On February 8, 2024, a New York community bank stood in Brooklyn, New York City.
Spencer Pratt | Getty Images
New York Community BankArea banks that needed more than $1 billion in lifelines last month are offering some of the highest interest rates in the country on savings accounts.
NYCB increases annual yields offered through its online division, My bank directlyAnalyst Ken Tumin, who tracks rates on its site, said the interest rate is as high as 5.55%, which is higher than on widely used accounts at other banks. deposit account.
Tumin said this outstanding rate may indicate that NYCB is facing financial pressure.
“It looks like they’re trying very hard to attract deposits,” Tumin said. “I’ve been with Banking Direct for a long time, over 10 years, so their interest rates that are too high may be a sign of need for funding.”
NYCB’s woes began in January, when it said it was preparing for losses on commercial real estate loans that far exceeded analysts’ expectations. That triggered a downward spiral in its stock price, rating agency downgrades and multiple management changes. On March 6, the bank announced a capital injection from investors led by former Treasury Secretary Steven Mnuchin’s Liberty Strategy Capital.
In the month before the rescue plan was announced, NYCB cut deposits by 7%, to $77.2 billion as of March 5, the bank said in a statement. Promotional meeting.
Nothing “crazy”
On a conference call following the financing, analysts asked how NYCB retains so many deposits during turbulent times.
NYCB Chairman: ‘We’re not doing anything crazy relative to deposit pricing’ Sandro Dinello replied. “We’re not going out and offering 6% CDs or anything like that to make the numbers look good, if that’s all you care about.”
NYCB did not return calls seeking comment on its financing strategy.
Former comptroller of the currency Joseph Otting took over as chief executive of the bank on April 1, about a week before the rate hike.
Despite the turnaround plan, NYCB shares remain below $4 and are down more than 68% year to date.
forced to repay
Tumin said other banks currently offering rates above 5% tend to be newer or smaller banks than NYCB.
Among established banks, the average high-yield savings rate is about 4.4%, with several banks including American Express, Goldman Sachs and ally) Interest rates have declined over the past month, he said. NYCB rates also top the list of accounts Nerd Wallet and bank interest rate.
My Banking Direct’s customer deposits are FDIC insured up to a limit of $250,000.
Savings account interest rates have generally increased over the past two years.
Since the regional banking crisis engulfed Silicon Valley Bank and First Republic last year, smaller banks have been forced to pay higher interest rates on deposits than larger banks. JPMorgan To compete, say Matt StarkeyChief Portfolio Manager, Equity, Northwestern Mutual Bank.
“When banks have to go out and advertise higher rates, it’s usually because they have deposit problems,” Starkey said. “It’s no longer difficult for customers to switch banks.”
