Why would a bank keep higher than average rates? Most banks honor the higher rates because they want to build goodwill. It does them no good to buy the assets of a bank and then see them run out the door the next day. They’re trying to maintain those business relationships so the branches they do buy will be profitable and grow.

Do they always keep the higher rates? No, when Silver Falls Bank failed in late February, certificate of deposit creditors had their rates slashed:

As a former banker, Norm Andreen knew his certificates of deposit were safe when regulators shut down Silver Falls Bank.

But he was disappointed to learn this week that Citizens Bank of Corvallis, which took over his deposits, was slashing interest rates from as much as 4 percent to 1 percent or less.

Fortunately depositors aren’t bound to the new rates. Citizens, the buyer, was required to notify depositors of any rate change and let them cancel their CDs without penalty (which they did). Remember, the deposit itself was safe because it was covered by FDIC insurance, but the rate wasn’t.