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Acceptance speech:

Lending Club launched on Facebook approximately 100 days ago and has just surpassed the $1 million dollar loan mark.

As the first financial service to ever launch on a social network, and one of a handful of Day 1 Facebook applications, we are pleased to see that Facebook has more than doubled its active user base to 40 million and that there are now 4,000 Facebook applications. We checked in with Facebook on our progress and are appreciative of their continued support:

“Facebook Platform was designed to enable innovative business opportunities for all application developers. We're pleased to see Lending Club, one of the first Facebook applications, leveraging the social graph to build a successful business around Facebook Platform.”

Dave Morin, Senior Platform Manager for Facebook

During this credit crunch, we have received a few questions about the credit quality of our borrowers. Lending Club borrowers all have prime credit due to our requirement for a minimum FICO score of 640. Our experience to date shows the value of prime borrowers, as our average FICO score on issued loans is 704 and we have not had any defaults on qualified loans.

From an interest rate perspective, our average interest rate is just over 11%.

We are still seeing a considerable amount of bicoastal activity, with California leading the lending states and Florida leading the borrowing states.

I lived in New York City for much of my life and one of our infamous mayors, named Ed Koch, used to walk around the city saying “How am I doing?” It was a great way to get feedback then, and I think it still is now. So, how are we doing? Let us know.

There are many ways to measure how we are doing. We have had previous posts on new features, new state licenses, credit policy, volume of loans, and many other topics. This post is about interest rates. We have issued more than $750,000 in loans at an average interest rate of 11%. That is a great rate at which to borrow money, as well as to lend money.

• Our average loan size continues to increase and is currently $5,586. Loan size tends to be higher at lower credit grades, possibly reflecting the need to consolidate debt. The F credit grade carries the highest average loan size of over $9,000.

• Over half of our loans carry an interest rate of 10% or below, with over 25% of all loans carrying an interest rate of 8% or less. These are great interest rates for borrowers when you consider that the average credit card (with a balance) carries an interest rate of about 15%.

• While half of the loans are issued at an interest rate of 10% or below, you can see from the distribution of rates below that our lenders have funded loans across all credit grades. Our lowest interest loan to date was issued to a New Yorker at an interest rate of 7.12% and the highest interest loan was issued to a resident of Georgia at 17.54%. We have issued loans in 22 states with Florida, New York and Massachusetts leading the pack.

So, how are we doing? We would love to hear from you.

Better rates. Together.

John Donovan

I was reading mobilemoneybanking.com e-mail and they mentioned this report called “Out of Balance: Consumers pay $17.5 billion per year in fees for abusive overdraft loans” written by the Center for Responsible Lending.

I am amazed at that level of fee income for the banks - $17.5 billion. The report goes into overdraft fees, and also mentions that the $17.5 billion in fees was for loans of only $15.8 billion.

Think about that one - the fees are actually greater than the total amount of loans.

Other interesting facts in this study:
• The average fee for overdraft is $34 (on a check or debit card payment of $27!)
• Abusive overdraft loan fees accounted for over 40% of bank and credit union fee income in 2006, up from 27% in 2004
• Some banks change the order of overdraft checks so that more checks are charged an overdraft fee (see the study for a better explanation – pages 6 and 7)

Enjoy the study!

John from Lending Club

We wanted to remind our blog readers that after you sign-up for lendingclub.com via Facebook, you can use our convenient “Sign In” button on the top right of this page to log directly onto your Lending Club account.

We are always looking for ways to simplify, so please let us know if you have any other suggestions.