Lending Club's fourth quarter earnings release showed a decrease in investment from retail investors; the decrease follows an increased focus from the company on banks and institutional investors as the company seeks to regain credibility following issues in 2016; while originations have remained fairly steady over the past three quarters, the percentage of investment from institutional investors increased to 74% in the fourth quarter. Source
Alternative data scoring considerations are becoming more prevalent in today's credit market; the Consumer Financial Protection Bureau (CFPB) has announced a public comment period seeking feedback on the potential use of alternative credit sources such as mobile phone bills and rent payments in credit approvals; the CFPB is seeking to identify how it might be able to serve consumers with minimal credit history; it says that approximately 26 million Americans have no credit histories and an additional 19 million consumers lack enough credit information to produce a credit score. Source
OnDeck released their Q4 earnings and also announced a reduction of 11% of its staff; the company added $19 million to their loss provision expenses in part due to underperformance seen in 15+ month loans; OnDeck is focused on being adjusted EBITDA positive in 2017 with GAAP profitability in 2018; originations were $632 million for Q4 2016; OnDeck continues to hold more loans on their balance sheet as revenue from loan purchasers remains flat. Source
The chart below shows the stock performance for Lending Club versus OnDeck since May 16, 2016, which is the day Lending Club's stock bottomed out after their CEO resigned; Lending Club is up 64% and OnDeck is up 8%; both companies have taken a hit this week after earnings, largely due to profit taking.
In January, Prosper began using its new PMI7 credit underwriting model; Prosper expects PMI7 to help improve returns and credit scoring metrics; the estimated return on loans issued for January is 7.86%; post-charge off recoveries have been higher than estimated which is expected to increase IRR calculations; delinquencies and pre-payments are also improving; the average coupon increased 300 bps in January to 15.99% as PMI7 caused an increase in higher risk loans. Source
OnDeck released its fourth quarter and full year earnings before the market's open on Thursday; the firm reported a net loss of $67.0 million for 2016 compared to a net profit of $10.3 million in 2015; originations were $2.4 billion in 2016 compared to $1.9 billion in 2015; revenue for the year increased to $264.8 million from $195.1 million; loan loss provisions were a factor contributing to the net loss with provisions increasing to $149.96 million in 2016 from $74.86 million in 2015. Sources
Lending Club released its fourth quarter and full year earnings results on Tuesday, February 14; Lend Academy provides details of the earnings release in their article; the lender originated $8.6 billion in loans for 2016; net operating revenue for the year was $495.5 million, up from $426.7 million in 2015; net income fell to -$146 million from -$5 million in 2015; banks increasingly returned to the platform in the fourth quarter of 2016 funding 31% of loans, an increase from 18% in the third quarter. Source
After opening a search for a digital lending solution, the American Bankers Association has chosen Akouba; Lend Academy provides details in their article; Akouba offers banks a digital lending software solution for executing small business loans; it primarily works with community and regional banks; the ABA endorsement is a huge win for Akouba and will substantially add to its sales pipeline; the firm has 11 employees and has mainly been working with community banks reporting $500 million to $25 billion in assets; in addition to facilitating new business for Akouba, the ABA endorsement is also designed to help educate the market on advanced solutions for small business online lending; the ABA will be releasing a report on Akouba and the company will be holding a webinar on March 8 to discuss digitizing the small business lending process. Source
In an article from Quartz several stories are outlined sharing how SoFi has helped borrowers get re-employed or negotiate for higher salaries; in one example Joanna Mathews was laid off and called SoFi to get forbearance on her credit consolidation loan which was approved; Joanna was subsequently assigned a counselor to help in the process to find employment, speaking weekly to her counselor; Joanna attended webinars on writing resumes and interviewing, eventually landing 15 interviews; after a three month search Joanna was employed again; in another story a borrower reached out to a SoFi coach for tips on salary negotiation, bargaining for an additional $6,000 per year using tips from SoFi. Source
The American Bankers Association (ABA) has endorsed Akouba as its marketplace lending partner; Akouba offers cloud-based white label technology for online business lending; the firm was chosen by evaluation from Aditya Khurjekar, CEO of Let's Talk Payments, and oversight from the ABA's Endorsed Solutions Banker Advisory Council. Source