Customers of one of the biggest banks will soon see another name atop their favorite branch.
Wells Fargo announced in early June that it’s selling 52 branches in the Midwest to Flagstar Bank, a midsize federal savings bank based in Troy, Michigan. Soon, there will be no Wells Fargo branches in Indiana, Michigan or Ohio. Wisconsin will lose four branches, leaving 48 locations for customers in that state.
The deal is expected to close at the end of the year, and there is no action that customers need to take at the moment, a bank spokesperson says. Even if you barely visit a physical branch, you should understand what’s going to happen to your Wells Fargo checking or savings account.
What’s being sold
Wells Fargo is selling roughly $2.3 billion in deposits. In the states impacted by the acquisition, Flagstar will take over:
- Consumer and small business deposit accounts (including debit cards).
- Personal loans.
- Small business loans.
- Direct auto loans.
- Business direct (both commercial and industrial).
Wells Fargo is holding on to its other accounts in the Midwest, including:
- Consumer and small business credit cards.
- Home loans.
- Investment and wealth management.
- Indirect auto loans (through dealerships).
- Wholesale banking.
- Business banking.
All 490 team members affected by the sale will receive offers to work at Flagstar, which will reach out to customers with the accounts they’re acquiring.
The branches Flagstar is acquiring are in an area the bank has operated in for more than 30 years, a bank spokesperson says. The bank already has nearly 100 branches in Michigan and a handful in California. It also operates nationwide as the fifth largest bank mortgage lender.
Consumers should feel better knowing that Flagstar has dealt with acquisitions before. In March, it acquired eight community bank branches in California.
“As with our recent acquisition of Desert Community Bank, we will make every effort to align Flagstar and Wells Fargo products in a way that creates the least disruption to customers,” a Flagstar bank spokesperson says. “Customers will be informed well in advance of any changes to products or processes that would affect them.”
Though both institutions expect the transition to run smoothly, consumers should be prepared to deal with potential complications.
“In a good acquisition, the acquirer automates as much of that as possible to render the transition as seamless as possible for the consumer,” says Steve Reider, founder of Bancography, a financial services consulting firm. “But our history in the industry is littered with poorly executed conversions where banks have squandered much of the goodwill and even many of the accounts that they purchased by really creating a lot of barriers to consumers during the transition process.”
One in 3 retail bank customers who recently went through a merger or acquisition report that the change led to some sort of problem, according to J.D. Power’s latest Retail Banking Satisfaction Study. Among those customers, 3 in 4 had fee-related issues. Some folks had technical problems and 1 in 5 had trouble with the features of a product or service.
What customers can expect
Customers at a bank that’s getting acquired may have to adapt to a lot of changes. You might need new passwords and ATM PIN codes, and you might have to get used to a new fee structure. If you still use checks, your routing and account numbers will change.
Borrowers impacted by the acquisition may have to mail payments to a different address or visit a different processing site. In most cases, automatic bill pay should automatically transfer over, says Paul Schaus, president and founder of CCG Catalyst Consulting Group.
Smaller, community-based banks tend to be known for their stellar customer service. Joining the Flagstar family will also give Wells Fargo customers in the Midwest a chance to support a local institution.
Savvy customers accustomed to Wells Fargo’s innovative products may need to consider whether Flagstar will be the right bank for them.
Both banks strive to meet the needs of their clients in the channel of their choice.
“We’re big enough to have the products people want and small enough that people like to do business with us,” says Flagstar Bank CEO Alessandro DiNello.
But Wells Fargo spent more than $7 billion on technology in 2016. Customers coming over from Wells Fargo may question whether they will get the same digital offerings at a smaller bank.
“Flagstar has to have compatible products compared to Wells Fargo or you’re going to have disappointed clients who will move to another bank that has a similar experience,” Schaus says.
Wells Fargo customers in the Midwest should keep an open mind, Reider says. Ask plenty of questions to understand how the acquisition will affect you. And weigh different factors — including savings and CD rates — to decide whether banking with Flagstar makes sense.
Wells Fargo’s plans
Wells Fargo’s plan is to close branches until it ends up with about 5,000 locations by the end of 2020. The bank says it has a lot to take into account when deciding which branches to cut.
“A variety of factors go into our branch optimization strategy, including economic and demographic factors, the competitive landscape, and the overall performance and growth potential of our branches in a particular market,” says Wells Fargo spokesperson Steve Carlson. “Density also is a critical factor, and we simply don’t have a major retail banking presence in Indiana, Michigan, Ohio and parts of Wisconsin.”
Other big banks, including Bank of America, have also sold branches to smaller banks.
The latest news comes as the bank tries to reduce annual expenses, bounce back from the scandal involving unauthorized accounts and address other incidents that have tarnished its reputation.
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
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2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
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