Kensington Blake Capital’s Managing Principal Brian Zwerner been a participant in the marketplace or Peer 2 Peer loan markets now for about 9 months. We have been able to build a portfolio that has an attractive risk/reward profile in the consumer loan space. Against the backdrop of ultra-low rates in government, municipal, and corporate bonds, we believe consumer loans offer exceptional value.

1. Brian Zwerner of Kensington Blake Capital Commentary on Marketplace Loan Quality
May 16, 2015
Kensington Blake Capital’s Managing Principal Brian Zwerner been a participant in the marketplace or
Peer 2 Peer loan markets now for about 9 months. We have been able to build a portfolio that has an
attractive risk/reward profile in the consumer loan space. Against the backdrop of ultra-low rates in
government, municipal, and corporate bonds, we believe consumer loans offer exceptional value.
The largest Peer 2 Peer loan originators are currently Lending Club and Prosper. Bloomberg News
published an article questioning the loan quality of this market. Their main arguments was very high
loan volume growth rates and the presence of securitization to add leverage to the market. While these
factors are worthy of concern, they are not indicators of future default. The attempt to draw a parallel
from this market to the subprime mortgage loan market of 2007 is a stretch in our opinion.
By investing in this marketplace, we have been able to assemble a portfolio that is of acceptable credit
risk. The average consumer FICO score on our portfolio is just under a 700, not really comparable to the
650 score on the typical subprime mortgage. The average borrower in our portfolio has a 20 year credit
history and has been employed for over 11 years. The average debt to income ratio of the borrowers in
our portfolio is around 33%, a manageable level. In addition, these loans pay monthly principal and
interest, with an average life of two-years.
With the Peer 2 Peer loan portfolio described above yielding over 15% per annum, we believe the
reward far outweighs the risks in the current low yield market environment.
Commentary by Brian Zwerner, Managing Principal, Kensington Blake Capital, LLC.
www.kensingtonblakecapital.com
Please see recent article in Bloomberg News on marketplace lenders:
http://www.bloomberg.com/news/articles/2015-05-14/wall-street-loves-peer-to-peer-loans-despite-
concerns-of-a-bubble