E-Trade Group Inc. is hoping its foray into recreational vehicle and marine lending not only diversifies revenues but provides new customers for its growing list of financial products, reports Thomson Media Inc.’s American Banker.
Last December the McLean, Va., company bought Ganis Credit Corp., one of the country’s largest recreational vehicle lenders. Ed Arienti, who was with Ganis for 12 years and is now E-Trade’s vice president of recreational loan products, said there is a lot to admire about the business, including the potential for cross-selling.
RV enthusiasts tend to be affluent, have stable incomes, and long track records at their jobs – “all of the typical patterns and parameters that a lender would look for,” maintains Arienti.
Buying Ganis added to E-Trade’s Southern California lending properties. These include a mortgage lender it bought in 2002, LoansDirect.
E-Trade said that in the second quarter it originated $2.9 billion in mortgage loans, up 16% from the first quarter and 146% from a year earlier.
It is “working toward more disclosure” but does not currently break out its recreational vehicle lending volume, a spokeswoman said. Ganis has a $4.5 billion servicing portfolio.
At the time of the LoansDirect purchase, Forrester Research Inc. analyst James Punishill said E-Trade had “desires of being nothing less than the next Citigroup.” It is primarily known as an online brokerage but has a bank that sells deposit accounts, certificates of deposit, and fixed-income products. E-Trade also markets auto loans, stock plan administration and market-making services through Dempsey & Co. in Chicago.
The specialized lending sector has drawn interest from more traditional commercial banks that, like E-Trade, want to diversify and draw in freshcustomer assets. National City Corp. is also trying to build its RV lending business.
Justin J. Hughes, who recently left Jefferies & Co., said in a June research note that Ganis has “strong positioning” in recreational vehicle lending. “One of the potentials from this acquisition,” he wrote, “is the ability to cross-market other E-Trade products to this attractive client base.”
Although the recreational business is not well known, Richard H. Repetto, an analyst with Putnam Lovell NBF, says it blends in with E-Trade’s profile customer – those with high credit scores and good credit histories.
Ganis’ servicing portfolio is backed by loans that are much higher-yielding than other assets, such as mortgages. “That helps them diversify the lending and revenue,” Mr. Repetto said. “I thought it was a decent acquisition.”
Mr. Arienti said Ganis’ dealer partnerships helped his company become a force in recreational lending. In 1994 Ganis formed the only captive finance company in the RV world, Thor Credit Corp. Ganis is a 50% partner in the company with Thor Industries Inc., which manufactures RVs under 10 different brand names, including Airstream. In April, Ganis formed a private-label retail marine finance program with Genmar Holdings Inc., a boat manufacturer that builds under some of the best-known brands, including Carver, Crestliner, Four Winns, Zodiac and Wellcraft.