A reader forwarded me a letter that this bank had sent which explains the change. Below are excerpts of that letter:
Our goal when offering the Loyalty account was to gain customers for Farmers State Bank that would be customers for life, and to reward our current customers. We have been surprised at the popularity and success of the account. Due to the popularity of the account we are restricting the availability of this account to our local trade area going forward. Our trade area includes Black Hawk and Buchanan Counties in Iowa.
In order to continue to offer this product to our customers we have chosen to make some changes to accounts that are outside of our trade area. Beginning August 1, 2010, we will be converting your account to our FSB Ultimate Checking Account. This is a Free Checking account with no minimum balance requirements and which pays no interest.
It does seem unfair to change the accounts of existing customers especially those who recently opened the account.