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Indirect Used Car Lending Contributed to the Failure of Valley State Credit Union "Credit News 24"

It appears that a rapid growth in indirect used car lending played a significant role in the failure of Valley State Credit Union (Saginaw, MI).

Valley State Credit Union failed on March 31, 2018.

The following graphs provide a visual depiction of rapid growth in used car and indirect lending, the growth in delinquencies in used car and indirect loans, and the subsequent spike in net charge-offs in used car and indirect loans.

Between September 2014 and December 2015, used car loans rapidly expanded by almost 236 percent from $2.3 million to almost $7.86 million.


Over the same time period, indirect lending expanded from 11.08 percent of total loans to peaking at 33.89 percent of all loans.


Used car loan delinquency rate went from 3.02 percent in September 2014 to 30.68 percent as of September 2017.


Indirect loan delinquency rates went from 4.84 percent to 33.35 percent over the same period.


In the fourth quarter of 2017, net charge-offs for used car loans and indirect loans were $1.4 million and $1 million, respectively.



Title : Indirect Used Car Lending Contributed to the Failure of Valley State Credit Union "Credit News 24"
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