Navy Federal Credit Union is growing origination volume at a faster pace than it expected for the year, in part due to pullback from larger banks, Joseph Pendergast, Navy Federal’s vice president of consumer lending, told Auto Finance News.
“We’ve had a great start to the year,” he said. “Five months, almost six months through the year now, and our origination volume is doing much better than we originally budgeted.”
Although he declined to disclose specific numbers, he said underwriting standards have not changed to extend credit to more borrowers. Rather, there are more opportunities to lend as banks such as Chase Auto Finance, Santander Consumer USA, and Wells Fargo Dealer Services are all experiencing double digit year-over-year declines in originations, according to first quarter earnings reports.
“The big banks have shareholders to answer to and we have our members to answer to,” Pendergast said. “The way we answer to our members is we continue to expand branches, because some of our members want to go to a branch. We’re opening 20 branches a year for the next several years. Larger banks are getting out of the brick and mortar business, but our members like it, so we’ll continue to do that.”
Navy Federal’s origination growth also comes amid an expansion of its membership to veterans, not just active duty service members and their families. Still, that has not resulted in an expansion of credit criteria.
“We’re always looking at how we can say yes to more members,” he said. “We’re very comfortable in our originations and the volume that we’re getting, and we don’t feel [expansion] is something that’s really necessary right now.”
While there are no publicly available numbers for 2017 volume, the company’s originations did decline slightly in 2016, according to the Big Wheels Auto Finance Report. The credit union originated $6.4 billion in retail contracts last year, down from $6.6 billion the year prior. However, total outstandings still grew to $11.5 billion last year, compared with $10.9 billion in 2015, which was enough to maintain Navy Federal’s status as the largest credit union in the U.S.