Despite the fact that Texas Dow Employees Credit Union had seen success with the indirect lending program it started in 2001, executives were interested in finding ways to further maximize its potential. The credit union’s portfolio stood at $450 million, but had not fully taken advantage of neighboring markets, namely the greater Houston area. It also had all of its indirect lending operations outsourced through a CUSO.
Along with $2.9 billion in assets and an indirect portfolio of $1 billion, TDECU has more than 200,000 members. The credit union is based in Lake Jackson, TX, and has more than 35 branches throughout the state.
For over 10 years, we had been using a CUSO to originate, process and fund the loans, and we would receive a contract packet at the end, said Margaret Hartenstine, vice president of wholesale lending at TDECU. We wanted to further expand to markets like Houston, and bring everything in house.
Hartenstine added that TDECU didn’t have the functionality or manpower to handle all of the contracts it expected it would receive from the added dealers. That’s when the credit union explored outsourced options for its processing and funding needs to complement its internal staff that included nine loan officers and six other staff members.
TDECU pinpointed CRIF Select’s outsourced processing and funding services as the missing ingredient for expanded indirect lending success. By partnering with Select for those services, which are options within the SelectChoice solution, TDECU could enhance one of the most challenging parts of its operations without missing a beat.
As an overview, SelectChoice allows the financial institution to choose the solutions (technology, dealer management services, underwriting services, processing and funding, and reporting and consulting) that work together best to enhance its indirect lending program. These customized solutions are ideal for institutions that have some indirect lending experience or want to internally control their programs while still partnering for more time- and cost-effective operations.
CRIF Select’s processing and funding services really met our needs and allowed us to expand almost immediately, Hartenstine said. Dealertrack’s DDS (Digital Document Services) proved to be a huge benefit for us as we looked to go green and further streamline operations with faster turnaround times.
Once the dealership is ready to send a loan package to TDECU for funding, it is transmitted to one of CRIF Select’s full-service processing centers. When it arrives, Select performs quality checks, reviews for compliance, and chases down any missing information from the dealership. When the loan packet is complete, Select lets the institution decide whether the images are scanned and delivered or securely destroyed. Select then completes the final step in the process by facilitating an ACH transaction from the institution to the dealership.
Partnering with CRIF Select paid immediate returns and has enabled steady growth for TDECU indirect portfolio with each passing year. TDECU’s indirect portfolio currently stands at more than $1 billion with at least 20% growth each year. Within the first five or six months of using CRIF Select services, average monthly volume increased from nearly $15 million to more than $20 million, Hartenstine added.
Not only has CRIF Select’s processing and funding services allowed TDECU to successfully expand to the Houston market and the rest of Harris County, it’s also opened doors for other neighboring markets such as Fort Bend County and Galveston County that weren’t available through its previous operations. Indirect lending success has also led to cross-sell opportunities where TDECU has been able to expand in other areas such as mortgages and credit cards.
The service-level commitment with CRIF Select has always been consistent as Select processes the contracts the same day they are received, which allows us to pay the dealers within 24 hours of receiving the contract packet, Hartentine said. We’re obviously very happy with this fast-paced service, and we know our dealers appreciate it too.
Before partnering with Select, TDECU operated with a network of approximately 41 dealerships. Since the switch, that network has grown to more than 150 dealerships. Partnering with Select was certainly the right call, Hartentine said. We’ve well exceeded our expectations and look forward to seeing this trend continue.
CRIF Select offers the tools and expertise to help any credit union build and maintain a superior indirect lending program. For a complete guide on how to build or strengthen each portion of your program including dealer management, technology, underwriting, processing and funding, and consulting and reporting, please click the button below to request a copy of our Universal Roadmap for Indirect Lending Success.