New Bank Says, 'Get Lost'

chisueSeptember 22, 2009

We had three 1-year CD's maturing September 28 with a bank we knew was failing (Corus). Yesterday we received a letter from the bank that took over Corus Sept. 12 (MB Financial). No surprise.

MB says they have reduced the interest on our CD's from 4.6% to 0.05% as of their takeover date and that we will receive checks immediately paying out our CD's with interest earned -- no penalties for early payout. Not very surprising.

The surprise is that there is absolutely no bid from MB for our business. It's, "Here's your hat. Get lost."

Guess banks really do have too much cash.

And, we're back to wondering what to do with the CD cash, plus some that's in a money market checking account there. (All were there chasing higher interest rates. All FDIC insured.)

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gardenspice

That is interesting. I wonder if operationally it was cheaper to treat them all the same, rather than to have an extended period of waiting to hear back from the customer about conversion. The clean slate approach.
At least you made it close to the 1 year marker.

    Bookmark   September 22, 2009 at 2:24PM
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haus_proud

In my limited understanding, when a bank fails, FDIC is there to make sure you get your money back. That is your PRINCIPLE, not the interest you supposedly earned, but didn't because the bank failed. Consider yourself lucky that you were in an institution that had FDIC because, if it did not have that, you might have lost your principle.

Still: I understand that it is painful to lose the interest you thought you were earning. Take the check(s) they sent you and deposit them fast into an account of a bank that is SOLID. Then take a few days, or a week or two, to decide what to do with your money next. The safest is a T-bill, but its interest rate is nearly nothing. The next safest thing is a CD in a bank that is solid, although that too will earn very little. Considering other options involves going into considerable detail about your whole financial/life circumstances -- perhaps you should consult a FEE ONLY certified financial planner.

    Bookmark   September 22, 2009 at 2:30PM
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chisue

haus_proud -- Noooo. We will receive our principal AND the interest accrued up to when the bank was taken over. We get Principal + 4.6% on it from Sept. 28, 2008 to Sept. 12, 2009 -- plus that wowser 0.05% from MB for the days between Sept. 12 and when they cut us the checks.

(I called the FDIC to double-check!)

    Bookmark   September 22, 2009 at 3:46PM
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jkom51

Apparently you are not the target customer that MB Financial serves. It has nothing to do with 'banks having too much cash' and everything to do with targeted niche marketing. There's a number of 'business banks' in our area, and I wouldn't expect them to want our individual-only business. These types of banks prefer to serve individuals who also have business relationships with them. Nothing unusual about that.

"MB Financial Bank, N.A. provides customer-driven financial solutions to privately-held, middle-market businesses as well as to small businesses and individuals who work and live in the communities we serve. We offer a wide array of commercial and personal banking products and services as well as trust, private banking and investments through our wealth management division. MB is also among a small number of banks that works closely with leasing companies to provide debt, equity and bridge financing."

    Bookmark   September 22, 2009 at 9:40PM
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chisue

Thanks for the insight, jkom51. Our only 'business' is our vacation rental condo on Maui! LOL. Small potatoes. It's also possible that the bank computer doesn't link our four accounts to one address. (They were taken out before the FDIC protection was raised to $250K).

    Bookmark   September 23, 2009 at 1:13PM
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kframe19

Credit unions.

I have affiliations with two banks, the small bank in the town where I grew up, and a bank that cobrands with NRA to provide services to members, but mortgage, CDs, primary savings, checking, and primary credit cards are all with Navy Federal Credit Union, secondary accounts with Pennsylvania State Employee's Credit Union.

Not the greatest rates in the world, but fees are practially non-existent and service is top flight.

If I'm ever forced to go with a bank for my primary financial institution, I think I'll just keep my money in the mattress.

    Bookmark   September 23, 2009 at 1:44PM
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harriethomeowner

ING is offering 1-year CDs at 1.85%. No fees. Is anyplace else going to do better than that right now? Of the two credit unions we belong to, one is offering 1.15% and the other 1.81% for the same term.

It almost is like keeping it under the mattress, isn't it?

    Bookmark   September 23, 2009 at 2:28PM
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cindyb_va

jkmom got it right. Don't take it personally, you just don't fit not MB's ideal new client profile. Question though, are you sure the new rate wasn't 0.50%? 0.05% just seems out of line for market CD rates these days.

When banks are in trouble, they often give extremely high rates on deposits, this is one of the tell-tale signs of a bank being short of capital. MB is clearly well capitalized and doesn't need to pay clients 4.60% on CD money.

Harriet, I also use ING for term money (CDs). I have found their rates are generally very competitive. Internet banks can afford to pay more on CDs because they don't have to pay the cost of having a brick and mortar branch staffed with people. I have also found their customer service to be excellent, they always notify me in plenty of time when my CDs are rolling and what the new rate is expected to be.

    Bookmark   September 23, 2009 at 5:50PM
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chisue

harriethomeowner -- On Bankrate.com I see some banks offering a tad over 2% for 1-year CD's. Big whoop!

cindyb_va -- Yes, MB Financial's letters, received last week, say they will be paying 0.05% (five one-hundredths of a percent) from the time they took over Sept. 12 until the time they cut checks for our CD's. It's a nit for us because our CD's have earned their 4.6% for all but two weeks of a full year, but not nice for people whose 'younger' CD's at good rates are terminated.

Yesterday we received another letter from MB -- dated the same Sept. 18 as the first ones. This is the make nice letter, 'welcoming' us to MB as 'valued customers'. It's even auto-signed by the president of MB whereas the earlier communications about the CD's bore no name or signature.

This last-received letter also spells out that the Corus customers' financial agreements with Corus have evaporated. If a customer does not *claim* his accounts within a year from the takeover the funds will go to the FDIC. We only have the three CD's -- which they say they will terminate by returning funds to us -- and one MM checking account. This letter is the first to say that we must initiate some action on that account -- either empty it or inform MB that we want it converted into one of their instruments.

Still haven't received the 'Your CD is Terminated' letter on one of our three CD's.

Hope I'm not boring readers. Thought it might prove useful to someone else in a similar situation with a bank takeover.

    Bookmark   September 24, 2009 at 11:31AM
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joyfulguy

As for the 0.05% offered by the MB bank ... that's pre-tax income, don't forget.

Plus ... one needs to shift part of current interest earnings over to the principal amount, in order to offset the erosion of value of each dollar-denominated invested dollar due to inflation.

One of ole joyful's theme songs over the years of being a personal financial advisor,

"What's better than putting your money into a bank?

Buying a piece of the bank".

Recently amended to, " ... buying a piece of a Canadian bank" ... better regulated.

None of them have gone under ... or are about to.

But the one in which I bought shares 42 years ago for about $4.20 and whose value had risen to $107. or so each in June '07 ...

... was exposed to the U.S. financial fiasco ...

... and after the fallout was finished (well, up till now, anyway) was down to about $40.00, late fall last year ... back to about $60.00 now.

But pays about 30 times the rate of (tax-advantaged) dividend that it did when I bought it. And employment earnings, pensions (above a minimal deductible amount) and interest earnings are taxed at top rate, around here.

How about buying a chunk of an oil well?

Gold mine?

When there's huge debt, and major deficit, plus bailouts, overhanging a currency, it's at some serious risk.

And when the country fires up the printing presses to print more, that adds to the risk.

Maybe move some assets offshore - but risky if to Canada, for when you guys get a sniffle ... we get pneumonia!

ole joyful

    Bookmark   September 24, 2009 at 4:40PM
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chisue

I hear you, Ed. This little wad is our 'stash' -- for no-risk investment. Sorry our US troubles trouble *everybody*. That may soon cease to be the case since we are so in hock.

If you haven't already heard enough about our darn CD's, there's been yet another development. DH called MB today, thinking he'd move 'his' supposedly kaput CD into the MM checking account. Surprise! All our CD's are intact, still chugging along at 4.6% until their maturity date, Sept. 28. We were not meant to have receved the 'Get Lost' letters; those were for out-of-state customers.

I think this is the last installment of our Corus-to-MD Financial tale. I *think* it is! LOL

    Bookmark   September 24, 2009 at 5:30PM
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jkom51

So Chisue, what did you and DH finally decide to do with your CD cashouts? Roll it into another bank's CDs or....?

    Bookmark   September 25, 2009 at 1:03PM
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dreamgarden

"We had three 1-year CD's maturing September 28 with a bank we knew was failing (Corus). Yesterday we received a letter from the bank that took over Corus Sept. 12 (MB Financial). No surprise.

MB says they have reduced the interest on our CD's from 4.6% to 0.05% as of their takeover date and that we will receive checks immediately paying out our CD's with interest earned -- no penalties for early payout. Not very surprising.

The surprise is that there is absolutely no bid from MB for our business. It's, "Here's your hat. Get lost." "

For what its worth, MB Financial isn't doing very well either. TheStreet.com gives them a D+. A bank with an "A" rating is best.

Might want to check this out yourself and see if its worth keeping your business with them.

A link that might be useful:

www.thestreet.com/bank-safety/index.
html?src=ratingsindex&tab=3

    Bookmark   September 26, 2009 at 11:02AM
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