Vineyard banks reassure customers
Island banking executives are putting extra emphasis on reassuring depositors that their money is safe, in the wake of several high-profile bank failures in other parts of the nation.
The Federal Deposit Insurance Corporation (FDIC), the independent agency that insures most bank deposits, has taken over eight banks since January 1, and the chairman of the agency expects that number to go up.
All three Island banks are members of FDIC, which insures all bank deposits, including savings accounts, checking accounts, certificates of deposit (CD), and money market deposit accounts, up to $100,000. Individual retirement accounts are insured up to $250,000.
"We have seen an increase in calls," said Ann Hunt, vice president of The Bank of Martha's Vineyard. "Having an opportunity to speak with customers gives us an opportunity to explain how their insurance works. Mostly, the folks that are calling are very informed, they know about coverage, and they have accounts that approach some of those levels."
The Martha's Vineyard Savings Bank recently featured information about deposit insurance prominently on its web site.
"I wouldn't call it alarm, but we get calls, we get questions, which is to be expected in today's world," said Bob Wheeler, executive vice president at the bank.
Mr. Wheeler says as a mutual bank, his institution participates in a private insurance pool called the Depositors Insurance Fund (DIF) that guarantees all deposits above the FDIC limits.
Fielding Moore, chief operating officer at Edgartown National Bank, points out that the insurance limits are for each account by ownership, so there are ways to insure more than the $100,000 FDIC limit for an individual account.
"For example," said Mr. Fielding. "let's say you and your wife have a joint account, you would be insured up to $100,000. If you opened a separate account just in your name, you'd be insured up to $100,000 for that, and your wife could open another account in her name."
Island banks also have the option of participating in the Certificate of Deposit Account Registry Service (CDARS) that insures CDs up to $50 million.
Local executives say their banks are on very sound financial footing, and assure customers that the upheaval in mortgage lending markets is not affecting Vineyard institutions.
"The bank failures have been mostly in Nevada, California or Florida," said Mr. Moore. "I don't think they have affected any New England banks."
"The FDIC closed down its eighth bank last Friday," said Mr. Wheeler. "People see that kind of thing, they wonder what's happening at my bank. We fortunately have not had anywhere near the problems a lot of banks have. We have never got involved in the sub-prime lending."