Kevin Bell, an Illinois banker, is counting on a new state rebate program to steer hybrid car buyers — and government deposits — his way.
Mr. Bell is the president and chief executive of the $163 million-asset First Trust and Savings Bank in Watseka. The First Trust Holdings Inc. unit is one of more than 50 Illinois banks and credit unions participating in the Green Rewards program launched July 15 by Treasurer Alexi Giannoulias.
“We’d like to make more car loans, but a lot of our business has gone to captive companies” like Toyota Motor Credit Corp., Mr. Bell said. “But they’re not part of this program.” Related Link
Twelve states, including California, Florida, and Pennsylvania offer residents rebates on hybrid car purchases, but most pay for their programs with tax credits or through their state’s general fund, according to the Office of the Illinois State Treasurer. Illinois is the first state to ask financial institutions to pay for the rebates themselves, offering state deposits in return.
“This way we don’t have to take money from the state’s general revenue fund,” Mr. Giannoulias said. “It’s a win-win for us, consumers, and for the institutions, who get deposits and a chance to bring in new customers.” The amount of money that the lender saves on CD interest offsets the rebates, he said.
Mr. Giannoulias was speaking on a cell phone while criss-crossing the state in his own hybrid car promoting the program at various press conferences. His office is promoting the program with the help of car dealership trade groups, while the participating lenders are publicizing it in their local markets.
Illinois has committed $2 million for the program, more than any other state offering rebates for hybrid car purchases.
John Livesay, the CEO of the $113 million-asset First National Bank of Pana, said that the amount of state deposits in his bank may not be significant, but that the rebate program does give the bank a chance to make loans on somewhat expensive cars. (The prices for hybrids start at about $23,000.)
Good will is another benefit, Mr. Livesay said. “Positive public relations result from combining good corporate citizenship with responsible government policies.”
Richard S. Dennis, the CEO of the $66 million-asset Athens State Bank, agreed that customers may appreciate a bank that cares enough about the environment to advocate the purchase of hybrid cars, which typically produce 80% less harmful emissions than traditional cars.
And now that gasoline has become so expensive — with prices averaging about $3 a gallon in his market — customers may also appreciate a bank that helps them buy a car that gets up to 60 miles to a gallon, Mr. Dennis said. Athens is about 15 miles from Springfield, and many of the Athens Bancorp Inc. unit’s customers commute to the state’s capital.
“For commuters putting all those miles on their car, buying a hybrid can be very attractive,” he said. “This is one more way to get our name in front of the public.”
Illinois has used the promise of deposits to encourage low-interest loans to farmers, to owners of child care facilities, and for economic development in blighted markets. Other states have “linked-deposit” programs similar to those, and Mr. Giannoulias said several state treasurers have inquired about the Illinois program for hybrid cars after its much-publicized launch.
