July 23, 2025 • 31 mins
Rising vehicle prices, longer loan terms, and shrinking margins. As credit unions adapt, standing out requires more than competitive rates. It takes consistency, clarity, and a lending team built for speed and service.In this episode, host Barry Roach sits down with Adam Brice, Chief Lending Officer at EFCU Financial, to unpack how his team reimagined consumer lending from the ground up. From creating a centralized loan contact center to balancing common sense with emerging tech, Adam shares what it really takes to grow a high-performing, resilient lending strategy.Join us as we discuss:
- What happens when you move your best loan officers out of branches.
- How EFCU maintained low charge-offs while doubling down on auto.
- The ripple effects of extended terms and negative equity.
- How AI can strengthen, not replace, sound underwriting.
- Why NIL deals and financial literacy can drive deeper community impact.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
Hello, and welcome to Leaders in Lending, brought to you
by Upstart. I'm your host, Barry Roach, and I'm happy
to be joined today by Adam Brice, the chief lending
officer at EFCU Financial in Baton Rouge, Louisiana.
Speaker 2 (00:14):
Now.
Speaker 1 (00:15):
Adam's first visit to the podcast was in late twenty
twenty two, and he talked about advances and enterwriting technologies
and how that fits with a common sense approach to lending.
In today's episode, Adam's sharing his views on today's auto
lending environment and how credit unions can adapt to capture
market share. Adam also talks about how credit unions play
a big part in supporting their community and shares how
(00:37):
EFCU Financial has teamed up with local universities to help
students improve their financial literacy. Thank you for listening. Let's
get started.
Speaker 2 (00:45):
I'm doing good, Barry.
Speaker 3 (00:46):
I'm happy to be on the podcast and I'm looking
forward to going through some different questions with you.
Speaker 1 (00:50):
How are you today, I'm good. Thanks, thanks for joining us. So, Adam,
you were on the pod in December of twenty twenty two.
What's changed between now and then? Probably a lot of
things on the lending side, I mean you would talk
back then around some shifts and indirect auto lending, and
if you think about at that time period, we were
still kind of coming out of the pandemic and some
(01:13):
of the supply chain issues that had been happening back then,
and that was certainly impacting auto lending and credit unis
and other financial services. What shifts have you seen really
in in indirect auto lending since that time period, you know,
going back two and a half years or so.
Speaker 3 (01:29):
There has been a couple of shifts. And you know,
I'd made a prediction kind of during and after COVID
that I thought the days of full car lots and
you know, plenty of inventory and the lots, I thought
those days are done because you saw the way that
dealerships were handling business during the COVID times. You could
do some dealerships only had five, six, seven, eight, nine,
(01:49):
nine units in a lot and they were having record profits,
record months. And when you have a bunch of inventory
sitting on the lot, I mean, as you know, that's
just interest running and that's just a lot of expenses
there that's just sitting on the lot. You know, not
nothing's really happening to those expenses. But now, you know,
as we fast forward to twenty twenty five and I
kind of look around our area, dealerships are full backup
(02:12):
of inventory. There's plenty of inventory just about every dealership
that I see. So that shift that I thought we
were going to see of you know, units and inventory
being a little bit less, you know, it's it's it's
kind of not happened, and it's come back to seeing
full lots, full inventory. And then you know, you're seeing
some captives kind of move away from from indirect lending.
(02:33):
You've seen some kind of re enter the market. And
I think especially here in our area in Louisiana, insurance
is always going to be a big factor because we
are in a natural disaster prone area like Batono's Louisiana
and Southern Louisiana in general, insurance is always going to be,
you know, a big issue, and that it's been a
big issue for some of our members, you know, being
able to obtain insurance, whether it be auto or home,
(02:55):
you know, just because of some of the natural disasters
that we've seen in this area over the past eight
to ten years.
Speaker 1 (03:00):
Right right, So, really, I guess to summarize a lot
of the supply chain issues have seemed to have abated,
where we're back to seeing some some lots that are
full again. What else do you attribute that to, though,
because I mean, let's face it, cars are lasting a
lot longer now than they were maybe when you and
I started driving, right, you know, the the average life
(03:24):
of a of a car or a carburetor for example,
didn't seem to last all that long, and nowadays are
just manufactured in such a way that that they just
last a little longer. I mean, are you seeing that
on the used car side, that that's having an impact
on sort of valuations for in your underrating processes, or
(03:46):
changes in maybe some of the consumer behaviors around that.
Speaker 3 (03:50):
I think we're saying some change in the consumer behavior.
I think people are holding on to their vehicles a
little bit longer. You know, valuations have certainly increased, especially
especially during COVID and moving on through the years now
in twenty twenty five, but you kind of see, you
kind of can look around and people are holding onto
their vehicles a little longer, even you know, our portfolio
in general, you know, we see people kind of holding on,
(04:12):
holding on to vehicles just a little bit longer than
they typically have, and it's you know, it's resulted in
you know, people using their vehicles a little bit more.
They're they're running them a little bit harder, and then
when you get to the time where they do get
the trade typically you know, they've put a little bit
more miles on the vehicles that we've seen, and we've
seen you know, negative equity climbing a little bit. And
I think there's that's a that's kind of a two
(04:33):
pronged answer there, because I think with some of the
valuations that we've seen, you know, during COVID and kind
of after COVID, UH, the valuations are extremely high, and
I think you've seen some of that level out over
the past couple of years now. So when people were
puying you know, two and three years ago, and now
they're coming to that you know, thirty six thirty eight
months on frame where we're seeing the standard you know,
(04:53):
member come in to trade a vehicle in. They're their
their equities a little bit, a little bit more negative
than they're maybe accustomed to because of the valuations at
that time that we were seeing a few years back.
Speaker 1 (05:04):
Sure, yeah, I remember in twenty one and twenty two.
I was working at credit unions of the time and
we're looking at valuations that were coming in because used
car values is shot through the roof and thinking, well,
that's great, what's the residual value going to be if
I have to collect on this thing in two or
three years? And from talking to collections professionals across our industry,
they're kind of seeing that happening right now, that, as
(05:25):
you said, a lot of negative equity, and if someone
does have some sort of financial misfortune that makes them
not able to make those payments anymore, not a lot
of value left after repoll. Have you experienced something similar
to that down in your region?
Speaker 3 (05:41):
Yeah, we have, And I think that's something else to
be talked about is the longer terms now here, especially
in the Baton Rouge area, and eighty four more term
is barely standard. That represents probably over half of our
half of our monthly indirect business is in the eighty
four month terms. So with the higher value, the higher terms,
(06:02):
that neck of equity is kind of getting pushed a
little bit further and further. And when people do come
into trade, not only are they a little more upside
down because the evaluation may be a little bit higher
when they purchased in twenty one, twenty twenty two, but
then maybe they signed on for an eighty four month term,
So really you're into the forty eight to sixty month
area of that term of the loan. You've not paid
(06:23):
as much principle as you may have originally paid, you know,
in prior loans, because let's be honest, seventy two month
was kind of that standard, that standard loan term now
and then now the eighty four month term is just
so so much standard, especially for us and in our area.
It certainly that's what drives a lot of volume in
our market, and a lot of them I think can
be you know, it can be attributed to a vehicle
(06:45):
prices have gotten a lot more higher and a lot
more expensive. People are still trying to keep up with
the joneses, you know, and trying to They're shopping more
payment conscious where versus maybe what's more practical for them,
and so well, we can get a lower payment if
we stretch out the term to say eighty four months,
and that's what we're seeing a little bit of now,
(07:06):
and I think people were ultimately starting to pay the
price for it, you know, as they're come and do,
whether they're training the vehicle in or if they're struggling
making their payments. And what happens is the negative equity
is so high that when a vehicle does get turned
in for a repo, or it gets you know, there's
a wreck or something in an accident, the DA gets totaled,
the value is just not there. I can share my
(07:27):
own personal story. My wife and I bought a vehicle
in October of twenty twenty one, right when the vehicle
value craze is really kind of getting getting a little wild.
The clean trade on that vehicle was forty three thousand.
In January the following year, which is about four months later,
I pulled the value in her vehicle and the vehicle
(07:48):
had jumped up in value to fifty one thousand dollars.
I have never in my life, and I've been in
lending now over fifteen years, I've never in my life
seeing a car appreciate in value the way like that.
Speaker 2 (08:01):
That did.
Speaker 3 (08:01):
Much less cars genuinely appreciating period, but for it to
appreciate almost you know, twenty five percent was just astronomical
in my opinion. And that's just a one sample it's
a one off deal of one vehicle. It was like
that for thousands of thousands of vehicles and thousands of
thousands of members who are feeling that effect. And now
you know, a year and a half later after that,
the value had significantly dropped. And I think that's what
(08:23):
you're seeing now with the negative equity and the people
trying to trade in with longer terms.
Speaker 1 (08:28):
Now sure, I mean, think of this this low rate
environment atom that we enjoyed in the auto landing space,
I should say we as lenders. It was tough for us,
but as purchasers, as borrowers, it was great. There were
two ninety nine auto loans pretty much available for you
know what, like a six or seven year period like that, right,
So that was you talk about when values were up
(08:50):
at the end of twenty one into twenty two. That
was kind of the end of that era if you
think about it, because inflation started and then interest rates
started to pop up. So those two ninety nine auto
loan deals now are six ninety nine And can I
afford Can I afford that fifty thousand dollars car in
a seventy two month term? Probably not anymore. That's why
(09:10):
it's it starts out to eighty four and then you
have the add on products. Right, So there's some sort
of a if there's gap or some sort of a
other sort of mechanical breakdown assurance or something like that.
So has that has that meant that EFCU has had
to sort of change aspects of your underwriting policies or
the way that you're looking at the asset or are
(09:32):
you sort of weighing the asset versus the borer quality
any differently now than you would have been, say, two
three years ago.
Speaker 2 (09:41):
I'll be honest with you.
Speaker 3 (09:42):
We we weigh it kind of the same as we
did two or three years ago. It's just kind of
a natural progression that you know, collateral and inventory has
taken and we've kind of just naturally kind of gone
with it. One of the things that I preached our
underwriting teams is consistency. You know, what we approved to
day is what we will approve tomorrow and what we
will approve next week. And in order for us to
(10:05):
be and for us to stay consistent and to be
so successful that we are in indirect lending, it helps
the dealers understand that they know, hey, EFCU is gonna
buy this deal, you know, next week or today or tomorrow.
And that's helped really a lot with our progression indirect lending,
our protection and consumer lending is just staying consistent across
the board, and you know, always, you know doing you
(10:27):
know what's right, what's the best interest to the member,
and what's just in the best interest.
Speaker 2 (10:31):
In the credit union.
Speaker 3 (10:31):
If if the loan makes sense, I can promise you
we're going to do it regardless one way or another.
Speaker 2 (10:36):
If it makes sense, we will do the loan.
Speaker 3 (10:38):
And we've seen that kind of consistency play out, you know,
from time and time and again with our portfolio. Our
loan portfolio has been outstanding. We have some of the
lowest delinquency in the state of Louisiana. Our charge off
numbers are some of the lowest charge off numbers in
the state Louisiana. And I really preach that to the
consistency and to the underwriting soundness and reviews that we
(10:59):
consistently do day and day out.
Speaker 1 (11:01):
Right now, you use a common sense approach with that, Adam.
I remember from your last pod you talked about that
that certainly you've got your underrating policy, your general lending
policy specific policies for auto loans, and then you use
technology for the underrating process, so you're not just relying
on on just sort of a credit score or you know,
there's multiple aspects of the credits. The border was credit
(11:25):
worthiness that you're looking at. So has that had to
change any at all in these past few years or
is common sense still very much a critical component of
your underating process as you're looking at each board where
that comes through your system.
Speaker 3 (11:40):
Common sense lending is still the number one priority here
at Ecuminans. We're doing loans at the end of the day,
and I tell my underwriters this, if you can answer
this question, and that question is will this loan be
repaid as agreed? And if you can answer that question
and you can answer yes to it, then we should
be doing that loan because at the end of the day,
you know we're roll us what the loan is for.
(12:01):
If if you know that the loan is going to
be repaid back and you can say yes to that question,
then you should be doing that loan. You should be
figuring out a way how to do that loan, whether
you know, making an exception to a policy or a procedure.
You know because at the end of the day, you know,
it's all about you know, the bar's repayment ability, and
if they have the ability to repay and you can
answer yes to say they're going to repay this loan,
(12:24):
then you should be able to do the loan. And
that's kind of the typical practice that we take here
at the Credit UNIITYFC Financial and that's how we've kind
of always kind of worked in that way for the
past ten to twelve years.
Speaker 2 (12:34):
And you know, I will.
Speaker 3 (12:35):
Say that it seems like a very good approach for us,
but you know, to say that is always going to
be the same way, no, because we're going to be
looking at some type of AI uh, you know software
here in the future. You know, we may be looking
at zest or Synaptics or maybe some other type of
AI vendor to kind of you know, move forward with
our you know, with our lending uh and move into
(12:57):
some more automation, some efficiencies driving automatic decisions right right.
Speaker 1 (13:01):
And which is I think a smart way of doing it.
You can still retain that common sense judgment which is necessary,
but the ability to have consistency with common sense lending.
You and I both know, like we people are going
to have a different perspectives as they may look at
at a loan application. You may look at differently than
I would than someone else would, And I think that's
(13:22):
where maybe AI comes in to assist with putting some
guardrails around what that underwriting criteria would be. And I
know that IFCU is also looking at at other ways
to sort of gain more consistency around that lending decision.
So maybe you can start of share with our audience
a little bit about how you've you've changed how you're
looking at lending in branches and now I have more
(13:45):
of a centralized aspect of that. So maybe maybe take
us through that a little if you could.
Speaker 3 (13:50):
Yeah, absolutely So last year, in the middle of the year,
we decided that we wanted to create a loan contact
center and basically some of the things that we seeing
the branches where you know, we had you know, forty
five to fifty different loan officers in the branches.
Speaker 2 (14:05):
Some of them wanted to do loans, someone would rather
just be be a teller and a worker box.
Speaker 3 (14:09):
Some of them have be a headteller and other ones
wanted to work different duties and we kind of recognized
this and we could see it in our lending numbers.
We could see it in our debt protection numbers and
our ancillary product numbers. With the gap and warranty, you
can kind of see certain people who would really, you know,
really relish in that fact that they got to, you know,
cross selling loans and really succeed in some of those things.
(14:29):
But then we had others who were a little bit inconsistent.
You know, their volume wasn't wasn't being driven as high
by you know, motivation. They would rather do, you know,
some different things. So what we decided to do as
a credit union was create a loan contact Center. So
what we did was we put out, you know, some
job descriptions for you know, we wanted to bring in
five to seven of the best loan officers that we
(14:50):
had in the branches, centralized them here at our operations
center where they would just focus.
Speaker 2 (14:55):
On loans and branch loans all day every day.
Speaker 3 (14:58):
We've created a kiosk kind of a kiosk center in
each branch where we have a computer station there where
a member can do they can do live live in
video with the with the one of the Loan Contacts
Center REPS here at Operations Center They can also do
a remote video from a cell phone. So if they're
at their house and they want to have a video
conference with one of our loan contacts and reps, they
(15:19):
can easily log on and have a video chat from
their house with one of our contacts iner reps. And
basically what this is doing is we're filtering all of
our consumer lending origination into six different people and six representatives,
six of our loan experts. So instead of training forty
to fifty different people, we're training you know, six to
eight people and it's just loans all day, every day.
(15:39):
That's all they do. We're training, they get training the
heavy train on ancillary products, debt protection, you know, cross selling,
you know, identifying opportunities on credit reports, you know, to
make cross sells. And this has been, you know, one
of the things that we were really targeting because we
really wanted to see our consumer lending numbers really get
a good boost.
Speaker 2 (15:58):
We wanted to see some of.
Speaker 3 (15:59):
Our net interesting margin get a boost, and we were
struggling with some of those things like debt protection, answer products,
and this was kind of our answer to that was
to be able to filter in, you know, all of
our consumer loans from the branches into six different people
who are working loans all day every day. They're not
working on a box, they're not opening up an IRA
in the branch. They're not dealing with fraud issues from
(16:19):
different members coming in, you know, having issues like that.
It's all loans, all day, every day, and you know,
when it really gets together and it really starts hitting
on all cylinders, we really believe that we'll have one
of the top options for consumer lending in the state
of Louisiana.
Speaker 1 (16:34):
Heat in all cylinders, I get that right, the little
pun there so all gas and no brakes to use
another pun, right. Really, this is a dedicated sales force
that all they have to do is go out and.
Speaker 2 (16:46):
With these new.
Speaker 1 (16:47):
Borders not just create that new loan solution for them,
but also look at those ancillary products. So I would
imagine you've seen some cross sell opportunities or some cross
sell successes that have come from that approach as well.
Speaker 3 (17:00):
Absolutely, I mean, our our debt production numbers have steadily
started climbing. You're seeing our antilayer products, you know, start
to climb with gaps and warranties, which means our net
interest margin, our non interest income is starting to take
a boost, and that's exactly where we want to be
and we want to see and we want to continue
to get those number numbers better. And as that contact
center develops and grows and matures and seasons, you know,
(17:22):
as as people get stronger and stronger up loans, we expect,
you know, those numbers just continue to continue to escalate
and get higher and improve, you know, all those things
that you know we're talking about, whether it be net
interesting come or non interesting income, and our net interest
margin continue to improve and grow.
Speaker 1 (17:37):
Yeah, I mean improve net interest margin. Music to ears
for every CFO out there, it's so hard right now,
especially when we had we've had what three rate cuts
since September of twenty twenty four that have not taken
hold in the interest rate market at all. We're still
seeing the tenure, for example, in around the four forties
at the time of this recording, and it just there's
(18:00):
so much uncertainty out there as to where the interest
rate environment will be going. Has that had an impact
on for you FCU in terms of your planning for
twenty twenty five? There has been marching compression because of
the cost for the credit union to get a dollar
to come in, and then you know there's pressures to
decrease interest rates so you can be competitive in your marketplace.
(18:22):
So with that marching compression, are there has that shifted
or has that changed in any way your growth of
your growth prospects for twenty twenty five.
Speaker 3 (18:32):
Yeah, I mean we've always been a heavy certificate of
deposit shop where a lot of that's how a lot
of a lot of our deposits were coming in. And
we've made a shift, you know, to try to move
away from that to try to get some non maturity
deposits in the door. We've made some changes to our
money market product. We've made a couple of changes to
some of our checking account products to try to bring
in some of that non maturity money to come in.
(18:52):
So you know, we're not you know, we're sitting on
fixed costs, you know for CDs. You know where our
average certificate rate probably in twenty twenty five, I want
to say, was around four and a half percent, and
then when you have rates you know kind of in
the sixes, six and a half seven percent area, you
know that that margin is not very it's not very big.
That's a very thin margin, especially when you talk about
(19:13):
factor and cost labor, you know, software delinquency charge offs.
I mean, that's a very razor thin margin that we've seen.
So we've shifted our focus, you know, from being you know,
a heavy CD shop to more of a you know,
try to bring in more non maturity deposits to be
able to you know, be able to lend that money
out at some higher rates and you know, have some
lower rates coming in for that no non maturity money.
(19:35):
And we've seen, you know, we've seen some improvements there
on our end. We've we've been able to lower some
of our non maturity or've increased our non maturity numbers
and lowered some of our CD numbers to be able
to continue to lend. So there's margins will continue to
kind of grow and expand.
Speaker 1 (19:49):
Yeah, that's smart until we see rates start to lower.
Bor room rates at least for financial institutions. You know,
you're you're going to have to think fast to be
able to keep that liquidy wheel turning as as things
go on. I'm gonna shift gears a little bit. There's
another fun shift gears. Let's talk a little bit about
(20:10):
I know we FCU is prolific in your communities, in
supporting your local academic institutions, specifically Louisiana State University, Southern University,
both in your inergy pardon me, both in your geographic footprint.
And I know you've been doing some things around financial
literacy education and some other partnerships. So maybe share with
(20:31):
the audience a little bit about the genesis of that,
why that started with financial literacy with students, and kind
of where you've taken it, where you think it may
go from here. Yeah.
Speaker 3 (20:42):
Absolutely, So we had a CEO change a couple of
years ago. We brought in a new CEOT out of
Michigan and he actually was with the University of Michigan
Credit Union. His name is Tom Kashlikiz. He was a
former CFO over at the University of Michigan Credit Union. Naturally,
he had that relationship you know, already pre established at
the University of Michigan, at the University of Michigan itself,
(21:02):
So that was one of his goals coming in here,
was to be able to establish some relationships with some
of the local universities around here. In that timeframe. Uh,
since he's come in, we've signed sponsorship agreements with Louisiana
State University and Southern University multiple year agreements where we've
become you know, some of the flagship sponsors for credit
unions for those universities. With that comes you know, a
(21:24):
lot of perks. We've been able to go in.
Speaker 2 (21:26):
To both universities LSU and Southern.
Speaker 1 (21:29):
UH.
Speaker 3 (21:29):
We've been doing some financial literacy. UH. I've done some
car buying seminars with both Southern student athletes and LSU
student athletes. You know, people who you don't really you know,
handle some of those day to day things. They've never
really gone out and you bought a vehicle. So we've
done you know, kind of mock uh mock car buying
scenarios and seminars with with both universities that really provide
(21:50):
a lot of great results and a lot of great
feedback from both universities and just them just getting general understanding,
general training about you know, some real worldlife things like
going out and buying a vehicle has been you know,
tremendous help to some of these kids and some of
these students in these communities. And it's you know, it's
not information and it's not education that they typically get,
you know, in the classroom or you know, out in
(22:12):
their out in their day to day life because typically
you know, these are generally sports sports athletics athletes who
are usually concentrate on their sports and you know, they're
not having a whole lot of time to be able
to go out and do some of these things. So
for us to be able to go in there, you
know and provide some of these financial literacy events, you know,
such as car buying, uh, you know credit you know,
credit worthiness and kind of understand like a credit one
(22:32):
oh one, uh, you know, type of class that we've
been able to go in as Southern and l s
U and kind of teach and kind of get the
get a basic understanding, get a graphs, you know, for
these students to really understand, you know, what some of.
Speaker 2 (22:43):
These things mean. What some of these things do.
Speaker 3 (22:46):
You know, when it is a great time to go
buy a vehicle, you know, what should we be doing
before we go buy a vehicle? You know, going getting
pre approved, you know, understanding what you know, what your
interest rate, you're going to you potentially qualify for. You know,
what is the value of the vehicle that you may
be trained in things like that that we're just kind
of you know, showing these student athletes just basic little
things that you know will go a long way and
(23:07):
save them so much money, you know when they go
out and do go buy that first vehicle?
Speaker 1 (23:11):
Yeah, I mean you're teaching them life skills really and
it's beyond just the vehicle, and it's also how you're
going to pay for that vehicle. Have you considered insurance?
Have you considered if there's a breakdown, how are you
going to pay for all those things? So, you know,
I've had more than twenty years in credit unions and
it still floors me that there's there's nothing in high
(23:33):
schools or middle schools teaching financial literacy. It seems to
fall on the community based financial institutions and a grassroots
level to go out and actually educate these kids on
the realities of their financial life that you know, you're
preparing them for things that those that aren't going through
any sort of program like this just just may not
(23:55):
have any any sort of understanding of or even know
where to go to ask for these sorts of questions.
So kudos to to the FCU and yourself for that.
I know that you also with these universities, the f
c U is embarking in uh an IL name, image
and likeness promotions, So not necessarily straight down the lending path,
but certainly I think it's something that's helping to build
(24:17):
your brand in in your marketplace and maybe some some
brand awareness for potential car buyers, potential auto loan borders.
So maybe talk a little bit about how an i
L started as an idea with the FCU and kind
of where it's where it's going from there.
Speaker 2 (24:33):
Yeah.
Speaker 3 (24:33):
Absolutely, I mean it started with our price price Tyler grodeye,
you know, and at that point, and I AL was
so very new, you know, not a lot of people
had a lot of understanding of the I L and
you know what the ramifications were going to be, you know,
contract obligations, you know, how to write up a contract
for a player at that point, you know, and when
Tom came in, you know, Tom had already had some
(24:54):
experience of this with the University of Michigan Credit Union,
so you know, he's come in, We've got the sponsorship
of agreements lined up with these universities, and then hey,
now it's time that we know we help some out
of the student athletes out. We were able to do
several sponsorship in I l agreements with two LSU baseball players,
Danny Dickinson and Chase Shores. I happen to be the
(25:16):
beneficiary of being able to select those players. I'm not
sure if you see behind me, there's a there's a
nice there's a bat above there, and there's a a
platform at night platform, but they pick a frank picture
of l s U in National Championship, say number seven.
I happen to be a huge l Shue baseball fan,
so it kind of was a natural fit for me
to be able to kind of identify some some players
(25:37):
of the LSU's team and you know, be able to
reach out to them. And you know how that started
was being able to go into some of these universities
and start doing some of these financial literacy events.
Speaker 2 (25:48):
We started by doing a.
Speaker 3 (25:49):
Financial literacy at LSU and that's how I met Danny
Dickinson and him and I quickly established a relationship. And
then later on down the line, you know, we were
able to offer him an n IL deal where you know,
he came in along with Chase Shores. They came in,
We took some pictures, we put up put them up
on some billboards. You know, talking about some of our
great products and services. So and now they're you know,
(26:10):
they are recognizable faces around.
Speaker 2 (26:12):
The LSU community.
Speaker 3 (26:13):
And it's just been the same thing for Southern you know,
we've gone in we've done a few sponsorship agreement in
IL agreements with some of their players, you know, getting
them kind of more involved, and just getting the universities involved.
And it was all literally through the financial literacy events
that we started doing with some of these student athletes
at these universities, and that's how these relationships developed. LSU
specifically has actually a mock in IL not in mocking
(26:36):
an in IL app where you can request, you know,
a certain player, you can and they have the contract
already drawn up where the player will put his information,
the credit union or institution will put in their information.
It'll be a signed agreement, it'll have some kind of
detail information or what's required other player d DNT information,
what's required out of that institution. And we've been able
(26:57):
to sign a few agreements that way and be able
to really kind of pushed an eye out button into
our favor and really kind of getting our name more
out there as associated with these players and these student
athletes and it's been a really good, really big success
for us. We've seen a lot of success from you know,
both the Credit Union standpoint and the players standpoint. As
you know, they're succeeding in the field, the Credit uniit
(27:18):
is succeeding in the community absolutely.
Speaker 1 (27:20):
I mean when when true and when the Credit Union
gets a greater brand awareness, uh from representation by these
players and then they got a few dollars in their pocket,
which not that long ago. Amateur athletes, n CUAA athletes,
we're getting paid a big fat zero for the performance
on the field. And so now they're actually gained a
(27:41):
little bit for the skill that that that they're and
and the work that they put in for amateur athletics.
So that's that's great for you, f CEU. All Right,
So we usually end the pod with bold predictions, but
I'm gonna have a little bit of a twist here today, Adam,
because you're a veteran of the pod. I mean, you
can handle these sort of these these sort of curve balls,
right baseball pun there. So I'm going to do bold
(28:02):
predictions with word associations. So I'll give you a word
and you give me a bold prediction on it okay,
and and yeah you know these are free or your
money back okay. So on all these predictions, so we
won't hold you too hard to it so bold prediction
word association. Interest rates.
Speaker 2 (28:21):
Bold prediction.
Speaker 3 (28:22):
For the year, they probably stay the same, maybe even
into halfway a twenty twenty six. I think interest rates
are going to kind of hover around the same, regardless
if the FEDS aside to drop the rate or not.
I think I think INTR rates are going to kind
of hold steady.
Speaker 1 (28:35):
Got you use vehicle prices?
Speaker 3 (28:40):
Use vehicle prices I think will start coming down a
little bit, as they have already that we've seen this
year with the influx of inventory. Rates are still high.
Inventories are very plentiful. At that point, when you have
high inventory, you have load demand. What happens prices start
going down. I think that's exactly what you're going to
start seeing, as you've started seeing over the past, you know,
sover months or so.
Speaker 1 (29:01):
Got you tariffs.
Speaker 2 (29:04):
Mixed results.
Speaker 3 (29:06):
I'm not sure what to think about the tariffs, and
I don't think anyone else has an ID.
Speaker 1 (29:09):
I don't either. I don't even think the auto company
executives know what what's gonna happen with you.
Speaker 3 (29:15):
Yeah, I'll just say neutral because I'm not really sure.
Speaker 2 (29:18):
That's just a mixed bag.
Speaker 1 (29:19):
They're altogether Yeah, uncertainty. So here I'm breaking into this,
but a little bit of uncertainty. And perhaps that's why
you're seeing more cars than the losses. People are maybe
not quite ready to make that jump, thinking, hey, things
might get a little bit harder economically here. Maybe I'm
okay with my car. It's not perfect, but it still runs,
(29:40):
and uh, and maybe I'm not ready to take on
a new payment or a higher payment.
Speaker 2 (29:44):
Yeah. Maybe. So it's just it's just so, it's just
a big mix bag there.
Speaker 3 (29:49):
No one, I don't think no one really has a
good idea of what's really going to come out of.
Speaker 2 (29:52):
That right on.
Speaker 1 (29:53):
Okay, three more self driving vehicles.
Speaker 3 (29:57):
Will become a bigger thing as we progress in time.
I think it's a small thing right now. But you've
already seen like some you know, trucking manufacturing companies who
have some of these self driving eighteen wheelers that are
already doing you know, drives across the country right now.
And I think that's only going to progress, especially in
like the transportation industry, when it comes to eighteen wards,
(30:19):
I think that's only going to continue to progress.
Speaker 1 (30:22):
AI Artificial intelligence here to.
Speaker 3 (30:26):
Stay, and it's only going to continue to be a
bigger factor in everything that we do in our lives,
whether that be underwriting, lending, financial institutions, grocery stores. I mean,
I went through a Taco bell a couple of weeks
ago with my little boy, and I was I was
doing an order taker with an AI assistant. It wasn't
a live person, it was AI.
Speaker 1 (30:46):
Right, and Brito's delivered to your door just like that exactly.
LSU Tiger Baseball will be in.
Speaker 3 (30:53):
Omaha this year. We'll be competing for a national championship.
This is open as a as a baseball field as
I've seen in quite some time. I think there's probably
seven to eight teams that can win a national championship
this year, but I expect LSU to be an Omaha.
Speaker 1 (31:07):
So my crack researcher told me though that that LSU
Baseball is some ranked number one in the country right now.
So well, Adam, thank you once again for coming on
the pod. We really appreciate you coming on and sharing
your views on auto lending and things down the road.
For the economy and and and lending in general, and
appreciate your time, and we'll certainly have you back sometime
(31:27):
in the future.
Speaker 3 (31:29):
Absolutely, Barry, thank you so much for having having me,
and I really appreciate doing this with you, and I
look forward to being able to doing this with you
again in the future.
Speaker 2 (31:36):
Thank you, thank you,
Hello, and welcome to Leaders in Lending, brought to you
by Upstart. I'm your host, Barry Roach, and I'm happy
to be joined today by Adam Brice, the chief lending
officer at EFCU Financial in Baton Rouge, Louisiana.
Speaker 2 (00:14):
Now.
Speaker 1 (00:15):
Adam's first visit to the podcast was in late twenty
twenty two, and he talked about advances and enterwriting technologies
and how that fits with a common sense approach to lending.
In today's episode, Adam's sharing his views on today's auto
lending environment and how credit unions can adapt to capture
market share. Adam also talks about how credit unions play
a big part in supporting their community and shares how
(00:37):
EFCU Financial has teamed up with local universities to help
students improve their financial literacy. Thank you for listening. Let's
get started.
Speaker 2 (00:45):
I'm doing good, Barry.
Speaker 3 (00:46):
I'm happy to be on the podcast and I'm looking
forward to going through some different questions with you.
Speaker 1 (00:50):
How are you today, I'm good. Thanks, thanks for joining us. So, Adam,
you were on the pod in December of twenty twenty two.
What's changed between now and then? Probably a lot of
things on the lending side, I mean you would talk
back then around some shifts and indirect auto lending, and
if you think about at that time period, we were
still kind of coming out of the pandemic and some
(01:13):
of the supply chain issues that had been happening back then,
and that was certainly impacting auto lending and credit unis
and other financial services. What shifts have you seen really
in in indirect auto lending since that time period, you know,
going back two and a half years or so.
Speaker 3 (01:29):
There has been a couple of shifts. And you know,
I'd made a prediction kind of during and after COVID
that I thought the days of full car lots and
you know, plenty of inventory and the lots, I thought
those days are done because you saw the way that
dealerships were handling business during the COVID times. You could
do some dealerships only had five, six, seven, eight, nine,
(01:49):
nine units in a lot and they were having record profits,
record months. And when you have a bunch of inventory
sitting on the lot, I mean, as you know, that's
just interest running and that's just a lot of expenses
there that's just sitting on the lot. You know, not
nothing's really happening to those expenses. But now, you know,
as we fast forward to twenty twenty five and I
kind of look around our area, dealerships are full backup
(02:12):
of inventory. There's plenty of inventory just about every dealership
that I see. So that shift that I thought we
were going to see of you know, units and inventory
being a little bit less, you know, it's it's it's
kind of not happened, and it's come back to seeing
full lots, full inventory. And then you know, you're seeing
some captives kind of move away from from indirect lending.
(02:33):
You've seen some kind of re enter the market. And
I think especially here in our area in Louisiana, insurance
is always going to be a big factor because we
are in a natural disaster prone area like Batono's Louisiana
and Southern Louisiana in general, insurance is always going to be,
you know, a big issue, and that it's been a
big issue for some of our members, you know, being
able to obtain insurance, whether it be auto or home,
(02:55):
you know, just because of some of the natural disasters
that we've seen in this area over the past eight
to ten years.
Speaker 1 (03:00):
Right right, So, really, I guess to summarize a lot
of the supply chain issues have seemed to have abated,
where we're back to seeing some some lots that are
full again. What else do you attribute that to, though,
because I mean, let's face it, cars are lasting a
lot longer now than they were maybe when you and
I started driving, right, you know, the the average life
(03:24):
of a of a car or a carburetor for example,
didn't seem to last all that long, and nowadays are
just manufactured in such a way that that they just
last a little longer. I mean, are you seeing that
on the used car side, that that's having an impact
on sort of valuations for in your underrating processes, or
(03:46):
changes in maybe some of the consumer behaviors around that.
Speaker 3 (03:50):
I think we're saying some change in the consumer behavior.
I think people are holding on to their vehicles a
little bit longer. You know, valuations have certainly increased, especially
especially during COVID and moving on through the years now
in twenty twenty five, but you kind of see, you
kind of can look around and people are holding onto
their vehicles a little longer, even you know, our portfolio
in general, you know, we see people kind of holding on,
(04:12):
holding on to vehicles just a little bit longer than
they typically have, and it's you know, it's resulted in
you know, people using their vehicles a little bit more.
They're they're running them a little bit harder, and then
when you get to the time where they do get
the trade typically you know, they've put a little bit
more miles on the vehicles that we've seen, and we've
seen you know, negative equity climbing a little bit. And
I think there's that's a that's kind of a two
(04:33):
pronged answer there, because I think with some of the
valuations that we've seen, you know, during COVID and kind
of after COVID, UH, the valuations are extremely high, and
I think you've seen some of that level out over
the past couple of years now. So when people were
puying you know, two and three years ago, and now
they're coming to that you know, thirty six thirty eight
months on frame where we're seeing the standard you know,
(04:53):
member come in to trade a vehicle in. They're their
their equities a little bit, a little bit more negative
than they're maybe accustomed to because of the valuations at
that time that we were seeing a few years back.
Speaker 1 (05:04):
Sure, yeah, I remember in twenty one and twenty two.
I was working at credit unions of the time and
we're looking at valuations that were coming in because used
car values is shot through the roof and thinking, well,
that's great, what's the residual value going to be if
I have to collect on this thing in two or
three years? And from talking to collections professionals across our industry,
they're kind of seeing that happening right now, that, as
(05:25):
you said, a lot of negative equity, and if someone
does have some sort of financial misfortune that makes them
not able to make those payments anymore, not a lot
of value left after repoll. Have you experienced something similar
to that down in your region?
Speaker 3 (05:41):
Yeah, we have, And I think that's something else to
be talked about is the longer terms now here, especially
in the Baton Rouge area, and eighty four more term
is barely standard. That represents probably over half of our
half of our monthly indirect business is in the eighty
four month terms. So with the higher value, the higher terms,
(06:02):
that neck of equity is kind of getting pushed a
little bit further and further. And when people do come
into trade, not only are they a little more upside
down because the evaluation may be a little bit higher
when they purchased in twenty one, twenty twenty two, but
then maybe they signed on for an eighty four month term,
So really you're into the forty eight to sixty month
area of that term of the loan. You've not paid
(06:23):
as much principle as you may have originally paid, you know,
in prior loans, because let's be honest, seventy two month
was kind of that standard, that standard loan term now
and then now the eighty four month term is just
so so much standard, especially for us and in our area.
It certainly that's what drives a lot of volume in
our market, and a lot of them I think can
be you know, it can be attributed to a vehicle
(06:45):
prices have gotten a lot more higher and a lot
more expensive. People are still trying to keep up with
the joneses, you know, and trying to They're shopping more
payment conscious where versus maybe what's more practical for them,
and so well, we can get a lower payment if
we stretch out the term to say eighty four months,
and that's what we're seeing a little bit of now,
(07:06):
and I think people were ultimately starting to pay the
price for it, you know, as they're come and do,
whether they're training the vehicle in or if they're struggling
making their payments. And what happens is the negative equity
is so high that when a vehicle does get turned
in for a repo, or it gets you know, there's
a wreck or something in an accident, the DA gets totaled,
the value is just not there. I can share my
(07:27):
own personal story. My wife and I bought a vehicle
in October of twenty twenty one, right when the vehicle
value craze is really kind of getting getting a little wild.
The clean trade on that vehicle was forty three thousand.
In January the following year, which is about four months later,
I pulled the value in her vehicle and the vehicle
(07:48):
had jumped up in value to fifty one thousand dollars.
I have never in my life, and I've been in
lending now over fifteen years, I've never in my life
seeing a car appreciate in value the way like that.
Speaker 2 (08:01):
That did.
Speaker 3 (08:01):
Much less cars genuinely appreciating period, but for it to
appreciate almost you know, twenty five percent was just astronomical
in my opinion. And that's just a one sample it's
a one off deal of one vehicle. It was like
that for thousands of thousands of vehicles and thousands of
thousands of members who are feeling that effect. And now
you know, a year and a half later after that,
the value had significantly dropped. And I think that's what
(08:23):
you're seeing now with the negative equity and the people
trying to trade in with longer terms.
Speaker 1 (08:28):
Now sure, I mean, think of this this low rate
environment atom that we enjoyed in the auto landing space,
I should say we as lenders. It was tough for us,
but as purchasers, as borrowers, it was great. There were
two ninety nine auto loans pretty much available for you
know what, like a six or seven year period like that, right,
So that was you talk about when values were up
(08:50):
at the end of twenty one into twenty two. That
was kind of the end of that era if you
think about it, because inflation started and then interest rates
started to pop up. So those two ninety nine auto
loan deals now are six ninety nine And can I
afford Can I afford that fifty thousand dollars car in
a seventy two month term? Probably not anymore. That's why
(09:10):
it's it starts out to eighty four and then you
have the add on products. Right, So there's some sort
of a if there's gap or some sort of a
other sort of mechanical breakdown assurance or something like that.
So has that has that meant that EFCU has had
to sort of change aspects of your underwriting policies or
the way that you're looking at the asset or are
(09:32):
you sort of weighing the asset versus the borer quality
any differently now than you would have been, say, two
three years ago.
Speaker 2 (09:41):
I'll be honest with you.
Speaker 3 (09:42):
We we weigh it kind of the same as we
did two or three years ago. It's just kind of
a natural progression that you know, collateral and inventory has
taken and we've kind of just naturally kind of gone
with it. One of the things that I preached our
underwriting teams is consistency. You know, what we approved to
day is what we will approve tomorrow and what we
will approve next week. And in order for us to
(10:05):
be and for us to stay consistent and to be
so successful that we are in indirect lending, it helps
the dealers understand that they know, hey, EFCU is gonna
buy this deal, you know, next week or today or tomorrow.
And that's helped really a lot with our progression indirect lending,
our protection and consumer lending is just staying consistent across
the board, and you know, always, you know doing you
(10:27):
know what's right, what's the best interest to the member,
and what's just in the best interest.
Speaker 2 (10:31):
In the credit union.
Speaker 3 (10:31):
If if the loan makes sense, I can promise you
we're going to do it regardless one way or another.
Speaker 2 (10:36):
If it makes sense, we will do the loan.
Speaker 3 (10:38):
And we've seen that kind of consistency play out, you know,
from time and time and again with our portfolio. Our
loan portfolio has been outstanding. We have some of the
lowest delinquency in the state of Louisiana. Our charge off
numbers are some of the lowest charge off numbers in
the state Louisiana. And I really preach that to the
consistency and to the underwriting soundness and reviews that we
(10:59):
consistently do day and day out.
Speaker 1 (11:01):
Right now, you use a common sense approach with that, Adam.
I remember from your last pod you talked about that
that certainly you've got your underrating policy, your general lending
policy specific policies for auto loans, and then you use
technology for the underrating process, so you're not just relying
on on just sort of a credit score or you know,
there's multiple aspects of the credits. The border was credit
(11:25):
worthiness that you're looking at. So has that had to
change any at all in these past few years or
is common sense still very much a critical component of
your underating process as you're looking at each board where
that comes through your system.
Speaker 3 (11:40):
Common sense lending is still the number one priority here
at Ecuminans. We're doing loans at the end of the day,
and I tell my underwriters this, if you can answer
this question, and that question is will this loan be
repaid as agreed? And if you can answer that question
and you can answer yes to it, then we should
be doing that loan because at the end of the day,
you know we're roll us what the loan is for.
(12:01):
If if you know that the loan is going to
be repaid back and you can say yes to that question,
then you should be doing that loan. You should be
figuring out a way how to do that loan, whether
you know, making an exception to a policy or a procedure.
You know because at the end of the day, you know,
it's all about you know, the bar's repayment ability, and
if they have the ability to repay and you can
answer yes to say they're going to repay this loan,
(12:24):
then you should be able to do the loan. And
that's kind of the typical practice that we take here
at the Credit UNIITYFC Financial and that's how we've kind
of always kind of worked in that way for the
past ten to twelve years.
Speaker 2 (12:34):
And you know, I will.
Speaker 3 (12:35):
Say that it seems like a very good approach for us,
but you know, to say that is always going to
be the same way, no, because we're going to be
looking at some type of AI uh, you know software
here in the future. You know, we may be looking
at zest or Synaptics or maybe some other type of
AI vendor to kind of you know, move forward with
our you know, with our lending uh and move into
(12:57):
some more automation, some efficiencies driving automatic decisions right right.
Speaker 1 (13:01):
And which is I think a smart way of doing it.
You can still retain that common sense judgment which is necessary,
but the ability to have consistency with common sense lending.
You and I both know, like we people are going
to have a different perspectives as they may look at
at a loan application. You may look at differently than
I would than someone else would, And I think that's
(13:22):
where maybe AI comes in to assist with putting some
guardrails around what that underwriting criteria would be. And I
know that IFCU is also looking at at other ways
to sort of gain more consistency around that lending decision.
So maybe you can start of share with our audience
a little bit about how you've you've changed how you're
looking at lending in branches and now I have more
(13:45):
of a centralized aspect of that. So maybe maybe take
us through that a little if you could.
Speaker 3 (13:50):
Yeah, absolutely So last year, in the middle of the year,
we decided that we wanted to create a loan contact
center and basically some of the things that we seeing
the branches where you know, we had you know, forty
five to fifty different loan officers in the branches.
Speaker 2 (14:05):
Some of them wanted to do loans, someone would rather
just be be a teller and a worker box.
Speaker 3 (14:09):
Some of them have be a headteller and other ones
wanted to work different duties and we kind of recognized
this and we could see it in our lending numbers.
We could see it in our debt protection numbers and
our ancillary product numbers. With the gap and warranty, you
can kind of see certain people who would really, you know,
really relish in that fact that they got to, you know,
cross selling loans and really succeed in some of those things.
(14:29):
But then we had others who were a little bit inconsistent.
You know, their volume wasn't wasn't being driven as high
by you know, motivation. They would rather do, you know,
some different things. So what we decided to do as
a credit union was create a loan contact Center. So
what we did was we put out, you know, some
job descriptions for you know, we wanted to bring in
five to seven of the best loan officers that we
(14:50):
had in the branches, centralized them here at our operations
center where they would just focus.
Speaker 2 (14:55):
On loans and branch loans all day every day.
Speaker 3 (14:58):
We've created a kiosk kind of a kiosk center in
each branch where we have a computer station there where
a member can do they can do live live in
video with the with the one of the Loan Contacts
Center REPS here at Operations Center They can also do
a remote video from a cell phone. So if they're
at their house and they want to have a video
conference with one of our loan contacts and reps, they
(15:19):
can easily log on and have a video chat from
their house with one of our contacts iner reps. And
basically what this is doing is we're filtering all of
our consumer lending origination into six different people and six representatives,
six of our loan experts. So instead of training forty
to fifty different people, we're training you know, six to
eight people and it's just loans all day, every day.
(15:39):
That's all they do. We're training, they get training the
heavy train on ancillary products, debt protection, you know, cross selling,
you know, identifying opportunities on credit reports, you know, to
make cross sells. And this has been, you know, one
of the things that we were really targeting because we
really wanted to see our consumer lending numbers really get
a good boost.
Speaker 2 (15:58):
We wanted to see some of.
Speaker 3 (15:59):
Our net interesting margin get a boost, and we were
struggling with some of those things like debt protection, answer products,
and this was kind of our answer to that was
to be able to filter in, you know, all of
our consumer loans from the branches into six different people
who are working loans all day every day. They're not
working on a box, they're not opening up an IRA
in the branch. They're not dealing with fraud issues from
(16:19):
different members coming in, you know, having issues like that.
It's all loans, all day, every day, and you know,
when it really gets together and it really starts hitting
on all cylinders, we really believe that we'll have one
of the top options for consumer lending in the state
of Louisiana.
Speaker 1 (16:34):
Heat in all cylinders, I get that right, the little
pun there so all gas and no brakes to use
another pun, right. Really, this is a dedicated sales force
that all they have to do is go out and.
Speaker 2 (16:46):
With these new.
Speaker 1 (16:47):
Borders not just create that new loan solution for them,
but also look at those ancillary products. So I would
imagine you've seen some cross sell opportunities or some cross
sell successes that have come from that approach as well.
Speaker 3 (17:00):
Absolutely, I mean, our our debt production numbers have steadily
started climbing. You're seeing our antilayer products, you know, start
to climb with gaps and warranties, which means our net
interest margin, our non interest income is starting to take
a boost, and that's exactly where we want to be
and we want to see and we want to continue
to get those number numbers better. And as that contact
center develops and grows and matures and seasons, you know,
(17:22):
as as people get stronger and stronger up loans, we expect,
you know, those numbers just continue to continue to escalate
and get higher and improve, you know, all those things
that you know we're talking about, whether it be net
interesting come or non interesting income, and our net interest
margin continue to improve and grow.
Speaker 1 (17:37):
Yeah, I mean improve net interest margin. Music to ears
for every CFO out there, it's so hard right now,
especially when we had we've had what three rate cuts
since September of twenty twenty four that have not taken
hold in the interest rate market at all. We're still
seeing the tenure, for example, in around the four forties
at the time of this recording, and it just there's
(18:00):
so much uncertainty out there as to where the interest
rate environment will be going. Has that had an impact
on for you FCU in terms of your planning for
twenty twenty five? There has been marching compression because of
the cost for the credit union to get a dollar
to come in, and then you know there's pressures to
decrease interest rates so you can be competitive in your marketplace.
(18:22):
So with that marching compression, are there has that shifted
or has that changed in any way your growth of
your growth prospects for twenty twenty five.
Speaker 3 (18:32):
Yeah, I mean we've always been a heavy certificate of
deposit shop where a lot of that's how a lot
of a lot of our deposits were coming in. And
we've made a shift, you know, to try to move
away from that to try to get some non maturity
deposits in the door. We've made some changes to our
money market product. We've made a couple of changes to
some of our checking account products to try to bring
in some of that non maturity money to come in.
(18:52):
So you know, we're not you know, we're sitting on
fixed costs, you know for CDs. You know where our
average certificate rate probably in twenty twenty five, I want
to say, was around four and a half percent, and
then when you have rates you know kind of in
the sixes, six and a half seven percent area, you
know that that margin is not very it's not very big.
That's a very thin margin, especially when you talk about
(19:13):
factor and cost labor, you know, software delinquency charge offs.
I mean, that's a very razor thin margin that we've seen.
So we've shifted our focus, you know, from being you know,
a heavy CD shop to more of a you know,
try to bring in more non maturity deposits to be
able to you know, be able to lend that money
out at some higher rates and you know, have some
lower rates coming in for that no non maturity money.
(19:35):
And we've seen, you know, we've seen some improvements there
on our end. We've we've been able to lower some
of our non maturity or've increased our non maturity numbers
and lowered some of our CD numbers to be able
to continue to lend. So there's margins will continue to
kind of grow and expand.
Speaker 1 (19:49):
Yeah, that's smart until we see rates start to lower.
Bor room rates at least for financial institutions. You know,
you're you're going to have to think fast to be
able to keep that liquidy wheel turning as as things
go on. I'm gonna shift gears a little bit. There's
another fun shift gears. Let's talk a little bit about
(20:10):
I know we FCU is prolific in your communities, in
supporting your local academic institutions, specifically Louisiana State University, Southern University,
both in your inergy pardon me, both in your geographic footprint.
And I know you've been doing some things around financial
literacy education and some other partnerships. So maybe share with
(20:31):
the audience a little bit about the genesis of that,
why that started with financial literacy with students, and kind
of where you've taken it, where you think it may
go from here. Yeah.
Speaker 3 (20:42):
Absolutely, So we had a CEO change a couple of
years ago. We brought in a new CEOT out of
Michigan and he actually was with the University of Michigan
Credit Union. His name is Tom Kashlikiz. He was a
former CFO over at the University of Michigan Credit Union. Naturally,
he had that relationship you know, already pre established at
the University of Michigan, at the University of Michigan itself,
(21:02):
So that was one of his goals coming in here,
was to be able to establish some relationships with some
of the local universities around here. In that timeframe. Uh,
since he's come in, we've signed sponsorship agreements with Louisiana
State University and Southern University multiple year agreements where we've
become you know, some of the flagship sponsors for credit
unions for those universities. With that comes you know, a
(21:24):
lot of perks. We've been able to go in.
Speaker 2 (21:26):
To both universities LSU and Southern.
Speaker 1 (21:29):
UH.
Speaker 3 (21:29):
We've been doing some financial literacy. UH. I've done some
car buying seminars with both Southern student athletes and LSU
student athletes. You know, people who you don't really you know,
handle some of those day to day things. They've never
really gone out and you bought a vehicle. So we've
done you know, kind of mock uh mock car buying
scenarios and seminars with with both universities that really provide
(21:50):
a lot of great results and a lot of great
feedback from both universities and just them just getting general understanding,
general training about you know, some real worldlife things like
going out and buying a vehicle has been you know,
tremendous help to some of these kids and some of
these students in these communities. And it's you know, it's
not information and it's not education that they typically get,
you know, in the classroom or you know, out in
(22:12):
their out in their day to day life because typically
you know, these are generally sports sports athletics athletes who
are usually concentrate on their sports and you know, they're
not having a whole lot of time to be able
to go out and do some of these things. So
for us to be able to go in there, you
know and provide some of these financial literacy events, you know,
such as car buying, uh, you know credit you know,
credit worthiness and kind of understand like a credit one
(22:32):
oh one, uh, you know, type of class that we've
been able to go in as Southern and l s
U and kind of teach and kind of get the
get a basic understanding, get a graphs, you know, for
these students to really understand, you know, what some of.
Speaker 2 (22:43):
These things mean. What some of these things do.
Speaker 3 (22:46):
You know, when it is a great time to go
buy a vehicle, you know, what should we be doing
before we go buy a vehicle? You know, going getting
pre approved, you know, understanding what you know, what your
interest rate, you're going to you potentially qualify for. You know,
what is the value of the vehicle that you may
be trained in things like that that we're just kind
of you know, showing these student athletes just basic little
things that you know will go a long way and
(23:07):
save them so much money, you know when they go
out and do go buy that first vehicle?
Speaker 1 (23:11):
Yeah, I mean you're teaching them life skills really and
it's beyond just the vehicle, and it's also how you're
going to pay for that vehicle. Have you considered insurance?
Have you considered if there's a breakdown, how are you
going to pay for all those things? So, you know,
I've had more than twenty years in credit unions and
it still floors me that there's there's nothing in high
(23:33):
schools or middle schools teaching financial literacy. It seems to
fall on the community based financial institutions and a grassroots
level to go out and actually educate these kids on
the realities of their financial life that you know, you're
preparing them for things that those that aren't going through
any sort of program like this just just may not
(23:55):
have any any sort of understanding of or even know
where to go to ask for these sorts of questions.
So kudos to to the FCU and yourself for that.
I know that you also with these universities, the f
c U is embarking in uh an IL name, image
and likeness promotions, So not necessarily straight down the lending path,
but certainly I think it's something that's helping to build
(24:17):
your brand in in your marketplace and maybe some some
brand awareness for potential car buyers, potential auto loan borders.
So maybe talk a little bit about how an i
L started as an idea with the FCU and kind
of where it's where it's going from there.
Speaker 2 (24:33):
Yeah.
Speaker 3 (24:33):
Absolutely, I mean it started with our price price Tyler grodeye,
you know, and at that point, and I AL was
so very new, you know, not a lot of people
had a lot of understanding of the I L and
you know what the ramifications were going to be, you know,
contract obligations, you know, how to write up a contract
for a player at that point, you know, and when
Tom came in, you know, Tom had already had some
(24:54):
experience of this with the University of Michigan Credit Union,
so you know, he's come in, We've got the sponsorship
of agreements lined up with these universities, and then hey,
now it's time that we know we help some out
of the student athletes out. We were able to do
several sponsorship in I l agreements with two LSU baseball players,
Danny Dickinson and Chase Shores. I happen to be the
(25:16):
beneficiary of being able to select those players. I'm not
sure if you see behind me, there's a there's a
nice there's a bat above there, and there's a a
platform at night platform, but they pick a frank picture
of l s U in National Championship, say number seven.
I happen to be a huge l Shue baseball fan,
so it kind of was a natural fit for me
to be able to kind of identify some some players
(25:37):
of the LSU's team and you know, be able to
reach out to them. And you know how that started
was being able to go into some of these universities
and start doing some of these financial literacy events.
Speaker 2 (25:48):
We started by doing a.
Speaker 3 (25:49):
Financial literacy at LSU and that's how I met Danny
Dickinson and him and I quickly established a relationship. And
then later on down the line, you know, we were
able to offer him an n IL deal where you know,
he came in along with Chase Shores. They came in,
We took some pictures, we put up put them up
on some billboards. You know, talking about some of our
great products and services. So and now they're you know,
(26:10):
they are recognizable faces around.
Speaker 2 (26:12):
The LSU community.
Speaker 3 (26:13):
And it's just been the same thing for Southern you know,
we've gone in we've done a few sponsorship agreement in
IL agreements with some of their players, you know, getting
them kind of more involved, and just getting the universities involved.
And it was all literally through the financial literacy events
that we started doing with some of these student athletes
at these universities, and that's how these relationships developed. LSU
specifically has actually a mock in IL not in mocking
(26:36):
an in IL app where you can request, you know,
a certain player, you can and they have the contract
already drawn up where the player will put his information,
the credit union or institution will put in their information.
It'll be a signed agreement, it'll have some kind of
detail information or what's required other player d DNT information,
what's required out of that institution. And we've been able
(26:57):
to sign a few agreements that way and be able
to really kind of pushed an eye out button into
our favor and really kind of getting our name more
out there as associated with these players and these student
athletes and it's been a really good, really big success
for us. We've seen a lot of success from you know,
both the Credit Union standpoint and the players standpoint. As
you know, they're succeeding in the field, the Credit uniit
(27:18):
is succeeding in the community absolutely.
Speaker 1 (27:20):
I mean when when true and when the Credit Union
gets a greater brand awareness, uh from representation by these
players and then they got a few dollars in their pocket,
which not that long ago. Amateur athletes, n CUAA athletes,
we're getting paid a big fat zero for the performance
on the field. And so now they're actually gained a
(27:41):
little bit for the skill that that that they're and
and the work that they put in for amateur athletics.
So that's that's great for you, f CEU. All Right,
So we usually end the pod with bold predictions, but
I'm gonna have a little bit of a twist here today, Adam,
because you're a veteran of the pod. I mean, you
can handle these sort of these these sort of curve balls,
right baseball pun there. So I'm going to do bold
(28:02):
predictions with word associations. So I'll give you a word
and you give me a bold prediction on it okay,
and and yeah you know these are free or your
money back okay. So on all these predictions, so we
won't hold you too hard to it so bold prediction
word association. Interest rates.
Speaker 2 (28:21):
Bold prediction.
Speaker 3 (28:22):
For the year, they probably stay the same, maybe even
into halfway a twenty twenty six. I think interest rates
are going to kind of hover around the same, regardless
if the FEDS aside to drop the rate or not.
I think I think INTR rates are going to kind
of hold steady.
Speaker 1 (28:35):
Got you use vehicle prices?
Speaker 3 (28:40):
Use vehicle prices I think will start coming down a
little bit, as they have already that we've seen this
year with the influx of inventory. Rates are still high.
Inventories are very plentiful. At that point, when you have
high inventory, you have load demand. What happens prices start
going down. I think that's exactly what you're going to
start seeing, as you've started seeing over the past, you know,
sover months or so.
Speaker 1 (29:01):
Got you tariffs.
Speaker 2 (29:04):
Mixed results.
Speaker 3 (29:06):
I'm not sure what to think about the tariffs, and
I don't think anyone else has an ID.
Speaker 1 (29:09):
I don't either. I don't even think the auto company
executives know what what's gonna happen with you.
Speaker 3 (29:15):
Yeah, I'll just say neutral because I'm not really sure.
Speaker 2 (29:18):
That's just a mixed bag.
Speaker 1 (29:19):
They're altogether Yeah, uncertainty. So here I'm breaking into this,
but a little bit of uncertainty. And perhaps that's why
you're seeing more cars than the losses. People are maybe
not quite ready to make that jump, thinking, hey, things
might get a little bit harder economically here. Maybe I'm
okay with my car. It's not perfect, but it still runs,
(29:40):
and uh, and maybe I'm not ready to take on
a new payment or a higher payment.
Speaker 2 (29:44):
Yeah. Maybe. So it's just it's just so, it's just
a big mix bag there.
Speaker 3 (29:49):
No one, I don't think no one really has a
good idea of what's really going to come out of.
Speaker 2 (29:52):
That right on.
Speaker 1 (29:53):
Okay, three more self driving vehicles.
Speaker 3 (29:57):
Will become a bigger thing as we progress in time.
I think it's a small thing right now. But you've
already seen like some you know, trucking manufacturing companies who
have some of these self driving eighteen wheelers that are
already doing you know, drives across the country right now.
And I think that's only going to progress, especially in
like the transportation industry, when it comes to eighteen wards,
(30:19):
I think that's only going to continue to progress.
Speaker 1 (30:22):
AI Artificial intelligence here to.
Speaker 3 (30:26):
Stay, and it's only going to continue to be a
bigger factor in everything that we do in our lives,
whether that be underwriting, lending, financial institutions, grocery stores. I mean,
I went through a Taco bell a couple of weeks
ago with my little boy, and I was I was
doing an order taker with an AI assistant. It wasn't
a live person, it was AI.
Speaker 1 (30:46):
Right, and Brito's delivered to your door just like that exactly.
LSU Tiger Baseball will be in.
Speaker 3 (30:53):
Omaha this year. We'll be competing for a national championship.
This is open as a as a baseball field as
I've seen in quite some time. I think there's probably
seven to eight teams that can win a national championship
this year, but I expect LSU to be an Omaha.
Speaker 1 (31:07):
So my crack researcher told me though that that LSU
Baseball is some ranked number one in the country right now.
So well, Adam, thank you once again for coming on
the pod. We really appreciate you coming on and sharing
your views on auto lending and things down the road.
For the economy and and and lending in general, and
appreciate your time, and we'll certainly have you back sometime
(31:27):
in the future.
Speaker 3 (31:29):
Absolutely, Barry, thank you so much for having having me,
and I really appreciate doing this with you, and I
look forward to being able to doing this with you
again in the future.
Speaker 2 (31:36):
Thank you, thank you,
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