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Marine financing poised for 2013 gains

In case you missed it, there’s good news from the National Marine Bankers Association. It recently reported increased loan activity for 2012 through the third quarter, with 92 percent of those reporting expecting the final quarter will prove the same or better than a year ago.

“I expect to see a continued increase in boat loans in 2013,” says former NMBA president and director emeritus Bill Otto of Lake Effect Financial Services. “Money is definitely available for qualified buyers. There is absolutely no shortage of available funds; rather we have had a shortage of available buyers. Clearly more retail boat sales would fire up the lending market, draw in more players and create more competition.”

The NMBA does quarterly and annual studies of boat-lending activity. Here are some interesting recent sidelights:

  • Loan service companies that originate loans for banks reported the majority of their customers were 45-54 years old with household incomes of $50,000 to $99,000.
  • Similarly, banks responding to the study found the average age 45-54, but with a higher household income range of up to $150,000.
  • Boat loans continue to have a lower delinquency rate than other types of consumer instalment loans. Average delinquency in 2011 performed better than that of all installment loans by 44 basis points. That trend is expected to continue. Moreover, charge-offs have dropped below all loans tracked after two years of being above them.
  • For the first time in several years, down payments on new and used boats are trending down.
  • Turnover in loans is holding steady. The NMBA’s last report had the mean at 43 months and 42 months, direct and indirect boat loans respectively.
  • Lenders overwhelmingly reported consumer credit quality to be the same or better than the previous quarter, so borrowers with strong credit profiles are leveraging it for a boat purchase. Moreover, only 15 percent of the survey respondents indicated credit criteria were more stringent in the third quarter of 2012 than the previous period.
  • Dollar volume of loans booked during the third quarter 2012 was up over the same period in 2011, reported 69 percent of the responding lenders, with an additional 15 percent of lenders reporting volume to be about the same.
  • Finally, while conventional thinking has been that used-boat sales are accounting for more than 80 percent of all boat sales, new boat sales might finally be gaining a bigger piece. In the study, 92 percent of the respondents cited new boats as accounting for 26-50 percent of loans, at least by dollar volume.

Jim Coburn of Coburn & Associates, the NMBA director and also a former president, is on point when he says: “I find that bankers are interested in booking good, clean assets. This bodes well for marine retail, but the growth may be at a slower rate than the industry would like. Margins will still be a central focus with consumer lenders — along with credit quality. And rates are still at historic lows.”

Speaking of margins, in the last quarterly NMBA survey, 77 percent of the retail marine lenders responding said their average margin on boat loans was the same or better than that of the prior year. In contrast, a little-publicized fact is that banks have generally been experiencing margin compression in their overall lending as older loans mature and are repriced at lower rates. Throw in some marketplace competition and there’s more pressure on rates. Marine portfolios, on the other hand, have historically produced solid yields and, therefore, it seems logical that boat loans will become more attractive going forward. Coburn somewhat backs up that thinking when he tells me: “We are aware of a few more banks planning new marine retail programs for 2013. All good news.”

With increasing interest in marine lending, this year’s NMBA Recreational Marine Lender’s Workshop is expected to see increased attendance. It’s slated for March 3-5 in Fort Lauderdale. Those involved in or looking to get in any level of marine finance (underwriters, sales managers, collectors, funders, remarketing services, surveyors, maritime attorneys, service companies, dealer F&I personnel) are encouraged to attend. It’s the premier marine lending workshop held anywhere in the country.

Full workshop details can be found at


3 comments on “Marine financing poised for 2013 gains

  1. Peggy

    Norm thanks for highlighting the availability of marine financing to the boating community. Though we have far fewer lenders than 5 years ago, those that have remained true to the industry during this down turn are to be commended. Those banks suffered losses in their marine portfolios too, but chose to support a market that continues to outperform other types of consumer lending. The public perception still appears to be that boat lenders are gone or qualifying is near impossible. Marine lenders are looking for more business. Rates are attractive, and common sense seems to their guide when it comes to lending policy. And there are banks offering non-prime loans to help those who are recovering from financial setbacks. The range of lenders is very broad.

    Thank you for supporting the NMBA marine lending workshop – the only one of its kind. There are 9 modules covering the areas of credit analysis, collateral evaluation, lien perfection, collections, repossession and remarketing, and marine insurance. Bankers, F&I managers, and anyone affiliated with marine lending should have attendees at this workshop – they will be pleased they did!

  2. BoatLoanPro

    The NMBA statistics are welcomed, but it is going to be the buyers who look to dealers and brokers and, yes, even the private sellers for well priced vessels with all proper and updated equipment. The buyers are out there , and they drive the market.
    As to your comments regarding the NMBA Workshop and your responder ‘Peggy’ applauding the workshop; I would disagree. The workshop is ‘old hat’ stuff being offered by speakers who, at best, will be repetetive, predictable and self-serving. It’s really just a few days in Florida for the organizers and speakers, on NMBA’s nickel – the ‘tuition’ has gone up to cover airfare, accomodations, stipends, meals and entertainment for the organizers and speakers, and the attendee interest is not really there – NMBA produced a $50K loss on its’ last financial statement thanks to its’ officers and directors and the recently (slightly) revised roster of officers and directors are looking to dig another hole for the next fiscal year, starting with the ‘workshop’ loss of money and interest.

  3. Michael Bryant

    The person who refers to himself or herself as a “boatloanpro” is clearly uninformed as to the history of the NMBA and the dedicated people who have served it.

    The boat lending profession is a specialized one, and only a fraction of individuals have the background and knowledge to be considered truly proficient. Every year the NMBA provides a educational forum – our Marine Lending Workshop – sent by their respective companies to improve their skills and accelerate their understanding of the marine lending business. And, each year, the modules that are taught are updated to reflect the changes that have occurred in the industry, making the material presented timely and relevant.

    The countless hours and energy that the board of directors as well as other dedicated MNBA members put into the Association is without compensation. In fact, some of the expenses are born by the companies where these dedicated professionals are employed. As far as it’s directors benefiting through the organization, we would like to think that everyone benefits through their membership in the NMBA and will continue to do so.

    This is a non- profit organization. There has been many years where the economy, and in particular the marine industry and its lending partners, have been on better footing, and, as a result, the NMBA has been able to set aside monies to cover times like the past few years when the economy has been more of a challenge.

    And finally, it is important to note that many of the directors and members are competitors in this industry, but all have one goal in common, and that is to make it a better industry for everyone who works in it, even the “boatloanpro”.

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