We want to decrease our margin from 1% to .5% which will decrease our floor. Can we do this? Do we need to offer this new rate to our existing customers?

If we don't offer the new floor to our existing customers, do we need to show both plans on our disclosures?

I would think that you would treat this like a new product offering. As long as your system will handle the different terms and conditions.

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Do we need to offer this new rate to our existing customers?

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No, if you were offering a new checking account product, you would not automatically offer it to all existing account holders; however they would be free to come in and change their account over. It would be advisable to have a modification ready to change their rate and floor if they should request it ---- and give the new disclosures.

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If we don't offer the new floor to our existing customers, do we need to show both plans on our disclosures?

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Which disclosures? You gave them a disclosure when they applied with the terms of the product they selected.

If you equate this to a new product offering, I think it will be easier to understand what is needed and what is not. The only quirk, is being prepared to accommodate those who may want an adjustment and the bank is agreeable.

What if we want to have two margins available, 1% for loans $50,000 and under and .5% for loans $50,000+? Can we do this?

bump

Personally, I would be leery of doing it this way, because of possible disparate impact issues. I guess I would document in the loan policy that it was being done for a legitimate business reason (profitability, probably).

However, there is no problem with having two separate programs with different margins. A great many banks do this.