[CreditGuy]

I think you are mistaking arbitraging the systems for some sort of systemic failure. The system was built to track a binary condition, "was a payment collected?" CAN employees figured out that so long as the condition was true they would show fewer delinquencies since it doesn't sounds like a payment schedule was created at origination and payments were reconciled against it on an ongoing basis. Now, there's an argument that the system should have solved for that, by say tracking expected payment against actual received, which is a fine bit of armchair quarterbacking. It might have been thousands of payments, but the number of impacted loans is what actually matters.

Let's say CAN has made 500,000 loans. Now, let's assume that 10% were fudged. That leaves 450,000 totally valid and valuable observations over 19 years. Even if the number of impacted loans is 20% of their book, that is still more valid observations than probably anyone in the rest of the industry. Any negative impact to the data can be mitigated through effective ETL prior to using the data for analytics or modeling.

[J.Celifarco]

I think you are mistaking arbitraging the systems for some sort of systemic failure. The system was built to track a binary condition, "was a payment collected?" CAN employees figured out that so long as the condition was true they would show fewer delinquencies since it doesn't sounds like a payment schedule was created at origination and payments were reconciled against it on an ongoing basis. Now, there's an argument that the system should have solved for that, by say tracking expected payment against actual received, which is a fine bit of armchair quarterbacking. It might have been thousands of payments, but the number of impacted loans is what actually matters.

Let's say CAN has made 500,000 loans. Now, let's assume that 10% were fudged. That leaves 450,000 totally valid and valuable observations over 19 years. Even if the number of impacted loans is 20% of their book, that is still more valid observations than probably anyone in the rest of the industry. Any negative impact to the data can be mitigated through effective ETL prior to using the data for analytics or modeling.

Other companies are not going to be that interested in the book when the best deals have been refi out to 24-36 month deals hich most companies aren't comfortable doing.. The most valuable thing they have to sell ids their data, the book of business is not worth as much as you would think if all the best deals are cheap long programs with small profit margin

[GSilverman]

Credit Guy, in your opinion, was fraud committed?

[Funder Mark]

Credit Guy, in your opinion, was fraud committed?

Technically yes by the employees, pretty sure its not up to the CEO level. The real question to me is what % of expected payments actually came in. Even if they have to clarify for the future what a default is, and what they do to merchants who miss payments, I think they will still easily survive.

[CreditGuy]

Credit Guy, in your opinion, was fraud committed?

Yes. If your reason for asking is that to then use my admitting to it to call into question the value of ANY of the data, I disagree.

[GSilverman]

What data? The funding world has gone through rapid evolution. Pre-2015 data is moldy due to many factors, including - merchants stacking 2-4 positions and a growing willingness of merchants willing to walk. Good data exists in the MCA - Credit Card split world. Bad data exists in the the post Credit Card split world.

[HDF]

And as far a brand value goes, assigning a value to that is almost impossible in this industry. The brand is valuable in relation to ISOs not the end client. (besides happy renewing merchants) Plus a great many deals were spoon fed by Wells Fargo. So I'd first like to know how many businesses in the portfolio came from them and look into how they performed as a subset.

[CreditGuy]

What data? The funding world has gone through rapid evolution. Pre-2015 data is moldy due to many factors, including - merchants stacking 2-4 positions and a growing willingness of merchants willing to walk. Good data exists in the MCA - Credit Card split world. Bad data exists in the the post Credit Card split world.

Okay. You've now convinced me that you know very little about which you are speaking. Thanks for playing.

[mcg168]

Other companies are not going to be that interested in the book when the best deals have been refi out to 24-36 month deals hich most companies aren't comfortable doing.. The most valuable thing they have to sell ids their data, the book of business is not worth as much as you would think if all the best deals are cheap long programs with small profit margin

CAN has never done 36 month deals. They just started going out to 18 months in the last 2-3 years. The 24 month deals were few and far between, and they essentially stopped those turns last spring.

If you looked at their entire portfolio, the average deal length is going to be under 14 months.

[GSilverman]

We shall see over the next few weeks.

[GSilverman]

What has been the weekly attrition rate over the past 7 weeks of inactivity? What % of their book has fallen off? Defaults must be spiking. Credit Guy has the answers.

[J.Celifarco]

CAN has never done 36 month deals. They just started going out to 18 months in the last 2-3 years. The 24 month deals were few and far between, and they essentially stopped those turns last spring.

If you looked at their entire portfolio, the average deal length is going to be under 14 months.

retention pricing for existing customers, i thought these deals went out 36 months. I could be wrong but i have been told numerous times they they did these. That said if the average deal in the portfolio is over 12 months when the majority of the industry max term is 12 months that is going to greatly reduce the value of the whole book..

[mcg168]

retention pricing for existing customers, i thought these deals went out 36 months. I could be wrong but i have been told numerous times they they did these. That said if the average deal in the portfolio is over 12 months when the majority of the industry max term is 12 months that is going to greatly reduce the value of the whole book..

Retention pricing was rolled out in the summer of 2014 and the max term on those programs was 12 months. A few months later they allowed retention to go out to 15 months. It wasnt until this time last year that 16 - 24 month programs were available for retention pricing. Obviously those terms were available with them prior, just not on the retention program and the pricing prior to retention was similar to OnDeck, IOU, ect.

They stopped doing 22, 23, 24 month programs altogether this past summer.

I have never seen a 36 month program....the longest I ever saw was 24 and they were not very common, mostly reserved for doctors.

[mcg168]

What has been the weekly attrition rate over the past 7 weeks of inactivity? What % of their book has fallen off? Defaults must be spiking. Credit Guy has the answers.

Who says defaults are spiking in the last 7 weeks?? All of their employees who are still working there (well above 100 btw) have been moved to customer service or collections.

The amount paid off by competitors is mind boggling. In my opinion, the competitors paying off their balances has helped bail them out of their current situation and also take some bad deals off their book.

[GSilverman]

MCG168 - Estimate the size of their book Nov 2016 vs Feb 2017

[GSilverman]

"In my opinion, the competitors paying off their balances has helped bail them out of their current situation and also take some bad deals off their book."

The bad deals in their Book of Business probably aren't being paid off by competitors. Why would a competitor pay off a deal in default? MeThinks - The good deals are being paid off.

[mcg168]

MCG168 - Estimate the size of their book Nov 2016 vs Feb 2017

Funding on new deals wasnt turned off till late November...renewals a week after that. Prob somewhere around $35,000,000 from Nov 1 - Jan 18th

[FUNd]

CAN has never done 36 month deals. They just started going out to 18 months in the last 2-3 years. The 24 month deals were few and far between, and they essentially stopped those turns last spring.

If you looked at their entire portfolio, the average deal length is going to be under 14 months.

CAN absolutely does (or did) 36 month deals.

[J.Celifarco]

Retention pricing was rolled out in the summer of 2014 and the max term on those programs was 12 months. A few months later they allowed retention to go out to 15 months. It wasnt until this time last year that 16 - 24 month programs were available for retention pricing. Obviously those terms were available with them prior, just not on the retention program and the pricing prior to retention was similar to OnDeck, IOU, ect.

They stopped doing 22, 23, 24 month programs altogether this past summer.

I have never seen a 36 month program....the longest I ever saw was 24 and they were not very common, mostly reserved for doctors.

I am almost positive you are wrong, I didnt work with them but my brother has done a bunch of business with them and has spoken about 36 month offers and fundings he did with them.. Either way what ever the program was wont help them moving forward

[mcg168]

"In my opinion, the competitors paying off their balances has helped bail them out of their current situation and also take some bad deals off their book."

The bad deals in their Book of Business probably aren't being paid off by competitors. Why would a competitor pay off a deal in default? MeThinks - The good deals are being paid off.

No doubt good deals are being paid off as well. But there are deals that are in default with CAN and the competitor has no way of knowing they are in default with CAN (lowered payments, ACH information isnt valid, slow paying, ect)

Even still, i have seen competitors paying off CAN balances when the merchant is on a weekly settlement agreement. Or the merchant has been non performing for over 3 months so no CAN payments are showing in the bank statement. Theres a TON of available deals out there, and people are funding good and bad ones.

[GSilverman]

So let's do the math....On average, if 1.5% of their book naturally matures every week, in 7 weeks about 10% of their book has evaporated.

[mcg168]

CAN absolutely does (or did) 36 month deals.

You funded a 36 month program with them?? I never saw or heard of these offers.

[CreditGuy]

So let's do the math....On average, if 1.5% of their book naturally matures every week, in 7 weeks about 10% of their book has evaporated.

That would put the average duration of their portfolio at 15 months. There's no way it is that long.

[GSilverman]

add in payoffs and maybe 15% of their book is gone. Every week of non-renewal activity 1.5%-2% of their book evaporates.

Time is Ticking

[Sean Cash]

CAN absolutely does (or did) 36 month deals.

FUNd is alive!!