FAQ on Recent Banking Industry News

The Federal Deposit Insurance Corporation (FDIC) has taken control of a few financial institutions to protect consumers’ deposits. This includes Silicon Valley Bank (SVB) and Signature Bank.

Silicon Valley Bank experienced a “run on the bank.” This was triggered after influential figures encouraged companies to remove their deposits after the release of a financial report in early March. This report showed that SVB had suffered a loss due to the sale of a portion of its bond portfolio to ensure it could meet liquidity needs due to increased deposit withdrawals.   SVB had concentrated investments in long-term, low-yield securities, and the institution’s response of liquidating assets for a loss and attempting to raise capital through issuing shares furthered the losses and concerns among their depositors, triggering the run.

A run on a bank occurs when a large number of clients request their deposits to be withdrawn in a short period of time. Banks only keep a percentage of deposits as cash in hand. To meet this demand, banks will need to sell assets to pay those depositors. The result of losses from those sales can push the bank into insolvency.

Leader Bank is in strong financial position. You can read more about our balance sheet here.

Our approach has been recognized by multiple governing agencies. Leader Bank has substantial capital and exceeds the requirements for the highest standard of “well capitalized” as set by the regulatory agencies.  Leader Bank also closely monitors our liquidity to ensure we can always meet our depositor’s needs.  In recognition of our financial strength, the Bank has repeatedly received A+ grades from Weiss Ratings and Five Star Ratings from Bauer Financial, Inc.

Additionally, Leader Bank is an FDIC insured institution, and as such each depositor is insured through the FDIC to their maximum limits.   If you hold funds above the FDIC limit,  Leader Bank is a member of IntraFi, which may allow you to increase your insurance coverage depending on your eligibility and needs.

FDIC insurance is deposit insurance. It guarantees that you will be made whole for your deposits, up to the insured limit amounts, by the United States Government in cases where the insured bank fails.

There are different insured limits depending on your scenario.   As the FDIC places limits on member banks advising clients on insurance coverage, the best way to determine the amount of funds that the FDIC will cover is to utilize their free online calculator, which may be found at:  https://edie.fdic.gov/calculator.html

IntraFi is a network of banks that exchange deposits to ensure that a depositor’s total balance is FDIC insured. When a client deposits an amount over the insured limit, that overage is sent to other banks on the IntraFi network and held in an FDIC insured account.

As part of this program, you would receive information about where these funds are being held on your statement.

DIF (Depositor Insurance Fund) is similar to Intrafi in that it helps insure deposits over the FDIC amount. The key differences between IntraFi and DIF are:

1. The DIF network of institutions is smaller and limited to Massachusetts-based institutions. IntraFi is made up of over 2,000 institutions spanning the nation.

2. IntraFi is FDIC insured, whereas DIF is private insurance.

3. DIF is only available for small financial institutions.

No, we do not offer DIF. Instead, we use IntraFi, a service that offers the same benefit of insuring your entire deposit amount.

Yes, you will need to enroll to benefit from this program. You can do that by contacting Client Services.

Yes. We can assist you in opening an account and performing same-day ACH transactions. Some funds could be temporarily unavailable, but the FDIC has stated that all clients will be made whole and we will work closely with you to ensure you can transfer all available proceeds.

We offer several ways to open an account.

1. For personal checking and savings, you can contact us or open the account online.

   • Checking

   • Savings

2. For business checking and savings, please contact a Business Banking Officer.

It depends on the method of transfer. Two common methods are:

• Via Wire: Wires must be initiated from the source account. These are processed same-day, but typically cannot be returned.

• Via Same-Day ACH: The time it takes for a transaction to settle depends on what time of day the ACH was initiated. Typically, ACHs will settle that night or the following day.

You can reach us at 781-641-8686