John Deere Owner Trust 2025-B Annual Report: Essential Insights for Noteholders

For investors holding Notes issued by John Deere Owner Trust 2025-B, this annual report offers a vital look into its performance. Unlike a traditional company stock report, we delve into the world of asset-backed securities, focusing on the stability and management of the underlying assets that secure your investment.

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1. Business Overview

John Deere Owner Trust 2025-B functions as a special purpose entity, specifically designed to finance John Deere equipment sales. Its core role involves acquiring "retail receivables"—the installment loans customers use to purchase equipment from John Deere Capital Corporation. The Trust then channels the cash flow from these loans to pay investors who hold its asset-backed "Notes" (which are essentially bonds).

This structure allows John Deere Capital Corporation to continually finance new equipment sales by converting these customer loans into marketable securities. As a pass-through entity, the Trust itself does not have employees or conduct traditional business operations. Instead, John Deere Capital Corporation manages all its activities, serving as both the Servicer and Administrator.

2. Financial Performance

We assess the Trust's performance differently than a typical company. As a pass-through entity, it does not generate traditional revenue or profit. Instead, its financial health hinges on:

• The stability and repayment of its underlying loan portfolio.
• The Servicer's effectiveness in managing these loans.
• The adequacy of its credit enhancement mechanisms.

The report confirms that John Deere Capital Corporation, acting as the "Servicer" (the entity responsible for collecting loan payments and managing the portfolio), fully complied with the servicing criteria outlined in the transaction agreements. This compliance is a crucial indicator of sound operations and proper management of the assets backing the Notes. A more detailed discussion of the underlying collateral's performance, which directly impacts the Trust's financial results, is in the Management Discussion and Analysis section below.

3. Management Discussion and Analysis (MD&A)

This section analyzes the Trust's financial condition and operations, focusing on the performance of the underlying loans and the Servicer's activities.

• Collateral Performance: The total principal balance of the retail receivables held by the Trust has decreased from its initial balance when the Notes were issued, primarily due to scheduled principal payments and prepayments.
  • Delinquencies: The report provides specific delinquency rates. These figures are vital for evaluating the credit quality of the underlying assets and remained within expected ranges for the period.
  • Net Losses: Cumulative net losses (defaults minus recoveries) for the period remained within expected ranges. The Trust's credit enhancement mechanisms successfully absorbed these losses.
  • Prepayments: Prepayment rates can influence the Notes' average life.
• Servicer Activities: John Deere Capital Corporation confirmed its full compliance with all material aspects of the servicing agreement for the reporting period. This includes adhering to established procedures for loan collection, default management, and reporting to Noteholders. No material non-compliance was reported, demonstrating effective management of the loan portfolio. John Deere Capital Corporation also acts as the Trust's Administrator, overseeing its general operations and ensuring adherence to transaction documents.
• Credit Enhancement: The Trust uses various forms of credit enhancement to protect Noteholders from potential losses, including overcollateralization, a reserve account, and subordination of junior notes. These enhancements remained at their required levels, providing a strong buffer against potential loan losses. The reserve account balance was consistent with the transaction documents.

4. Financial Health

The financial health of John Deere Owner Trust 2025-B is primarily driven by the credit quality and cash flow generated by its underlying retail receivables, along with the strength of its credit protection structure.

• Debt Outstanding: The Trust's main obligation is the outstanding principal balance of the Notes issued to investors. The total principal balance of the outstanding Notes aligned with the remaining principal balance of the underlying collateral, after adjusting for overcollateralization.
• Cash Flow and Liquidity: The Trust generates its liquidity directly from the scheduled principal and interest payments on the retail receivables. The Servicer collects these cash flows and uses them to make timely principal and interest payments to Noteholders. The reserve account further boosts the Trust's liquidity and its ability to cover shortfalls, ensuring timely payments even if receivable collections face temporary disruptions.
• Credit Enhancement: As detailed in the MD&A, the various credit enhancement mechanisms (e.g., overcollateralization, reserve account, subordination) are designed to absorb losses and maintain the Trust's financial integrity, thereby protecting Noteholders. These mechanisms were maintained at their specified levels, indicating a robust financial buffer.

5. Risk Factors

While investors in the Notes do not face stock price risk, they should be aware of specific considerations:

• Credit Risk: The primary risk is that many customers default on their equipment loans. Such losses could exceed credit enhancement levels and potentially affect payments to Noteholders.
• Prepayment Risk: If loans are paid off faster than expected (for example, due to low interest rates or equipment trade-ins), Noteholders might receive their principal back sooner, potentially requiring reinvestment at lower rates. Conversely, slower prepayments can extend the Notes' duration.
• Servicer Performance Risk: Although John Deere Capital Corporation reported compliance, any future failure to effectively collect payments or manage defaults could negatively impact cash flow to Noteholders.
• Economic Downturns: Broader economic conditions, especially in the agricultural and construction sectors, could increase default rates on the underlying equipment loans, thereby affecting the Trust's performance.
• Interest Rate Risk: For variable-rate Notes, rising interest rates could reduce the value of the Notes if investors sell them before maturity.

6. Future Outlook

This report does not include forward-looking statements or specific projections for the Trust's performance. As a passive securitization vehicle, the Trust does not engage in strategic planning or issue traditional guidance. However, several factors will continue to influence the performance of the Trust's Notes:

• The credit quality and payment behavior of the underlying John Deere equipment loan customers.
• The overall health and economic conditions of the agricultural and construction industries.
• The effectiveness and ongoing compliance of John Deere Capital Corporation's servicing operations.
• Prevailing interest rate environments, which can affect prepayment rates and the Notes' value.

7. Competitive Position

The concept of "competitive position," typically applied to operating companies, does not directly apply to John Deere Owner Trust 2025-B. The Trust is a passive, special purpose entity whose sole function is to hold a pool of assets and issue securities backed by them. It does not compete in any market for goods or services.

Its standing in the financial markets stems from several factors: the credit quality of the underlying retail receivables, the structural integrity of the securitization, John Deere Capital Corporation's reputation and performance as the originator and servicer, and the pricing of the Notes compared to other asset-backed securities. The Trust's ability to successfully issue Notes relies on the market's confidence in these elements, rather than its own competitive strategies.

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In Summary: John Deere Owner Trust 2025-B continues to operate as designed, effectively financing John Deere equipment sales through asset-backed Notes. The Servicer's compliance and the current performance metrics of the underlying loan portfolio indicate stability for Noteholders. However, as with any investment, understanding the specific risks of asset-backed securities and closely monitoring the underlying assets' performance remains crucial. For a complete understanding, Noteholders should also review the original prospectus and other periodic reports.