Three years after shutting down its indirect automobile lending unit because it lacked scale, First Niagara Financial Group (FNFG) in Buffalo is jumping back into the business in a big way.

The $33 billion-asset company announced Wednesday that it has established a new unit that will provide car financing through dealerships across the Northeast. More than 400 dealers have already signed on as partners and First Niagara said it expects to be working with 1,500 dealers within the next two years.

First Niagara is one of several regional banks ramping up its auto lending in hopes of capitalizing on a surge in car sales. Huntington Bancshares (HBAN) in Columbus, Ohio, recently expanded its indirect auto lending into Wisconsin and Minnesota and TCF Financial (TCB) in Wayzata, Minn., acquired a nationwide auto lender late last year

Andrew Farnola, a senior vice president at First Niagara, said in an interview that the bank has re-entered the auto lending business both in response to the robust demand for car loans and to fill “a significant gap” in its consumer lending capabilities.

He added that First Niagara will be able to build the scale it could not achieve in its last go-round because it’s a far larger company than it was three years ago and now has more sophisticated processes in place to handle demand. He said, for example, that the company, which has more than tripled its size since 2009 through acquisitions, can originate car loans on the same system it uses to originate home equity loans.

“As we have built capability to handle our growth, we can leverage those systems to new product offerings, like indirect auto lending, very quickly,” Farnola said.

First Niagara is also counting on the experience of some newly hired lenders to help it build up its auto lending business. Farnola said that the company has taken advantage of some consolidation in its markets to bring on teams of lenders that have strong connections with dealers in their markets.

First Niagara is initially offering auto loans in New York, New Jersey, Delaware and the six New England states. It expects to begin making loans through dealerships in Pennsylvania in the second quarter.

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