Update: LendingClub talks about this issue in this press release (dated 4/20/2013)

It’s a pretty well agreed upon fact that Lending Club‘s popularity has increased in recent months.  While it’s a great thing that Lending Club‘s loan origination rate remains high, an important realization to make is that the average loan In-Funding time has fallen significantly over the past two months. Please consider the following chart:

** This feature is now discontinued due to LendingClub providing this data for free at the current time**

Usually, when one wants to run statistical analysis on Lending Club historic loan data, one uses LoanStats.csv. The problem with LoanStats.csv is that it only includes a limited portion of the information that is available to investors via the real-time BrowseNotes6.csv file. BrowseNotes version 6 is a file that shows the details of all In Funding notes, but not notes that have already found funding. DeluxeLoanStats.csv is a feature that seeks to bypass this data problem.

Once per hour, BrowseNotes version 6 is downloaded and processed. All newly listed notes are identified. Once processed, the newly listed notes are added to an index where once a week this index is bundled line by line onto the existing LoanStats.csv. Once this file is compiled, it is released weekly to P2P Analytics subscribers.

The purpose of this new file is to allow P2P Analytics investors the ability to run their own detailed analysis with historical data that Lending Club does not regularly provide.

Below is a table showing the updated P2P Analytics performance statistics.

The first table compares the performance of the Average Lending Club investor to the Average P2P Analytics investor, assuming they only invested between P2P Analytics inception (August 2012) until the end of 2012.

The second table compares the performance assuming they only invested between P2P Analytics inception (August 2012) until today. So far the results of the service are favorable and prove that statistically based note selection can be profitable and minimize one’s risk of defaults. As time goes on, more detailed Lending Club investment strategies can be developed for less defaults.

A quick note on how “Theoretical defaults” was calculated: According to the Lending Club statistics page, the recovery rate for 16-30 day late notes is 77%. The recovery rate for notes 31-120 days late is 53%. The formula used for theoretical defaults in all cases is the following:  =(#.of.16-30DayLateNotes*0.23)+(#.of.31-120DayLateNotes*0.47)+(#.of.Defaults/Write offs).

Over the past week, there has been a large surge in the availability of A,B,C and even D grade notes on Lending Club. Although E,F and G grade notes have also seen increased note availability, the surge in these grades has been more muted than in the other grades. See the charts below for more detail. Note: These charts were started in November of 2012.

Could this recent surge be in part due to the new (and more forgiving) credit criteria at Lending Club? The new lending criteria can be found in the November 2012 prospectus.

A new daily chart has been added to the public charting section: Average time in funding.The purpose of this chart is to show the average time in funding for the different note grades on Lending Club. With this knowledge, investors can generally estimate how much time they have to invest after any one particular note is listed (based on its grade).

Thanks to everyone for a great start in 2012.

P2P Analytics has been growing gradually and consistently in terms of subscribers and services provided. Here’s a list of some of the features that were added in 2012:

•  Folio Fn suggestions based on the selection algorithm and other filters.

• Basic, Real time, Lending Club note funding charts broken down by Grade (for subscribers) with general charts publicly available.

• Records to track the performance of P2P Analytics suggestions.

Below is a summary of the performance of the P2P Analytics service for LendingClub note selection:

Thanks again to all of the readers and subscribers – Here’s to a great 2013!

After keeping track of note availability for the past few weeks, one main trend has emerged: A grade notes on Lending Club are becoming very plentiful while lower grade notes are starting to become a little supply constricted. I’ll let the following two charts speak for themselves.

A grade note funding availability (22 day chart)

F&G  grade note funding availability (22 day chart)

If this trend continues, this will mark a very important shift in terms of the types of notes that are available for investors who have a higher appetite for risk. Will Lending Club have to change their issuance policies to keep up if the trend continues? Although 22 days worth of data is not enough to come to long term conclusions regarding Lending Club’s note supply, the trend so far is interesting.

Over the next few weeks, further automation will be applied to all algorithms and functions of P2P Analytics. The goal is to provide more frequent updates and to start working towards custom solutions options.

A quick note regarding P2P Analytics performance to date in terms of selecting Lending Club notes:

P2P Analytics Performance to date (Service established on August 5th,2012)

Every Tuesday, FolioFN suggestions based on the selection algorithm will be made public. Please see the new section at the top of this page marked “FolioFN” for details.

Here are some of  the things that are happening behind the scenes currently at P2P Analytics:

1. The weekly release computations are in the process of being fully automated. Eventually this will mean more releases per week and more features/statistics per release.

2. The FolioFN releases are still being refined. This week an HTML format release will come along with the spreadsheet/XLS format. Hopefully within a week or two, the FolioFN releases will be ready to release in limited batches to the public readers.

This week marks the very first week that Lending Club Folio FN loan recommendations have been made on P2P Analytics. The methodology behind selecting notes on the FolioFN platform currently is as follows:

First, loans on the FolioFN platform are eliminated using the following criteria:

1. All notes that are fully paid, in default, late or are in a grace period are removed from consideration. In the future, this may be changed as notes that are in several of these states may be worth purchasing if the discount is notable.

2. All notes that have a markup of greater than 1 are removed. Again, in the future this may be changed due to the fact that some notes that show a great history may be statistically worth paying a premium for.

3. Notes with 1 payment left are excluded.

4. Notes with “Days since payment” of greater than 30 are excluded.

Following the above criteria eliminates roughly 95% of the notes currently available on FolioFN. Once this list of criteria has been applied, the remaining notes can be checked against the all time rankings via the traditional P2P Analytics algorithm. In this week’s release, any of the FolioFN notes that passed the above criteria and also belonged to the top ranked 20% of all notes issued on LendingClub were provided to subscribers.

Beginning a few weeks, limited FolioFN recommendations will be provided to the public after this service is improved. At the current time, only 1 release per week will occur as the above filtering needs to be automated fully.