We have just wrapped up the shortest month of the year and Lending Club continues on its rapid growth upwards. It issued $120.2 million in new loans – 13 times more loan volume than Prosper who was once again under $10 million in new loans for the month.
Lending Club’s Biggest Monthly Increase Ever
I had a feeling this was going to be a very big month for Lending Club when they started off February with a $20 million day. And sure enough they were able to keep the momentum going throughout the month. With this massive loan volume the number of available loans was down from previous months as loans were being funded in hours (even minutes in some cases) instead of days.
As I reported last month Lending Club broke $100 million in a month for the first time in January, it was $105.1 million to be exact. In February they ended with $120.2 million an increase of more than $15 million, by far their largest monthly increase ever. Not bad for a 28 day month. Average loan size was also at an all time record at $15,894 as more larger loans were approved. Total number of loans issued was 7,561 or 398 loans for each working day in February.
For the first time in many months Lending Club is not ending the month with a glut of loans on their platform. As of this writing there were only 568 loans available for investors. So, I don’t think we will see the huge first day of the month tomorrow as has been typical now for over a year.
Below is Lending Club’s always impressive looking 18-month chart. The black line is the three-month moving average.
The Turnaround at Prosper Has Not Yet Materialized
The new executive team at Prosper took over in late January so it was probably a bit much to expect a sudden increase in volume in February. Although I was expecting the month to be better than what it was. Prosper just wrapped up February with new loan volume of $9 million which was down from $9.8 million in January.
The number of new loans reached an 18-month low with just 966 loans issued. The month would have been worse but for the fact the average loan amount reached an all time high of $9,326. On a personal note my filters didn’t pick up nearly as many loans as usual, particularly the last half of the month, so I invested half my usual amount.
The one piece of good news was that Worth-Blanket2 returned to the platform for the first time since November but they invested just $245,000 making them the number three investor in February behind Index_Plus and Tolerant-Responsibility051 according to Prosper Stats. And digging a little deeper into Worth-Blanket2’s account they have over $600K in pending loans right now so March is looking much better.
This gels with what Prosper said. When I reached out to them for comment today this is what Ron Suber, Global Head of Institutional Sales, said:
Considerable time in February was spent meeting with the institutional and retail investor communities and listening to their needs. We are responding to those needs with a larger inventory of borrowers based on what our investors want. March and April are the months to watch for growth.
The loan inventory is definitely growing with 221 loans available to investors as I write this. So we can expect to see some positive growth out of Prosper in March. I am not sure if we will get a record month like I predicted in January but we should see some decent growth. It will be a very interesting next couple of months at Prosper.
Big, big month from Lending Club; what do you think of their quickly increasing average amount per loan? Just last August they were $12,932 per loan.
It is something to watch but larger loans have performed quite well in the past. It is somewhat counterintuitive but loans above $20,000 outperformed the smaller loan sizes. See this post from a year ago:
https://www.lendacademy.com/three-myths-investors-have-about-p2p-lending/
Great info. I have been busy since being stationed in Korea but now am back in the mix. I have slowly started to ease back into the Prosper market utilizing just the one year loans. But still glad to see the large increase in Lending Club. Hope it continues and will soon lead to an IPO.
Great to have you back Phillip.
I’d be curious to see the average statistics on the the loans that get funded within minutes.
That is not data I have access to. The historical data download file only includes an application date with no information about time the loan took to fund. Maybe one of the stats sites like Nickel Steamroller, Peercube or Interest Radar could work something up but it is not readily available.
“The month would have been worse but for the fact the average loan amount reached an all time high of $9.326.” Ummm…yeah, this is incorrect.
I am not sure what you mean here. I am confident the $9,326 is an all time high for an average loan size for a month at Prosper.
Sorry, I read it as an American would. I forget that other countries use the decimal as the thousands indicator whereas the US uses it as a fractional part.
I stand corrected Roy. I did have the amount in there as $9.326 not $9,326. It has now been fixed.
I am really not surprised with Prosper’s February performance. Fewer loans on the platform met my criteria, too. But it goes beyond that. I am finding that I am having more and more loans just pending for days at a time, even the ones that are in verification stage 3. How do you issue loans if they are stuck pending for days and then don’t issue. So fewer loans meeting my criteria and the ones that do take forever to issue, if they issue at all. Why invest on prosper when the average number of loans on LC’s platform are higher than the total number of loans Prosper issues in a given month. WB2 might have over 600K in pending loans right now, but I’d be surprised if half of that actually issue given what I seem to be encountering personally. Prosper needs to overhaul their verification stage info or ditch it altogether. From an investor’s point of view, I see it as rather useless information that gives me no indication of whether or how long a Note will take to issue. I think the verification stage 3 loans might fund faster, but I don’t see a difference in time frame to where they are actually issued (again, if they are actually issued at all). I think those of us who keep hoping for a better showing from Prosper will continually be disappointed. I really don’t want one company dominating the industry, but the lack of performance from Prosper leads me to believe that the p2p lending industry will be a one company industry or LC and another company – or maybe other companies sometime in the future – that is not Prosper. I believe the new management at Prosper only has a couple more months left to start actually increasing loan volume before investors, like myself, decide to move on. I don’t think I’ve added to my position at Prosper in a year, and I don’t see myself doing so anytime soon.
There is no question Prosper needs to do some improvements in this area. I actually copied your comment in an email to the new operations person at Prosper who is in charge of making things more efficient. We will see if there are improvements soon.
I have concerns about prosper, but I am giving them some time while they transition. It is never as smooth as anyone would like. That said there are a number of issues that have had me concerned over the last 6+ months.
-increase in defaults (especially those that make 1-2 payments). I thought I read they only have one person going after late payments.
-missed paydays. I go 2-3 days sometimes with no payment to my account. I have multiple loans that clear every day (not the end of the world, but shouldn’t this be fairly automated?)
-lack of loans available. I stopped funding my prosper account months ago and my loan funding hasn’t kept up with what is coming in.
I’m getting more cautious with prosper by the day. Kinda a shame as I like their platform.
Jason
I know they had some payment problems due to a software glitch in January, I wasn’t aware it was still happening. And as for your other two points these are major goals of the new team they have stressed to me in many conversations. They are committed to doing a better job at collections and I think we will see some more loans on the platform very soon. We are already seeing signs of it with 50% more loans available today than a week or two ago.
I concur with Jason in that I also like Prosper’s platform.
-I haven’t really noticed too many people who make 1 or 2 payments and then default.
-I think I have I have this happen occasionally, but generally only a day where nothing appears to show up. It hasn’t gone on for multiple days since the December issue.
-Already stated that I am in agreement with this. I honestly think the issue here is the lack of a real growth strategy, borrowers and lenders alike. I know LC went for a while looking to make significant strides in growing their business. I think that has paid off for them. I think Prosper needs to make some serious strides in this regard. I also think a targeted approach of going after the larger states with limited to no access for LC investors is probably the best approach, like adding TX, PA, OH and MA to their platform would be huge strides in establishing a foothold in those states. Obviously that is easier said than done. Perhaps the greatest issue for Prosper is the looming potential of an Lending Club IPO allowing all states to participate on LC’s platform. I really think that would be the death knell for Prosper: Prosper’s stagnant growth + an early LC advantage in almost half the states where Prosper has no presence.
@Peter, I have noticed that some of my charged off Notes will receive a payment occasionally–ALWAYS happy to see this! Though, I’m not sure how much to attribute to Prosper’s collections and how much to attribute to the lender.
I think Prosper should be given a few months to execute with the new management. I’ve seen more loans cancelled lately but I think that’s due to an increase in verifying borrower information, which is a good thing. The other point I’d make is that it doesn’t really matter which company (LC or Prosper) is performing better because we’re not investing in the company, we’re investing in the notes. As long as our investments are protected–and Prosper took extensive steps to ensure that–the platform is irrelevant. When you invest in stocks, you probably don’t care if it’s through Fidelity or E-Trade or Scottrade, you just care that your investment is safe.
http://www.hulu.com/watch/4163
Obviously, it doesn’t matter which company is performing better than the other. The issue at hand is whether the market will be dominated by just one platform to the point of a near monopoly, similar to Ma Bell. When you invest in stocks, you might not care whether it is through Fidelity, E-Trade or Scottrade. But would you care if your only option was E-Trade? Obviously you would prefer to have a choice. I think we can agree that competition is a good thing and monopolies generally not. This is why the federal government (sometimes a little over-zealously) cracks down on (perceived) antitrust – also known as competition law – violations. Even the basic founding principles of the US are against a monopoly of power and are nicely summed up as such:
The federal structure allows local policies ‘more sensitive to the diverse needs of a heterogeneous society,’ permits ‘innovation and experimentation,’ enables greater citizen ‘involvement in democratic processes,’ and makes government ‘more responsive by putting the States in competition for a mobile citizenry.’ Gregory v. Ashcroft, 501 U. S. 452, 458 (1991).
I believe it is important there be competition in this industry. It, too, permits innovation and experimentation while making the companies more responsive when they are in competition for a consumer base.
Great clip Roy. And I couldn’t agree more. I do not want to see the p2p lending industry so dominated by one player that it becomes a monopoly. I would like to see Prosper grow quickly to become a solid #2 to Lending Club. Because if p2p lending eventually just becomes Lending Club then the only people that is really good for are the shareholders of Lending Club. A competitive industry is what will most benefit everyone else.
Has anyone else notice the blow-out month that Prosper is on pace for in March?
According to Prosper-stats, they are over $7.6mln as of March 18th:
http://www.prosper-stats.com/SearchResults.jsp?dateMin=2013-03-01&dateMax=&sn=&slM=&slX=&tm=&fsn=
Another day or two and they will exceed their entire Feb 2013 loan volume ($8.37mln), and this is all happening without Worth-Blanket2 investing?
Is Prosper back on track or is March an anomaly?
Yes. I have been keeping a close eye on the numbers for Prosper this month. They are up 70% month-to-date over February and will have their best month in many months. I am confident that this is not an anomaly – that Prosper has turned the corner. BTW, worth-blanket2 is now back and while they are not alone they are helping to drive the growth.
Peter,
I did see that WB2 has just started again, none of this investments are included in the $7.6m number. Not sure if he is back at full speed, or just reinvesting his earnings like the $245k he invested in Feb (looks like the former, based on amounts).
http://www.prosper-stats.com/LenderActivity.jsp?sn=WORTH-BLANKET2
I also noticed that Prosper is now allowing him to invest up to 100% of a note. Wasn’t he limited to 80 or 90% to allow smaller investors to get a piece of good notes? (Personally, I have no problem with him investing the full 100%. I am a true believer of “you snooze, you lose”)
CA-Lender, It does appear that Worth-Blanket2 is not investing this month but that is because Prosper made a change where they stopped showing investor bids. So Prosper Stats can no longer report who is making what bids. This change happened the first week of March so Feb is the last month we will know how much everyone invested.
There has been a lot of talk over on the forum about this change and I will mention it in my monthly roundup post in a couple of weeks. You can read the forum comments here:
https://www.lendacademy.com/forum/index.php?topic=790.0