North Carolina, Georgia credit union leagues agree to market Centrix auto loan program

ENGLEWOOD, Co. – In an effort to bolster lackluster auto lending and beef up indirect loan delivery systems, the North Carolina Credit Union League and the Georgia Credit Union Affiliates through its Alliance for Credit Unions, LLC, recently signed an agreement with Centrix Financial, LLC to market the firm’s loan portfolio management program. Through its portfolio management program (PMP), Centrix helps credit unions to finance auto loans to their credit-impaired members. Centrix markets, underwrites, collects and insures loans against principal loss, which in turn may minimize the costs and risks traditionally, associated with non-prime and sub-prime auto loans. Auto loan lending had nearly come to a halt for credit unions in North Carolina, said Patti Weber, executive vice president/COO of the state’s league, prompting her to seek out ways to increase lending for the industry here. North Carolina’s league represents 164 credit unions and 2.3 million credit union members. Weber spoke to several representatives from several leagues when she heard some encouraging information from the Colorado Credit Union League. “I appreciated the fact that Centrix was very up-front about the type of credit union the program is tailored for,” Weber said. Representatives from nine North Carolina credit unions attended a Centrix educational class in July in Greensboro, and Weber expects one will be held each quarter. Three consultants for the league will also travel the state. As a follow-up, Centrix invites credit unions to attend a one-day training session in Colorado with the firm paying for transportation and accommodation expenses. The league agrees to do marketing and advertising at no cost and will earn compensation based on the number of loans secured. The PMP may not be for smaller credit unions, Weber said, since there has to be enough volume to know how many loans are being run with C and D credit ratings. Jennifer Prince, Centrix’s vice president of marketing and training, said a credit union doesn’t have to be a certain size to implement PMP, adding that the company currently works with 150 credit unions in 13 states and its PMP portfolio has 19,736 loans totaling $365 million underwritten. The auto finance market is the fastest growing sector in consumer finance pulling in $500 billion a year, Prince said. Financing for borrowers with limited credit histories, low income or past credit problems who are in the categories of “B” (non-prime), “C” or “D” (sub-prime) make up 30% of all U.S. credit customers. For the Georgia Credit Union Affiliates, which represents 189 credit unions and 1.6 million members, the impetus comes from wanting to increase indirect lending and reaching out to those “subprime” members, said Tim Bridges, the league’s executive vice president/CFO. The league will market the program through the Alliance for Credit Unions, LLC, a joint venture between the Georgia and Florida credit union leagues. Florida has already begun to market the program through the alliance. “Credit unions are flush with cash but loans are down due to the economy,” Bridges said. “Credit unions do a pretty good job at lending but historically, indirect lending and subprime have been lower than the marketplace. We see this as more of an investment because this is an opportunity for members who may have had chargeoffs, bankruptcies and credit scores that are lower than the traditional lending limits.” Bridges said credit unions that have a large number of select employee groups, community charters and are currently involved in indirect auto financing are prime candidates for Centrix’s portfolio management program. The league invited 12 of the state’s largest ones to attend an information session held on July 18. Nine representatives showed up, and the next step will be to narrow down that list to be sure that Centrix will be an appropriate fit for each respective credit union, Bridges said. [email protected]