State Bank of Texas 12-Month CD Update
What a difference a week can make in the current rate environment. Seven days ago, I wrote about the State Bank of Texas (SBT) nationally available 1-year CD Special, which was a near-rate leader offering 4.65% APY. Over the weekend, SBT hiked the rate again, and the 12-month CD Special is now the new 1-year CD rate leader with a 5.00% APY. The minimum opening deposit is $25k, with no stated balance cap.
The 12-month CD Special was added back to the product line in December 2021 earning 0.85% APY, which was considered to be competitive rate at the time. Since its debut, there have been 15 rates increases, adding a rather impressive 415 bps.
Funding and Other Particulars
The information is from CSR.
- Funding – ACH transfer, wire, or check.
- Maturing Funds – ACH ($10 fee), wire transfer ($30 fee), cashier’s check to the address on file, or transferred to another SBT account.
- Interest – compounded/credited monthly and distributed by ACH to a checking account at any bank, or deposited into the CD annually.
- Grace Period – 10 calendar days before automatic renewal.
- Beneficiaries – unlimited, equal shares, Social Security numbers required.
- Early Withdrawal Penalty – 60 days interest; early closure only.
Headquartered in Dallas, State Bank of Texas has been offering a variety of CDs on a nationwide basis for about five years. The only nationally available CD currently offered is the 12-month CD Special.
The first page of the online application reads,
Please note that you must be 18 years of age and classified as a US Person to apply online.
According to the IRS definition of U.S. Persons, the following are eligible to open a 12-month CD:
- A citizen or resident of the United States
- A domestic partnership
- A domestic corporation
- Any estate other than a foreign estate
- Any trust if: a court within the United States is able to exercise primary supervision over the administration of the trust, and one or more United States persons have the authority to control all substantial decisions of the trust
- Any other person that is not a foreign person.
In addition to opening a CD online, a CD can be opened at any of five Texas branches located in Dallas, Garland, Houston, Irving, and Richardson, or the single full-service Illinois branch located on Chicago’s North Side.
While SBT has a brick-and-mortar presence at Chicago’s Midway and O’Hare airports, the vast majority of those “branches” are kiosks that only offer currency exchange services. The one exception is the O’Hare location in Terminal 5, on the Lower Level outside of security next to arrivals. No airline ticket is required for entry to the Terminal 5 location.
State Bank of Texas has an overall health grade of "A+" at DepositAccounts.com, with a Texas Ratio of 4.77% (excellent) based on June 30, 2022 data. In the past year, SBT has increased its total non-brokered deposits by $351.77 million, an excellent annual growth rate of 40.33%. Please refer to our financial overview of State Bank of Texas (FDIC Certificate # 27074) for more details.
Founded in 1987, State Bank of Texas continues to be a family-owned and operated bank. After 20 years in the hotel industry, SBT’s founder, Chan Patel, set out to create a bank for the immigrant community, particularly those in the hospitality industry. At the time, $2 million of capital was required to start a bank; Patel had $1 million of his own to invest but needed to find investors for the remaining $1 million. Using the novel approach of offering a lifetime career as a professional banker and a Director’s position in exchange for a $100k investment, Patel raised the monies within two weeks.
In the past ten years, SBT acquired Millennium State Bank of Texas, National Republic Bank of Chicago, and Seaway Bank and Trust Company, becoming the largest Indian-American owned bank in the country. SBT is currently the 62nd largest bank headquartered in Texas with assets in excess of $1.6 billion.
How the 12-Month CD Special Compares
When compared to similar length-of-term CDs tracked by DepositAccounts.com which are available nationwide and have minimum deposit requirements of $25k or less, no bank or credit union has a higher rate than currently offered on the SBT 12-Month CD Special. The following table compares the 12-Month CD Special to the two highest-rate CDs from other banks and the two highest-rate CDs from credit unions.
The above information and rates are accurate as of 12/5/2022.
To look for the best CD rates, both nationwide and state specific, please refer to our CD Rates Table page.
if it only pays simple interest at the end of the year? does that create a tax problem?
Otherwise, only "invest" 95% and save the 5% to spend.
If you read the website under Personal Certificates of Deposit it states:
"Interest is paid monthly via ACH OR added back annually". :
That means you CAN receive the interest every month into your checking account. It won't compound monthly, no, ...but that means: If its an APY of 5.00% ..then the APR is 5.00% also. Which works out to be higher than the APR of an account that was compounding monthly.
for reading the paperwork on behalf of people that refuse.
try to think it through.
if 5% is the rate you actually want. and you need that 5% interest, to get through the year.
deposit 5% less, and live off the 5% that was not invested.
or read the disclosure statement , as richreg did.
that's when you've chosen the option of REINVESTMENT.
There is NO compounding if it reinvests annually...and there is no compounding if you take the monthly interest via ACH to your checking account. It becomes simple interest by default.
But that RATE is 5.00%.
or confusing yield and coupon with bonds.
impossible to comprehend what people, think they are thinking.
..but the rate is 5.00%. And you can get to accumulate that interest
on your own, once a month, in your checking account.