Signature Bank Chicago wants you to know it’s not the crypto-friendly bank that failed over the weekend

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Spare a thought for the folks at Signature Bank of Chicago.

The privately held, “careful” and “conservative” Midwestern bank has apparently had to spend the week fending off worries from customers, who had it confused with “Signature Bank of New York,” the cryptocurrency-themed bank that was seized by regulators over the weekend

“We want to assure you that Signature Bank Chicago is a completely separate entity with no relation at all to Signature Bank New York,” the Chicago bankers say on their website, adding that they don’t own any cryptocurrency at all. (Perish the thought.)

And they follow up with a heroic attempt to jam as many reassuring words as possible into the remainder of their statement: “solid, privately owned Midwest companies…heartland…Midwest perspective…carefully and conservatively…a who’s who of the Midwest’s middle market, family-owned businesses…careful and deliberate…”

You get the picture.

Some of those conservative, Midwestern, heartland folks must have had conniptions over the weekend, when they heard that “Signature Bank” had been taken over by regulators after speculating in digital monopoly money.

Let alone when they read that the board of directors included… er… Barney Frank, the ultraliberal former Congressman from Massachusetts.

The small bank recently reported a 22.5% jump in net income for 2022 to $26 million. The commercial bank says about half its deposits are noninterest bearing, while about half its loans are tied to floating interest rates — meaning that unlike the banks currently in crisis, it’s been benefiting, not suffering, from rising interest rates.

As it happens, the Chicago bank may also be trying to fend off any possible concerns in another way: A clever grab for deposits.

It’s offering an FDIC-insured Certificate of Deposit that is paying 5.45% for five years. In theory, at least.

That compares with an interest rate of just 3.5% on five-year Treasury bonds—even though, up to $250,000, both come with the same federal guarantee. The CD is being offered through brokerage accounts.

But there’s a big catch. There is no “call protection.” This means the bank can pay you out and close the CD early—way early. The account is callable as early as September.

“It’s our call option,” bank executive vice president and co-founder Bryan Duncan tells us. “The investor has to hold it until maturity. But we have the option to call it after six months.”

In other words you’re only guaranteed to get 2.73% interest on your money, meaning half of a full year’s 5.45%. Then, unless interest rates skyrocket, you’ll probably just get your money back.

“If we could reissue the CD at a lower rate we would certainly do that,” Duncan confirms.

Midwestern values indeed.

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