March was an interesting month in many ways. Lending Club jumped out of the gate fast and then glided to another record month. But the bigger story this month as far as numbers go was Prosper. They were up 68% over last month as it looks like the promised turnaround has begun. Before we dig into that, though, let’s take a look at Lending Club.
Lending Club Issues $127.6 Million in New Loans
We have come to expect this from Lending Club. In the first eight business days of the month they issue $76 million in new loans (almost $10 million a day) and then the hectic pace slows in the second half of the month. They ended the month just $7.5 million more than February, their smallest monthly gain in four months.
This was part of the plan according to CEO Renaud Laplanche. When I spoke with him earlier in the month he said that there would be more measured growth in March after the huge gains of the previous two months. No doubt they need to take a breather as they continue to rapidly add staff. They now occupy two full floors of their building in downtown San Francisco having just recently added the floor below. Despite doubling their space Laplanche said they would need more space by the middle of the summer as they continue their rapid growth.
Looking into the numbers Lending Club issued a record 8,273 loans in March with an average loan size of $15,428. This average was down slightly from February but is still the third highest on record as they continue to originate more of the high dollar loans. As I mentioned a couple of weeks ago Lending Club are having trouble keeping the loans on their platform very long. Despite this huge loan volume the number of loans available at any one time was under 500 for most of the month and many loans were being snapped up in minutes.
Below is the always impressive 18-month loan volume chart for Lending Club. The black line is the three month moving average.
Prosper Has Their Best Month Since October Issuing $15.1 Million
Last month many were writing Prosper’s obituary. They had their worst month in over 12 months and their first ever (for Prosper 2.0) year over year volume decline for a month. It was a horrible month any way you slice it. But in March they have turned things around.
When I chatted with Ron Suber, their Head of Institutional Sales, in late February he predicted that Prosper would do $15 million in loan volume in March. At the time I thought that was a little optimistic given February’s $9 million number. But we can all see he was right. When I chatted with him again yesterday he said there has been strong institutional investor demand but increased volume from retail investors as well.
That last point was surprising to me. Given that there were problems with Automated Quick Invest last month and the fact that Prosper removed investor bid data I would have expected retail volume to be down substantially. But Suber pointed out that there was a great deal more loan inventory for investors to choose from than in previous months and that helped drive the increased volume. And because we no longer have bid data we have no idea how much Worth-blanket2, Index_Plus or any of the other big investors did in March. But we do know that overall investor interest was way up.
I had a great conversation with Aaron Vermut yesterday, who is starting in his new role as the President of Prosper on Monday. One of the things he stressed to me is that he wants Prosper to be more open and communicative to investors from now on and he will be leading that charge. He also talked about some upcoming changes that are about to be announced such as increasing maximum loan size to $35K, the launch of a whole loan program and improved collections.
With all these changes I expect Prosper will be able to keep the positive momentum going. I am pretty confident that April will be a record month. Below is their 18-month chart.
