Not so long ago, the sight of customers lining up outside a bank's lobby doors was a sure-fire sign of trouble.
But the crowd that queued outside a United Jersey Bank branch in Union City, N.J., last Saturday morning wasn't there to yank money out of the bank. They'd come to put money in.
About 15 customers had gathered outside in a cold drizzle before 9 a.m. as the bank was preparing to open its doors. For most, the draw was a one- day "sale" on certificates of deposit, featuring yields well above the going rate.
Despite the foul weather, most customers said they didn't mind the wait.
"We waited longer for rates to go up," shrugged Manuel Perez, a local businessman who said he showed up for the promotion because it provided the best rates he could find.
The CD campaign, dubbed the "One-derful One-Day CD Sale," was part of a push by UJB Financial Corp. to bring in $200 million in fresh deposits. Similar events were staged last Saturday at the Princeton, N.J.-based banking company's 269 branches across New Jersey and Pennsylvania.
UJB isn't alone. Throughout the country, banks are coming up with strategies to bring back savings dollars that had migrated to mutual funds and other uninsured investments in recent years.
One-day sales on CDs and other products, such as home loans, are a particularly popular tactic, according to Rolland Johannsen, president of Furash and Associates, a Washington consulting firm.
"If it's done selectively, it can give a bank an image of being a rate leader well after the promotion is over," Mr. Johannsen said.
That's exactly what UJB was shooting for by offering 18-month and 30- month CDs, which yielded 6.75% and 7%, respectively. The average 30-month certificate yields only 6.06%, according to Bank Rate Monitor, a Boca Raton, Fla.-based newsletter.
United Jersey is betting that the higher rates will attract new business and help broaden the bank's customer base.
"We hope these new rates will show our customers that we do respond to the hikes in the prime rate," said Amy Celento, retail product manager.
The inspiration for the CD promotion came from retail giants such as Macy's and Bloomingdale's, which regularly run one-day sales for their customers, Ms. Celento said.
Customers wanting to purchase the CDs were required to pay cash or draw funds from another financial institution. The minimum CD purchase was $5,000. Rain checks were available that would allow customers to open CDs at the special rates through Jan. 21.
To get the word out to customers, employees at the bank's Union City branch sent out mailings and telephoned customers before and on the day of the promotion.
"I'm calling my sister right now to tell her to send some people over," said Sonia Santiago, a clerk at the branch.
Union City is a blue-collar town with a large immigrant community where Spanish is heard as often as English. Bank employees, many of whom live in the area, said their customers have a tradition of building their savings and are more comfortable putting their money in insured deposits.
"Most of the people who came in were ready to open a CD today and most moved more than the $5,000 minimum," said Tanya Baquero, an assistant manager.
"People are really conscious of rates, too," said Kathy Cunningham, the branch manager. "People who left CDs when rates were low are coming back now, and some of the money is coming back from mutual funds."
Indeed, a woman and her two adult sons, who asked not to be identified, had cashed in some mutual funds in order to purchase two 18-month CDs. They were savvy enough to know that rates might go higher.
"These rates are definitely competitive," said one of the men. "But we're expecting rates to go up."
"Yeah, we're waiting for (Federal Reserve Board Chairman Alan) Greenspan's move," his brother said.