SOURCE: Prosper.com

Prosper.com

August 08, 2011 13:03 ET

Prosper.com Investor Returns Increase to 10.6%*

High-Yield Short-Duration Loans Help Investors Diversify, Reduce Portfolio Risk

SAN FRANCISCO, CA--(Marketwire - Aug 8, 2011) - Prosper.com, a social lending marketplace that brings together creditworthy borrowers with individual and institutional investors, today announced that lender returns have increased to 10.6%* from 10.4%, delivering the best returns and lowest actual defaults in the social lending industry. Prosper's actual annualized loss rate is 5.3%, compared to a forecast loss rate of 6.3%**.

As the Federal Reserve keeps short-term rates low, investors continue to seek yield outside of traditional investment vehicles. Many are finding that social lending provides a consistent and stable income stream, and that Prosper's 10.6% returns serve as a great way to diversify their portfolio and reduce total investment risk.

"I have found Prosper.com to be a great tool to me help diversify my portfolio from traditional investments like stocks and bonds," said Jeff Stutzman, a Prosper lender. "Aside from earning great double-digit returns in today's challenging investing environment, it provides me with a fixed high-yield current income. On Prosper, I can build a diversified consumer loan portfolio that helps to reduce my overall investment risk. I also feel good knowing that I am providing capital to small businesses and individuals who want a better rate than what traditional financial institutions are offering."

"This is a wise time to invest in social lending," said Chris Larsen, chief executive officer and co-founder of Prosper. "Where else can investors get a fixed income short-duration product that's delivering 10.6% net returns? It's a great source of consistent income in today's no-yield world."

Social lending on Prosper.com delivers:

  • High-yield 10.6%* overall returns;
  • High-credit quality consumer loans: 731 average Experian Scorex PLUS credit score***;
  • Short-duration, fixed-income cash returns for income-oriented investors;
  • Reduced portfolio risk: helps lower volatility and offers non-correlation to other asset classes.

Consumer lending has historically been an inefficient and opaque system controlled by only a handful of the nation's largest banks. Prosper was founded to fundamentally change the way consumers access credit and how lenders earn returns on their investments. Prosper provides investors with direct access to a compelling and unique asset class of consumer personal loans.

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 Statistics for June 2011:

Prosper Rating Borrower Rate Effective Lender Yield Estimated Annual Loss Rate Estimated Annual Return Average Loan Amount Loan Volume % of Funded Loans
AA 9.87 % 8.86 % 1.73 % 7.14 % 11,135 512,194 9 %
A 12.00 % 10.97 % 3.07 % 7.90 % 9,486 872,678 16 %
B 16.87 % 15.59 % 5.95 % 9.64 % 6,728 666,120 12 %
C 20.13 % 18.68 % 6.10 % 12.58 % 6,835 430,590 8 %
D 26.70 % 25.06 % 10.69 % 14.37 % 6,274 1,311,350 23 %
E 31.21 % 28.82 % 13.96 % 14.86 % 4,983 1,479,974 26 %
HR 31.90 % 29.08 % 19.79 % 9.29 % 3,334 333,398 6 %
Total 22.70 % 21.00 % 9.17 % 11.83 % 6,188 5,606,303 100 %

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 August 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 June 30, 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.

*** Average Experian Scorex PLUS credit score of loans originated on the platform from July 15, 2009 through June 30, 2011. The average is weighted by the originated dollar amount of the loan.

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.

Contact Information

  • Prosper Press Contact:
    Laurie Azzano
    Prosper Marketplace Inc.
    415.786.3317
    lazzano@prosper.com
    Twitter: www.twitter.com/prosperloans