Uninsured deposits, explained

An uninsured deposit is the part of a depositor's balance that exceeds the deposit insurance limit — generally $250,000 per depositor, per institution, per ownership category. If a business keeps $1 million in a single operating account at one bank, roughly $750,000 of it is uninsured. If a household spreads $400,000 across a joint account and two individual accounts at the same bank, it may be fully insured, because each ownership category is covered separately.

Uninsured deposits are common and legitimate. Businesses, nonprofits, municipalities and wealthy households often need large balances for payroll and payments. The issue is not that they exist, but how concentrated they are at a particular institution.

Insured depositors have little reason to run, because their money is protected. Uninsured depositors do have a reason: if the bank fails, they may wait months for a partial recovery. When many uninsured depositors are connected — the same industry, the same investors, the same social networks — and can move money instantly online, withdrawals can be extremely fast.

Silicon Valley Bank and Signature Bank, both closed in March 2023, each had a large majority of their deposits above the insurance limit according to their own regulatory filings. The Federal Reserve's review of Silicon Valley Bank describes about $42 billion of withdrawals in a single day, with more requested for the next morning. First Republic Bank, closed in May 2023, also had a high share of uninsured deposits and suffered heavy outflows. Post-failure reviews by the Federal Reserve and the FDIC identified reliance on uninsured deposits, combined with interest-rate losses on securities, as central weaknesses.

Regulators invoked a systemic risk exception to protect all depositors at Silicon Valley Bank and Signature Bank. That decision is not automatic and should not be assumed for any future failure.

Banks do not report each customer's balance publicly. Instead, the call report provides estimates in Schedule RC-O, which collects data used for deposit insurance assessments:

• Banks with $1 billion or more in total assets report an estimated amount of uninsured deposits, taking into account ownership categories where they can.
• All banks report the number and dollar amount of deposit accounts with balances above $250,000. An approximate uninsured amount can be derived by subtracting $250,000 for each such account from the total. This tends to overstate uninsured deposits slightly, because some large accounts are fully covered through joint or trust ownership.

Credit unions report comparable information on the NCUA 5300 call report, but the definitions differ, and the figures for smaller credit unions are generally less precise. TellerScore shows the uninsured share as a percentage of total deposits, based on the figures each institution reports. Deposits that are collateralized — for example, many public funds — may appear as uninsured even though they are secured.

• Use ownership categories. Individual, joint, retirement and trust deposits at the same institution are insured separately.
• Use more than one institution. Each separately chartered bank or credit union carries its own limit. Check that two brands are not the same charter.
• Reciprocal deposit networks. Some banks offer services that spread a large balance across many insured banks in amounts below the limit at each. Read the terms and confirm which banks hold your money.
• Treasury bills or money market funds are alternatives for very large balances, though they are not deposits and carry different risks.

Our deposit coverage calculator gives a quick estimate. For complex arrangements, use the FDIC's EDIE tool or the NCUA's Share Insurance Estimator.