NCUA Insurance Coverage Penfed/Valor Merger

dmjgriffin | Feb 27, 2018 | 3 posts since 2018

Valor and PedFed merged 4/1/2017. At that time I had Ira CD's totaling nearly $200K at Valor and approximately $150K at PedFed. Obviously this was a concern since NCUA coverage is limited to $250K. I reached out to PedFed and (I Think) was told the Valor CD's would be covered by separate from existing PenFed CD's by NCUA until maturity. Unfortunately this was a verbal conversation and I have no documentation. Now I am told by NCUA and PenFed coverage is limited to $250K regardless of whether the CD originated with Valor or PenFed.

I believe this topic was covered by DepositAccounts but can't find the info. Is my memory of this issue wrong?

If I am wrong, it will be necessary to transfer funds from PedFed and likely early withdraw penalties will be imposed.

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Answers

alan1 | Feb 27, 2018 | 877 posts since 2015

from NCUA "Share Insurance FAQ":

What happens when federally insured credit unions merge?

If a member has accounts in credit union A and credit union B, and credit union A merges into credit union B, accounts of credit union A continue to be insured separately from the share deposits of credit union B for six months after the date of the merger or, in the case of a share certificate, the earliest maturity date after the six-month period. In the case of a share certificate that matures within the six-month grace period that is renewed at the same dollar amount, either with or without accrued dividends having been added to the principal amount, and for the same term as the original share certificate, the separate insurance applies to the renewed share certificate until the first maturity date after the six-month period. A share certificate that matures within the six-month grace period that is renewed on any other basis, or that is not renewed, is separately insured only until the end of the six-month grace period.

https://www.mycreditunion.gov/estimator/Pages/backup/fdic_info.html#20

alan1 | Feb 27, 2018 | 877 posts since 2015

continuing, this time from PenFed's "Welcome to the Family Valor Federal Credit Union" -- scroll down to "Frequently Asked Questions" -- there's the same question as in the NCUA "Share Insurance FAQ". What happens when federally insured credit unions merge? And, the identical answer (no surprises):

"If a member has accounts in credit union A and credit union B, and credit union A merges into credit union B, accounts of credit union A continue to be insured separately from the share deposits of credit union B for six months after the date of the merger or, in the case of a share certificate, the earliest maturity date after the six-month period. In the case of a share certificate that matures within the six-month grace period that is renewed at the same dollar amount, either with or without accrued dividends having been added to the principal amount, and for the same term as the original share certificate, the separate insurance applies to the renewed share certificate until the first maturity date after the six-month period. A share certificate that matures within the six-month grace period that is renewed on any other basis, or that is not renewed, is separately insured only until the end of the six-month grace period."

https://www.penfed.org/valor

P.S. You are incorrect in stating "Valor and PedFed merged 4/1/2017." That was the date Valor accounts were converted to PenFed accounts. The merger of the credit unions occurred on Mar. 1, 2017.

"When will the merger with PenFed Credit Union be completed?

"On March 1, 2017, your Valor Credit Union membership will officially become a PenFed membership. On that date all Valor Credit Union branches will open as PenFed branches, and all new business will be completed in PenFed's systems. Then, on April 1, we will complete the merger process by converting your existing Valor accounts and products to PenFed accounts and products that are most similar to what you have now."

dmjgriffin | Feb 27, 2018 | 3 posts since 2018

Thanks for your help. This is exactly what I need to correct PenFed's assertions relative the NCUA coverage.

Kaight | Feb 27, 2018 | 1,192 posts since 2011

I'm with alan1 on this one and thumbs up to him for posting the actual language.

I think the NCUA rep gave you some bad information. Above all, do not close any accounts and lose money. You will be fine until your CD accounts mature. After that, of course, you will need to make other arrangements.

dmjgriffin | Feb 27, 2018 | 3 posts since 2018

Thanks for your response. I may have given the NCUA a bad rap. They indicated that after the six-month period had expired Roth and Traditional IRAs would be added together and insured up to $250K.
However the next paragraph qualifies that somewhat: "The separate insurance of member accounts assumed continues for six months from the date the assumption takes effect or, possibly longer in the case of share certificates." PenFed offered no qualifiers, IRAs covered up to $250K only. Now with alan1 and your info I will challenge their position.

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