Recap: I have volunteered myself to be the CB guinea pig to test out lendingclub.com (referred to below as LC) and report back monthly with detail from the investor side. I have been investing $50 a week since Nov 2012. Specific stats are below. I have made previous monthly posts that provide some history of my experience and a lot more detail and background (probably good background to read if you missed them to bridge to what is below). Search under Acorn and Lending Club and you should find the various numbered entries.

As you may recall, my last post laid out my one bad note so far and how my return had dropped into the 8% range. After one month, my to date return is now back up and closing in on 10%. That $25 default early on hit my return percentage pretty hard, but for the same reason, the recovery is very quick.

Update about LC versus Prosper to date per their websites as of 9/30/12:

LC Loan Face Value: $914 million total and $77 million in Sept (vs. $837MM total and $70MM in Aug)
Prosper Loan Face Value: $405 Million total and $18 million in Sept (vs. $387MM total and $15MM in Aug).

Quick comment I continue to be stunned at LCs growth rate. My guess is that they plan to surpass $1 Billion in loans issued in October they need $86 million. Their goal was to be at a $Billion at the end of the year, so they are growing even faster than their beginning of the year goal (I admit freely that I thought it would be tough for them to hit $1Billion, and their growth has far exceeded my expectations...) They are also now more than double the size of Prosper I wonder at times if the funding will dry up for Prosper as they were first, but they are getting their yewts kicked.

Here is the update of my stats/experience to date, again followed by a number of observations:

Amount invested: $2,400, plus reinvested principal and interest. Most of my notes are 36 month term (60 month notes have higher interest rates). Current Account Value: $2,501.


8 A Notes; 7.18% average yield
62 B Notes; 12.39% average yield
24 C Notes; 15.33% average yield
2 D Notes; 17.42% average yield
2 E Notes; 19.96% average yield
1 F Notes; 22.45% average yield
0 G Notes;

Payments to Date:
Principal: $411
Interest: $115 ($22 in the last 30 days)
Late Fees: $0

Current forecasted monthly cash flow rate - $86 (includes both principal and interest)

Current Average Yield 13.04% The primary difference between the return to date and the average yield primarily has to do with my one note that defaulted ($25) plus the service fees - about ½% for fees to LC to administer my loans to date, I have paid $4.95 in fees.

Here is my note count rollup by status:
In Funding: 3 notes
Issued and Current: 106 notes
Fully paid: 2 notes
Late 16-30 days: 0 notes
Late 31-120 days: 0 notes
Default: 0 note
Written off: 1 notes

A few observations to report this month:

This may be anecdotal, or it may be because of the way I do my selection (I take less than 5 minutes to invest my $50 each week), but it appears that the note quality has deteriorated. I have to review more notes in order to find two that meet my basic criteria. In the past, I would probably take less than 2 minutes a week, but now I find I have to read through more and I might even be spending more than 5 minutes to find my two notes a week (I also buy more notes whenever more than $25 gets accumulated in my account from principal and interest payments). Something that is measureable - the average FICO score of their applicants has decreased over the last several months, so maybe my observation is more telling than I thought (you can see all of their statistics on their website).

One thing I did notice as I have mentioned, I am tracking default and growth trends (LC only posts real time measurements rather than trends as far as I have found). The default rate tweaked up this month. (I have been expecting this, but saw no evidence to date.) 6.25% default rate, which is the highest since February. I will continue to report each month. However, if one of you want the details, BM me and I can send you my excel spreadsheet.

Recommendations?

Anyone in debt, especially with high interest credit card debt, if you are able to get a lower rate interest loan at LC, I would highly recommend that you investigate it.

Those with some idle cash sitting around - if any of you decide to open an account with LC let me recommend LC to you through their website and both you and I will get a $100 rebate (boardmail me your email address and you will receive an auto email from me recommending LC when I register it for us to get the rebates).

For now, I plan to do my next post on or around October 31 or Nov 1. It was nice to have a weekend to have a little time to do this on the 30th.