We've all looked at the deterioration in LC loan performance over 2015 & 2016 in a variety of ways. We've charted delinquencies, chargeoffs, by time, by vintage, used different return measures, etc. Here's something really simple.
I used numbers from LC's chart with all those dots,
https://www.lendingclub.com/info/statistics-performance.actionThis chart shows the performance of INVESTORS rather than performance of loans, so is therefore close to investor's hearts. One downside is that this chart uses ANAR to measure investor performance. I won't detail all the characteristics of ANAR here, but one is important enough that I have to say it. ANAR measures your performance since you opened your account. Those of us who have been investing with LC for a long time, have higher ANARs, just because ANAR averages over all the time our accounts have been open, and returns were higher in past years than they are now. My account is 9 years old, so this is painfully clear to me. I suspect that many accounts have been open just a few years, so perhaps this effect isn't so bad on the average. Just be aware. If Joe's ANAR is 7%, he may be earning only 4% now, for example.
This chart has been changing vs time. Lets look at what this chart NOW says.
I made the following selections...
Adjustment for past-due notes: ON
Min number of notes per account: 500 (Lets look at well diversified accounts, so we know the numbers are not noise)
Max note size less than 0.5% (Same thing, ie well diversified accounts)
Now, there's one more selection, the weighted-average-interest-rate WAIR. This, like credit grade, is just a measure of the riskiness of the loan, as LC sees it.
In the middle of the graph, LC highlights accounts with average age of loans in the portfolio of 12 to 18 months. This is a reasonable definition of a steady-state account, so lets use that selection. LC displays 10th percentile, median, and 90th percentile ANAR for accounts in this range.
Finally, here's how the median ANAR varies with WAIR.
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