[GSilverman]

If Average deal length was 14 months...that's 70 weeks....on average 1.5% of the portfolio falls off weekly if no renewals - not counting early payoffs

[CreditGuy]

If Average deal length was 14 months...that's 70 weeks....on average 1.5% of the portfolio falls off weekly if no renewals - not counting early payoffs

On Deck, their nearest competitor, has an average duration of just over 13 months per their 2016 Q3 10-Q (page 33). Your estimate of 1.5% a week would be 15.38 months. That is 18% longer than On Deck's average term. There is simply no way there is that big of a disparity given CAN's non-retention/vanilla/whatever max term was 18 months. Doing some more math, On Deck's average loan term is about 55% of their vanilla max term of 24 months. (Both advertise 36 month terms but those terms are really more marketing than reality.) If CAN's vanilla max term was 18 months, then 55% of that would be around 10 months or about 2.25% a week. Assuming CAN had a 24 month term on their vanilla product as well, then reason holds it would be about in line with On Deck's average of 13 months, which means they'd have run off of about 1.85% a week. They are probably seeing more severe portfolio contraction than you are estimating. I'd also note that average term accounts for early payoffs, so it's not necessary to make that disclaimer.

[J.Celifarco]

On Deck, their nearest competitor, has an average duration of just over 13 months per their 2016 Q3 10-Q (page 33). Your estimate of 1.5% a week would be 15.38 months. That is 18% longer than On Deck's average term. There is simply no way there is that big of a disparity given CAN's non-retention/vanilla/whatever max term was 18 months. Doing some more math, On Deck's average loan term is about 55% of their vanilla max term of 24 months. (Both advertise 36 month terms but those terms are really more marketing than reality.) If CAN's vanilla max term was 18 months, then 55% of that would be around 10 months or about 2.25% a week. Assuming CAN had a 24 month term on their vanilla product as well, then reason holds it would be about in line with On Deck's average of 13 months, which means they'd have run off of about 1.85% a week. They are probably seeing more severe portfolio contraction than you are estimating. I'd also note that average term accounts for early payoffs, so it's not necessary to make that disclaimer.

the max term was 36 months not 18. I understand that the max you saw was 18 months but they 100% went out 36 months I have spoken to merchants who have the program and have spoken to number of ISO's who have referenced this program

[CreditGuy]

the max term was 36 months not 18. I understand that the max you saw was 18 months but they 100% went out 36 months I have spoken to merchants who have the program and have spoken to number of ISO's who have referenced this program

(Both advertise 36 month terms but those terms are really more marketing than reality.)

In order to advertise a 36 month term on their public site (both CAN and ODC do) and not be in violation of UDAP, they need to offer the terms as part of normal course of business. That is, even if only 0.25% of all applicants (25 out of 10,000/month) would qualify it meets the test. For the purposes of using max term to proxy average term removing such a significant outlier is warranted.

[J.Celifarco]

it wasnt that insignificant retention pricing for their good customers a good portion of those were moved to 36 months.. Ondeck select 36 month offers are definitely a bigger % then what you are saying.. i think they did more of those longer deals then you are assuming..

[GSilverman]

Great Post! So lets call it 2.25% weekly runoff-all in; by Feb 1 a least 20% of their Book vanishes; by March 1 30%.