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Knoxville TVA Employees Credit Union Builds on Long Lasting Partnership with Origence. Grows Indirect Lending 15% in 2020, On Pace for 32% Growth in 2021

Knoxville TVA Employees Credit Union (KTVA) and Origence have been together for a long time. The $3.2-billion credit union, headquartered in Knoxville, Tennessee, began using the company’s CUDL auto lending network in 1994 to originate indirect loans. The relationship continues to help the credit union grow its auto lending business and maintain a real marketplace edge. And like a fine wine, the relationship gets better with age.

“Consistent monitoring over several years has shown the value of the partnership with Origence—they are the best combination of service and price for us,” notes Lisa McDaniel, the credit union’s assistant vice president of indirect lending.

In 1994, KTVA wanted to reach new members and build its loan growth by establishing ease of use in dealerships. In addition, it wanted those new members to use the credit union’s existing services. At the time, the credit union worked with six local dealerships. Today, KTVA’s indirect lending program includes partnerships with 139 dealerships, and McDaniel said its dealership-to-staff ratio is at maximum capacity.

Cultivating quality relationships with dealers

The CUDL auto lending network has helped KTVA grow and advance its relationships with dealers by improving the speed of the lending process. McDaniel said thanks to digitizing their loan process by also incorporating the Origence SmartFund program, funding is “very fast.”

“The dealers we work with speak very highly of the emphasis we put on funding speed,” she said. “Our dealers also love the auto-approval capabilities we have, as well as having access to member payoffs. Most of our forms are downloaded and mapped in the Origence Consumer Loan Origination System (LOS) for easy access to our dealer partners.”

Immediate improvement

KTVA saw “instant” improvement in its overall loan activity after launching indirect lending with Origence. McDaniel added that the subsequent addition of Origence’s Decision Engine Optimization (DEO) streamlined the credit union’s lending efforts even more.

“The [Origence] LOS has made our entire process more efficient,” she said. “We are completely paperless and can efficiently work remotely by utilizing ACH provided by CUDL.”

“The process of professionally designing (DEO) our auto approval guidelines was a tremendous step in efficiency,” she recalled. “Prior to DEO, our auto approvals were approximately 19 percent of all loan applications submitted. After the implementation, we are at 35 percent. We also are able to add auto counters and auto declines.”

Built for long-term success

Overall, the management team’s long-term expectations of the Origence indirect lending program have been well met, McDaniel said, noting the credit union’s loan efficiency has improved to the point its internal ROA in indirect lending is considerably higher than the ROA of the credit union as a whole. This is possible, she explained, due to needing fewer employees and less paper-per-dollar revenue.

Today, KTVA’s indirect lending program is strong, and hitting on all cylinders. She described it as efficient, adding it is well-respected and well-supported by the dealerships in the credit union’s local area.

“Our look-to-book is considerably above our peers, and all other metrics, including loan loss, are impressive,” she revealed. “We do not feel as if we could consistently maintain the success we have had without the efficiency and technology that Origence provides for us.”

The numbers tell the tale: Knoxville TVA projects to originate approximately $750 million in indirect loans in 2021 – including booking more than $100 million in loans in the month of March alone.

KTVA has experienced solid loan and member growth for several years now, McDaniel shared. In 2018 the credit union had 29.87% new loan growth and 32% new member growth; in 2019 the growth in these areas were 13.87% and 10.83%, respectively, followed by 15.21% and 6.59% in 2020.

So far in 2021, new loan growth is 31.87% compared to last year, while new member growth is up 4.61% over last year’s booming numbers.

Through the middle of September, the credit union has added more than 12,500 new members through its indirect lending program, after bringing in more than 12,000 new members in 2020. Thanks to that growth, McDaniel added, KTVA has had many opportunities to contact prime members with offers of other products and services.

McDaniel said it is difficult to compare lending data before/after implementation of CUDL nearly three decades ago, but she noted since the Origence Consumer LOS was implemented, it is safe to say the credit union has at least doubled – if not tripled – its monthly lending volume. 

Looking forward

With the world’s economy still trying to emerge from the ongoing pandemic and the auto industry facing numerous headwinds and supply shortages, McDaniel said 2022 can be seen as “The Year of the Unknown.”

“Our success will hinge on our dealership partners’ success,” she said. “If the supply/demand issues can be solved and vehicles can get on the ground, there is no reason to expect anything less than another successful year.”

KTVA tends to project 8% to 10% loan growth each year, according to McDaniel, despite the fact it is in a “hyper-competitive” market with many credit unions making a “substantial effort” in indirect lending.

“We have learned through the years that relationships are the key to our success. Our mission is to help our members grow financially. Our executive team has been the driving force behind our success, and Origence has played a vital role in achieving that success.”

When the decision was made in 1994 to develop an indirect program, the credit union elected to be a “partner” to its local dealerships–in every sense of the word. McDaniel said this attitude has helped KTVA build strong relationships in its area.

“In 2009, when we saw devastating economic downshifts, Glenn Siler, our CEO, made a statement to the entire credit union staff: ‘We refuse to participate in the recession.’” That is exactly the path we took with our indirect partners as well, McDaniel recalled. “We were there for them when the banks and other financial institutions turned away. They remember that and appreciate our commitment to their success. We depend on our partners, like Origence, to take care of our most valuable asset—our members—and we see our dealership partners as members too.”