| Deposit Insurance After a Merger What happens to your deposit
insurance coverage if, because of a merger of two insured institutions, you end up with
more than $100,000 in the resulting institution? Under the FDIC’s rules, you’re
in no immediate risk of having funds over the insurance limit. In general, deposit
accounts you had at the two institutions before the merger would continue to be separately
insured for six months after the merger—and longer in the case of some certificates
of deposit (CDs). This six-month grace period is to give you time to restructure your
accounts so they stay within the $100,000 limit or to transfer some of the excess funds to
another insured institution.
As for a CD account opened at one institution but assumed by another institution, it
will continue to be separately insured until the earliest maturity date after the end of
the six-month period. So, if you have a three-year CD of this type that matures two years
after the merger, it continues to be separately insured for the remaining two years. But
let’s say you have such a CD that matures during the first six months after the
merger. If you renew the CD for the same term and the same dollar amount (with or without
accrued interest), it will continue to be separately insured until the first maturity date
after the six-month grace period. But if you renew the CD for a different term or dollar
amount, it will be separately insured only until the end of the six-month grace period.
The insurance rules for mergers can be confusing, so if you have questions about the
coverage of your accounts after a merger, contact your bank or the FDIC’s deposit
insurance experts in our Division of
Compliance and Consumer Affairs.
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