March 17, 2020
To Our Customers:
Once again, we as a nation and as individuals and businesses are facing challenging times due to COVID-19, the coronavirus. Our main message to you is: North State Bank is open and ready to serve you. For your health and well-being, as well as that of our team members, we ask you to consider other means of banking during this time: drive-through teller windows, ATMs, night drops (will be checked several times a day), and online and mobile banking services. We created a special page on our website that details all of the ways you can bank with us remotely.
The Federal Reserve recently took steps, utilizing its monetary policy tools, to lower interest rates to the lowest levels since the Great Recession of 2008. Specifically, the Fed Funds target rate range was lowered to 1.00 - 1.25% on Tuesday, March 3 and then to 0.00 - 0.25% on Sunday, March 15. For individuals and businesses, these interest rate cuts have some positive impacts, such as:
- Lowering the interest rate at which individuals and businesses can borrow funds, including home purchases and refinances.
- Lowering the interest rate on variable or adjustable interest rate loans, such as mortgages, home equity lines, car loans and some credit cards.
The Federal Reserve’s goal in doing this is to make it easier for you to spend, bolstering the economy as a result. Along with these and other positive and desired impacts, these interest rate cuts will inevitably lower interest rates on deposit accounts. Some may question this action, but the Fed cuts immediately lower rates on all variable rate loans, prompting a cut in deposit rates. Furthermore, community banks lend from deposits, not borrowed Fed Funds, which were reduced to 0.25%, which led to a reduction in the prime rate to 3.25%.
For this reason, North State Bank must reduce interest rates on deposit accounts effective Tuesday, March 17. While this is a difficult decision, our hope is it will be a temporary reduction. As such, we hope to adjust loan and deposit interest rates once our lives return to normal.
We deeply appreciate your business and hope we have clearly shared the reasons for reductions in deposit interest rates.
Please call your North State banker, if you have questions or concerns.
Larry D. Barbour
President & CEO