California Republic Bank, a wholly owned subsidiary of California Republic Bancorp, completed its first securitization of nearly $183 million in prime indirect automobile loans yesterday.
The transaction of $182.56 million in notes backed by CRB’s auto loans were sold to institutional buyers in a private offering.
Through the private placement deal, CRB also sold all its remaining residual interests in the receivables via a sale of the underlying ownership certificates of the securitization trust. The bank will continue to service underlying receivables on behalf of noteholders and certificateholders.
“This is an important milestone for our company,” CEO Jon Wilcox said in the announcement. “It reflects the strong growth in our indirect automobile platform since its start in July 2011.”
California Republic Bank provides loans, deposit and cash management services to consumers, companies, and their owners throughout Southern California. It has three regional branch hubs in Newport Beach, Beverly Hills, and Westlake Village. CRB also has an indirect auto finance division headquartered in Irvine, which purchases automobile installment sale contracts from franchised and independent car dealerships.
I think there can be some fair comparisons made between the payday loan business and the BHPH auto loan business. Personally, I’m not for curtailing either. How else does a segment of the population that, for better or worse, has found themselves in the straits of bad credit. If these to segments of finance are curtailed, will those people cease their borrowing? I think not. “Guido and Tony” from “Break Your Knee Caps” loans will benefit. If I’m going to make loans to risky borrowers, I will set my own rules, thank you very much!
It seems to me that there are certain things that need to be scrutinized in the business of lending to consumers, but a federal one size fits all solution is not called for. Statutes already exist to deal with lending practices on both the federal and state level.
Perhaps securitization needs to be looked at? I’m not aware of any CDOs being attached to auto loan securities. Does anyone know anything about that? I’ve got a real “thing” about CDOs, which in my mind are insurance products. AIG and others did not use the term insurance when they created these “risk hedges” and the appropriate authorities totally missed it. We all know what happened from there…. no reserves to pay claims and no safety net under the system, as with insurance products.
Let’s hope the folks who lobby for the auto industry can gain an ear on this issue.