Navy Army Community Credit Union’s south Texas community is struggling with their credit scores, says CEO Wayne Vann, so the credit union puts extra effort into examining loan applications individually to approve as many as possible.
“We’re in a credit challenged area. We could never have automated decision-makers here,” Vann says. “We try to build a relationship at the member service relationship desk. Our members appreciate that relationship, they respect it, and they take care of it.”
Navy Army Community CU ($1.3B, Corpus Christi, TX) snagged 24.6% growth in its auto loan portfolio in 2011 and Vann says he expects this year’s growth to be on par with that as the credit union expands its indirect program further south into Texas. The credit union controls about 30% of the used car loans and 22% of the new car loans in its market. Its auto loan portfolio, which is about 50% of its total loan portfolio, is about 65% indirect lending and about 35% direct lending.
In the fourth quarter of 2011, Navy Army Community CU ranked fifth in its peer group of 183 credit unions with more than $1B in assets for strongest penetration of auto loans to its members, according to Callahan & Associates’ Peer-to-Peer data. More than 37% of its members held auto loans as of December 2011 – 12.3% with new auto loans and 25.4% with used auto loans. While Navy Army Community CU grew its auto loan penetration rate by 5.8% year-over-year, its peer group’s auto loan-to-member ratio has remained flat at about 16%.
Vann attributes the Navy Army Community CU’s steady loan growth to its decision to build stronger relationships with members, which has drummed up a significant number of word-of-mouth referrals. It rewards longer term members who have proven they can make regular payments on their loans with lower rates and discounts. The credit union enjoyed a 0.41% delinquency rate in the fourth quarter of 2011, well below its peer group’s average of 1.73%, according to Callahan & Associates’ data.
“We understand our audience and are comfortable financing loans to this audience,” Vann says. “How much risk tolerance do you have? And do you really understand your audience?”