NYCB pays the highest interest rate in the country (APY)

New York Community BankA regional lender that needed a more than $1 billion lifeline last month is offering the highest interest rate in the country for a savings account.

NYCB has increased the APR offered through its online division. My Banking Directto 5.55%, higher than any other bank’s widely available account, according to Ken Toomin, an analyst who tracks rates on his website. Deposit accounts.

The outstanding performance could be a sign that NYCB is facing funding pressure, Toomin said.

“They seem to be trying very hard to attract deposits,” Toomin said. “My Banking Direct has been around for a long time, more than 10 years, so an aggressive rate could be a sign of a need” for financing.

NYCB’s troubles began in January when it said it was bracing for much larger losses on commercial real estate loans than analysts had expected. This led to falling stock prices, ratings downgrades from rating agencies, and numerous management changes. On March 6, the bank announced an infusion of capital from investors led by former Treasury Secretary Steven Mnuchin’s Liberty Strategic Capital.

In the month before the bailout was announced, NYCB lost 7% of its deposits, falling to $77.2 billion by March 5, the bank said. presentation.

During a conference call following the capital raise, analysts asked how NYCB was able to retain such a large portion of its deposits during a turbulent period.

“We haven’t done anything crazy with regard to deposit pricing,” the NYCB chairman said. Sandro Dinello answered. “We didn’t offer 6% CDs or anything like that to make the numbers look good, if that’s what you’re concerned about.”

NYCB did not return a call seeking comment on its funding strategy.

Joseph Oetting, the former comptroller of the currency, took over as the bank’s CEO on April 1, about a week before the rate hike.

Despite the turnaround plan, NYCB shares are still trading at less than $4 per share and are down more than 68% year to date.

Other banks now offering rates above 5% tend to be newer or smaller players than NYCB, Tumin said.

Among reputable banks, the average high-yield savings rate is about 4.4%, and some of them (including American Express, Goldman Sachs And Ally) According to him, rates have decreased over the past month. NYCB rate also outperforms accounts listed on NerdWallet And Bankrate.

Customer deposits with My Banking Direct are insured by the Federal Deposit Insurance Corporation (FDIC) up to a standard limit of $250,000.

Savings account rates have generally been rising over the past two years.

As a regional banking crisis engulfed Silicon Valley Bank and First Republic last year, smaller players were forced to pay higher deposit rates compared to giants such as JP Morgan Chase to compete, said Matt StuckeyChief Equity Portfolio Manager at Northwestern Mutual.

“When a bank has to come out and advertise a much higher rate, it’s usually because of deposit problems,” Stuckey said. “Customers no longer find it difficult to switch banks.”