Volume declines spur Crescent Bank to furlough auto staff, tighten underwriting | Auto Finance News Volume declines spur Crescent Bank to furlough auto staff, tighten underwriting | Auto Finance News
Auto Finance News
Subscribe
  • Home
  • News
    • All News
    • Exec of the Year
    • Innovation & Technology
    • Management
    • Compliance & Regs
    • Risk Management
    • Capital & Funding
    • Powersports
  • Events
    • 2020 DEMOvations
    • Auto Finance Summit
    • Auto Finance Innovation Summit
  • EXCELLENCE
    • Best Practices
    • Topics
      • Compliance
      • Customer Experience
      • Operations
      • Technology
    • White Papers
    • Glossary
  • Magazine
    • Latest
    • Magazine Issues
  • Data
    • Lender Ranking
    • Fixed Rate Outstandings at Banks
    • Securitizations
    • Marketshare Monitor
AFN PLUS
Monday, January 18, 2021
Log In
No Result
View All Result
Auto Finance News
  • Home
  • News
    • All News
    • Exec of the Year
    • Innovation & Technology
    • Management
    • Compliance & Regs
    • Risk Management
    • Capital & Funding
    • Powersports
  • Events
    • 2020 DEMOvations
    • Auto Finance Summit
    • Auto Finance Innovation Summit
  • EXCELLENCE
    • Best Practices
    • Topics
      • Compliance
      • Customer Experience
      • Operations
      • Technology
    • White Papers
    • Glossary
  • Magazine
    • Latest
    • Magazine Issues
  • Data
    • Lender Ranking
    • Fixed Rate Outstandings at Banks
    • Securitizations
    • Marketshare Monitor
AFN PLUS
Log In
No Result
View All Result
Auto Finance News
No Result
View All Result

Volume declines spur Crescent Bank to furlough auto staff, tighten underwriting

Nicole Casperson and Joey Pizzolato by Nicole Casperson and Joey Pizzolato
April 2, 2020
in Risk Management
Reading Time: 2min read

Subprime lender Crescent Bank & Trust has tightened its underwriting policies and furloughed a “significant” number of its staff as dealership closures across the nation have reduced the company’s origination volumes, Chief Lending Officer Donald Howie told Auto Finance News.

“In some of the larger states we do business in, the volume has reduced to almost zero,” Howie said, noting that Michigan, New York and Pennsylvania have classified dealership sales as “nonessential” businesses. New Orleans-based Crescent Bank has 6,500 dealer partners in 32 states, with the majority of its dealer network being franchise new car dealers, he said.

Crescent Bank has not yet deactivated any of its dealerships at this point, Howie noted. The lender, however, is monitoring its dealer network as the coronavirus pandemic has created a situation in which they may go out of business, which would place stress on the lender’s cash flow.

However, the bank isn’t concerned with liquidity drying up because it secures its funding through certificates of deposit, which are insured by the Federal Deposit Insurance Corp.

Crescent Bank originated $342 million of auto loans in 2019, and has a managed portfolio of $766 million. The lender had 504 employees across 16 offices with total assets of $962 million at yearend 2019.

While Crescent is a small player in the subprime market, it is one of the first to reduce its staff significantly as vehicle sales and origination volumes plummet in the auto finance sector as a result of the COVID-19 economic crisis.

“We reduced staff on the origination side: sales, credit and funding,” Howie said. “This is the side of the business responsible for originating volume and where there has been negative impact to staffing.” On the other side of the business, collections is “all hands on deck to keep customers in their vehicles,” he said.

With jobless claims reaching a record 10 million in just two weeks, it is likely that several small scale subprime lenders start credit-tightening. Crescent Bank is adjusting its minimum Fico score and loan-to-value ratios, and requiring larger down payments from customers.

Typically, the lender accepts a minimum of a 450 Fico score and combined household income of $2,000, according to the company’s website. It also offers a minimum $1,500 guaranteed backend for warranty or guaranteed asset protection if the customer elects.

“We haven’t made any changes yet on minimum income, but we definitely have had discussions about it,” Howie said. “We’re seeing a lot of movement in this area with the other lenders.”

Prior to the coronavirus pandemic, Crescent Bank was on a growth trajectory expecting to increase originations to $400 million this year and $500 million by 2021, Howie said. While tighter credit policies and subsequent reduction in origination volume will hinder the bank’s growth, the operational changes made this week may help the return to growth mode as soon as possible, he stated.

Tags: auto financeCoronaviruscrescent bankCrescent Bank & Trustfdicrisk management
Previous Post

JP Morgan: Credit losses to hit crisis levels as residual values drop

Next Post

Bank of America CEO says half a million customers have deferred payments

Related Posts

Auto refinance applications spike at RefiJet
Risk Management

Auto refinance applications spike at RefiJet

January 14, 2021
US jobless claims jump by most since March, approach 1 million
Risk Management

US jobless claims jump by most since March, approach 1 million

January 14, 2021
Risk Management

Weekly Wrap: Riots, credit performance and inventory

January 12, 2021
Next Post
Bank of America CEO says half a million customers have deferred payments

Bank of America CEO says half a million customers have deferred payments

Latest Magazine Issue

Sign Up Email List

INNOVATION & TECHNOLOGY

2021 Auto Finance Innovation Summit returns as virtual experience

2021 Auto Finance Innovation Summit returns as virtual experience

January 13, 2021
Auto Finance Innovation Summit Delves Into Analytics-Enabled Tech

Top 5 tech stories of 2020

December 29, 2020

CORONAVIRUS

Inside Scott Painter’s NextCar subscription service

Wells Fargo looks to increase vehicle loan automation

January 15, 2021
Auto refinance applications spike at RefiJet

Auto refinance applications spike at RefiJet

January 14, 2021

SPONSORED

Collateral Protection Insurance (CPI): What is CPI and what does it do?

Collateral Protection Insurance (CPI): What is CPI and what does it do?

January 8, 2021
US auto sales poised for crash after slowest pace in a decade

Driving Customer Loyalty, Retention After Total Loss

December 9, 2020
When tough times hit, proactive strategies pay

When tough times hit, proactive strategies pay

November 2, 2020

About

ABOUT US

PRIVACY TERMS

ADA COMPLIANCE

CODE OF JOURNALISM ETHICS

Follow Us

Twitter Facebook LinkedIn Soundcloud

Contact Us

ADVERTISE

HELP CENTER

EMAIL SIGN UP 

©2021 Royal Media & Auto Finance News

No Result
View All Result
  • Home
  • News
    • All News
    • Exec of the Year
    • Innovation & Technology
    • Management
    • Compliance & Regs
    • Risk Management
    • Capital & Funding
    • Powersports
  • Events
    • 2020 DEMOvations
    • Auto Finance Summit
    • Auto Finance Innovation Summit
  • Excellence
    • Best Practices
    • Topics
      • Compliance
      • Customer Experience
      • Operations
      • Technology
    • White Papers
    • Glossary
  • Magazine
    • Latest
    • Magazine Issues
  • Data
    • Lender Ranking
    • Fixed Rate Outstandings
    • Securitizations
    • Marketshare Monitor
  • +PLUS
  • SUBSCRIBE
  • Log In / Account

© 2020 Royal Media

Go to mobile version