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FNBO makes return trip to market with $384.6m card ABS deal

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After ending a two-year absence from the asset-backed market in April, First National Bank of Omaha didn’t wait as long this time around.

According to presale reports, FNBO is following up with a second 2017 securitization of credit-card receivables in a transaction sized at $384.6 million. All of the receivables are from accounts originated by FNBO through both its direct-market and co-branded cards programs, and assigned to its revolving master-trust issuance program.

First National Master Note Trust Series 2017-2 is comprised of prime-quality receivables it services through its direct-issued Visa, Mastercard and American Express cards as well as through its co-branded cards program.

Moody’s Investors Service and Fitch Ratings have assigned triple-A ratings to the $300 million Class A bond tranche, which has credit enhancement through 22% subordination of two unrated Class B ($40.4 million) and Class C ($44.2 million) notes series.

The transaction is similarly structured to the FNMNT issuance earlier this year, including the $384.6 million notes sizing. That had been FNBO's first foray into the card-receivables securitization market since 2015, and just the second since 2013.

The accounts in the pool have average balances of $3,281 on average credit lines of $17,802, a far-lower percentage of use than other “Big Six” credit-card ABS trust sponsors, according to Moody’s.

They are from a managed portfolio of $5.5 billion in accounts.

Over 96% of the accounts are at least four years old, and FNBO’s trust has a greater percentage of borrowers in its higher credit tiers above a 700 FICO (75%) than that of Chase (68%), Citibank (62%), Bank of America (61%), Discover (56%) and Capital One (51%).

FNBO has far lower economies of scale than the $140 billion Chase and $131 billion Citibank trust issuance program, but the long-time card issuer (since 1953) has been securitizing receivables from high-credit quality borrowers since 1995, and earns high marks from ratings agencies because of its voluntary 4% discount of principal receivables that contribute to excess spread and yield enhancement, according to Moody’s.

The trust’s yield averages 15.8%.

While the monthly full-payment rate of 18.29% is lower than peer issuers, Moody’s attributes that to fewer rewards-based products in its card lineup that tend to attract borrowers who pay off cards in full each month to accumulate points and rewards.

Gross charge-offs for FNBO’s program are 3.79%, up slightly from the 2016 year-end figure of 3.27%.

JPMorgan and Wells Fargo are lead underwriters of the transaction.

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Credit card ABS First National Bank of Omaha Moody's Fitch