VIENNA, Va.–Navy Federal Credit Union has released additional details around its decision to offer private deposit insurance to customers of Community Bank, the overseas bank the credit union is now operating.
As CUToday.info was first to report here, after winning the contract in 2023 to operate Community Bank after Bank of America chose not to rebid on the contract, the $170.8-billion Navy FCU officially began operating what are officially known as the Military Banking Facilities (MBF) in Europe and the Pacific, better known as "Community Bank."
The MBFs are now co-branded as "Community Bank, Operated by Navy Federal Credit Union,” and include 60 MBFs and 272 ATMs already in existence on designated DoD military installations.
Navy Federal was unable, however, to qualify for deposit coverage from the National Credit Union Share Insurance Fund (NCUSIF) because the Federal Credit Union Act prohibits coverage of any non-credit union deposits.
In response, it turned to Dublin, Ohio-based Excess Share Insurance (ESI), and affiliate of American Share Insurance.
Discussions Began in Late 2023
A Navy Federal spokesperson told CUToday.info it reached out to American Share Insurance in the Fall of 2023 when it became apparent the NCUSIF would not be able to provide deposit insurance.”
Navy Federal said it remains in discussions with NCUA over deposit insurance.
“Even though we have licensed and regulated insurance for deposits at levels exceeding industry standards, we continue to remain engaged with the NCUA on deposit insurance,” the credit union said.
What Customers Have Been Told
A notice on Community Bank website notes deposits are not federally insured. In response to a question from CUToday.info over whether there has been any feedback or pushback on the lack of federal deposit insurance, Navy FCU said, “…Customers of Community Bank have been informed that Navy Federal Credit Union has assumed operation of DoD Community Bank. While bank customers may notice superficial changes related to this transition, the products and services they are accustomed to continue uninterrupted. We are dedicated to providing a seamless customer experience throughout this transition.”
Navy FCU declined to provide the total amount of deposits ESI is insuring, saying in a statement, “All consumer deposits are insured through ESI. Each deposit account is insured up to $250K. ESI offers more protection by insuring up to $250,000 per account, compared to the industry standard of $250,000 per client.”
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