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Michigan Credit Union League Home » Information Services » Publications » Contact » 2006 » 2nd Quarter » Focus: Products & Services  

Safety, Compliance, Confidence in Third-Party Lending

By Robert E. Sutton
Chairman and CEO

The stage is set for CENTRIX and the credit union industry to renew our work together, with a new clarity of purpose and a new confidence in the safety and performance of the CENTRIX Portfolio Management Program™ (PMP).

We are entering a phase of expansion characterized by new levels of regulatory oversight, operational efficiency and diversified funding. New NCUA guidelines, combined with process improvements and technological innovations at CENTRIX, have brought us to an important juncture in our evolution as a company.

To strengthen the dedicated focus we are putting on our credit union partnerships, CENTRIX recently appointed two senior executives to lead our credit union business. John Frew joins CENTRIX Financial as executive vice president, Credit Union Markets, with oversight of all activity related to CENTRIX’s key funding partners. Jeff Martin, who has been our credit union sales executive for the Western U.S., is now national sales manager.

Many of you may know that John Frew led our effort to work with the NCUA as it developed credit union industry regulations for third-party indirect lending. The guidelines constitute a framework for credit unions that sets standards for third-party, subprime lending and pave the way for credit unions to pursue their mission of serving the underserved.

The NCUA has lifted a number of the Documents of Resolution (DOR) that were issued to credit unions after the June 2005 Risk Alert — with more in the pipeline to being lifted all the time. We believe that this is significant progress and will allow credit unions to realize the potential of the growing special auto finance market.

Additionally, on March 17, the NCUA issued its white paper outlining a standardized static pool analysis model letters/RiskAlert.html. On Feb. 21, the comment period expired on the NCUA’s proposed rule for indirect third-party lending, setting the stage for the agency to issue a final rule with clear guidance to the credit union industry.

During the period when credit union allocations to the PMP decreased, CENTRIX began diversifying capital resources in order to avoid over-reliance on any one industry for funding. The response to the CENTRIX program by banks and the capital markets is overwhelmingly positive.

As more capital sources become active or resume their activity with the CENTRIX program, we expect the monthly allocation level from all funding categories to continue to show substantial month-to-month increases.

Over the last several months, we have been making improvements at CENTRIX, expanding our business approach, realigning our workforce and increasing our technical capabilities. The result is a streamlined operation with greater efficiency for CENTRIX and our business partners.

As I have said since CENTRIX began working with credit unions nearly a decade ago, we are truly partners. We have stood together in facing many challenges — and the NCUA Risk Alert was no exception. CENTRIX was determined to ensure that every issue was addressed and every concern resolved.

Because of the detailed work we engaged in directly with the NCUA, we believe there is no other company that understands the new regulatory environment — or is equipped to meet those guidelines — as well as CENTRIX.

We have proven our commitment to our partners and we look forward to a bright future characterized by an even stronger working relationship.

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For more information, contact CENTRIX Financial at (877) 500-4646, or
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