The Federal Deposit Insurance Corporation (FDIC) says large customers at a recently shut down bank could collectively lose millions of dollars in uninsured deposits.
The banking regulator says at least $7.1 million at First National Bank of Lindsay in Oklahoma was uninsured, held in accounts that exceed the agency’s $250,000 insurance coverage limit.
For now, the agency says customers can access 50% of those uninsured deposits, a number that could remain the same or change as the FDIC sells the assets of the failed bank.
The news follows the full reimbursement of uninsured depositors in the previous four bank failures, sending a message that balances above the limit can still vaporize.
The FDIC’s $250,000 cap was tested amid last year’s collapse of Silicon Valley Bank, Signature Bank and First Republic Bank, along with this year’s failure of the similarly-named Republic First Bank.
In a historic first, all deposits at the first two banks were protected by the federal government with a combination of the FDIC’s insurance and an extraordinary use of the systemic risk exception, giving the FDIC, Federal Reserve and Treasury Department the power to backstop everything.
In the two bank failures that followed, both lenders were acquired by rival banks and all assets were assumed, including uninsured deposits.
Regulators say last week’s shutdown of First National Bank of Lindsay happened after they identified false and deceptive bank records and other information that suggests fraud depleted the bank’s capital.
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