Lend Academy Network Forum

Lending Club Discussion => General Lending Club Discussion => Topic started by: ibonobos on July 03, 2015, 05:22:21 PM

Title: Sudden drop in Lending Club loan count on July 1
Post by: ibonobos on July 03, 2015, 05:22:21 PM
At 5:30 AM July 1, 2015 Lending Club had 4215 loans available for investment.
At 9:30 AM July, 1 2015 Lending Club had 2458 loans available for investment.
At 9:00 PM July, 1 2015 Lending Club had only 715 loans left.
Any ideas? Keep in mind on a good day perhaps 200 loans are filled and removed from listing.
Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: lascott on July 03, 2015, 10:27:14 PM
A few threads about this already.
Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: ibonobos on July 04, 2015, 07:04:57 AM
@lascott  Where would one find these threads?
Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: Lovinglifestyle on July 04, 2015, 07:47:18 AM
Here's one:  http://www.lendacademy.com/forum/index.php?topic=3233.0

And another:  http://www.lendacademy.com/forum/index.php?topic=3283.0
Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: ibonobos on July 04, 2015, 08:31:12 AM
Thanks for the links. What concerns me is not a question of loans not issuing but of loans disappearing from the board in great numbers as happened four days ago on July 1. Did anyone else witness this?
Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: Lovinglifestyle on July 04, 2015, 10:11:23 AM
Yes, a lot of people noticed.  Here's more, page 4:  http://www.lendacademy.com/forum/index.php?topic=3272.45

Rawraw posted a link I can't find right now.  It shows quantities and times of release, I think.  It was a good chart--darn.   

In general, there weren't enough buyers for a couple of days and then things went back to normal because LC arranges things that way according to demand and how many loans are allocated to whole or fractional.

That was probably the biggest fluctuation ever!
Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: lascott on July 04, 2015, 10:50:37 AM
Yes, a lot of people noticed.  Here's more, page 4:  http://www.lendacademy.com/forum/index.php?topic=3272.45

Rawraw posted a link I can't find right now.  It shows quantities and times of release, I think.  It was a good chart--darn.   

In general, there weren't enough buyers for a couple of days and then things went back to normal because LC arranges things that way according to demand and how many loans are allocated to whole or fractional.

That was probably the biggest fluctuation ever!
Thinking of my graphs in this thread?
http://www.lendacademy.com/forum/index.php?topic=3272.msg29510#msg29510
Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: Lovinglifestyle on July 04, 2015, 11:06:29 AM
f
Yes, a lot of people noticed.  Here's more, page 4:  http://www.lendacademy.com/forum/index.php?topic=3272.45

Rawraw posted a link I can't find right now.  It shows quantities and times of release, I think.  It was a good chart--darn.   

In general, there weren't enough buyers for a couple of days and then things went back to normal because LC arranges things that way according to demand and how many loans are allocated to whole or fractional.

That was probably the biggest fluctuation ever!
Thinking of my graphs in this thread?
http://www.lendacademy.com/forum/index.php?topic=3272.msg29510#msg29510

Yes, that's what I meant by "page 4" of that thread.  Thank you for posting that!  But I also was thinking of a tab I'd saved for days, and somehow closed it.  Pretty sure I'd found it myself from the lc address on it in the other posted link (rawraw?),  but now no roads lead to Rome.  Can't even get it in my History.  It had exact release times and options such the hour, day,, week, month or whatever.  Think it had a jagged black line instead of colors.  Hours across the bottom and # of notes released at that time up the left side. 
Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: Lovinglifestyle on July 04, 2015, 11:27:35 AM
ok, thanks to my fuzzy mind, this is what I couldn't find.  It's also from you, lascott, at the bottom of page 1 in "Weird Goings On at LC".  Thank you for that.  I had never navigated to it before your post.  It isn't that hard to find for one who is looking for it on PeerCube instead of on the LC site!

https://www.peercube.com/histperf/available_loans/lc

f
Yes, a lot of people noticed.  Here's more, page 4:  http://www.lendacademy.com/forum/index.php?topic=3272.45

Rawraw posted a link I can't find right now.  It shows quantities and times of release, I think.  It was a good chart--darn.   

In general, there weren't enough buyers for a couple of days and then things went back to normal because LC arranges things that way according to demand and how many loans are allocated to whole or fractional.

That was probably the biggest fluctuation ever!
Thinking of my graphs in this thread?
http://www.lendacademy.com/forum/index.php?topic=3272.msg29510#msg29510

Yes, that's what I meant by "page 4" of that thread.  Thank you for posting that!  But I also was thinking of a tab I'd saved for days, and somehow closed it.  Pretty sure I'd found it myself from the lc address on it in the other posted link (rawraw?),  but now no roads lead to Rome.  Can't even get it in my History.  It had exact release times and options such the hour, day,, week, month or whatever.  Think it had a jagged black line instead of colors.  Hours across the bottom and # of notes released at that time up the left side. 
Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: ibonobos on July 04, 2015, 12:09:20 PM
I am troubled by the idea that LC overextended itself and reacted badly. How does Lending Club go from 5000+ loans two weeks ago down  to 6 or 7 hundred today? If they hit the panic button and simply pulled the loans, what happens to investors who had money committed to the pulled loans and all those individuals hoping to have their loans filled?
Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: edward on July 04, 2015, 12:29:00 PM
I can't find the thread, but one poster contacted LC and they said they had problems with placing the loans on the "whole loan" platform, so for a few days until they got that resolved, they had to post all the notes on the "fractional" platform.
Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: lascott on July 04, 2015, 12:31:06 PM
I am troubled by the idea that LC overextended itself and reacted badly. How does Lending Club go from 5000+ loans two weeks ago down  to 6 or 7 hundred today? If they hit the panic button and simply pulled the loans, what happens to investors who had money committed to the pulled loans and all those individuals hoping to have their loans filled?
Loans are still getting filled at the same rate AFAIK. Did you read this entire thread?  Several long time posters provided various opinions.
Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: ibonobos on July 04, 2015, 01:48:05 PM
I am a newbie to this forum. That said, I have been with LC for five years and have made over twenty thousand loans from two different accounts. I pay close attention.  Something does not seem right with LC recently and I hope others will take a closer look as I have done.
Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: lascott on July 04, 2015, 01:54:19 PM
I am a newbie to this forum. That said, I have been with LC for five years and have made over twenty thousand loans from two different accounts. I pay close attention.  Something does not seem right with LC recently and I hope others will take a closer look as I have done.
Thanks for that perspective. Your first post did not appear like you did any research at all first before just posting. You didn't reference that you did or point to any threads that you looked at. Just an impression of how you came off to me.

Still your LC experience is primarily with the pre-IPO LC. We are only on the 2nd quarter with the post-IPO LC so I think things are different because of that.  As well they have a lot of new employees, lot of new borrowers from different sources, lot of pressure from institutional investors, etc, etc, etc. LOT has changed in the just the past 1.5 years that I've seen. LOTs!

The post about most going to fract then most going to whole were interesting. And post about how LC use to fund loans that weren't fully funded. Next weeks should be interesting and things may settle back down.

I can't find the thread, but one poster contacted LC and they said they had problems with placing the loans on the "whole loan" platform, so for a few days until they got that resolved, they had to post all the notes on the "fractional" platform.
This thread. http://www.lendacademy.com/forum/index.php?topic=3286.0
You'd think a "large" company would not have these issue. Still a lot of growing going on apparently.
I'm sure everytime there is a "major" problem they fix it and do post-mortem to determine how to avoid it again. I hope!
Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: nonattender on July 04, 2015, 05:25:44 PM
I am troubled by the idea that LC overextended itself and reacted badly. How does Lending Club go from 5000+ loans two weeks ago down  to 6 or 7 hundred today?

By making a call or two and having one of the hundreds of institutions dying to deploy capital into these notes send over ~$80 million into the fractional market.  I fail to see how this can be seen as a sign of distress, but, frankly, I don't think most people, here, understand the scale at which LendingClub operates these days.  I saw some guy post and say "Well, if they'd have opened TX and AZ sooner, I know at least 5 friends who would have put in $50k each - that's $250k!" and I'm sitting here thinking, does this guy have any idea what "billions" means?  I don't think the average forum/retail investor really have a clue at the staggering amount of loans LC funds per day, week, quarter, yr - many of them don't even seem to realize that the fractional note market is just the tip of the iceberg when it comes to total loan volume.  There are institutions that eat up dougle-digit millions per week and most of you guys don't see it.

*shrug*

Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: lascott on July 04, 2015, 05:46:00 PM
Funny point. But my LC investment is a lot to little ole' me in my little world! (And when I say me I really was talking about myself.)

Via: https://www.nsrplatform.com/#!/

Graphic: http://i.imgur.com/Y1pwkZR.png
(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Fi.imgur.com%2FY1pwkZR.png&hash=8a10a291382701ed5e5205820748be71)

[update]Another source that has the same number for verification.

Via: https://www.lendingclub.com/info/demand-and-credit-profile.action
Graphic: http://i.imgur.com/4JlHJnS.png
(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Fi.imgur.com%2F4JlHJnS.png&hash=b7b2a38031d9b516b3968a1ea75d70d9)
Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: nonattender on July 04, 2015, 05:58:22 PM
Here's another funny point:

So, let's take Avant for instance...  You know what Avant does on the back end?  It AUCTIONS loan participation to investors.  So, instead of charging borrowers a 5% origination fee or whatever, it holds YIELD AUCTIONS (reverse dutch) for the investors and pockets spreads - can you imagine what a thing like that would do for LC, given the scale it has?  Now, that's not to say that investors (even "institutional") are rational and won't bid the spreads down too far, which is, I believe, what's been happening over there (combined with mispricing, by Avant, on loans with FICOs going down to like 560 - which, btw, they just raised to 600 a week or so ago)...  But, imagine, just for fun, if LendingClub did something only very tiny and incremental like cranking the servicing fee on BILLIONS of dollars by just, say, ~50-100 bip.

The investor market wouldn't blink and LC, through very tiny adjustments at scale, would stand to reap massive windfalls on $B's of AUM.

That's not to say I have any knowledge that they're going to do that - I think that's a ways off - but the potential is always there to crank up profitability, through extremely small tweaks to various fee structure inputs, which, at scale, would yield them massive $'s.

*mega-shrug*
Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: Fred93 on July 04, 2015, 06:06:48 PM
The sudden increase to 5000 loans in inventory on the fractional market in late June was an accident.  They spilled too many loans into the fractional market, and raised the inventory too high.  After that happened, LC began sending 90% of loans to the whole loan market.  I assume they did this to lower the fractional loan inventory to a more reasonable level.

July 1,2,3 LC put out 1000 listings every feeding time, ie 4000 listings/day.

Note that was not 1023 one time and 927 the next, etc, but exactly 1000 loans each feeding time.  The only way that could possibly happen is if they had a huge supply, and were metering them out.

This is evidence of great supply.  It is astonishing to me that people read these facts and come up with theories that there is some crisis in supply.  I say nonsense, there is amazing supply.

By the way, suppose about 50% of those listings become loans.  (I don't remember the exact historical number, but its close.)  4000/day x 50% x say 350 days/year = 700,000 loans/year.  (yipes, quite a lot eh?)

700,000 loans/year x $15,000/loan = $10.5 Billion / year

That's huge.  Would be out of line with LC's carefully controlled growth of "only" approximately doubling every year.  For this reason I believe this huge supply is a transient of some sort.

In any case, there is no crisis of supply.
Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: nonattender on July 04, 2015, 07:43:46 PM
By the way, suppose about 50% of those listings become loans.  (I don't remember the exact historical number, but its close.)  4000/day x 50% x say 350 days/year = 700,000 loans/year.  (yipes, quite a lot eh?)

700,000 loans/year x $15,000/loan = $10.5 Billion / year

That's huge.  Would be out of line with LC's carefully controlled growth of "only" approximately doubling every year.  For this reason I believe this huge supply is a transient of some sort.

In any case, there is no crisis of supply.

So, how about some more handwavey math?  I'm so bad at it...

$10.5 Billion / year of originations * 5% orig fee = $525,000,000

Now, it costs something to acquire those loans, do CR pulls, hire people to talk to people etc, so, that's not $525 million of profit...  but,
let's say total acq/servicing cost per loan is $200 (I believe this is high by ~2x, but it probably captures SG&A costs fairly well) per each loan, so, $200 x 700,000 loans = $140,000,000... So, that comes out of the $525mm, leaving $385 million in origination fee revenues...

Add on to that $385 million whatever the hell the math looks like on the per payment 1% servicing fee, as payments roll back in, add in interest on $10.5 billion, let's call it $11.5 coming in the next year, knock it down to $11.25 for early defaults (1% fee per payment - so, even if the loans default, the timing of the defaults comes into play), and that's somewhere around 1% of $11.25b/postorig, for year 1.

Which is like $112.5 million... added onto the $385 million of orig fees... so, we're at $497.5 million dollars... after acq, servicing, labor...

Now, 370 million shares are floating... so...  $497.5mm in revenues looks like an EPS of $1.344... and cash on hand of around $850mm, post-ipo...  Of course, they're busy building new channels, developing new products, staffing up, stealing smart/expensive people, etc.

So, hell, let's knock another $100mm off, just for fun, and call it $397.5mm...  / 370 million shares outstanding to make things fit better.

And, while I'm waving my hands, let's go out to year 2, where, if things progress as they have been, and volume just merely doubles...

Not only does it not just go to $2/sh EPS, the 1% servicing fee is running cumulatively, AUM-like, for ~3 yr period, so, it's more than 2x, as they're not entirely dependent on the origination fees to build revenue growth...  they actually participate in their portfolio growth - via the servicing fee attached to each loan/note...

Am I doing this wrong?  I'm so, so bad at math... ;)

ETA:  Oops, my 5% orig fee assumption is high...  All those super-primes pay very little..  Nevermind, this business sucks, "SELL, SELL!"

*giggle*
Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: Fred93 on July 05, 2015, 03:09:15 PM
Well, the 1000 loan feeding times have come to an end.  Guess you won't get rich immediately owning LC stock  ;D
Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: nonattender on July 05, 2015, 04:12:12 PM
Well, the 1000 loan feeding times have come to an end.  Guess you won't get rich immediately owning LC stock  ;D

I don't do the daily weather - but I do keep some umbrellas upside down... ;)

https://www.youtube.com/watch?v=jwN6xyfUwtM

Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: ibonobos on July 06, 2015, 04:36:02 PM
Anyone notice another erasure of loans today? All the 2day,3day,4dayetc vanished.
Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: lascott on July 06, 2015, 04:56:52 PM
Anyone notice another erasure of loans today? All the 2day,3day,4dayetc vanished.
Didn't notice which ones but here is BlueVestment's 24hr chart.

http://i.imgur.com/15smh2p.png
(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Fi.imgur.com%2F15smh2p.png&hash=b5964b52cc72bc5338c021ac321da806)
Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: Fred on July 07, 2015, 03:49:29 AM
So, how about some more handwavey math?  I'm so bad at it...

$10.5 Billion / year of originations * 5% orig fee = $525,000,000

That's a little off.

LC Q1/2015 revenue (origination + servicing + ....) was only $81MM, with net income of -$6.37MM (a loss).

Source: https://www.google.com/finance?q=NYSE%3ALC&fstype=ii

Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: nonattender on July 07, 2015, 10:14:06 AM
So, how about some more handwavey math?  I'm so bad at it...

$10.5 Billion / year of originations * 5% orig fee = $525,000,000

That's a little off.

LC Q1/2015 revenue (origination + servicing + ....) was only $81MM, with net income of -$6.37MM (a loss).

Source: https://www.google.com/finance?q=NYSE%3ALC&fstype=ii

Really?  Thanks for letting me know.  Zero, huh?  Well, I better go...

Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: Rob L on July 07, 2015, 06:45:10 PM
Source: https://www.google.com/finance?q=NYSE%3ALC&fstype=ii

Someone help me out with balance sheets 101 (see above link, quarterly balance sheet tab).
Total assets and total liabilities are totally out of whack. Neither simply adds up.
My guess is that the entry: Other Current Assets, Total (shown as -every quarter) is wrong.
Same thing for Other Current Liabilities (not zero but way low).
And I was simply looking to find where the borrower loans and investor notes appear.
Probably should be in these entries, but are they are not there.
Hope the LC IRS filings are more accurate than the Google report, or I'm missing something very basic.
It happens.
Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: Fred93 on July 07, 2015, 07:02:15 PM
Source: https://www.google.com/finance?q=NYSE%3ALC&fstype=ii
Someone help me out with balance sheets 101 (see above link, quarterly balance sheet tab).
Total assets and total liabilities are totally out of whack. Neither simply adds up.

Google has left out an important line.  Suggest you read the balance sheet in the most recent quarterly report (SEC 10Q filing). 

http://www.sec.gov/Archives/edgar/data/1409970/000162828015003709/lc-2015xq1.htm
Balance sheet is on page 2.
Title: Re: Sudden drop in Lending Club loan count on July 1
Post by: rawraw on July 07, 2015, 07:58:52 PM
LC's balance sheet looks really screwy due to the structure