By Ray Birch
DALLAS— At a time when many credit unions are still trying to balance slower loan growth, lingering liquidity pressures and the challenge of putting excess cash to work without taking outsized risk, ALM First has launched a new NCUA-approved loan fund structure that could give institutions a different way to do both: buy whole consumer loans at scale when they want yield, and create a new outlet for sellers when liquidity tightens.
The new ALM First Loan Fund Investment Pilot Program is notable because it appears to be the first time NCUA has allowed a third-party manager to aggregate multiple credit unions into a pooled vehicle for the purpose of purchasing consumer loans from other institutions, rather than relying on the traditional one-buyer, one-seller participation or loan-sale model.
NCUA approved the pilot on Dec. 17, 2024, allowing up to 30 complex federal credit unions to participate in non-registered investment funds made up of permissible consumer loans with maturities under 10 years, plus overnight investments. State-chartered credit unions with federal parity may also participate, according to NCUA’s published conditions.
For credit unions, the appeal is less about novelty than about a familiar industry problem: balance-sheet mismatch. Some institutions continue to see excess liquidity but not enough attractive organic loan demand; others need to sell loans or create balance sheet room but do not always find dependable buyers, especially when rate volatility or credit concerns make the participation market more selective. Travis Goodman, a principal at ALM First, said the fund is meant to sit in that gap by pooling buyers, standardizing underwriting and pricing, and acting as a steadier liquidity source when traditional channels thin out.
Uneven Growth
That matters because while overall system growth has improved from the worst of the post-rate-shock period, the data still show a credit union industry growing unevenly. NCUA said total assets at federally insured credit unions rose $126 billion, or 5.4%, in 2025 to $2.43 trillion, while total loans outstanding increased $76 billion, or 4.6%, to $1.72 trillion.
But on a median basis—often a better read on what the “typical” credit union is experiencing—loans outstanding grew just 0.7% over the year ending in the fourth quarter of 2025, while deposits rose 2.9% and the median loan-to-share ratio stood at 70%. In other words, many institutions still have cash and funding capacity, but not necessarily the organic loan production to fully deploy it.
At the same time, NCUA has made clear that liquidity remains a live supervisory concern even as rates have eased from their peak. In its 2026 supervisory priorities, the agency said liquidity risk and interest-rate risk remain central areas of focus, warning that elevated funding costs, asset quality pressure and “structural liquidity constraints” are still affecting earnings and balance-sheet resilience across the system. That makes any new mechanism that can either provide liquidity to sellers or help buyers deploy funds more efficiently especially relevant in 2026.
Goodman said that was part of the thinking when ALM First first brought the idea to NCUA in 2021. He said the firm had seen multiple credit unions buying the same types of loans from the same third-party originators, but often at different prices depending on when they entered the relationship and how much scale they brought. That, he argued, highlighted an inefficiency in a market where credit unions often negotiate as smaller individual buyers even when they are all pursuing the same assets. By aggregating 5, 10 or 15 institutions in a single fund, he said, the group can negotiate with more purchasing power and potentially access sellers or originators that may not want to transact with one institution alone.
Just as important, Goodman said, the structure is designed to impose more discipline on pricing and due diligence at a time when some institutions still feel pressure to replace runoff, maintain yield or keep excess cash from sitting idle. He said that during prior periods of heavy loan trading, some buyers were so eager to put money to work that “good asset pricing and disciplined evaluation processes” could get pushed aside.
The fund, he said, is intended to follow a more capital-markets-style process, using third parties for loss estimates, due diligence and payment or collections administration to give investors more consistency in how assets are evaluated and serviced.
Liquidity A Bigger Story?
For institutions on the other side of the table, the bigger story may be liquidity. Goodman pointed to the 2022-23 period, when sharply higher rates caused many participation buyers to step back from the market, either because they had enough organic originations of their own or because they were concerned about rates, credit or pricing. In that environment, he said, credit unions that wanted or needed to sell loans often had fewer counterparties. The new fund, he argued, could become a more dependable buyer in those moments—essentially creating an internal credit union system liquidity outlet when other sources pull back.
The pilot comes with meaningful guardrails. NCUA said participating federal credit unions must be “complex,” well-capitalized and are limited to an aggregate investment of up to 50% of net worth. The fund can invest only in consumer loans with maturities under 10 years and overnight investments, and the pilot is capped at 30 complex federal credit unions. Goodman said ALM First can also work with state-chartered institutions that have parity, and said the program can have up to $10 billion outstanding at any one time.
He said the five-year pilot clock began with the fund’s first purchase last week, after which NCUA can examine the program and ultimately decide whether to make it permanent.
In practical terms, the asset mix is likely to look familiar to most credit unions. Goodman said the fund is focused on whole loans—not participations—and that autos will likely be the core product, with potential for personal unsecured loans, home improvement loans, equipment financing, powersports and certain shorter-duration home equity loans that fit within the maturity constraints.