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Lone Star Bank: 2024 Banking Review

This community bank is local to Houston residents, but accessible anywhere in the US.

Lone Star Bank
Overview

Lone Star Bank is a privately owned, FDIC-insured community bank with four branches in Houston. However, the bank isn’t limited to residents of Space City. Its online banking platform allows you to open an account anywhere in the US, and its mobile app is available for Android and iPhone devices and includes mobile check deposit.

While most of its deposit accounts earn relatively low annual percentage yields compared with online checking and high-yield savings accounts at other banks, Lone Star offers competitive rates for three of its CD terms -- six-month, 11-month and 13-month -- each at 3.50% APY. Moreover, this small community bank offers one significant advantage for high-net-worth individuals: access to multimillion-dollar FDIC protection (although brokered CDs are an alternative to securing extended FDIC coverage on large balances).

If you’re a Houston resident interested in investing in shorter-term CDs and need extended bank insurance coverage, it might be worth considering this bank. Otherwise, you’ll probably benefit more from national banks with competitive deposit accounts.

What we like

  • Minimal fees: Lone Star’s savings account and some of its checking accounts either don’t charge monthly fees or have reasonable balance minimums to avoid fees.
  • No ATM fees: All ATM fees are reimbursed.
  • Mobile app: Lone Star’s app supports check deposits and is available for Android and iPhone. 

What we don’t like

  • Limited physical branches: There are only four branches in the Houston area.
  • No ATM network: Lone Star Bank doesn’t participate in a third-party ATM network or reimburse ATM fees charged by vendors.

Who is Lone Star Bank suited for? 

Lone Star Bank is ideal for Houston residents with deposit accounts of more than $250,000 -- the limit for standard FDIC coverage -- who can benefit from extra insurance coverage through such services as Insured Cash Sweep service (for money market accounts) or Certificate of Deposit Account Registry Service (for CD accounts). These extended FDIC coverage programs split your higher balances among a network of FDIC-insured banks into accounts with a maximum balance of $250,000. Lone Star Bank becomes your single point of access to the networked accounts and the source for all record keeping.

Lone Star Bank products

Overview

Lone Star Bank has three checking accounts, each with reasonable initial deposits ranging from $100 to $250. The LSB Personal Interest and Senior Interest Checking accounts earn an APY above the national average, however, you can find higher-yielding checking accounts at other banks. The LSB Personal Interest Checking account charges a $10 monthly fee, which is waived by maintaining a minimum balance of $500 in the account or an average collected balance of $1,000 monthly. All three accounts reimburse all ATM fees.

 

Checking Account Features

 

Checking account APY Minimum initial deposit Monthly fee Overdraft fee
LSB Free Checking N/A $100 $0 Varies
LSB Personal Interest Checking 0.20% $250 $10 Varies
LSB Senior Interest Checking 0.25% $250 $0 Varies

 

Rates as of March 8, 2023.

Pros

  • Free checking options: There are no monthly service fees or minimum balance requirements for two checking accounts.

  • Convenient mobile app: Lone Star’s app permits mobile check deposits.

  • Low initial deposit: The highest minimum deposit to open a checking account is $250.

  • Overdraft protection: The service is available and determined on a case-by-case basis.

Cons

  • Overdraft fees: A branch manager will determine your overdraft fee based on your account history. The fees aren’t disclosed on Lone Star’s website.

  • Interest checking: Although two accounts earn above-average APYs, competitive checking accounts are available elsewhere.

Overview

The LSB Personal Savings account earns an APY that’s above the national average but is relatively low compared to many high-yield savings accounts at other banks. If you’re not in Houston, you’ll use Lone Star’s online banking features. Moreover, you can find better rates at banks that don’t charge monthly fees. Lone Star Bank charges a $6 quarterly fee if your account balance drops below $200 or isn’t linked to a CD with a balance of at least $1,000.

 

  • APY: 0.40%
  • Minimum balance to open: $200
  • Quarterly maintenance fee: $6

Pros

  • Low initial deposit: The minimum deposit to open a savings account is $200.

Cons

  • Low rates: High-yield savings accounts, with more than six times higher rates, are available elsewhere.

  • Maintenance fees: This account charges $6 per quarter if the average collected balance falls below $200 or isn’t linked to a CD with a minimum balance of $1,000. There’s also a $2 fee per transaction for each withdrawal that exceeds six per quarter.

Overview

The Lone Star Bank offers a standard CD with terms that range from seven days to five years. The minimum deposit required to open a CD is $1,000. While most of the terms earn relatively low APYs, the six-month, 11-month and 13-month terms earn competitive yields, each at 3.50% APY. If you prefer a wider variety of terms with competitive yields, this list of higher-yielding CDs highlights banks with great rates.

 

CD Account Features

 

CD term APY
7 to 89 days 0.20%
90 to 179 days 3.00%
6 months 3.50%
9 months 0.27%
11 months 3.50%
12 months 3.50%
13 months 3.50%
15 months 2.40%
18 months 2.50%
24 months 0.41%
30 months 0.46%
36 months 0.51%
48 months 0.61%
60 months 0.71%

 

Rates as of March 8, 2023.

Pros

  • Wide variety of terms: CDs are available in a wide array of terms, from seven days to five years.

  • Online banking access: You can open a CD through Lone Star’s website or mobile app.

  • Competitive rates available: The six-month, 11-month and 13-month CDs earn competitive rates each at 3.50% APY.

  • Reasonable initial deposit: The $1,000 initial deposit requirement makes a CD affordable for people with limited savings.

Cons

  • Limited CD types: Lone Star Bank only offers standard CDs. It doesn’t offer specialty CDs such as no-penalty or step-up CDs.

Overview

The LSB High Yield Money Market account has a tiered interest rate structure ranging from 0.25% for balances under $25,000 to 1.75% for balances over $500,000. This account has a relatively low minimum deposit requirement of $250, making it widely accessible. The monthly fee of $10 can be waived by maintaining an average collected balance of $2,500 or a minimum balance of $1,500.

Moreover, the high-yield account offers check-writing privileges and debit card access. A $10 fee per withdrawal is charged for more than six transactions in a statement cycle.

 

Account APY Minimum balance Monthly fee Overdraft fee Excessive transaction fee
LSB High Yield Money Market 0.25% to 1.75% $250 $10 Varies $10 per item

 

Rates as of March 8, 2023.

Pros

  • Low minimum deposit: The minimum deposit for a money market account is lower than for most banks.

  • Competitive APYs: Although the rates offered are competitive with some banks, you can find higher rates for money market accounts at other banks.

Cons

  • Maintenance fees: This account charges $10 per transaction for each withdrawal that exceeds six per statement cycle. It also charges $10 per month if the balance falls below $1,500 or the average collected balance is less than $2,500.

  • Overdraft fee: A branch manager determines your overdraft fee based on your account history. While overdraft protection is available, it’s determined on a case-by-case basis.

Banking experience

Lone Star Bank is a community bank with four branches in the Houston area. The mobile app and online banking tools with features like mobile check deposit, online bill pay and peer-to-peer electronic money transfers make it simple to access your accounts 24/7, especially if you live outside the Houston area. However, the bank’s vague policy for establishing overdraft fees, which are set at the branch level, can be an issue for some people. 

Overdraft fees

The overdraft fee is determined separately by a branch manager and based on your specific account history. There’s an overdraft protection program, but coverage varies.

Customer service

Lone Star Bank offers in-person or telephone customer support Monday through Friday from 9 a.m. to 5 p.m. CT. Visit their website for a phone number for the local branch. You can also submit questions online.

About Lone Star Bank

Lone Star Bank is an independent and privately owned bank established in 2006 that primarily engages in commercial banking. It offers SBA loans, real estate loans and conventional business banking products. Although commercial banking is the main focus, Lone Star Bank also provides a full suite of personal deposit accounts.

Toni Husbands is a staff writer with CNET Money who enjoys exploring topics that promote financial wellness. She began writing about personal finance to document her experience paying off $107,000 of debt, which is detailed in her book, The Great Debt Dump. Previously, she contributed as a freelance writer for websites, including CreditCards.com, Centsai and Wisebread. She was also a regular contributor to Business AM TV, and her work has been featured on Yahoo News. Being a part-time real estate investor and amateur gardener also brings her joy.