Bulldog FCU Goes From “0-60” with Indirect Lending Success

What would your credit union do if you could start your indirect lending program from scratch? In February 2018, $167 million Bulldog Federal Credit Union, headquartered in Hagerstown, Maryland, got to answer that very question — and the clear choice was CU Direct and its CUDL indirect auto lending platform.

Bulldog FCU was chartered on July 16, 1968, to serve employees of Mack Truck Union Local 171. In just a decade the credit union experienced tremendous growth, amassing $4.3 million in assets. Continued growth came with the addition of products such as mortgages, home equity loans and business banking, and a community charter in 2001.

But through all the growth over the first 49 years, Bulldog FCU never had an indirect lending program. Auto loans were processed as direct loans that were closed in the branches. Michael A. Oravec, the credit union’s Business Development Rep and Indirect Loan Underwriter, said the management team finally realized there was a need for such a program because so many people were clamoring for one.

“These requests came from existing members, dealerships and non-members,” Oravec recalled. “In addition, loan and membership growth factored into the final decision.”

With this clean slate, Oravec said choosing CUDL over its competitors was easy: “Bulldog liked the fact CUDL is designed with credit unions in mind,” he said.

The initial goals of this fledgling indirect lending program — both short-term and long-term — were to grow the credit union’s membership base and increase overall loan production. Since the program launched on the CUDL platform on February 5, 2018, Oravec said those goals have been “exceeded” through the consistency in the way the program has run since day one.

In just a year and a half, the indirect lending program has become a powerhouse, he reported. Its first $1-million month came in July 2018, in only the sixth month of the program. That was the start of a consistent string of $1-million months — topped by its highest volume month earlier this year, in January 2019, when it funded a whopping $3,563,736.

In total, since February 2018, Bulldog has funded 1,082 deals for $31,016,714. “Funding $31 million in indirect vehicle loans — especially in such a short time — has greatly helped the credit union grow,” Oravec said. “And it is not just about profitability. Through this program we have been able to build strong dealer relationships and provide excellent member service. Thanks to a great deal of positive word of mouth advertising, we have had dealers calling in to become a part of the program. They love the fact even though the program has grown, we still provide the same level of service that we did at the beginning.”

In Bulldog Federal Credit Union’s June 2018 Call Report, it listed $746,709 in net income for the first six months of that year. The credit union’s interest received on loans for that period was $1,710,989. It held 2,915 new vehicle loans for $13,866,596, plus 1,151 used vehicle loans for $17,364,359.

One year later, the improvement in nearly all of those categories was remarkable. In Bulldog CU’s June 2019 Call Report, net income increased by 31.5 percent to $982,052 as interest received on loans jumped 32.7 percent to $2,271,416. As of June 30 of this year, Bulldog FCU was holding 516 new vehicle loans for $14,600,055, while the number and dollar amount of used vehicle loans increased to 2,788 and $33,752,289, respectively. In one year the number of used loans more than doubled, while the dollar amount skyrocketed by 94.4 percent.

Cultivating quality relationships with dealers

As its indirect lending program has grown, Bulldog FCU has cultivated relations with 10 dealers that each have funded more than $1 million in loans. According to Oravec, taking time to nurture successful relationships with dealers has helped spur this rapid growth. He explains that even if a dealer only sends the credit union one or two deals each month, the key is to show each dealer plenty of appreciation and offer assistance in building future deals.

“We let them know we are here to help,” he said.

Oravec stresses that once dealers learn about the power of the CUDL lending platform, they are very impressed. Oravec related his experience with one dealership in the credit union’s home city of Hagerstown — “at first, the dealership was not interested in changing to Bulldog or using CUDL. The people there reiterated they were happy with their current set-ups,” he recalled.

Because he knew persistence pays off in business development, Oravec visited the dealership on multiple occasions, despite the fact each time he was told “no, thank you.”

“Anytime I would be in the area of this dealership, I would stop by to check in,” he said. “On the fourth visit, the dealership said they wanted to further discuss options with Bulldog and using CUDL. Our CU Direct rep and I made our presentation and the dealership soon signed.”

The gist of the story: this formerly reticent dealership ended up being the first to have $1 million in funded loans, and Oravec said it continues to provide “consistent volume” on a monthly basis.

Top performers, consistency and great communication

From the start of the implementation process the management team at Bulldog has been pleased with the CUDL platform.

“As with any successful operation, teamwork is vital to achieving goals,” Oravec said, adding the entire implementation process went “rather smoothly.” He had particular praise for CU Direct’s team. “They have been great since the beginning,” he enthused. “The communication with the team has been excellent. Calls are returned, and all of our questions are answered promptly.”

Consistency has been key to the credit union’s indirect lending program’s continued success, Oravec noted. He noted that Bulldog FCU views all of the lending decisions it makes via indirect as if it was underwriting a direct loan in the branch. “Our indirect program has far exceeded our expectations,” he said, adding the credit union has put a strategy in place that will help it meet present and future membership and lending goals.