How does deposit insurance work?

Updated March 26, 2024  |   Published March 24, 2023

Categories:  
• Banking
• Webster First

At Webster First, keeping your money safe is a top priority.

With news of some of the tech industry’s top banks collapsing, many have questions and concerns about smaller banks or credit unions having similar issues. Rest assured that your money is safe at Webster First. The National Credit Union Administration (NCUA), a U.S. Government Agency, insures member deposits for up to $250,000. The Massachusetts Credit Union Share Insurance Corporation (MSIC) insures additional amounts. MSIC fully insures excess shares and deposits above the federal insurance limit of $250,000 at ALL of its member credit unions.

We understand that you may have further questions about how this insurance works, and we are here to answer those for you.

 

What is NCUA?

Congress created The National Credit Union Administration (NCUA) as an independent federal agency in 1970. They charter credit unions, insure their deposits, and make sure that they follow federal regulations.

The National Credit Union Share Insurance Fund is what NCUA uses to insure all members’ deposits up to the limit of $250,000. Their website, ncua.gov¹, states:

“Administered by the NCUA, the Share Insurance Fund insures individual accounts up to $250,000. Additionally, a member’s interest in all joint accounts combined is insured up to $250,000. The Share Insurance Fund also separately protects members’ IRA and KEOGH retirement accounts up to $250,000 and provides additional coverage for members’ trust accounts.” ²

You can read more about the history of the Share Insurance Fund at NCUA’s website here³.

 

What is MSIC?

A special Act of the Massachusetts Legislature chartered the Massachusetts Credit Union Share Insurance Corporation (MSIC) in 1961.⁴ Formed before NCUA, MSIC was the first insurance company in the nation to insure deposits for credit union members.

Federally chartered credit unions operating in Massachusetts may become a member of MSIC and provide MSIC’s deposit insurance to their members. However, they are not required to do so by law. In the case of Webster First, we’ve been a member of MSIC since 1964.⁵

Since Webster First has both of these insurances, that means your shares are 100% covered.

 

What happens if a credit union fails?

In the unlikely event that a credit union fails, NCUA would step in and take control of its assets. As a result, it may be purchased by another credit union. In this case, all of your deposits or loans would be transferred to that credit union. If the member shares are not assumed by another credit union, all verified member shares are typically paid within five days of a credit union’s closure.⁶  According to NCUA, no member of a federally insured credit union has ever lost a penny in insured accounts.

 

 

Strength you can depend on

For over 95 years, Webster First has committed to making sound, responsible financial decisions resulting in us being one of the strongest, most fiscally secure credit unions in Massachusetts. We have a track record of lasting through several economic upturns and downturns. Since our founding in 1928, our financial strength has helped us power through the Great Depression, the Great Recession of 2007-2009, the 2020 COVID-19 pandemic, and several other brief recessions in between. Throughout all of those years we’ve continued to grow and thrive – and we will continue to grow and thrive during whatever may come next.

We are one of the most well-capitalized credit union’s in the state of Massachusetts, as can be seen by our financials⁷. Additionally, we’ve consistently been rated 5-stars (Superior)⁸ by Bauer Financial⁹ for the past seven years. Bauer Financial is an independent bank research firm that rates banks and credit union’s based on financial reporting. For that reason, you can have peace of mind that your money is safe and insured at Webster First.

 

 

Sources and links:

1. https://ncua.gov/
2. https://ncua.gov/support-services/share-insurance-fund
3. https://ncua.gov/support-services/share-insurance-fund/fund-history
4. https://www.msic.org/about-us
5. https://www.websterfirst.com/about/our-story/
6. https://ncua.gov/support-services/conservatorships-liquidations#:~:text=If%20the%20member%20shares%20are,of%20a%20credit%20union’s%20closure.
7. https://www.websterfirst.com/about/financials/
8. https://www.bauerfinancial.com/star-ratings/?inst=C
9. https://www.websterfirst.com/blog/webster-first-rated-5-stars-by-bauerfinancial-for-june-2022/