Auto loan delinquencies at U.S. banks rose for the third straight quarter, inching closer to pre-pandemic levels.

Total auto loan delinquency ratio witnessed a sequential increase of 21 basis points to 2.39% in the third quarter, the highest level since the first quarter of 2020, according to analysis by S&P Global Market Intelligence. The ratio was at 2.60% in the first quarter of 2020.

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At the same time, the total delinquent auto loans at U.S. banks jumped to $13.13 billion in the third quarter against $11.95 billion in the previous quarter. This is the highest level of delinquent auto loans since the $13.82 billion in the fourth quarter of 2019.

The auto vehicle values normalizing is a headwind for the auto loan industry and is contributing "to the pace of credit normalization," Capital One Financial Corp. Chairman, CEO and President Richard Fairbank said during a third-quarter earnings call.

Capital One's auto loan delinquency ratio jumped 143 basis points year over year to 5.45% in the third quarter.

Boston-based Santander Holdings USA Inc. had the highest delinquency ratio among the top 25 banks by auto loans, up 215 basis points from a year ago to 10.50%.

Puerto Rico-based OFG Bancorp had the second-highest delinquency ratio in the third quarter at 7.15%, up 178 basis points year over year.

Muted uptick in auto loans

U.S. banks' collective auto loans continue to grow in the third quarter but at a muted pace, 0.3% sequentially to $550.52 billion. The auto loan portfolio posted 3.8% growth on a year-over-year basis at the end of the third quarter.

Capital One leads the way

Among the top 25 auto loan lenders, 13 posted a sequential increase in their portfolios while 12 recorded a quarter-over-quarter decline.

Capital One continued to lead the table as the bank with the largest auto loan portfolio, despite falling 0.4% sequentially to $79.58 billion.

Pittsburgh-based F.N.B. Corp. saw the steepest sequential rise in auto loans, at 9.9% to $1.57 billion in the third quarter. Meanwhile, Providence, R.I.-based Citizens Financial Group Inc. witnessed a 5.3% decline to $11.96 billion, the most significant quarter-over-quarter drop among the top 25 lenders during the quarter.