FT. LAUDERDALE, Fla.-Lower CD rates-and no resulting runoff-has City County CU well positioned to increase is auto loan portfolio in 2010.
By dropping its cost of funds, CCCU can consider cutting another 50 basis points off its 4.49% APR rate for 36 month-terms on A paper. A rate below 4% stands out locally, noted EVP and COO LLoyd Gill, who hinted that there still could be room to move. "My blended cost of funds is pretty low, about .88%. My peers are at about 1.67% on average, last time I checked."
Gill, who also chairs CUNA's Lending Council, said the $300-million CU did not lower its cost of funds to capture more auto loans, it just worked out that way. City County has been focused on reducing costs for some time, he said. CCCU has dropped its CD rates to 1.15% APY (based on relationships) for six month terms, and to 1.25% for one year terms. "We have not seen any runoff."
Overall, CCCU's auto loan portfolio stands at $100 million, and Gill expects it can afford to put out $5 to $10 million at the low rate. "I certainly could not have our entire portfolio priced at 4%. But we have excess funds, about $18 million. We can make about 25 basis points on short-term investments, or we can make 4% on an auto loan."
The credit union's other auto loan rates for the best credit: 4.99% for 48 months and 5.49% for 60. Members can get another 50-basis-point-reduction for multiple relationships, 25 basis points off for an extended warranty purchase, and 25 more if they buy a hybrid vehicle.
