TAMPA, Fla. – Up until a few years ago, Bay Gulf CU faced a similar problem other CUs have to contend with on weekends or evenings. Members who wanted to finance an auto loan through the CU had no one to take their loan application at the CU when the doors were closed for business. Bay Gulf's indirect lending relationship with Aimbridge Indirect Lending has not only made that predicament a thing of the past for Bay Gulf, it's boosted the CU's indirect lending portfolio to a level where it's almost equal to its direct auto loans. As of mid-September, BGCU had $84 million in its auto loan portfolio of which $46 million were direct loans and $38 million were indirect loans. " In addition, the delinquency rate for the indirect lending program is lower than our direct loans. And that is pretty significant," says BGCU President/CEO Bill DeMare. Prior to its relationship with Aimbridge, the $186-million BGCU wouldn't have been able to say that. " Many of our members were purchasing autos at times when we weren't open," said DeMare, either at night or on weekends. "We explored using an indirect program so it was convenient for our members and easy for us to capture most of our members' auto loans." Before shaking on its partnership with Aimbridge, he explained that Bay Gulf tried the route of getting members to come to the credit union to be pre-approved for a loan "so that way even if we were closed when they wanted to finance a vehicle they'd at least have been pre-approved by us." But that strategy didn't work either, said DeMare, because it wasn't convenient for members to come to the CU because of the hours it was open for business. "So for us to serve our members, we decided to go with an indirect program in addition to continuing our direct program," he said. DeMare said one of the reasons Bay Gulf elected to partner with Aimbridge Indirect was because the indirect lending provider, a division of Aimbridge Lending, was already established in the Tampa market and had relationships with dealers. The company also already had relations with some of the larger credit unions in the Tampa area such as MacDill FCU and GTE FCU, "so they'd already established relations with credit unions here. So we knew we would get immediate results," said DeMare. Bay Gulf CU has eight branches and over 23,000 members. Aimbridge Indirect has relations with more than 2,197 dealers throughout the U.S. including 197 in Tampa. It has relations with 507 throughout Florida including those in Tampa as well as in Orlando, Miami and Jacksonville. Five years later, DeMare is confident that, "Most of the money that's come in to Bay Gulf through indirect loans we wouldn't have gotten otherwise." He estimates Bay Gulf would probably only have captured about 15% of the auto loans it's gotten. In an interesting – and possibly unique twist on Bay Gulf's indirect lending program – up until a year ago only existing members of the CU could fund auto loans at the dealership. Non-members couldn't join Bay Gulf at the dealership site. That changed, said DeMare, "after Aimbridge encouraged us to allow dealers to begin signing up new members because they felt there was a lot of business we were losing." What about the quality of these new members who are joining Bay Gulf at the dealership? DeMare says the latest data show they carry about two products with Bay Gulf, the auto loan and the minimum share deposit. "They're not the best quality members and financially I think it's a small gain and small loss. You break even. But it's worth it in terms of our relations with the dealerships because it give them much more flexibility and enhances our relations with them" he says. DeMare admits that he's considered on more than one occasion bringing the management for Bay Gulf's indirect lending program in-house "because we look at the costs of running the program the way it is between paying the dealer and paying Aimbridge. "But every time we look at it we know we couldn't do it as effectively. There are a lot of trade-offs," he says. -

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