Banks are reducing the yields paid on certificates of deposit, but one big name continues to command one of the highest rates available. New York Community Bank offers the highest CD rate for maturities of less than 36 months among banks covered by Morgan Stanley, coming in at 5.5%. Webster Financial follows in second place with a rate of 5.4% and Bank OZK rounds out the top three places with a rate of 5.3%. New York Community Bank is offering a low annual percentage yield at a time when the institution itself is going through a period of turmoil. Even though the company is willing to pay a 5.5% annual percentage yield on a seven-month CD, its shares are down more than 50% this year. In February alone the stock fell by 24%. NYCB YTD Line YTD Performance of NYCB Stock In late January, the Hicksville, New York-based bank charged a higher-than-expected fee for expected loan losses. The bank also cut its quarterly dividend by about 71% to 5 cents per share. Earlier this month, Moody’s Investors Service downgraded the bank’s long-term ratings to junk, citing “the multiple financial, risk management and governance challenges facing NYCB.” However, savers should be aware that their deposits, whether in bank accounts or CDs, are subject to protection by the Federal Deposit Insurance Corporation. Generally, the FDIC covers $250,000 per depositor, per FDIC-insured bank, for each category of account ownership. Expect CD rates to continue falling across the board, with longer-dated offerings likely to fall faster than shorter-dated instruments, Morgan Stanley analyst Betsy Graseck wrote in a report Thursday. “Once the Fed begins cutting, the path of net interest income will largely depend on how quickly banks can reduce overall deposit costs,” she said.
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Banks are reducing the yields paid on certificates of deposit, but one big name continues to command one of the highest rates available.