Alliant Finds Bright Spot in Falling Loan Participation Sales

Alliant Credit Union’s sales of loan participations fell 18% overall last year with the decline in the mortgage market, but it was able to increase its sales of other types of loans by 74%, including a $55.8 million loan to the owners of a high-end apartment complex near Raleigh, N.C.

NCUA data showed the Chicago-based credit union sold $414.5 billion in residential real estate loan participations last year, down 49% from 2021. However, its sales of $468.9 million in non-residential loan participations last year in 25 transactions was up from $269.7 million in 2021.

That group included consumer loans and commercial real estate. Prominent in the mix is the $55.8 million, five-year loan closed last July with Knightdale Multifamily Ownership, LLC of Syracuse, N.Y., whose manager was listed as Joseph R. Scuderi.

Scuderi is president and a founder of The Widewaters Group, a Syracuse real estate development company. The 20-acre, 350-unit property, Parkstone at Knightdale, is nine miles east of downtown Raleigh. Completed in 2019, it is Widewaters’ first multifamily development.

An Alliant news release Tuesday said it expects the Raleigh area to continue growing “at a substantial pace into the future, which positions this newly built, high-quality asset for positive operating results.”

Alliant’s total of $883.3 million in total participation sales last year compared with $1.1 billion in 2021, which made it the fifth-largest seller among credit unions that year. It had sold $425.6 million in 2020.

This year, Alliant moved up a notch to become the nation’s sixth-largest credit union based on its Dec. 31 assets of $18.7 billion, displacing Golden 1 Credit Union, Sacramento, Calif. ($18.5 billion, 1.1 million members).

That put Alliant closer to PenFed Credit Union, the nation’s third-largest credit union ($35.5 billion in assets, 2.8 million members).

PenFed, based in Tysons, Va., just outside Washington, D.C., was the leading seller of participation loans in 2021: Selling $6.4 billion, up nearly four-fold from $1.6 billion in 2020.

This year PenFed sold $5.3 billion in participation loans, down 17% from 2021, with essentially all the sales occurring in the first half.

The pattern held at Alliant: First-half participation sales rose 2% to $616.9 million, while second-half sales fell 44% to $266.4 million.

“This year was a tale of two markets, with 80% of our loans sold in the first half of the year,” Gilberto Roman, senior manager of Alliant’s Loan Trading Desk, said. “We managed a record year, in the face of consistent rate hikes that decreased demand for fixed-rate loans in the second half of the year.”

Alliant said its sales mirrored the shift in markets. Alliant sold a majority of fixed-rate consumer loans in the first half of the year and shifted to sell mainly floating-rate commercial loans in the second half of the year, “yielding attractive returns in a volatile market.”

Alliant said it expanded its network by transacting with 13 new counterparties, with trading partners encompassing other credit unions, financial technology (”fintech”) and lenders in the digital realm.

Alliant’s commercial real estate mortgage loan sales “spanned multifamily properties, including student housing and manufactured housing communities, often with complex structures,” its news release said.

Charles Krawitz, Alliant’s chief capital markets officer and head of commercial lending, said loan trading is an important lever for credit unions to manage loan-to-share ratios as interest rates continue to move up this year.

“Now is a great time for credit unions or depositary institutions with liquidity to add high-quality loans to their balance sheets,” Krawitz said. “We have attractive participations available such as floating-rate HELOCs that can be benefitted from in this rising rate environment.”