If all went as planned, deposits at SmartyPig should now be held at BBVA Compass. SmartyPig reported in June that BBVA Compass would replace West Bank as the holder of customer deposits effective August 1, 2010. The change was needed due to SmartyPig outgrowing West Bank. With more than two years of offering top internet savings account rates, I can understand how they outgrew West Bank. BBVA Compass is a much larger bank which should provide SmartyPig with plenty of room to grow.
West Bank mentioned SmartyPig in its second quarter results. It's interesting how the new rate tier affected West Bank's deposits:
West Bank's total deposits declined by $80.6 million during the second quarter. The decrease was largely due to the decision to tier interest rates on SmartyPig deposits. This action had the desired effect of discouraging rate shoppers from using SmartyPig. As previously announced, SmartyPig has entered into an agreement to use BBVA Compass Bank as its banking partner effective August 1, 2010, replacing West Bank. The Company will retain its minority ownership interest in SmartyPig.
BBVA Compass and FDIC Insurance Statement
This transition to BBVA Compass is now reflected at SmartyPig's website. In SmartyPig's security page, it states:
Your SmartyPig account is a separate account held in your name at BBVA Compass, an FDIC insured bank.
This now makes it clear that your money at SmartyPig is FDIC insured as it would be if you held an account directly at BBVA Compass. In the past, SmartyPig's FDIC information was a little vague. I'm glad to see they clarified this statement. You can review the FDIC status of BBVA Compass at this FDIC page.
Financial Health of BBVA Compass
Some readers have expressed concerns about the health of BBVA Compass. Its ratings for safety and soundness are a little weak: 3 stars (adequate) at BauerFinancial and 2 stars (below peer group) at Bankrate.com. Our ratings for BBVA Compass are better. We have an overall health score of 4 out of 5 (see our financial overview of BBVA Compass). All of these ratings are based on 3/31/10 financial data.
It appears the bank's health is improving. The Phoenix Business Journal reported on its second quarter results:
Its net income was up 2 percent to $113 million for the six months ended June 30, up from $100 million during the same period in 2009. Its total revenue increased 19 percent to $1.6 billion during the first half of this year, compared with $1.3 billion during the first half of 2009.
BBVA Compass is a sizable bank with $65.1 billion in assets and $46.5 billion in deposits.
SmartyPig Savings Account Review
SmartyPig currently has the best non-promo rate for a nationwide savings account for balances under $50K. As of 8/01/2010, the rate is 2.15% APY for balances up to $50K. Balances above $50K earn 0.50% APY (on the entire balance). I would guess that this rate will likely hold for a while since it wouldn't look good to have a rate cut around the time of the transition to BBVA Compass. Since I first reported on SmartyPig in April 2008, they have always been one of the rate leaders.
I'll soon have another post in which I'll focus on the savings account features at SmartyPig. I've done a few reviews in the last two years, but it's time for a new one. It's not a typical savings account. It has some features that are useful if you don't have much savings and you want to save for specific goals. If you have a large savings balance and you just want a place to earn a decent return, some of SmartyPig's features may be a little annoying. I'll discuss these details in the future post.
Update 8/03/2010: Here's the new review of the SmartyPig savings account.