On Monday, Rising Bank, the new internet division of Midwest BankCentre, opened its virtual doors for business. The product line debuted with a High Yield Savings account and CDs with terms from one to three years. The High Yield Savings Account earns 2.45% APY on balances of $1k and up to a maximum of $500k.
Rising Bank’s disclosures page has links to the account disclosure and the fee schedule.
The High Yield Savings account requires a minimum $1k opening deposit and a minimum $1k balance to qualify for interest. According to the account’s truth-in-savings disclosure:
You must maintain a minimum balance of $1,000.00 in the account each day to obtain the disclosed annual percentage yield.
Maximum balance is $500k per account.
According to the disclosure, “interest will not be compounded,” but “interest will be credited to your account every month.” It’s important to note that “if you close your account before interest is credited, you will not receive the accrued interest.”
The fee schedule only lists two fees: $24 fee for outgoing domestic wire transfer and a $12 fee for each chargeback. There are no monthly maintenance fees, no minimum balance fees or excessive withdrawal fees. Even though there are no excessive withdrawal fees, there is still the typical savings account limit of six withdrawals per month as required by federal regulation. If you go over this limit too many times, Rising Bank may close your account.
Funding and Accessing
Account opening and account management is paperless. Paper check deposits are not accepted. Also, there is no ATM/debit card. Deposits and withdrawals must be made by ACH or wire transfers. In their ACH bank-to-bank transfer system, they are still deciding on ACH limits. If they settle on small limits, you can always fall back on initiating an ACH transfer from your other bank.
Rising Bank CDs
Rising Bank is also offering two types of CDs. The first type is the standard CD. These have the names Term CDs (minimum deposit of $1k) and Jumbo CDs (minimum deposit of $100k). The second type is the Rising CD, and it has both a rate bump-up option and an add-on deposit option. Minimum deposit for the Rising CD is $25k.
Maximum balance for any of the CDs is $500k per account.
According to the CD truth-in-savings disclosure, Interest is compounded and credited to your account every three months. This is important to know if you do an early account closure. You will not receive accrued interest if you close the CD before interest is credited.
Under the CD transaction limits, the truth-in-savings disclosure states:
You may not make withdrawals of principal from your account before maturity.
This also applies to interest:
You cannot withdraw interest from your account before maturity.
However, after the transaction limits, the disclosure lists the early withdrawal penalties which implies that early withdrawals are permitted with penalty. The early withdrawal penalty for the 12-month CD is equal to 90 days’ interest on the amount withdrawn. For longer terms, the penalty is equal to 180 days’ interest on the amount withdrawn.
Term and Jumbo CDs
Currently, Rising Bank is listing just one Jumbo CD (2-year term), and its APY is the same as the 2-year Term CD APY. Minimum deposit is $100,000.
Three Term CDs are listed. These have 1-year, 2-year and 3-year terms. Minimum deposit is $1,000. All three rates are currently fairly competitive.
|2.50%||$1k||$500k||Rising Bank||3 Year Term CD|
|2.45%||$1k||$500k||Rising Bank||2 Year Term CD|
|2.40%||$1k||$500k||Rising Bank||1 Year Term CD|
Rising Bank’s Rising CDs have two unique features that can be useful in an uncertain interest rate environment.
|2.50%||$25k||$500k||Rising Bank||18 Month Rising CD|
|2.50%||$25k||$500k||Rising Bank||36 Month Rising CD|
The most useful of the two features in my opinion is the add-on deposit option. For the 18-month Rising CD, you have one option to make an additional deposit during the term. For the 36-month Rising CD, you have two options to make additional deposits. Minimum deposit for additional deposits is $5k.
The $25k minimum initial deposit and the $500k maximum balance limit some of the benefits of the add-on deposit feature. The ideal add-on CD has a small minimum initial deposit and no limits on the add-on deposit amount. Nevertheless, the Rising CD is still a good deal when there’s a real possibility of falling rates in the next year or two. Since I think it’s unlikely that rates will fall quickly, the 36-month Rising CD is more useful than the 18-month. The current APY of 3.00% is fairly competitive. A year or two from now, 3% may look high for CDs. If that occurs, you can always fall back on this CD and make one or two additional deposits and get a 3% APY for the remaining time.
The second feature is the rate bump-up option. Here’s an excerpt of the description of this feature from the 18-month Rising CD account disclosure:
you will have the option to exchange this interest rate one time during the original term of the account. The new interest rate will be the interest rate we are then offering on the 18 Month Rising Certificate of Deposit. This exchange will be at no cost to you. If you make an exchange, the maturity date of this account will remain the same as originally scheduled.
The bump-up feature is described the same for the 36-month Rising CD except that you can bump up the rate two times.
This bump-up option works just like it does for Ally Bank’s Raise Your Rate CDs. My primary issue with the bump-up feature is that it depends on the bank keeping the rate competitive. Another problem is that even if the bank does keep the CD rate competitive, it still can be difficult to know when to use the bump-up option. If you jump too early on a rate bump, you may miss out on future rate increases. On the other hand, if you wait too long, you’ll lose the benefit of the higher rate since there will be less time until the CD matures.
Update 2/8/19: I was told by the Rising Bank official that the add-on option and the bump-up option are completely independent of each other. You can choose to just use the add-on option without the bump-up option or vice versa. Thus, if rates fall instead of rise, you can just use the add-on option.
Trust Accounts and Beneficiaries
Rising Bank currently does not open accounts in the name of a trust.
Multiple payable-on-death (POD) beneficiaries are allowed, but they must be designated after the account is opened. This cannot be done in the online application. Regarding the information required for listing beneficiaries, I was told they prefer to have the social security numbers of the beneficiaries (to help with identification), but it’s not required. Only persons and trusts can be named as beneficiaries. Charities/non-profits cannot be named.
Rising Bank is offering accounts nationwide. Anyone 18 years or older with a valid Social Security number or Taxpayers Identification Number can open an account.
Only individual and joint accounts can be opened with Rising Bank. Custodial accounts and trust accounts are not permitted, but as mentioned above, trusts can be named as a beneficiary.
According to a Rising Bank official, there is no hard credit pull in the application process. It’s just a soft pull, and there should be no need to unfreeze your credit if you had done a credit freeze.
As an internet bank, Rising Bank has no brick-and-mortar branches. Opening a High Yield Savings account and/or CD can only be done online. The online application process is intended to be easy enough that it can be completed on a PC or a smartphone in three minutes or less.
Rising Bank is a new online division of Midwest BankCentre. Midwest BankCentre is a community bank with 19 branch locations in the St. Louis metro area of Missouri. It’s a sizeable community bank with $1.9 billion in assets and $1.4 billion in deposits.
Why is a community bank starting an internet bank? The Rising Bank official said that they see it as a good way to increase core deposits. Unlike brokered deposits, core deposits are seen as a more stable source of funding. They allow building of a customer relationship that makes the deposits less sensitive to interest rates. They also give the bank cross-marketing opportunities. The official said they have near-term plans to add new products including a checking account and loans.
Does a community bank have the technology resources for an internet bank? One thing that is helping community banks manage an online bank are financial technology (fintech) companies that provide services to community banks. One of those fintech companies that is partnering with Rising Bank is XpertSavers. The following excerpt from XpertSavers’ home page describes what they do:
XpertSavers is an alternative channel for banks and credit unions to gather deposits. Our team is led by a group of banking experts with a solid record of building internet deposit businesses, while meeting the rigorous regulatory and security demands of the financial industry.
The good news for savers is that we should see more community banks like Midwest BankCentre launch internet banks. This should lead to more competition which should result in better rates and service. These fintech companies should also help improve the software usability in account opening and managing. However, I expect it will take time before the usability equals that from the large, well-established internet banks like Ally and Synchrony.
As an online division of Midwest BankCentre, Rising Bank operates under Midwest BankCentre’s FDIC Certificate and shares its financial history. Rising Bank/Midest BankCentre has an overall health grade of "A" at DepositAccounts.com, with a Texas Ratio of 3.92% (excellent) based on September 30, 2018 data. In the past year, the Bank increased its total non-brokered deposits by $30.86 million, an above average annual growth rate of 2.32%. Please refer to our financial overview of Rising Bank/Midwest BankCentre (FDIC Certificate # 1058) for more details.
Note: According to the small print of Rising Bank’s website:
Rising Bank® and Midwest BankCentre® are treated as the same entity for the purpose of calculating FDIC insurance limits and deposits.
Midwest BankCentre was founded in St. Louis in 1906. The Bank has grown in recent years due to acquisitions. In April 2015, they acquired Southern Commercial Bank, and in July 2016, they acquired Bremen Bank and Trust Company.
How the High Yield Savings Compares
When compared to the Savings Accounts tracked by DepositAccounts.com that are available nationwide, Rising Bank’s High Yield Savings APY currently ranks second, tied with CIT Bank’s Savings Builder.
How the 12-Month Term CD Compares
When compared to the 210 similar length-of-term CDs tracked by DepositAccounts.com, which require a similar minimum deposit and are available nationally, Rising Bank’s 12-month Term CD ranks third, tied with several others.
How the 36-Month Rising CD Compares
Since there aren’t many CDs that allow rate bumps and add-on deposits, it’s difficult to compare the Rising CDs. I’ll just compare the 36-month Rising CD to two other CDs. The first is Mountain America Credit Union’s 3 Year Term Deposit Plus. This is an add-on CD, but it has a maximum balance of $100k. There is no rate bump option. The second is Ally Bank’s 4-year Raise Your Rate CD. This only offers the rate bump-up option. There is no add-on deposit option. As can be seen below, Rising Bank’s 36-month Rising CD ranks second on rate.
The above rates are accurate as of 2/7/2019.