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Incremental gains continue for marine bankers in 2nd quarter ‘12

Monday, July 16, 2012   (0 Comments)
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Overall marine lending volume rose incrementally and an uptick on loans for new boats have been reported by NMBA members in a survey on their activity for the 2012 second quarter ended June 30. The spring report also marks the first reading in the past 18 months where all respondents said boat lending was the same or improved over the previous quarter with the latter group accounting for 89%, highest in the past five quarters.

Observers suggest the readings mirror the increased sales activity being reported by boat builders in the spring. That, in turn, may have been supported by growing consumer confidence and a firming housing market. Marine lenders expect gains to continue into the summer quarter, but are split with slightly more than half expecting growth with the balance eyeing flat activity.

Mild early spring weather may have pulled boat buying earlier into the model year and may also have shifted some borrowing ahead. Survey respondents indicated this when they noted lower credit ratings for borrowers and more tightness by lenders in 2Q, reflecting more demand for loans across all lines. For the balance of the year there may be additional borrowing headwinds with consumer concerns on the economy (especially job prospects), healthcare coverage questions, and expectations of a disconcerting national election atmosphere.

The NMBA introduced the brief quarterly members’ survey in 1Q 2011 to gauge changes in the lending environment and identify trends that could be used for business planning. One-quarter of the NMBA lender members (loan originators/brokers/ financial service firms, banks, credit unions, and finance companies) responded to the 2nd quarter 2012 survey, with the majority having a national presence.

The list of survey questions follows:

How does dollar volume of loans booked 2Q2012 compare to 2Q2011?

89% responded: volume was up

11% responded: volume was the same

What percentage of dollar volume of loans booked 2Q2012 is on new boats?

50% responded: <26%

38% responded: 26-50%

12% responded: 51-75%

What percentage of dollar volume of loans booked 2Q2012 is refinance business?

78% responded: <26%

22% responded: 26-50%

What is your outlook for 3Q2012 compared to 2Q2011?

56% expect loan business to be up

44% expect loan business to be about the same

How does lending criteria 2Q2012 compare to 1Q2012?

11% more stringent

22% less stringent

67% feel criteria is about the same

How does credit quality 2Q2012 compare to 1Q2012?

22% responded they believe credit quality is better

22% responded they believe credit quality is worse

56% responded credit quality is about the same

How has your average boat loan amount changed in 2012 from 2011?

78% responded: increased

11% responded: decreased

11% responded: same

How has your average margin on boat loans changed in 2012 from 2011?

11% responded: increased

22% responded: decreased

67% responded: same

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