Regions Financial Corp. continues to see declines in its auto portfolio amid a repositioning away from third-party providers of loans in favor of growth in the bank’s own indirect lending efforts, according to the company’s third-quarter earnings.
Earlier this year, Regions decided to end an undisclosed partnership with a third-party loan provider, which is expected to have a $510 million impact on the lender’s portfolio this year. The company is nearly a year into a two-and-a-half-year runoff of that portfolio, David Turner, the company’s chief financial officer, said during the call.
In total, indirect vehicle balances declined 5% in the third quarter, compared with the same period the year prior.
Separated out, outstanding balances from third-party providers was down 30% year over year in the third quarter to $1.4 billion. However, that was partially offset by a 2% year-over-year uptick in the company’s dealer financial services division to $2.1 billion outstanding.
Although Regions did not break out vehicle charge-offs in its earnings, the total loan charge-offs grew by 12 basis points to 0.38% of the portfolio.