of Allegheny Valley. Deposit customers of Metropolitan Savings will automatically become depositors of the assuming bank. All depositors will continue to have immediate access to their insured funds.
Customers with more than the insurance limit on deposit at the failed bank should contact the FDIC toll-free at 1-877-289-2088. The toll-free number will be operational on Saturday from 8:00 a.m. to 5:00 p.m., Eastern Time; on Sunday from noon to 5:00 p.m.; and Monday through Friday from 8:00 a.m. to 6:00 p.m. For additional information on today's transaction, customers of the failed bank can visit the FDIC's Web site at
www.fdic.gov/bank/individual/failed/MetropolitanSB.html.
Allegheny Valley has agreed to pay the FDIC a premium of 6% of the assumed deposits and purchased certain assets in the form of cash equivalents, securities, and loans secured by deposits.
Metropolitan Savings is the first FDIC-insured institution failure in the country since June 25, 2004, and the first in Pennsylvania since Pulaski Savings Bank, Philadelphia, was closed on November 14, 2003.
# # #
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,743 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed.
The FDIC receives no federal tax dollars – insured financial institutions fund its operations.
FDIC press releases and other information are available on the Internet at
www.fdic.gov, by subscription electronically (go to
www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-9-2007"