SUMTER, S.C.-Just in time for holiday gift-giving, SAFE FCU slashed its loan rates almost across the board to 2.99% APR, generating more than $2 million in the first two days of the offer.
SAFE cut all of its loan rates except mortgages and credit cards through Dec. 30. The $736-million CU made the move to give back to members at a time they need money to spend on their families and to help the credit union improve its loan-to-share ratio.
"Each year we give a bonus dividend to our members in the form of a cash rebate and we will do that again this year, probably $2 to $3 million," said Penny Pratt, SVP of lending and sales. "But we wanted to find another way to give back and we thought 2.99% is a great way. We have cash to lend and we want to put it out there-2.99% is better than .25% in overnight funds."
Pratt acknowledged the holiday special was not "completely altruistic. At one point our loan-to-share ratio was around 80% and it's in the 50%-range now. But that's changing, we did $2.2 million in the first two days of the loan special."
Deposits have outpaced loans this year, and lending has been flat at SAFE FCU, noted Pratt. The credit union had been seeing rapid loan growth prior to 2011, adding more than $100 million to its portfolio in less than four years. "We have been doing extremely well," said Pratt. "We ran the numbers and 2.99% works. We ran scenarios on what this would do to our overall portfolio yield if we did $20 million this month, which is our stretch goal. The blended yield for our entire portfolio is 6.27%, high by industry standards, so we can afford to do this."
Record Year in Income
SAFE FCU's overall financial performance also made the decision easier, explained Lynn Wright, director of marketing. "ROA is 1.05% and we are having almost a record year in income, making over $7 million year-to-date."
The 2.99% rate is well below the credit union's standard 5.25% auto loan rate and 9.99% consumer loan rate; $25,000 is the maximum on personal loans for the special.
SAFE, which normally risk prices loans, is not doing so in December. "The person just has to qualify. We will not make a risky loan. We have done some loans in the low 600s. We know there are a lot of newly credit-impaired members out there. Maybe their scores were in the 700s prior to the recent financial hardships. This is our opportunity to repay them for their business and help them get back on their feet."
Members can get the loan rate for a refinance, but only for loans outside the credit union.
Advertising says, "Our Gift to You this Holiday Season." SAFE is using statement inserts, point of sale, TV, radio, and billboards.
