In my last Friday bank failure summary, there was a comment about deposits above the FDIC limit and what happens to those deposits when a bank fails and is acquired by another bank. Before the financial crisis in 2008, it was common for banks that acquired a failed bank to assume only the insured deposits. Deposits over the FDIC limit would not be assumed and those uninsured deposits would be lost. After the IndyMac Bank failure, this started to change. The buyers were increasingly assuming all deposits including deposits over the FDIC limit. I'm not sure why or how this happened. It appears that a decision was made at the FDIC to insist that the acquiring banks assume all deposits instead of just the insured deposits.
Now it's very rare for the acquiring bank to not assume all deposits even those above the FDIC limit. The only exception is brokered deposits. Most buyers don't assume brokered deposits. Banks probably don't see any benefit for assuming brokered deposits since there are no relationships to be gained.
You can review all my bank failure summaries for the last two years. I did a quick review of these to find what was the last bank failure in which the acquiring bank only assumed the insured deposits. I didn't do a thorough review, but it appears to be Alpha Bank and Trust in Georgia which failed on October 24, 2008. Here's what the FDIC's press release stated about the failure:
To protect the depositors, the FDIC entered into a purchase and assumption agreement with Stearns Bank, National Association, St. Cloud, Minnesota, to assume the insured deposits of Alpha Bank & Trust.
The FDIC also provided an estimation of the uninsured deposits:
At the time of closing, there were approximately $3.1 million in uninsured deposits held in approximately 59 accounts that potentially exceeded the insurance limits. This amount is an estimate that is likely to change once the FDIC obtains additional information from these customers.
When the buyer assumes both insured and uninsured deposits, the FDIC states that it'll "assume all of the deposits". Here's an example from last Friday's failures:
To protect the depositors, the FDIC entered into a purchase and assumption agreement with Centennial Bank, Conway, Arkansas, to assume all of the deposits of Gulf State Community Bank.
Further information is provided in the FDIC's Q&A Guide:
YOUR MONEY IS SAFE! No one lost any money on deposit as a result of the closure of this institution.
However, not all deposits were assumed by the buyer. Brokered deposits (Cede & Co. deposits) were not assumed. Here's what the FDIC's Q&A Guide stated:
As an All-Deposits Transfer transaction, the total of all deposit accounts, excluding the Cede & Co. deposits, have been assumed by Centennial Bank. If you are a customer who has a Gulf State Community Bank deposit through a broker, you must contact your broker with any questions.
Depositors should still make sure they keep their deposits under the insured limit. If the FDIC can't find a buyer, the FDIC will only pay out insured deposits. Uninsured deposits over the FDIC limit will be loss (some may be recovered based on the sale of the failed bank's assets).
I did a quick count of the banks that failed this year that weren't acquired by another bank. There appears to only be 7 banks out of 149. The last one was First Arizona Savings, A FSB, in Arizona which failed on October 22nd. According to the FDIC's press release, there were potentially $5.8 million in uninsured deposits.