First National Master Note Trust Annual Report - How They Did This Year

I’m writing this guide to help you understand how the First National Master Note Trust performed this past year. My goal is to turn complex financial filings into plain English so you can decide if this investment fits your strategy.

1. What does this company do?

Think of this Trust as a financial "pass-through" vehicle. It isn’t a typical company with employees or a storefront. Instead, First National Bank of Omaha (FNBO) created it to bundle credit card debt into investments. When you invest here, you are buying a piece of the payments made by credit card users. The Trust manages a pool of credit card debt—totaling about $4.2 billion—which backs the notes held by investors.

2. Financial performance

Because this is a specialized trust, it doesn't report "profit" or "revenue" like a standard company. Its job is to collect interest and fees from cardholders and pass that money to investors. The Trust remains active and issued $500 million in new notes in 2024 to pay off older ones. Independent auditors reviewed the Trust’s 2025 operations and found no issues, confirming that monthly collection rates remain stable at about 15% of the total balance.

3. Major wins and challenges

The biggest story for the Trust is a long-running legal battle over "interchange fees"—the fees merchants pay when you swipe your card.

• The Challenge: A court rejected a previous $6.24 billion industry-wide settlement in 2024.
• The Update: In November 2025, a new settlement was proposed. If approved, it would cap interchange rates and allow merchants to add surcharges for certain cards.
• The Cost: The bank is setting aside money to cover these legal costs, including $21 million for merchant education, $4.5 million for auditors, and up to $206 million for legal fees. The bank’s corporate entity is absorbing these costs, which protects the Trust’s cash flow.

4. Financial health

The Trust is in "maintenance" mode. It isn’t a growth company; it is an income vehicle, currently paying an average interest rate of 5.8% to investors. Its health depends on cardholders paying their bills on time. The current rate of unpaid debt is 3.2%, which is well within the limits needed to keep the Trust’s credit ratings high. While the bank faces other legal disputes, these are handled by the bank itself and do not currently threaten the Trust’s ability to pay investors.

5. Key risks

The primary risk is legal and regulatory uncertainty. The 2025 settlement is still waiting for a court hearing. If approved, it will change how credit card fees work, which could reduce the money flowing into the Trust. Additionally, the bank’s legal costs are just an estimate. If the final bill exceeds the $231.5 million set aside, it could strain the bank and potentially impact its ability to support the Trust during tough economic times.

6. Future outlook

The future depends on the court’s decision regarding the 2025 settlement. Investors should watch for news on the court’s hearing, expected in early 2026. If approved, it clears up a legal headache that has lasted nearly two decades. For now, the Trust remains focused on collecting payments from cardholders and ensuring that the interest collected stays higher than the interest paid to investors.

Investor Takeaway: If you are looking for steady, income-focused returns, this Trust offers a clear, predictable model. However, because your investment is tied to the outcome of a major legal settlement, keep a close eye on the court’s decision in early 2026. If you prefer investments with less regulatory exposure, you may want to weigh that risk against the current 5.8% yield.