Huntington Bancshares Inc. expanded its subsidiary FirstMerit Corp.’s recreational vehicle and marine business into 34 states this year, up from its prior 17-state footprint, Mac McCullough, Huntington’s chief financial officer, said on the second-quarter earnings call Friday.
“We believe there is an opportunity to expand FirstMerit’s attractive recreational vehicle and marine finance business,” McCullough said. “Nick Stanutz, who is the head of our highly successful auto finance business, runs RV and marine finance with the same discipline, risk management protocols, and — in some cases — technology that he applies to our super-prime auto finance business.”
Huntington has expanded the RV and marine business “and the early results are already exceeding our business plan,” he added. The expansion into new states was primarily in the Southeast.
Huntington Bank does not break out originations trends for the RV and marine business, but the portfolio had period-end balance of $2.2 billion in 2Q, according to the earnings report, up from $1.9 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 business focuses on “quality borrowers” with an average origination Fico of 786. Delinquencies 30 days or more past due declined to 0.6% in the second quarter, as compared to 0.8% in the previous quarter, according to the report. Net charge-offs also declined on a quarter-over-quarter basis to 0.4%, from 0.5%.
“We’re starting to break out some of the RV/marine portfolio … and it’s a portfolio that has performed very well through the cycle for FirstMerit,” Steve Steinour, Huntington’s president and chief executive, said on the call. “We have some experience in terms of the team we put in place about two years ago now to help us understand and manage that [business]. We are able to leverage the skill set and technology in auto and apply it to that book as well.”