We recently introduced a new feature that allows investors to model the impact of potential loan losses for past-due loans in their portfolio. This feature utilizes Lending Club's historical charge off rates on past-due loans to deliver an Adjusted Account Value and an Adjusted Net Annualized Return (Adjusted NAR). You may also use your own assumptions to customize the loss rate estimates applied to your portfolio.
Adjusted NAR may be a useful metric for investors who want to use past-due loan status as an indicator of possible future loan losses. Whether an investor uses Lending Club’s estimated loss rate or their own, Adjusted NAR is not a guarantee of future performance. Standard (unadjusted) NAR will still be available for all investors.
Furthermore, we have refined the NAR formula to deduct 100% of the outstanding principal amount of a Note at the same time as the corresponding loan charges off and is removed from the Account Value, rather than when it enters default status, as was formerly the case. This formula refinement will align changes to NAR together with changes to the Account Value.
Log in to your account to see Adjusted NAR in action.