Pen Air's initial goal was to generate $400,000 in new business with a basic direct mail program targeting members who had recently financed cars elsewhere. By the end of August 2009, the credit union produced more than $1 million in new loan activity from the program, which included new car loans, credit cards, HELOCs and other personal loans.

"I wanted to create a market and not wait for it to come to us," Tuyo said. "Indirect is considered a higher risk source, and I really wanted to capture our members and penetrate wallet share."

In the first six months of the program, Pen Air sent out 6,000 direct mail offers and acquired 183 new loans, reaping a $46 return per dollar spent.

In the first year of Greenville Heritage Credit Union's recapture program, the credit union gained 33 new members and 46 new auto loans worth $905,790.

"I have seen so many credit unions get burned badly by indirect lending programs that I did not want to go down that road until there were no other options," CEO Alan Berry said.

Prior to launching the program with CUNA Mutual, Greenville Heritage ran the usual newsletters, statement inserts and lobby banners, Berry said.

"They work, but are not nearly as effective as auto lending recapture," he added.

Berry said the program has succeeded in a difficult auto lending time because the credit union offers a good rate in the mailing and people are looking to save money wherever they can. Greenville Heritage has seen increased competition from captive financing companies for new cars at the dealership, but Berry said the credit union's used car business has been better than ever because the national and local banks are still very cautious in that area.

The benefit the direct mailing offers to members who switch their loan to Pen Air depends on time of year and season, Tuyo said.

CUNA Mutual works with the credit union to evaluate the program and send mailings out to targeted members typically on a monthly basis, but it can vary depending on the size of the credit union.

"An important part of the program is that we work to provide a return on the investment," said Steve Hoke, senior manager overseeing the auto loan recapture program at CUNA Mutual. "We circle back with our credit unions once the program is underway and we're hearing that credit unions are seeing immediate results and driving income to see value in the program."

Since the mailings are targeted, CUNA Mutual's credit union clients have also been very happy with the quality of the loans they are seeing, Hoke said. The average credit score for loans coming from the program is 737.

"Since we are able to set the parameters, we have very solid credit quality from the responses," Berry said.

While both Greenville Heritage and Pen Air decided to go the recapture route rather than the indirect route, Hoke said the majority of CUNA Mutual's clients in the program offer both indirect loans and the recapture program.

"Many have decided to add the recapture program to supplement a decrease in indirect lending they've been seeing," he added. "For those that don't go the indirect route at all they come to us because they want to build deeper relationships with current members.

CUNA Mutual currently has 350 credit unions in the program.

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