Auto Lending Helps EDCU To Get 'Miles Ahead'
OLYMPIA, Wash.-After a poor showing in 2010, evergreenDIRECT CU has begun to bounce back, in part thanks to a renewed focus on auto lending.
"From a year ago, we're miles ahead of where we were," said CEO Ed Danz. "In 2010 loans went down 10% and we had a $30-million portfolio. We've done almost $2.75 million" so far this year.
One simple but effective strategy deployed by the $42-million institution to bolster its loan portfolio has been to lower its rates.
"You can get a car loan here for 2.19%," said Danz. "That's obviously only for 24 months, but it's amazing how many people will go 'What about 36 months?'" The latter rate is just below 3%.
"We've gotten the staff to be really good about asking for the business and just looking at credit reports and saying, 'We can save you money.'"
Danz noted that evergreenDIRECT staff are working hard at refinancing loans members have from other lenders in the belief it can save members money, and possibly even bring some new members into the fold. He added that refinancing credit card debt has also been big business lately.
"Most people don't pay attention to what they're paying on a credit card," said Danz. "I think a lot of the larger credit cards have raised their rates, because suddenly people are saying 'Why am I paying 22%?'"
While evergreenDIRECT has mostly relied on word-of-mouth to spread the news about its money-saving ways, Danz said that there was a small direct mail campaign involving approximately 1,500 pieces of mail. The CU has more than 4,300 members.
"We've also run some little challenges to the staff to get new members," said Danz, explaining that staff receive a $40 incentive for each new member they sign up for four services, such as auto loans, checking, savings and credit card. The organization saw a net increase of 25 new members for March 2011-a solid showing, he said.
Danz said the goal is to maintain the momentum. "I'd say that until rates start going back up, we can do it. Our overall yield on these loans we've made in the last two months is still over 6%."
Danz added, "When the Fed stops printing money faster than we can lend it out," then evergreenDIRECT may raise its rates. Until then, however, "I'd rather make loans to our members than invest, because that's what we're here for."