SOURCE: Prosper.com

Prosper.com

June 28, 2011 08:00 ET

Lender Returns of 10.4%* and Low Default Rates Continue to Drive Record Growth at Prosper.com

Best-in-Category Lender Returns and Low Default Rates Drive Appeal of Marketplace; Repeat Borrowers Surge 46% in May

SAN FRANCISCO, CA--(Marketwire - Jun 28, 2011) - Prosper.com, a social lending marketplace that brings together creditworthy borrowers with individual and institutional investors, today announced that lender returns of 10.4%* and default rates of 5.3%** continue to fuel record monthly and quarterly growth of personal loans funded, citing double-digit growth for nine consecutive months. Driven by its proprietary Prosper Rating credit scoring system, Prosper's actual annualized loss rate of 5.3% compares to a forecast loss rate of 6.3%.**

The company also announced that the number of repeat borrowers increased by 46% in May as consumers continue to use social lending to pay down expensive credit card debt and strengthen their personal balance sheet.

"Our proprietary credit and risk scoring system -- derived from more than five years of social lending data -- continues to drive our best-in-category lender returns and low default rates for individual and institutional investors," said Chris Larsen, chief executive officer and co-founder of Prosper. "As awareness for social lending grows, it is increasingly viewed as a compelling asset class and alternative investment opportunity for investors seeking consistently strong returns. And with credit card rates greater than 14%(i) on average, borrowers are turning to social lending to take advantage of personal loan rates starting at 7.43%***."

The Wall Street Journal recently named Prosper to the 2011 "Next Big Thing" list, which recognizes the 50 most promising venture-backed companies, selected from more than 10,600 U.S.-based companies.

Debt consolidation, home improvement and small business-related loans remain the leading loan categories on Prosper.com. To learn more about Prosper's lender returns, competitive personal loans and small business loans, please visit http://www.prosper.com.

Prosper RatingBorrower RateEffective Lender YieldEstimated Annual Loss RateEstimated Annual ReturnAverage Loan AmountLoan Volume% of Funded Loans
AA8.81%7.81%1.65%6.15%11,090621,03111%
A10.75%9.73%3.07%6.66%8,615689,18312%
B15.99%14.74%5.86%8.88%7,450595,97711%
C19.29%17.87%6.70%11.16%8,369761,53914%
D25.88%24.26%10.60%13.66%6,9721,484,98827%
E30.45%28.10%13.81%14.29%5,3711,262,08923%
HR31.91%29.10%19.51%9.58%3,570185,6433%
Total21.41%19.79%8.66%11.12%6,9405,600,451100%

Definitions

Borrower Rate: The dollar weighted average interest rate borrowers will pay on their Prosper personal loan.

Effective Lender Yield: Effective Lender Yield is equal to the Borrower Rate: (i) minus the servicing fee rate, (ii) minus estimated uncollected interest on charge-offs, (iii) plus estimated collected late fees.

Estimated Annual Loss Rate and Estimated Annual Return: Estimated Annual Return is the projected average annual return on funds invested in all loans with a certain Prosper Rating originated on our platform during the month. Expected Annual Return is calculated by subtracting the Estimated Annual Loss Rate for those loans from the corresponding Effective Lender Yield. The Expected Annual Loss Rate is the estimated principal loss on charge-offs for loans originated during the month, and is based on the historical performance of Prosper loans for borrowers with similar characteristics. The calculations of Effective Lender Yield, Estimated Annual Loss Rate and Estimated Annual Return require significant assumptions about the repayment of loans, and lenders should make their own judgments with respect to the accuracy of these assumptions. Actual performance may differ from estimated performance.

* Net Annualized Returns represent the actual returns on Borrower Payment Dependent Notes ("Notes") issued and sold by Prosper since July 15, 2009. To be included in the calculation of Net Annualized Returns, Notes must be associated with a borrower loan originated more than 10 months ago; this calculation uses loans originated through May 31, 2010. To calculate Net Annualized Returns, all payments received on borrower loans corresponding to eligible Notes, net of principal repayment, credit losses and servicing costs for such loans, are aggregated then divided by the average daily amount of aggregate outstanding principal for such loans. To annualize this cumulative return, the cumulative number is divided by the dollar-weighted average age of the loans in days and then multiplied by 365. Net Annualized Returns are not necessarily indicative of the future performance of any Notes. All calculations made as of March 31, 2011.

**Annual loss rate represents the actual losses on Borrower Payment Dependent Notes ("Notes") issued and sold by Prosper since July 15, 2009. To be included in the calculation of annualized loss rate, Notes must be associated with a borrower loan originated more than 10 months ago; this calculation uses loans originated through May 31, 2010. To calculate the annual loss rate, the net credit losses corresponding to eligible Notes are aggregated then divided by the average daily amount of aggregate outstanding principal for such loans. To annualize this rate, the cumulative number is divided by the dollar-weighted average age of the loans in days and then multiplied by 365. The forecast loss rate represents the Estimated Annual Loss Rates we provided for the borrower listings corresponding to the Notes included in the calculation of annual loss rate.

We only include Notes that have been outstanding for at least 10 months in these calculations because we believe loss rates on less seasoned Notes are less reliable indicators of likely loss rates on such Notes over their lifetime. For comparison's sake, the annual loss rate on all Notes booked from July 15, 2009 through March 31, 2011 is 3.6%. All calculations made as of March 31, 2011.

*** Based on personal loans made to borrowers with an AA Prosper Rating. APRs by Prosper Rating range from 7.43% (AA) to 35.84% (E). Rate offered is based on Prosper Rating and other factors and your actual rate may differ. Eligibility for a loan is not guaranteed and requires that a sufficient number of investors commit to fund your loan. Refer to Borrower Registration Agreement for all terms and conditions. All loans made by WebBank, a Utah-chartered Industrial Bank.

About Prosper
Prosper Marketplace Inc., a social lending marketplace that brings together creditworthy borrowers with individual and institutional investors, allows people to invest in each other in a way that is financially and socially rewarding. Individual and institutional investors invest in minimum increments of $25 on loan listings they select. In addition to credit scores, ratings and histories, investors can consider borrowers' personal loan descriptions, endorsements from friends, and community affiliations. Prosper handles the servicing of the loan on behalf of the matched borrowers and investors.

Prosper was co-founded by Chris Larsen, co-founder of E-LOAN. Prosper has raised $74.85 million in venture capital and is backed by financial and technology luminaries including, Jim Breyer of Accel Partners; Tim Draper of Draper Fisher Jurvetson; Jerome Contro of Crosslink Capital, CompuCredit; Omidyar Network; Capital One Co-founder Nigel Morris of QED Investors; Court Coursey of TomorrowVentures; Larry Cheng of Volition Capital.
Notes offered by Prospectus.

(i) Source: CreditCards.com

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