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Space Coast Credit Union issued $700 million in securities backed by indirect auto loans Wednesday — its third sale over the past two years.
Space Coast of Melbourne, Fla. ($9.16 billion in assets, 684,320 members) contributed loans for new and used cars carrying terms from 24 to 84 months to borrowers with prime credit scores of at least 640. The weighted average score was 760.
The sale will generate cash and reduce Space Coast's high loan-to-share ratio. It stood at 107% on June 30, and if the sale had occurred then, the ratio would have fallen to 98%, based on NCUA data pulled from Callahan’s Peer Suite. The average for all credit unions was 83% on June 30 — slightly lower than it was a year earlier.
Space Coast also has a high proportion of indirect auto loans. They account for $3.65 billion or 88% of its total $4.15 billion auto portfolio.
Its 60-day-plus delinquency rates have risen for its auto loans, but the rates are still lower than the credit union average. Space Coast's delinquency rates were 0.35% on new loans and 0.51% on used loans on June 30. The national average was 0.51% for new and 0.98% for used auto loans.
Moody's gave investment-grade ratings to the securities, which mature from July 2026 to September 2033. Space Coast will service the loans.
A Moody's pre-sale report said the key strengths of the deal were the credit union’s more than 50 years of servicing auto loans, the strong performance of its previous two auto loan securities and structural features of the securities that will build up credit protection for the buyers as the loan pool amortizes.
Key challenges were weaker performance for early 2024 vintage loans and weaker credit quality of the 2025 pool compared with its earlier issues.
The loan-to-value ratio was 110% for the 2025 issue, compared with about 100% for the 2024 issue. Loans with original terms of 73 to 84 months made up 73% of the 2025 pool, compared to 57% of the 2024 issue.
“Longer-term loans generally experience weaker performance than loans with shorter terms due to the increased likelihood for a life event or economic downturn to occur during the longer life of the loan,” the report said.
The credit union has now sold $1.78 billion in auto loan securities, including $422 million sold in 2023 and $669 million sold in 2024.
The total for this year is now $1.1 billion following sales by four other credit unions.
Space Coast earned $20.4 million, or an annualized return of 0.90% of its average assets in the three months ending June 30, up from $13.4 million (0.60% ROA) in the previous quarter.
Contact Jim DuPlessis at JDuPlessis@cutimes.com.
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