Spirit Financial Deposits Insured Up to $500,000
The fallout from Silicon Valley Bank’s collapse has depositors questioning the safety of their money. You need not question the safety of your deposits in Spirit Financial. Your deposits are secure and insured by the National Credit Union Administration (NCUA). The NCUA is an independent federal agency that insures deposits at federally insured credit unions, protects members who own credit unions, and charters and regulates federal credit unions.
Spirit Financial Excess Share Insurance
As mentioned above, through the NCUA, your deposits are federally insured up to $250,000 and backed by the full faith and credit of the United States Government. Spirit Financial goes above and beyond, insuring members share deposits for up to $500,000. This is arranged through a combination of federal insurance provided by NCUA and private insurance through the Excess Share Insurance (ESI) Corporation. This is provided automatically and at no extra cost to our members. The ESI program provides up to an additional $250,000 of insurance once a credit union member’s balance exceeds the coverages provided by the NCUA.
What happened to Silicon Valley Bank (SVB)?
According to the Public Broadcasting Service (PBS), in simple terms, SVB did not have enough cash to pay depositors, so regulators closed the bank. It was reported that SVB’s deposits doubled in 2021, and they weren’t lending it out fast enough. They instead invested it in ultra-safe U.S. Treasury securities. The rapid increase in interest rates in recent years caused these securities to drop. Short on capital, SVB sold all of its available-for-sale bonds at a $1.8 billion loss.
Companies got wind and began to pull their money from SVB, and it snowballed into many depositors withdrawing funds as well, to the tune of a staggering $42 billion of deposits withdrawn by the end of the day on Thursday, March 9, 2023 according to a CNBC report of a California regulatory filing. Regulators quickly stepped in and shut the bank down to protect depositors.
According to a release by the FDIC on Monday, March 13, 2023, The Federal Deposit Insurance Corporation (FDIC) transferred all deposits—both insured and uninsured—and substantially all assets of the former Silicon Valley Bank of Santa Clara, California, to a newly created, full-service FDIC-operated ‘bridge bank’ in an action designed to protect all depositors of Silicon Valley Bank. Similar to how the NCUA insures deposits at federally insured credit unions, the FIDC insures deposits at FDIC-insured banks.
Please visit mycreditunion.gov for more information on share insurance through the NCUA or excessshare.com for more information on excess share insurance provided by Spirit Financial for our members.