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A deposit insurance national bank (DINB, /ˈdɪnbi/ DIN-bee) is a temporary bank in the United States that is established by the Federal Deposit Insurance Corporation (FDIC) in the wake of a bank failure under the Banking Acts of 1933 and 1935.

Characteristics

DINBs are chartered by the Office of the Comptroller of the Currency. Upon creation, the bank assumes the failed bank's insured deposits and temporarily provides banking services to customers. A DINB's powers are narrowly limited to servicing the insured deposits of a failed bank; it cannot acquire assets from the failed bank, as a bridge bank can, nor can it accept uninsured deposits, unless it is the only depository institution in its community.

The bank is managed by an executive officer appointed by the FDIC. A DINB is not required to have paid-in capital stock, has no board of directors, and is not required to own stock in a Federal Reserve Bank. Otherwise it conforms to the National Bank Act and other laws relevant to national banks.

A DINB can operate for up to two years. It can be acquired by another bank in its community, raise capital to become a permanent bank, or wind down and transfer its obligations to the FDIC.

History

DINBs were initially the only way that the FDIC could resolve a failed institution. The first DINB was the Deposit Insurance National Bank of East Peoria, created when Fond Du Lac State Bank was closed by Illinois regulators on May 26, 1934. Under this original deposit insurance system, the FDIC assumed receivership of nine insured banks and paid off their deposits through DINBs.

After the Banking Act of 1935 permitted the FDIC to pay out depositors without establishing a DINB, use of this resolution method largely ceased, except for cases where a bank failed in an area with only limited banking services or where a prompt pay-out was not possible. For example, 1975 saw failures of Swope Parkway National Bank, a Black-owned business serving the local Black community, and The Peoples Bank of the Virgin Islands, which was the only locally owned institution in the U.S. Virgin Islands; a DINB was created for each in hopes of giving the community time to establish a replacement institution. Only five DINBs were created by the FDIC between 1935 and 1998.

Initially, the FDIC responded to the 2023 collapse of Silicon Valley Bank by forming a Deposit Insurance National Bank of Santa Clara because no institution was immediately willing to assume its substantial uninsured deposits. After the Treasury granted an exception to cover the uninsured deposits, the DINB was replaced with a bridge bank named Silicon Valley Bridge Bank, N.A.

List of deposit insurance national banks

See also

• Bridge bank § United States

Notes

1. Organized as a federal savings association rather than a national bank
2. Never operated; assets and liabilities were transferred to a bridge bank.

References

Citations

1. ^ Strachan, Stanley (November 16, 1975). "Bank Failures Rise to Record Levels". The New York Times. p. 187.
2. ^ 12 U.S.C. § 1821(m) "New depository institutions"
3. ^ Resseguie, Donald; Zisman, Barry Stuart (2012) . "Liquidation and New Banks". Banks and Thrifts: Government Enforcement and Receivership (revised ed.). Matthew Bender & Company. §13.04. ISBN 978-0-820-51923-4 – via Google Books.
4. 12 U.S.C. § 1821(n) "Bridge depository institutions"
5. 12 U.S.C. § 1821(m)(3)
6. 12 U.S.C. § 1821(m)(4)
7. 12 U.S.C. § 1821(m)(7)
8. 12 U.S.C. § 1821(m)(5)
9. ^ BHDI 1998, p. 38.
10. ^ "Reopening of Closed Banks for Business and Lifting of Restrictions". Commercial & Financial Chronicle. Vol. 139, no. 3602. July 7, 1934. pp. 62–64.
11. ^ Annual Report of the Federal Deposit Insurance Corporation for the Year Ending December 31, 1934 (PDF) (Report). Federal Deposit Insurance Corporation. 1935. Retrieved 2023-03-13.
12. ^ History 1998, p. 71.
13. "FDIC Creates a Deposit Insurance National Bank of Santa Clara to Protect Insured Depositors of Silicon Valley Bank, Santa Clara, California" (Press release). Washington, D.C.: Federal Deposit Insurance Corporation. March 12, 2023. Retrieved March 13, 2023.
14. "FDIC Acts to Protect All Depositors of the former Silicon Valley Bank, Santa Clara, California". www.fdic.gov. Retrieved 2023-03-14.
15. Guida, Victoria; Sutton, Sam (March 16, 2023). "Why there was no SVB deal". Politico. Retrieved 2023-03-16.
16. Division of Research and Statistics (August 1997). Statistics on Banking: A Statistical History of the United States Banking Industry (PDF) (Report). Vol. 1. Washington, D.C.: Federal Deposit Insurance Corporation. p. C-2.
17. ^ Burgee, Michael B. (Summer 1979). "Purchase and assumption transactions under the Federal Deposit Insurance Act". The Forum. 14 (5). American Bar Association, Tort Trial & Insurance Practice Section: 1154. JSTOR 25761513 – via JSTOR.
18. "F.D.I.C. Step Is Rare". The New York Times. July 7, 1964. p. 45.
19. "Virginia Bank Ordered Closed; 'Bad Management' Is Charged". The New York Times. September 5, 1964. p. 23.
20. ^ History 1998, p. 532.
21. "F.D.I.C. Takes Over Virgin Islands Bank". The New York Times. October 28, 1975. p. 44.
22. FDIC Report on Receivership of Penn Square Bank, N.A., and Operations of the Deposit Insurance National Bank of Oklahoma City, Oklahoma (Report). Washington, D.C.: Federal Deposit Insurance Corporation. February 7, 1984. Retrieved March 13, 2023.
23. "FDIC Creates a Deposit Insurance National Bank to Facilitate the Resolution of New Frontier Bank, Greeley, Colorado" (Press release). Washington, D.C.: Federal Deposit Insurance Corporation. April 10, 2009. Retrieved March 13, 2023.
24. "FDIC Creates a Deposit Insurance National Bank to Facilitate the Resolution of Community Bank of Nevada, Las Vegas, Nevada" (Press release). Washington, D.C.: Federal Deposit Insurance Corporation. August 14, 2009. Retrieved March 13, 2023.
25. "FDIC Creates a Deposit Insurance National Bank to Facilitate the Resolution of Citizens State Bank, New Baltimore, Michigan" (Press release). Washington, D.C.: Federal Deposit Insurance Corporation. December 18, 2009. Retrieved March 13, 2023.
26. "FDIC Creates a Deposit Insurance National Bank of Kaysville, Utah to Protect Insured Depositors of Barnes Banking Company, Kaysville, Utah" (Press release). Washington, D.C.: Federal Deposit Insurance Corporation. January 15, 2010. Retrieved March 13, 2023.
27. "Bank Failures & Assistance Data". BankFind Suite. Washington, D.C.: Federal Deposit Insurance Corporation. Retrieved March 13, 2023.
28. "Failed Bank Information - Question and Answer Guide for Waterfield Bank, Germantown, MD". FDIC. March 5, 2010. Retrieved 2023-03-13.
29. "FDIC Creates the Deposit Insurance National Bank of McDonough to Protect Insured Depositors of Enterprise Banking Company, McDonough, Georgia" (Press release). Washington, D.C.: Federal Deposit Insurance Corporation. January 21, 2011. Retrieved March 13, 2023.
30. "FDIC Creates the Deposit Insurance National Bank of Louisville to Protect Insured Depositors of FirsTier Bank, Louisville, Colorado" (Press release). Washington, D.C.: Federal Deposit Insurance Corporation. January 28, 2011. Retrieved March 13, 2023.
31. "FDIC Creates a Deposit Insurance National Bank of Eastern Shore to Protect Insured Depositors of Bank of the Eastern Shore, Cambridge, Maryland" (Press release). Washington, D.C.: Federal Deposit Insurance Corporation. April 27, 2012. Retrieved March 13, 2023.
32. "FDIC Creates a Deposit Insurance National Bank of Santa Clara to Protect Insured Depositors of Silicon Valley Bank, Santa Clara, California" (Press release). Washington, D.C.: Federal Deposit Insurance Corporation. March 10, 2023. Retrieved March 13, 2023.

Sources

• Managing the Crisis: The FDIC and RTC Experience. Vol. 1: History. Washington, D.C.: Federal Deposit Insurance Corporation. May 1, 1998. p. 71. Retrieved March 13, 2023.
• Division of Research and Statistics (1998). A Brief History of Deposit Insurance in the United States (PDF) (Report). Washington, D.C.: Federal Deposit Insurance Corporation. pp. 38–39. Retrieved March 12, 2023.

• Federal Deposit Insurance Corporation
• Bank failures in the United States