EXCLUSIVE: Bank of the West exits indirect auto
Bank of the West has set the wheels in motion to shutter its indirect auto lending business, sources told Auto Finance News. The San Francisco-based bank has started to lay off salespeople — including its East Coast sales staff — and inform dealers of its impending exit next week. The bank will instead focus on its marine and RV business.
“Bank of the West is exiting the indirect auto business effective November 2019,” a bank spokesperson confirmed in an email to Auto Finance News. “The Personal Finance team will refocus its resources on its RV/marine loan business. Although we will no longer write new indirect auto loans as of Nov. 12, 2019, we will continue to service existing loans for the remainder of their terms. We appreciate the partnership of the auto dealers and borrowers we have engaged with over the years.”
The move marks the third major bank exit from the sector this year. In February, Regions Bank shut down its indirect business, and in May, Fidelity Bank followed suit.
Bank of the West’s auto portfolio has been slipping the past two years. Outstandings dropped 6.7% to $4.1 billion at yearend 2018, on the heels of a 19% decline in 2017, according to Big Wheels Auto Finance Data. Bank of the West was ranked 37th in the Big Wheels ranking of the nation’s top 100 financiers.
In early 2018, Bank of the West invested $40 million to transform itself into a “full-spectrum, full-service, flexible vehicle financing platform,” Executive Vice President of Personal Finance Michael Pereira told AFN at the time. By yearend, the bank had debuted its Premier Partner Program in California, consolidating efforts to strengthen and deepen relationships with dealers.
With that goal top of mind, the bank opened its book of business to borrowers with credit scores as low as 560, created a customer service team and online portal to help dealers, and invested heavily in the risk it was about to take on. Beyond retail lending, Bank of the West offers cash flow and interest risk guidance, as well as commercial floorplan financing and wealth management products.
The bank continued its work into 2019, with plans to expand its product set. “We needed to reinvent our business model,” Pereira told AFN in February. At the top of the priority list was a dealer portal, slated for release by yearend. “We need to be engaging with our dealers to make sure their needs are fully taken into account,” he added.
Meanwhile, originations in California, Bank of the West’s largest state, have slowed in the past year. The bank originated 951 loans in September, down 13.2% year over year, according to AutoCount data from Experian.
