The Federal Deposit Insurance Corporation (FDIC) says large customers at a recently closed 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 and in accounts that exceeded the insurance coverage limit of $250,000.
For now, the agency says customers have access to 50% of those uninsured deposits, a number that could stay the same or change if the FDIC sells the failed bank’s assets.
The news follows the full refund of uninsured depositors in the previous four bank failures, sending a signal that balances above the limit can still evaporate.
The FDIC’s $250,000 limit was tested during the collapse of Silicon Valley Bank, Signature Bank and First Republic Bank last year.
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, the Federal Reserve, and the Treasury Department the power were given to stop everything.
In the two bank failures that followed, both lenders were taken over by rival banks and all assets were acquired, including uninsured deposits.
Regulators say the closure of First National Bank of Lindsay occurred last week after identifying false and deceptive bank records and other information indicating fraud has depleted the bank’s capital.
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