PNC Financial Services Group, the nation’s 22nd-largest auto finance company, is “losing share in auto purposely.”
That’s according to Chief Executive William Demchak, who told investors on the bank’s first-quarter earnings call yesterday that PNC was actively moving away from the auto finance business. The reason given was a lack of appetite for subprime.
Total outstandings of auto loans were $11.12 billion in the first quarter, down 4.3% from the prior quarter, but up 2% over last year. PNC has a network of 3,400 dealers, a company spokeswoman said.
These changes come amid major personnel shifts at PNC. As recently as 2013, the role of SVP of auto was held by Joe Perveiler, whose title was Senior Vice President, Direct and Indirect NonEquity Group Manager within the bank’s Consumer Lending Product Management division. But at some point last year, Perveiler moved on at PNC to the role of SVP, Offer Management Group Manager within Retail Assets, Auto Finance News learned.
Perveiler was replaced by Christopher Dervan, SVP, Direct and Indirect NonEquity Group Manager. Dervan reports to Jeff Turley, president of PNC Dealer Finance since 2004. In August 2014, Turley told Auto Finance News that “disciplined growth” in auto within PNC would be the pursuit.
Regarding the pullback in auto, here’s Demchak on yesterday’s call:
We’ve seen inside of the retail space, particularly in auto, decline year-on-year as we have kind of held to our standards, and we have seen others extend maturities and drop Fico. I saw a stat somewhere on the percentage of new car lending that is now subprime, which was a very high percentage — yes, 40%, and we … do not play in that space. So we’re losing share in auto purposely.
Demchak’s assessment was reinforced by PNC CFO and EVP Robert Reilly: “Yes, the risk return has gotten tighter, and the best example is auto, where we are deliberately pulling back from some of the risk.”
This post was updated after receiving additional personnel information from PNC.
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