Pagaya auto run rate up 109% YoY

Pagaya Technologies ’ auto volume climbed to a record high in the first quarter as it further diversified its funding levers and expanded auto credit parameters. The fintech’s annualized run rate for auto reached $2.3 billion in the first quarter, up 109.1% year over year and 9.5% quarter over quarter , according to the company’s May 7 letter to shareholders. “The auto loan business has reached record performance this quarter, with volumes hitting [an] all-time high,” Pagaya Chief Executive and co-founder Gal Krubiner said during the earnings call that day. “Auto has become a true structural growth engine for Pagaya, enhanced by product improvements and network pricing efficiency.” During the quarter, Pagaya onboarded auto lender Global Lending Services , fintech Upstart and buy now, pay later solution providers Sezzle and Upgrade ’s FlexPay , Pagaya President and co-founder Sanjiv Das said on the call. “It's still early days, but all four are showing healthy progression in their ramps,” he said. “On top of that, we are in the process of onboarding regional banks that we expect to announce soon.” Auto losses trend lower Pagaya also began allowing for higher loan amounts and APR caps “in keeping with where consumer loans are right now ,” Das said. Those changes, combined with using technology to improve transactions at the dealer level , “led to a massive growth in our auto business.” Despite the growth, credit performance is steady. Auto cumulative net losses (CNLs) were trending between 40% and 60% below comparable 2022 levels between five and 14 months-on-book (MOB), according to the letter. [caption id="attachment_58361244" align="aligncenter" width="949"] (Courtesy/Pagaya)[/caption] “In auto, recent vintages continue to perform well relative to prior periods, with delinquencies and losses within expected ranges and recoveries improving,” Chief Financial Officer Evangelos Perros said on the call. Pagaya issues $481M auto ABS deal Meanwhile, Pagaya came to market with a $481.4 million subprime auto asset-backed securitization (ABS) transaction on April 20, according to CreditFlow , which monitors securities. The deal includes a maximum of 20% of loans with original terms longer than 76 months, up from 15% in the prior $394 million subprime auto ABS deal that closed March 6 after Pagaya increased its origination of such deals, according to an April 22 Kroll Bond Rating Agency new issue report. KBRA’s base case CNL is 11.79% for the latest deal compared with 14.7% in the prior transaction. Loans in the deal were originated by Ally Financial , Consumer Portfolio Services , Foursight Capital , Global Lending Services, Stellantis Financial Services and Westlake Financial Services , according to KBRA. “Auto remains a key focus for us,” Das said. “We are seeing significant growth and strong profitability driven by access to additional flow sources , improved ABS execution, optimized offers and pricing and tax season tailwinds.” Pagaya on March 24 closed a $450 million auto re-securitization transaction, the first in auto for the fintech following a long-standing program for personal loans, according to a release. Re-securitization involves bundling loans that have already been securitized into fresh securities for investors as a form of refinancing. “By providing access to a pool of diversified auto assets with 24 months of seasoning, this format provides investors with a de-risked entry point into the company’s auto loan ecosystem,” according to the release. The auto re-securitization expanded Pagaya’s investor base, Krubiner said. The deal included auto loans that were originally securitized in transactions issued in 2023 and 2024, according to a March 23 KBRA new issue report. “Re-securitization is becoming a key part of our capital market strategy,” Perros said, noting Pagaya is diversifying its funding channels. “It gives us ... a repeatable mechanism to return capital from prior vintages on an accelerated basis [and] lower funding costs by refinancing seasoned collateral with more predictable credit performance.” In other news, Pagaya appointed Chief Strategy Officer Jonathan Dobres as CFO effective June 15, according to a release. He will succeed Perros, who has been with the company since November 2021 and will remain on as an executive adviser through Dec. 31. Dobres joined Pagaya in September 2021 and previously held investment roles at several asset management firms. “We're focused on a seamless transition and continuity across, particularly in the areas of investor engagement and capital efficiency,” Perros said. Shares of Pagaya Technologies [Nasdaq: PGY] up 3.9% to $15.41 as of 3:38 p.m. ET on May 7. Pagaya has a market capitalization of $1.3 billion. Robert McDonald , managing director and head of credit solutions at Pagaya, will speak on a panel diving into private credit trends in auto finance during Auto Finance Capital Summit this month, happening alongside Auto Finance Summit East. To see event agendas and register, visit autofinance.live .

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Pagaya auto run rate up 109% YoY

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