To do something that has never been done before requires initiative, hard work, creativity and, in this case, the Power of Cooperation that credit unions use as their secret weapon to compete. Alloya, working alongside three credit unions, Blaze (Minnesota), Consumers (Illinois) and Interra (Indiana), completed the credit union network’s first ever multi-issuer prime auto loan asset-backed securitization (ABS). This group of credit unions should be considered pioneers as they have opened a significant new source of liquidity for the entire credit union network. Banks have never completed a multi-issuer ABS, and this powerful story is a shining example of how credit unions working together can build capabilities that only the largest financial institutions in the United States possess.
The securitization, backed by a diversified pool of auto loans originated by the three credit unions involved, was structured to optimize investor appeal while maintaining strong credit quality. The deal was sold to broad investor interest with the tranches being three to five times oversubscribed. Alloya provided strategic advisory, operational support and ongoing monitoring throughout the process, ensuring a seamless execution from issuance to servicing.
“This transaction exemplifies the power of cooperation within the credit union system,” said Andrew Kohl, Alloya’s Chief Investment Officer. “By pooling resources and leveraging Alloya’s capital markets expertise, our member credit unions were able to access the securitization market in a way that would be difficult to achieve independently. Our goal is to provide a platform for ongoing access to markets using this initial transaction as the ‘template’ for future deals.”
“This securitization highlights the power of the cooperative network and what can happen when credit unions work together,” said Amy Sink, CEO of Interra Credit Union. “Interra is honored to be a part of this first-ever transaction and looks forward to participating with other credit unions on future deals.”
Sean Rathjen, CEO of Consumers Credit Union, echoed this sentiment. “The partnership with Alloya and two fellow credit unions is a great example of the collaboration and cooperation amongst credit unions. This is the first of many multi-entity auto loan securitizations which will provide another option for liquidity and credit risk mitigation,” Rathjen remarked. “I applaud Alloya for spearheading this project and look forward to more innovation with them. Wall Street will have a detailed review on the performance of credit union underwriting and will reward us over time with better market pricing. Many thanks to the Alloya team for providing the support and guidance in this transformative transaction.”
The deal reflects growing interest among credit unions in structured finance as a tool for managing risk and funding growth. It also underscores Alloya’s commitment to delivering innovative financial solutions that empower its members to thrive in a competitive lending environment.
Dan Stoltz, CEO and President of Blaze Credit Union, also expressed excitement about his team’s involvement in the securitization. “Blaze is honored to partner with Alloya Corporate, Interra and Consumers to facilitate another liquidity avenue for credit unions nationwide. Our teams have collaborated extensively over the past nine months to deliver a triple win: a win for Blaze, our members and the credit union industry,” said Stoltz.
“Alloya’s Board of Directors is filled with visionaries, and they challenged management to open the doors to this alternative source of liquidity for the credit union network. It was not easy to accomplish this historic milestone, but these credit unions worked well together and cleared several hurdles to create a path for other credit unions to follow. Alloya’s mission is to support credit union success and simplify their back office lives – mission accomplished,” remarked Todd Adams, Alloya’s Chief Executive Officer.
Alloya continues to explore new avenues to support credit union success through securitization, loan participations and other capital markets strategies. Those interested in learning more can visit www.alloyacorp.org/capital-markets-simplified.