Kenneth Mahon is not a hipster. He’s a 65-year-old bank president.
Still, Mahon can be found every day in the Brooklyn neighborhood that has become the East Coast’s epicenter of hipster style and fashion, at the Dime Savings Bank of Williamsburgh. And he’s pretty sure he knows how to talk to the millennials padding around outside in their yoga pants and Vans. He talks to them in dollars and cents.
“It can be terrible for a company to try to act hip,” Mahon said. “We’re bankers. You don’t want to overplay your hand.”
So Dime lures deposits from Brooklyn—and from all over the country—by offering a money market account with an annual yield of 1.1 percent. Bankrate.com, which collects rate data, lists only two banks in the U.S. that offer more, at 1.11 percent. These days, anything close to 1 percent qualifies as wildly generous.
Stocks and bonds offer the chance for greater rewards—your money might actually keep up with inflation, for example—but involve risk. The Federal Deposit Insurance Corporation protects depositors from bank failures by insuring each account for at least $250,000. That makes a high-yielding savings account useful as an emergency fund. Dime’s first motto, now 152 years old: “In times of prosperity, save for adversity.”
The banks paying 1 percent or more are a motley crew of community institutions, online banks, and even Goldman Sachs Group, each with unique reasons for their largesse.2 Dime needs the deposits to fill a booming local niche. It lends to owners of apartment buildings spread out across New York’s five boroughs. Instead of obtaining a mortgage, landlords put up their buildings’ rents as collateral. By refinancing, they can convert rising property values into cash.
It’s practically the only kind of lending the bank does, and its staff has become expert at it. Before helping a landlord buy or refinance, Dime must decide on the prospects for a building and its surrounding neighborhood. That’s where Dime’s local roots come in, said Mahon, a 36-year veteran at the bank. His 74-year-old boss, Chairman and Chief Executive Officer Vincent Palagiano, has been there for 46.