After a few down years following the Covid-19 pandemic, merger and acquisition activity in the banking sector is expected to pick up with a renewed push for consolidation. While that may be good for banks’ bottom lines, what does it mean for business owners who rely on their local branch for services? The Federal Deposit Insurance Corp. offers some options to consider.

According to the FDIC report, at least 90 days before the proposed closing date, the bank must mail a notice to customers of the branch. And, at least 30 days before the closing, the bank must post a visible notice at the branch. These notices will help bank customers understand the bank’s plan for their accounts.

“For example, if the notice directs you to a nearby branch, determine if its location and hours are convenient for you and what other banking options are available to you in your area,” the report said. “If you have a safe deposit box at the branch and haven’t received a notice regarding it, find out from the bank whether you need to remove the contents before the closing date or whether they will be transferred to another location.

Customers may also experience changes to their banking services during mergers

Under FDIC rules, for at least six months after the merger, transferred deposits will be separately insured from any accounts customers may already have had at the assuming bank (the bank taking over or acquiring the former bank), according to the FDIC. This grace period gives a depositor the opportunity to restructure accounts, if necessary. This is useful when a depositor holds funds at each of the two banks prior to the merger, each in the same ownership category, and now the combination of funds after the merger exceeds $250,000.

“Different rules for bank accounts apply when a bank fails,” the FDIC said. “In this instance, if the acquiring bank assumes the failed bank’s deposit accounts, the original contract with the failed bank no longer exists. So, the new bank will create a new deposit contract, perhaps with a different interest rate. Rates on CDs may also be changed. In this case, the failed bank’s customers can withdraw their money without an early withdrawal penalty.”

Knowing your options during a bank branch closing or relocation or bank merger will help ensure your financial needs continue to be met.

SOURCE: Federal Deposit Insurance Corp.