Core Viewpoint - LendingClub (LC) is expected to significantly outperform the market, particularly in a soft landing economic scenario, with a potential 50% chance of such an outcome as suggested by economic expert Mohamed El-Erian [5]. Company Financials - As of June 2024, LC's balance sheet shows a strong asset base primarily composed of fixed-yield loans, which do not reprice with interest rate changes [6][7]. - The total deposit base is approximately $7.5 billion, and a reduction of 150 basis points in rates could yield a pre-tax benefit of around $112 million, which is substantial given LC's market cap of $1.2 billion [8]. - The current balance of securities available for sale is about $2.4 billion, with a fixed yield of just over 7%, indicating strong demand from asset managers [7]. Marketplace Dynamics - LC's marketplace revenue for Q2-2024 is approximately $58 million, significantly lower than the $214 million in Q2-2022, but there are expectations for strong growth as the economic environment improves [9]. - An incremental annual revenue increase of around $200 million from the marketplace is considered plausible, with most benefits expected to contribute to the bottom line [9]. Risk Management - LC has de-risked its balance sheet in recent years, maintaining a high Common Equity Tier 1 (CET1) ratio of approximately 18%, which positions the company well to withstand economic downturns [12]. - The primary risk to LC's business model is a hard landing, which could lead to increased loan losses, although the likelihood of this scenario is viewed as low [10].

Rate hikes have slammed this fintech, but imminent cuts could make it skyrocket.The Federal Reserve's fastest-ever interest rate hikes since March 2022 have been a big headwind for a lot of stocks. But nowhere have rapid rate hikes been felt more than the fintech space, with the potential exception of regional banks. Fintech marketplaces such as LendingClub (LC -2.76%) count regional banks as some of their key loan buyers, so when those banks had to pull back, fintech marketplaces such as LendingClub, Upsta ...

Core Viewpoint - LendingClub (LC) has shown a significant price increase of 18.8% over the past four weeks, with a mean price target of $13 indicating a potential upside of 30.9% from the current price of $9.93 [1] Price Target Analysis - The mean estimate consists of 10 short-term price targets with a standard deviation of $1.35, suggesting a relatively high agreement among analysts [1] - The lowest estimate of $11 indicates a 10.8% increase, while the most optimistic target is $15, representing a 51.1% potential increase [1][4] Analyst Sentiment - Analysts show strong agreement in revising earnings estimates higher, which correlates with potential stock price movements [5] - Over the last 30 days, six estimates have been revised upward, leading to a 41.4% increase in the Zacks Consensus Estimate for the current year [5] Zacks Rank - LC holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate factors, indicating strong potential for upside [5] Caution on Price Targets - While price targets are a common tool for investors, they can often mislead, and reliance solely on them may not yield favorable returns [2][4] - A low standard deviation among price targets indicates a consensus among analysts, but it should not be the sole basis for investment decisions [4][6]

PART I. FINANCIAL INFORMATION [Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for the period ended June 30, 2024, show an increase in total assets to $9.6 billion, driven by growth in securities and deposits, while net revenue decreased to $187.2 million for the quarter, though net income increased to $14.9 million due to reduced credit loss provisions [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2024, total assets increased to $9.59 billion from $8.83 billion at year-end 2023, primarily driven by a significant rise in securities available for sale to $2.81 billion and total deposits to $8.10 billion, while loans and leases held for investment, net, decreased to $4.00 billion Balance Sheet Items | Balance Sheet Items | June 30, 2024 (in thousands) | December 31, 2023 (in thousands) | | :--- | :--- | :--- | | Total cash and cash equivalents | $938,119 | $1,252,504 | | Securities available for sale | $2,814,383 | $1,620,262 | | Loans and leases held for investment, net | $3,999,482 | $4,539,915 | | Total assets | $9,586,050 | $8,827,463 | | Total deposits | $8,095,328 | $7,333,486 | | Total liabilities | $8,298,105 | $7,575,641 | | Total equity | $1,287,945 | $1,251,822 | [Condensed Consolidated Statements of Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For Q2 2024, net income increased 47% to $14.9 million despite a 19% decrease in total net revenue to $187.2 million, largely due to a 47% reduction in the provision for credit losses and a 12% decrease in non-interest expenses, resulting in diluted EPS of $0.13 Three Months Ended June 30 | Metric | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Total net revenue | $187,241 | $232,470 | -19.5% | | Provision for credit losses | $35,561 | $66,595 | -46.6% | | Total non-interest expense | $132,258 | $151,079 | -12.5% | | Net income | $14,903 | $10,110 | +47.4% | | Diluted EPS | $0.13 | $0.09 | +44.4% | Six Months Ended June 30 | Metric | Six Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Total net revenue | $367,929 | $478,164 | -23.1% | | Provision for credit losses | $67,488 | $137,179 | -50.8% | | Net income | $27,153 | $23,776 | +14.2% | | Diluted EPS | $0.24 | $0.22 | +9.1% | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on significant accounting policies and financial statement line items, including a breakdown of marketplace revenue, composition and credit quality of loan and securities portfolios, an increase in total deposits, and confirmation of regulatory capital compliance [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=56&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reports sustained GAAP profitability despite challenges from the interest rate environment and economic volatility, which have adversely impacted marketplace loan demand and pricing, with profitability supported by strong credit performance, expense discipline, and a 47% YoY decrease in the provision for credit losses - The company has maintained GAAP profitability despite adverse impacts from the interest rate environment and economic volatility on investor demand and pricing for marketplace loans[252](index=252&type=chunk) - Total assets grew **15% YoY to $9.6 billion**, and total deposits grew **18% YoY to $8.1 billion**, with FDIC-insured deposits representing approximately **87% of the total**[258](index=258&type=chunk) Key Financial Metrics | Metric | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | Loan Originations | $1.81B | $1.65B | $2.01B | | Total Net Revenue | $187.2M | $180.7M | $232.5M | | Net Income | $14.9M | $12.3M | $10.1M | | Diluted EPS | $0.13 | $0.11 | $0.09 | [Results of Operations](index=61&type=section&id=Results%20of%20Operations) In Q2 2024, total net revenue decreased 19% YoY to $187.2 million, driven by a 32% decline in Marketplace Revenue, while a 47% reduction in Provision for Credit Losses and a 12% drop in Non-Interest Expense led to a 47% YoY increase in Net Income to $14.9 million Q2 2024 vs Q2 2023 Performance Drivers | Component | Q2 2024 vs Q2 2023 Change | Key Driver(s) | | :--- | :--- | :--- | | **Marketplace Revenue** | ▼ 32% | Lower marketplace loan volume and lower loan sale prices | | **Net Interest Income** | ▼ 12% | Shift in asset mix from loans to securities and higher deposit funding costs | | **Provision for Credit Losses** | ▼ 47% | Lower volume of originated loans retained as HFI | | **Non-Interest Expense** | ▼ 12% | Decreased compensation and benefits from workforce reductions in 2023 | [Capital Management](index=82&type=section&id=Capital%20Management) The company actively manages its capital to meet regulatory requirements and support business initiatives, with both LendingClub Corporation and LC Bank maintaining capital ratios well above the minimums required by the Basel III framework as of June 30, 2024 LendingClub Corporation Capital Ratios | Ratio (LendingClub Corporation) | June 30, 2024 | Required Minimum + CCB | | :--- | :--- | :--- | | CET1 Capital Ratio | 17.9% | 7.0% | | Tier 1 Capital Ratio | 17.9% | 8.5% | | Total Capital Ratio | 19.2% | 10.5% | | Tier 1 Leverage Ratio | 12.1% | 4.0% | [Liquidity](index=83&type=section&id=Liquidity) The company manages liquidity to meet both expected and contingent cash flow obligations, with primary sources for LC Bank including its deposit base, cash, and available borrowing capacity from the FHLB and FRB Discount Window, which management believes are sufficient for the next twelve months - Capital expenditures for 2024 are expected to be approximately **$50 million**, primarily for the development and support of the online lending marketplace platform[366](index=366&type=chunk) LC Bank Liquidity Sources | LC Bank Liquidity Sources | June 30, 2024 (in thousands) | | :--- | :--- | | Cash and cash equivalents | $917,693 | | Liquid securities available for sale | $366,724 | | Total available borrowing capacity | $2,995,451 | [Quantitative and Qualitative Disclosures About Market Risk](index=85&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, which affects net interest income, with a sensitivity analysis showing that a hypothetical 100 basis point increase in interest rates would decrease projected net interest income by 3.5% over the next twelve months, while a 100 basis point decrease would increase it by 1.4% Projected Change in Net Interest Income | Instantaneous Change in Interest Rates | Projected Change in Net Interest Income (Next 12 Months) | | :--- | :--- | | + 200 basis points | (7.3)% | | + 100 basis points | (3.5)% | | – 100 basis points | 1.4% | | – 200 basis points | 2.4% | [Controls and Procedures](index=87&type=section&id=Item%204.%20Controls%20and%20Procedures) As of June 30, 2024, the company's management, including the CEO and CFO, concluded that its disclosure controls and procedures were effective at a reasonable assurance level, with no material changes to the company's internal control over financial reporting during the second quarter of 2024 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period[382](index=382&type=chunk) - No material changes in internal control over financial reporting occurred during the second quarter of 2024[383](index=383&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=87&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various claims and regulatory matters arising in the ordinary course of business, with a detailed discussion provided in Note 18 of the financial statements - For a comprehensive discussion of legal proceedings, the company refers to Note 18 in Part I, Item 1 of this report[384](index=384&type=chunk) [Risk Factors](index=87&type=section&id=Item%201A.%20Risk%20Factors) The company states that the risk factors disclosed in its Annual Report on Form 10-K remain current in all material respects and could adversely affect its business, financial condition, and operating results - The Risk Factors section from the company's Annual Report remains current in all material respects[385](index=385&type=chunk) [Other Information](index=88&type=section&id=Item%205.%20Other%20Information) This section discloses that CEO Scott Sanborn entered into a Rule 10b5-1 trading plan in May 2024 to sell up to 119,000 shares, and on July 30, 2024, the company filed an Eighth Amended and Restated Certificate of Incorporation to limit the personal liability of certain officers as permitted by Delaware law - CEO Scott Sanborn adopted a Rule 10b5-1 trading plan in May 2024 to sell up to **119,000 shares**, representing his first sale of company stock in eight years as CEO, outside of tax-related obligations[388](index=388&type=chunk)[389](index=389&type=chunk) - The company filed an Eighth Amended and Restated Certificate of Incorporation to limit the liability of certain officers, effective July 30, 2024[390](index=390&type=chunk)

Core Viewpoint - LendingClub (LC) has received a Zacks Rank 1 (Strong Buy) upgrade, indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Impact - The Zacks rating system tracks the Zacks Consensus Estimate, which reflects EPS estimates from sell-side analysts, and changes in these estimates are strongly correlated with near-term stock price movements [1][3]. - Rising earnings estimates for LendingClub suggest an improvement in the company's underlying business, which is expected to positively influence its stock price [3]. Earnings Estimate Revisions - LendingClub is projected to earn $0.29 per share for the fiscal year ending December 2024, reflecting a year-over-year decline of 19.4% [5]. - Over the past three months, the Zacks Consensus Estimate for LendingClub has increased by 8%, indicating a positive trend in earnings estimates [5]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [4]. - The upgrade of LendingClub to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [7].

Company Overview - LendingClub (LC) currently holds a Momentum Style Score of B and a Zacks Rank of 1 (Strong Buy) [2][6] - The company connects borrowers and lenders online, positioning itself as a promising momentum pick [3] Price Performance - Over the past week, LC shares increased by 4.53%, outperforming the Zacks Financial - Miscellaneous Services industry, which rose by 1.45% [3] - In the last month, LC's price change was 46.32%, significantly higher than the industry's 2.94% [3] - Over the past quarter, LC shares rose by 36.42%, and over the last year, they increased by 61.84%, while the S&P 500 only moved 10.01% and 21.8% respectively [4] Trading Volume - LC's average 20-day trading volume is 1,645,599 shares, indicating a bullish sign as it establishes a good price-to-volume baseline [4] Earnings Estimates - In the past two months, 2 earnings estimates for LC moved higher, while none were revised lower, increasing the consensus estimate from $0.27 to $0.29 [5] - For the next fiscal year, 2 estimates have also moved upwards with no downward revisions [5]

Financial Data and Key Metrics Changes - Originations increased by 10% sequentially to $1.8 billion, with pre-provision net revenue growing 13% to $55 million, and GAAP net income rising 21% to nearly $15 million [6][7][28] - Total revenue for the quarter was $187 million, up from $181 million in the prior quarter, with net interest income increasing to $129 million from $123 million [20][22] - Risk-adjusted revenue rose to $152 million from $149 million in the prior quarter, reflecting the lower risk nature of the assets [22] Business Line Data and Key Metrics Changes - The structured certificate program led originations with $885 million, while whole loans sold through the marketplace totaled $270 million [19] - The company retained $335 million in its held-for-investment portfolio, increasing the amount of whole loans retained on the balance sheet to 36% of total originations, up from 32% in the prior quarter [19][20] Market Data and Key Metrics Changes - The company reported a 40% better delinquency rate across all core segments compared to competitors, with delinquencies and charge-offs trending lower as the portfolio ages [7][8] - The demand for personal loans remains strong, with over 80% of members stating that LendingClub's products help them manage their debt burden effectively [11] Company Strategy and Development Direction - The company aims to leverage its industry-leading capabilities to acquire more customers and enhance engagement through its mobile app, which has seen a doubling of first-time downloads [12][13] - Strategic initiatives include maintaining strong credit performance, innovating products, and re-engaging banks to drive loan sales pricing and originations growth [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the challenging operating environment, highlighting a solid foundation for growth and a historic opportunity ahead [17] - The company anticipates originations to grow to a range of $1.8 billion to $1.9 billion in Q3, supported by improving marketplace demand [28] Other Important Information - The company has upgraded its servicing operations, resulting in a one-third reduction in the operational cost to originate a personal loan over the past year [12] - The tangible book value per common share increased to $10.75 [28] Q&A Session Summary Question: Inquiry about loan sales and current loan book marks - Management noted a 20 basis point increase in loan prices quarter-over-quarter and a $110 million increase in loans sold through the marketplace [32] Question: Update on discussions with banks regarding loan purchases - Management indicated a strong pipeline of discussions with banks, with expectations for potential purchases in Q4, though timing is uncertain [35] Question: Performance of new programs and their impact on volume - New initiatives are contributing to growth, with management maintaining flat acquisition costs while driving efficient borrower acquisition [37] Question: Changes in consumer engagement and loan demand - Management highlighted strong demand due to high credit card balances, with opportunities for consumer education to increase take rates [51] Question: Clarification on PPNR guidance for Q3 - Management provided guidance for PPNR in Q3 at $40 million to $50 million, anticipating stable revenue and modest expense increases [55]

LendingClub’s latest results noted growth in loan originations, a surge in repeat business — and cross-pollination efforts that management said reflect the ability to deepen, and lengthen, customer relationships.CEO Scott Sanborn noted on the conference call with analysts that originations were up 10% to more than $1.8 billion. “We have calibrated the business to the current operating environment,” he said on the call, as “strong credit performance” was a hallmark of the quarter, and said that delinquency r ...

Second Quarter 2024 Results July 30, 2024 Disclaimer Some of the statements in this presentation, including statements regarding our competitive advantages, loan and financial performance, business outlook, and demand for our loan programs, are "forward-looking statements." The words "anticipate," "believe," "estimate," "expect," "intend," "may," "outlook," "plan," "predict," "project," "will," "would" and similar expressions may identify forward-looking statements, although not all forward-looking statemen ...

LendingClub (LC) came out with quarterly earnings of $0.13 per share, beating the Zacks Consensus Estimate of $0.04 per share. This compares to earnings of $0.09 per share a year ago. These figures are adjusted for nonrecurring items. This quarterly report represents an earnings surprise of 225%. A quarter ago, it was expected that this company that connects borrowers and lenders online would post earnings of $0.03 per share when it actually produced earnings of $0.11, delivering a surprise of 266.67%. Over ...