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