Author Topic: Return by Grade Trends  (Read 4256 times)

Randawl

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Return by Grade Trends
« on: March 17, 2013, 02:47:31 PM »
I've been observing the new data and graphs LC provides every month on their statistics page.
Earlier this month I saw that the return by grade appeared to be quite lower in most grades than the image in my head from the previous month.  I hadn't been saving each one every month but I was able to find February's.

From inception to 2/07/2013



From inception to 3/05/2013


It is expected that these numbers will fluctuate each month but this is the first one that I recall that has negative changes across the board.  Since LC includes loans that are 3 months and older in their NAR calculation, this is the first data set from them that includes originations from the new underwriting standards from December.

Does anyone have older months from LC to compare?

Update for April:

From inception to 4/08/2013



From inception to 5/13/2013


From inception to 6/11/2013

« Last Edit: June 19, 2013, 04:30:28 PM by Randawl »

mitgib

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Re: Return by Grade Trends
« Reply #1 on: March 17, 2013, 03:10:14 PM »
Just whip out the wayback machine

http://web.archive.org/web/*/https://www.lendingclub.com/info/statistics.action

yojoakak

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Re: Return by Grade Trends
« Reply #2 on: March 17, 2013, 03:30:40 PM »
Just whip out the wayback machine

http://web.archive.org/web/*/https://www.lendingclub.com/info/statistics.action

I'm guessing you didn't actually try that.

Randawl

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Re: Return by Grade Trends
« Reply #3 on: April 22, 2013, 04:58:09 PM »
Updated for April.  Returns across all credit grades continue to decline.

berniemadeoff

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Re: Return by Grade Trends
« Reply #4 on: April 22, 2013, 06:01:06 PM »
Assuming this data is dollar weighted, the fact that overall originations have spiked over the recent year means that we probably don't see the true performance of older vintage loans in these charts.  I think the only accurate way to measure performance over time is to take a particular vintage and track how IRRs change as payments are made.  Similarly, I only look at my seasoned loan performance (10+mos old) because we all know that losses spike up 5-10mo after issuance. Looking at this performance data for any loans made after May/June 2012 is pure folly.

Randawl

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Re: Return by Grade Trends
« Reply #5 on: April 22, 2013, 06:34:39 PM »
Assuming this data is dollar weighted, the fact that overall originations have spiked over the recent year means that we probably don't see the true performance of older vintage loans in these charts. 

Indeed.

Quote
I think the only accurate way to measure performance over time is to take a particular vintage and track how IRRs change as payments are made. 

I agree.  I track mine using xirr as well.

Quote
because we all know that losses spike up 5-10mo after issuance. Looking at this performance data for any loans made after May/June 2012 is pure folly.

Knowing this, one would expect the LC's numbers on those charts to increase in these periods of rapid growth because they are utilizing lightly seasoned data (3+ months).  Instead, we see them declining despite the continuous rise in rate of originations.  I suspect this is because the defaults/charge-offs/losses are catching up and even surpassing what would normally be offset by the data from young loans.

Fred

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Re: Return by Grade Trends
« Reply #6 on: April 22, 2013, 07:14:48 PM »
On page 18 of LC Form-10K, you can see the graph of dollar weighted average interest rate for Member Loans originated from inception to December 31, 2012, by grade.

https://www.lendingclub.com/fileDownload.action?file=10-K-DEC-31-2012.pdf&type=sf10k

Randawl

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Re: Return by Grade Trends
« Reply #7 on: May 18, 2013, 08:08:05 PM »
Updated for May.  Returns continue to drop across the board despite inclusion of young and immature loans during a period of rapid growth.  How low will it go?  When will it stabilize?  On these charts LC provides, it will not stabilize until issuance rates stabilize and do so for an 36+ months.

This is not unexpected, but it will be interesting to continue to watch the trend.

On page 18 of LC Form-10K, you can see the graph of dollar weighted average interest rate for Member Loans originated from inception to December 31, 2012, by grade.

https://www.lendingclub.com/fileDownload.action?file=10-K-DEC-31-2012.pdf&type=sf10k

The dollar weighted average interest rate by grade listed there in the 10-K is quite different than the return by grade that LC provides monthly and that is being referred to here.   ;)




Edit:  Also note the change to what used to be recoveries by status on their performance page:






Average six month recovery rates by loan status for the months of August 2012, September 2012, and October 2012. For example, 19% of loans in "Grace Period" status as of August 2012, September 2012, or October 2012, had been charged off when observed six months later (as of January 2013, February 2013, and March 2013 respectively).

They now display percent of loans charged off the following 6 months by status.  This is useful for assessing value of late notes when selling on Folio.  It is also helpful in more accurately assessing loss % when attempting to predict ROI of a portfolio that contains late notes.
« Last Edit: May 18, 2013, 08:18:29 PM by Randawl »

rawraw

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Re: Return by Grade Trends
« Reply #8 on: May 18, 2013, 09:36:37 PM »
On their stats page, it shows that the composition of loans has changed over time (seems like lower grade notes are more common).  But interesting nonetheless