Live Oak Bank’s short-term CDs saw modest rate increases this week, adding between 5 and 10 bps. The latest rates are 6-month (2.10% APY), 1-year (2.55% APY), and 18-month (2.60% APY). Any of the CDs offered by Live Oak Bank can be opened with a minimum $2.5k deposit, with a maximum $250k deposit per account. The maximum aggregate balance, which includes all consumer accounts at Live Oak Bank, is $5 million. In addition, individuals may not have more than 25 consumer accounts.
|2.55%||$2.5k||$250k||Live Oak Bank||18 Month CD|
|2.50%||$2.5k||$250k||Live Oak Bank||1 Year CD|
|2.00%||$2.5k||$250k||Live Oak Bank||6 Month CD|
Funding a Live Oak Bank CD must be done through an ACH transfer from an existing checking or savings account at the bank named in the online application. There is a 10 calendar day grace period before a CD automatically renews. Maturing funds can be distributed through an ACH transfer, a wire transfer, or a certified check. Up to five beneficiaries may be added, but all beneficiaries must be U.S. citizens.
As stated in Live Oak Bank’s Consumer Terms and Conditions document, the Early Withdrawal Penalty (EWP) reads as follows:
If your account has an original maturity of less than 24 months: The fee we may impose will equal 90 days interest on the amount withdrawn subject to penalty.
If your account has an original maturity of 24 months or more: The fee we may impose will equal 180 days interest on the amount withdrawn subject to penalty.
I’ve mentioned the EWP for terms greater than 24 months because of the Bank’s 5-year CD, which surprisingly had its rate lowered this week to 3.05% APY.
The previous 3.20% APY was especially competitive when the EWP was factored in, with effective yields ranged from 2.17% APY (closed at 18-months) to 2.84% APY (closed at 4 years). With the APY being lowered 15 bps, the effective yields have lost their edge:
- 2.05% APY (closed at 18 months)
- 2.31% APY (closed at 2 years)
- 2.57% APY (closed at 3 years)
- 2.70% APY (closed at 4 years)
When I wrote about Live Oak Bank CDs in July, there were 120 bps separating the 6-month and 5-year CD rates, an improvement of 45 bps from the March yield curve. With the 6-month gaining 10 bps and the 5-year losing 15 bps, the yield curve is now fairly compressed, with only a difference of 95 bps.
Thanks to DA reader, Bowman, for Thursday’s Forum post about Live Oak Bank’s CD rate increases.
Headquartered in Wilmington, North Carolina, Live Oak Bank is a pure internet bank (no brick-and-mortar branches), which offers its product line to U.S. citizens or Permanent Residents with a valid Social Security number.
The first step in establishing a new Live Oak Bank account is the Get Started page, as there is no direct link to the online application for new customers.
Clicking on the “Open Your CD Today” button takes you to a simple form that requests your name and email address. As explained on that page, “To begin the account creation process, please complete the information below.” According to CSR, this is the first step toward initiating the online application process.
While Live Oak Bank’s online application is fairly straightforward, CSR made a point to tell me that there is no "back button," so extra care needs to be taken when filling out the application. CSR also stated that having a copy of your Driver’s License (or other government-issued ID) uploaded on your computer will insure speedy completion of your online application.
Live Oak Bank has an overall health grade of "A+" at DepositAccounts.com, with a Texas Ratio of 0.68% (excellent), based on March 31, 2018 data. In the past year, the Bank has increased its total non-brokered deposits by $946.54 million, excellent annual growth rate of 77.64%. Please refer to our financial overview of Live Oak Bank (FDIC Certificate # 58665) for more details.
A fast growing institution, Live Oak Bank currently has $3.4 billion in assets and more than 31,700 customer accounts. The Bank specializes in small business loans in niche industries, such as self-storage companies, veterinary medicine, funeral homes, as well as more traditional industries like government contracting and hotels.
In addition to having recently marked its 10th anniversary, Live Oak Bank has another reason to celebrate. According to press release issued in May,
Live Oak Bank announced today it has officially launched a new lending division focused on financing for the franchise restaurant industry. The vertical marks Live Oak’s 18th industry specific lending division and will include all franchise businesses from quick service and fast-casual to full-service dining.
“The franchise restaurant industry is one of the fastest growing in the U.S. and our team has the extensive knowledge owners need to grow their business,” said Jason Lumpkin, general manager of emerging markets at Live Oak Bank. “Live Oak is dedicated to helping customers meet their goals and provide ongoing recommendations along the way.”
How the CDs Compare
When compared to the 208 similar length of term CDs tracked by DepositAccounts.com that require a similar minimum deposit and are available nationally, Live Oak Bank’s 1-Year CD APY currently ranks third.
When compared to the 158 similar length of term CDs tracked by DepositAccounts.com that require a similar minimum deposit and are available nationally, Live Oak Bank’s 18-month CD APY currently ranks fourth.
The above rates are accurate as of 8/11/2018.
To look for the best CD rates, both nationwide and state specific, please refer to our CD Rates Table page.