Depository Bonds allow banks to offer deposit protection in excess of the Federal Deposit Insurance Corporation (FDIC) insurance coverage to customers with deposits in excess of these limits (currently $250,000 per depositor). Typically, this type of bond is requested by educational institutions, governmental and quasi-governmental agencies, businesses and high-net worth individuals. This protection allows the bank to attract and retain customers without tying up the banks investments to back these excess deposits.
With the end of the Frank/Dodd Act in December 2012, entities no longer had unlimited protection on non-interest bearing accounts. With this change taking effect, it created situations within the banking industry where these non-interest bearing accounts in excess of $250,000 must have depository bonds covering the excess so that the depositor felt comfortable that their deposits were secure.
Banks may also be the depository for the Department of Justice Trustees for bankruptcy assets. There are 21 different regional US Trustee’s offices that oversee the administration of bankruptcy cases.
As a result of the unlimited FDIC coverage being reduced, Goldleaf Surety was asked to put together a $260MM bond program for a large regional bank that was appointed as a depository for the handling of bankruptcy assets for 16 districts. When we completed putting together this program for the bank, the bond program was handled by five of the larger surety markets with each surety agreeing to cover specific districts or in some cases, the sureties cover the excess deposits for a specific region jointly thru a co-surety arrangement.
Once again, Goldleaf Surety was able to put together a large bond program for an agent. The agent was able to keep their client happy thru the assistance of Goldleaf Surety and the bank is extremely satisfied working with a bonding professional that knows how to get things done.