Even as a smaller community bank, it was not easy to tally uninsured deposits. This was due to:
1. Use of different systems or databases for non time-based deposits and time-based deposits.
2. Not having the ability to tie customers easily across the systems or databases.
What we had to do is dump all accounts and aggregate by TIN or EIN to identify the depositor to determine the aggregate deposit balance. We did not attempt to factor how having multiple depositors on accounts (e.g., joint accounts, accounts with more than one TIN or EIN, etc.) impacted the uninsured amount.
I can imagine this is even more difficult for larger institutions or institutions that have more disparate systems or data sources. Based on the precedence the FDIC has established, I think they should take the approach of not having an insured limit and insure all deposits.
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Matt Johnson
CFO
Premier Bank
Omaha, NE
Posts reflect my personal opinion and do not represent any organization in which I am affiliated.
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Original Message:
Sent: 08-15-2023 10:48
From: Rob Blackwell
Subject: Tuesday Topic: The Uninsured Deposit Conundrum
Last week, The Wall Street Journal noted that certain banks are struggling to accurately count their uninsured deposits, highlighting one institution in particular that has revised its number several times since February and restated its first-quarter numbers twice. Notably, the article doesn't explain why tallying uninsured deposits so is difficult, at least not in adequate detail, just that it's "hard stuff for some banks."
But an S&P article from last month attributes the main reasons for the restatements to changes in how banks treat intrabank accounts or intercompany deposits, mistakes in counting funds held by payroll processors (many of which may qualify for pass-through insurance), and the bottom-line impact of the FDIC's special assessment.
Is your bank having any trouble tallying uninsured deposits? Do you think the rules for reporting uninsured deposits are clear enough? How would you change them? And more broadly, what risks are posed by the confusion over how to tally these deposits?
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Rob Blackwell
Chief Content Officer and Head of External Affairs
IntraFi
Arlington, VA
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