Security Service Adjusts Underwriting to Optimize Success [PODCAST]

Charles Goss, EVP and Chief Lending Officer, Security Service Federal Credit Union

Security Service Federal Credit Union attributes its No. 1 overall ranking in the 2017 Auto Finance Performance report to managing success by focusing on dealer and member service, and not by trying to gain marketshare, said the credit union’s Executive Vice President and Chief Lending Officer Charles Goss.

“What we try to do is be consistent,” he said during Episode 3 of The Auto Finance Roadmap. “We don’t manage this company on marketshare. We really manage to optimize our balance sheet positions to provide convenience for our members and to provide that best- in-class service to our dealers. We look at [the market] a little differently. … I do certainly look at our placement in the marketplace [and] our placement with certain dealers, because those are potential signs we are doing something right or we need to make some course corrections. It’s just another tool in our tool chest to manage this holistically this whole process.”

As part of Security Service’s strategy to manage the process holistically, the credit union has been “very proactive” over the last year and a half, Goss said, by making changes to underwriting when needed.

“I’m not just going to exit the market when things are not going optimal,” he said. “We are consistently there for our dealers.” Amid high delinquencies in the industry, Security Service has “already made adjustments to underwriting and gotten a little more conservative to make sure we have a sustainable program that can take these swings in the marketplace,” he added.

More specifically, the lender shifted its focus to what it considers “A and A-plus business” (prime and super-prime) with less reliance on “B and C business” (nonprime), Goss said.

“While it does negatively impact my net interest margins — because they are skinnier deals and lower rates — they are also higher credit quality individuals, so we don’t see the losses on the backend as much,” he added.

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