BELOIT, Wis.-Members began lining up at 4 a.m. outside a branch of First Community Credit Union here in order to take advantage of special pricing on loans.
Within three hours of opening, the credit union had approved more than 70 loan apps for more than $1.2 million.
The rush was to apply for loan rates that started at 0.99% for the first $500,000 in loans made by the credit union, 1.99% for the next $500,000, and 2.99% for all loans made beyond $1 million.
FCCU celebrated the grand opening of its Janesville branch with all the usual fanfare, including ribbon-cutting, free food, giveaways and more. But FCCU President Jack Gill noted marketing related to the grand opening had centered on the loan promotion and the message clearly appealed to members.
The first member was in line outside the CU at 4 a.m. (the member brought along a space heater to stay warm), and 50 people were in line by 8:30 a.m., a half-hour before the credit union opened the doors at the new branch. The event was promoted via a local radio station (which did a two-hour remote broadcast from the CU at lunch time on the day of the grand opening), through print media and a direct mail postcard campaign to 5,500 homes within a mile and a half of the branch. Gill said that members were calling as early as two weeks before the big day just to ask what time they needed to arrive.
An hour before the doors opened, credit union reps distributed clipboards and applications to those waiting in line. After that, said Gill, "We ran credit reports, said 'How much do you want? That looks good, we'll approve it.' Then get 'em out the door and get the next one in."
Members could apply for any kind of secured loan with the exception of real estate, up to a maximum of $25,000. The maximum term on all loans was 60 months, and a minimum credit score of 670 was required. Members whose application did not fit in the desired parameters for the promotion received the 2.99% rate.
Because of the "get 'em in and get 'em out" approach of the day, no actual loans were closed that day, and First Community spent the following week clearing out the pipeline. "We did a little over 70 loans and ended up denying only four," said Gill, explaining that those denials were the result of issues such as a credit score in the 400s or debt-to-income ratios above 75%.
Non-Members Attracted
Moreover, about 35% of the loans approved that day were for non-members, and the credit union planned to complete the membership sign-up process during the loan closing. First Community CU serves about 14,000 members with approximately $75 million in assets.
Gill noted that the low rates won't make FCCU much money, but said that in this scenario, making a splash with the community was more important than generating income. Besides, he said, "the vast majority of the loans are in the high 700, low 800 credit scores," so those are strong members with less chance of default or delinquency. The overall quality of the loans, he added, was "better than I ever would have anticipated."
'Spirit Is Alive'
The loan promo was the first of its kind for First Community, but Gill said that he hopes to run something similar once every quarter in the future-particularly in locations such as Rockford, Ill., where the CU has branches that see less traffic and where there isn't as much understanding of CUs.
The week following the promotion was a busy one at the Janesville branch, but Gill said that "the spirit is alive here and we've got things going on. People are excited about things. Yeah, it's a little more stressful, but I really prefer that" to the alternative.
"We would have made as many loans as it took," added Gill. "The line started winding down around 11:30 and we normally close at noon, but if there had still been people in line at 3:00 p.m. we would've been there until we were done."
