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Oportun pools smaller loans with higher coupons in next consumer ABS

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Oportun Financial Corp.’s fourth consumer loan securitization of the year features lower balances and higher coupons that its prior deal, completed in October.

The $175 million Oportun Average is backed by loans with an average balance of $2,365, down from $3,084 in the previous transaction. This reduction reflects, at least in part, the fact that fewer of the assets are “renewal loans" to existing borrowers who qualify for larger loans through the firm’s “good customer” program because of previous on-time payment activity. Just 76.31% are renewal loans, down from 80.49% for the prior deal, according to Kroll Bond Rating Agency.

Among other notable differences in the collateral, the loans have a higher weighted average coupon rate (32.51% vs. 31.85%).

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 in four states.

Oportun, 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.

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Consumer ABS Subprime lending