Last week two credit unions issued a combined $1 billion in securities backed by their auto loans.

On Wednesday it was $700 million from Space Coast Credit Union of Melbourne, Fla. ($9.2 billion in assets, 684,320 members).

On Friday, it was $350 million from Oregon Community Credit Union (OCCU) of Eugene ($3.6 billion in assets, 280,040 members).

For each credit union, last week’s asset-backed securities deal was the largest of their three so far. OCCU previously sold $275 million in 2022 and $258 million in 2023.

For Space Coast, it was the largest ABS deal ever among the 25 or so deals executed since November 2019, when GTE Federal Credit Union of Tampa, Fla. ($2.9 billion in assets, 230,192 members) became the first by issuing $175 million in securities.

Both loan pools were made up of new and used indirect loans.

OCCU held $1.7 billion in car loans on June 30, accounting for 52% of its total portfolio.

The sale will generate cash and a 1% fee for servicing the loans. It will also reduce OCCU’s loan-to-share ratio, which stood at 109% on June 30, little changed from a year earlier and down from 108% in March. If the securities had been sold June 30, it would have reduced the ratio to 98%.
Used cars make up 81% of the vehicles in OCCU’s loan pool. The loans’ other attributes included:

  • A 733 weighted average credit score;
  • A 113% loan-to-value ratio;
  • An 8% APR;
  • 79 months average original term; and
  • 68 months average remaining term.
Moody’s pre-sale report said the pool credit quality was improved by raising the minimum credit score to 660, rather the 620 minimum used for the previous two issues. The weighted average credit score of 733 is only “marginally stronger” than the 727 average of the 2023 pool.

And the 113% loan-to-value ratio is higher than the 105% of the 2023 pool.

The pool also has a higher proportion of longer-term loans. The 79 months average original term is similar to the 2023 pool, but the 2025 pool is the first to include 88- to 96-month terms, which comprise 9% of the loans.

Moody’s said another worry is that the 2022 and 2023 issues performed worse than its expectations. "Despite the weak performance of prior deals, we have observed improvements in managed portfolio performance during the most recent 2024 vintages.”

The loans also have a high geographic concentration with 86% of the borrowers in either Washington or Oregon.

The report said the possibility of used car prices falling would result in more severe losses on defaults.

The report also listed tariffs as a risk.

“The U.S. administration's tariff policies may pose economic headwinds for consumers,” the report said. “Increased goods prices stemming from tariffs will likely hurt household finances, leading to a weakening in asset performance as borrowers face higher costs. Slowing economic momentum and a loosening labor market could further impact consumers, posing challenges to their ability to service debt.”

Contact Jim DuPlessis at JDuPlessis@cutimes.com.

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