Better Quality, Worse Performance

Despite moves initiated two years ago to tighten underwriting, Brookline Bank continues to see deterioration in its auto loan portfolio.

The Massachusetts bank reduced originations and targeted higher credit quality borrowers, yet delinquencies continue to climb.

Here are the stats:

• As of Sept. 30, Brookline Bank’s portfolio totaled $566.9 million, with an average credit score of 760. The year prior, the portfolio totaled $604.5 million, and the average credit score was four points lower — 756.

• Only 2.6% of the loans originated in the first nine months of this year were to borrowers with credit scores below 660, down from 5.7% in the first nine months of 2008.

• Even so, 1.84% of the portfolio was at least 30 days delinquent in 3Q09 — up from 1.72% in 3Q08 — and the allowance for auto loan losses increased to 1.49% of the portfolio from 1.19%.

The upshot is that there is only so much that auto lenders can do to improve portfolio performance. At some point, economic factors just have to run their course.