Podcast: Q3 bank earnings offer mixed results 

Amanda Harris 0:30 Hello everyone and welcome to the road map from auto Finance News. Since 1996, the nation’s leading newsletter and automotive lending and leasing. It is Monday, October 21st. And I’m Amanda Harris, joined by Ashley Savage. This is our weekly wrap and what happened in auto finance for the week ending October 18th, 2024. In economic news, US retail sales strengthened September by more than forecast as the value of retail purchases, unadjusted for inflation, increased .4% after a .1% uptick in August, according to Commerce department data Last week, excluding autos and gasoline stations, sales climbed .7%. Applications for jobless benefits also declined following an increase due to Hurricane Harvey. An automotive finance TD Bank plans to scale back auto lending after being hit with $3.1 billion. Combined fines related to Monday laundering charges from the US Department of Justice and the Financial Crimes Enforcement Network as part of the settlement, the office of the Comptroller of the Currency impose an asset cap of $434 billion for the bank’s total US. Assets TD is reducing its commercial auto dealer lending portfolio. In compliance to Consumer Financial Protection Bureau’s. Office of Service member Affairs published a report last month that Active duty and retired military personnel. Nearly 85,000 complaints with the CFPB in 2023, more than half of which were related to credit and consumer reporting issues. Collectively, complaints and service members grew 27% year over year, while those related to auto finance jumped 150%. Oral arguments also were held earlier this year for the national Automotive Dealer Association’s Legal challenge to the Federal Trade Commission’s combating auto retail scams rule, which is known as the CARS rule. The Nada argued that the FTC did not provide. Proper advance notice for the feedback on the rule. While the FTC upheld that advance notice was not required and there were opportunities for an ADA to engage in the regulatory process, the cars rule, if passed, is projected to cost dealers about $1.1 billion in compliance Costs for regulators believe the benefits will outweigh the cost. As a rule targets what the FTC deems bait and switch tactics and hidden junk fees. No date is yet set for the final decision from the court. Also last week, third bank earnings continued and highlighted mixed results. Auto portfolio growth. Bank of America’s auto originations rose about 16% year over year to about 7.9 billion in the third quarter, while U.S. banks, indirect auto loan and lease originations jumped 65% year over year to 1.8 billion. Huntington Bank’s auto originations rose. 71% to 2.4 billion. And Ally Financial originations actually declined 11.3% year over year to 9.4 billion during the quarter. Other regional banks portfolios saw slight growth in Q3 with the third bank’s auto outstanding. Up about 3.3% year over year to 15.9 billion in PNC Financials Auto portfolio of 1.3% year over year to 15.1 billion. Truist auto portfolio declined 6.5% year over year 22.5 billion. Turning to credit performance, delinquencies and net charges rose across the board in line with industry trends. And you can check out all of our earning stories for more details on all the bank’s earnings that are reported so far. We’ve also hosted the 2024 Auto Finance Summit in Las Vegas earlier this month. Several takeaways from the show. So Ashley has some of those details, Ashley. Ashley Savage 4:05 Thanks, Amanda. As you mentioned, our auto finance and powersport finance summit are officially behind us for the year, leaving us with the luxury of an abundance of industry news and insight to highlight just a few takeaways from both events for credit in 2025, we’ll be looking. To leverage consumer data to improve communications with borrowers and streamlining customer service, lender plans to launch a new platform next year that will help them to know their customer a little better. The platform, in short, well would allow Ford credit to better understand the best times to contact the customer, whether the customer prefers a text message or a call, and other helpful insight to consumer preference is similarly Carvana is using technology to gather consumer data. Consumer data and identify business trends. Matt Dundas, Vice president of finance at Carvana, said on a panel. Quote technology has changed the way that we’re extracting insights and figuring out where to prioritize our efforts. Kristina Bolte from U.S. bank also shared similar sentiments, adding that lenders should employ tools that allow customers to confidently work with the financial institution kitchen gears a bit. But at our Powersports finance summit. Harley-Davidson Financial Services announced plans to add certified, pre owned and used motorcycles to its Flex financing program in 2025.One speaker from HDFS highlighted that integrating Cpos and use models to the program will take less number crunching. Thanks to the lender’s long time presence in the market and access to historical data and used vehicle values. Currently, the chicago-based Lender’s Flex financing program, which is similar to a lease deal and launched in February, is available under select terms on model year 2023 and 2024 motorcycles. The decision to integrate CP OS and use motorcycles into the Flex Financing program joins HDFS ongoing efforts to review each of its programs, including those for limited credit borrowers and first time buyers for ways to increase motorcycle sales. While maintaining the same risk appetite. And another quick power sports update, Canadian powersports manufacturer BRP is planning to sell portions of its marine business to prioritize its core powersport product. Announcement by BRP comes after North American retail sales fell 18% year over year in the second fiscal quarter due to softer retail demand and added incentives from competitors. BRP believes the sales process assisted by National Bank financial might allow the manufacturer to capitalize on growth opportunities within the powersports. Industry and improve its margin profile. For a closer look at which products will be included or excluded in the sales process, we have live coverage available at autofinancenews.net. But before you head over there, I’m going to hand it over to Amanda for some closing thought. Amanda Harris 6:41 Thank you, Ashley. We do have tons of coverage up from both the power Sports Finance Summit and the Auto Finance summit. So you can find links to our coverage on autofinancenews.net and of course I will do it for today’s episode. We thank everyone for joining us on the road map. Be sure to also follow us on X and LinkedIn. Check out the website and join us here next time.