Capital markets opening to credit unions

One credit union finds success with test of securitization; subordinated debt also in play.

New territory is opening up for sophisticated credit unions: access to the capital markets, where long-term debts or equity-backed securities are bought and sold.

Last year $2.3 billion GTE Financial, a federal credit union based in Tampa, Florida, tested the new option for credit unions to do securitizations and reports success.

GTE Financial is usually a prodigious producer of automobile loans. In 2019, it originated $401 million of them, $305 million direct and $96 million indirect, according to CFO Brad Baker, a CUES member.

That was more than the credit union wanted to keep, which would normally be about 35% of the portfolio. From 2014 through 2018, GTE Financial divested $202 million of automobile loans through participations, each ranging in size from $1 million to $23 million.

 

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