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Oportun pools larger consumer loans in next $250M ABS

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Oportun Financial Corp.'s third consumer loan securitization of the year features higher balances and less seasoning.

The $250 million Oportun Funding X Series 2018-C transaction, a pool of unsecured consumer loans issued to low-income and underserved borrowers, features 86,321 accounts with an average original balance of $3,049 that have aged an average of four months.

In recent Oportun deals, the range of loan sizes was $2,142 to $2,598, with a weighted average seasoning of five to six months.

Among the factors in the larger loan size include the largest-ever collection of loan renewals (80.3% of the pool) from the Oportun shelf, many of which represent accounts from prior borrowers who qualify for larger loans through the “Good Customer” program for the firm because of previous on-time payment activity.

The transaction is backed by $263.1 million in unsecured consumer loans, and features four classes of notes. The capital stack includes $184.2 million Class A notes with a preliminary A+ rating from Kroll Bond Rating Agency, and supported by 30% credit enhancement.

The deal is Oportun’s 12th overall securitization, and is slated to close Oct. 22.

The transaction has a three-year revolving period, in which the issuer can add newly originated eligible loans generated through both its 12-state operational footprint. Oportun includes retail store fronts in eight states (with most in California and Texas), as well as new mobile-based originations that are active in four states.

The loan ranges are from $300 to $9,090, with terms ranging from six to 43 months.

Oportun Financial, based in San Carlos, Calif., provides unsecured installment loans to thin-file borrowers who either lack credit scores, have a limited history or are “mis-scored” – borrowers the company feels have credit eligibility that profiles above what their traditional credit scores indicate.

The company is recognized as a nonprofit community development financial institution, with a mission to provide financial services in underserved and low-to-moderate-income communities. Oportun provides affordable credit to underserved populations, at lower interest rates compared to other funding alternatives, such as payday loans, for targeted borrower groups.

Since 2005 the company has raised over $266 million in equity capital and $2.4 billion in debt. Company also has a $300 million warehouse line and a $260 million whole-loan facility to provide additional financing outside of the securitization channel, according to Kroll.

The company is headed by former executives of Walmart.com, MRU Holdings and HSBC Card Services.

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