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Federal Deposit
Insurance Corporation

Each depositor insured to at least $250,000 per insured bank

Question and Answer Guide

MagnetBank, Salt Lake City, UT

FDIC Call Center
Toll free number 1-800-822-0412
Hours of Operation – Mountain Standard Time
Friday, January 30, 2009: 1:00 p.m. - 9:00 p.m.
Saturday, January 31, 2009: 9:00 a.m. - 6:00 p.m.
Sunday, February 1, 2009: Noon - 6:00 p.m.
Thereafter: 8:00 a.m. - 8:00 p.m.

Is My Account Fully Insured? (www.5.fdic.gov/drrip/afi/index.asp)

Electronic Deposit Insurance Estimator (www.myfdicinsurance.gov)

The following answers are provided to the most commonly asked questions by customers of the failed bank. If the balance in your interest bearing account(s) (this includes any accounts in which you have an ownership) is less than $250,000, or if your deposit is in a non-interest bearing transaction account(s), no action is required on your part at this time. The FDIC will mail you a check for your insured deposit. You should receive this check within one week of the closing.

Deposit Questions

  1. Over $250,000: What if I have more than $250,000 in my accounts at MagnetBank?
  2. Account Hold: I have been advised there is a hold on my account. What does that mean?
  3. Account Insurance Status: Is my account fully insured? Is there a method to verify whether my account(s) at MagnetBank are fully insured?
  4. Brokered Deposits/Deposit Broker: I am a deposit broker or I have brokered deposits.
  5. Claim Account(s): How do I claim my account(s)?
  6. Customer Impact: How does this action affect me?
  7. Early withdrawal penalty: Will I incur an early withdrawal penalty on my CD if I close my CD before maturity?
  8. Final Statement: How will I get my final statement(s) from MagnetBank?
  9. Interest: Will I be paid interest at the same rate?
  10. Internet Connection: Will online banking work?
  11. Lose Any Money?: Will I lose anything on my deposit account?
  12. Records/Account Histories: What if I need information regarding my account during the time MagnetBank was in business?
  13. Tax Reporting - 1098/1099s: Who will send my 1098 and/or 1099 information?
  14. Uninsured: Will I collect my uninsured deposits?
  15. Wire Transfer: Can funds be wired to me?

Loan Questions

  1. Construction Loan Draws: Will draws continue and will my project be completed?
  2. Construction Loan Voucher Control: Will my subcontractors be paid as before?
  3. Escrows: Will my escrows continue to be paid?
  4. Fees: Are there any changes to fees or charges due to this event?
  5. Lender and contact names: Who is my lender and has my loan contact changed?
  6. Loan Sales: Will my loan be sold?
  7. Line of Credit Advances  Home Equity: Can I continue to obtain advances on my line of credit?
  8. Loan in Process: I have a loan currently in process. How is my loan impacted?
  9. Loan Sweep: Will my loan sweep be discontinued?
  10. Payments: How/where do I make my payments?
  11. Pre-payment Penalty: If I refinance, will my pre-payment penalty be waived?
  12. What Happens Now: What will happen to my loan?

General Questions

  1. Why Payout: Why is this closure being handled as a payout?
  2. FDIC Rules: How can I find out more about Federal Deposit Insurance rules?
  3. Media: I represent a TV/Newspaper/Radio and would like some information.
  4. Shareholder: I am a shareholder in MagnetBank. What happens to my shares?
  5. Unpaid Work: I did some work for MagnetBank and have not yet been paid. What should I do?
  6. What happened: Why did the banbk fail?

DEPOSIT QUESTIONS

1. What if I have more than $250,000 in my accounts at MagnetBank?

If you have more than $250,000 in your interest-bearing account, or if the total of your related interest-bearing accounts exceeds $250,000, your accounts may require review by an FDIC Claim Agent. You should call the FDIC to schedule a telephone appointment with an FDIC claim Agent at 1-800-822-0412.

If you have an interest-bearing account or group of interest-bearing accounts that exceeds $250,000, you may need to complete certain declarations or affidavits and provide documentation so that the FDIC can make an insurance determination on your account(s).

If you are an investor with a deposit broker, you may need to complete one of these forms only if your investment exceeds $250,000. However, you must mail your form to your deposit broker for submission to the FDIC.

If your deposits DO NOT exceed $250,000, or if your deposits are in a non-interest bearing transaction account(s), you DO NOT need to complete these documents or contact the FDIC.

An account hold may be placed on an account due to the need for additional documentation from a depositor. For example, a Declaration for Trust form may be required to attest to the parties involved in a trust. These forms can be mailed to you, or you can access them online at: Deposit Claims (www.fdic.gov/regulations/laws/forms/#DepositClaims).

If you have a question regarding the completion of required affidavits or declarations, please call 1-800-822-0412 and indicate you have a form completion question.


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2. I have been advised there is a hold on my account. What does that mean?

It is possible a depositor’s account was held due to delinquent loans where the depositor is the borrower or guarantor. Additionally, any account pledged as collateral for a loan will continue to be held. A letter will be sent informing you of any holds placed by the FDIC, along with instructions on how to proceed. If you have any questions regarding these holds, please call your loan officer or the FDIC at the number provided in the letter.

Another reason an account hold may be placed is due to the need for additional documentation from a depositor. For example, a Declaration for Trust form may be required to attest to the parties involved in the trust. Please contact the FDIC at 1-800-822-0412 to schedule a telephone appointment.


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3. Is there a method to verify whether my account(s) at MagnetBank are fully insured?

A tool, Is My Account Fully Insured? (www5.fdic.gov/drrip/afi/index.asp), is available that allows failed bank customers the ability to verify whether their account is fully insured or if they need to contact the FDIC.  This service will be available for use no later than the first business day after the bank's failure.  Once you enter your account number, your insurance status for that account will appear.  If there is a hold on your account, it may be due to the need for the additional documentation referenced in question number one.

If there is a hold, you will need to contact the FDIC at 1-800-822-0412 to schedule a telephone appointment.


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4. I am a deposit broker or I have brokered deposits. What do I need to do?

Brokered deposits will be held by the FDIC, and those insured deposits will be paid off when the insurance determination is complete. The FDIC offers an online reference guide to deposit brokers acting as agents for their investor clientele. This site outlines the FDIC’s policies and procedures that must be followed by deposit brokers when filing for pass-through insurance coverage on custodial accounts in a failed FDIC-insured institution. Please read the following Deposit Broker Processing Guide completely before contacting the FDIC with questions:

Deposit Broker Processing Guide (www.fdic.gov/deposit/deposits/brokers/index.html)

Should you have any questions regarding the completion of required affidavits or declarations on behalf of your client, please call 1-800-822-0412 and indicate you have a form completion question.

If you are a customer who has a MagnetBank deposit through a broker, you must contact your broker with any questions. Once the FDIC receives a balanced investor file along with all the required documentation, from your broker, your insured funds will be wired to them on your behalf.


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5. How do I claim my account(s)?

You will receive a check from the FDIC within one week of the closing. Please be advised that this money will be turned over to your state as unclaimed property if this check is not cashed within 18 months. Unclaimed property can be located by visiting www.missingmoney.com or contacting your state treasurer’s office or office of unclaimed property.


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6. How does this failure affect me?

All accounts have been closed, and you will receive a check from the FDIC within one week of the closing.

If you had a loan with MagnetBank, please send all future correspondence and payments to:

FDIC as Receiver for MagnetBank
2825 E. Cottonwood Parkway
Suite 180
Salt Lake City, UT 84121

Please make your check or money order payable to “FDIC as Receiver for MagnetBank.”

If you have any questions concerning this matter, please call 1-801-733-2626 to schedule an appointment with an FDIC representative.


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7. Will I incur an early withdrawal penalty if I close my CD before maturity?

Your CD will automatically be closed, and you will receive a check from the FDIC within one week of the closing. You will NOT be assessed an early withdrawal penalty.


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8. How will I get my final account statement(s) from MagnetBank?

You will receive a final statement within one week of the closing.


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9. Will I continue to earn interest at the same rate?

All interest on insured deposits accrued through January 30, 2009 will be paid at your same rate. This will be included in the check you will receive from the FDIC within one week of the closing.


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10. Why doesn’t my Internet connection to MagnetBank work?

All accounts have been closed, and you will no longer have access to the website.


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11. Will I lose anything on my deposit account?

Principal and interest on insured accounts, through January 30, 2009, are protected by the FDIC, to at least $250,000. Certain accounts can be insured in excess of the $250,000.

If you have more than $250,000 in your interest bearing account (or $250,000 in your IRA), or if the total of your related interest bearing accounts exceeds $250,000, your accounts may require review by an FDIC Claim Agent. All accounts that appear to be related are reviewed to determine ownership and insurance coverage. See question number one for information regarding forms you may need to complete to expedite this process.


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12. What if I need information regarding my account during the time MagnetBank was in business?

Please contact the FDIC at 1-800-822-0412 to request a copy of your records.


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13. Who will send my 1098 and/or 1099 information after the end of the year?

The FDIC will be responsible for mailing your 1099 tax information. Your 1098 reporting will be done by the FDIC or the servicer of your loan. You will be notified of any changes in ownership or servicing of your loan.


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14. Will I collect my uninsured deposits?

If you have a loan in the same name as your uninsured deposit account, it may be possible to offset your uninsured amount against your loan. You should discuss this with your claim agent during your appointment.

If it is determined that you have some uninsured funds, the FDIC will mail you a Receivership Certificate. This certificate entitles you to share proportionately in any funds recovered through the sale of the assets of MagnetBank. You may eventually recover more of your uninsured funds as assets are liquidated.

When a financial institution is closed, and the Federal Deposit Insurance Corporation ("FDIC") is appointed as receiver, one of FDIC's responsibilities is to sell the institution's assets to pay the depositors and its creditors. The money generated by the sale of these assets will flow through the Receivership, and periodic dividend payments will be made to proven claimants when excess cash is available. For an explanation of the dividend process, go to FDIC Dividends from Failed Banks (https://closedbanks.fdic.gov/dividends/index.asp).

Of course, you will receive immediate full payment for your insured amount by check directly from the FDIC.

If you have a deposit through a broker, your insured funds will be wired to your broker on your behalf once the FDIC receives all required documentation from your broker.


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15. Can funds be wired to me?

Non-brokered deposits will be paid by check within one week.

Brokered deposits will be wired to the broker and distributed by the broker to individual depositors.


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LOAN QUESTIONS

16. Will construction draws continue? Will my project be completed?

Each loan is being reviewed independently, and you should direct your questions to your loan officer. These will be determined on a case-by-case basis.


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17. Will my subcontractors be paid as before?

Each loan is being reviewed independently and will be determined on a case-by-case basis. You should direct your questions to your loan officer.


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18. Will you continue to pay my escrows?

All services previously performed related to your loan will continue. Should you receive notification that any portion of your taxes or insurance were not paid, please notify your loan officer immediately.


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19. Are there any changes to fees or charges due to this event?

No. The current fee structure will remain the same.


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20. Who is my lender and has my loan contact changed?

Your loan is currently owned by the FDIC and is being serviced by all of the same personnel with whom you have worked in the past. All prior contacts remain the same.


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21. Will my loan be sold?

Your loan may be sold at a future undetermined date. If that occurs, you will be notified in advance through written correspondence. If you are concerned about whom your future lender or servicer will be, you have the right to independently refinance you loan with another lender.


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22. Can I continue to perform advances on my personal line of credit?

No. All Home Equity Lines of Credit (HELOCs) have been suspended. You should contact another financial institution to discuss establishing a borrowing relationship.


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23. I have a loan currently in process. How is my loan impacted?

Please contact your loan officer directly.


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24. Will my loan sweep be discontinued?

This will be determined on a case-by-case basis. Please contact your loan officer.


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25. How and where do I make my payments?

Please send all future correspondence and payments to:

FDIC as Receiver for MagnetBank
2825 E. Cottonwood Parkway
Suite 180
Salt Lake City, UT 84121

Please make your check or money order payable to “FDIC as Receiver for MagnetBank.”

If you have any questions concerning this matter, please call 1-807-733-2626 to schedule an appointment with an FDIC representative.


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26. If I refinance with another lender, will my pre-payment penalty be waived?

Those will be determined on a case-by-case basis.


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27. What will happen to my loan?

Each loan is currently being reviewed independently to determine the best action for that individual loan. If you are concerned about whom your future lender or servicer may be, you have the right to independently refinance your loan with another lender.


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GENERAL QUESTIONS

28. Why is this closure being handled as a payout rather than a deposit transfer as in other closed banks?

When a buyer cannot be found for a failed bank, the FDIC honors its obligation to insured depositors by mailing an insurance check.


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29. How can I find out more about Federal Deposit Insurance rules?

You may access our website, which contains deposit insurance information and an Electronic Deposit Insurance Estimator (EDIE):

Deposit Insurance (www.fdic.gov/deposit/index.html)
Are my deposits insured? (www.fdic.gov/deposit/deposits/index.html)
EDIE (www.myfdicinsurance.gov)


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30. I represent a TV/Newspaper/Radio and would like some information.

Please contact the Office of Public Affairs:

David Barr
202-898-6992
dbarr@fdic.gov

Andrew Gray
202-898-7192
202-494-1049
angray@fdic.gov


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31. I am a shareholder in MagnetBank. What happens to my shares?

Shareholders have a claim against the receivership; however, they have the lowest priority of claim. You should discuss this with an accountant and/or the IRS concerning the exact requirements necessary to recognize the investment as a loss for tax purposes.


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32. I did some work for MagnetBank and have not yet been paid. What should I do?

Please send your bills to the following address:

FDIC as Receiver for MagnetBank
1601 Bryan Street
Dallas, TX 75201


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33. What happened, why did the bank fail?

MagnetBank, Salt Lake City, UT was closed Friday, January 30, 2009 by the Utah Department of Financial Institutions. Subsequently, the Federal Deposit Insurance Corporation (FDIC) was appointed Receiver. According to regulatory policy, there is no advance notice given to the public. Please see the Utah Department of Financial Institutions press release for more information.

The good news is that no one lost any insured deposits as a result of the closure of MagnetBank. An assuming bank could not be located; therefore, the FDIC will fulfill its obligation to insured depositors by mailing checks for their insured amounts. These checks should be received within one week of the closing.


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SCAMS: Be watchful for and resistant to any scams to obtain information from you by individuals or entities stating that they are acting on behalf of either the failed bank, new bank, or the FDIC. Should you be contacted by anyone requesting personal information from you related to this event, please contact the call center above and you will be directed to the appropriate person.

For more information: www.fdic.gov/bank/individual/failed/magnet.html

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