DBRS Confirms Ratings on Lendmark Funding Trust 2016-B

DBRS, Inc. (DBRS) has today confirmed its ratings on the following notes issued by Lendmark Funding Trust 2016-B (Series 2016-B):

-- Series 2016-B Notes, Class II-A, rated A (sf)
-- Series 2016-B Notes, Class II-B, rated BBB (sf)

The Series 2016-B transaction is a warehouse for the financing of consumer loan receivables. The confirmations are based on amendments to the transaction, which include changes to concentration limits and trigger levels.

The ratings are based upon a review by DBRS of the following analytical considerations:
-- Transaction capital structure, proposed ratings and form and sufficiency of available credit enhancement.
-- The ability of the transaction to withstand stressed cash flow assumptions and repay investors according to the terms under which they have invested. For this transaction, the rating addresses the payment of timely interest on a monthly basis and principal by the stated legal maturity date.
-- Lendmark Financial Services LLC’s (Lendmark) capabilities with regard to originations, underwriting and servicing.
-- The credit quality of the collateral and performance of Lendmark’s consumer loan portfolio. DBRS has used a hybrid approach in analyzing the Lendmark portfolio that incorporates elements of static pool analysis employed for assets, such as consumer loans and revolving asset analysis, employed for such assets as credit card master trusts.
-- DBRS applied a finance yield haircut of 6.00% for Class A and 4.00% for Class B. While these haircuts are lower than the range described in the “Rating U.S. Credit Card Asset-Backed Securities” methodology, the fixed-rate nature of the underlying loans, lack of interchange fees and historical yield consistency support these stressed assumptions.
-- DBRS applied a payment rate haircut of 35.0% for Class A and 30.0% for Class B.
-- DBRS applied charge-off multiples of 3.25 times (x) for Class A and 2.50x for Class B.
-- The legal structure and presence of legal opinions that address the true sale of the assets to the Issuer, the non-consolidation of the special-purpose vehicle with Lendmark, that the trust has a valid first-priority security interest in the assets and is consistent with the DBRS methodology “Legal Criteria for U.S. Structured Finance.”

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodologies are Rating U.S. Structured Finance Transactions and Rating U.S. Credit Card Asset-Backed Securities, which can be found on dbrs.com under Methodologies.

The rated entity or its related entities did participate in the rating process. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.