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IPf’. 4 lining & entertainment

Herald & Lantern 26 January '83

Local Banks

(From Page 1) "WE CHOSE NOT to pull a bait and switch and remained competitive.'' said Alan Bard, manager of Collective's Eastern Region Collective's interest rate, however, "could change any day. " Bard said Collective simply renamed its SWEEP account "Market Rate Checking" and cur rently pays 10 05 percent interest on an account that also, unlike its competitors, per mils unlimited checking Federal regulations, although permit-

ting unlimited deposits and withdrawals, allow only three third-party checks and three telephone withdrawals per month ALTHOUGH eight of 14 financial institutions surveyed by the Herald and Lantern are pegging their money market interest rates to the 9Hiay U S. Treasury Bill rate, their method varies greatly One matches the T bill rate, one says it will pay "at least" the T-bill rate, one says it will pay "equal to or more than” the T-bill rate, and five pay from one-quarter to one-half preent more than the T-bill rate

Collective s interest rates, however, are determined "by senior management who felt the T-bill was too low," a bank spokesman srttd Of the six financial institutions not using the T-bill rate, one links its money market interest to its own six-month Certificates of Deposit (CD) rate, one to an index of uninsured money markets published weekly, and four are relying solely on management decisions apparently based on competitive factors. WHILE THE introductory rates were in most cases set for two weeks or one month, almost all now change weekly. Those tied to the T-bills, auctioned every MdhHay. will change on Tuesdays. Those nofMinked to the T-bills are changing on various days. Although agreeing that some customers may be confused by the new money market accounts, most financial institution representatives felt that customers understood that the introductory rates were a "bonus” or "incentive" and would be followed by lower rates. Many of the lending institutions did not spell out in their advertisements or literature exactly how the interest rates would be determined, apparently because they themselves did not know at the time In all cases, depositors will officially learn their new interest rates after the fact, in monthly statements .But the rates are posted in the financial institutions and quoted over the telephone. MARINE NATIONAL Bank last week sent letters to more than 1,000 Market Plus account holders to explain that it changed its originally announced plans It first said it would adjust interest rates monthly, but it is now doing it weekly, agreeing to pay at least a rate equal to the seven-day uninsured money market fund average published in the Wall Street Journal Marine had guaranteed its introductory rate of 12 percent until Jan. 12. It extended that until Jan. 15 when its rate dropped to 8 02 percent A Marine spokesman said its Market Plus account took in $25 million in its first month, 30-40 percent of that "new money," the balance transfers from other Marine accounts Some financial institutions said they could not report the amount of money invested in their money market accounts; others said they would not because it was competitive information. WILLIAM CARLOS, director of marketing for Guarantee Bank, for example. called the new accounts, "enormously popular" and said the bank took in "many millions of dollars, a great deal of it new money " Guarantee offered 11.5 percent interest through Jan 3, extended that rate through Jan. 17 and dropped to 7.87 percent on Jan 18 Officials said the rate will change every Tuesday and be "equal to or more than the T-bill " They said it currently is onequarter of I percent higher “We can pick a number out of the air," said a bank spokesman, "b\it we wouldn't^ pull the rug out from under our depositors " Guarantee also seems *o have cir cumventcd federal regulations on thirdparty checks by requiring its customers to have a checking account in conjunction with their money market account. Guarantee automatically transfers from the money market to the checking account to cover checks. In effect, that offers the customer unlimited checking plus money market interest rates. NOT JUST INDIVIDUALS transferred funds into the new money market accounts The Cape May County Chamber of Commerce, for example, withdrew $13,000 from a private fund and invested in Marine National's Market Plus, citing the security of FDIC insurance. "Xbis is definitely helping the industry," said William Frambes, money market manager for Anchor Savings. "This is bringing u» cash that had gone out to the brokered money markets, money that had been removed from local investment We hope this will enable us to drop mortgage lending rates " Officials pointed out that those shopping for the best insured money market rates also should consider other factors in eluding frequency of compounding interest, whether interest begins on day of deposit, penalties for falling below a $2,500 minimum etc They also cautioned that a still-newer bank account, called Super Now, is further complicating the investment scene Super Now, intended as a checking account, in most cases pays a lower rate of interest than money market accounts, intended primarily for investment NOT ALL financial institutionsjy* offer ing Super Now Spokesmen at Collective and Guarantee said they are not sure if

they will have Super Now. Marine said it will on Feb. 1, but hasn’t decided on interest rates yet. Financial institutions may pay whatever interest they want on both insured money market accounts and Super Now. A summary of the rates at the other financial institutions: First Jersey Natiorial Bank’s introduc tory interest rate of 12.5 percent for what it calls its Liquid Investment Account was the highest in the county. That dropped to 8.27 percent Jan. 14 and will change every Saturday according to a management decision "based on the six-month Money Market rate." A bank spokesman said it "stuck our necks out for the first period" and was "pleasantly surprised” at the amount of new deposits. Its five Cape May County branches opened 197 Liquid Investment Accounts totaling almost $5.3 million. Of that amount, a bank spokesman said, almost 60 percent was "new money.” First Jersey also offers a "Super-Now" account paying 7 08 percent interest It was described as "not very popular " FIRST NATIONAL State Bank of New Jersey started its Money Market Investment Account with a 12 percent interest rate, but has dropped to three-eights of 1 percent more than the 91-day T-bill rate The bank was paying 7.994 last week. Its Super Now is paying 6.724 percent on a $15,000 balance and 6 474 percent on less than that. Citizens United Bank started its CMMCA (Citizens Money Market Capital Account) with a 9.25 percent interest rate that dropped to 8.5 percent on Jan 20 Rates are determined by management Citizens has a Super Now paying 1 'y per cent less than its CMMCA, which currently amounts to 7 percent interest Heritage Bank, originally offered 10 percent interest through Jan. 5 on its Money Market Investment Account. That has been extended through Jan. 25, bank of ficials said, and the new rate will be determined "according to competition " "There are so many different things banks are tying it to," said a spokesman. "It will be bouncing around until there’s something more concrete. " Heritage is paying 9.5 percent interest on its "Super Now" account, which has a $5,000 minimum. UNION TRUST COMPANY of Wildwood offered a 10 percent interest rate on its Money Market Account for two weeks, dropped to 8.4 percent Jan. 4, and was paying 7 65 percent last week Spokesman said it will pay "at least the 91-day T-bill rate, "which was 7.61 last week They said about $5 million was invested in its Money Ac counts through Jan 8, the majority of its transfers from other types of savings accounts. Union Trust does not yet have a Super Now Anchor Savings & Ixian opened its Money Market Account paying 12 percent interest until Jan 3. That dropped to 10 percent and was at 8 119 percent last week It will change every Tuesday and is pegg ed at one-half of 1 percent above the 91-day T-bill. It has a Super Now account on which it pays interest one-half of 1 percent below the T-bill. Anchor opened 617 new accounts totaling $7 million in its seven branches. Eightyone of those accounts were in its North Cape May branch, but a dollar breakdown for that branch was not available. A spokesman did say that about one-quarter of the investments were "new money." CAPE MAY COUNTY Savings & Loan Assn, set a 10.5 percent introductory interest rate, dropped to 8 percent Jan. 11, where it remains The rate can change every Tuesday. It's not pegged to anything," said a spokesman "The officers decide They keep it competitive and in line.” He said the institution has opened 560 new Money Market accounts totaling "a little over $6 million." Cape May Savings & Loan Assn, has a Super Now, but doesn't call it one The in stitution said it automatically converts Now accounts to a higher paying yield when they total more than $5,000. The ac count currently pays 6.5 percent, a figure set by management Crest Savings & Loan opened its Money Market Fund paying 10 percent interest. It switched to the 91-day T-bill rate after two weeks and was paying 7.61 percent las» week ILs Super Now account pays the T bill rate minus 1 percent FIRST SAVINGS & Loan started its Money Market Fund at 10 percent interest, switched to the 91-day T-bill rate plus onehalf of 1 percent on Jan. 4 and was paying 8.119 percent last week (Page 23 P lease)

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