Rethinking Differentiation, Auto Loan Growth
Published July 24, 2015 10:56 AM
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Updated June 1, 2021 1:22 PM
1 Min Read
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CU Journal has always sought to be a forum for discussion of the issues that are important to credit unions, to facilitate a dialogue on the biggest trends, challenges and opportunities to face our readers. Read on to see some of your colleagues' latest comments.
We need to remember it's not so much what we do but how we do it that can differentiate us! All financial institutions are involved in their communities. Whatever community involvement fits your brand or is part of your heritage or is a new cause that dramatizes your new brand position, do it in way that no one will forget... Several years ago, Northwest Community in Oregon sponsored its local A-League baseball team. But rather than mail a check and have the logo on the outfield wall, Northwest made every Monday home game "Northwest Community Credit Union Margarita Monday!" Staff made the margaritas by pedaling bicycle-powered blenders! ...No one who witnessed the blenders ever forgot the experience!
Posted by Matt P July 17 at 3:07PM ET
Since bank regulators already do reviews of third-party vendors, I'm not convinced it is out of line for NCUA to have similar authority. BUT... there's no sense in multiple financial regulators performing nearly-duplicate and redundant reviews. Since many third-party vendors provide services to both banks and CUs, there should be some sort of sharing or joint review.
Posted by Paul M July 14 at 3:37PM ET
I see many signs that risk is rising in the battle to take market share. ...It is not unusual to see auto loan portfolios that have increased 40%. When a CU grows its auto loan portolio at that rate in a compeitive market then you have to wonder "how did they do it?" I think the answer lies in a number of areas. The combination of long terms, high advances, high dealer commissions and lower credit scores represents an increase in risk. The risk is being hidden by the huge increase in new loans which has driven delinquency rates lower. New loans tend to perform for the first few months before the borrower begins to miss payments. Every time I have seen huge rates of growth in a competitive market I have seen problems in credit quality follow. The question is whether this time is different. What is especially scary this time is that these loans were sold with some of the lowest rates and highest dealer commissions I have seen. If there is a credit problem there won't be much interest income to offset losses.
Posted by henryw July 10 at 11:42AM ET
