The average loan-to-share ratio among all credit unions was 82.8% on March 31, up from 80.9% a year earlier but down from 85.1% on Dec. 31.

Like many credit unions with high loan-to-share ratios, its borrowings are also above average. Borrowings as a percent of assets had risen from 11% in March 2023 to 16% in March this year. Nationally, they rose from 4.7% in March 2023 to 5.7% in March this year.

Last year, First Community generated $11.8 million in net income, or a 0.50% return on average assets, down from 0.97% ROA in 2022. It earned $1.9 million in the first quarter, or 0.30% ROA.

First Community Credit Union was the sponsor in Thursday's sale. It sold the loans to FCCU Auto Funding LLC, the depositor, which sold them to FCCU Auto Receivables Trust 2024-1, the issuer.

Moody's gave investment-grade ratings to all seven tranches maturing from May 2025 to July 2032.

Moody's May 16 pre-sale report said the securities are backed by new and used auto loans FCCU originated indirectly through dealers to members with prime credit ratings. The pool consists of 39% new car loans and 61% used. About 27% of the loans were originated this year, 58% in 2023 and the remaining 15% earlier.

"The key credit strengths of the transaction are FCCU's long standing origination and servicing history, the strong credit quality of the collateral and the build-up of credit enhancement as the pool amortizes," Moody's said.

The pool has a weighted average FICO score of 754 with a minimum of 680. "The (weighted average) FICO is at the higher end compared to the other credit union deals we rated, but lower than the captive and bank-sponsored deals we recently rated," the report said.

Weaknesses in the issue include the high proportion of longer term loans (71% have terms of 73 to 84 months), the high geographic concentration with all the loans originated in Texas, and weakening performance of the loans. The balance of loans at least 30 days delinquent was 2.09% as of March 31, up from 0.88% a year earlier.

Moody's also found it harder to assess risk because of FCCU's size. Moody's was able to analyze FCCU originations of auto loans from 2016 to 2024 with borrower FICO scores of 680 or more.

"The origination amount for quarterly vintages between 2016 and 2021 averaged around $10-$30 million, and only ramped up to $50-$80 million starting from 2022. The thin origination volume has resulted in more volatile CNL (cumulative net loss) performance," the report said.

FCCU became the 13th credit union to sponsor an auto securities deal since the first one in 2019. Altogether credit unions have sponsored $4.3 billion in deals.

This year's total is now close to $1 billion following a $400 million issue March 14 by GreenState Credit Union of North Liberty, Iowa ($11.1 billion in assets, 454,787) and a $331.7 million issue March 26 by Valley Strong Credit Union of Bakersfield, Calif. ($3.8 billion in assets, 325,608 members).