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

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

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

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

What separates ACIG's approach, Meyer said, is that they don'twant to be a “one transaction” dealmaker. “The value we bring isthat we deliver a true total liquidity program. The others are justin it for that one shot.” He acknowledged other competitors, butcalled them “just other brokers.”

“If a transaction is beneficial for a credit union we try todevelop an ongoing relationship. We look at this from a long-termperspective. Sometimes, it may very well be just one sale, butthat's not all there is to this business. We offer consultingservices over and above that and we're now working with some100-200 credit unions overall,” said Meyer.

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

Meyer said that typically, buyers prefer simplicity in the typesand classes of the portfolios they buy, as in prime, nonprime andsubprime, but once they buy a portfolio or several, they can dowhatever they like, including pool them for resale. (Ascend Unitedbelieves that debt pooling, or combining the smaller charge-offdebt portfolios of several institutions into larger, more diverseofferings attracts the best possible buyers and results in betterpricing.)

Who is buying? Meyer won't say, of course, as that informationis proprietary, but he would say that it's a diverse group andwouldn't comment on hedge funds and venture capitalists being amongthe bunch. “All of our buyers incidentally are nationallyrecognized banks and acceptance corporations, backed bymulti-billion dollar institutions,” he said.

Meyer said that the credit crunch seen in the markets of latehasn't affected the number of overall buyers waiting to take on therisk of a subprime auto portfolio either. “Our market hasn't rundry at all in the last 3-6 months,” he said. “I know thesedevelopments can affect other industries, but I've seen no adversechange in our buyers market. A credit crunch can make it moredifficult to get loans because there is less demand. There's adifficulty in acquiring assets. But that can be beneficial, too.The law of supply and demand means there are fewer portfolios forsale which means that buyers must bid up. That better price onlyhelps the credit union.” CAPex was developed to match buyers andsellers, he said. To participate, a CU can go to www.acinvest.comto create an account.

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

Typically, credit unions keep their auto loan in theirportfolio, but Meyer said that might change. Just as it once wasanathema to sell a credit card porfolio, a CU may think nothing ofselling off its auto loans to gain liquidity at some time. “Sellingauto loan portfolios can be an integral part of an ALM policy. Itcan help fuel growth, and CUs can participate out parts of theirportfolio or sell off the entire portfolio to other credit unionsor other entities. It's a call on whether the liquidity componentof the auto program can augment returns and member growth. Witheach credit union client, we try to get a feel for what the needsare and advise accordingly. Sometimes, it's a sale, sometimesnot.”

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

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