Hartford Business Journal

22 Hartford Business Journal • April 4, 2016 www.HartfordBusiness.com REPORTER'S NOTEBOOK CT credit unions' auto-loan gamble Credit unions nationwide for some time have been gaining in members, with deposits in these member-owned credit cooperatives cresting above $1 trillion in 2015, according to new federal data. However, within that National Credit Union Administration (NCUA) fourth-quarter industry financial performance report there is one red flag. NCUA is the federal insurer of credit-union deposits and regulates federally chartered CUs. According to NCUA's year-end report on Connecticut's 109 state- and federally chartered CUs, their combined volume of new and used auto loans originated by third parties, such as dealerships, has increased along with their over- all delinquency rate. Categorized as "indirect loans,'' these totaled $415.1 million, or 8 percent of all outstanding loans on their books, at Dec. 31, 2014, vs. $536.9 million, or 10 percent of all loans outstanding as of Dec. 31, 2015. A growing percentage of indirect-loan bor- rowers are 60 days or more behind on their payments — 0.82 percent in the fourth quarter of 2015 vs. 0.69 percent in the fourth quarter of 2014. Though a relatively small number of past-due loans, it's potentially troublesome given the trend of CUs expanding their "indi- rect-loan'' portfolios. Connecticut Banking Department Commis- sioner Jorge L. Perez, chief regulator of state- chartered CUs along with most other financial- services providers operating in this state, says his agency is aware of the rise in indirect loans and continues to monitor state CUs' underwrit- ing and collections related to them. Perez cautioned, however, that lenders' and regulators' financial reports are merely snapshots in time, and don't always accu- rately reflect what's trending among CUs' financial performance. Perez agreed that a clearer picture of Connecticut CUs' lending performance will emerge with time. "We're not aware of any Connecticut-char- tered credit unions that are keeping us up at night with their indirect lending,'' Perez said. Nationally, the rate of seriously delinquent subprime car loans soared above 5 percent in February, according to Fitch Ratings. That's worse than during the Great Recession and the highest level since 1996. It was a surprising development given the rel- ative health of the overall economy. Fitch blamed it on a dramatic rise in loans with lax borrowing standards that have helped fuel the recent boom in auto sales. More Americans bought new cars last year than ever before and the amount of auto loans soared beyond $1 trillion. Fitch also said auto loans to borrowers who have better credit scores remain "stable." The good news in Connecticut, however, is that credit unions' profitability and overall assets increased in 2015. The state's not-for- profit cooperatives posted a combined $28.6 million surplus in 2015, compared to a $24.5 million surplus a year earlier. Their collec- tive assets rose slightly to $9.6 billion, up from $9.3 billion in 2014. Connecticut credit unions also reversed two years of member- ship declines, increasing their customer base about 1 percent to 851,579 members – Gregory Seay, CNNMoney SAVE THE DATE! 'BLACK TIE & BLUE JEANS' PARTY Cool things just stand the test of time. Join us in celebrating 20 years of young entrepreneurs. HBJ's 40 Under For ty Rock n' Roll Blue Jeans 20th ANNIVERSARY 1997-2016 READY to ROCK N' ROLL? #HBJ40U40 TICKETS: Individual and Table Pricing Available – see website for details For tickets, contact Amy Orsini at aorsini@HartfordBusiness.com or 860-236-9998 ext. 134 or go to HartfordBusiness.com and click on "our Events" ANNIVERSARY EVENT: WEDNESDAY, SEPT. 14, 2016 CT CONVENTION CENTER | HARTFORD CT Credit Union Indirect Lending Performance Dec-2014 Dec-2015 Indirect Loans — Point of Sale Arrangement $319,307,659 $393,386,321 Indirect Loans — Outsourced Lending Relationship $95,781,549 $143,501,221 Total Outstanding Indirect Loans $415,089,208 $536,887,542 % Indirect Loans Outstanding / Total Loans 8.30 9.99 Indirect Loans Delinquent by 60 days or more $2,854,224 $4,403,137 % of Indirect Delinquent Loans/Total Indirect Loans 0.69 0.82 S O U R C E : N A T I O N A L C R E D I T U N I O N A D M I N I S T R A T I O N CT ranks in top 10 for sin taxes A new national survey ranks Connecti- cut 10th when it comes to the payment of sin taxes, including levies for tobacco and liquor. The survey by personal finance website Credio incorporated tax data from Tax- PolicyCenter.org and the Federation of Tax Administrators. Credio ranked the states from lowest to highest aggregate sin taxes. Here is how Connecticut's sin taxes break down: Tobacco Tax (Dollars per Pack): $3.40 Liquor Tax (Dollars per Gallon): $5.40 Wine Tax (Dollars per Gallon): $0.72 Beer Tax (Dollars per Gallon): $0.24 Connecticut is ranked second in New England behind Rhode Island for high- est sin taxes. New Hampshire is the best ranked New England state at 35th. Alaska is ranked as the No. 1 state for sin taxes followed by Hawaii, Washing- ton, Tennessee and Florida. Wyoming has the lowest sin taxes. Its tobacco tax is 60 cents per pack and its beer tax is 2 cents per gallon. Its liquor and wine taxes are not broken out because the state runs the liquor stores. – Keith Griffin

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