Auto Lending Focused Credit Unions Play to their Strengths to Shine

As was reported in last week's First Look article, for the 227 participating First Look credit unions, totaling $142.7 billion in assets, loan growth struggled in the first quarter at 1.3%. First mortgage loans remained the primary source of lending activity with 5.6% growth since year-end. However, some credit unions outperformed the averages by excelling at what they know best - auto lending - instead of following the first mortgage trends.

 
 

As was reported in last week's First Look article, for the 227 participating First Look credit unions, totaling $142.7 billion in assets, loan growth struggled in the first quarter at 1.3%. First mortgage loans remained the primary source of lending activity with 5.6% growth since year-end. However, some credit unions outperformed the averages by excelling at what they know best - auto lending - instead of following the first mortgage trends.

The top twenty First Look credit unions in auto loan concentration (auto loans as a percentage of total loans) stayed focused on auto lending and managed to grow their entire loan portfolio by 2.2% in the first quarter. Auto loans made up 63.7% of the total loans of these twenty credit unions, up from 62.3% a year ago.

Callahans currently is conducting our 3rd annual survey on indirect and other forms of auto lending. Follow the link below if you would like to participate and receive a FREE summary of the key findings.

Take our survey on
auto lending programs

These twenty auto loan-heavy credit unions were able to generate a strong 3.1% growth in auto loans in the first quarter, driving their solid first quarter total loan growth. By comparison the other 207 First Look credit unions relied on first mortgage loans in the first quarter to help keep loan growth positive, their first quarter auto loan growth was virtually flat at 0.7%.

Focusing on auto loans also helped generate a higher yield on average loans. These twenty credit unions yielded 7.9%, thirty basis points higher than the First Look average, helping them return 1.2% on average assets, while maintaining quality assets with a 0.9% delinquency ratio.

Although these auto lending focused credit unions couldn't quite keep pace with the first mortgage loan growth, albeit not by much, 4.8% first quarter growth versus 5.6% for all 227 credit unions, they still outperformed the field by staying attuned with their expertise.

Share your auto lending experience with other credit unions! Your participation in our 2002 Auto Lending Survey will help credit unions discover better solutions for their auto loan programs through shared learning. Each participant will receive a summary of key findings when the report is published.

 

 

 

May 20, 2002


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