In the months following IBERIABANK’s July 2017 acquisition of VirtualBank, there was little rate activity for the eCDs. That changed in mid-January when the 12- and 24- eCD APYs gained 42 bps and 49 bps, respectively. Following that rate increase, the 12-month eCD was the top 1-year CD, albeit by a margin of only one basis point. The 12-month eCD’s 2.11% APY lasted about two weeks: last weekend, the 12-month eCD’s rate fell to 2.05% APY. In contrast, the 24-month eCD’s APY was increased to 2.36% APY at the same time.
Watching the race to the top of the 1-year CD category is like watching the Tour de France: no one maintains the lead for long. Strong contenders will break from the peloton to challenge the leader, and inevitably there will be a new leader. The difference being there is no finish line in the CD rate race, just endless jockeying for the top position.
VirtualBank also raised the rate on its 60-month eCD to 2.58% APY. While the 60-month eCD gained 24 bps in the latest rate increase, the new 2.58% APY only places in the middle of the nationally available 5-year CDs in DA’s current CD Rates Summary.
As stated in the Deposit Account Agreement document, the Early Withdrawal Penalty reads as follows:
Terms greater than 30 days but less than or equal to one year:
100% of interest in amount withdrawn.
Terms greater than one year but less than or equal to two years:
1% of an amount withdrawn.
Terms greater than two years:
2% of an amount withdrawn.
Accessing Maturing Funds
As I mentioned in my January blog post, DA reader, Db1234, raised concerns about receiving funds from a maturing CD.
Setting up 3 CDs was easy, and customer service people were helpful. Upon CD maturity, though, things turned for the worst: I learned that getting money back required a paper check. They will accept the initial deposit from a linked external account. But when the account is cancelled, they insist on sending a paper check. This gives them the benefit of interest that would have been earned during the time the check is processed, mailed, and eventually cashed. Interest you will lose during the float period makes their rate uncompetitive with other online banks.
Cancelling a CD at the end of its term also requires sending them a “bankmail”—an internal VirtualBank communication—about your wishes. Again unlike other banks, they make no indication on the online account records about the desired treatment of the funds upon maturity. Upon maturity, my online account showed that the CD had been rolled over, requiring a lengthy call to correct the situation.
DA reader, itserich, posted a comment about withdrawing funds that provided more detail.
I contacted Virtual Bank and a representative told me normally a check by mail is the only way to receive proceeds of a matured CD. Which seems absurd.
I sent an email, but based on the phone call, it sounds like a request can be made through online banking to "cash out" a CD instead of allowing it to rollover into a new CD. And, I think a money market account, which requires a $100 balance to avoid a monthly fee, can also receive the proceeds of a matured CD. And then, hopefully, an ACH transfer could be initiated at an external bank.
Just a guess.
Wishful thinking in place, I read and re-read every disclosure I could find, but found no answers. When I spoke to CSR, I received the “check in the mail” answer. I then suggested itserich’s idea of transferring maturity funds to an existing VirtualBank eMoney Market (0.80% APY on all balances); CSR agreed this was another way to access funds.
The opening deposit for the eMoney Market account is $100, in addition to the minimum $100 balance to avoid the $5 monthly fee. There is no early termination fee listed, but “If you close your account before interest is credited you will not receive the accrued interest.”
VirtualBank became an internet division of IBERIABANK in July 2017. Accounts at VirtualBank can be opened by U.S. citizens with valid Social Security numbers.
Opening any VirtualBank eCD can be done online. As stated on the online application,
Complete our online certificate of deposit application and provide certain information about yourself and any joint owner. To fund the eCD quickly and electronically, we will need your personal checking account number, bank name and routing number. You can choose to connect the eCD to any checking account, including one at VirtualBank.
Since being acquired by IBERIABANK, VirtualBank has added a PDF version of the eCD Account Application, which can be returned by snail mail or by fax.
As an internet division of IBERIABANK, Virtual Bank operates under IBERIABANK’s FDIC Certificate and shares its financial history.
VirtualBank/IBERIABANK has an overall health grade of "A+" at DepositAccounts.com, with a Texas Ratio of 4.41% (excellent), based on September 30, 2017 data. In the past year, the Bank has increased its total non-brokered deposits by $5.12 billion, an excellent annual growth rate of 33.85%. Please refer to our financial overview of VirtualBank/ IBERIABANK (FDIC Certificate # 28100) for more details.
VirtualBank was originally the internet branch of Lydian Private Bank. When Lydian failed in 2011, Sabadell United Bank assumed all deposits, as well as the VirtualBank division. On July 31, 2017, IBERIABANK Corporation finalized its acquisition of Sabadell United Bank, including VirtualBank.
IBERIABANK is currently Louisiana’s largest bank, with assets in excess of $27.8 billion and more than 453,000 customer accounts. The acquisition of Sabadell United Bank expanded IBERIABANK’s presence in South Florida and increased its asset base by more than $5 billion.
How the eCDs Compare
When compared to the 208 similar length-of-term CDs tracked by DepositAccounts.com that are available nationally and require a minimum deposit of $10k or less, VirtualBank's 12-month eCD APY currently ranks second.
When compared to the 205 similar length-of-term CDs tracked by DepositAccounts.com that are available nationally and require a minimum deposit of $10k or less, VirtualBank's 24-month eCD APY currently ranks first. (FYI – there are four other banks offering an APY only 1 basis point lower.)
The above rates are accurate as of 2/7/2018.
To look for the best CD rates, both nationwide and state specific, please refer to our CD Rates Table page.