Silver State Schools Credit Union: Strategic Benefits of Auto Loan Default Insurance

By John Flynn, CEO, Open Lending

Silver State Schools Credit Union, located in Las Vegas, sees its fair share of consumers with poor credit. The average credit score in Las Vegas is less than 633, placing it in the bottom 9% out of 2,570 U.S. cities studied by WalletHub.

Scott Arkills, CEO of the $770 million Silver State Schools Credit Union, said that serving the underserved has always been an interest of his. Prior to coming to the credit union, he served as president/CEO for Key Bank’s subprime auto finance division. Providing auto loans to those who really need a hand up just to get to work and pay the bills is a critical piece of Silver State Schools’ mission. Open Lending’s Lenders Protection helps the credit union fulfill that mission, according to Arkills. “It’s important for us to have opportunities in areas where we can do lending in areas where we might not be able to do that,” he said. The Federal Reserve Bank of Kansas City reported the national delinquency rate on subprime auto loans was 16.3% as of August 2018.

“We needed to have a program that reinsured the credit union so that we covered those losses we might take, but also offer opportunities to those members that we might not otherwise be able to make those credits to,” Arkills explained.

The program has been highly successful for Silver State Schools. The credit union has made 344 loans under Lenders Protection for more than $8 million as of Jan. 31, 2019. The return on loans covered by Lenders Protection has been 2.82%, which is 54 basis points over expectations.

“We’re over what our projected return on assets were…” Arkills said, “so we’re pleased with it…. We know we can make some inroads with the dealers as they become aware of our program.” Silver State Schools has $156 million outstanding in indirect loans of a total $232.5 million, according to American Share Insurance.

Arkills concluded, “What you can’t lose with this program is that what you’re getting is a greater spread of the business from A to E. At the end of the day, that’s what’s important is that by actually buying some of those lower credits, and actually opening yourselves up to that, as a long-time auto lender – 35 years in the business, I can tell you that’s what dealers appreciate most –the fact that you’re going to buy not only the A+ deal but also the E deal from time to time. Open Lending allows us the ability to do that.”