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Fintech20 Oct 20232 min read

Cross River Bank Leads $250M Securitization for Personal Loans

Cross River Bank has announced a historic $250 million securitization backed by personal loans from Upstart, marking a significant achievement in asset-backed securities. This milestone demonstrates the bank’s innovation in financial solutions and commitment to expanding its funding channels.

Source: crossriver.com
Cross River Bank Leads $250M Securitization for Personal Loans
Image via crossriver.com

Key Takeaways

  • 1."Bringing CRB 2023-1 to market establishes a new funding channel for the bank, allowing us to independently secure asset-backed financing for our retained loan portfolios," said Ryan Callahan, Co-Head of Capital Markets at Cross River.
  • 2.“Obtaining a AAA rating (from S&P) on the senior security issued by CRB 2023-1 creates additional liquidity for the personal loan asset type, bringing in pockets of capital that may have otherwise been sitting on the sidelines,” Callahan added.
  • 3.Cross River Bank has unveiled its inaugural broadly syndicated securitization, CRB 2023-1, which is backed by $250 million worth of personal loans generated through the Upstart platform.

Cross River Bank has unveiled its inaugural broadly syndicated securitization, CRB 2023-1, which is backed by $250 million worth of personal loans generated through the Upstart platform. This milestone was announced on October 20, 2023, marking a substantial advancement for Cross River in the asset-backed securities sector.

"Bringing CRB 2023-1 to market establishes a new funding channel for the bank, allowing us to independently secure asset-backed financing for our retained loan portfolios," said Ryan Callahan, Co-Head of Capital Markets at Cross River. This securitization not only signifies the bank's growth but also highlights its innovative approach toward financial solutions.

Notably, this issuance is distinguished as one of the first personal loan securitizations originated by a partner bank through a marketplace lending platform that has received a AAA rating from S&P Global Ratings on the senior tranche of offered notes. Cross River serves as both the Sponsor and the sole Seller and adheres to the customary vertical 5% Risk Retention to meet U.S. Credit Risk Retention guidelines.

“Obtaining a AAA rating (from S&P) on the senior security issued by CRB 2023-1 creates additional liquidity for the personal loan asset type, bringing in pockets of capital that may have otherwise been sitting on the sidelines,” Callahan added. This achievement reflects the bank's ongoing commitment to providing tailored solutions that support the broader fintech ecosystem.

The transaction also involves Goldman Sachs & Co. LLC serving as the Initial Purchaser and Structuring Agent, with Barclays Capital Inc. and CRB Securities, LLC participating as Initial Purchasers and Joint Bookrunners. With Upstart acting as the sub-servicer, the deal demonstrates a collaborative effort among leading financial institutions.

Cross River’s progression into the securitization landscape aligns with its strategy to leverage technology in providing embedded financial solutions. This recent development illustrates the bank's ability to innovate while navigating a dynamic financial marketplace.

As the landscape of financial services continues to evolve, the successful execution of such asset-backed securities is likely to encourage further investments in personal loan portfolios and the fintech sector as a whole. The establishment of CRB 2023-1 may pave the way for more opportunities, signaling a positive outlook for Cross River and its partners moving forward.