First National of Omaha Returns with $384.6M Card ABS

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First National Bank of Omaha is returning to the securitization market for the first time in two years with $384.6 million of notes backed by credit-card receivables.

First National Master Note Trust 2017-1 pools Visa and Mastercard receivables from accounts originated and serviced by the bank, a unit of credit-card pioneer First National of Nebraska.

The trust will issue three classes of floating-rate notes, according to a filing Tuesday with the Securities and Exchange Commission. Only the senior Class A notes totaling $300 million will be publicly offered, however.

The notes are not yet rated; however FNBO is soliciting opinions on the deal from two undisclosed national ratings agencies. The firm's previous $320.5 million transaction, completed in 2015, was rated by S&P Global Ratings and Fitch Ratings. A 2013 transaction was rated by S&P and Moody’s Investors Service.

The senior tranches of the previous deals garnered triple-A ratings and had credit enhancement levels ranging from 22% to 24%.

The notes issued in the new deal will be secured from FNBO trust’s pool of $282 billion in managed card receivables from 2.1 million accounts. The average balance is $1,325 from an average credit limit of $17,125, according to the SEC filing. Both 60-day plus delinquencies of 0.98% and gross-charge-off average of 3.36% have been on the decline in the portfolio.

FNBO has a long-term issuer and deposit rating of ‘A2’ through Moody’s, but it recently asked S&P to drop its formal ‘BBB-’ issuer rating. Credit cards comprise the largest share of FNBO’s total loan portfolio (approximately 40%) but that has not translated into a large national market share in credit cards for the bank (under 1%) and represents a “major credit challenge” to the institution, Moody’s noted in a February credit opinion report.

Wells Fargo and RBC are joint bookrunners on the transaction.

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