Dedicated to Deposits: Deals, Data, and Discussion
DETAILSINSTITUTIONAPYMINMAXPRODUCT
Incredible Bank0.95%$2,500$250kIncredible Money Market
Incredible Bank0.59%-$250kIncredible Checking
Accounts mentioned in this post. Rates as of August 21, 2014

Incredible Bank's 3-Year Anniversary - Comparing Its Rate History

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Incredible Bank

It has been three years since the Wisconsin-based River Valley Bank launched Incredible Bank. The first product was an internet checking account with a very competitive rate. I first reported on it in my November 2009 post when the checking account was paying 2.02% APY. Rates have gone down, but it has remained competitive over the last three years. In addition, they have expanded their products to include a money market account and internet CDs. The money market account is now the best deal with a 1.05% APY for balances of $2,500 to $250,000 (as of 11/09/2012).

When I first reported on Incredible Bank, I asked "will it stay competitive"? In 2009 we had already seen big rate cuts at checking accounts of other internet banks like Charles Schwab and Salem Five Direct. So there was concern that the rates wouldn't hold up. Below shows how Incredible Bank's rates have held up compared with one of the best all-access credit unions, Alliant Credit Union, and the largest internet bank, ING Direct.

I also included the rate history of CNB Bank Direct. This is an internet bank that's similar to Incredible Bank. CNB Bank Direct was launched in 2008, about a year before Incredible Bank. Unlike Incredible Bank, CNB Bank Direct doesn't offer a checking account. It just has a savings account and CDs. Both internet banks are divisions of community banks that are similar in size. Incredible Bank's parent is River Valley Bank which has $992 million in assets. CNB Bank Direct's parent is The Citizens National Bank of Bluffton which has $611 million in assets. As you can see in the rate history, CNB Bank Direct has recently become uncompetitive. The current savings account rate is now only 0.41% as of 11/09/2012. The savings account remained competitive in previous years.

Incredible Bank rate history:

  • 10/31/2012 - checking: 0.88% APY, MMA: 1.05% APY
  • 10/31/2011 - checking: 1.06% APY, MMA: 1.18% APY
  • 10/31/2010 - checking: 1.42% APY
  • 10/31/2009 - checking: 2.02% APY

Alliant Credit Union rate history:

  • 10/31/2012 - checking: 0.75% APY, savings: 0.80% APY
  • 10/31/2011 - checking: 1.10% APY, savings: 1.15% APY
  • 10/31/2010 - checking: 1.35% APY, savings: 1.35% APY
  • 10/31/2009 - checking: 1.75% APY, savings: 2.00% APY

ING Direct rate history (for $100K checking tier)

  • 10/31/2012 - checking: 0.85% APY, savings: 0.75% APY
  • 10/31/2011 - checking: 1.10% APY, savings: 0.90% APY
  • 10/31/2010 - checking: 1.25% APY, savings: 1.10% APY
  • 10/31/2009 - checking: 1.55% APY, savings: 1.30% APY

CNB Bank Direct rate history:

  • 10/31/2012 - savings: 0.51% APY
  • 10/31/2011 - savings: 1.05% APY
  • 10/31/2010 - savings: 1.25% APY
  • 10/31/2009 - savings: 1.70% APY
  • 10/31/2008 - savings: 4.00% APY

Will It Stay Competitive?

For those who don't yet have an Incredible Bank checking or money market account, there is still the question of whether the rates will stay competitive. Three years of history provides some assurance, but history is no guarantee of the future as you can see with CNB Bank Direct.

The risk is that you never know when management loses their motivation on keeping the internet account competitive. Another thing that can ruin an internet account is when the internet bank's parent is acquired by another bank. New management is often not interested in keeping the internet account competitive. We have seen this with acquisitions by M&T Bank and Peoples United. I don't see any signs that River Valley Bank will be acquired, but it's always a possibility in the future.

In 2011 Incredible Bank received nationwide publicity when it was mentioned on CNN.com. I had some concern that it would attract too many deposits which could force the bank to lower rates. It appears that did not happen. Over the last year deposits have increased from $805 million to $840 million. That's about a 4% increase. In 2009, River Valley Bank had $740 million in deposits. So in 3 years, deposits have grown by about 14%. That's not a big increase when you consider Incredible Bank has been offering competitive rates nationwide for 3 years. This shows that brick-and-mortar branches still pull in the bulk of deposits for most banks.

Incredible Bank Money Market Account Overview

The money market account pays 1.05% APY for balances of $2,500 to $250,000 (as of 11/09/2012). There's a $10 monthly fee if the balance falls below $2,500. One downside is that checks are not offered. Another downside with Incredible Bank is a small limit on its ACH bank-to-bank transfer service. The bank only allows a maximum of $10,000 ACH transferred out per day and a maximum of $50,000 ACH in per day. If you plan on maintaining a large balance in these accounts, you should use another internet bank, like Ally, to push and pull funds into and out of your Incredible Bank accounts. I have more details on the account features in my Incredible Bank account review

River Valley Bank and Incredible Bank Overview

Last year I found this press release that highlights MeridianLink, the company that powers IncredibleBank's account-opening process. In the press release, it provides some history of Incredible Bank:

Incredible Bank quickly made an impact in the online-only banking space. “The first several months we had as many as 500 applicants for new accounts in a month,” says Jaeger. “We quickly grew to have customers in each of the 50 states.”

It also provides some history of River Valley Bank:

Since its beginning in 1967 with one location in Rothschild, WI, River Valley Bank, a family-owned financial services company dedicated to effectively satisfying customers’ needs, has grown to 18 locations in North and Central Wisconsin and Michigan’s Upper Peninsula.

The bank has an overall health score at DepositAccounts.com of 4 stars (out of 5) with a Texas Ratio of 22.13% (average) based on June 2012 data. Please refer to our financial overview of Incredible Bank's parent for more details. The bank has been a FDIC member since 1967 (FDIC Certificate # 19772).


  Tags: Incredible Bank, checking account, money market accounts

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Comments
7 Comments.
Comment #1 by Wil posted on
Wil
Incredible Bank has been great: rates have remained competitive, though no longer "top tier," and customer service is superb. I'm glad I opened the checking account with them, I only wish I had done so sooner, but I was initially skeptical. And, please, don't even hint about River Valley Bank being bought by another bank!!!

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Comment #2 by Truthseeker (anonymous) posted on
Truthseeker
Yes. Incredible Bank checking and savings accounts are completely liquid, and pay near the top of the dismal interest rate scene. They offer the type of accounts I need for cash flow in between the time I get the cash, and the time I convert it to hard currency.  The only negative is the limit on money movement, but most major brokerage houses and several other banks will push and pull unlimited amounts through ACH. Sometimes, though, you need to make a phone call to pull more than $100,000 or $250,000, in one day, depending on what their "online limit" may be.

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Comment #3 by Truthseeker (anonymous) posted on
Truthseeker
I worry about one thing with these little banks.

Suppose I set up several accounts, titled differently, so that they are all FDIC insured, and, then, have total deposits, let's say, of $1.2 million, at the bank. Then, one day, I see the price of gold or silver, or something else, attacked and battered down. I want to buy right away. I cannot wait weeks to withdraw the money I need, because, after the NYC banks are finished attacking and inducing volatility on behalf of the Fed, the price will snap back.

So, let's say, I want to pull a total of $1 million in one day in the form of a wire transfer to my brokerage house. Can a small bank, like River Valley Bank, give me close to a million dollars upon request, without a great deal of problems, let alone the possibility that it would cause a so-called "run" on the bank? Does anyone have any experience or insight on this????

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Comment #4 by Anonymous posted on
Anonymous
They should be able to do a wire for any amount with no problem. Even the smallest banks have to keep a certain amount liquid, and they all have various means of backup liquidity (FHLB credit lines, the Fed if they're a member, etc.) if there are substantial withdrawal requests.

Now, if you actually wanted to walk into a branch and withdraw $1 million in cash, yes, you'd have a problem. Most banks would need advance notice to deliver that. But a wire is just "paper money". You'd be fine.

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Comment #5 by Anonymous posted on
Anonymous
One more thing - River Valley has almost $1 billion in assets, a wire for $1 million is about 0.1% of their assets - not a substantial issue.

If they had $5 million or $10 million in total assets I might have to qualify my comment a bit.

2
Comment #6 by OC Steve (anonymous) posted on
OC Steve
Re: #3 - Run on a Bank.

Do you remember Indy Mac Bank?  They actually had long lines of scared customers at many of the branches and the depositors were draining most of the Bank liquidity.  Same for WAMU--lots of withdrawals in just a few weeks--daily almost.  They failed due to liquidity problems.  You can have a positive net worth, but if assets are too non-liquid and a deposit crisis happens, then you can die (fail) due to no more immediate funds available to pay off withdrawals.

All Banks or CUs has to maintain a certain amount of base liquidity, like 10% of defined deposits.  Liquidity would include cash in vault, clearing deposits at correspondence Banks, FRB advances, FHLB back-up lines of credit, Fed Funds sold, back-up lines of credit with larger correspondent banks, liquid investment securities (US Govt. bonds, FHLB bonds, etc.), etc.  Given a large deposit drain, a Bank/CU could also sell unencumbered loans (not pledges for loans at FHLB or FRB), but that would generally take some time to accomplish.

If a Bank/CU had an unusually high DDA or NOW account deposit base (able to be withdrawn on demand), then they would want to keep more liquidity than is required by OCC/FDIC, etc.

Once news media start to report on Bank/CU runs, it typically does not stop.  It scares large segments of the population that do not really understand how FDIC deposit insurance works.  It only takes a failed bank with no acquiring institution where you get an FDIC Insurance Fund check, to prove what FDIC insurance really means--your insured funds are insured as long as you are under the insurance limit, supplemented by various depositor ownership categories.  I was with Home Savings of America and in Feb 2012 they failed with no acquiring institution and my family all received FDIC Insurance Fund checks promptly the week after the Bank failure.

Just my 2 cents worth.

 

5
Comment #7 by Anonymous posted on
Anonymous
While the rates are attractive at Incredible bank.com, I must admit I have decided to use other resorces on the internet for my funds as their website and secure email manager are very poor.  The phone support I received was very good, but I have never (read NEVER) had a more frustrating online experience than trying to set up and use (and make a deposit into!!! wtf?) my incredibleBank.com online account.  Sorry, but I just cant recomend them, at all... 

2