Deal Summary: 22-Month CD (1.60% APY w/checking, 1.50% APY w/o checking) Allows partial add-on deposits, partial penalty-free early withdrawals and a one-time rate bump-up.
First Green Bank is advertising promotional rates on two of its Hybrid Flex CDs. When I drove past one of their branches, I thought they may have a CD special. A sign that used to say “we don’t finance fracking” now says “ask us about our great CD rates.” I took a look at their website, and sure enough, their home page mentions these two Hybrid Flex CDs.
The most competitive one is its 22-month Hybrid Flex CD (1.60% APY). There’s also a 10-month Hybrid Flex CD (1.05% APY). These rates require a direct deposit checking account. Without the checking, the rates are 10 basis points lower (1.50% APY 22-month and 0.95% APY 10-month). Minimum balance to open the CD is $1,000. New money is required. To receive the higher rates, a checking account with a minimum $800 monthly direct deposit is required. More details are listed at the bank’s promotion page.
As the name of this CD suggests, it’s not a typical CD. It allows add-on deposits and penalty-free early withdrawals. Also, it has a rate-bump option. These are nice features, but they all have significant limitations. Below is a list of the features and limitations:
- Additional deposits must be made in increments of $100, up to ½ of the initial deposit.
- There is no limit of the number of additional deposits that can be made, but the additional deposits cannot total more than ½ of the initial deposit. For example, if the initial deposit was $50k, you are limited to $25k in additional deposits.
- You can withdraw up to ½ of the initial deposit without a penalty. If you withdraw more than ½, the penalty can be up to six months interest.
- Increase the rate one time during the term if the bank’s rate increases
Thanks to the reader who emailed me news of these CDs.
Evaluating the Value of the Hybrid Flex Features
How useful are these hybrid flex features? Both the add-on feature and the penalty-free early withdrawal feature limit the amount to one-half of the initial deposit.
One-half of the initial deposit is a major limitation for the add-on feature. As an add-on CD nears maturity, add-on deposits can be thought of as buying a short-term CD. The original rate becomes increasingly more competitive as the period before maturity shortens. With the add-on deposit limited to half of the initial deposit, you won’t be receiving a big windfall. For example, if you wait to 6 months before maturity to make you add-on deposit, it’ll be like opening a 1.60% 6-month CD. This sounds very nice in today’s interest rate environment. However, if your initial deposit was $20k, the total interest earned from a $10k add-on deposit would be about $80.
Limiting the penalty-free early withdrawal to one-half of the initial deposit is also a significant limitation. The limitation may not be a major issue if you need only some of the principal before maturity. However, it reduces the chance of you wanting to move your money to benefit from a higher-rate CD. For example, if in a year, you can get a 10-month CD earning 2%, you would benefit by moving half of the initial deposit. For a $20k initial deposit, that would allow you to move $10k into the 10-month CD with no penalty. The extra earnings from the 10-month CD (above what would be earned by keeping the money in the Flex CD) would be about $33.
The third feature of the Hybrid Flex CD is the bump-up option, and the usefulness of this is even more dubious than the other two features. My primary concern of this feature is that the bank may not offer higher rate on future 22-month Hybrid Flex CDs. Even if the rate does go up, if it rises too late in the term, it will have minimal benefit. For example, if the rate goes up to 2.00% one year from now, a bump-up request would result in 10 months of a 2% yield. If your deposit was $20k, the extra earnings from the bump would be about $67.
Headquartered in Orlando, First Green Bank has a market area that includes parts of Central and Southeast Florida. The Central Florida counties with branches include Orange, Seminole, Lake and Volusia. In Southeast Florida, First Green Bank has one branch in Fort Lauderdale.
If you live outside these areas, you may still be eligible to open an account. Here’s what the bank states on its Hybrid Flex CD page:
You can also call or visit our location to open an account. Our representatives would love to assist you with your application. If you live in a market outside of our geographic area, please call a representative at one of our locations to see if you qualify for an account.
First Green Bank (FDIC Certificate # 58874) has an overall health grade of "A+" at DepositAccounts.com, with a Texas ratio of 2.25% (excellent) based on December 31, 2016 data. In the past year, First Green Bank has increased its total non-brokered deposits by $143.71 million, an excellent annual growth rate of 43.84%. Please refer to our financial overview of First Green Bank for more details.
In 8 years, First Green Bank has grown to become Florida’s 40th largest bank, with assets in excess of $542 million. With its new expansion into South Florida, the Bank continues its impressive growth that began when it reached profitability only 19 months after opening.
As one of the first banks in the United States which has an environmental and
social mission, First Green Bank was founded in 2009 by a team of experienced and
successful local bankers after being given the last bank charter in the state of Florida.
How the Hybrid Flex CD Compares
When compared to the 246 similar length-of-term CDs tracked by DepositAccounts.com that require a similar minimum deposit and are available to residents in the Bank’s market area, First Green Bank’s 22-Month Flex CD APY (w/checking) currently ranks in the top 12 rates. It outranks all CDs from banks or credit unions with branches in the Bank’s market area.
The above rates are accurate as of 5/11/2017.