Last year, I opened a money market account with Aurora Bank, a division of Lehman Brothers. If it seemed like an odd thing to do, it probably was. Lehman Brothers had filed for bankruptcy in 2008, yet in 2011, they were promoting their online retail bank and looking for new customers. Not wanting to associate the marketing push with their brand, the bank had the name Aurora Bank rather than Lehman Brothers Bank, as it had been known from 1999 until after the bankruptcy.
I knew at the time that Lehman Brothers had been directed to sell Aurora Bank by May 2012, and that target is approaching. If regulators approve the acquisition, New York Community Bank will be assuming all deposits (savings, money market, and checking accounts) from Aurora Bank. New York Community Bank is no stranger to acquiring “online” banks. AmTrust was a recent acquisition. AmTrust “failed” in 2009, alongside many banks that crumbled under the credit crunch and recession, and New York Community Bank became the receivor. In this case, the situation does not reflect any problem with Aurora, but a condition of Lehman Brothers’ bankrupcty.
As I pointed out in my review of Aurora Bank, with the pending sale, Aurora Bank offered higher than average rates and initiated a marketing push to build a larger customer base in advance of the banking division being sold to the highest or best bidder. The risk of acquisition is mostly meaningless to customers, particularly those who are generally blind to brands and are not concerned with being loyal to a bank with whom they’ve had a relationship for many years. The FDIC ensures that changes like these don’t affect customers, even when banks fail without being acquired by another bank.
New York Community Bank consists of several divisions, each serving a different community. Most of these communities are in the New York area, but with acquisitions, the service area has spread. With the divisions operating somewhat separately, maintaining their own branding, and keeping the word “community” in many of the division names, the bank is certainly looking to emphasize the small-town vibe of a community-focused organization despite the growing size of the company.
- Queens County Community Bank is a division of NYCB that operates in Queens County, New York.
- Roosevelt Savings Bank operates in Brooklyn, New York.
- Roslyn Savings Bank operates on Long Island.
- CFS Bank operates in Westchester County, Manhattan, and the Bronx.
- Richmond County Savings Bank operates on Staten Island.
- NYCB also operates several banks in New Jersey including the Garden State Community Bank.
New York Community Bank’s online features are not as strong as one might expect from a bank that competes for business among the best online savings accounts, but Aurora Bank customers should receive services similar to those they’ve had over the past few years, including high-yield money market accounts accessible online.
Even the bigger online banks are not immune to changes; Capital One has acquired the United States deposits of online juggernaut ING Direct. The retail banking industry has been in a state of upheaval since the recession, and while the rate of failing banks has slowed down, banks with power are seizing opportunities for acquisitions. With consolidation, there is always fear that the customer will lose, and there is some validity to that fear. Competition is good in the banking industry, motivating companies to offer products that meet customers’ needs while keeping fees low.
Here is the text of the letter I received as a customer of Aurora Bank:
Dear Bank Customer:
Please be advised that at 12 noon on July 6, 2012, the following Aurora Bank FSB (aurora) branches will close permanently…
Separately, we wish to inform you that New York Community Bank, in a transaction that is subject to regulatory approval, will be acquiring any deposit accounts you currently maintain at Aurora. In the event the required regulatory approvals have not been received prior to the branch closing date, your accounts will be transferred to, and will be serviced by, Aurora’s home office, currently located at 1000 West Street, Suite 200, Wilmington, Delaware 19801, until such time as the necessary approvals are received. New York Community Bank will contact you with additional information regarding the transfer of your account(s). No action by you will be necessary.
We thank you for being an Aurora customer. If you have any questions, please contact our customer service department at 888-522-9295.
The letter comes to me as a reminder that I have too many open bank accounts floating around, mostly as a result of writing reviews for Consumerism Commentary readers.