SHREWSBURY, N.J. -- If your credit union was out shopping rates on July 28 it could have found some of the best rates at what some may consider an unlikely place--Louisiana Corporate.
That's not to say Louisiana Corporate is a second-rate corporate or deficient in anyway, however at $192 million it is one of the smallest corporates in the nation, and may not be the corporate CUs think of first for high rates.
But on July 28 Louisiana Corporate was offering a 5.55% rate on a $200,000 six-month CD, a 5.55% rate on a six-month $2 million CD, a 5.47% rate on a two-year $200,000 CD, and 5.47% on a two-year $2 million CD. The two-year CD rates ranked first among all corporates and its six-month rates were near the top.
Louisiana Corporate CEO David Savoie said his corporate's ability to compete with the big boys says something about recent merger activity.
"Every time there is a large corporate merger, we read that the reason is economies of scale. When small corporates like Louisiana Corporate are paying some of the highest rates, it's a wake-up call about economies of scale, whether it is really benefiting the members. Some may be creating diseconomies of scale," said Savoie.
On the other end of the spectrum, the $26 billion WesCorp, the nation's largest corporate, was also at or near the top in most categories, as was the second largest corporate, Southwest.
WesCorp CFO Todd Lane said the one-day rate comparison was accurate, but that WesCorp's rates stay competitive no matter what day is studied. "WesCorp's rates are competitive day in and day out. We don't modify our pricing on a regular basis to bring in money, or to push away money. If you look at it over an extended period of time, we're competitive throughout."
WesCorp also utilizes a one-account structure for overnight funds to give members all the same rate. On July 28, WesCorp members could receive 5.26% on overnight funds. Lane said that rate applies to all WesCorp members across the board, there is no tiering.
Louisiana Corporate was also paying 5.26%, however Louisiana Corporate uses a settlement account that at press time was paying 1.50%. Savoie said the corporate encourages members to keep as little money as possible in the settlement account to achieve better yield.
On July 28, rate hunters could have found the best deal on six-month CDs at VACORP, which was offering 5.60% on $200,000 and $2 million CDs. FirstCorp was paying the highest overnight rates at 5.32%. Smaller corporates routinely beat larger corporates on certain products on July 28. Georgia Central and First Carolina Corporate, two mid-sized corporates, had high rates across the board.
See the complete chart for a corporate rate comparison on July 28. --firstname.lastname@example.org
(Editor's Note: Credit Union Times stands by the accuracy of the rate comparison chart. However, readers should note that this is a one-day snapshot, and rates vary greatly from day-to-day, from corporate-to-corporate.)