“There might be one out there, but we haven’t found one and we talked about multiple other parties and they hadn’t seen one before either,” he said.

Each of the three participating credit unions is selling $50 million into the issue. NCUA data pulled from Callahan’s Peer Suite showed:

• Consumers Credit Union of Lake Forest, Ill., 30 miles north of downtown Chicago ($4.2 billion in assets, 265,552 members) held $1516.6 million in car loans March 31, which were 54% of its total loans. Indirect were 64% of car loans. Its loan-to-share ratio was 82%.
• Blaze Credit Union of Minneapolis-St. Paul ($4.4 billion in assets, 249,761 members) held $609.8 million in car loans March 31, which were 25% of its total loans. Indirect were 55% of car loans. Its loan-to-share ratio was 67%.
• Interra Credit Union of Goshen, Ind., about 100 miles east of Gary ($2 billion in assets, 88,628 members) held $217.4 million in car loans March 31, which were 14% of its total loans. Indirect were 82% of car loans. Its loan-to-share ratio was 99%.

Each credit union retains servicing rights on their loans, and will receive a 1% fee. Alloya also receives a fee as the administrator.

Kohl said fixed costs in a securitization mean credit unions usually need to sell at least $250 million or $300 million to make the deal worthwhile.

But Alloya and the three participating credit unions wanted to do the deal as “proof of concept.”

“We wanted to make sure we had three credit unions that were strong believers in following through in this process,” Kohl said. “The three really had a strong feeling that this could help the credit union system. They were less concerned about the overall economics of it.”

Tim Bruculere, SVP for membership, said Alloya is planning on bringing other credit unions into similar multi-seller deals. “Our anticipation is that we’re going to do a couple of these a year at those larger dollar amounts,” he said.

The Alloya issue will bring the total for securities backed by credit union auto loans to about $405 million. First Community Credit Union of Houston ($2.7 billion in assets, 173,985 members) sold $255.1 million in May.

Last year credit unions sold a record $2.4 billion in auto securities.

Kohl said the slowdown in issues this year might be the result of loan growth slowing, and loan-to-share ratios falling.

Credit unions that sell loans for securities typically have strong origination teams that can quickly overload a credit union’s lending capacity, raising its loan-to-share ratio.

In this case, only Interra had a larger-than-average loan-to-share ratio.

S&P’s pre-sale report said the loans in the collateral pool had:

• An average weighted credit score of 740, which is “comparable to its peers."
• An average original term of 70 months.
• An average remaining term of 56 months, which is shorter than most other credit union deals S&P has rated and higher level of seasoning at 13.7 months.
• A 98.1% loan-to-value ratio, “which is lower than most of its peers."
• Most borrowers are in Indiana (34%), Minnesota (31%) and Illinois (11%), which is “more diversified than many of its peers.”