Commerce Bank Sells Prime Loans, Offsets Lower Loan Volume

Commerce Bank sold two pools of prime and super-prime auto loans — one in June and the second in September — in an effort to “control” new loan origination growth, after the bank’s intentional pullback in auto, Indirect Lending Manager Robert Griffin told Auto Finance News.

In March, Commerce Bank set aside $50.4 million of auto loans to be sold. The bank’s auto portfolio experienced “a lot of growth” in the past five years, Griffin said, and selling the loans provided Commerce an opportunity to balance the portfolio.

Auto originations, however, are fairly flat this year, versus the same period last year, due to a strategic slowdown in originations in oil and agriculture-producing states, Griffin added.

Through June, Commerce Bank originated $239 million in new auto loans, on pace for a 4% decline by yearend, according to the company’s earnings report.

“We’ve intentionally pulled back, and that’s caused flattening across the board,” he said. “We pooled some of our existing loans and sold those to tier banks, and that reduced our outstandings. So if you look at our outstanding growth, year over year, it’s flat also because we have removed about 5% of our portfolio.”

The bank had a $975.5 million portfolio at midyear, according to the report. Commerce Bank has more loan sales in store for 2017, Griffin said, but it has not yet pinpointed the timing or dollar amount of the pools.