April 2022, the World Financial Network Credit Card Master Trust
III amended its 2009-VFC conduit facility, increasing the capacity
from $225 million to $275 million and extending the maturity to
July 2023. In addition, in April 2022, the World Financial Capital
Master Note Trust amended its 2009-VFN conduit facility, increasing
the capacity from $1.5 billion to $2.5 billion and extending the
maturity to July 2023.
As of June 30, 2022, we had approximately $12.4 billion of
securitized credit card loans. Securitizations require credit
enhancements in the form of cash, spread deposits, additional loans
and subordinated classes. The credit enhancement is principally
based on the outstanding balances of the series issued by the
Trusts and by the performance of the credit card loans in the
Trusts.
The following table shows the maturities of borrowing commitments
as of June 30, 2022, for the Trusts by year:
Table 10: Borrowing Commitment
Maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022
|
|
2023
|
|
Thereafter
|
|
Total
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate asset-backed term note securities
|
|
$
|
653
|
|
$
|
—
|
|
$
|
—
|
|
$
|
653
|
Conduit facilities (1)
|
|
|
—
|
|
|
5,525
|
|
|
—
|
|
|
5,525
|
Total (2)
|
|
$
|
653
|
|
$
|
5,525
|
|
$
|
—
|
|
$
|
6,178
|
(1) |
Amount represents borrowing capacity, not outstanding
borrowings. |
(2) |
Total amounts do not include $1.8 billion of debt issued by the
Trusts, which was retained by us as a credit enhancement and
therefore has been eliminated from the Total. |
Early amortization events as defined within each asset-backed
securitization transaction are generally driven by asset
performance. We do not believe it is reasonably likely that an
early amortization event will occur due to asset performance.
However, if an early amortization event were declared for a Trust,
the trustee of that particular trust would retain the interest in
the loans along with the excess spread that would otherwise be paid
to our Bank subsidiary until the investors were fully repaid. The
occurrence of an early amortization event would significantly limit
or negate our ability to securitize additional credit card
loans.
We have secured and continue to secure the necessary commitments to
fund our credit card and other loans. However, certain of these
commitments are short-term in nature and subject to renewal. There
is no guarantee that these funding sources, when they mature, will
be renewed on similar terms, or at all, as they are dependent on
the availability of the asset-backed securitization and deposit
markets at the time.
Regulation RR (Credit Risk Retention) adopted by the FDIC, the SEC,
the Federal Reserve and certain other federal regulators mandates a
minimum five percent risk retention requirement for
securitizations. Such risk retention requirements may limit our
liquidity by restricting the amount of asset-backed securities we
are able to issue or affecting the timing of future issuances of
asset-backed securities. We satisfy such risk retention
requirements by maintaining a seller’s interest calculated in
accordance with Regulation RR.
Stock Repurchase
Programs
On February 28, 2022, the Company’s Board of Directors approved a
stock repurchase program to acquire up to 200,000 shares of the
Company’s outstanding common stock in the open market during the
one-year period ending on February 28, 2023. As of June 30, 2022,
the Company had repurchased all 200,000 shares of its common stock
available under this program for an aggregate of $12 million.
Following their repurchase, these 200,000 shares ceased to be
outstanding shares of common stock and are now treated as
authorized but unissued shares of common stock.
Dividends
During the three and six months ended June 30, 2022, we paid $11
million and $22 million, respectively, in dividends to our
shareholders of common stock. On
July 28, 2022, our Board of Directors declared a quarterly cash
dividend of $0.21 per share on our common stock, payable on
September 16, 2022, to stockholders of record at the close of
business on August 12, 2022.