Since this is so rare these days, I thought it would be worthwhile to highlight SFGI Direct's rate increase. SFGI Direct increased the yield on its online savings account from 1.26% to 1.41% APY late last week. With rate cuts so common these days, it's nice to see a rate hike for a change.
SFGI Direct is fairly new, but it does have more than a year of history with competitive rates. It was launched during the summer of 2009 with a 2.25% APY. My first report on the account was in July 25, 2009. The bank was careful not to let SFGI Direct grow too fast. Twice it stopped accepting new account applications. For most of 2010 the account was closed to new customers. It finally reopened the account in October. We'll see how long it'll stay open to new customers now. Banks sometimes choose to reduce deposit growth by lowering rates. Stopping new applications is a better approach in my opinion.
You can review SFGI Direct's rate history and when they closed new accounts in my July 2009 account review. The rate history is at the bottom of the post.
As I mentioned in the 2009 review, the savings account has some nice features. Some of the notable features include:
- No monthly fees or minimum balance requirements (initial opening deposit is $500)
- Online line account application and funding (per FAQ)
- You can initiate external transfers (ACH)
- Allowed to initiate ACH transfers through another institution (per FAQ)
- Fast external transfers (readers have reported one day delays)
- No maximum dollar limit on external transfers (per FAQ)
It does have a few downsides:
- Only allow one external link for ACH transfers (per FAQ)
- No beneficiaries (per FAQ)
- 5 business-day hold for the initial ACH deposit and 2 day hold for ongoing ACH deposits (per account disclosure)
SFGI Direct is the online division of Summit Community Bank which has 15 branches in West Virginia and Virginia. The bank isn't in the best financial shape. We give it an overall health score of 2 out of 5 with a Texas Ratio of 76.49% (below average) based on June 2010 data. Please refer to our financial overview of Summit Community Bank for more details. The bank has been a FDIC member since 1995 (FDIC Certificate # 34102).
The bank is under the bank holding company, Summit Financial Group, Inc, which trades on the NASDAQ. When the holding company released its 2009 results, it mentioned SFGI Direct and indicated it was being used to "improve its funding mix":
Total deposits as of December 31, 2009 were $1.02 billion, up $51.5 million, or 5.3 percent, compared to $966 million at December 2008. Summit used this opportunity to improve its funding mix, replacing $103.4 million of short-term borrowings with $106.3 million of retail deposits, driven primarily by the successful introduction of a new internet savings account product, SFGI Direct. Savings account balances grew by $126.7 million during 2009.
Hopefully it'll let the savings account balances grow for a while so it can keep accepting new customers.