Risk Management Efforts Headline Auto Excellence Awards

LAS VEGAS — Renowned artist and architect Maya Lin once said: “To fly, we have to have resistance.”

These days, auto financiers are meeting resistance on all fronts. Vehicle sales volume is down, funding hard to come by, and credit performance weakening. Yet through the difficulties, lenders have managed to fly — to innovate and succeed. For their efforts, four companies won 2008 Auto Finance Excellence Awards.

“It might be said that perhaps excellence awards may not be merited considering the deterioration of the financial services sector and the decline in automotive sales over the last 12 months,” said JJ Hornblass, executive editor and publisher of Auto Finance News, in presenting the awards at the Auto Finance Summit this month. “We think the opposite. We see many enterprises using their whole creativity and ingenuity to find their way through our current predicament. This is why our awardees for 2008 largely found achievement in risk- management.”

Award recipients were chosen from nominations by industry executives and after careful consideration by the Board of Advisors of the Auto Finance Summit and the editors of Auto Finance News.

The winners, in alphabetical order:

BANK OF AMERICA DEALER SERVICES
Creative Combo
Earlier this year, Bank of America inked a deal with Fleetwood Enterprises Inc. to create a captive, called Fleetwood Financial Services, to offer retail and wholesale financing, as well as banking products, to Fleetwood’s 1,000 dealers nationwide. Fleetwood began internal talks about a captive in May 2007. After considering every major lender in the industry, the manufacturer chose BofA because of its capabilities in both floorplan and retail financing.

M&T BANK
Intensive Risk Management
In a move that could be described as prescient, M&T Bank started comprehensive review of its risk-management efforts late last year. The Buffalo, N.Y.-based bank increased use of scenario analysis and risk and control self assessments (RCSA), a technique that involves bringing the staff of an entire unit together to identify and devise action plans for risk and control issues. For months, the bank worked through every single RCSA, asking specific departments how often certain threats could happen and what would be the worst-case scenarios if they did.

TOYOTA FINANCIAL SERVICES (two Auto Finance Excellence Awards)
On the Cutting Edge
As virtual worlds gain popularity, auto financiers are looking for ways to tap real-world customers through them. As of April, Toyota Financial Services, one of auto-lending’s internet pioneers, had approved nearly 23,000 Scion loans in Whyville (www.whyville.net), an educational web site for kids. For Toyota Financial, the virtual world has presented a way to explore and test the capabilities of new technology. Initially, the captive joined Whyville to get a jumpstart on brand loyalty with consumers too young to buy cars and to create an atmosphere in which children influence their parents. However, the lender also has been promoting financial literacy while integrating its brand for offline leverage.

Disaster Recovery
In the wake of extensive flooding in Iowa this summer, Toyota Financial Services managed to maintain service levels while at the same time helping staff affected by the deluge. TFS paid employees at its Cedar Rapids call center, despite halting operations for three days. The company also aided employees with homes and property damaged by the natural disaster. To support the relief efforts, TFS donated $200,000 to the American Red Cross in the Cedar Rapids area. Toyota Material Handling, another unit of Toyota Motor Co., also donated a forklift to sift through the rubble.

WORLD OMNI FINANCIAL CORP.
Operational Overhaul
With risk-related issues at the forefront of auto finance improvements these days, World Omni Financial Corp. demonstrated foresight when it bolstered its companywide framework of operational risk management. Starting last year, the Deerfield Beach, Fla.-based lender set up a compliance office, a business-process office, and a 10-person quality assurance group to regularly review systems and procedures. The company has also added a user-provisioning project that automatically ties users’ IDs to functions within the corporate systems that they are allowed to access.

—Marcie Belles