Regions Financial Corp.’s indirect vehicle lending balances dipped 9.8% year over year to $3.7 billion in the second quarter, according to the company’s earnings last week.
However, after removing activity from third-party partners, the company’s indirect vehicle portfolio grew 1.6% on a year-over-year basis to $2.1 billion in total during the second quarter.
“The third-party portfolio is expected to decline between $500 and $600 million on a full-year average basis during 2017,” Grayson Hall, president and chief executive of Regions, said on the earnings call.
The decline is attributable to the lender’s exit from one of the platforms it used to partner with, the company disclosed last quarter. In April, a spokeswoman told Auto Finance News that Regions is not disclosing which platform it exited.
Indirect vehicle charge-offs also rose in the quarter. Net charge-offs as a percentage of average loans rose to 0.7%, up from 0.6% the same quarter a year prior.
However, delinquencies 30 to 89 days past due dropped to $54 million, from $55 million in 2Q16, while delinquencies 90 days past due remained flat year over year.
“As it relates to our [total] loan portfolio, we remain focused on our deliberate and intentional diversification strategy, while we also seek to achieve appropriate risk-adjusted returns,” Hall said. “We are experiencing success with our remixing efforts. For example, we were early movers to reduce exposure in certain asset classes, including auto and multifamily lending.”
Regions has made a “very conscious effort to take a different risk appetite on certain lending segments,” which includes auto, Hall said. “We’ve been very thoughtful about what part of our lending portfolio we want to grow, and we feel like we’ve sort of remixed both our deposit and our loan balance sheet.”