Prestige Financial Services Issues $335 M Securitization | Auto Finance News

Prestige Ups Concentration of Bankruptcy Accounts in $335M ABS

Prestige Financial Services completed its 16th rated term securitization this week — backed by $358.5 million in auto installment receivables — with a higher concentration of bankruptcy accounts, according to a presale report by DBRS.

Prestige Financial Services strategically tightened up its risk modeling earlier this year, accounting for a 15% year-over-year drop in originations, Rich Hyde, chief operating officer told Auto Finance News in July. The tightening occurred in the lender’s non-bankruptcy business, which was a conscious decision, he added.

“Our model is not changed, we are not going to prime or near-prime, we will stay in mid-subprime paper,” Hyde said in July. “We are expanding our open bankruptcy program — that’s now 48% of our new business going on. Last year, that percentage had reduced a little bit into the high 30% range, so we are up about 10%. We continue to explore ways to expand that as well.”

Prestige’s specialty within the subprime sector is lending to potential obligors who have recently declared either Chapter 7 or 13 bankruptcy. Specifically, Prestige lends to car buyers who have filed for bankruptcy and have opted to purchase a vehicle prior to the closing or discharge of their bankruptcy cases.

“[Bankruptcy accounts] have always performed better historically,” Hyde said in July. “People coming out of bankruptcy are incented to improve,” meaning those consumers work to reestablish their credit and move forward in order to graduate to a lower interest rate loan, he added.

The Prestige Auto Receivables Trust 2017-1 consists of 54.4% of non-bankruptcies and 45.6% of bankruptcies, as compared to 58.4% and 41.6% — respectively — in the 2016-2 trust.

Additionally, the average loan size decreased to $14,904, as compared to $17,442 in the 2016-1 pool and $16,287 in the 2016-2 pool. The weighted average Fico score was 525, but the percentage of 401 to 500 Ficos increased to 29.4%, as compared to Prestige’s 2016-2 transaction of 27.9%. Also, 601 and higher Ficos also increased for the 2017 securitization — to 5.8% — from 5.3% in the previous issuance.

As of June 30, Prestige Financial serviced an approximate $1.1 billion portfolio of auto loans. The number of active accounts to date is 77,488, compared to 69,974 at the same time a year prior. Direct lending accounts for 0.7% of the securitization, as the company implemented a direct lending pilot program in 2017, according to the presale.

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  1. […] on bankruptcy accounts. The subprime lender completed its 16th rated term securitization last August — backed by $358.5 million in auto installment receivables — with a higher […]