2023 Recap: A Year of Making a Difference With SNCares

At the start of each new year, many of us pause and reflect on our actions and accomplishments over the past 12 months. Here at State National, we’re doing the same and taking a moment to recognize and appreciate the impact that SNCares, our charitable committee, has made in the lives of those we've been fortunate enough to support throughout 2023.

A Journey to Greatness Setting and achieving goals is one of the best ways to feel fulfilled. Whether it’s in our personal, social, or work life, we all require a certain level of success to build confidence and to have a sense of well-being. There’s something especially remarkable about success in the workplace, where a group of people with common goals and values come together to help each other achieve those goals on a personal and collaborative level. And the significance of celebrating those successes is equally as important as setting them and reaching them! Working Together to Provide an Excellent Borrower Experience Our Contact Center here at State National does exactly that. Not only do our hard-working representatives strive for and achieve daily, weekly, monthly, and yearly success as measured by ambitious KPIs, they were also recently awarded with Center of Excellence Certification from BenchmarkPortal — the global leader in the call center industry. BenchmarkPortal provides benchmarking, certifications, training, consulting, and industry reports and has gained international recognition for its innovative approach to best practices. Their Center of Excellence Certification isn’t an easy accolade to achieve — it’s specifically given to call centers that implement best practices and attain world-class performance in their industry. BenchmarkPortal’s CEO, Bruce Belfiore, says that he was “struck by the high level of customer service and by the efficiency with which contacts are handled,” at our in-house Contact Center, noting that the State National team achieved certification on the very first try due to their exceptional performance on BenchmarkPortal’s comprehensive 360-degree on-site assessment. The Power of Persistence Earning this certification wouldn’t have been possible without our knowledgeable and dedicated Contact Center representatives. They recognize the importance of delivering exceptional service to borrowers and focus on building and maintaining a positive relationship with every individual, on each call. Our Contact Center’s core values include regular, ongoing training, process improvement, and utilizing our state-of-the-art technology to better serve borrowers nationwide. Working as a team is critical for achieving success in any organization. We’re especially proud of what our SNC Contact Center team has accomplished, which is a testament to the power of teamwork and the importance of setting clear goals and working together to achieve them. We are excited to see what they will do next and have no doubt that they will continue to raise the bar for customer service excellence. Our dedicated representatives’ enthusiasm, professionalism, true caring, and daily focus on continuous improvement makes them a shining example of what can be accomplished through teamwork and a clear vision for success. See what BenchmarkPortal has to say about State National’s recent win here. Have questions about BenchmarkPortal Certification and how world-class, dedicated service can benefit your financial institution and your borrowers? Learn all about it here.

Inflation has been squeezing businesses and consumers alike. Perhaps the easiest industry in which to spot the consequences of financial stress is the automotive industry. How can you maintain a competitive advantage while also protecting your portfolio in this market? Read on to find out. Spotlight Soundbite: Maintaining Your Competitive Edge During Auto Industry Inflation Consumers Are Facing Post-Pandemic Financial Stress The government’s stimulus checks have long run out, as have the grace periods many financial institutions implemented during the pandemic. Many individuals have returned to work and are again bearing the costs of gas, transportation, childcare, and other employment-related expenses. With many Americans increasingly financially strapped, what does this mean for lenders? Unfortunately, prices are soaring and may continue to rise. We know that those directly impacted by inflation (which is all lower- to middle-class Americans) alter their consumption, investment choices, and spending habits as their purchasing power decreases. Something has to give as many consumers struggle to make ends meet. Unfortunately, many may choose to scale back on or even cancel their auto insurance as a result. In addition, consumer debt-to-income ratio is expected to increase. As borrowers continue to take out large auto loans, particularly on used cars, they will be stuck with these loans even if the value of the item purchased decreases long-term — potentially putting borrowers upside down on their loans, with a vehicle worth considerably less than what they still owe in the future. Revenue Lost in Charge-offs What does this mean for financial institutions? Unfortunately, this financial stress being felt by consumers also increases risk in a lender’s loan portfolio. As financial institutions are providing loans for vehicles with a hyper-inflated value, it’s likely they will see an increase in bad debt as those loans start to default to historic norms and possibly higher. Without proper risk mitigation measures in place, if the collateral sustains damage or loss when a borrower is uninsured or underinsured, the financial institution making the loan can also find itself “upside down,” so to speak, with the claims amount received insufficient to cover its exposure. Not all is lost, however — financial institutions with a high-quality portfolio protection insurance program will experience relief from a significant amount of this bad debt. Not only will this critical protection keep your borrowers covered, it will also safeguard your balance sheet. Insurance Tracking Also Helps Lenders Manage Risk In addition to the protection provided by the insurance coverage, lenders can also use the detailed borrower insurance tracking in the program to assess and mitigate risk. High-quality, real-time tracking allows lenders to leverage knowledge of a borrower’s lack of coverage as an indicator of when a loan may be at a higher risk of default. This early warning sign provides an opportunity to initiate preventive steps to work with those borrowers to avoid collections, as well as take proactive measures to step up early collections efforts. How a Program with State National Tackles Inflationary Hardships We can help as you are undergoing a double squeeze from tighter net interest margins. In addition to decreasing your charge-offs, here are a few of the relevant ways our program supports you no matter the storm: Our partners have full transparency and access to immediate real-time data with InsurTrak, the industry’s only system built from scratch specifically for CPI. It’s your single sign-on source of truth for insurance tracking, claims, and reporting, resulting in maximum ease, speed, and transparency. With your loan portfolio data at your fingertips, accessible instantly all in one place, it's easy and quick to identify trends and potentially at-risk borrowers. Our internal infrastructure is supported by our parent company Markel, a $55 billion Fortune 500 company, which has been proudly rated “A” (Excellent) by AM Best for many decades and is regarded as an industry leader. Our combined tenure, strength, and expertise translate to unmatched peace of mind and security for our partners. Our Claims Advisory Recovery Services (CARS) boosts your bottom line by mitigating your auto portfolio losses, reducing your internal expenses, and giving you more time to spend servicing your borrowers. With CARS, we manage repossessed collateral and remarketing profitability at auctions for you while also maximizing settlements from outside insurance claims and recovering suspected skips. All of this combined with State National’s culture of continuous improvement for the past half century, unwavering commitment to investment in technology, and unsurpassed service delivery ensures we can best serve our partners in both good times and challenging times, and we can help your business weather any economic storm. Practical Solutions for Mitigating Portfolio Risks State National's Client Advisory Council (CAC) recently discussed some practical steps their credit unions are taking for creating alternative revenue methods. Even in the face of rising inflation and decreased lending demand, there are still many ways credit unions can grow while serving their members well. For more information on how our solutions can help your credit union, contact us! To read the first article in this SNC Spotlight series, Tackling Inflation and the Auto Industry, visit: Protecting Your Credit Union from Car Market Volatility

In today’s auto lending environment, a comprehensive and high-quality portfolio protection program is more important than ever — including partnering with a provider that will pay the full loan balance instead of actual cash value (ACV). Protecting Your Credit Union from Car Market Volatility According to Scott Colbert, EVP, Chief Economist for Commerce Trust Co., in Q2 of 2022 there were 17,000 auto dealers in the U.S. — but there are only about 34,000 new vehicles on those dealers’ lots. That’s roughly only 2 to 2.5 new vehicles per dealer. Employees have returned to work amidst a shortage of the auto parts necessary for the vehicles they drive to get there. New car inventory sits on hold due to a shortage of microchips and other supply chain issues. Some dealerships report their back order for new vehicles ranges from a couple of months to 5 years! This has caused used car demand to skyrocket, along with sticker prices. According to J.D. Power, the average sales price of a new vehicle during the first six months of 2022 hit a record of $44,907 — 17.5% higher than just a year ago. Edmunds.com reported that 12.7% of borrowers who financed a new vehicle in June 2022 had monthly payments of $1,000 or more. And used cars are definitely not exempt from rising prices — the average monthly payment on a used car was $503 in the first quarter of 2022 — up from $413 for the same period in 2021, reports Experian. Relief Is Not Yet In Sight Analysts don’t expect auto prices to begin leveling off until late in 2023 or even into 2024. Unfortunately, people who need a car now don’t have the luxury of waiting for prices to decrease — they will pay whatever they can stretch to afford. To meet this demand lenders are offering larger and larger loans for both new and used vehicles. This desperation in the car market has forced many borrowers into disproportionately high-cost auto loans — with recent higher interest rates adding to borrowers’ monthly payment burdens. Borrowers Aren’t the Only Ones at Risk Future market volatility has the ability to impact a vehicle’s perceived value between now and when a member pays off their loan. Today’s larger loan balances and longer loan terms leave them at risk of being upside down, with a vehicle worth considerably less than what they still owe. As a result, this also increases risk for credit unions in their loan portfolios as they are providing loans to their members for vehicles with a hyperinflated value. If the collateral sustains damage or loss when a borrower is uninsured or underinsured, the credit union can also find itself “upside down,” with the claims amount they receive insufficient to cover its exposure. The Good News The solution? When you partner in a high-quality collateral protection program with State National, you can receive Waiver of Actual Cash Value (ACV) coverage — which means State National will pay the value of the entire loan amount remaining and not just a car’s value at the time of a claim. In “normal” times, Waiver of ACV coverage is a valuable tool for decreasing risk in a lender’s portfolio. In times like these, when lenders are already being double-squeezed by low net interest margins and increases in bad debt, it’s a vital part of a successful credit union’s risk mitigation strategy. For more information on how this valuable solution can help your credit union, contact one of our specialists today! To read the second article in this SNC Spotlight series, visit Part 2, Maintaining Your Competitive Edge.

The Difference Is in the Details: Timely Automated Insurance Verification for Borrowers “Why am I getting these notifications? I sent in my insurance information already — twice!” Depending on the company and system you’re using for insurance tracking, this kind of noise may be an all-too-familiar sound. It’s never a good feeling to hear that an upset borrower has called to complain that they’ve received an insurance notification — or even worse, had a policy placed — in error. That’s why it’s so important that the partner you choose for portfolio protection has done everything they can to ensure those calls don’t happen. Collateral protection has come a long way since State National pioneered it back in 1973. In those days, when notifications and insurance submission was all done by mail or phone, even the best-run programs had to cope with a certain level of borrower noise because of unavoidable delays. But, fast forward to today and cutting-edge proprietary advanced technology and tools are available to solve these problems — in many cases, before they ever happen. We’ll let you in on a secret, though — not every provider has them at the same level, although they may tell you they do. Because of State National’s exclusive technology solutions, and service that’s entirely focused on portfolio protection, all you’ll notice is the peaceful sound of silence — which is good for your borrowers, your staff, and your bottom line. Watch the short video below to see how State National can help you reduce friction and borrower noise in your collateral protection program.