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LoanStreet's Ian Lampl Discusses Loan Participations Growth & Future

In this episode of With Flying Colors Mark Treichel interviews LoanStreet's Founder Ian Lampl on both sides (buying and selling of loans) and why this type of lending is likely going to continue to grow. LoanStreet is an innovative platform for the syndication of loans. Through automation and standardization, LoanStreet enables institutions to efficiently and cost-effectively syndicate their loans to interested investors. LoanStreet saves you time and money while diversifying your balance sheet and increasing your non-interest income.


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LoanStreet's Ian Lampl Discusses Loan Participations Growth & Future

I've got an opportunity to interview Ian Lampl. How are you doing, Ian?

I'm doing well, Mark. Thank you so much for having me.

I’m glad to hear it. I was on your LinkedIn, as I mentioned before we started. I've got a bio here that I wanted to share with people. You are the Cofounder of LoanStreet, which was founded in 2013 with the mission to create a more efficient, transparent and robust way to connect lenders and investors, as well as administer their loans. Hundreds of financial institutions, which includes a lot of credit unions, rely on LoanStreet's turnkey automated platform to gain access to a nationwide network of lenders and investors.

It also improves the performance of their loan portfolio so that they can more profitably grow and diversify their balance sheets. From our previous conversations, I remember you saying you were involved in the Troubled Asset Relief Program or TARP. When we chatted about it, I didn't realize you were the Deputy Chief Counsel of that office. I'm sure there are some things you’ve learned from that that helped you build out what you've done at LoanStreet.

Maybe we can get into that. I knew you were a lawyer. I didn't know that you started as an electrical engineer with a degree in that. Maybe we can touch upon that.

You went pretty far back. Thank you for that kind introduction. Before starting LoanStreet, I served as Deputy Chief Counsel for what was called the Office of Financial Stability, which implemented the Troubled Asset Relief Program or TARP for the Treasury Department. That covered all sorts of programs, from the big bank programs to a program called the Community Development Capital Initiative, a full program that credit unions could participate in.

You're correct. The genesis of LoanStreet came out of my time at the Treasury Department, where I had the benefit of meeting with financial institutions of all sizes. That could have been the large ones like JPMorgan Chase, small credit unions, and everything in between. One of the things that I found quite striking was how difficult it was for financial institutions to manage the lending side of their balance sheet. Fundamentally, what I mean by that is shared credits, when there are multiple lenders in a loan.

Large institutions oftentimes call that syndicated lending. Credit unions commonly call that participation lending. Whatever you call it, the friction of getting into and then managing those transactions over time is quite hard. That resulted in those institutions doing it less than what otherwise be optimal. When people looked at this problem, historically, they tended to view the problem as a matching problem. It's just hard to find the right partner at the right time. Our view was that puts the cart in front of the horse. It wasn't so much a matching problem but a scaling problem. Once you have the infrastructure in place to help financial institutions to share loans at any time in any amount with any partner, matching becomes easy.

What we focus on is how you build infrastructure. In many ways, we take for granted this type of infrastructure in the bond market to allow for a more liquid market because liquidity provides for better execution and better diversification. It allows lenders to focus on what they're good at, lending in the local market to their members without fear of hitting concentration limits and be able to manage their balance sheet more effectively.

One of the things is oftentimes, credit unions can face greater concentration issues and even a similar situation to community banks due to the membership requirements. In my mind, we shouldn't throw up our hands and say, "That means that we're forever going to be subject to these more difficult pathways.” Rather, we should look for other ways of mitigating those risks. Our view is that shared credit is one of the most effective ways of doing so.

That's a great point. Membership can create more concentrations. As simple as it is a farming credit union and we are farmers in a town, that's all we do. You're going to have that. NCUA, in the past, had challenges with the medallion credit unions. There were participations there. Obviously, some seismic things happened in that arena. It's good to see that all that has been resolved. The statistics on participation loans show how well they're performing, especially now that those medallion loans are no longer in those statistics and that they have rolled off.

You mentioned one thing and it reminded me of an author, James Clear, who wrote the book Atomic Habits, which speaks to friction. His concept is that you can improve your habits by creating friction for bad habits and removing friction for good habits. I never looked at what LoanStreet does relative to that, but that's what you've done. If I'm interpreting this right, you've created a structure that removes a lot of the friction that allows me, if I'm a seller or person B, if they're a buyer, to acquire or initiate some loans that allows me to improve my overall balance sheet.

WFC 20 Ian | Loan Syndication
Loan Syndication: Once you had the infrastructure in place to help financial institutions to share loans at any time in any amount with any partner, matching becomes easy.

That's right. If you think about the traditional process of the way credit unions would share loans in the past, there were a few things there that were incredibly manual in nature. One was that they would always look for a single counterparty. That single counterparty had to buy the full amount available for sale. That immediately means that all institutions are generally only going to operate with other like-sized institutions.

For example, if I'm a billion-dollar institution and I need to move $50 million to $100 million of loans, I can't sell $100 million of loans to a hundred-million-dollar institution. I can only sell it to other billion-dollar institutions. On the other side of the coin, if you're in a high friction environment, if you are a hundred-million-dollar institution and you need a couple of million dollars worth of capital relief, you can't sell a couple of million dollars to a multibillion-dollar institution. It doesn't work. Therefore, you are limited to like-sized institutions.

When you're selling a one-to-one transaction, people tend to renegotiate the contract every time and that takes time. Not that it’s necessarily expensive, but it's the effort to renegotiate that contract every time. Let's face it, the relationship among lenders for participations doesn't change that much. The rights to workouts, voting, and rights to proceeds are things that are fairly well agreed to even if people negotiate in the margins. It's unnecessary.

If you can strip out those negotiations and have one agreement that many people use, all of a sudden, you can go from a world of having to have a single buyer to a world where you can have many buyers. Once you're in a world with many buyers, if you think about an IPO, can you imagine trying to get an IPO done if you had to find that single equity holder for the entire multibillion-dollar equity offering?

That will never happen. You couldn't get an IPO off. What do they do? They line up 1,000 insurance companies and immediately, you get your IPO off. In the loan market, of course, you're going to find a single counterparty. Why would you ever find more than one when in every other market, whether it's debt or equity, when it comes to selling bonds or selling equity, you have many holders. It was only in the loan market where you'd say, “The right way to do this is to find one counterparty.” It's bizarre. In order to have many partners, you have to have one agreement.

If you think about it, in the bond market, there's something called qualified indentured debt. The rights of bondholders are always the same even if the covenants move. Equity holders have fiduciary rights as common holders. These things are standardized and allow you to have many holders, but also, the bond market and the equity market have a lot of infrastructures that people take for granted.

Your ownership percentage is managed by trustees and transfer agents and paying agents. We're not concerned about getting your dividend and interest payment on time and in the right account. All of this is managed by these quasi-public utilities. Yet, in the loan market, none of that exists. You're dependent on the back office or the financial institution that sold it to you to manage that process of tracking ownership, reporting, remitting and reconciling. It’s not what they do every day. It's a thing that they do once in a while and they have good tools to do it.

If you can automate those processes of what the bond market and the equities market take for granted and you can standardize that arrangement, now you can go one-to-many. You removed all that friction of transacting in the first place. You removed the friction of having many counterparties. All of a sudden, you can manage your balance sheet in a much more active way. You don't have to be worried about, “I need to build up a big block of loans to sell them at high friction transaction to a single counterparty.”

I can dollar cost average my way and I can sell all the time. I can dollar cost average my way in as a buyer. I can buy lots of amounts from lots of different parties because the effort it takes to transact goes down and the effort to manage goes down. I now have a much more liquid secondary market and I can manage my balance sheet as a buyer or seller or both much more effectively.

When you're selling a one-to-one transaction, people tend to renegotiate the contract every time, and that takes time. Not that it’s necessarily expensive, but it's the effort to renegotiate that contract every time.

It’s creating diversification for the buyer and the seller at the same time because they're not keeping it all on their books.

Also, the diversification of their buyer base. If you think about it, if you want to say to your ALCO committee, to your board or your examination authorities, "I have a liquidity source. I can sell loans." If your liquidity source is two partners, what happens if they're out of the market for one month? If you got hundreds of institutions that are buying from you historically, that's a real liquidity source. You're able to execute efficiently and without concern whether 1 or 2 of them are out in the market when you get the bond.

You mentioned the regulatory authorities. One thing that credit unions have to deal with every year is a priority letter to credit unions. In 2022, NCUA had eleven topics. One of which was they added loan participations as a priority. I've done an episode on that. I have some statistics from that. In my opinion, it's not that NCUA views participation loans as a problem. They're creating it as a priority because it has been growing and taking off. At the end of the year, about 4.7% of total loans were in loan participations. Also, another type of loan purchase, the eligible obligations, has grown from about 1.7% to 3% of eligible obligations.

I'm sure that LoanStreet has played a role in some of this growth relative to both sides of the balance sheet. Let me throw one other thing out there. When I was a regional director, when I would go out and speak, I would say, “You could put 5% of your money into just about anything.” When I see that you got 4.7% in participation loans as a percentage of loans that credit unions now have on their books and they're performing extremely well, that's a good thing for the industry to see that that's what's happening at this juncture. Do you have any thoughts relative to that?

There are a number of secular trends that are only going to see participations grow. Several years ago, the participation marketplace was under $20 billion. Now it's over $60 billion. It has been growing at an annual compound growth rate of over 15%. Our view is it's going to even start growing faster. It's right for the NCUA to be paying attention. It's going to be a significant part of every credit union's balance sheet for the foreseeable future. It needs to be done well and in transparently because it's such an important tool that people need to be paying attention to. It needs to be in an effective marketplace because otherwise, the industry is going to struggle.

The reason why I believe so strongly in that is the days of individual consumers walking into a credit union branch to take out loans are either disappearing altogether or disappearing quickly. More and more consumers and small businesses are taking out loans on their phones or online. Credit unions may not always be well positioned to have the best and most engaging mobile app. That said, that loan should still probably be on a credit union balance sheet. It's just getting there differently.

In order for that loan to get to a credit union balance sheet, most likely, credit unions are going to have to partner with technology providers. People sometimes call them FinTechs. They are origination channels. They're sourcing deal flow for credit unions with savvy apps and origination channels. They're going to capture some portion of that market. The super-prime portion of what they're capturing should end up in a credit union balance sheet. It's not going to go to a hedge fund or asset management. Their cost of capital won't enable it if they can be good credit union partners.

On the other side of the coin though, not every single one of those technology partners can then partner with thousands of credit unions. It’s more likely that they're going to partner with a handful. Those handfuls are going to need to do a few things. They're going to need to enter into reasonably complex forward flow arrangements. They're going to have to have a decent sized balance sheet in order to support some of that lending upfront. We're going to need to monitor that FinTech or technology origination channel to make sure that they're performing as agreed.

Once it's in that regulatory box and on a credit union balance sheet, that institution can then participate down to thousands of other credit unions. They can take advantage of the fact that one potentially larger credit union is specialized in terms of understanding how to partner with FinTech, understanding those forward flow arrangements, and understanding that monitoring the role that they play.

They're going to earn some income for that. They might get some additional gain on sale, some servicing spread, and then they're going to participate down to thousands of credit unions that probably can't partner with that FinTech directly. If I'm right that that's the direction in which origination is going, more and more of credit unions’ balance sheets are going to be in participations, not less.

WFC 20 Ian | Loan Syndication
Loan Syndication: The relationship among lenders for participations doesn't change that much. The rights to work-outs, voting, and rights to proceeds are things that are fairly well agreed to even if people negotiate in the margins. It's unnecessary.

I think you’re right. From the number of potential clients and client calls I have, I could see that their credit unions are doing more of this and how I've acquired some loans that I got personally from conversations I have with my kids, who are in their early 30s. That generation doesn't get loans like my dad and mom did or like I am right now.

When the smaller credit unions have liquidity and want to maintain their local autonomy, whether that's Aberdeen, South Dakota or somewhere in the middle of a small town in Texas, and you've got this excess liquidity and this large credit union that does have the economies of scale to make a sound loan, but also to attract people who want to invite them in to make that volume of loans. As you said, the originators of these opportunities are only going to go to a handful of organizations.

It's good for credit unions that large credit unions can do this. Obviously, you have to do it in a safe and sound manner. That goes to the guidance that NCUA has out relative to the priority rules. The long-standing guidance came out in 2007 or 2008 relative to doing third-party due diligence. From our previous conversations, I know that the systems you put in place create ways for the credit unions to comply with what NCUA is expecting. Do you want to speak to that a little bit?

This has to be done correctly. We don't have the opportunity to get this wrong. Credit unions need to be able to partner with FinTechs. They need to do it in a safe and sound manner and actively manage their balance sheet and allow for credit unions to purchase in a safe and sound manner. Our view is transparency is a critical feature and being able to track loans and payments individually not just at the time of purchase but also subsequently. How are these loans performing at a micro level?

Loans are also going to repay and be charged off in non-uniform ways. Even if it meets expectations, it's going to have this lifetime behavior that can be surprising, especially as you make multiple purchases at different times from different institutions for different asset classes and being able to understand what your balance sheet looks like today. Not what it was when you bought into these loans six months ago or a year ago or two years ago. What does your balance sheet look like today? That helps you to manage your balance sheet for your next purchase actively.

It’s the same thing as a seller. What does your balance sheet look like today? It’s not what it used to look like. Having that real-time transparency into payment level information allows you to make better-informed decisions, both in terms of what has happened and what you need to do moving forward. Reverting back to your point about the supervisory priority, what was interesting to us was also that the NCUA highlighted the ongoing reporting aspects, tracking loans independently and understanding what's going on.

In our view, that is a critical need. If you're not paying attention to the payment level and the individual loans and if you're trying to do things a little loose at the pool level, you're going to miss things that matter. That's where things can go sideways because things are going to go wrong. Not every loan is going to repay perfectly, but if you have the information, you put yourself in a position to mitigate problems, as well as to take action to improve your balance sheet.

If a credit union is looking to add loans to their pool and they don't currently have a relationship with LoanStreet and don't currently do either any eligible obligations or purchase of loan participations, what are the first steps that a credit union like that would go into relative to reaching out to your organization to see if it's something that does fit for them?

I'm going to circle back to one of the original points you made. We talked about this idea of membership and how a field of membership can result in surprising concentrations. It's fascinating because if you think about the original purpose of field membership, it was supposed to be credit enhancing where we all know each other and therefore, it's a credit enhancement. Now, we would argue that it is not credit enhancement but can hamper a credit union.

Not every loan is going to repay perfectly, but if you have the information, you put yourself in a position to mitigate problems, as well as to take action to improve your balance sheet.

In my mind, that is an interesting point to start with on a board. If you are not currently in participations, the regulation itself requires that there should be a policy. A part of that policy by the board has to come into a conversation about what is the purpose of a participation policy and what am I trying to achieve as a seller or a buyer. Recognizing that the field membership requirement in and of itself can be credit hampering. It’s not an enhancement anymore.

Why are we putting together this policy? Let's take a step back and understand as a board how we're going to navigate managing the balance sheet of a credit union, either selling, buying or both, to get diversification, get different assets, or leverage expertise and scale of another institution as long as I understand that credit risk. In my mind, that is a starting point. Once we understand what we're doing there, perhaps we have a strong indirect auto program in our own local community, and we're constantly scaling it up and down because we're running out of balance sheet space with all the concentration. If we start participating out, then we can keep our foot on the gas.

We keep lending successfully, amortize those marketing costs of those loan officers and the servicing and collection people and distribute. It will allow another credit union to get the benefit of your expertise in your local community. You first have to start off speaking to the board and educating the board of the value of what we're trying to achieve. You have to put a policy in place. From there, you need to think about what is their criteria in terms of what type of loans am I looking for and what are the different ways I can access those loans?

Some credit unions rely on calling each other. There are other platforms like LoanStreet and others where you can log in and see different types of opportunities. Most of them don't charge for you to register and log in and see the deal flow. Some of them do. It's totally worthwhile to look at a number of different types of opportunities to source deal flow. You have to understand how you are going to perform the ongoing management and reporting functions either as a seller yourself or as a buyer.

We highly encourage people to understand the nature of the reporting they're going to receive before they transact. If they don't understand the reporting they're going to receive before they transact, it's going to be difficult for them to manage their portfolio moving forward. You want to make sure not just that you are able to understand the risk-return profile of the opportunity you're looking at but also, “How am I going to track this over time? What are the tools that I have? What are the tools that the platform I'm working with gives me access to and understand how did it perform? I thought it would be a prepayment speed of X. We ended up with Y. We thought charge offs would be A, they ended up with B.”

Maybe they're better. Maybe they're worse. Maybe it's a mix. Trying to track that manually month over month in Excel spreadsheets is functionally impossible. You need to have specialized software that you're working with to understand these variations over time. I highly encouraged credit units both in terms of what they're getting into, and then how they're going to manage it, and not view these things as separate concepts but as a whole together.

A real sweet spot of the product that you offer is the ability to have detailed reports relative to what it is you own, which reminds me of some other conversations I've had with some of the experts that assist me. We get into conversations with clients talking about what's going into a report to the board. What is it that the board should know? What is it that they need to know? What is it that they want to know?

If you don't have the ability to put that together easily, it gets harder for them to understand what their risks are. That’s the official’s side of it. The other side of it is if NCUA is going to be coming in and looking to say, “What level of due diligence did you have relative to purchasing these loans?” Having good reporting can go a long way towards NCUA being comfortable with the fact that you understand what it is you bought and the fact that you have a policy that puts appropriate guard rails on it.

In some ways, it’s equally fascinating. We’re talking to a large credit union. They have a five-person analyst team dedicated to reviewing their participation program. They were looking at those monthly reports and those Excel spreadsheets and trying to track things. They produce a report and it’s superficial. It looks very professional. If anyone will look at it, they will be like, “They are on top of this.”

They have the charts and the numbers but then when you dug in, their prepayment speeds were wildly off. This is the difference between humans trying to track Excel spreadsheets versus specialized software. What they were reporting to the board, the ALCO committee and their management was wrong. It was inaccurate.

WFC 20 Ian | Loan Syndication
Loan Syndication: There's something called qualified indentured debt. The rights of bondholders are always the same even if the covenants move. Equity holders have fiduciary rights as common holders.

Doing this at scale, when you're buying into an auto pool, you'll be dealing with thousands upon thousands of loans. The idea that you're manually tracking these things off core is functionally impossible. You have to have a system that you're using because you can produce pretty reports that purport to have everything you need but if the underlying data is flawed, you've got a real problem. That is one of the fascinating things too. It's not just being able to present something like, “Here are our charge off numbers.” What's your confidence that it is correct?

Manual systems can work in super small situations. I think of Lucille Ball and the chocolates coming off the system where things start coming so much quicker that Lucy had to start eating half the chocolates. A third of the chocolates were eaten, a third hit the floor, and a third of them went into the box. That's not the kind of reporting that anybody wants to have, whether it's loan participations or chocolates. That's a great point.

I'm assuming as we see this growth happen every year from 2013, you've seen more buyers and sellers coming in. I've heard from clients that do purchase some loans either at LoanStreet or elsewhere that there is a lot of demand, that there's oversubscription sometimes, and that their goal is to get a certain amount and they're not able to do it. It's great to have buyers and sellers. I'm presuming that both of those things are going quite well at LoanStreet but that's a balancing act as well that you have to try and achieve.

Not to talk too much about LoanStreet itself but LoanStreet has about 1,300 financial institutions on our platform. We do have some community banks on the platform as well. It’s around 25% of the industry by number. We're adding about a credit union a day. We're in a large percentage of credit unions at this point. This goes back to another point we’ve raised which was we tend to facilitate a one-to-many transaction versus a one-to-one. The traditional way of doing it is you got to buy the full amount available for sale because you individually negotiated that transaction. That has some benefits, but that means you were the absolute highest bidder on the bid. You don't get it at all.

The one thing you know when you're using the traditional process is that you are willing to pay more than anybody else. It is funny because if you think again about the IPO and bond world, when you buy a bond, when you're into an original issue bond or original issue IPO, they build a book, but everyone pays the same price. You know with confidence that the amount you paid was a market-clearing price. When you win something doing the old-fashioned way, you win it and you win all of it, but then it also means you're willing to pay more than anybody. You get that bit of what they call buyer's remorse.

If you do a one-to-many trade, you know that there might be 20, 30 or 40 other institutions that have agreed that that's a fair market price for that opportunity. Lots of people are buying in at the same price regardless of size or if they know the CEO. Everyone is paying the same amount. It gives you a lot of confidence, but it also means you may not get the full allocation that you were hoping for. In order to successfully build a book, you have to try to oversubscribe it a little bit. In the equities market, they call it a green sheet. A perfect IPO is 20% oversold, but you're trying to get that perfect level and then everyone gets cut back a little bit.

If a credit union is consistently selling, then you've done your due diligence. You know a lot about that product and the faster you do your due diligence for the next transaction. It is hard. It is a bit of an art to try to keep the two sides balanced. Sometimes you can't help it. There are going to be more sellers or more buyers. Things are going to be tighter or more liquid. If you do a one-to-many trade, you may not get your full as a buyer, but at least you've got something, and you have the confidence that other people are paying the same price for it, as opposed to knowing that if you want it, that means that you paid more than anybody else was willing to pay.

You talked about the importance of educating your board and your staff when they're thinking about doing this. That reminded me of a quote which is, “The best time to plant a tree was twenty years ago. The second-best time is now.” If someone is thinking that maybe this is something they either want to do on one side or the other, the time is now because rates have gone up and things have changed. There were people who probably should have bought hedges six months ago that didn't. Now, if they buy one, it costs a lot more.

Getting up and running and educating yourself take some time. It's always why I presume to do that and to do your education, if I want to start doing it in a year from now or six months from now, I should be reaching out to someone like LoanStreet or one of the other providers to start learning about it, get the board educated, figure out what makes sense, work on the policy, etc.

If a credit union is consistently selling, then you've done your due diligence. You know a lot about that product and the faster you do your due diligence for the next transaction.

I will use a different phrase. We like the phrase, “Crawl, walk, run.” Our view is you need to do the education at the board level, at the management level, and understand what the process is and the different roles people play in the process. You don't have to move your entire balance sheet as a buyer or seller. You can make an initial transaction either as a sale or as a purchase that doesn't need to change the entire look and feel of your entire balance sheet.

Get used to the process and understand what you're doing. Make a small purchase, understand and look at a few monthly reports. Practice integrating that into your call report, and then start jogging from there. You don't need to move to a different world and do some hundred-million-dollar transaction right off the bat.

Even if you are a large institution, you can start small. We're big believers in starting small and growing the program over time. We also think it's important even for sophisticated large institutions that have been doing this a long time that doing things in smaller amounts more frequently allows them to manage their program on both sides of the tray more closely. You're not having to take bets about timing the market.

If you're doing small amounts every quarter or every month, even if it's the same amount you would have moved over the course of the year, you're unlikely to make a massive mistake in terms of timing. If you're doing it consistently and if this is a program that you're entering into where I'm always buying, I'm always selling, and I'm always managing my balance sheet, you're unlikely to be put in a position where you missed time to market. Your balance sheets can be better for it.

Any other last thoughts? Any question I should have asked you that I didn't that you want to speak to here?

There are a couple of things to pay attention to if you haven't spent a lot of time in this market. One would be prepayment speeds. This is true of all financial institutions. They tend to focus on the credit risk where most of the transactions in a participation market happen at a premium, some happen at a discount, but prepayment speeds are a critical factor in the performance of a participation.

Understanding what the expectations are there and how they changed over time can drive returns for both the buyer and seller even more so than credit risks. A lot of people think about the charge off first and the prepayment speeds second. Prepayment speeds are a critical thing for people to understand. It's important for people to understand, especially in this interest rate environment, that there are a lot of floating-rate opportunities and adjustable-rate mortgages and understand the difference between weighted average life and duration.

These are important concepts. People sometimes misunderstand how to judge risk in terms of what a comparable asset may be. These are also important. Another concept that a lot of people forget is what's called delayed days. Let's take the most basic example. Let's say you're buying loans like auto loans that people are paying and prepaying all throughout the course of the month. On average, the payment comes in on the fifteenth. If you get your participation report on the first of the month and let's say it all works perfectly and you get your money on the second day of the month, that means you have about seventeen days of delayed days on average from your payments.

There's nothing inherently wrong with that. That is a completely normal process. Understanding delayed days is important because you need to take that into account when you're calculating the yield on the purchase that you're making. It's not enough just to include the prepayment expected charge off and how that affects returns, but you have this small amount of drag depending on when you get that report and payment. Is it on the second? Whatever it is, you should understand what the expectation is, and then include delayed days in your calculations because it will affect the ultimate return that you get.

WFC 20 Ian | Loan Syndication
Loan Syndication: Financial institutions tend to focus on the credit risk where most of the transactions in a participation market happen at a premium, some happen at a discount, but prepayment speeds are a critical factor in the performance of a participation.

All this is built-in for people when they do securitization. Oftentimes, securitizations have 45 days' worth of delayed days. Material delayed days are relative to what you see. A participation marketplace is much tighter than a securitization marketplace. A lot of times, people forget about that. They forget that there are going to be 15, 17 and 20 days' worth of delayed days that they should build in, but it's okay.

On the other side of the coin, they don't need to do operationally difficult things like remit every day or remit every week. You can save all that operation pain, remit once a month, and add the delayed days in the beginning. It works on both sides. You can make things operationally efficient. We build delayed days in the front end. There are these nuances that a lot of people don't pay attention to.

If I can put a plug in, if you go to our website under our knowledge base, you can read lots of articles about prepayment speed, duration and delayed days. We have a lot of white papers out there educating people about all these nuances that oftentimes they don't think about when they're starting a program, but it's important to get your arms around them. Not because these things are terribly complex, but they’re easy to forget about if you haven't spent a lot of time in this market.

A seller who comes to your organization and wants to start looking at all these things and getting that standardized agreement out there that they're going to put out there for anybody who's considering buying, this would be part of the education your staff would do with them relative to the different levers that play into it.

We're big believers in education first. Allow them to make their own decisions, understand the risks and returns of selling and purchasing, and how to structure a transaction to result in the most operational efficiencies for both sides.

Going back to something we said earlier, I believe that you're right that this is going to continue to be a growth area in financial institutions and particularly credit unions. It was great chatting with you. If a credit union from either side wants to reach out, what would be the best way for them to reach you or who should they try and reach out to?

Thank you for that, Mark. It’s very kind of you. They can go to our website, which is They can go to the Contact Us page or It's easy to go to our website and the Contact Us page, and then a LoanStreet representative will reach out to you in response to any questions you may have.

Thank you for your time. For our audience out there, I appreciate your time. We look forward to seeing you or hearing you on the show for our next episode. Thanks so much for your time.

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About Ian Lampl

Ian Lampl is CEO & Co-Founder of LoanStreet Inc., an innovative online platform that helps financial institutions share, manage, and originate loans.

Prior to launching LoanStreet, Ian served as Deputy Chief Counsel for the Office of Financial Stability which implemented the Troubled Asset Relief Program (TARP) for the United States Department of the Treasury. While at Treasury, Ian developed and managed a number of the Treasury programs to stem the financial crisis. For his work, he received the Treasury Secretary's honor award for exemplary public service.

Ian is recognized as an industry leader in loan participations and is a frequent speaker at banking, credit union, and financial technology conferences. Before joining Treasury, Ian was an attorney at Cravath, Swaine & Moore LLP, where he focused on commercial lending and securities offerings. He graduated with honors from both University of Chicago Law School and Princeton University, where he received a B.S.E. in Electrical Engineering.


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