benchmarking credit union performance using market data benchmarking...collection and forecasting...
TRANSCRIPT
![Page 1: Benchmarking Credit Union Performance Using Market Data Benchmarking...Collection and Forecasting Models Remarketing with the most accurate floors 41 of the top 50 auto finance providers](https://reader033.vdocument.in/reader033/viewer/2022042917/5f58bff514ef901b3248d093/html5/thumbnails/1.jpg)
Benchmarking Credit Union Performance Using Market Data
cunastrategicservices.com
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page 2 October 13, 09 |
Agenda • Company Introductions • Automobile Market Update • Understanding Changes in your Portfolio by
Comparing Apples to Apples • Balancing Competitive Interest Rates and a
Sustainable Portfolio • Understanding the Effects of Credit and Collateral
Risk to: • Grow your Portfolio, and; • Protect your Net Worth
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page 3 October 13, 09 |
Certified Public Accountants with Over 60 Years
Collective Experience
Well Over $100 Billion in Loans Evaluated
Work Exclusively with Credit Unions
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• Loan Level Risk Analysis – Provides a "Credit Quality Grade" to each loan based on current
characteristics of the borrower and their collateral. This risk-based approach is widely accepted by the NCUA and has been proven to pinpoint a high percentage of charge offs (70%-90%) in a small percentage of loans (8%-12%)
• Portfolio Stress Analysis • Collateral Confirmation for Consumer Loans (Black Book) • Collateral Confirmation for Real Estate (AVM) • Loan Allowance Validation
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page 5 October 13, 09 |
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Founded in 1955 in Gainesville, GA
Owned by The Hearst Corporation since 1981
Independent source with the most timely updates and most accurate values
Over 3K lenders and 1K Credit Unions use Black Book as their Trusted Values
Originate loans at more accurate LTVs
Lost Business Analysis
Collection and Forecasting Models
Remarketing with the most accurate floors
41 of the top 50 auto finance providers use Black Book
Over 18,000 dealers in the US and Canada use Black Book values
Timely, Independent and Accurate™
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page 7 October 13, 09 |
Our Markets
» Cars, Trucks, Vans, SUVs » PowerSports - Motorcycles, Personal Watercraft, Snowmobiles » CPI – Collectibles and Exotics » MD & HD Trucks & Commercial Trailers » New Car Pricing and Specifications » Residual Value Projections » US & Canada
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page 8 October 13, 09 |
Timely, Independent and Accurate™
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page 9 October 13, 09 |
Timely, Independent and Accurate™
Where have we been and what does that mean?
Some explanation behind the numbers.
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Stronger Than Normal: November 23 – December 28, 2012 Date % of Increases
Nov 9 25
Nov 16 23
Nov 23 40
Nov 30 31
Dec 7 36
Dec 14 37
Dec 21 43
Dec 28 50
Jan 11 36
Jan 18 33
Jan 25 41
Feb 1 36
Feb 8 41+
Feb 15 46+
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Date $ Adjustment
Jan 11 -$62
Jan 18 -$64
Jan 25 -$49
Feb 1 -$46
Feb 8 -$24
Feb 15 -$18*
Cars – Overall adjustment was less each week
One year ago: $-54 Most consistent segment is SCC (Compact Car) Wk of 2/1/13 Jan. 2013 Avg One year ago
-$26 -$28 -$8
Wk of 2/15/13 One year ago
-$4 +$7
January & February 2013 - Cars
*smallest segment average since May 11, 2012
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Date $ Adjustment
Jan 4 -$23
Jan 11 -$36
Jan 18 -$28
Jan 25 -$22
Feb 1 -$27
Feb 8 -$33 (cars -$24)
Feb 15 -$19 (cars -$18)
Better than cars until early February
Average since January 1, 2013: -$27 One year ago: $-21 All three pickup segments are good (CPT, MPT, & FPT) FV segments (Full-size Vans Cargo and Wagon) were strong but now have
backed off. Dec 1 to Jan 18 increased every week!
January & February 2013 - Trucks
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20334 20207 [-0.6%]
19548 [-3.3%]
18543 [-5.1%]
17749 [-4.3%]
16000
16500
17000
17500
18000
18500
19000
19500
20000
20500
21000
2/1/12 5/1/12 8/1/12 11/1/12 2/1/13
Aver
age
Valu
es ($
)
Prior Year, By 3 Month Intervals (2007-2011 models)
Price Feb. 1, 2012 (2006-2010 models) was $16942
$807 increase in average price
Remarketing Industry Performance (as of 2/1/13)
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17237 [-1.6%]
18232 [-0.8%]
17513
18373
16600 16800 17000 17200 17400 17600 17800 18000 18200 18400 18600
Car
Truck
Average Values ($)
1 Month Comparison
1/1/13 2/1/13
(2007-2011 models)
Car and Truck Performance (as of 2/1/13)
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17237 [-5.1%]
18232 [-3.5%]
18172
18892
16000 16500 17000 17500 18000 18500 19000 19500
Car
Truck
Average Values ($)
3 Month Comparison
11/1/12 2/1/13
(2007-2011 models)
Car and Truck Performance (as of 2/1/13)
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17237 [-14.5%]
18232 [-11.1%]
20158
20501
15000 16000 17000 18000 19000 20000 21000
Car
Truck
Average Values ($)
12 Month Comparison
2/1/12 2/1/13
(2007-2011 models)
-9.2% year ago
-6.7% year ago
Car and Truck Performance (as of 2/1/13)
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2/1/12 to 5/1/12: 1 year ago Overall: -.6% 12 of 24 segments up Segments with strongest retention
SCC (Compact Cars) ELC (Entry Level Car) EMC (Entry Mid-size Car)
2/1/11 to 5/1/11: 2 years ago
Overall: -1.1% 14 of 24 segments up Segments with strongest retention
SCC (Compact Cars) ELC (Entry Level Car) EMC (Entry Mid-size Car
Next three months of 2013 – expect less strength than 2012 trend Supplies will steadily increase
First Quarter Trending & Forecast
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All Cars Not the Same
-2.6%
-6.7%
-17.6%
-1.1%
-4.9%
-12.6%
-20.0%-18.0%-16.0%-14.0%-12.0%-10.0%
-8.0%-6.0%-4.0%-2.0%0.0%
1M 3M 1Y
% Change for PLC and SCC as of Feb. 1, 2013
PLC
SCC
-1.8%
-4.9%
-10.9%
-1.3%
-8.1%
-2.9%
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
1M 3M 1Y
% Change for PLC and SCC as of Feb. 1, 2012
PLC
SCC
Model years 2007-2011 Model years 2006-2010
PLC – Prestige Luxury Cars SCC – Compact Cars
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Where’s the Better Opportunity?
$21,400
-$5,900
$4,850
-$400
-$10,000
-$5,000
$0
$5,000
$10,000
$15,000
$20,000
$25,000
Today's value 12M $ Change
PLC vs SCC (2007 models) as of 2/1/13
2007 BMW 328i - PLC 2007 Ford Focus ZX4 SE - SCC
-21.6% -7.6%
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Where’s the Better Opportunity?
$46,600
-$17,000
$9,400
-$700
-$30,000
-$20,000
-$10,000
$0
$10,000
$20,000
$30,000
$40,000
$50,000
Today's value 12M $ Change
PLC vs SCC (2010 models) as of 2/1/13
2010 BMW 750Li - PLC 2010 Ford Focus SE - SCC
-26.7% -6.9%
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Where’s the Better Opportunity?
$46,600
-$17,000
$4,850
-$400
-$30,000
-$20,000
-$10,000
$0
$10,000
$20,000
$30,000
$40,000
$50,000
Today's value 12M $ Change
PLC vs SCC (2010 and 2007 models) as of 2/1/13
2010 BMW 750Li - PLC 2007 Ford Focus ZX4 SE - SCC
-26.7% -7.6%
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page 22 October 13, 09 |
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page 23 October 13, 09 |
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page 24 October 13, 09 |
Why Does Evaluation Matter? • Estimating the Effect from Policy Changes or New
Relationships • New Loan Products • Indirect Lending / New Dealer Relationships
• Uncovering Opportunities for Growth • Developing Concentration Risk Policies
• Not Required to Prophesize Market Deterioration • Required to be Capitalized Well Enough to Maintain Core
Operations Given Market Deterioration
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page 25 October 13, 09 |
Adjusting for External Factors • Eliminate/Reduce - Looking at LTVs at Origination
• Requires Reliable Values • Think About Valuation in Terms of Losses. If you Repo the
Car, do you Expect to get Retail Value? • 5 New Autos - Average LTV Retail Value = 95.6% • Same 5 Autos – Average LTV Wholesale Value = 118.2%
• Adjust For - Comparing Depreciation on Similar Loans Period Over Period
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page 26 October 13, 09 |
Benchmarking Performance Apples to Apples
• Important to Understand the Life Cycle of an
Automobile • Generally, Loan-to-Values (LTV) Start High and
Migrate Downward Over Time • Depending on Duration, LTV May Continue to
Increase Over the Short Term • Challenge: Finding Relevant Comparisons
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page 27 October 13, 09 |
Loan-to-Value Analysis
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
2005 2006 2007 2008 2009 2010 2011
Don Ready Ford Gibby Newsome Dodge Ben Selleck Chevrolet
Brent Gage Honda Babs Merrick Toyota Paxton Harding BMW
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page 28 October 13, 09 |
Loans Originating in Q3 and Q4 2012 (As of
12.31.12)
Loans Originating in Q1 and Q2 2012 (As of
12.31.12) Change % ChangeNumber of Loans 5,642 5,858 -216 -3.7%Current Balance 117,897,515 109,151,567 8,745,948 8.0%Risk of Loss High Balance 462,788 614,691 -151,903 -24.7%Weighted Average Rate 3.2% 3.3% -0.1% -4.2%Weighted Average Orig FICO 771 770 1 0.2%Weighted Average Curr FICO 776 775 1 0.2%Weighted Average LTV 99.3% 88.9% 10.4% 11.8%Weighted Average Default Risk 6.6 6.4 0.2 3.0%
Problem: Auto Life Cycle Makes Information Hard to Compare
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page 29 October 13, 09 |
Solution: Benchmark Using Loans in Similar Life Cycle Stage
Loans Originating in Q3 and Q4 2012 (As of
12.31.12)
Loans Originating in Q1 and Q2 2012 (As of
6.30.12) Change % ChangeNumber of Loans 5,642 5,896 -254 -4.3%Current Balance 117,897,515 120,984,888 -3,087,373 -2.6%Risk of Loss High Balance 462,788 434,399 28,389 6.5%Weighted Average Rate 3.2% 3.3% -0.1% -4.3%Weighted Average Orig FICO 771 764 7 0.9%Weighted Average Curr FICO 776 768 8 1.0%Weighted Average LTV 99.3% 98.1% 1.2% 1.3%
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page 30 October 13, 09 |
How Loan Duration Affects LTV’s and Risk - Short Duration
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page 31 October 13, 09 |
How Loan Duration Affects LTV’s and Risk – Long Duration
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page 32 October 13, 09 |
Interest Rate Trends
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page 33 October 13, 09 |
Current Interest Rate Environment
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page 34 October 13, 09 |
Challenges to Interest Rate Competition
• Rates at Historical Lows • Everyone Seems to Be Going Lower • Direct Dealer Financing Doesn’t Fight Fire With Fire
• Discounted Interest Rates Priced Into Vehicle
• “How Low Can You Go” While Still Accounting for: • Charge Offs • Dealer Incentives / Other Administrative Expenses • Profit Margin (Cost of Shares)
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Pricing Analysis
Average
Rate
Earned
Average
Yie ld After
Charge Offs
Average
Rate
Earned
Average
Yie ld After
Charge Offs
Auto - New Direct Auto - New Ind irect
A Paper 5.16% 0.10% A Paper 5.34% 2.08%
B Paper 5.06% 2.31% B Paper 5.24% -8.04%
C Paper 6.75% -14.60% C Paper 6.98% 5.52%
D Paper 7.79% 5.01% D Paper N/A N/A
E Paper 6.78% 6.43% E Paper N/A N/A
Auto - Used Direct Auto - Used Ind irect
A Paper 5.31% 5.31% A Paper 5.58% 5.58%
B Paper 0.48% 0.46% B Paper 5.47% 5.11%
C Paper 6.87% 6.81% C Paper 7.30% 6.98%
D Paper 7.75% 7.04% D Paper N/A N/A
E Paper 10.18% 9.09% E Paper N/A N/A
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Pricing Analysis
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page 37 October 13, 09 |
Pricing Analysis (Net of Charge-Offs)
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page 38 October 13, 09 |
THANK YOU!
Dan Price Manager
877.392.2021 [email protected]
Ricky Beggs VP, Managing Editor
770.533.5221 [email protected]
Brett Collett Lender Solutions Manager
770.533.5239 [email protected]
Steve Miller Director of Operations
877.392.2021 [email protected]