CROSSVILLE, Tenn.–An investment in marketing by Upper Cumberland CU has jolted lending and led to a tripling of ROA in one year.
The CU’s good fortunes are a combination of timing and sound decision making, said CEO Denise Cooper. Seeing consumers struggling to obtain loans in the city and with the credit union wanting to do more, UCCU hired a local marketing firm to get its name out and let the community know more about the benefits of credit unions, such as member-ownership.
“We hired Napier Media, because we have tried in the past to do marketing on our own. But we are a small credit union and we knew we could get better results using an agency,” said Cooper. “It worked. Many more people now know we are here and know about credit unions.”
The campaign–which used newspaper, radio, direct mail, in branch, and electronic signage–emphasized the big difference today between banks and credit unions, and it was introduced, simply by chance, just before Bank Transfer Day.
“It was the right decision at the right time,” said Cooper, who hired Napier in July of 2011 and advertising rolled out two months later. Part of the marketing strategy was to play up the words “credit union” in the CU’s new logo. “That may seem simple, but one of the most important things we did was change our logo so that the name credit union dominated the image (see graphic).”
With a new logo and marketing campaign, momentum has been building for Upper Cumberland, which has loaned out a little more than $9 million in the first six months of 2012, a total higher than all loans made last year. “We made 2,835 loans in the first six months and we are a $30-million credit union. Our loan-to-share ratio is 82.99% and ROA is 1.48%.”
Results from August 31, 2011, to August 31, 2012 show: Credit cards balances increased by 13.90%; Unsecured loans increased by 27.12%; New vehicles loans increased by 37.86%; Used auto loans increased by 41.11%; First mortgages increased by 25.71%; Total Assets increased by 21.58% ($5.3 million); Loan income increased by 16.74%, and membership increased by 7.54%
“Loan growth boomed due to a 2.99% auto loan special,” said Cooper. “Also, a 3.99% mortgage special with a 10-year term and a maximum balance of $75,000 was offered for several months. The 3.99% was a huge hit as a lot of people converted their existing loans from other lenders to one payment at UCFCU. Most of the these 3.99% mortgages had loan to value of less than 50% after paying off their existing balances.”
Delinquency numbers have not suffered with the increased lending, as delinquent loans to total loans is .17% and net charge-offs to average loans is .30%.
In addition to a logo that shouts “CU,” Upper Cumberland is not shy about advertising its offerings, installing a digital sign at its main office, near the street, that scrolls along the credit union’s specials. “That sign was a big expense ($24,000) for a credit union our size, but it’s been well worth it. We don’t mind the expense.”
For Upper Cumberland, the increase in marketing expenses has been approximately $4,000 a month. “Even if you’re a small credit union, don’t be afraid to spend money on marketing,” advised Cooper.