KBRA Affirms Ratings for Truliant Federal Credit Union

KBRA affirms the deposit and senior unsecured debt ratings of BBB, the subordinated debt rating of BBB-, and the short-term deposit and debt ratings of K3 for Winston-Salem, North Carolina-based Truliant Federal Credit Union (“Truliant”, "TFCU", or “the credit union”). The Outlook for all long-term ratings is Stable.

Key Credit Considerations

The ratings are supported by Truliant's seasoned management team with a mix of credit union and banking experience and the granular/consumer-focused banking model, lending to a strong deposit franchise with core deposits representing 89% of total funding. Furthermore, TFCU has generally reported better than peer earnings largely supported by a durable NIM and solid noninterest income contributions. That said, we recognize that due to the consumer concentration of the credit union, which has been impacted by the higher rate environment and inflationary pressures, charge-off activity was 1.37% for 3Q25, largely comprised of auto loans (58%) followed by unsecured consumer loans (40%), which has weighed on earnings in recent periods. However, management has downsized the auto portfolio, tightened underwriting standards, and focused on enhancing the recovery values for auto loans. As such, charge-offs have improved through 9M25, and we expect NCOs to normalize moving forward. We also recognize that the loan portfolio is highly granular, with an average loan size of $22,500, which is less susceptible to large loss given defaults like that of a commercial bank with less than 1% of commercial loans delinquent. TFCU benefits from an above average NIM largely supported by the credit union’s asset sensitive balance sheet amid the higher rate environment given a shorter duration loan portfolio as the auto portfolio (27% of loans) has an average life of 22 months. As such, the loan portfolio has been able to reprice relatively quicker, further aided by the remixing of the earning asset base towards loans increasing to 91% of the earning asset base compared to 87% at YE24. Going forward, we expect NIM be upheld by the continued repricing of the loan portfolio paired with management’s low single digit loan growth target and favorable core deposit base. Capital metrics have improved through 9M25 given slower loan growth and improved earnings with the net worth ratio at 9.6% as of 3Q25. While we note that capital tracks below that of similarly sized peers, TFCU maintains an adequate buffer above the minimum for well capitalized of 260 bps. Going forward, management indicated plans to continue to accrete capital via retained earnings and low single digit loan growth, which we view favorably.

Rating Sensitivities

Improved scale and geographic diversification, in conjunction with maintenance of solid profitability metrics, above peer capital ratios, and improved credit quality metrics consistent with the higher rating category could result in positive rating momentum over time. Conversely, negative rating action may result in the event that credit quality metrics continue to worsen negatively impacting profitability metrics beyond peer levels, capital metrics deteriorate, notably net worth ratio dipping below 8%, or a material change in the funding profile occurs.

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