1. FDIC Deposit Insurance Coverage Audio Conference for Bankers July/August 2006 Including Recent legislation

2. 2 Today’s Speakers Kathleen Nagle Deposit Insurance Outreach (202) 898-6541 www2.fdic.gov/starsmail Joe DiNuzzo Counsel, Legal Division (202) 898-7349

3. 3 Overview Deposit Insurance Resources and Information Basic Concepts and Rules Recent Legislative Changes Questions and Answers

4. 4 Deposit Insurance Seminar INFORMATION and RESOURCES

5. 5 FDIC Contact Information Call the FDIC toll-free 1-877-275-3342 Information specialists are available from 8 a.m. until 8 p.m. Eastern Time Monday through Friday Hearing impaired: 1-800-925-4618

6. 6 FDIC Contact Information Send your deposit insurance questions by email using the FDIC's online customer assistance form at: www2.fdic.gov/starsmail Mail your deposit insurance questions to FDIC Attention: Deposit Insurance Outreach 550 17th Street NW Washington DC, 20429 Read more about FDIC insurance online at: www.fdic.gov

7. 7 (PAUSE) Your Insured Deposits (Comprehensive Guide) Financial Institution Employee’s Guide to Deposit Insurance

8. 8 Deposit Insurance Seminar BASIC CONCEPTS and RULES

9. 9 Deposit Types FDIC insurance covers only bank deposits Checking Accounts NOW Accounts Savings Accounts Certificate of Deposits (CD’s) Money Market Deposit Accounts (MMDA)

10. 10 Non-Deposit Products Stocks, Bonds, Municipal Bonds and Other Securities Mutual Funds (money market mutual funds and stock, bond, or other security mutual funds) Annuities Insurance Products (automobile and life insurance) U.S. Treasury Bills, Bonds or Notes Safe Deposit Box Contents

11. 11 Insurance Coverage Per Depositor and Per Ownership Category Per Insured Depository Institution – Per separately charter bank or savings association – Not per branch office Basic Insurance Amount is $100,000 (Unchanged by Recent Legislation)

12. 12 Account Ownership Categories Single Accounts Certain Retirement Accounts Joint Accounts Revocable Trust Accounts Irrevocable Trust Accounts Employee Benefit Plan Accounts Corporation, Partnership and Unincorporated Association Accounts Government Accounts

13. 13 Most Commonly Used Account Ownership Categories Joint Accounts Single Accounts Revocable Trust Accounts Certain Retirement Accounts

14. 14 Single Accounts Deposits owned by one person Coverage: $100,000

15. 15 Joint Accounts Deposits owned by two or more natural persons Each owner’s shares of all joint accounts are added together FDIC assumes ownership is equal unless otherwise stated Each co-owner must have same withdrawal rights and sign signature card Coverage: $100,000 per owner

16. 16 Multiple Joint Accounts Account Title Balance 1) Jane Smith and Andrew Smith $200,000 2) Jane Smith and Harry Jones 100,000 Total $300,000 Co-ownerBalanceInsuredUninsured Jane Smith Acct 1: $100,000 Acct 2: 50,000 $100,000$50,000 Andrew SmithAcct 1: 100,000100,0000 Harry JonesAcct 2: 50,00050,0000 Total$300,000$250,000$50,000

17. 17 Revocable Trust Accounts Deposit accounts that evidence an intention that the funds will belong to one or more named beneficiaries upon the owner’s death Can be formal or informal trust Coverage: $100,000 per owner per qualifying beneficiary Each owner’s funds for each qualifying beneficiary in all revocable trust accounts are added together

18. 18 Informal (POD) Requirements Title must indicate the existence of a trust relationship Beneficiaries must be named in account records Beneficiaries must be “qualifying” If any requirements are not met the account or portion of the account will not qualify for deposit insurance coverage under the revocable trust ownership category

19. 19 Revocable Trust Beneficiaries Spouse Children Grandchildren Parents Siblings Adopted and step relationships Ex-spouse In-laws Great-grandchildren Nieces, nephews, cousins Friends Grandparents Organizations Trusts Other relationships not listed Who qualifies Who does not qualify

20. 20 POD – One Owner Example 1: $ 200,000 CD John Jones POD to Sue and Mark Sue and Mark – (John’s daughter and son) John’s trust relationship with Sue: $100,000 John’s trust relationship with Mark: $100,000 John Jones $200,000

21. 21 POD – Multiple Owners Example 2: Jane and Andrew Smith POD to Billy and Betty Smith $ 400,000 (Jane and Andrew – Husband and Wife) (Billy and Betty – Jane and Andrew’s children) Insurance Coverage?

22. 22 Jane and Andrew Smith POD to Billy and Betty Smith $400,000 Fully Insured Jane’s ownership interest $200,000 Andrew’s ownership interest $200,000 Andrew’s trust relationship with Billy $100,000 Andrew’s trust relationship with Betty $100,000 Jane’s trust relationship with Billy $100,000 Jane’s trust relationship with Betty $100,000

23. 23 Maximum Deposit Insurance Coverage Single Accounts Self- Directed Retirement Accounts Joint Accounts Revocable Trust Accounts* Total Coverage Husband$100,000$250,000$100,000$300,000*$ 750,000 Wife$100,000$250,000$100,000$300,000*$ 750,000 Total$200,000$500,000$200,000$600,000*$1,500,000 * Assumes husband and wife have named three qualifying beneficiaries in their revocable trust

24. 24 Living Trust Requirements Beneficiaries must be “qualifying” Account title at the bank must indicate the existence of a trust relationship Beneficiaries must become entitled to trust assets when owner dies The beneficiary’s interest must not depend on the death of another beneficiary

25. 25 Living Trust – One Owner with Conditions Example 1 A father has a living trust leaving all trust assets to his three children but only if they each graduate from college by age 25 1 Owner X $100,000 X 3 Qualifying = $300,000 Beneficiaries

26. 26 Living Trust - Non-Qualifying Beneficiary Example 2 A father has a living trust naming his son and nephew as beneficiaries of all assets (qualifying and non-qualifying beneficiary)

27. 27 Maximum Coverage $200,000 Father’s trust relationship with Son $100,000 Insured in Revocable Trust Account Category Insured in Single Account Category * * Assumes Father has no single ownership accounts Father’s trust relationship with Nephew $100,000 Example 2 – Insurance Coverage

28. 28 Deposit Insurance Seminar Federal Deposit Insurance Reform Act of 2005

29. 29 Maintains the basic amount of coverage at $100,000 Establishes mechanism to index for inflation that could take effect on January 1, 2011, and every succeeding five years Increases coverage for “Certain Retirement Accounts” from $100,000 to $250,000 (also to be indexed for inflation adjustments) Legislation Highlights

30. 30 Eliminates tie-in of a depository institution’s capital to the amount of coverage available on employee benefit plan accounts Institutions are no longer required to provide capital level disclosures to administrators of employee benefit plans Legislation Highlights

31. 31 Legislation Highlights Merges the Bank Insurance Fund and Savings Association Fund into the Deposit Insurance Fund Requires FDIC to establish a single “FDIC Official Sign” for the Deposit Insurance Fund. Eliminates separate signs for banks and savings associations

32. 32 Certain Retirement Accounts Deposits owned by one person Coverage: $250,000 Limit applies to combined total of all deposits the owner has in this category at the same bank Coverage is not increased by naming beneficiaries on retirement account or in the applicable retirement plan

33. 33 Traditional and Roth IRAs SEP IRAs SIMPLE IRAs “Section 457” Deferred Compensation Plan Accounts Self-directed Keogh Plan Accounts Self-directed Defined Contribution Plan Accounts Certain Retirement Accounts

34. 34 Self-Directed -- Definition A self-directed retirement account is a retirement account for which the owner, not a plan administrator, has the right to direct how the funds are invested, including the ability to direct that the funds be deposited at a specific FDIC-insured bank.

35. 35 Not Eligible for $250,000 Coverage Coverdell Education IRAs Health Savings Accounts Defined Benefit Plan Accounts Section 401(k)s -- Not Self-directed Keoghs – Not Self-directed

36. 36 Coverdell IRAs/Health Savings Accounts Coverdell IRAs – insured as:  Irrevocable Trust Accounts Health Savings Accounts – insured as either:  Single Ownership Accounts  Revocable Trust Accounts

37. 37 Employee Benefit Plan Accounts Defined Benefit Plan Accounts Section 401(k)’s – Not Self-directed Non Self-Directed Keoghs – Not Self-directed Pass-through Coverage: Up to $100,000 for each participant’s “non-contingent” interest

38. 38 Employee Benefit Plan Accounts A “non-contingent interest” is an interest subject to no contingencies, except life expectancy. “Pass-through” coverage is based on each participant’s non-contingent ascertainable interest in the plan. “Pass-through” coverage is not determined by simply multiplying $100,000 by the number of plan participants.

39. 39 Official FDIC Sign Deposit Insurance Reform Legislation requires: Replace existing official signs -- one for banks and one for savings associations -- with a single official FDIC sign New official FDIC sign must state that insured deposits are “backed by the full faith and credit of the U.S. Government” Until New Rules Are Adopted: FDIC’s existing rules remain in effect All FDIC-insured banks and savings associations should continue to use their existing teller signs

40. 40 Deposit Insurance Seminar Questions and Answers