Better Alternatives Are Available
Written: Nov 02 '05 (Updated Feb 13 '07)
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Product Rating:
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Pros: VERY convenient branch location near our office
Cons: Reneged without notice on an employee check cashing agreement
The Bottom Line: They reneged on a check cashing agreement. Better options are available for both commercial banking and personal banking in the Chicago area.
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| Saxguy's Full Review: First Midwest Bank |
A couple of years ago, First Midwest Bank bought the building at Higgins and Cumberland Road in Chicago from the Northern Trust Bank (TNT). The bank is less than a half mile from our office and, at least partially because of location, Northern Trust had been functioning as one of my organization’s two lead banks.
TNT said that, of course, they would like the banking relationship to continue. First Midwest made it clear that they would like to cultivate a banking relationship with us. We continued with Northern to a lesser extent, because they were willing to provide a courier service for our check deposits without charge. However, First Midwest maintained their commercial services, including safe deposit box and corporate window so we opened an account.
The first main reason was that currency deposits are necessary. I work for a not-for-profit agency, and we occasionally need to deposit currency that is received as part of collections that take place at our evens. It makes no sense for us to use couriers for our small level of currency deposits because couriers for currency are much more expensive and require much scheduling precision than typical couriers. So the location continued to benefit us by being able to easily handle currency deposits.
The second reason why the location benefited us was by providing a check cashing service for employee payroll checks and advance/reimbursement checks for employees and guests. Our disbursements are processed through Harris Bank, as was the payroll until we switched to a dedicated ADP account with Bank One (now chase). This had never been an issue with TNT; First Midwest did make it an issue. They first suggested that we move our disbursements to them and when we said that we were not interested in that, we negotiated an agreement where basically we assumed all liability on these transactions and agreed to keep a compensating balance comfortably above the amount of the checks being cashed. This took a couple of weeks, but it was ultimately completed. It’s not like there was a huge number of check cashers, but there were probably 20-25 each pay date. Illinois is a state where you are not able to legally require employees to go on direct deposit. So, we dealt with that.
The third reason to open an account was to facilitate occasional money orders or cashiers checks immediately necessary.
Making them our main commercial bank was not an option because they did not have the lockbox processing capabilities or the foreign wire transfer capabilities that we needed and were already getting from TNT and Harris.
They provided the currency depositing service, prepares necessary cashiers checks and cashed our employees and guests’ checks drawn on Harris Bank until……
Friday, January 14 2005, I got a frantic call from one of our employees who was at First Midwest saying that “they won’t cash my pay check”. I tried to reach my commercial banking contact, who was not available. I then reached the retail branch manager, who said that First Midwest would no longer cash checks not drawn on their bank. I reminded her that we had a duly executed legal agreement and we had around $100,000 in an account in their bank. She said that there was nothing she could do – it was a procedure that First Midwest’s retail operation had implemented January 1. I asked her why I had not been informed of this until now and did not receive an answer. Obviously, our employees were not going to get checks cashed at First Midwest that day.
This situation had the potential to get ugly. After all, payroll hits people where they live. If there is ANYTHING unusual about a pay check it makes people anxious. So, I did what any self-respecting Controller would do when faced with a crisis. I scrambled. Realizing that the pay checks were drawn on Bank One, I called a couple of nearby branches and asked them about their check cashing procedures for people who did not have individual bank accounts but needed a corporate payroll check cashed. I took down the procedures, which were the same between the two branches (thank God) and published them along with a link to Bank One’s local branches in an email to all employees. That seemed to handle the problem I had that day.
I then left a message for our commercial banking contact, requesting a call back, which happened the following week. He said that the decision was made by retail banking management, who cited the Patriot Act as a justification. He asked for reconsideration of the decision and it was rejected. He had received no notice of the change because he was on the commercial banking side and not in a management relationship with the tellers.
He also said that the employees could get a First Midwest individual bank account so they could cash their checks. This was not really acceptable, since many of the check cashers want NO bank account.
For the record, the Patriot Act is a law enacted to restrict banking transactions for terrorists and others with interests contrary to the US. The Patriot act does require financial institutions to document how well they know their customers and document transactions. However, there is NOTHING in the Patriot Act that precludes check cashing for checks drawn on other banks. I have confirmed this with officers of 4 other banks. So, maybe First Midwest was trying to limit recordkeeping, but the excuse they cited was bogus.
I didn’t have a lot of alternatives except to suggest to my boss, the Chief Financial Officer and my colleague, the Assistant Treasurer, that there was no need to keep a large compensating balance there any more. We now maintain the balance at around $10,000.
Except for this transaction, First Midwest has provided acceptable customer service. Their tellers, branch manager and commercial contacts are reasonably accessible and provide competent customer service within the limits of their influence.
However, I cannot recommend them as a commercial bank for anything but currency deposits. They do not have the breadth of services that larger banks, such as Harris, TNT and Chase (formerly Bank One) provide. Plus, retail management controls branch operations, so commercial banking interests get the short straw when there is a conflict with the retail banking operation.
On a more personal note, I have had an auto loan with First Midwest for about 3 ½ years now. They have serviced the loan competently. Their customer service people have been available and helpful when I have needed to call them.
That having been said, I cannot recommend them as a personal bank either. In Chicago, this branch is the only one in the city, and really on the outskirts of it. Larger banks, such as Chase, control the market because they have so many branches and so many ATMs. I have had great experience with Chase (Bank One) and so I would look at them or Bank of America (lots of branches and satellites (grocery stores)) instead of First Midwest.
Thanks for reading. God bless!
You might be interested in some of my other reviews:
Chase Perfectcard Rebate Credit Card
ING Direct Bank
Citibank Mastercard - 5% Rebate for Groceries!
Recommended:
No
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