Urban Partnership Bank, the successor to the recently failed ShoreBank, has already boosted the interest rates on a couple of savings accounts for its online ShoreBank Direct.
The ShoreBank Direct Online Savings Account now pays a 1.25 percent annual percentage rate with a $100,000 minimum balance, up from 1.19 percent. It also pays 1.2 percent for balances of less than $100,000, up from 1.03 percent.
The rate hikes were first reported by www.depositaccounts.com, a tracker of bank account trends.
Sometimes, when a bank fails, the institution that takes it over cuts rates. That happened last September, for example, when Chicago-based Corus failed, and MB Financial acquired it in an FDIC-assisted deal.
But it works the other way, too. Regulators often keep an eye on shaky banks such as ShoreBank, the South Side lender seized by banking regulators on Aug. 20, to make sure they’re not paying interest rates well above the norm.
Free of those restraints, well-capitalized acquiring banks such as Urban Partnership Bank have the freedom to boost interest rates that they’re paying depositors.
But another South Side institution said he believes there’s another reason why Urban Partnership Bank might be hiking its rates.
“My personal bankers mentioned last week that they had seen several rather large new deposit customers open with us with the money coming out of Shorebank, or, more accurately, the new company,” said Tim Goodsell, president of Hyde Park Bank, also on the South Side. “I’m sure the deposit rate increase is an attempt to hold deposits.”
But Urban Partnership sounds satisfied with its acceptance as the new owner of failed ShoreBank.
“New and existing deposits from our branches and online banking channel demonstrate strong support for Urban Partnership Bank’s commitment to providing a competitive rate of return and quality financial services that will revitalize our urban communities,” said Brian Berg, spokesman for Urban Partnership Bank.
The accounts are insured by the Federal Deposit Insurance Corp. Each depositor is insured to at least $250,000 per insured bank.
Major investors in Urban Partnership include American Express Co., Bank of America Corp., Citigroup, Ford Foundation, GE Capital’s equity investments arm, JPMorgan Chase & Co., Key Community Development Corp., Morgan Stanley, Northern Trust Corp., PNC Investment Corp., Goldman Sachs Group Inc., and Wells Fargo & Co. Former First Chicago executives who joined ShoreBank in recent months will run the bank.
Urban Partnership has said it enters the market “well-capitalized.”