According to terms and conditions displayed on the website, the card carries an annual fee of $125 for the first year (and $96 per year thereafter) and a $10 monthly maintenance fee subsequent to the first year after the account's opening. Marketing materials for the Mid America Bank & Trust-issued Matrix MasterCard offer consumers the opportunity to "Get your very own credit card!" The Matrix card, which is intended for those with "less than perfect" credit, pitches an initial credit limit of $500 and initial available credit of $375. "However, the subordination, the excess spread, and the triggers in the priority of payments mitigate this risk." "The charge-offs, if front-loaded, make the bonds weaker," Morningstar said in the presale report. Morningstar also calculated that the amount of excess spread in the deal exceeds 60% per year.
The $40.7 million in class A notes that Morningstar expects to rate at A+ benefit from subordination, overcollateralization and a reserve account. It expects the cumulative charge-off rate on the static pool will range from 45% to 50% of the original pool balance. In its review of Continental Finance's $168.7 million managed portfolio, Morningstar said the charge-off rate through the first nine months of 2016 was 41.7%. The average balance of the underlying accounts is $420 and the weighted-average account age is 2.4 years. Mid America Bank & Trust and Celtic Bank generated 74.9% and 25.1%, respectively, of the loans in the Continental Credit Card ABS 2016-1 static pool, Morningstar reported. The two issuing banks maintain receivables purchase agreements with Continental Finance through which they continually transfer their rights, title and interest in the loans. Morningstar in its presale report said Continental Finance approved more than 2.2 million credit card accounts since March 2006, targeting consumers with sub-700 Vantage scores with a range of fully secured, partially secured and unsecured products marketed by direct mail and the internet. and Salt Lake City-based industrial bank Celtic Bank that have been purchased by a subsidiary of Delaware-based Continental Financial Co. Morningstar Credit Ratings recently issued preliminary ratings on the $64.5 million Continental Credit Card ABS 2016-1 LLC, a securitization with few recent comparables in the nonprime segment of the credit card industry.Ĭontinental Credit Card ABS 2016-1 is backed by a $67.9 million static pool of credit card loans with a weighted-average Vantage score of 624 originated by Dixon, Mo.-based Mid America Bank & Trust Co.
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