Alliant Credit Union’s success in obtaining loans for recreational vehicles has led it to step up its sales of these loans to participating credit unions.
The Chicago-based Credit Union ($ 13 billion in assets, 539,503 members as of September 30) native $ 610 million in RV loans in the 12 months ending Dec.31, and said he expected to do about the same in 2021.
Alliant ended the year with $ 1.3 billion in RV loans on its books, roughly the same as the year before.
RV loans made up the vast majority of its loans in the NCUA category for “all other unsecured non-real estate loans” with a sprinkling of boat and plane loans. In September, this category accounted for 15% of Alliant’s $ 9 billion in loans, while the average for all credit unions was 8%.
Charles Krawitz, vice president of commercial real estate lending and loan trading, said Wednesday that Alliant’s strategy was to sell some of the RV loans to keep the category below the board cap and to create a source of non-interest income from premiums and service charges. .
He sold $ 64.5 million of those loans last year to a group of about 10 to 12 regular members of credit unions.
“We’re always on the lookout for new buyers,” Krawitz said.
Typically, a buyer may have a high concentration of auto loans and wants to adjust their risk allocation, and has excess deposits and “is looking to put that money to work,” Krawitz said. Some credit unions buy loans in a new market to gain experience before they start issuing this type of loan themselves.
Krawitz said credit unions are often wary of recreational vehicle loans, but their risk-adjusted returns outweigh auto loans.
For its part, Alliant is looking for credit unions that are regular buyers, ideally buying at least $ 5 million per month in RV loans.
One of the participants in the RV loan for several years is the First Peoples Community Federal Credit Union of Cumberland, Maryland ($ 525.2 million in assets, 32,331 members).
Lynn Stuart, vice president and chief credit officer of FPCFCU, said in a press release from Alliant that Alliant has streamlined the process.
“We were impressed with their attention to detail, due diligence and efficiency. From the moment we express our interest in a stake, we can receive a full proposal and be closed in just a few days, ”said Stuart.
Alliant began financing recreational vehicles for its members in 2008 and in 2013 expanded to indirect channels focused on the largest franchised dealerships.
The RV Industry AssociationThe latest report in the report showed that 390,030 caravans and motorhomes were sold from January to November 2020. The number is only 3% more than in the first 11 months of 2019 due to the fall in sales last spring after COVID-19 was declared a pandemic in March.
This year, the RV Industry Association predicts that sales will increase by nearly 20%, topping 500,000 units.
Krawitz said RV buyers include “digital nomads” whose jobs are far away and can work anywhere. Others are reluctant to stay in hotels because of the pandemic. And then, of course, there’s the growing number of baby boomer retirees who are ready to hit the freeway in search of adventure.
RV loans represent only a small portion of Alliant loan sales. Other credit unions purchased $ 443 million in Alliant loans of all types last year, including home equity lines of credit, indirect auto loans, business loans and personal term loans. That’s a 68% increase from $ 263 million in 2019.
And he’s also a loan buyer. The credit union said next week that it plans to purchase $ 100 million in residential solar loans from two credit unions. Krawitz said one of the reasons was that solar loans were new to Alliant and holding loans would be a start to learning more about the market. He said he hoped to start offering solar loans through an indirect program – possibly later this year.