website header balloon at sunset.jpg

CRIF Lending Solutions Blog

Expert Insight. Forward thinking. Trusted perspective.

Ask the Experts: Smarter Ways to Spur Indirect Lending Growth (Part 2)

Wed, Nov 29,2017 @ 03:15 PM / Chris Carlson / Underwriting, indirect lending, ask the experts

I’m not sure about the rest of you, but I certainly had my fill of turkey and assorted trimmings last Thursday – not to mention all of the other food I put down while out of town for the holiday weekend. Besides the food, I always enjoy spending so much time with family and friends as we catch up on stories since we last got together – be it professional or personal. Unlike what I pile on my plate, I never can seem to get enough of the stories that explained the decisions they made, experiences shared, thought processes surrounding everything and how others reacted. In my family, this all accounts for a lot of laughs.

In a similar fashion, financial institutions of all sizes should equally enjoy hearing success stories and details of how challenges were tackled by others in our industry. When it comes to indirect lending, testimonials and first-hand accounts of what worked, what didn’t and how results eventually came to fruition are often the most useful when deciding your own course of action.

That’s why this week’s blog post picks up where we left off regarding the Q&A portion of October’s indirect lending webinar with our guest Toby Smith, Vice President of Lending, SECU. Here are a few more questions from that day’s attendees regarding SECU’s program as well as changes made to facilitate SECU’s transition to smart and sustainable growth:

Q: What, if anything, was changed regarding your manual underwriting efforts?

A: It circles back to why manual underwriting was being required in the first place. We still have a 25 percent gap that we need to close between our direct and indirect sides. Historically, we’ve been a little more conservative with our indirect side because of our philosophy as a credit union. So we’re working to even that out. But a lot of [what we changed] involved understanding why certain areas required manual underwriting and then making changes to our AUS policy or approval guides in general to avoid manual underwriting. If underwriters were comfortable approving 80 percent of the loans with a 5-basis-point increase in DTI, then why would we not program the system to have that same comfort level? That’s just one example of something we did to increase consistency between manual underwriting and automated decisioning.

Q: Is your dealer reserve based on credit tier? If so, how is it structured?

A: Our dealer reserve isn’t set up according to credit tier. What we have is more of a loss-allocation that we target. While we don’t have reserves set up for individual dealers, we have our flats set up via credit tiers (1 percent for A and A+, and then 2 percent for everything else to help drive the mix that we want).

Q: Who performs SECU’s quarterly ROA analysis?

A: We handle it internally. Our manager of business analysis performs preliminary reviews in conjunction with our finance department. We overlay some internal overhead as well as some of our CRIF fees, quite frankly. All of that is baked into our quarterly ROA analysis. Again, we try not to be reactive on certain things. We monitor with more of a trend approach, and we do this on a quarterly basis. But all of the other financials including delinquency and performance origination data, Select SECU-1.pngas well as existing versus new members are analyzed on a monthly basis. CRIF does a great job of sending us performance analytics that supplement some of the customized reports that we use to validate or support some of our internal findings as well.

If you’re interested in the whole story of how SECU transformed its indirect lending program and eventually transitioned to sustainable, smart growth that matched its overall and long-term goals, click the button below to request a copy of our case study. If you’d like to listen to more on not only this Q&A, but also Toby’s advice to financial institutions of all sizes, click here to request a link to the recording.

Request Our Case Study

Photo Credit: RebeccaWong.Rx

 Prev All Posts Next 

Complimentary Webinar: Can your customers/members open an account from end to end with their mobile phones?

Did you miss our deposit account opening webinar earlier this month? Don't worry, you can request a consultation with one of our experts to discover how to build a winning strategy when it comes to leveraging the right deposit account opening technology to drive growth in all aspects of your financial operations.

Schedule Your Deposit Account Opening Consultation Today!