U.S. Bank has become an “all-prime” auto lender, Chief Operating Officer Andrew Cecere said during the bank’s second-quarter earnings call this week, despite a previous push toward more nonprime auto lending.
“We started a little initiative about a year and a half ago to pursue subprime, but the volume and the opportunity there was not sufficient,” Cecere said in a conference call. “So we’re completely a prime shop.”
Minneapolis-based U.S. Bank’s average auto loans — which have a weighted average Fico of 768 — totaled $15.6 billion last quarter, up from $14.1 billion in the prior-year period. The 10.6% year-over-year growth was driven by high-quality originations in the indirect channel, according to the bank’s quarterly earnings.
The purely prime focus is a shift from 3Q14, when Chief Risk Officer P. W. Parker told analysts that the bank’s “near-prime push in auto” was going well. “It’s been successful,” he said at the time. “It’s enabled us to provide a broader spectrum of ‘Yes’ answers in the dealership office.”
Chief Executive Richard Davis commented at the time that going further down the credit spectrum gave the bank more opportunity to expand its floorplan lending.
On a July 15 conference call, however, Cecere confirmed that the bank is re-focused on leasing and prime auto loans, which he called “probably one of the most competitive, dynamic loan categories on the balance sheet today.”
