Oportun hits $954M total warehouse capacity

Oportun, a financial services company listed on Nasdaq (OPRT), has secured a significant $187.5 million committed warehouse facility, bringing its total warehouse capacity to $954 million. 

This facility includes a two-year revolving period and is backed by Oportun's unsecured and secured personal loan originations.

The financing structure involves Natixis Corporate & Investment Banking as the senior lender and Neuberger Berman, representing client funds, as the mezzanine lender.

According to Paul Appleton, Oportun's Interim Chief Financial Officer, this funding will support the company's responsible growth strategy and diversify its capital sources.

These sources include warehouse facilities, asset-backed securitizations, corporate-level debt financing, and whole loan sales.

Funding Structure & Terms

Interest rates for this facility are unspecified, but previous facilities used SOFR-based rates with spreads.

Oportun's previous $245 million facility from August 2024 had a three-year term with an interest rate of Term SOFR plus a 3.08% spread, indicating competitive pricing with market rates for similar finance deals.

One innovative aspect of Oportun's financing strategy is its ability to diversify its capital sources by engaging multiple lenders across different facilities. For example, the recent facility involves Natixis and Neuberger Berman, while previous facilities included Deutsche Bank and Jefferies. This diversification helps reduce dependence on any single lender and can lead to better pricing and terms.

Current Loan Performance Metrics

As of the fourth quarter of 2024, Oportun's loan performance metrics include:

• 30+ Day Delinquency Rate: 4.8%, down from 5.9% in the prior-year quarter.

• Annualized Net Charge-Off Rate: 11.7%, the lowest since the third quarter of 2022, and down from 12.3% in the prior-year quarter.

• Portfolio Yield: 34.2%, an increase of 155 basis points compared to the prior-year quarter.

Origination Volumes and Portfolio Quality Trends

Over the past year, Oportun's origination volumes have shown mixed trends:

• Aggregate Originations: Increased by 19% year-over-year in the fourth quarter to $522 million, but decreased by 2% for the full year 2024 compared to 2023.

• Portfolio Quality: Improved with lower delinquency and charge-off rates, reflecting tighter credit standards and better credit performance.

^{_{Source: investor.oportun.com}}

Collateral Requirements and Triggers

The facility is collateralized by Oportun's unsecured and secured personal loan originations. While specific triggers for this facility are not detailed, typical warehouse facilities include delinquency and liquidity triggers that can adjust the advance rate. For instance, the $245 million facility had an advance rate of 95%, subject to reduction to 92% based on certain delinquency and liquidity conditions. These triggers help protect lenders by ensuring that the collateral remains sufficient to cover potential defaults.

Diverse and Flexible Financing Trends

Recent warehouse facilities secured by competitors in the alternative lending space often involve strategic partnerships with diverse lenders. For example, Idea Financial secured a $50 million facility through Performance Trust Capital Partners, leveraging community bank connections to enhance lending capacity. This trend highlights a shift towards more diversified and flexible financing structures, which can offer better terms and increased access to capital compared to traditional bank-dominated models.

This deal highlights the trend of increased funding in alternative lending, as private credit and alternative investments grow due to shifts from traditional banking. With banks retreating from riskier lending, private credit funds and alternative lenders are offering more flexible financing solutions. This trend is expected to continue, with significant growth projected for the global private credit market.

1-Minute Video: Court Case API: Slash Underwriting Risk in Seconds

Court records are a black hole for lending risk

Lawsuits can be a major red flag in loan applications, but they're often buried in court records, making them easy to miss.

Cobalt Intelligence illuminates the unknown with instant access to court cases and contractor licenses in your lending system.

Don't let hidden risk darken your portfolio.

Book a FREE Demo Call

Headlines You Don’t Want to Miss

VIS Capital Venture Expands Lending Capacity to $1 Billion in 2025 Under the Leadership of Gerald Smith

VIS Capital Venture, under the leadership of Gerald Smith, is expanding its lending capacity to $1 billion in 2025, backed by Family Office Capital. This expansion solidifies the firm's position as a premier private lender, offering tailored financing solutions across various asset classes in the U.S. commercial real estate market, including bridge loans and construction financing.

Brookfield Asset Management to buy majority stake in mortgage lender Angel Oak

Brookfield Asset Management has agreed to acquire a majority stake in Angel Oak Companies, a leading mortgage lender and investor managing over $18 billion in assets. This strategic partnership integrates Angel Oak into Brookfield's $317 billion credit business, providing access to Angel Oak's residential mortgage credit strategies while allowing Angel Oak to maintain operational independence under its current leadership. The deal aligns with Brookfield's strategy to expand its credit platform and leverage Angel Oak's expertise in non-agency U.S. residential mortgages, offering significant growth opportunities in underserved borrower segments.

MeridianLink Streamlines Solarity Credit Union’s Mortgage Lending into a Single, Efficient Solution

MeridianLink has successfully implemented its MeridianLink Mortgage solution for Solarity Credit Union, consolidating the credit union's mortgage operations from 13 different systems into a single, efficient platform. This integration has significantly streamlined the lending process, reducing the time from mortgage application to funding from 23 to 20 days and cutting processing time from 21 to 14 days, thereby enhancing operational efficiency and cross-selling capabilities for various financial products.