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Troubles at AmTrust Bank

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AmTrustDirect
The Office of Thrift Supervision (OTS) publicly released a Cease and Desist Order (pdf) for AmTrust Bank. Some of the orders include raising its capital ratio and restrictions on certain types of loans, on golden parachute payments, dividends and brokered deposits. More details of these regulatory orders and AmTrust's response are described in this Cleveland.com news article.

One restriction of note to savers limits interest rates that AmTrust can offer:
shall not solicit deposits by offering interest rates more than 75 basis points over the local rates in the association's normal market area

AmTrust's internet division, AmTrustDirect is definitely complying with this. Their savings account and CD rates are way down. Their highest CD rate is currently only 2.50% APY for a 12-month term. The Premium e-Money Market Account only pays 2.75% APY. Those who opened the e-Money Market Account last year receive only 1.25% since it's not the premium version. This is one example of their sneaky ways of cutting interest rates in which they create new accounts that offer decent rates, and the old accounts get stuck with low rates.

A reader commented on another way AmTrust is trying to cut rates. It's allowing CD customers to do an early closure of their CDs without penalty. Here are excerpts of an email a reader had posted:
A special offer for our AmTrust Direct customers:

With the holiday season approaching, AmTrust Direct is offering a limited time opportunity to our customers. Until December 5, 2008, you can close your CD without an early withdrawal penalty.

AmTrustDirect had been offering some very competitive CD rates, so they must be hoping to cut their costs. I'm not sure how they intend to maintain adequate deposits. Their actions won't help them keep customers for the long-term.

Thanks to the readers who emailed and commented on this AmTrust news.
  Tags: AmTrustDirect

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Comments
23 comments.
Comment #1 by Anonymous posted on
Anonymous
I used AmTrustDirect awhile back and it was a shady operation with lots of fraud and/or incompetence.

I finally pulled all funds from the bank, closed the account and never looked back. The OTS ruling of cease and desist due to poor reserves was predictable.

I will admit in the past I did not check out banks enough after I used bank rate blog to get high rate offers. I went to who offered the highest rate without regards to checking the banks out themselves thinking it was all FDIC insured and would all be good. The amtrustdirect experience was the worst experience I had in banking and it made me wise up to what to look for.

Flushing Savings has high rates, good reserves and profit, and a very low mortgage default rate of 2%. All OTS and FDIC info checks out.

Learn how to use info to choose your bank wisely from an investor + depositor standpoint.

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Comment #2 by Anonymous posted on
Anonymous
Too bad that all the "little games" they played to deceive people of their funds finally backfired, but I'm not surprised. I pulled all of my money out as a result and am glad I did.

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Comment #3 by Shashi (anonymous) posted on
Shashi
Are CDs already opened with AmtrustDirect Safe ?

-Peter

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Comment #4 by Anonymous posted on
Anonymous
The OTS is issuing orders to prevent the bank from collapsing.

Cash out the CD when it comes due and use a high rate safe bank next time.

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Comment #5 by Brent (anonymous) posted on
Brent
Wow. I've got three accounts with AmTrust Direct, because I've opened one after another chasing their best rates. I jumped on their 6-month CD awhile back at 4.35% APY, so I hope they keep their act together until that CD matures. Sadly, it's true that they are prone to the old "bait and switch" game when it comes to enticing new customers to open accounts. Guess it caught up with them!

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Comment #6 by Anonymous posted on
Anonymous
I actually liked my AmTrust savings account. But that was 3 years ago, before the silly games.

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Comment #7 by Anonymous posted on
Anonymous
My initial CD experience with AmTrust in 2003 was satisfactory. More recently, though, upon checking them out in contemplation of opening another CD there, I began to see the ridiculous business model they employ to nickel-and-dime their customers, e.g., charging $5 for each monthly interest check from the CD, eliminating the ACH transfer option for monthly interest payments. This is a "boiler-room" operation that is best avoided. I don't think existing depositor funds there are in any danger of being lost, however.

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Comment #8 by Anonymous posted on
Anonymous
I would actually say that my experience with AmTrust has been very positive. I've banked with them for 7 years and recently retired. Had I not switched my investments over to an AmTrust IRA at the time I did, I would have lost thousands in the market, like many of my friends have. People forget that FDIC Insured means something. Runs on the bank were of my parent's generation. For myself, I will stay with AmTrust and hope that they can survive this catastrophe of an economy. And for those of you wondering - they do have the best service I've ever had regarding my IRA. I talked to Erika in their IRA department and I think one time, Loraine. I have never received such personal service. As an old-timer, it's nice to have personalized service. I really wish them luck.

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Comment #9 by Brent (anonymous) posted on
Brent
I must add a comment here, related to the remarks by the previous retiree: I, too, have experienced very personalized service from AmTrust, and I live almost 1000 miles away from their home city. They are the only bank that I've ever used, across more than forty years, that has actually called me to get customer feedback on their products and services. Long live the underdog!

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Comment #10 by Anonymous posted on
Anonymous
BankDeals, do you still hold accounts with this AmTrust Direct Bank? Their rates are lousy, but comparable to the big bank mortars, like JPM-Chase or Citibank (non-online). To Shashi, current CD's with AmtrustDirect bank are safe. IF bank goes under, then my understanding is the last day you earn interest is on the date the bank is declared dead. I'm not sure the regulations on CDs. With WaMu dying, JPM-Chase came in within the same day and they continued paying interest. Not sure what happens if there is a delay in days or weeks or if no buyer buys deposit accounts. Either way, your money is safe; as long as you're below FDIC limits.

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Comment #11 by Anonymous posted on
Anonymous
I decided to utilize Amtrust's offer of no penalty of early closure of CDs and just closed my CD accounts. The experience with the customer service guy was very positive. Apparently the interest earned until today will be added to the principal (interests are compounded daily and accrue every six months) and the full amount sent to me without any penalty. I asked them to send it via wire transfer to my bank account (without any charges). Let's hope it shows up as promised.

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Comment #12 by Anonymous posted on
Anonymous
I have 2 accounts at amtrust totaling less than 100 dollars. Moved most out some time ago. I don't like this bank and never did. When they lower my rate and start a different account and pay new customers more thats it for me. Closed out my Countrywide account today as they are no longer competitive. Don't want any part of BAC. I did like using CW as they had a great system.

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Comment #13 by Anonymous posted on
Anonymous
Well, another bank to scratch off my potential customer list. :-)

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Comment #14 by Anonymous posted on
Anonymous
I requested amtrust close my MMA with them aprox 1 month ago; only $189 in it, but still can't get my money from them! When I call they tell me they're back up with work and don't have time!!! Still have $43,000 with them in CDs so am shaking in my boots that I'll get my money!!! Upset!! Jan.7.'09

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Comment #15 by Banking Guy (anonymous) posted on
Banking Guy
They sure seem to be going downhill. I'm still able to initiate ACH transfers from my AmTrustDirect money market account (I just have a little bit in there since their rates are so low). It may be easier to just withdraw the $189 from the account using their ACH service and let them close it when ever they want. If you have CDs with them, it may be better to keep the MMA open. Hopefully, they'll be able to transfer a matured CD into the MMA where you could transfer it out yourself.

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Comment #16 by Anonymous posted on
Anonymous
$50 minimum to transfer using their ACH. I'm pulling my money out using an outside ACH pull. Thanks for warning us about the safety issue.

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Comment #17 by Anonymous posted on
Anonymous
AmTrust Bank doesn't hit capital ratio targets set by feds by Arielle Kass, 2/18/2009.

AmTrust Bank still has not raised the capital ratios by an end-of-the-year deadline.

But in their end-of-quarter filing with the Federal Financial Institutions Examination Council as of Feb. 10, 2009, AmTrust had not yet reached the required levels. AmTrust was supposed to have a Tier 1 capital ratio of 7% and a total risk-based capital ratio of 12%, according to regulators’ orders. AmTrust’s Tier 1 capital ratio was at 4.95% and its total risk-based capital ratio was 9.99%. Both numbers were slightly lower than its third-quarter levels, when the Tier 1 capital ratio was 5.36% and the total risk-based capital ratio was 10.43%. (source: Crain's Cleveland Business)

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Comment #18 by Anonymous posted on
Anonymous
Check epinions under home/garden:finance to get the experiences of myself and others. Suffice that they lure elderly folks in with high advertised rates then do not give them the $$ back. No matter how many letters you send in, folks you talk to etc. We finally got my dad's $$ back by filing a OTS complaint. We tried to close the checking acct by writing a check but they just started adding fees to the empty acct.
To folks who think they are great, JUST WAIT UNTIL YOU TRY TO WITHDRAW A FEW DOLLARS.

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Comment #19 by Anonymous posted on
Anonymous
Amtrust bank sucks, is the worst bank ever !!. They never say anything about his policy.

THEY CHARGE NOT ONLY $35 OVERDRAFT FEE, THEY ALSO CHARGE $30 MORE AFTER TREE DAY PLUS $5 EACH DAY UNTIL YOU PAY THE DEBT. BUT THE GOOD PART IS THEY NEVER CONTACT OR SEND YOU A LETTERTO LET YOU KNOW YOU ARE PAST DUE. OTHER BANK JUST CHARGE YOU $35 AND AFTER 30 DAY THEY CLOSE YOUR ACCOUNT IF YOU DON'T PAY. AMTRUST BANK NEVER CLOSE THE ACCOUNT BECAUSE IS BETTER TO KEEP CHARGING $5 EACH DAY FOR THE REST OF YOUR LIFE.

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Comment #20 by Anonymous posted on
Anonymous
Amtrust Sucks!!We tried to short sale our house they were no help at all, first they wont tell us what kind of price to list the house at and after having multible offers and each time starting over because I guess they cant keep a file  open and Amtrust having the house appraised twice in one month and still not telling us what it appraised for we had to guess what they wanted. after another offer at what we thought was what they were asking they rejected it asking again for more money, moeny we know we cant get for the house --the people are rude and no help at all --the rumor that banks do not want to foreclose on you is not true when it comes to  Amtrust--Amtrust --thanks for nothing

2
Comment #22 by HealthcareGuru (anonymous) posted on
HealthcareGuru
Wow everything I've read about Am Trust explains why they are failing. And now that they have switched hands and become New York Community Bank things have not gotten better. They were terrible as Am Trust apparently and now apartied to an even bigger cretin New York Comminty Bank they are even worse. As for my rant I am a new home buyer with a very successful business, no debt and pefect credit as well as 20% down. They provided a loan approval commitment and prompted me to go forward with a new home build. I've since paid out expenses of an appraisal and now after recieving a Truth In Lending there was a rejection of the loan 10 months later with the home now done. I am now focused on holding them accountable. I will soon find out  the ramifications I am taking them to court and contacting my local news station. Perhaps with varied parties involved I can get a better undertanding of why they ****ed me over and got away with it.

Sincerely,

****ed off and seeking revenge.

1