bank rates

Top-Paying Bank Seized, Deposits Moved

We’re not seeing nearly as many bank failures as we did during the recession – fewer than two a month so far this year.

But federal regulators swooped in and closed the National Republic Bank of Chicago last Friday, transferring most of its deposits to the State Bank of Texas.

Of course, all of that money is guaranteed by the Federal Deposit Insurance Corp., so everyone’s savings are safe.

What we don’t know is whether the State Bank of Texas intends to honor all of the interest rates on National Republic CDs going forward.

It doesn’t have to. It can cut the return on the CDs it inherited.

We asked the Dallas-based bank for those new deposits. So far, we haven’t heard back.

While National Republic wasn’t a major player in the CD game, it was offering the second-best nationally available 6-month rate when it was seized – 0.80% APY.

You can no longer buy CDs through its website because it’s been taken down.

A call to one of National Republic’s two Chicago branches confirmed that they’ve reopened under State Bank of Texas ownership and that it was still offering the same great 6-month CD rate.

But you had to buy them in person, and who knows how long that will last, even as a local deal.

The State Bank of Texas doesn’t sell CDs online or even publish savings rates on its website. When we called a Dallas branch, we were told it’s paying 0.22% APY on 6-month CDs.

I think it’s telling that this is the first time the State Bank of Texas has ever been mentioned on Bankaholic. Its returns on CDs or money market and savings accounts have never caught our attention.

The Texas-chartered bank was founded in 1987 to provide loans to budding Indian entrepreneurs and now bills itself as the largest Indian-American owned and operated bank in the United States, with over $1 billion in assets.

A press release quoted CEO and Chairman Chan Patel as saying that two-thirds of the $600 million in loans it also acquired from the Chicago bank are in the lodging industry.

We “will be expanding our asset base while still sticking to what we know – Indian borrowers and hotel loans,” Patel said.

So far this year, 16 banks have failed, according to FDIC data. That’s down from 24 bank failures in 2013, 51 in 2012, and 92 in 2011.

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