1st Community FCU Testimonial

1st Community FCU Goes After The Ones That Got Away

Casting a wide marketing net has been getting 1st Community FCU a good auto lending haul in recent years. But nets, by definition, have holes. So this fall, the CU decided to go after some of the members who swam after more tempting bait, but got the "switch" instead.

As deposits poured into the San Angelo, Texas, credit union (assets $116 million) in recent years, it aggressively marketed auto lending with multi-media advertising. This boosted volume 11% and 21% for the one-year periods ending in June 2002 and June 2003, respectively. In comparison, other CUs of between $100 million and $200 million in assets grew auto loans an average of 6% to 6.5% during those periods.

Impressive, but not good enough, says George Sweet, SVP of lending. He says the CU decided on a direct-mail campaign aimed at members with solid credit scores who had recently financed vehicles elsewhere. Turns out 1st Community could offer most of these members a better rate, Sweet says.

The CU worked with a business partner to create a mailing list, customize marketing materials, and send the direct mail piece to 822 members in September. The mailing garnered a 5% response and $800,000 in loans that month alone. The CU pulled in another $500,000 that month by offering the same refinance terms to members who were not included in the mailing.

One reason the promotion took off, according to Sweet, is that 1st Community streamlined its underwriting procedures so that more members were eligible for the lowest rates. The CU scrapped its A-E scoring system and offered its best rate to members with credit scores of 640 or higher.

1st Community also looked for ways to help members who were "upside-down" on their loans, Sweet says. The CU refinanced the full balance if the member's credit score exceeded 700. For some members with lower scores, the CU offered the low refinance rate for the auto's market value and another rate on the remaining unsecured amount.

By April Eichmeier, Editorial Staff, CUNA Mutual Group