Can America’s credit unions provide part of the lending answer for recreational vehicle and marine manufacturers?
On the premise that the nation’s more than 8,100 federal credit unions represent “enormous potential” as a source of financing, this question was broached Wednesday (Mar. 11) during the all-day seminars hosted at the Century Center in downtown South Bend, Ind., by the Recreation Vehicle Industry Association (RVIA).
American Recreation Coalition (ARC) Executive Director Derrick Crandall offered attendees an overview of RVIA’s pilot program with the Credit Union National Association (CUNA) to develop consumer and, possibly, dealer floorplan lending through credit unions.
Crandall and RVIA President Richard Coon were joined on the panel by Rick Rice, president and CEO of South Bend-based Teachers Credit Union – a northern Indiana-based cooperative with $1.6 billion in assets – and industry veteran and lenders’ consultant Paul Novotny, who has been working recently with both the RV and marine industries. They contended there are opportunities in the credit union arena that might help replace some of the financial clout lost recently by the exits of some key retail and wholesale lenders.
The crux of the session was a report on the “Recreation Industry/Credit Union Liaison Program,” as it has come to be called. “RVIA through ARC, along with RVDA and the National Marine Manufacturers Association (NMMA), got ahold of the national credit union association and we’re working through them to work out a strategy where credit unions become more available with credit – both wholesale and retail – on behalf of dealers of recreational vehicles as well as for marine, snowmobiles and those kinds of things,” Coon said. “We have an actual pilot program under way with that national organization to get several dealers across the country – I believe we’re working with six dealers at them moment – and putting them together with their local credit union. Once we get those six results, then we plan on looking for the refinements that need to be made between the two industries and try to go forward with that.”
“The beginnings of these discussions were in the fall of 2008 when we began to explore the various relationships that already existed and the opportunities for growing those relationships,” said Crandall. “It culminated in our first CEO-level meeting with Dan Mica, the president of CUNA and the CEO’s of RVIA, RVDA and NMMA. Our findings were, to me at least, quite surprising. We found that there was a substantial existing relationship between credit unions and the RV and boating industries.”
Crandall said that they’ve initially found that credit unions, in certain respects, were easier to work with than other lenders and, contrary to the preconceptions of some, membership requirements don’t seem to represent a substantial barrier. In fact, he added, while 90% are already lending for boats and RVs at the consumer level, many of them also do member business loans that, in some cases, qualify as floorplan loans to member businesses.
Inasmuch as most credit unions were less affected by the credit crunch than traditional banks, the recreation-related industries have put together a CUNA/Recreation Industry Liaison Committee to explore how to take constructive steps forward to share information and explore future opportunities.
“What we have done is we put together a listing of some qualifying dealers who have lost traditional floorplanning through GE and Textron and others and are looking for new sources of commercial loans,” said Crandall, elaborating on Coon’s “We married them up with some larger credit unions that are operating in their geographic areas. And we are now bringing them together for initial conversations. So, we’re looking at a way to actually be match makers, to begin conversations and use these as a test bed for what may develop.”
He added that one of the things that recreation industry manufacturers, including motorcycle and snowmobile makers, can do to nurture this relationship is to promote credit unions among potential buyers in the future with an eye toward some sort of pre-approval format.
Meanwhile, there’s a move afoot to alter current regulations that limit credit union member lending to 12.25% of total assets. “CUNA at the national level is seeking to increase the allowed level of commercial lending by credit unions,” said Crandall. “It’s not as simple as it sounds because there are opponents to that initiative, especially from some banks. But RVIA has already signed on as a partner in the coalition to expand and free up credit union commercial lending.”