Limousines stretch Paragon FCU's business loan portfolio

WASHINGTON TOWNSHIP, N.J. - Paragon Federal Credit Union is the top of the line when it comes to limousine loans. "We wanted to put the business loans back on the books," said PFCU President Richard Rays. "So we began developing a business loan policy about one an a half years ago and looking for opportunities." Opportunity came in the form of stretch limousines and Charles Featherstone, a member and former dealership owner familiar with people in the local area involved with the auto industry. Serving as an independent consultant, Featherstone granted PFCU entry into the closely knit exclusive world of auto dealerships and limousine associations. Through the associations it was easy to determine which limousine companies were in the metro area and then it was just a matter of signing them up said Rays. "We deal with the limousine owners in the TriState area and as members they are entitled to business loans," said Rays. The limousines are actually Lincoln Continentals that are primarily driven to and from the airports. Because PFCU is dealing with the owners who are members, when it comes time to refinance their fleets they seek out the credit union. According to Rays, the owners have excellent contracts with large corporations which do very well and because they have excellent credit ratings it helps reduce the cost of borrowing which in turn helps PFCU. Creating its own niche works well for PFCU for the following reasons: * increased yields to the credit union which are greater than traditional loans * limousine loans are easier to originate - putting larger dollars on the books * the loans are very secure because PFCU has the personal guarantee of the owners who have credit * the loans are short - a 36 to 48 month duration with turnover usually within 24-36 months because the owners switch out the vehicles. This partnership, which is promoted primarily by word of mouth, has generated $8.2 million in loans which represents approximately 4.5% of the total business loan portfolio. PFCU's remaining 7.1% of business loans totals $13 million. PFCU has $246 million in assets and serves 50,371 members. -mbourjolly@cutimes.com