Marketing Helps PenFed Rack Up Major Growth Under Open Charter

[designated_knitter]

I searched for this but didn't see it...

Thought it was interesting in light of all the Penfed activity this year.

https://thefinancialbrand.com/108502/asset-growth-military-credit-union-open-charter-esport-penfed-a... 

Early on in the health crisis, many financial institutions shifted their messages to ones of overall concern, advice on how to bank during quarantines and on how to take advantage of voluntary and government-sanctioned credit relief programs. Many institutions otherwise slashed marketing budgets, anticipating the worst.

PenFed took the other tack, taking advantage of a partial vacuum in the market.

“We actually increased our marketing spending during COVID, when other brands pulled back,” says Bhatia. “It was an opportunity because media was cheap, nobody else was buying.”

That bold move came with a price tag. Comparing the “educational and promotional” lines in the credit union’s yearend 2019 and 2020 call reports indicates that PenFed increased marketing spending by over 40% year to year. The $26.7 billion in assets institution spent over $39 million on marketing for 2020.

This spending fueled growth both in the Washington, D.C., area as well as nationwide. In 2020 PenFed posted impressive results:

• Membership rose over 16%, coming in around 2.1 million people.
• Records were set for mortgage and consumer lending.
• Annual earnings, adjusted for one-time COVID reserves, increased by 40% over 2019.
• Total assets rose over 7% year to year.

[cashorcharge]

Thanks for sharing!

[Anonymous]

That's some serious growth. They're still about 5x behind NFCU in member numbers but if they keep pushing their marketing initiatives, it won't be long til they're number one unless NFCU goes open too (which I don't see happening). I called it back when they first got their open charter that they were going to put it to use despite assurances to the bank lobby that they wouldn't. 

[designated_knitter]

I would be shocked if Navy went open.  That is part of their brand... just as USAA's brand is being totally closed.

However, Navy has been known to be the Patron saint... we... CU of sub-700 FICO users and they have been very successful doing it.  

Based on the DPs in the Penfed thread, I do wonder if they aren't starting to mimic that business model.

[Anonymous]

Navy has been getting looser with their membership policies over time. I just don't think the bank lobby is going to let a titan like NFCU change their membership charter though. NFCU is already big enough to compete with major banks. I mean NFCU's 135 billion in assets are such that if they were a bank, they would be the 35th largest in the US. They would be ahead of the likes of Discover, BBVA, and Synchrony. 

PenFed by comparison with about 25 billion in assets would be the 83rd largest on the list which puts them just barely ahead of my local bank, FirstBank Holding Co. 

As for PenFed becoming the savior of the subprime... ehhhh... I have noticed that they are very bipolar with their lending. They go through loose periods and then very tight periods. NFCU usually sits somewhere in the middle for approvals but is very generous with CLIs as we all know. PenFed's tech leaves a lot to be desired too. I mean I just now found out today that PenFed doesn't even have purchase alerts for their cards, you have to use VISA Purchase Alerts like you would have to for some smaller CUs like my AOD card. 

[Mr_Mojo_Risin]

In about the 14 months I've been on myFICO, I've definitely seen an increase in PenFed membership/approvals. 

Interesting article, thanks for posting!