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KBRA Assigns Preliminary Ratings to Notes Issued by Flagship Credit Auto Trust 2018-4

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to five classes of notes issued by Flagship Credit Auto Trust 2018-4 (“FCAT 2018-4”), an auto loan ABS transaction.

As of the October 31, 2018 initial cutoff date, FCAT 2018-4 contained $239.97 million of receivables originated from both the Flagship Credit Acceptance (FCA) and CarFinance Capital LLC (CarFinance) branded origination channels and will contain $299.96 million after completion of the pre-funding period. The transaction includes a pre-funding feature that allows up to 20% of the collateral pool to be funded until two months after closing. The preliminary ratings reflect the initial credit enhancement levels of 37.40% for the Class A notes, 28.90% for the Class B notes, 17.65% for the Class C notes, 8.55% for the Class D notes and 1.85% for the Class E notes. Credit enhancement consists of over-collateralization, the subordination of junior notes, cash reserve account and excess spread. The transaction is the fourth term ABS securitization in 2018 for the Company and its twenty-fifth securitization overall.

KBRA applied its Global Auto Loan ABS methodology as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure and Flagship’s historical static pool data. KBRA also conducted an operational assessment on the originator and servicer, as well as a review of the transaction’s legal structure and transaction documents. KBRA will also review the operative agreements and legal opinions for the transaction prior to closing.

Preliminary Ratings Assigned: Flagship Credit Auto Trust 2018-4

ClassPreliminary RatingInitial Principal Balance
AAAA (sf)$190,780,000
BAA (sf)$25,480,000
CA (sf)$33,750,000
DBBB (sf)$27,300,000
EBB (sf)$20,090,000

About KBRA and KBRA Europe

KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus, is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Garage Youth Center Raises More Than $20,000 at Spring Fling

By Digital First Media

On May 20, supporters of The Garage Community and Youth Center gathered at Hartefeld National for a Spring Fling and $10,000 Raffle sponsored by Flagship Credit Acceptance.

The event and raffle combined generated over $20,500 for The Garage. The Garage plans to use the funds for after school programming, which serves over 500 students and includes homework help and tutoring, a daily academic STEAM (science, technology, engineering, art and math) activity, mentor program, boys and girls programs, community service opportunities, Nutrition Kitchen, career exploration, post- secondary counseling, and internships.

“We could not do the essential work that we do with at-risk teens without the support of volunteers and financial partners like Flagship, who give selflessly of their time and money to invest in our youth,” said Kristin Proto, Executive Director of The Garage.

The Spring Fling included games for kids, a bouncy house and vendors, like Cristina Tlaseca from Alliance Realty & Associates, who is an alum of The Garage’s program.

The Garage opened up opportunities for me,” said Tlaseca. “As a minority, I was faced with restricted opportunities, but The Garage gave me these great opportunities I never thought were possible. It was a safe haven. I wanted to come out and support this event because The Garage was so beneficial to me. I want to make sure other kids have that same opportunity.”

A Garage student, Evany Herrera, 17, was selected to pull the raffle’s winning tickets. “Thank you, Flagship, for helping The Garage. I love coming here because it is a safe space and I feel welcomed,” Herrera said.

Janet Syphan, HR Communications Specialist at Flagship won the first prize of $10,000. When asked how she would spend the prize, Syphan said “I’m not sure yet, but I know I’m donating the first thousand to The Garage. They do such incredible work.” The second prize of $1,500 went to Jeffrey Perez, Loan Servicing Representative at Flagship. Mary Teresa Maule Alft, from Lincoln University, PA, won the $500 third place prize.

“Events like this exemplify Flagship’s emphasis on serving the communities our customers live and work in,” said Chris Keiser, Flagship Executive Vice President and General Counsel. “We are so happy to be able to contribute to The Garage’s mission and we’re looking forward to our continued partnership and making this an annual event.”

For the past 17 years, The Garage Community and Youth Center has been a key part of the community, providing resources and sense of belonging to area youth who are in need. Through tutoring, mentoring, computer lab access, recreation and special programs, some of our community’s most “at-risk” middle and high school students are finding the necessary support to reach their full potential.

The Garage Partners with Flagship Credit Acceptance

By Richard L. Gaw
Chester County Press Staff Writer

Like most people who eventually become dedicated partners with The Garage Community and Youth Centers, Flagship Credit Acceptance executive vice president and general counsel Chris Keiser was introduced to the good work of the organization by friends of his from Chatham Financial, who was the founding corporation for The Garage when it was formed 17 years ago.

“They invited me to the holiday auction that the Garage hosts every year,” Keiser said. “Immediately, I found a synergy with some things in my past, through my support of Big Brother-Big Sister, Habitat for Humanity, and spending time in Latin America, speaking Spanish.”

The partnership between Flagship and The Garage may have taken root the day Keiser was first introduced to The Garage, but it was solidified through the infectious link Keiser saw between The Garage and its founding corporation.

“I remember seeing the folks from Chatham Financial working really hard for kids who may not have had the same opportunities that a lot of other kids do, to try to help them succeed academically, and in their post-academic careers,” he said.

“At the time, as I was starting to gain momentum with Flagship in 2014, the year it formed, our management team sat down and asked what it needed to do, and among those things was to create a community outreach program.”

Keiser proposed that the new company work with The Garage and now, several years later, it’s a firm commitment of engagement and volunteerism that will celebrate another milestone on May 20, when Flagship hosts a free, family-friendly Spring Fling at Hartefeld National Golf Club in Avondale. As part of the event, which will include vendors, food trucks, bouncy houses, games, putt-putt golf and face-painting, one lucky winner will be selected to receive a $10,000 grand prize from a raffle, that will also provide ticket holders a chance to win a second and third prize of $1,500 and $500.

Proceeds from the raffle and event will go to The Garage.

Headquartered in Chadds Ford, Flagship Credit Acceptance helps credit-challenged auto shoppers secure financing through partnerships with primarily franchised auto dealers and through its direct lending platform, CarFinance.com. It currently purchases indirect auto contracts from a nationwide network of over 9,400 dealers and originates direct to consumers in 46 states.

The company’s partnership with The Garage extends much farther than the upcoming raffle and community event. Flagship began offering volunteer time off (VTO) for its associates to work at The Garage’s functions in January 2016, which enabled its employees to get involved with The Garage’s annual holiday auction.

“I know that our Flagship volunteers really like The Garage,” said Janet Syphan, who helped coordinate the Spring Fling benefit with The Garage. “They feel like it’s a very worthwhile way to give back to the community that we serve. By offering each employee 16 hours off per year to provide assistance to The Garage, it allows them to take the time to give back to the community.”

Kristin Proto, The Garage’s executive director, sees the impact that Flagship employees have on young people who visit The Garage.

“I’ve heard Flagship employees say, ‘I remember when my kids were in middle and high school, and how hard it was for me as a parent,’” Proto said. “Having a teenager is just hard, regardless of what your background is, but having a teenager when you’re lacking in other resources compounds that. Flagship helps bridge that gap for so many of our kids.”

For Keiser, Flagship’s work with The Garage dovetails with the mission of the company, which is to provide not only resources and opportunities to purchase vehicles, but to educate consumers about the loan process. It’s an education he wants to establish at The Garage, in the form of non-intensive workshops taught by Flagship employees about money management.

“One of the initiatives I wanted to take hold is financial literacy for kids,” he said. “One of my frustrations is seeing people come out of high school with little knowledge of managing a budget, or knowing the importance of a credit score and paying bills on time. A program of this kind will allow Flagship to teach future consumers, early.”

“I think the door is wide open to continue our partnership with Flagship,” she added. “There are so many unique things that we can do now that we’ve spent the time to grow the relationship. It’s more than just writing a check with a logo on it.

“This is a vested effort to get even more Flagship employees to commit their time to us. It’s the chance to share information about The Garage, company wide, to hundreds of employees, to get more people in the door to help students and continue to spread the work of what we do in the community to others.”

The $10,000 winner will be chosen by one of the teens from The Garage at the event at 4 p.m. Individuals do not need to be present to win, and can purchase tickets online athttps://Go.RallyUp.com/Garage-Spring-Fling. Only 1,000 tickets will be sold, increasing participants’ odds of winning. Tickets for food and games can be purchased at the door.

To contact Staff Writer Richard L. Gaw, email rgaw@chestercounty.com.

Originally published in Chester County Press, online edition.

KBRA Assigns Preliminary Ratings to Notes Issued by Flagship Credit Auto Trust 2018-1

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to five classes of notes issued by Flagship Credit Auto Trust 2018-1 (“FCAT 2018-1”), an auto loan ABS transaction.

As of the January 11, 2018, statistical calculation date, FCAT 2018-1 contains $121.7 million of receivables and will contain approximately $164.6 million of receivables at closing out of an expected collateral balance of approximately $204.6 million after completion of the prefunding period. The transaction includes a prefunding feature that allows up to $40 million or 20% of the collateral pool to be funded after closing until April 20, 2018. The preliminary ratings reflect the initial credit enhancement levels of 42.01% for the Class A notes, 31.01% for the Class B notes, 19.01% for the Class C notes, 10.00% for the Class D notes and 4.25% for the Class E notes. Credit enhancement consists of overcollateralization, subordination of junior notes, cash reserve account and excess spread. The transaction is the first term ABS securitization in 2018 for the Company and its twenty second securitization overall.

This transaction includes loans originated from both the Flagship Credit Acceptance (FCA) and CarFinance Capital LLC (CarFinance) branded origination channels.

KBRA applied its Global Auto Loan ABS methodology as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure and Flagship’s historical static pool data. KBRA also conducted an operational assessment on the originator and servicer, as well as a review of the transaction’s legal structure and transaction documents. KBRA will also review the operative agreements and legal opinions for the transaction prior to closing.

For complete details on the analysis, please see KBRA’s Pre-Sale Report, Flagship Credit Auto Trust 2018-1, which was published today at www.kbra.com.

Preliminary Ratings Assigned: Flagship Credit Auto Trust 2018-1

ClassPreliminary RatingInitial Principal Balance
AAAA (sf)$122,750,000
BAA (sf)$22,500,000
CA (sf)$24,560,000
DBBB (sf)$18,420,000
EBB (sf)$11,770,000

Representations & Warranties Disclosure

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report available online.

Related Publications (available at www.kbra.com):

Flagship Credit Acceptance Issues $263.1 Million ABS

Flagship Credit Acceptance issued its fourth securitization of 2017, this time to the tune of $263.1 million, according to a pre-sale report by Kroll Bond Rating Agency.

Overall, the transaction is Flagship’s 21st securitization in its seven-year history. The ABS is also the 10th transaction that includes loans originated by both Flagship Credit Acceptance and CarFinance Capital LLC.

The average Fico in the pool is 593, the lowest of the four securitizations so far this year (which ranged from 594 to 597). The weighted average original loan term is 71 months, with an average loan balance of $20,556. Additionally, the pool consists of 34.3% new vehicles and 65.7% used.

Additionally, Chadds Ford, Pa.-based Flagship started to test out originating a small portion thin-file loans again — but to lower-risk borrowers this time — after the company halted those originations as one part of its strategy to lower losses, according to a pre-sale report. However, the thin-file loans make up less than 1% of originations, the company told Auto Finance News.

Flagship experienced an increase in losses in 2015 and 2016, due — in part — to an increase in full balance charge-offs related to an increase in skip accounts, according to the report.

In response to the increase in losses, Flagship made several changes to its underwriting including increased pricing on loans originated, reduced originations in the lowest quality indirect and direct tiers, and discontinued the military lending program. As a result, the company has experienced lower originations throughout 2017 compared to 2016.

Flagship maintains a separate loan origination system for its direct program. Direct loans are originated through CarFinance.com made via direct marketing to consumers and web aggregators, with 16% of loans representing new purchases and 84% representing refinancings as of Sept. 30.

KBRA Assigns Preliminary Ratings to Notes Issued by Flagship Credit Auto Trust 2017-4

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to five classes of notes issued by Flagship Credit Auto Trust 2017-4 (FCAT 2017-4), an auto loan ABS transaction.

FCAT 2017-4 is collateralized by approximately $218.1 million of subprime auto loan receivables as of October 31, 2017 out of an expected collateral balance of approximately $272.6 million after completion of the prefunding period. The transaction includes a prefunding feature that allows up to 20% of the collateral pool to be funded after closing. The prefunding period is two months but the prefunding is expected to be completed by the end of 2017 based on current origination volume. The preliminary ratings reflect the initial credit enhancement levels of 42.00% for the Class A notes, 31.75% for the Class B notes, 20.25% for the Class C notes, 11.00% for the Class D notes, and 5.50% for the Class E notes. Credit enhancement consists of overcollateralization, subordination of junior notes, cash reserves and excess spread. This transaction is Flagship’s fourth securitization in 2017 and its twenty first securitization overall.

This transaction includes loans originated from both the Flagship Credit Acceptance (FCA) and CarFinance Capital LLC (CarFinance) branded origination channels. On January 1, 2015, Perella Weinberg Partners’ Asset Based Value Strategy (PWP) closed a merger of its two auto loan platforms, FCA and CarFinance. FCA’s management team, led by Mike Ritter, has combined the FCA and CarFinance operations over the past two years following the merger.

KBRA applied its Auto Loan ABS methodology as part of its analysis of the transaction’s underlying collateral pool, the proposed capital structure and Flagship’s historical static pool data. KBRA also conducted an operational assessment on the originator and servicer, as well as a review of the transaction’s legal structure and transaction documents. KBRA will also review the operative agreements and legal opinions for the transaction prior to closing.

For complete details on the analysis, please see KBRA’s Pre-Sale Report, Flagship Credit Auto Trust 2017-4 Pre-Sale Report, which was published today at www.kbra.com.

Preliminary Ratings Assigned: Flagship Credit Auto Trust 2017-4

ClassPreliminary RatingExpected Initial Principal Balance
AAAA (sf)$163,570,000
BAA (sf)$27,940,000
CA (sf)$31,360,000
DBBB (sf)$25,210,000
EBB (sf)$15,000,000

Representations & Warranties Disclosure

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report entitled Flagship Credit Auto Trust 2017-4 Representations and Warranties Disclosure.

Related Publications (available at www.kbra.com):

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