FIRST NATIONAL FUNDING LLC Annual Report - How They Did This Year

I’m writing this guide to help you understand how First National Funding LLC performed this year. My goal is to turn complex financial filings into plain English so you can decide if this is the right place for your money.

1. What does this company do?

First National Funding LLC acts as a "depositor" for the First National Master Note Trust. Think of it as a middleman that bundles credit card debt from the First National Bank of Omaha (FNBO) into financial products sold to investors. As of the end of 2025, the trust manages about $4.2 billion in credit card debt. The company has no employees or offices; it acts as a legal "vault" for debt, keeping these assets separate from the parent bank’s bankruptcy risks.

2. Financial performance

Because this is a special-purpose entity, it doesn't report "profit" or "revenue" like a typical company. Instead, success depends on the stability of the debt it holds and timely interest payments to investors. The trust maintained a steady monthly payment rate of 18.5% in 2025, showing that borrowers are paying their bills on time. Independent auditors confirmed that the trust met all requirements and properly managed cash flow for investors.

3. Major wins and challenges: The "Elephant in the Room"

The biggest story is the long-running antitrust lawsuit against credit card companies and banks regarding interchange fees.

• The 2025 Proposed Settlement: A settlement proposed in November 2025 could force changes to how credit card fees are capped. It may reduce interchange rates by 0.07% to 0.10% and give merchants more freedom to charge extra fees for credit card use.
• The Cost: This settlement includes up to $206 million for attorneys' fees and $15 million for merchant education and monitoring.
• Ongoing Uncertainty: Management cannot predict the final outcome or how these rules will change long-term profits. A drop in fee income could shrink the "excess spread"—the safety margin that protects investors from credit losses. This might require higher levels of protection for future investments.

4. Other Legal Risks

Beyond the antitrust case, the bank and its trustees face other legal battles, including lawsuits over old mortgage-backed securities and student loan trusts. If the bank faces financial pressure from these settlements, it could impact the quality of the credit card debt that backs this trust.

5. Future outlook

The company continues to issue new notes, such as the $500 million Series 2024-1 issued in May 2024, showing that investors still want these assets. However, the future depends on the 2025 settlement. Investors should take a "wait and see" approach. The company is running smoothly, but the legal landscape for credit card fees is shifting.

6. Is it a good investment?

This isn't a "growth" stock. It is a specialized way to earn income from credit card debt. Your risk isn't about whether the company will "innovate," but whether the legal system will permanently reduce the fees that make this debt profitable.

Investor Tip: Keep a close eye on the "excess spread" in quarterly reports. If this margin drops below 3%, the risk of losing your principal increases significantly.