Home loans are the ammunition for Sanwa Bank's drive to capitalize on California's rebounding economy and apprehension over recent bank mergers.

The Los Angeles bank this week slashed the rate on its home equity credit line to below 6% and blanketed the state with a mailing to tout its lower rates. Some 250,000 pieces were sent out - 50,000 to Sanwa Bank customers and 200,000 to prequalified California residents.

Sanwa Bank also began sponsoring a traffic report to get its message over radio during key drive times and has placed stacks of glossy brochures in branches.

"California is a very competitive market," said Gene Galloway, executive vice president of retail banking. "We plan to stay as visible as we can to attract customers."

Mr. Galloway is betting that the promotion will pay off in a big way. He predicts the program will bring in 2,000 new customers and $100 million in loans over the next two months.

Sanwa Bank believes its high-profile approach is perfectly timed. It wants to be thought of by customers who, after years of watching their property values slip, are finding increased equity in their homes.

Sanwa Bank also wants to connect with residents who feel disenfranchised after last month's mergers of Wells Fargo & Co. and First Interstate Bancorp, and Union Bank and Bank of California.

"Right now a lot of customers in the state are in flux," Mr. Galloway said. "We want to build business from that."

Sanwa Bank stands a good chance of being rewarded for being among the first to act on California's budding economic recovery, an industry expert said.

"Anyone that would take a definitive stand when everyone else is saying let's wait and see will boom," said Robert A. Calvert, president of Calvert Consulting, Atlanta.

As for Sanwa's marketing approach, "It's very aggressive," Mr. Calvert said. "But that's what will attract good business to them."

Under the promotion, Sanwa offers a home equity credit line with a 5.99 introductory rate, and home equity loans with initial variable rates of 6.4% and fixed rates of 8.5%. In many cases, the bank is waiving points and fees.

The bank is subsidizing the low rates, believing the program will bring in more than enough business as compensation. For example, in addition to loan volume, the program will supply increased cross-selling opportunities through which Sanwa Bank can profit, Mr. Galloway said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.