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Florida Pilot Program

Florida Pilot Program

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Florida Pilot Program

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  1. Florida Pilot Program Ford Purchase Pilot & Ford/GM Leasing Pilot

  2. Agenda • Invest In America (IIA) Overview • Mission/Vision • Program Overview • Results • Florida Pilot Program • IIA Lease Program • Program Overview • Lease Process • Roles and Responsibilities • Benefits • Partner Opportunities • Credit Union Leasing of America (CULA) • GrooveCar • Q & A

  3. Mission • To develop and promote exclusive credit union member discounts on products and services offered by American owned corporations to provide a stimulus for stronger financial results for the U.S. economy, increase credit union membership and member satisfaction • Develop an extensive program with domestic automakers that generates incremental vehicle purchases and credit union loans • Identify and expand member rewards by partnering with larger Fortune 1000 companies

  4. IIA Vision Invest in America is our brand for credit union membership enhancements in order to drive growth and retention

  5. IIA Scorecard Automotive Sprint As of 5/15/09

  6. Chrysler Contract extension anticipated through year end May 6 – June 1, 2009 Up to $1,000 discount on top of the members best deal on the following 2009 models:

  7. Supplier pricing continues through year end GM Total Confidence extended through May 31, 2009 GM Private Offer ($500 discount) April 1 – May 31 Credit Unions were required to enroll GM

  8. GM Lease Pilot • 90 Day Pilot Program • Leasing Pilot in NY, NJ, FL and MI markets July 1 through September 30, 2009 • Pilot will start with select 2009 models from the four core brands and expand as 2010 models are launched

  9. Ford 90 Day Pilot Program Purchase pilot program in Florida providing members with $500 discount on top of member’s best deal on the purchase of new Ford, Lincoln or Mercury vehicles Leasing pilot program in FL, NY, NJ and MI market areas

  10. Sprint Member Discounts 10% off most regularly priced service plans Waived activation fee on new accounts Waived upgrade fees Business Discounts 15% discount on most corporate recurring charges Waived activation (new accounts) and upgrade fees Equipment discounts 20% off accessories

  11. Florida Pilot Program • Credit Union Member Purchase Offer • $500 discount on Ford, Lincoln or Mercury vehicles on top of the member’s best deal. • Credit Unions must enroll and agree to the following in order to offer this incentive: • Offer an interest rate 50 bps lower than the standard rate their member qualifies for on a 60 month loan. • Market the offer and IIA through website and lobby posters. • Credit Union Member Lease Offer • An attractive lease payment on a 39 month lease on Ford, Lincoln or Mercury vehicles. • A subvention to offset residual risk of $750 per vehicle leased.

  12. Leasing Pilot Overview • Ford/GM is offering a “Low Risk” leasing program pilot • Credit unions serving the FL, MI, NJ, NY & Philadelphia markets will be eligible to participate (Markets defined by Ford/GM) • July 1 – September 30, 2009 What: Where: When:

  13. Leasing Pilot Overview (continued) • Ford/GM and Lease Partner will fund a residual escrow account equal to 10% of ALG (Automotive Lease Guide) residual value to cover end of lease losses • Lease Partner will obtain residual value insurance to cover losses exceeding 10% of the ALG residual value • League and credit unions establish advertisable APR rate • Credit unions promote to their members all leasing offers on eligible models • Ford/GM will market lease payments to general public to increase dealership traffic • Dealers will turn to participating credit unions for lease financing on all eligible models How:

  14. Lease Process - Origination • Dealer directs current or potential member to participating credit unions via Route One, DealerTrac, AppTrac or other systems • Credit Union makes credit decision, if necessary, sends Adverse Action letter to lessee • Credit Union charges member the established acquisition fee • Dealer prints lease agreement from their Dealer Management System (DMS) or Lease Partner web site • Dealer closes the lease and processes the title • Credit union charges dealer for manufacturers lease subvention as an “administrative fee” • Dealer is reimbursed by Ford/GM for “administrative fee” • Credit union forwards “administrative fee” and acquisition fee to lease partner • Lease Partner deposits “administrative fee” along with Lease Partner contribution into escrow account

  15. Residual Value Escrow Account Ford/GM & Lease Partner deposit into escrow account (= to 10% of ALG value) RVI Lease Partner pays claims on losses exceeding 10% of ALG Per each vehicle returned If a gain is realized, the excess is deposited into the Escrow Account (+) If a residual loss occurs, the Escrow Account is used to cover loss (-) Escrow account performance reviewed quarterly

  16. Who is the RVI Group? • RVI Group is the world’s largest specialist in residual value insurance • Specializing in the passenger vehicle, commercial real estate and commercial equipment markets • Current clients include many of the world’s leading financial institutions, leasing companies and equipment manufacturers • A.M. Best Company rating currently B++ • Residual value insurance: • Protects against a decline in market value of tangible assets • Provides a critical tool for asset risk and lease accounting

  17. Lease Process – Life of Lease • Credit union receives and posts payments to principle, interest and sales tax • Credit union remits sales tax monthly to Lease Partner • Lease Partner files sales tax reports and remits tax to government entities • Credit union provides normal collections and repossession activities for non-payments

  18. Lease Process – Lease End • Lease Partner manages member education at lease end and remarketing (vehicle disposition) process • Member has first opportunity to purchase the vehicle • Originating dealer has second opportunity to purchase the vehicle • Vehicle sold through national network of dealers • Credit union has no responsibility to dispose of returned vehicles • Lease Partner sells the vehicle and uses the sales proceeds plus the Residual Escrow Account (If applicable) to pay off the ALG residual with the credit union.

  19. CUcorp/Manufacturer’s Role • Ford/GM will market the leasing program to consumers through TV, radio, print ads, etc. • Ford/GM will promote an attractive lease offer on a 39 month lease on selected models • CUcorp will develop turn key marketing materials for credit unions to use in marketing to their members • CUcorp will solicit credit union participation and enrollment • CUcorp will ensure Ford/GM dealer network in pilot market areas can be properly serviced by participating credit unions • If adequate credit union participation is not reached in a market area the pilot will be cancelled for that market area

  20. Lease Partner Role • Provides forms and documents that comply with Federal, State and NCUA requirements • Provide accounting and remittance for Federal and State income tax • Provide necessary insurance coverage (GAP, residual, contingent liability, contingent physical damage, garage, etc.) • Provide training for credit union staff and dealerships

  21. Lease Partner Role (continued) • Provide all vehicle remarketing services including contacting and educating members on options, vehicle inspections and sales • Third party vendor management with ALG, insurance companies, vehicle inspection services, auctions, lease tracking services, etc. • Establish and manage government backed secured escrow account and provide Ford/GM & RVI with quarterly accounting and reviews

  22. Credit Union Role • Determine credit criteria • Decision each loan • Rate setting – use standard rate or reduce for competitive purposes • Funding the dealer • Billing and collecting payments • Collect acquisition fee from member as established by Lease Partner • Collect administrative fee from dealer • Forward acquisition and administrative fees to Lease partner • Collecting lease payments from the member during the lease term

  23. Credit Union Requirements Enroll in and agree to program terms: • Complete enrollment form on www.lovemycreditunion.org • Offer leases on all eligible models from Ford/GM • Offer 39 month lease with advertised payment or lower • Offer a lease rate that is not higher than any other lease rate offered to other manufacturers • Collect acquisition and administrative fees and forward to Lease Partner • Accept new qualified members through the dealership

  24. Benefits to Members and Credit Unions • Member receives lower monthly payment than on a purchase • Member is able to drive new car with latest features and safety equipment • Lower cost of ownership since warrantees generally cover the lease period • Credit unions will not be competing with captives and banks for lease business • Credit union earns a higher rate of return than on auto loans • Credit union assumes a credit risk that is similar to auto loans • Ford/GM promotes to the general public providing opportunity for membership and auto loan growth • Dealers will direct consumers to participating credit unions

  25. Similar Credit Risks as Auto Loans Assumptions: $30,000 loan amount, 5.99% APR, 7% sales tax, $12,000 Residual 60 Mo Loan $579.84 39 Mo Lease $572.17

  26. 48 month payment Loan $638 Lease $428 Lower Payments for Members MSRP $28,945 Factory Invoice $26,102 Cap Cost $27,897

  27. Gross Interest Margin net of Lease Partner Expenses Loan – 60 mos $3,585 Lease – 36 mos $3,360 Higher Return for You MSRP $28,945 Factory Invoice $26,102 Cap Cost $27,897

  28. CULA (Credit Union Leasing of America) Bringing proven performance, experience and security to our credit unions

  29. Who is CULA? • Credit Union Leasing of America (CULA) is the nation’s largest provider of indirect leasing services to credit unions. • 21 years in business • 65,000 vehicles leased exclusively through credit unions • $2 billion • 25,000 vehicles successfully remarketed • Corporate office located in San Diego, California • 19 employees with over 100 years combined leasing experience • 1/3 of employees have been with CULA longer than 10 years each • Member of National Vehicle Leasing Association • 3 employees with CVLE designations through the NVLA

  30. Who is CULA? • Alliances • Cary Boyden- legal counsel • 35 + years in lease industry • Counsel for NVLA • Paul Doyle- CPA • 35 + years in lease industry • NVLA tax & accounting counsel

  31. CULA Map

  32. CULA ROLE Lease Accounting Sales Tax Filings and Remittance Complete Document Packages Customized for your Credit Union Residuals Residual Risk Management Lessor - related Insurance GAP Residual Value Insurance CL/CPD – (state minimums acceptable) Garage Keepers

  33. CULA Role Insurance Tracking Service Member Education at Lease End Remarketing Services Repossession Assistance Program NCUA State and Federal Program Compliance

  34. CULA Role End of Term Process Management Initial and On-going Staff Training Dealer Training Dealer and Member-friendly Website On-line Origination System New and Used Vehicle Leasing The Seamless Lease Connection

  35. The Seamless Lease Connection Proprietary Lease Management Software Internet Based Real time Complete lease portfolio management tool Validates lease at origination Provides reconciliation at lease end Manages sales tax changes, updating, reporting automatically Connectivity to core DP systems Connects to CULA Online Origination System Lease Validation Worksheet for funding ease Numerous ad hoc reporting features Archived images

  36. Roles

  37. The Credit Union Lease Simple Interest No Security Deposit No Prepayment Penalties Can Convert to a Loan at any Time Insurance – State Minimums GAP is Included Numerous Options at Lease End $500/$1,000 Wear and Tear Waiver

  38. CULA Remarketing Services Lease End Member Education 120- Day Brochure & Inspection Template are sent 90 day- member education about lease end & their vehicle specifically 60 day- order inspection and finalize lease end decision 30 day- review inspection results & coordinate turn in at originating dealer (if applicable) Turn In Member- friendly process is coordinated through lease end consultants and third-party vendors CULA requests lease end fees prior to turn in Dispositions Member given first right of refusal Vehicle remarketed to originating dealer, or Vehicle remarketed to national network of dealers, or Vehicle sold at auction

  39. CULA Report Card 65, 488 total leases – 7 complete lease cycles 52,088 leases with NO RESIDUAL loss CULA cash reserve Great American Policy 11,798 leases with minimal risk – most CU’s will have no loss RVI Group Policy A CULA’s cash reserve 0 to 55 basis points estimated loss 1,602 leases with NO LOSS LIKELY RVI Group Policy B CULA’s cash reserves

  40. Summary The Credit Union Lease opportunity mirrors your existing indirect lending product. You: Set rates Underwrite Fund dealer Post payments Service member CULA manages all lease-related functions, so you do not have to add staff to add the lease product Risk is minimized through successful business practices Credit union rate setting and underwriting CULA residual risk management

  41. CULA (Credit Union Leasing of America) Bringing proven performance, experience and security to our credit unions

  42. CU XPRESS LEASE

  43. The Life of a Lease Point of Sale Servicing Servicing & Remarketing Remarketing (Fundamentals) Full Service Leasing Product Specializing in all three components

  44. The Life of a Lease Point of Sale Remarketing • Relationship Management • Accountability • Motivating dealers • Providing credit unions with a competitive edge • Drive incremental business • Provide key technology • Protect the interests of credit unions and & their members • Maximize resale opportunities • Wholesale/Retail Multi level approach • Including national online retail sales • Credit union is made whole • Key nationwide strategic partnerships • Allow credit unions to gain & win through legacy loan program • Manage portfolio growth • Leverage technology and location

  45. The Right Experience • Official Invest In America Partner • #1 CU Automotive Buying Resource in the NY Metro Region • A decade of experience working with the nations largest CU’s • Auto Dealer relationships throughout the nation • Servicing over a million CU members throughout North East • Provides complete indirect lending solution • Our credit unions will fund nearly $500 million in 2009 • The nations #1 originator of new credit union leases

  46. Compete at the Highest Level • Maximizing dealer cooperation through communication, training, and technology (Yours or ours) • Keeping your credit union relevant in dealers daily business • CU lease specials advertised in local print/electronic media • Presence in dealer lease quoting systems (i.e. LeaseStar, LeaseProfit, R&R, ADP, etc.) • Offering off lease vehicles directly to your members… first!

  47. Technology & Support • Works seamlessly with current credit union/dealer interface • No Interface? Our plug & play interface is ready to go • Credit union & dealer training • Cross Selling program • Credit union marketing – essential for SEG based credit unions • Member toll-free phone support

  48. GrooveCar Business Alliances We currently offer leasing and indirect lending to over 100 GM and Ford dealers in New York