LAS VEGAS-Two experienced indirect lenders, both with $7.3-billion Security Service FCU in San Antonio, have some advice on the relationship builders that have led to SSFCU's indirect lending portfolio growing to nearly $5 billion.
The road to those numbers wasn't easy. "We did not do this overnight, there was some trial and error," said Mark Wild, SVP-lending for Mountain Regions and a 22-year lending veteran in remarks to CU Direct Lending's recent conference here.
Added Charles Goss, SVP/CLO and a former employee at a car dealership, "A credit union has to be at the right place at the right time to capture the deal, and that is the dealership. Dealers have to make decisions on the spot, so consistency is important."
According to Wild, a successful indirect program's business model must include a portfolio strategy, an online lending system, a specialized team, a reputable dealer network, strong relationships and flexible pricing.
"A business model requires buy-in from top down and cooperation from all departments," he said. "Consistent portfolio strategy and management means diversification in the geographic area and the dealer network. You also need strong yield analysis to plan liquidity needs."
The way to ensure a reputable dealer network is by initial due diligence and ongoing monitoring, Wild added. Any dealer that has been in business fewer than five years gets extra scrutiny. "We have processors that do nothing but work with dealers to solve problems. The dealers love this," said Wild.
Lending = Art Form
Lending is an "art form," said Goss, adding SSFCU looks for loans that "make sense" rather than going strictly by credit score.
"If someone has some old [derogatory credit] but in the last two or three years has been paying, we will give that dealer a break and make the loan," he said. "During the recession we were still out there doing loans. I heard from the owner of a dealership recently who talked about all the people who want his business now, and he wonders where they were two or three years ago. He told me he has instructed all of his general managers to take care of our credit union."
Goss said Security Service aims to fund loans quickly and help dealers get cars on the road, because: "If they are successful, we are successful. It is important to know their business, including the F&I guy who is grinding it out day after day. Our loan officers make regular dealer visits to make sure we know their hot points."
"Have direct communication with the F&I staff, and utilize AutoCount market reports," he said. "Ask dealers for their business and find out what they need from you."
Wild said that it's okay to play favorites. "It is acceptable to cater to top-volume dealers."
