The Oregon Community Credit Union has completed the sale of securities backed by a $275 million auto loan, a deal adviser said Wednesday.
ALM First, a Dallas-based financial advisory service, engaged OCCU in Eugene, Oregon ($3.5 billion in assets, 256,807 members as of September 30) as a consultant in a securitization that closed on October 20. said to have served.
Travis Goodman, principal of ALM First, said this was the credit union’s first asset-backed security issuance, confirming in the NCUA’s June 2017 opinion that the credit union is allowed to securitize. It is the fourth such securitization to complete industry-wide since then, it said. OCCU sales bring his total sales since 2019 to $1.2 billion.
“We have helped OCCU gain access to a broader investor market, profitably and access liquidity,” Goodman said. , helping credit unions strategically navigate the securitization process, provide insight into the pricing of new loans they sell, and implement hedging strategies to secure profits given the uncertain interest rate environment. We support.”
OCCU receives a 1% annual fee for loan services.
“This securitization will benefit our members by building OCCU’s financial strength,” said OCCU President and CEO Ron Neumann. “This strength enables us to serve more members and offers member benefits such as reduced or waived fees, additional branches and service centers, and advanced technologies such as digital banking and two-way automated teller machines. Our ability to provide
Moody’s Investors Service and Standard & Poor’s have given the security an investment grade rating.
The sale included $244.2 million of senior debt maturing between October 15, 2023 and November 15, 2029 and rated AAA or above by S&P. The $30.8 million subordinated debt matures in 2029-2031 and is rated AA to BBB by S&P, with the lowest investment grade rating.
S&P’s rating factors included the credit quality of an underlying pool of direct and indirect prime auto loans with a weighted average credit score of 730 and a minimum credit score of 620.
Risks identified by S&P include:
- Geographic concentration: Oregon and Washington each account for about 46% of pool originations.
- Concentration of long-term loans: Loans with tenor over 72 months make up 71% of the pool. About 11% of the pool consists of loans with an original term of 73-75 months, another 60% with a term of 76-87 months, the majority of which are 84-month loans.
- High loan-to-value ratio: This pool has a weighted average LTV ratio of 110%, the highest compared to peer securitization pools.
According to S&P’s presale report, the average loan balance in the OCCU pool averaged $29,442 with an original term of 77 months and an APR of 5.65%.
OCCU’s net charge-off rate was 0.11% in the first half of the year, compared to 0.12% in the first half of 2021. 2019. Due to the pandemic, the charge-off plummeted to 0.35% in 2020 and 0.16% in 2021.
The 30+ day delinquency rate for auto loans increased to 1.15% as of June 30, “signifying a normalization of delinquency rates compared to pre-2020,” S&P’s report said. increase.
OCCU’s 60+ days vehicle delinquency rate for all auto loans rose from 0.51% at the end of September 2021 to 0.78% from 0.58% on September 30, according to NCUA data.
NCUA data showed OCCU was the 127th largest credit union in the nation based on June 30 assets, up from 138th a year ago.
With $1.5 billion in total auto loans outstanding as of June 30, it is the 44th largest credit union auto lender in the nation. Auto loans make up 52% of his total loan portfolio compared to 32% for all credit unions.
As of September 30, the company had $1.7 billion in auto loans. New auto loan balances were $599.6 million, up 65% year-over-year. Used loans were his $1.1 billion, up 62%.
Previous credit union ABS sales were:
- GTE Financial Federal Credit Union Tampa, FL ($2.9 billion in assets, 231,425 members) sold for $175 million in November 2019.
- Unified Financial Federal Credit Union Torrance, Calif. ($4.1 billion in assets, 292,992 members) sold $300 million in March 2021. ALM First also acted as advisor on this transaction.
- PenFed Credit UnionTysons, Virginia ($35.9 billion, 2.8 million members) Sold $460.3 million in AugustThe PenFed had $5.3 billion in auto loans on Sept. 30, down from $6 billion on Jun. 30.