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Fifth Third Bank Provides $100MM Credit Facility to Tricolor

September 12, 2022, 07:52 AM
Filed Under: Automotive

Tricolor closed a $100 million warehouse facility with Cincinnati-based Fifth Third Bank,  secured by loans originated across its growing footprint, which spans five states, 20 markets and 55 retail hubs.

“The addition of Fifth Third Bank to our capital structure is another strong validation of our strategy and another significant step towards diversifying our sources of capital to support our growth as we continue expanding our platform into new markets,” said Daniel Chu, founder and CEO of Tricolor.

Tricolor has more than doubled its origination volume over the past two years, as well as doubled its market share over the past three years. Only CarMax and Carvana sell more used vehicles than Tricolor in Texas.

“We are excited to support Tricolor and its purpose-driven strategy to expand financial inclusion to a financially underserved yet critical segment of the U.S. population,” said Steven Ellis, managing director, asset securitization at Fifth Third Bank. “We’ve followed their progress for the last decade and the commitment of the Tricolor team to deliver a compelling and unique value proposition is highly admirable.”

During that same span, Tricolor’s focus on expanding financial inclusion to the underserved led it to become the first-ever lender in the United States to issue a social bond collateralized by consumer auto asset backed securities (ABS). This designation furthers the company’s mission to empower underserved, low-income communities and provide them with improved access to mainstream financing that ultimately allows them to build a better future.

Meeting the Needs of Underserved Hispanics
The more than 59 million Hispanics in the United States would collectively rank as the eighth largest economy in the world. Yet, according to the FDIC National Survey of Unbanked and Underbanked Households, 32% of this US Hispanic population has no or limited access to mainstream credit.

According to the U.S. Bureau of Labor Statistics, over 80% of the workforce growth in the U.S. over the last dozen years can be attributed to the Hispanic population, yet fewer than one in six Hispanics in the US can work remotely.

Tricolor uses artificial intelligence (AI) and nearly 15 years of proprietary customer insights and with over 25 million unique non-traditional credit attributes to unlock financially inclusive opportunities for low-income, credit invisible Hispanics left behind by mainstream financial providers. To date, Tricolor, a U.S. Department of the Treasury certified Community Development Financial Institution (CDFI), has disbursed over $2 billion in affordable auto loans as part of its mission to empower underserved Hispanics and provide them a path to a better future through both physical mobility and upward financial mobility.

Tricolor has now completed eight well-received ABS transactions and is the only issuer in all of subprime auto ABS with loans primarily backed by no-file or thin file borrowers. The Company issued its first securitization in July 2013. In September 2021, Tricolor closed a $90 million convertible preferred equity investment from funds managed by BlackRock.

Tricolor has been routinely recognized for its important work supporting consumers, including being named the winner of the Excellence in Financial Inclusion Award at the 2022 LendIt Fintech Industry Awards as well by the Finovate Awards and Auto Finance News.

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