Laddered CD Garners $12 Million for Citadel FCU in Four Weeks; CU Finds Way to Balance Out its High Loan-to-Share Ratio

THORNDALE, Pa. – Members are gravitating to a new, laddered certificate of deposit recently launched by Citadel Federal Credit Union. The Citadel Laddered CD, rolled out in late March, has brought in more than $12 million, said Maria Steffy, vice president of finance. Citadel members who invest $75,000 or more in a single transaction, can ladder their funds in multiple terms at different amounts and benefit from a rate above the jumbo rate called the bonus rate, Steffy said. Nearly 300 members have taken advantage of the CD since its launch. “We wanted a certificate that was unique and that would set us apart from other financial institutions,” Steffy said. “We wanted a competitive advantage with this offering.” One of the benefits of laddering CDs is that with maturity dates following one after the other, investors can take advantage of higher rates if interest rates go up, Steffy said. If interest rates go down, they remain locked in at that higher rate. Members who invest up to $24,999 can earn the base rates, which start at 1.05% for a three-month CD up to 4.75% for the 84-month CD. They also have the option of investing between $25,000 and $74,999 to earn the jumbo rates, which start at 1.30% for the three-month CD up to 5.00% for the 84-month CD plus the option of spreading that money over multiple terms. This is not the first time the $632 million credit union has offered a laddered option to members but offering the bonus rate with a $75,000 investment proved to be ahead of the competition in the marketplace here, Steffy said. “No one else in the market is doing it,” Steffy said. “It’s also a good (asset liability management) strategy because it allows for those locks.” A similar promotion, the Citadel Laddered IRA, was launched the same time as its sister counterpart, the Citadel Laddered CD and thus far has brought in $1.7 million in business. More than 40 members are currently using the CDs, Steffy said. Nearly 18 months ago, Citadel FCU offered its New Rules CD which “ran up the yield curve as rates would increase.” That product brought in $20 million in “a relatively short period of time.” Steffy said the CD balances out the credit union’s high loan to share ratio and its indirect lending program. The promotion is scheduled to run until late June and at that time the final numbers will be assessed to see if the laddered CD will be a permanent addition to its product lineup. “So far, we very pleased with the results,” Steffy said. [email protected]