Teachers FCU Plans National Auto Drive
Using open charter is part of the plan to nearly double auto loan and lease production this year.
New York’s Teachers Federal Credit Union said it plans to nearly double its automobile loan and lease production this year, in part as it spreads further from its Long Island base.
Teachers Federal Credit Union ($8.4 billion in assets, 355,731 members at Dec. 31) originated $500 million in automotive loans and leases in 2020, and its goal is to generate $900 million this year.
Francis Collins, SVP for credit, said the goal is a combination of originations from its existing footprint of 32 New York metro branches in 2020 and what it anticipates generating this year by adding new markets.
In November, the credit union rolled out a new online presence designed to allow it to expand nationally, and allow users to easily open accounts and apply for loans. Teachers is able to recruit members anywhere in the nation, regardless of affiliation, because it acquired an open charter in 2018 when it acquired the assets of Melrose Credit Union.
Two other credit unions have open charters: PenFed Credit Union of Tysons, Va. ($26.7 billion in assets, 2.2 million members) and Bethpage Federal Credit Union of Long Island ($10.4 billion in assets, 422,120 members).
All three acquired the open charters through mergers or partial mergers with credit unions that had large, failing portfolios of loans secured by taxi medallions.
Bethpage acquired Montauk Credit Union on Long Island along with its $166 million in taxi medallion loans and open charter in March 2016, six months after the NCUA conserved it.
PenFed acquired Progressive Credit Union, including its taxi medallion portfolio after a heavy write-down.
Teachers acquired its open charter by acquiring all assets except taxi medallion loans from Melrose Credit Union of New York on Aug. 31, 2018. Four weeks later, it acquired the non-taxi loan assets of LOMTO Credit Union. The NCUA retained the taxi loans of Melrose and LOMTO, later taking a heavy loss and selling them at a fraction of their value to private investors.
Teachers had 32 branches as of Sept. 30, with 31 on Long Island and one former LOMTO branch on the Upper West Side of Manhattan.
“As we are one of three credit unions in the nation with an open charter, we are evaluating strategies to further expand our footprint outside of the New York metro area to capture market share in this growing category,” Collins said.
“This effort will allow us to pick up incremental volumes versus concentrating only in the local market and getting caught up in a rate war with the local competition,” he said.
Car lending last year was “very tough,” Collins said. Automobile factories closed due to the pandemic, which meant low new car inventories that drove up prices on used vehicles. Consumers who hadn’t lost their jobs often worried if they would be next, so they held off buying.
“We are expecting that the market will gradually improve as the year progresses and the effects of the pandemic begin to ease,” Collins said. “As more people get vaccinated, positive cases decrease and cities reduce restrictions, consumers are more likely to feel comfortable making a vehicle purchase again.”
Teachers’ auto loan portfolio stood at $745.5 million on Dec. 31, down 10.4% from a year earlier. New car loans were $336.7 million, down 20.2%, while used car loans were $408.8 million, down 0.3%.
It is also far and away the largest auto leaser among credit unions. At Dec. 31, it held $1.1 billion in leases, down 0.2% from a year earlier. The next largest is nearby Bethpage with $614.7 million in leases at Dec. 31.
Only 88 credit unions carried leases as of September 2020, and those two credit unions accounted for 39% of them in total value.
Outside of automotive loans and leases, Teachers FCU’s other loans rose 10.5% to $3.2 billion last year.