SHILOH, Ill. - The automakers' captive finance companies and banks may be feeling the pain of slow car sales, but Catholic and Community Credit Union here has another challenge - too many auto loans.
The $74-million CCCU told Credit Union Journal the explosion of loan growth is the institution's toughest task to handle.
"Our biggest challenge is the sudden turnaround in loan volume," CEO Kenneth Bossung explained. "We went through the first half of the year where there was very little, and in the second half it intensified greatly."
As is the case across the country, auto sales are down in southwest Illinois, but there are still sales taking place. What has changed is competition in the market; Catholic and Community CU is one of the only games in town for individuals who need a car loan.
"It appears we became one of the few lenders (left) in the market; the banks pulled out," Bossung noted. "It's a positive, but it is challenging because we hadn't really planned for that, so we had to adjust our liquidity accordingly."
Though the skyrocketing loan demand left the credit union scrambling at the start of the second half of the calendar year, Bossung noticed a fairly significant drop in October and is not sure which trend will continue.
"We like the increase in market share, we don't know, however, if economic conditions are going to allow people to purchase," he said. "I guess we don't really know. We'd be happy if the banks got out of the car finance business; we'd be glad to take all that business from them."
Foreclosures are not an issue in the mostly rural and small town charter areas that Catholic and Community CU covers, but the declining health of the overall economy has not left the region untouched.
"We are starting to hear from our members that they are afraid for their jobs or they are cutting back a little bit. It's just a reflection of the uncertainty in the whole economy," Bossung said.
In response, the credit union is tightening some of its lending standards to limit exposure to potentially high-risk members, but it is also making other efforts to help its membership in tough times. Bossung pointed out that Catholic and Community has rolled out two new features that allow for greater flexibility with members that have outstanding loans.
"We hadn't been doing skip-a-pays, so we rolled out a program that will let them skip a payment," he said, noting the credit union's longstanding commitment to working with members in financial trouble. "We've also extended the term on first payments so (members) can go two whole months until the first payment is due. We're the ones that are going to ride out of this smoke with the white hats and provide the loans for people who need them."
