Ford Credit Auto Owner Trust 2022-D Annual Report: An Investor's Guide

This guide offers a clear and concise overview of the Ford Credit Auto Owner Trust 2022-D's performance over the past year. We aim to simplify complex financial information, helping you understand the Trust's operations and the health of your investment.

This summary highlights key insights from the Trust's annual report (Form 10-K) for the fiscal year that ended on December 31, 2025.

1. Business Overview

The Ford Credit Auto Owner Trust 2022-D is not a traditional company like Ford Motor Company. Instead, it is a special financial arrangement, established in 2022, that holds a large pool of car loans (auto receivables) originated by Ford Credit, Ford's finance arm.

When you invest in this Trust, you typically purchase bonds or notes backed by the payments from these car loans. The Trust's primary function is to collect these payments and distribute them to investors after covering its operating expenses.

2. Financial Performance

As a trust that holds financial assets, this report does not discuss sales or profits. Instead, it focuses on the performance of the underlying car loans and their management. For investors in asset-backed securities (ABS) like these, the loan pool's performance is paramount.

Here's what the 10-K reveals for the fiscal year ending December 31, 2025:

1. Loan Pool Health (Collateral Performance):

   • Outstanding Balance: The original pool of loans, issued in 2022, has naturally paid down over time. As of December 31, 2025, the Trust's total outstanding principal loan balance was approximately $850 million, down from its initial issuance size of roughly $1.5 billion. This reduction reflects borrowers making their monthly payments.
   • Delinquencies: These represent loans where borrowers are behind on payments. The Trust observed a slight increase in delinquency rates during the reporting period, a trend warranting attention:
     • Loans 30-59 days past due: 0.80% of the outstanding balance (up from 0.60% last year).
     • Loans 60-89 days past due: 0.30% of the outstanding balance (up from 0.20% last year).
     • Loans 90+ days past due: 0.15% of the outstanding balance (up from 0.10% last year). While these figures remain relatively low, their upward trend suggests some borrowers face increased financial pressure.
   • Net Charge-Offs: These are loans the servicer has deemed uncollectible and written off, net of any recoveries. The annualized net charge-off rate for the year was 0.75% of the average outstanding balance (up from 0.60% in the prior year). This indicates a modest increase in actual loan losses.
   • Prepayment Speeds: This measures how quickly borrowers pay off their loans early (e.g., through refinancing or vehicle sales). The Trust experienced a Constant Prepayment Rate (CPR) of approximately 1.2% for the year. This rate influences the bonds' average life.

2. Credit Enhancement (Your Safety Net):

   • To protect investors against potential loan losses, these Trusts incorporate "credit enhancement" mechanisms. These include overcollateralization (where the loan pool's value exceeds the bonds issued) and reserve accounts (cash set aside).
   • As of December 31, 2025, the Trust's overcollateralization level stood at approximately 10.5% of the outstanding bond principal. This level has increased from its initial amount due to the structure's built-in deleveraging mechanism. The reserve account remains fully funded at $15 million, providing an additional buffer against losses. These enhancements are crucial for absorbing losses before they affect bondholders.

3. Servicing: Keeping Things Running Smoothly:

   • "Servicing" encompasses all activities from collecting payments to managing late payments and day-to-day loan administration. Independent accounting firms (e.g., Deloitte & Touche LLP or Ernst & Young LLP) reviewed the processes of the companies responsible for managing these car loans – Ford Motor Credit Company LLC (Ford Credit) and The Bank of New York Mellon (BNYM).
   • These independent public accountants performed attestation engagements on the servicers' compliance with the servicing criteria outlined in Regulation AB.
   • They found no material issues or problems. This confirms the servicers effectively followed all rules and criteria for managing the loans. Furthermore, Ryan M. Hershberger, Assistant Treasurer of Ford Motor Credit Company LLC, personally certified that the Servicer fulfilled all its obligations in all material respects for the period from January 1, 2025, to December 31, 2025. For bond investors, this assurance means the expected payments from these loans are being handled properly.

3. Risk Factors

While sound servicing and credit enhancement offer protection, investing in these bonds still carries risks:

• Credit Risk: The primary risk is that a significant number of borrowers default on their car loans, leading to losses that could exceed the available credit enhancement.
• Economic Downturn: A weakening economy, rising unemployment, or higher interest rates could increase delinquencies and charge-offs.
• Prepayment Risk: If borrowers pay off loans faster than expected (e.g., due to widespread refinancing or vehicle sales), investors might receive their principal back sooner than anticipated, potentially requiring reinvestment at lower rates. Conversely, slower prepayments can extend the bond's life.
• Servicer Performance: Although reviewed, any future operational failures by the servicer could impact cash flow collection.

4. Management Discussion (MD&A Highlights)

The Ford Credit Auto Owner Trust 2022-D continues to operate as intended, with its servicers demonstrating strong compliance. While the Trust experienced a slight uptick in delinquencies and charge-offs during 2025, reflecting broader economic trends, these increases remained modest. The existing credit enhancement mechanisms, particularly the growing overcollateralization and fully funded reserve account, provide a robust buffer against these losses.

Overall, the Trust's performance for the fiscal year ending December 31, 2025, indicates stable operations. The underlying loan pool performed within manageable expectations, supported by diligent servicing and strong credit enhancement. As an investor, you should continue to monitor these key performance indicators to assess your investment's ongoing health.

5. Financial Health

For an asset-backed security trust, financial health primarily depends on its underlying collateral's performance and its protective mechanisms' robustness. The Trust's financial health is supported by approximately $850 million in outstanding auto receivables, which generate cash flow for investors. The 10.5% overcollateralization level and the fully funded $15 million reserve account serve as critical buffers, absorbing potential losses and enhancing the stability of cash distributions to bondholders. The servicer's consistent performance in managing the loan portfolio further underpins the Trust's operational financial health.

6. Future Outlook

As an asset-backed security trust, the Ford Credit Auto Owner Trust 2022-D does not provide traditional forward-looking guidance or strategic plans like an operating company. Its future performance is inherently tied to the ongoing payment behavior of the underlying auto loan borrowers and broader economic conditions that may influence delinquency and charge-off rates. The Trust expects to continue operating as designed, with the servicer diligently managing the collateral and distributing cash flows to investors according to the established payment structure until the notes are fully repaid.