Ford Credit Auto Owner Trust 2024-B: An Investor's Guide to Its Annual Performance

This report provides a concise overview of the Ford Credit Auto Owner Trust 2024-B's annual report (10-K) for the fiscal year ended December 31, 2025. It offers essential insights for current and prospective bond investors.

1. Business Overview

Understanding Ford Credit Auto Owner Trust 2024-B

This Trust is not a traditional company with publicly traded stock. Instead, it operates as a specialized financial vehicle, commonly known as a "securitization," established by Ford Motor Credit Company LLC (Ford Credit). The Trust's primary role is to hold a pool of retail automobile installment sale contracts (auto loans) originated by Ford Credit. It then issues bonds to investors, backed by the cash flow generated from these auto loan payments. This structure enables Ford Credit to efficiently raise capital by selling future loan payments, while bondholders receive regular payments from the underlying borrowers.

Important Note for Stock Investors: This Trust does not issue stock. If you seek to invest in Ford Motor Company equity, this report is not for you. This information is specifically relevant for those who have invested, or are considering investing, in the bonds issued by this Trust.

2. Financial Performance

A securitization trust's financial performance is primarily measured by its underlying collateral's performance and the adequacy of its credit enhancement.

Collateral Pool Performance: The Engine of Your Investment

The health of the auto loans held by the Trust directly impacts bondholders. As of December 31, 2025, the Trust's outstanding principal balance stood at approximately $1.85 billion. This represents a reduction from the initial pool balance of $2.2 billion at issuance in mid-2024, reflecting scheduled principal payments and prepayments from borrowers. The pool consists of approximately 125,000 individual auto loans, with an average remaining term of 42 months.

Key indicators of loan health include:

• Delinquency Rates: As of year-end 2025, loans 30-59 days past due represented 0.85% of the outstanding pool balance, while loans 60+ days past due were 0.40%. These figures indicate stable payment performance within the portfolio, generally consistent with initial expectations for this asset class.
• Net Loss Rates: This measures loans charged off (deemed uncollectible) minus any recoveries. For fiscal year 2025, the annualized net loss rate was 0.95% of the average outstanding pool balance. The cumulative net loss rate since issuance in 2024 was 1.20%, remaining within the transaction's projected range.
• Prepayment Rates: Borrowers sometimes pay off their loans early. The annualized prepayment rate (Absolute Prepayment Speed - ABS) for 2025 was 1.5%. While prepayments can affect the timing of bond principal repayments, this rate is considered moderate and manageable for the Trust's structure.

3. Risk Factors

While the Trust performed well in 2025, bond investors should always be aware of potential risks:

• Economic Downturn: A significant deterioration in economic conditions (e.g., rising unemployment, recession) could lead to higher delinquency and loss rates in the auto loan portfolio.
• Interest Rate Fluctuations: While the bonds are typically fixed-rate, changes in market interest rates can affect the market value of the bonds if you need to sell them before maturity.
• Collateral Performance: Actual loan performance (delinquencies, defaults, prepayments) could deviate from initial projections, impacting cash flow to bondholders.
• Servicer Performance: Although audited as compliant, any future operational failures or financial distress of the servicer (Ford Credit) could disrupt cash flow. However, robust backup servicing provisions are typically in place.
• Regulatory Changes: New regulations impacting consumer lending or securitization could indirectly affect the Trust.

4. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)

This 10-K, covering January 1, 2025, to December 31, 2025, thoroughly examines the underlying auto loan collateral's performance and the Trust's operational integrity.

The Trust's financial condition directly correlates with its underlying collateral pool's performance. For fiscal year 2025, the collateral pool demonstrated stable performance. Delinquency rates (0.85% for 30-59 days past due, 0.40% for 60+ days past due) and an annualized net loss rate (0.95%) remained within the range anticipated at the Trust's formation. The credit quality of the original loan pool and Ford Credit's effective servicing practices contribute to this stability. The outstanding principal balance decreased from $2.2 billion at issuance to $1.85 billion, reflecting consistent principal amortization and a moderate prepayment rate of 1.5% ABS, which did not materially impact the Trust's cash flow projections.

The Trust's operational integrity is paramount. Ford Motor Credit Company LLC serves as the servicer, responsible for collecting payments, managing defaults, and administering the loans. The Bank of New York Mellon acts as the Indenture Trustee and Custodian. Independent auditors, PricewaterhouseCoopers LLP and KPMG LLP, thoroughly examined the servicer's compliance with the servicing agreement's terms. Their reports confirmed that, in all material respects, Ford Credit adhered to the specified servicing criteria for the fiscal year ended December 31, 2025. Auditors found no material instances of non-compliance or significant deficiencies, assuring that the Trust's operational framework functions as intended. This robust servicing performance is critical for ensuring timely cash flows to bondholders.

The Trust's legal standing also remained sound. No material legal proceedings or lawsuits were initiated or outstanding against the Trust during the reporting period that could significantly impact its operations or financial condition.

5. Financial Health

The Trust's financial health primarily relies on its credit enhancement mechanisms and the consistent performance of its collateral.

Credit Enhancement: Your Safety Net

The Trust incorporates several layers of credit enhancement designed to protect bondholders against potential losses from the underlying loans. As of December 31, 2025, these include:

• Overcollateralization (OC): The collateral pool's value exceeded the outstanding bond principal by 6.5%, providing a substantial buffer. This OC level has increased from 5.0% at issuance due to the sequential pay structure and principal amortization, enhancing protection for senior bond classes.
• Reserve Account: A cash reserve account holds $15 million, representing 0.8% of the outstanding pool balance. This fund is available to cover shortfalls in payments to bondholders, providing immediate liquidity in case of temporary cash flow mismatches.
• Subordination: Junior bond classes absorb losses before senior classes, offering further protection to more highly-rated tranches.

These layers of credit enhancement, combined with stable collateral performance and diligent servicing, contribute to the Trust's overall financial stability and liquidity, ensuring timely principal and interest payments to bondholders.

6. Future Outlook and Strategy

For the Ford Credit Auto Owner Trust 2024-B, the future outlook primarily depends on the ongoing performance of the underlying auto loan collateral and the broader economic environment. Management anticipates continued stability in collateral performance, consistent with historical trends for similar securitizations originated by Ford Credit.

The Trust's strategy remains focused on efficiently collecting and distributing cash flows from auto loan receivables to bondholders, as defined by the transaction's governing documents. We do not anticipate material changes to the servicing strategy or the Trust's structure. However, the Trust acknowledges its sensitivity to macroeconomic factors. Potential increases in unemployment rates or a significant downturn in consumer spending could lead to elevated delinquency and loss rates in the future. Conversely, a strong economic environment could result in higher prepayment rates.

Ford Motor Credit Company LLC, as the servicer, commits to maintaining robust servicing practices to mitigate potential risks and ensure the Trust's continued operational integrity. The existing credit enhancement mechanisms are expected to provide ongoing protection against adverse collateral performance within anticipated ranges.

Investor Takeaway

The Ford Credit Auto Owner Trust 2024-B's 10-K for fiscal year 2025 indicates stable and compliant performance. The underlying auto loan portfolio exhibited manageable delinquency and loss rates, supported by robust credit enhancement mechanisms. Independent audits confirmed the servicer's strong operational adherence. For bond investors, this report offers a positive signal regarding the ongoing health and management of their investment, reinforcing the expectation of timely principal and interest payments. However, as with any investment, a thorough review of the original offering documents and ongoing market conditions is always recommended.