When a big national bank decided to stop funding car loans locally earlier this year, the Chandler, Ariz.-based First Credit Union saw others lenders follow suit.
Rather than get spooked by what the competition was doing, the credit union kept up its lending activity and recently launched its $50 Million "Loan-a-Thon" campaign to remind potential borrowers that the cooperative still has money to lend. Celebrating its 80th anniversary this year, First CU serves more than 55,000 members.
Since November, First CU has beefed up applications for auto loans, personal loans, home loans, home-equity loans and business loans through the promotion. While the individual loan amount will be based on loan policy amount limits, the minimum amount a borrower can apply for is $500. The loan rate is based on a person's financial situation and previous credit performance. A minimum deposit of $5 in a savings account is required for membership.
Loan inquiries and applications are up, said Karen Fuhre, marketing manager at $450 million First CU. So much so that the loan-a-thon, which was set to end on Dec. 31, will be extended into January 2010. The number of new loans funded in November increased 10% compared with those funded in October. Home loans and lines of credit have experienced the largest growth this year, amassing a 6.55% increase year over year, Fuhre noted. Business loans came in second with year over year growth at 2.68%.
"Our deposits have increased and liquidity is very good. We have money to lend and wanted to get the word out to the community that we are still making loans," Fuhre said, adding that First CU actually has more than $50 million to lend, but that number "was a good round figure."
As of Sept. 30, First CU had $301 million in its loan portfolio, according to NCUA data. Total shares and deposits were $423 million.
The credit union runs specials and promotions, including waiving fees on home-equity loans all the time, but this was its first ever loan-a-thon, Fuhre said. First CU has been running ads on billboards and gas pumps. Members can apply online or over the phone. A Web-based request form for those who are not sure about applying for a loan but want more information has generated a number of phone loan applications, Fuhre pointed out. The staff has backed the promotion so strongly that the majority of First CU's employees are sporting the red T-shirts with the loan-a-thon message, she added.
Even though the lending campaign has yielded strong returns, Fuhre said the credit union maintains its stringent underwriting policies. "It is the key to weathering these hard times," she said.
First CU's biggest competitors are the big-box banks, direct banks and, to a lesser extent, some credit unions, Fuhre observed. Unlike the banking industry, the local credit unions continue to work cooperatively because "if it's a win for one credit union, it's a win for the industry." Still, Arizona is among the top five states in the nation hammered the most with foreclosures. As the case nearly everywhere, unemployment has driven the housing market meltdown here.
Fuhre said it helped that First CU did not get involved in subprime lending.
"We've fared better than others in Arizona. We've seen significant declines in home values, but we are working very hard to keep members in their homes and cars," Fuhre said.
–msamaad@cutimes.com

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High Demand Prompts First CU to Extend Its $50 Million Loan-A-Thon

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