Delinquency

Portfolio at Risk (PAR) means the Outstanding Default Ratio  as a snapshot on a given date (last day of the month).

Adjusted Portfolio at Risk  means the Outstanding Default Ratio  as a snapshot on a given date (last day of the month) with the denominator updated based on Adjusted Outstanding Principal Balance Excluding Writeoffs.

          Why is Par Important:  

Portfolio At Risk (PAR) is a key metric for loan portfolios because it measures the percentage of a portfolio's total outstanding balance that is at risk of default. Specifically, PAR measures the proportion of loans that are past due but not yet written off, and it is typically calculated for loans that are 30, 60, or 90 days past due.

PAR is important for several reasons. First, it provides a snapshot of the overall quality of a loan portfolio, indicating the extent to which loans are being repaid on time. If PAR is high, it may be an early warning sign of potential credit losses in the future.

Second, PAR can help lenders identify specific loans or groups of loans that are at risk of default, allowing them to take remedial action before losses occur. For example, lenders may work with borrowers to restructure loans or provide additional support to help them get back on track.

Finally, PAR is a widely used metric in the banking and finance industry, allowing lenders to compare the quality of their loan portfolios to industry benchmarks and best practices. This can help lenders identify areas where they need to improve their lending practices and risk management processes.

Rolling Default Rate means the average of the previous 12 months using DPD90 (includes Writeoffs) and 6 MoB.    

Adjusted Rolling Default Rate means the average Adjusted Portfolio at Risk value for the previous 12 months (based on the month end snapshot).

Outstanding by Delinquency means the Delinquency Bucket as a snapshot at the end of the month based on Outstanding Principal Balance.

Adjusted Outstanding by Delinquency means the Delinquency Bucket as a snapshot at the end of the month based on Adjusted Outstanding Principal Balance.

          Why is Outstanding by Delinquency Important: 

Outstanding by Delinquency bucket is a key metric for loan portfolios because it provides a snapshot of the amount of loans that are delinquent or in default within different time frames. This metric divides the total outstanding loan balance into different "buckets" based on the number of days past due, such as 30, 60, or 90 days past due.

This metric is important because it helps lenders and investors identify the level of risk within the loan portfolio, as well as the potential impact on cash flow and profitability. By analyzing the outstanding balance by delinquency bucket, lenders and investors can determine the magnitude and severity of delinquencies and defaults in the portfolio.

Lenders and investors can also use this metric to identify trends and patterns in delinquency and default rates, as well as to track the performance of borrowers over time. For example, if the outstanding balance in the 30-day bucket is increasing, it may indicate that borrowers are experiencing financial difficulties, and lenders may need to adjust their underwriting standards or offer support to help borrowers avoid default.

Moreover, outstanding by delinquency bucket allows lenders to identify potential losses associated with delinquent or defaulted loans and make informed decisions about loan restructuring, asset sales, or write-offs. By analyzing the outstanding balance by delinquency bucket, lenders can estimate the level of reserves they need to set aside to cover potential losses, thereby ensuring the financial stability and soundness of the loan portfolio.

In summary, Outstanding by Delinquency bucket is a key metric for loan portfolios because it helps lenders and investors monitor credit risk, identify potential losses, and make informed decisions about portfolio management and risk mitigation.

First Payment Default (FPD) by Cohort means the percent of the sum of  First Payment Defaults as a percent of Original Principal Balance for each monthly cohort.  

Borrower Concentration means the Outstanding Principal Balance for an Active Unique Client as a percent of the sum of all Outstanding Principal Balance.

Delinquency by Cohort means the proportion of the  Outstanding Principal Balance Delinquency Bucket for a monthly cohort.