Bank of the West edges east
‘Lend into the recovery’ strategy favors expanded auto lending
Bank of the West in San Francisco is a regional bank that is gradually expanding auto lending eastward into more states.
Paul Wible, senior executive vice president for the national finance group, is responsible for the bank's national indirect consumer lending division, which makes auto loans and leases in 25 mostly Western states. Bank of the West's parent company is French banking giant BNP Paribas of Paris.
Wible is also chairman of the Consumer Bankers Association's Automobile Finance Committee. The association's annual convention, CBA Live, is scheduled for March 11-13 in Phoenix. The Auto Finance Forum, the portion of the program devoted to auto finance, is a major component of the convention.
Wible spoke with Special Correspondent Jim Henry.
Q: You're expanding in autos, as are other banks.
A: The way we put it is our responsibility was to "lend into the recovery." When the crisis was starting to end, our client base was going to recover quickly, so we wanted to be sure and be there every day for our dealers and our customers, as I say, to lend into the recovery, to offer dealers the tools they need to be successful. Our business as a result has progressed very well.
In how many states are you doing auto lending now?
Our branch footprint states are 19 Western states. In the last two years we continued to open new states. You could generalize that we are progressively moving eastward, as we understand those markets and get comfortable in those markets. So that makes 19 states plus Georgia, Texas and Florida. We hope to open additional states in 2013.
Do you do leasing? A lot of banks got out of leasing in the recession.
We are pretty proud of the fact that we have always been active in auto leasing. We see it as an important complement to our business and the services we offer our customers.
We feel comfortable we have a great product there, whether it's our residual values or our money factor.
Like most banks, are you primarily a prime or even superprime lender?
Our niche, and our brand, is known for being a prime and superprime lender. Part of what I mean by the term "lending into the recovery" is that we have been progressively more liberal with credit standards. We are doing that cautiously. As the improvement in the economy takes hold, we are more comfortable approving a somewhat wider universe of customers.
Does that mean subprime?
I don't think at this time our ambition is to be a subprime lender -- to have a major, significant activity in subprime. We want progressively to be a full-spectrum lender with a very heavy bias to prime and superprime.
Do you have any manufacturer relationships? For example, Wells Fargo gets incentives from General Motors and Chase Auto Finance works with several brands.
We have very important clients throughout our footprint. Some of those clients are multiple-dealership dealer groups. As importantly, individual dealerships comprise the vast majority of our clients.
We don't have any captive relationships today. We do talk to the OEMs from time to time.
What do you expect to hear at CBA Live?
The Auto Finance Forum is going to follow in the overall conference theme of "The Future of Money." For instance, participants are going to hear from the different credit bureaus how to use customer information to make better credit decisions.
There are also important compliance matters facing our industry.
The Consumer Financial Protection Bureau has been the buzz of the last couple of conventions, but so far the bureau hasn't really addressed autos. Are you worried about the CFPB?
With regard to the regulatory environment and the CFPB, I think every bank is well aware of the importance of maintaining a robust compliance structure.
Every bank is watching very closely what the CFPB is doing in some other areas. As the CFPB in the mortgage area has been prudent and reasonable, I don't see any reason to think they're going to take a different tack toward automotive finance.
At other finance conferences, speakers are asking, "Is this as good as it gets?" because delinquencies are so low. What do you think?
It has been remarkable to see. Through the recession and the credit crisis, I think every lender experienced increasing delinquencies and charge-offs, but auto loans overall performed remarkably well with regard to our own expectations and industry benchmarks. As an industry, we are now at pre-recession or better levels of delinquencies and losses.
You have worked in a lot of other parts of the bank besides autos. Is there a special esprit de corps in auto loans?
The bank has a very long history in auto finance. We believe it is a critical component of the success of the bank. All of my colleagues have a focus that we are in the business for the long term. We run it from that point of view, which allowed us to continue to lend through the crisis.
You can reach Jim Henry at email@example.com.