Huntington Bancshares Inc. continues to focus on its recreational lending business, following the expansion of subsidiary FirstMerit Corp. into 17 additional states earlier this year, according to the bank’s recent third-quarter earnings call.
Huntington Bank continues to “execute on the significant revenue enhancement opportunities,” which includes RV and marine lending expansions, Steve Steinour, Huntington’s president and chief executive, said on the call late last month.
“We really like the boat and RV book,” added Daniel Neumeyer, Huntington’s senior executive vice president and chief credit officer. “We think that is a real plus that we picked up through the acquisition, a business model and a team that are very skilled. We’ve supplemented that with external hires who have experience in the business.”
In August 2016, Huntington completed the acquisition of Akron, Ohio-based FirstMerit for $3.4 billion to enhance its footprint in the Midwest.
Huntington Bank does not break out originations trends for the RV and marine business, but the portfolio had a period-end balance of $2.3 billion in 3Q, according to the earnings report, up from $2.2 billion in the prior quarter.
The parent bank tightened underwriting at FirstMerit this year to align with Huntington’s origination standards and risk appetite. The company is also leveraging Huntington Auto Finance’s existing infrastructure and standards to grow the portfolio, according to the report.
The RV and marine businesses focus on “quality borrowers” with an average origination Fico of 772. Delinquencies 30 days or more past due remained at 0.6% in the third quarter, on par with the previous quarter, according to the report. However, net charge-offs increased on a quarter-over-quarter basis to 0.6%, from 0.4%.
“The profile of our customer [in RV and marine lending] is very strong, with Ficos of 790 to 795,” Neumeyer said on the call. “The asset size of the boats and RVs that they’re purchasing is in a range we’re very comfortable with — we’re talking $75,000 average size of the vehicle. These tend to be experienced boat and RV owners, and given that profile, the returns are strong as well. So, just on the whole, it’s a very nice asset class for us.”