U.S. Bancorp grew its auto originations 4.7% year over year to $18 billion, driven by “high-quality originations in the indirect channel,” the company disclosed in its third-quarter earnings report.
“We do have levers in the prime space and that continues to give us loan growth regardless of what’s going in the macro-economic environment,” Terry Dolan, U.S. Bank’s vice chairman and chief financial officer, said on the earnings call.
U.S. Bank deals mostly in the prime spectrum with a weighted average Fico score of 779 through its indirect channel and 748 through its direct channel. Most of the bank’s loans — 95% — were done through indirect channels, while the remaining 5% were through the direct channel.
Back in April 2015, U.S. Bank made a strategic shift toward originating more prime and super-prime loans. Additionally, U.S. Bank has been cutting back on its 84-month loan offerings since April 2015.
However, the Minneapolis-based bank was not immune to the industry-wide trend of rising delinquencies. The company saw an uptick in 30-to-89-day delinquencies to 0.89% of the total auto portfolio compared to 0.59% during the same quarter the year prior. Also, charge-offs rose to 0.40% of the total auto portfolio, up from 0.32% compared to the previous year.
But the uptick is not attributable to the hurricanes, Dolan said on the call, adding that it’s too early to see how much the storms will affect delinquencies and charge-offs.
“We have been putting programs in place for reaching out to [affected] customers and providing loan modifications,” he said. “The increase in auto [delinquencies and charge-offs] is seasoning and the fact that those portfolios have grown fairly significantly over past few years, so it’s just natural seasoning. They are performing at our expectations.”
John Hyatt, the bank’s executive vice president of dealer services, will speak on a panel entitled “Practical Strategies for a Post-Peak Market” at the upcoming Auto Finance Summit, which will take place on Oct. 25-27 at the Wynn Las Vegas. To learn more about this year’s event — or to register — visit the Summit’s homepage here.