NORTHFIELD, N.J.-For Jersey Shore FCU, much of its focus in 2013 will be on looking to rebuild its auto loan portfolio, as well as what is projected to be more than a year-long effort to recover from Hurricane Sandy.
Jersey Shore, which had $14.3 million of its auto lending portfolio as of September 2012, two months before Hurricane Sandy struck, has emphasized conservative underwriting for the last few years, and CFO Bill Kennedy said it is looking at loosening its policies a bit, including lowering credit score ranges by 25 points and "not being as tight-fisted on the value of the collateral. We're still going to be underwriting a loan and you still have to have a job history, so we're not loosening the strings there."
He confessed that it's "not a huge move," but also noted that JSFCU has to find a way to compete with dealer financing.
"I look at that as a no-win situation," said Kennedy. "At some point interest rates have to go up. They've been saying that for two years, but at some point they have to go up, and you don't want to have a bunch of 1.99% rates on your books."
One strategy the credit union has taken is to look for 15-20-year real estate paper, and hold it on the books as first mortgages and do participations.
"We are cognizant that we need to do more on the auto portfolio and try to steal some loans if the member has a higher rate."
Eye of the Storm
One factor affecting Jersey Shore FCU's auto loan portfolio has been members paying off their loans with the insurance checks they received in November and December for vehicles damaged or destroyed by water.
"We're definitely going to lose some loan volume; it's not going to be replaced immediately," Kennedy said.
The 10,000-member, $120-million JSFCU was "right in the eye of the storm, so everything south and north of us for 20-25 miles or so got creamed." Jersey Shore remained relatively unscathed, aside from some water damage. "In general, other than the total emotional drain, our limited area is OK," said Kennedy.
As far the storm affecting members, Kennedy said that at least half of the damage was done to second homes for members whose primary residences are in Delaware and Pennsylvania.
"In terms of numbers, it certainly could've been worse," he said, adding that many people have yet to discover the damage to their homes. There have already been situations in which homeowners thought their homes had only sustained water damage, but once they attempted to turn the power on they realized seawater had corroded the wiring.
"There's going to be a lot of people coming down to get their homes ready in April and May that are going to be very surprised," he said.
Jersey Shore rarely does second mortgages and doesn't portfolio first mortgages, so is not expecting Sandy to have a dramatic impact on its real estate portfolio.
According to 5300 data filed in September, nearly two months before the storm hit, Jersey Shore has more than 3,600 ($72 million) in loans, divided primarily between lines of credit and auto lending.