Early on I was a bit worried by how often the loan defaulted with only 0, 1 or 2 payments made. Sure, there are going to be some defaults and sometimes in extremely unlucky situation it might happen right away. But the amount of them seems to me to indicate LendingClub fails to do an adequate job of screening loan candidates.

Over time the rates LendingClub quoted for returns declined. The charges to investors for collecting on late loans were very high. It was common to see charges 9 to 10 times higher as the investor than were charged to the person that took out the loan and made the late payment.

For the last 6 months my account balance has essentially stayed the same (bouncing within the same range of value). I stopped reinvesting the payments received from LendingClub loans several months ago and have begun withdrawing the funds back to my account. I will likely just leave the funds in cash to increase my reserves given the lack of appealing investment options (and also a desire to increase my cash position in given my personal finances now and looking forward for the next year). I may invest the funds in dividend stocks depending on what happens.

This chart shows lending club returns for portfolios similar to mine. As you can see a return of about 5% is common (which is about where I am). Quite a few more than before actually have negative returns. When I started, my recollection is that their results showed no losses for well diversified portfolios.

The two problems I see are poor underwriting quality and high costs that eat into returns. I do believe the peer to peer lending model has potential as a way to diversify investments. I think it can offer decent rates and provide some balance that would normally be in the bond portion of a portfolio allocation. I am just not sold on LendingClub’s execution for delivering on that potential good investment option. At this time I don’t see another peer to peer lending options worth exploring. I will be willing to reconsider these types of investments at a later time.

I plan to just withdraw money as payments on made on the loans I participated in through LendingClub.

Related: Peer to Peer Portfolio Returns and The Decline in Returns as Loans Age (2015) – Investing in Peer to Peer Loans – Looking for Yields in Stocks and Real Estate (2012) – Where to Invest for Yield Today (2010)

The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, fell 3 basis points to 1.35% of all accounts – a record low. This also marked the third year that delinquency rates were below the 15-year average of 2.21%. The ABA report defines a delinquency as a late payment that is 30 days or more overdue. This is good news but the personal financial health of consumers in the USA is still in need of significantly improvements to their balance sheets. Debt levels are still too high. Savings levels are still far to low.

Home equity loan delinquencies fell 4 basis points to 2.70% of all accounts, which helped drive the composite ratio down. Other home related delinquencies increased slightly, with home equity line delinquencies rising 6 basis points to 1.21% of all accounts and property improvement loan delinquencies rising 2 basis points to 0.91% of all accounts. Home equity loan delinquencies dipped further below their 15-year average of 2.85%, while home equity line delinquencies remained just above their 15-year average of 1.15 percent.

Bank card delinquencies edged up 1 basis point to 2.48% of all accounts in the second quarter. They remain significantly below their 15-year average of 3.70 percent.

The second quarter 2016 composite ratio is made up of the following eight closed-end loans. All figures are seasonally adjusted based upon the number of accounts.

Closed-end loans
Home equity loan delinquencies fell from 2.74% to 2.70%.
Mobile home delinquencies fell from 3.41% to 3.17%.
Personal loan delinquencies fell from 1.44% to 1.43%.
Direct auto loan delinquencies rose from 0.81% to 0.82%.
Indirect auto loan delinquencies rose from 1.45% to 1.56%.
Marine loan delinquencies rose from 1.03% to 1.23%.
Property improvement loan delinquencies rose from 0.89% to 0.91%.
RV loan delinquencies rose from 0.92% to 0.96%.

Open-end loans
Bank card delinquencies rose from 2.47% to 2.48%.
Home equity lines of credit delinquencies rose from 1.15% to 1.21%.
Non-card revolving loan delinquencies rose from 1.57% to 1.65%.

Related: Debt Collection Increasing Given Large Personal Debt Levels (2014) – Consumer and Real Estate Loan Delinquency Rates from 2001 to 2011 in the USA – Good News: Credit Card Delinquencies at 17 Year Low (2011) – Real Estate and Consumer Loan Delinquency Rates 1998-2009 – The USA Economy Needs to Reduce Personal and Government Debt (2009)

Glossary
Indirect auto loan: loan arranged through a third party such as an auto dealer.
Direct auto loan: loan arranged directly through a bank.
Delinquency: late payment that is 30 days or more overdue.
Bank card: a credit card provided by a bank.
Closed-end loan: a loan for a fixed amount of money with a fixed repayment period and regularly scheduled payments.
Open-end loan: a loan with a fixed amount of available credit but a balance that fluctuates depending on usage such as a line of credit.
Non-card revolving loan: an unsecured, open-end loan that is not linked to a credit card. Examples may include lines of credit for overdraft protection or check credit.

See full press release

Credit scores range from 300 to 850. They are calculated by various credit reporting organizations, including FICO. They factor in payment history, percent of outstanding credit available that is used, credit report checks, length of outstanding credit accounts, etc..

Metlife report on consumers and credit scores provides some interesting data.

* Default rate in this case means, 90 days past due. MetLife got this data from the Consumer Financial Health Study dataset**.

Peer to peer lending platform, Lending Club, limits loans to those with a minimum credit score of 660 (remember there are multiple organizations that provide credit scores, this minimum is based on Lending Club’s score). In general I see scores above 700 in A and B loans, scores from 650-700 in C and D loans. Remember the credit score is not the only factor setting the rate (you will see scores above 700 in the C loans sometimes, etc.). Credit scores provide some insight but are just 1 factor in approving loans or setting rates (an important one but not a completely dominant one).

About 38% of people have credit scores from 750-850. Another 37% from 600-749 and about 25% from 350-599.

via online Vantage Score presentation

Vantage Score decided to make their score range go up to 1000, not the standard 850. Maybe a 750 score for them is comparable to 680? They say super-prime is 900+ (750-850 on more common scale), prime is 701-900 (680-739), near-prime 641-700 (620-679), subprime 501-640 (550-619). Anyway that chart shows the changing default rates from 2003 to 2010 by type of loan.

This Federal Reserve report on meeting between Federal Reserve Board staff and Fair Isaac Corporation (FICO) 20 June 2013 has some interesting material.

For guidance, the following table generally matches a borrower’s odds-of-default with the corresponding FICO 8 score (calculated on performance from Oct 2008 – Oct 2010). Of course, the range of scores and odds-of-default [the data is related to mortgages] will vary with each model as creditors develop and validate their own credit scoring models.

Odds-of Default		FICO 8 Score		percent of population**
5:1		610		9%
10:1		645		9%
20:1		685		6%
30:1		705		6%
40:1		720		6%
50:1		735		9%
100:1		770		30%

As you can see at a 610 level, 20 loans out of 100 defaulted. At 685 just 5 in 100 defaulted and at 770 just 1 in 100 did.

** I had to adjust this, because the report didn’t report it in this form, so it a very approximate measure (I made estimates for something like scores from 735 to 769 etc.). Again this is data from the Oct 2008 – Oct 2010 period. The rest of the population (about 25%) would have scores below 610.

Related: The Impact of Credit Scores and Jumbo Size on Mortgage Rates (2009) – Your FICO credit score explained – $2,540,000,000,000 in USA Consumer Debt

This page references a Fed report (that I can’t find) that found the following default rates on new loans for the two years after origination, 2000-2002:

***

The Consumer Financial Health Study respondents were asked to self-assess their credit quality and for permission to pull their actual credit scores.8 Forty-five percent of survey participants granted permission, yielding an “opt-in” sample size of 3,215. We appended two objective measures of creditworthiness to the dataset: Experian provided VantageScore 3.0 credit scores, and LexisNexis® Risk Solutions provided RiskView™ scores. VantageScore is a generic credit scoring model that was created by the three major credit bureaus (Equifax®, Experian and TransUnion®) and, in addition to
tradeline data, includes rent, utility and cell phone payment data when it is available in consumer credit files.

LendingClub suggest a minimum of 100 loans (of equal size) to escape the risk of your luck with individual loans causing very bad results. Based on this diversity the odds of avoiding a loss have been very good (though that obviously isn’t a guarantee of future performance), quote from their website (Nov 2015):

This chart, from LendingClub, shows a theoretical (not based on past performance) result. The basic idea is that as the portfolio ages, more loans will default and thus the portfolio return will decline. This contrasts with other investments (such as stocks) that will show fluctuating returns going up and down (over somewhat dramatically) over time.

For portfolios of personal loans diversity is very important to avoid the risk of getting a few loans that default destroying your portfolio return. For portfolios with fewer than 100 notes the negative returns are expected in 12.8% of the cases (obviously this is a factor of the total loans – with 99 loans it would be much less likely to be negative, with 5 it would be much more likely). I would say targeting at least 250 loans with none over .5% would be better than aiming at just 100 loans with none over 1% of portfolio.

There are several very useful sites that examine the past results of Lending Club loans and provide some suggestions for good filters to use in selecting loans. Good filters really amount to finding cases where Lending Club doesn’t do the greatest job of underwriting. So for example many say exclude loans from California to increase your portfolio return. While this may well be due to California loans being riskier really underwriting should take care of that by balancing out the risk v. return (so charging higher rates and/or being more stringent about taking such loans.

So I would expect Lending Club to adjust underwriting to take these results into account and thus make the filters go out of date. Of course this over simplifies things quite a bit. But the basic idea is that much of the value of filters is to take advantage of underwriting weaknesses.

This chart (for 36 month loans) is an extremely important one for investors in peer to peer loans. It shows the returns over the life of portfolios as the portfolio ages. And this chart (for LendingClub) shows the results for portfolios of loans issued each year. This is a critical tool to help keep track to see if underwriting quality is slipping.

In a very good result for LendingClub the worst performances are the first 2 years (2008 and 2009). Investing is challenging and trying to examine historical data and draw conclusions is not simple. The conclusion that LendingClub learned from their initial efforts in 2008 and 2009 and improved seems reasonable to me.

2010, 2011 and 2012 all have the loans completed (or nearly so, fro 2012) and the truth about peer to peer lending (or really any lending) can be seen from the chart. The return of the portfolio declines as it ages (as loans default).

What you should keep an eye on if you invest in peer to peer loans is if the lines for new years started to look much worse over time than previous years (for example if they started to look like 2008 or 2009). If that happened, ask why. If the economy entered a deep recession that may well explain it. But if there is not a macroeconomic explanation then you need to worry about underwriting quality.

If I decided the risk was real that underwriting quality had declined what I would likely do it stop reinvesting my payments in new loans (or reduce the amount of that I was doing). It is possible with LendingClub to sell your fractions of loans to other investors. I doubt I would bother with this but it is another option. Of course, unless you correctly determine underwriting quality declined faster than the other investors do their bids for those loans are going to be low (you will likely lose money on the sales).

In 2010 and 2011 returns started in the 11% to 12% range and by the time the loans closed the return was a bit above 6%. This is the type of decline you can expect (and it will be worse if there are bad macroeconomic conditions).

2012 started above 12% and is on track (with 2 months left) to slightly exceed the final returns for 2010 and 2011. The chart (and these comments) are based on all 36 month loans of all grades made in those years. LendingClub lets you show view the chart of 36 or 60 month loans and for all loans or looking at a specific grade. Remember in looking at all loans the returns are going to be impacted by the makeup of the loans (how many are A, B, C, D etc.). But you can also look at it directly for each grade to see if issues are cropping up in more specific areas.

An example of a site that examine past loan results to guess about future: How Will P2P Lending Perform During a National Recession?

it’s amazing to note that banks still did not lose money on credit cards during the 2008 recession. The stock market fell 57% in six months, yet major banks kept earning and earning.

What we see is the average return of 8.8% steadily dropping after each recession:

After the 2000 recession, avg. credit card returns fell 20% to an ROI of 7%
After the 2008 recession, avg. credit card returns fell 40% to an ROI of 5.2%
…
If this is equally felt in peer to peer lending, it could mean:

A more typical recession may also drop a peer lending return by 20% – say from 6% to 4-5%.
A more serious recession may also drop a peer lending return by 40% – say from 6% to 3-4%.
Of course, these losses will be easier if investors hold more A-grade loans, and more ugly if investors hold more E-grade loans.

100m deep is another useful resource. It provides an interactive tool to let you look at the past results based on characteristics (employment length, purpose of loan, home ownership, income, loan term, etc.) you chose.

My investigation so far makes me think peer to peer lending is a sensible place for a sophisticated investor to put a portion of their fixed income investments. I would go slowly and not commit a large amount to such investments but taking a small stake with a couple percent of a portfolio may well be wise for investors that know what they are doing. I will have more posts looking at peer to peer loans, including more on filters and automated investing with LendingClub.

Related: Investment Risk Matters Most as Part of a Portfolio, Rather than in Isolation
– Corporate and Government Bond Yields (2008) – All-weather Portfolio

With each loan you may lend as little as $25. Lending Club (and Prosper) deal with all the underwriting, collecting payments etc.. Lending Club takes 1% of payments as a fee charged to the lenders (they also take fees from the borrowers).

Borrowers can make prepayments without penalty. Lending Club waives the 1% fee on prepayments made in the first year. This may seem a minor point, and it is really, but a bit less minor than I would have guessed. I have had 2% of loans prepaid with only an average of 3 months holding time so far – much higher than I would have guessed.

On each loan you receive the payments (less a 1% fee to Lending Club) as they are made each month. Those payments include principle and interest.

This chart shows the historical performance by grade for all issued loans that were issued 18 months or more before the last day of the most recently completed quarter. Adjusted Net Annualized Return (“Adjusted NAR”) is a cumulative, annualized measure of the return on all of the money invested in loans over the life of those loans, with an adjustment for estimated future losses. From LendingClub web site Nov 2015, see their site for updated data.

Lending Club provides you a calculated interest rate based on your actual portfolio. This is nice but it is a bit overstated in that they calculate the rate based only on invested funds. So funds that are not allocated to a loan (while they earn no interest) are not factored in to your return (though they actually reduce your return). And even once funds are allocated the actual loan can take quite some time to be issued. Some are issued within a day but also I have had many take weeks to issue (and some will fail to issue after weeks of sitting idle). I wouldn’t be surprised if Lending Club doesn’t start considering funds invested until the loan is issued (which again would inflate your reported return compared to a real return), but I am not sure how Lending Club factors it in.

Return shown for my portfolio. My portfolio is currently 3% A, 25% B, 44% C, 19% D and 9% E loans. The terms of my loans are 81% 36 months and 19% 60 months.

They also don’t credit the money to you until what seems like about 5 days after the payment has been received. This also reduces your achieved rate of return, from the nominal rate charged to the borrower. I would like to assume they factor this into their calculated returns, but given the other decisions they make when calculating the return I am not certain they do.

In any case the real return is still very good compared to my other options and so if they inflate the results by 40 basis points (I don’t know what the actual discrepancy is and the uncertainty looking forward is much larger than that anyway). The expected rate is likely around 5-8% compared to about 0-.25% for me, so the slight exaggeration doesn’t matter to me.

For my portfolio (shown in the graphic above) Lending Club shows a current return of 12% with an expected return through the completion of the outstanding loans of 5.7% to 8.5%. The current return is very inflated when your portfolio is very new as you have experienced no, or very few, defaults. I will explore historical returns, returns as the portfolio ages and the expected returns in a future posts. My portfolio is currently 3% A, 25% B, 44% C, 19% D and 9% E loans. The terms of my loans are 81% 36 months and 19% 60 months.

You can read details on the loans (and filter loans on those details) for things such as: loan type, state of borrower, debt to income ratio, months since a delinquency, months since a default, monthly income, credit score, own/mortgage/rent. Lending club scores the loan quality and determines the loan interest rate depending on that (and 36 month versus 60 month term).

The more risk taken by borrowers the higher the expected returns. So if you take riskier loans you get a higher interest rate on the loan and historically even after losses from defaults the returns are greater. This brings up my biggest concern with these loans: underwriting risk. As long as Lending Club does a good job evaluating underwriting risk and properly assigning interest rates commensurate with that risk this should work very well as an investment.

As long as you have a well diversified portfolio of personal loans there is a long track record of the risk. And while plenty of risky personal loans will default, and more will default if the economy has a downturn the interest rates on the loans provides good income even after such losses. And even if things go poorly the actually losses of capital should be small (over the whole portfolio).

The discussion of investing in peer to peer loans using LendingClub will be continued in next post (next week, updated to add link to the post: Peer to Peer Portfolio Returns and The Decline in Returns as Loans Age).

Related: Looking for Yields in Stocks and Real Estate (2012) – Taking a Look at Some Dividend Aristocrat Stocks – Looking for Dividend Stocks in the Current Extremely Low Interest Rate Environment (2011) – Where to Invest for Yield Today (2010)

Credit has many benefits. Most people can’t pay cash for homes, college education or new cars. Without loans, buying a house or car would be impossible for many. And since it takes credit to build credit, many people apply for their first credit card in college to establish a credit history. A credit card also provides emergency funds when we’re short on cash.

Although we use credit regularly as consumers, there are dangers associated with credit. We can avoid some of these problems with responsible use. But unfortunately, credit management education isn’t taught in high school, and many adults don’t learn about credit management until after they’ve made mistakes.

Potential Dangers of Credit
Credit puts a lot of things within our financial reach, so it’s easy to get in over our heads. We might not have enough in savings to purchase an electronic device or take a vacation, but with one quick application, we can get approved for financing and take advantage of life’s pleasures. There’s nothing wrong with getting a loan. But some people can’t stop using credit and they get into serious debt.

Too much debt has a significant negative impact on your personal finances. Paying off that debt will reduce your available disposable income to build an emergency fund (if you haven’t done so already) or save for retirement a house or other large purchases.

Of course, debt isn’t the only thing to be concerned with. Getting credit also means you’re vulnerable to identity theft. This is one of the fastest growing crimes in the U.S. And while some people think it can’t happen to them, no one is invincible.

Keeping Your Credit Report Accurate
Identity theft involves someone stealing your personal information and purchasing items in your name or opening new accounts in your name. It can drive down your credit score and take several months or years to fix. Identity theft often goes unnoticed because some people never monitor their personal credit reports or file credit disputes

You might wonder, what is a credit dispute? As a consumer, you have the right to check your credit history and receive one free credit report from each of the bureaus annually. You are entitled to ask questions about anything included within your credit reports. 

Being proactive keeps your credit report free of errors, plus you’re able to detect unfamiliar account activity that could be a sign of identity theft. Credit report disputes are absolutely necessary if your credit report is inaccurate because these inaccuracies can hurt your credit score.

If you don’t know how to dispute credit report errors, you might feel powerless to fix your situation. However, filing a complaint and challenging errors is easier than you think. If you request a free credit report online from AnnualCreditReport.com, you can file a dispute directly from the website. Or you can write and send a dispute letter to each of the credit bureaus. The bureaus will start an investigation. And if able to confirm errors or fraudulent activity, these items must be updated or deleted from your report within 30 days.

Your credit history determines whether you’re able to buy a house or a car. Even finding work in some occupations requires a good credit score. So it’s important to use credit responsibly by paying your bills on time and keeping your debt manageable. Also, don’t forget to check your credit report at least once a year to make sure all information is accurate and up-to-date.

via wikipedia

The chart shows USA household debt in the 60% range of disposable income in the 1980s. It isn’t as if the 1980s in the USA were some low debt era. Personal debt was high then. It rose into the 120% range in the last 10 years and in the last few years dipped to the 110% range.

Given the large amount of debt falling into collection managing that debt has becoming increasingly important to local banks and credit unions. Companies like, Intelligent Banking Solutions, are helping those institutions deal with collections while building a strong business themselves.

As consumers we need to use debt sparingly and without our means or be trapped in a personal financial crisis. It is hard enough to get ahead today without creating problems such as paying high interest rate debt or penalties and fees for failing to pay back your obligations as required.

While too much mortgage debt is an issue, mortgage debt is less bad than other personal debt in my opinion. Student debt levels have been increasing dramatically over the last 10 years.

Low interest rates today can tempt consumers into unwise borrowing. That should be avoided. Other charts will show debt payments compared to disposable income. I believe those charts do not provide a good view at this time, due to low interest rates. If interest rates increase the debt payments required could increase dramatically very quickly.

Related: The USA Household Debt Overhang – Consumer and Real Estate Loan Delinquency Rates from 2001 to 2011 in the USA – Good News: Credit Card Delinquencies at 17 Year Low (2011)

Wahid Says Ringgit Too Weak as Growth Improves: Southeast Asia

India and Indonesia have experienced large stock market declines and currency devaluations recently. The Malaysian Ringgit has declines 10% against the US $ in the last 3 months. Malaysia is holding up ok, but is venerable as these international loses of confidence often sweep over countries (and move from country to country).

The main foreign exchange earner recently seems to be selling property, that isn’t a good way to be earning foreign currency (selling assets). It is ok to do this to some extent, but relying on large inflows this way is very risky (and self defeating over the long term if it is too large). Even though palm oil and rubber exports are declining a bit, I believe they are still strong sources of foreign currency so that is good.

I agree completely with his last statement. The issue is fixing the fundamentals. The statement can also be made that if you don’t fix the fundamentals short term market declines are the indication of the beginning of long term market declines. The critical point is fixing the fundamental problems and in Malaysia the most likely top of those fundamental issues is reducing debt levels (for the government and consumers). Fix that, at the other strengths of Malaysia’s economy will likely create a very positive future.

Large foreign ownership of debt is also risky, as those foreigners can pull out investments quickly. Investment sentiments change quickly and it is easy for fearful investors to overreact (especially with funds they have invested in other countries).

Related: Malaysian Economy Continues to Expand, Budget Deficits Remain High – Pursuing a Growing Economy While Avoiding the Pitfalls That Befall to Many Middle Income Countries – GDP Growth Per Capita for Selected Countries from 1970 to 2010 (Malaysia, Singapore, Korea, Indonesia…)

Chart showing loan delinquency rates from 2001-2011. It shows seasonally adjusted data for all banks for consumer and real estate loans. The chart is available for use with attribution. Data from the Federal Reserve.

2011 saw delinquency rates for loans fall across the board in the USA. Residential real estate delinquency rates fell just 25 basis points (to a still extremely large 9.86%). Commercial real estate delinquency rates fell an impressive 186 basis points (to a still high 6.12%). Credit card delinquency rates fell 86 basis points to a 17 year low, 3.27%.

The job market continues to struggle, though it is doing fairly well the last few months. The serious long term problems created by governments spending beyond their means (for decades) and allowing too big to fail institutions to destroy economic wealth and create great risk to the economy are not easy to solve: and we made no progress in doing so in 2011. The reduction in delinquency rates is a good sign for the economy. The residential real estate delinquency rates are still far too high as is government debt. And the failure to address the too big to fail (big donors to the politicians) is continuing to cause great damage to the economy.

We need to reduce consumer and government debt. Many corporations are actually flush with cash, so at least we don’t have a huge corporate debt problem. Reducing debt load will decrease risks to the economy and provide wealth for consumers to tap as they move into retirement. The too-big-to-fail big political donors like to keep policies in place that encourage too much debt and favor complex financial instruments that they take huge fees from and then let the government deal with the aftermath. The politicians continued favors to too-big-to-fail institutions is very damaging to out economic well being.

Across the board, the wealthy economies are facing a rapidly aging population (the USA is actually acing this at a much slower rate than most other rich countries – which is helpful).

Related: Consumer and Real Estate Loan Delinquency Rates 2000-2011 – Real Estate and Consumer Loan Delinquency Rates 1998-2009 – Government Debt as Percent of GDP 1998-2010 for OECD

Notes: these data are compiled from the quarterly Federal Financial Institutions Examination Council Consolidated Reports of Condition and Income. Charge-offs are the value of loans and leases removed from the books and charged against loss reserves. Charge-off rates are annualized, net of recoveries. Delinquent loans and leases are those past due thirty days or more and still accruing interest as well as those in nonaccrual status.

Charge-offs, which are the value of loans removed from the books and charged against loss reserves, are measured net of recoveries as a percentage of average loans and annualized. Delinquent loans are those past due thirty days or more and still accruing interest as well as those in nonaccrual status. They are measured as a percentage of end-of-period loans.

Chart showing loan delinquency rates from 2000-2011, shows seasonally adjusted data for all banks for consumer and real estate loans. The chart is available for use with attribution. Data from the Federal Reserve.

Residential real estate delinquency rates increased in the first half of 2011 in the USA. Other debt delinquency rates decreased. Credit card delinquency rates have actually reached a 17 year low.

While the job market remains poor and the serious long term problems created by governments spending beyond their means (for decades) and allowing too big to fail institutions to destroy economic wealth and create great risk for world economic stability the USA economy does exhibit positive signs. The economy continues to grow – slowly but still growing. And the reduction in delinquency rates is a good sign. Though the residential and business real estate rates are far far too high.

Related: Consumer and Real Estate Loan Delinquency Rates 2000-2010 – Real Estate and Consumer Loan Delinquency Rates 1998-2009 – Government Debt as Percent of GDP 1998-2010 for OECD

Notes: these data are compiled from the quarterly Federal Financial Institutions Examination Council Consolidated Reports of Condition and Income. Charge-offs are the value of loans and leases removed from the books and charged against loss reserves. Charge-off rates are annualized, net of recoveries. Delinquent loans and leases are those past due thirty days or more and still accruing interest as well as those in nonaccrual status.

Charge-offs, which are the value of loans removed from the books and charged against loss reserves, are measured net of recoveries as a percentage of average loans and annualized. Delinquent loans are those past due thirty days or more and still accruing interest as well as those in nonaccrual status. They are measured as a percentage of end-of-period loans.