USAA Auto Loan Grantor Trust 97-1 Pass-Thrus Rated by S&P
20 November 1997
USAA Auto Loan Grantor Trust 97-1 Pass-Thrus Rated by S&P
NEW YORK, Nov. 20 -- Standard & Poor's today assigned its
triple-'A' rating to USAA Auto Loan Grantor Trust 1997-1's auto loan pass-
through certificates class A. The class B certificates were rated single-'A'-
plus. Rated debt totals $700.2 million.
Standard & Poor's assigned ratings to the class A and B pass-through
certificates issued by USAA Auto Loan Grantor Trust 1997-1. Ratings are based
on credit support provided by 3% subordination supporting the class A
certificates, a 2% cash reserve account supporting both classes of
certificates, annual excess spread of about 1.40%, and a sound legal
structure. The ratings are also based on USAA Federal Savings Bank's
exceptionally low loss rates and strong pool characteristics that include
receivables with nearly 12 months seasoning, along with collateral consisting
of 80% new autos. The initial reserve amount of 1.5% of the initial pool of
receivables will amortize to a floor of 1% of the original pool balance.
There are performance-based triggers that would result in the reserve account
increasing from 2% to 4% of the current balance.
USAA Federal Savings Bank (USAA FSB) is a federally chartered thrift
institution, with an auto loan portfolio that has grown from approximately
$780 million at Dec. 31, 1994 to about $1.7 billion at Sept. 30, 1997. At
this time, annualized net losses for 1997 are projected to be slightly higher
than the 0.20% reported for 1996. During 1995 and 1994, net loss levels of
0.12% and 0.08% were recorded. Delinquencies for the nine months ended
Sept. 30, 1997 are 0.25% compared to 0.49%, 0.31%, and 0.18% for year ends
1996, 1995, and 1994, respectively. Although this portfolio shows some
deterioration, it continues to be among the elite performers in the industry.
Management believes this is due to its educated, military-related membership
and high underwriting standards.
Auto loans are originated using two approaches. The first is a judgmental
approach that uses an empirical-based scoring process provided by credit
bureaus. The second method determines whether creditworthy bank customers can
be pre-approved based on existing USAA FSB's credit card experience.
Pre-approved customers will be offered a loan in an amount determined by the
credit limit amount of the individual's credit card account with the bank.
The 1997-1 receivables pool is composed of automobile installment sales
contracts to prime borrowers. This pool's similarities to previous
securitizations include its weighted average seasoning of 11.54 months and
state concentrations in Texas (16.4%) and California (10.5%). The average
contract balance is a bit larger at $11,460, the new auto portion is higher,
and the weighted average annual percentage rate of the receivables is 8.46%.
Series 1997-1 is USAA FSB's third public securitization of automobile
receivables. USAA FSB is an indirect wholly owned subsidiary of the worldwide
insurer, United Services Automobile Association (USAA), and is engaged in
providing consumer banking products and services primarily to USAA's
membership. USAA members are mostly active, retired, and former United States
military officers. Customers primarily bank through telephone, mail, and
computers since the bank does not maintain any branches. USAA FSB was
established in 1983 and ranks as the 27th largest thrift institution based on
assets, Standard & Poor's said. -- CreditWire
SOURCE Standard & Poor's CreditWire