DENVER — Access Capital Investment Group reached a milestone with the August sale of two more Centrix CU portfolios, bringing the total to $65 million for the last 12 months, said Seth Meyer, ACIG's secondary market manager. He predicted reaching the $100 million mark by year's end.

“We've specialized in developing liquidity programs for our credit union clients, specifically in the auto world,” Meyer told Credit Union Times. ACIG isn't the only player in the sell-off of Centrix portfolios, as Ascend United of Federal Way, Wash., is offering CUs that hold Centrix paper (performing and non-performing) the opportunity to participate in a pooled portfolio designed to attract the highest possible price. AU claims to be the nation's top seller of credit union charge-off debt and is an experienced debt recovery and collections specialist.

ACIG's experienced team has successfully facilitated over $1.5 billion in portfolio sales and acquisitions over the last three years, the company stated and has now created a system called CAPex (Commercial Auto Paper Exchange) to enable CUs to break into the secondary market more easily. “We know who the buyers are,” said Meyer. But he claims that ACIG also offers a lot more than the ability to unload the Centrix loan risk of which CUs have become leery.

“If credit unions want to sell loan paper but aren't sure where to start looking, we'll help them find buyers and give them additional services at no cost. They can sign up for free at our CAPex page and we'll do a free portfolio assessment,” he said.

What separates ACIG's approach, Meyer said, is that they don't want to be a “one transaction” dealmaker. “The value we bring is that we deliver a true total liquidity program. The others are just in it for that one shot.” He acknowledged other competitors, but called them “just other brokers.”

“If a transaction is beneficial for a credit union we try to develop an ongoing relationship. We look at this from a long-term perspective. Sometimes, it may very well be just one sale, but that's not all there is to this business. We offer consulting services over and above that and we're now working with some 100-200 credit unions overall,” said Meyer.

“We've made real strides with CAPex, I think,” he said, by offering a streamlined way to sell loans to investors and beef up a CU's liquidity. ACIG doesn't mix portfolios from more than one credit union into pools, which is the approach taken by Ascend United. Why not? “We don't mix portfolios because every portfolio is different. Our buyers buy smaller portfolios and prefer to discriminate on size. Aggregation can lower the price, depending on the underlying assets.”

Meyer said that typically, buyers prefer simplicity in the types and classes of the portfolios they buy, as in prime, nonprime and subprime, but once they buy a portfolio or several, they can do whatever they like, including pool them for resale. (Ascend United believes that debt pooling, or combining the smaller charge-off debt portfolios of several institutions into larger, more diverse offerings attracts the best possible buyers and results in better pricing.)

Who is buying? Meyer won't say, of course, as that information is proprietary, but he would say that it's a diverse group and wouldn't comment on hedge funds and venture capitalists being among the bunch. “All of our buyers incidentally are nationally recognized banks and acceptance corporations, backed by multi-billion dollar institutions,” he said.

Meyer said that the credit crunch seen in the markets of late hasn't affected the number of overall buyers waiting to take on the risk of a subprime auto portfolio either. “Our market hasn't run dry at all in the last 3-6 months,” he said. “I know these developments can affect other industries, but I've seen no adverse change in our buyers market. A credit crunch can make it more difficult to get loans because there is less demand. There's a difficulty in acquiring assets. But that can be beneficial, too. The law of supply and demand means there are fewer portfolios for sale which means that buyers must bid up. That better price only helps the credit union.” CAPex was developed to match buyers and sellers, he said. To participate, a CU can go to www.acinvest.com to create an account.

ACIG is not a buyers' broker, said Meyer. “We work for the sellers and we deal directly with the end-buyer so there is no middle-man and no middle man discount. We strive to get the highest possible price for the portfolios,” he added.

Typically, credit unions keep their auto loan in their portfolio, but Meyer said that might change. Just as it once was anathema to sell a credit card porfolio, a CU may think nothing of selling off its auto loans to gain liquidity at some time. “Selling auto loan portfolios can be an integral part of an ALM policy. It can help fuel growth, and CUs can participate out parts of their portfolio or sell off the entire portfolio to other credit unions or other entities. It's a call on whether the liquidity component of the auto program can augment returns and member growth. With each credit union client, we try to get a feel for what the needs are and advise accordingly. Sometimes, it's a sale, sometimes not.”

ACIG has sold off Centrix paper that is both performing and non-performing. Obviously, allowed Meyer, the loans that are current get a better price, but selling non-performing loans releases a CU from collections efforts or the costs of repossessions, so there is benefit (and a likely loss) but freedom from still growing losses. “Common sense prevails,” said Meyer.

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