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The Independent Community Bankers of America (ICBA) and FirstState Bank are reminding community bank customers of the extraordinary stability of the community banking industry as the troubles of large Wall Street financial institutions and investment firms dominate mainstream headlines.

“Our customers may be watching the news and reading the papers and, naturally, they worry about their own banks,” said Ken Vaughan, President of FirstState Bank.  “We understand their concern, but want to reassure our customers that they need not worry about the stability of their bank and safety of their money.

“These are challenging times for our nation’s economy and financial system – one of the most challenging in many, many years.  We have seen the failure of some large financial firms and investment banks,” said Vaughan.  “However, the challenges are primarily on Wall Street, not Main Street, and investment banks are not commercial or savings institutions.  The reality is there are more than 8,400 commercial banks in our country and insured deposits are safe in an FDIC-insured institution.  No depositor has ever lost a penny of FDIC-insured funds.  Investments banks are not FDIC-insured.”

Deposits held in FDIC-insured community banks are guaranteed by the federal government for up to $250,000 through December 31, 2013.  On January 1, 2014, the standard insurance amount for deposits held in FDIC-insured community banks will return to $100,000 per depositor for all deposit accounts except certain retirement accounts, which will remain at $250,000 per depositor.

FDIC deposit insurance temporarily increased from $100,000
to $250,000 per depositor through December 31, 2013.

FirstState Bank is participating in the FDIC’s Transaction Account Guarantee (TAG) Program. Under that program, through December 31, 2010, all non-interest bearing transaction accounts are fully guaranteed by the FDIC for the entire amount in the account. Coverage under the TAG Program is in addition to and separate from the coverage available under the FDIC’s general deposit insurance rules.

Another part of the TAG Program is the Debt Guarantee Program, in which the FDIC will, for a fee, guarantee certain unsecured debt of the bank or its affiliates. Since neither the bank nor its parent holding company has any qualifying unsecured debt, FirstState Bank has decided to not participate in this portion of the program.

“When it comes to community banks, the vast majority have been and continue to be some of the safest, soundest and most secure financial institutions in our nation,” said Vaughan.  “Community banks follow responsible business practices.  Community banks are risk-averse; they are sensible businesses that work every day to support their customers, communities and local markets.

“We encourage customers to call us if they are concerned,” said Vaughan.  “We value our relationship with our customers and our communities, and we want everyone to feel secure – both now and well into the future.”

Founded in 1971, FirstState Bank is one of the largest financial institutions in its area.


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