Minnesota-based TCF Financial Corp.’s auto lending unit was a key growth driver at the bank over the past few quarters, and that will likely continue for the remainder of the year, according to company executives speaking during the bank’s earnings call Tuesday.
The bank started to amp up its auto lending efforts after the 2011 acquistion of California based Gateway One Lending & Finance LLC.
By 2014, TCF’s year-over-year auto loan portfolio nearly doubled to almost $1.4 billion by the end of the first quarter, up from $719,666 at the same time last year.
The bank’s overall net interest income in the quarter increased $2.2 million, or 1.1 percent, compared with the first quarter of 2013 and remained relatively flat compared to the fourth quarter of 2013. But the bank said the increase from the first quarter of 2013 was driven in part by higher average loan balances in the auto finance unit.
TCF has been expanding its pool of active dealers in its network and deepening penetration of existing territories. The bank has also increased its inventory finance portfolio.
During the earnings call, CEO William Cooper did say there had been some margin pressure in the auto portfolio.
Consolidated quarterly yields and rates for 1Q2014 were 4.52, down from 5.23 the same time last year.
“Some in the industry have changed their underwriting standards. We have not and we’re simply going deeper in our existing dealerships and increasing our origination capacity in more dealerships, and that has increased origination,” he said.
