CHESAPEAKE, Va.-After setting a goal of saving members $1.5 million with its "Honest to Goodness Savings" refinancing promotion, ABNB FCU here has already hit the $1.9-million mark-and counting.
EVP Mike Doland explained that the promotion is part of a broader branding campaign that the 44,000-member, $362-million CU undertook earlier this year with the help of Third Degree marketing.
ABNB reported that it had a $3-million increase in gross loan volume during July and had about $4 million in Honest to Goodness auto refinances in addition to that. August numbers were on track to meet or even exceed those from July, added Doland.
According to its most recent Call Report, ABNB FCU has more than 20,000 total loans and leases totaling about $260 million. Any type of loan is eligible refinancing as part of the Honest to Goodness promotion, as are checking accounts. In other words, any product on which ABNB can save members money over another institution.
Doland noted that the marketing strategy of promoting the benefits to members in refinancing their loans is new for the credit union. The total amount saved is calculated by determining the difference in interest rate and borrowing costs over the total life of a loan.
In addition to saving money, ABNB is also offering savers the chance to win one of two grand prizes-free maid service for a year or a cruise vacation. One member is also chosen each month to win $500 cash.
While the promotion is mostly aimed at loans from other institutions, Doland said that if a member wanted to refinance an in-house loan, "we haven't said we won't do it."
One way the CU is enticing members to save is through a new on-boarding program, wherein CU representatives call all new members-including those who joined through indirect channels such as auto sales-to welcome them to the institution. That rep asks the member's permission to reexamine the credit report and look for ways ABNB can save that member money.
No Pricing Changes Made
Loans are not priced differently for the new promotion and the underwriting standards remain the same. The exception is that ABNB is also running an internal word-of-mouth promotion which rewards employees for each auto re-fi they refer that closes.
Employees receive $10 for each of the first five closed loans they refer and $25 per loan beyond that. ABNB has run the 60-day promotion for a few years, at times doling out more than $6,000 in incentives to employees. The CU is offering its normal rates for the program-as low as 1.99%-but the underwriting standards are a bit unusual.
"The qualifications are that if you have a loan already with another financial institution, then it's been underwritten," said Doland, adding that the average Beacon score for the promotion is above 700. "We will pull a credit report, but we only look to see if you're not delinquent right now," he said.
Doland noted that the potential is always there that those borrowers could become delinquent or default on the loan, but said that it wasn't enough to make CU officials worried. "Will we get some that are questionable? Yes, but not enough that it's significant."
The savings statistics from the auto re-fi promotion count toward the Honest to Goodness grand total, and when the internal program concludes at the end of August, the credit union plans to advertise the results through mass media for an additional 60 days-something it has never done before.
All participants are eligible to win the prizes. Doland said that in the past the CU had tried offering incentives such as gas cards, "but it didn't get much traction; it just wasn't enough to get people to move," whereas the flashier prizes with this promotion seem to be doing the trick. ABNB will run Honest to Goodness through the end of this year.
