Fourth Quarter 2023 Results Disclaimer Some of the statements in this presentation, including statements regarding our competitive advantages, loan and financial performance, macroeconomic and 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 stat ...

LendingClub Corporation (NYSE:LC) Q4 2023 Earnings Conference Call January 30, 2023 5:00 PM ET Company Participants Artem Nalivayko - Head of IR Scott Sanborn - CEO Drew LaBenne - CFO Conference Call Participants Brad Capuzzi - Piper Sandler Giuliano Bologna - Compass Point Bill Ryan - Seaport Research Partners Reggie Smith - JPMorgan David Chiaverini - Wedbush Securities Michael Perito - KBW Operator Hello, everyone. Thank you for attending today's LendingClub Fourth Quarter 2023 Earnings Conference Call. ...

LendingClub (LC) reported $185.61 million in revenue for the quarter ended December 2023, representing a year-over-year decline of 29.4%. EPS of $0.09 for the same period compares to $0.19 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $180.68 million, representing a surprise of +2.73%. The company delivered an EPS surprise of +350.00%, with the consensus EPS estimate being $0.02.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wal ...

Company Performance - LendingClub reported quarterly earnings of $0.09 per share, exceeding the Zacks Consensus Estimate of $0.02 per share, but down from $0.19 per share a year ago, representing an earnings surprise of 350% [1] - The company posted revenues of $185.61 million for the quarter ended December 2023, surpassing the Zacks Consensus Estimate by 2.73%, but down from $262.71 million year-over-year [1] - Over the last four quarters, LendingClub has consistently surpassed consensus EPS and revenue estimates [1] Future Outlook - The immediate price movement of LendingClub's stock will largely depend on management's commentary during the earnings call [2] - Current consensus EPS estimate for the upcoming quarter is $0.03 on revenues of $184.33 million, and for the current fiscal year, it is $0.35 on revenues of $768.15 million [4] - The estimate revisions trend for LendingClub is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [4] Industry Context - The Financial - Miscellaneous Services industry, to which LendingClub belongs, is currently in the bottom 33% of over 250 Zacks industries, which may impact stock performance [5] - Jackson Financial, another company in the same industry, is expected to report quarterly earnings of $3.53 per share, reflecting a year-over-year decline of 37.6%, with revenues anticipated to be $1.64 billion, up 530.2% from the previous year [5][6]

Core Viewpoint - LendingClub's business model has faced significant challenges due to rising interest rates and the regional banking crisis, but there are signs of potential recovery as regulatory capital requirements are expected to change in February 2024, allowing for greater growth capacity and possible share buybacks [1][2][14]. Regulatory Capital Position - LendingClub operates under a more restrictive regulatory capital regime compared to most banks, with commitments to maintain higher capital ratios until February 2024, including a CET1 risk-based capital ratio of 11.0% and a Tier 1 leverage ratio of 11.0% [3][4]. - Upon expiration of the current agreement in February 2024, LendingClub will revert to minimum capital requirements, significantly increasing its capacity to grow its balance sheet [5]. Structured Certificates - To adapt to challenging market conditions, LendingClub has introduced a Structured Certificates program, which involves private two-tier securitizations of packaged personal loans, allowing the company to take on less risk while providing attractive returns for asset managers [6][7]. - As of Q3, LendingClub has closed approximately $2 billion in Structured Certificates, with expectations for increased demand in Q4 due to declining yields on U.S. treasury bills [7][8]. Buybacks - LendingClub is currently trading at a significant discount to its tangible book value, making share buybacks an attractive option post-February 2024 when restrictions from the Radius acquisition agreement are expected to be lifted [11][13]. - The CFO indicated that share buybacks could become a compelling action for management and the board after the current restrictions are removed [13][14]. Final Thoughts - The shift from riskier personal loans to lower-risk Structured Certificates is likely to alleviate capital constraints, positively impacting LendingClub's business model and investment thesis [14]. - Key indicators to monitor in the upcoming Q4 earnings include signs of recovery in the marketplace and growth rates in the Structured Certificates program [14].

Financial Performance - Total net revenue for Q3 2023 decreased by $31.6 million, or 14% sequentially, and $104.1 million, or 34% year over year [243]. - Net income for Q3 2023 decreased by $5.1 million, or 50% sequentially, and $38.2 million, or 88% year over year [246]. - Total net revenue for Q3 2023 was $200.8 million, a decrease of 13.6% from $232.5 million in Q2 2023 and a decrease of 34.1% from $304.9 million in Q3 2022 [253]. - Net income for Q3 2023 was $5.0 million, down 50.5% from $10.1 million in Q2 2023 and down 88.4% from $43.2 million in Q3 2022 [253]. - Total non-interest income for Q3 2023 was $63,844, down 26% sequentially and 65% year-over-year [260]. - Total non-interest income for Q3 2023 was $56.222 million, down from $178.744 million in Q3 2022, reflecting a decline of 68.4% [325]. - For the first nine months of 2023, net income was $28.784 million, down from $266.094 million in the same period of 2022, a decline of 89.2% [328]. - Total net revenue for the first nine months of 2023 was $679.013 million, compared to $924.508 million in the first nine months of 2022, a decrease of 26.6% [328]. Loan Originations - Loan originations for Q3 2023 decreased by $502.4 million, or 25% sequentially, and $2.0 billion, or 57% year over year, primarily due to a decrease in unsecured personal loan origination volume [242]. - Total loan originations in Q3 2023 were $1.5 billion, a decrease of 25.0% from $2.0 billion in Q2 2023 and a decrease of 57.5% from $3.5 billion in Q3 2022 [253]. - Total loan originations for the nine months ended September 30, 2023, were $5,806,299, a decrease of 45% compared to the same period in 2022 [269]. - Loan origination volume for marketplace loans was $1.2 billion in Q3 2023, down 13% from $1.4 billion in Q2 2023 and down 50% from $2.4 billion in Q3 2022, due to lower investor demand amid rising interest rates [270]. Assets and Deposits - Total cash and cash equivalents as of September 30, 2023, increased by $103.8 million, or 9% sequentially, and $354.9 million, or 37% year over year [247]. - Total assets as of September 30, 2023, increased by $129.8 million, or 2% sequentially, and $1.7 billion, or 25% year over year [248]. - Total deposits as of September 30, 2023, increased by $156.7 million, or 2% sequentially, and $1.9 billion, or 37% year over year [248]. - Total assets as of September 30, 2023, were $8.5 billion, an increase from $8.3 billion as of June 30, 2023, and an increase from $6.8 billion as of September 30, 2022 [256]. - Total deposits increased to $7.0 billion as of September 30, 2023, compared to $6.8 billion as of June 30, 2023, and $5.1 billion as of September 30, 2022 [256]. Cost Management - The company implemented a cost reduction plan in October 2023, reducing its workforce by 172 employees, or 14%, expected to save approximately $30 to $35 million annually [241]. - Total non-interest expense for Q3 2023 was $128,035, down 15% from Q2 2023 and 31% from Q3 2022 [260]. - Compensation and benefits expense decreased by $13.1 million, or 18%, sequentially for Q3 2023, and by $26.4 million, or 31%, year-over-year [311]. - Marketing expenses decreased by $4.4 million, or 18%, sequentially for Q3 2023, and by $26.5 million, or 58%, year-over-year [313]. Credit Losses and Provisions - Provision for credit losses for Q3 2023 decreased by $2.1 million, or 3% sequentially, and $18.3 million, or 22% year over year [245]. - The provision for credit losses for the third quarter of 2023 was $64.5 million, a decrease of 22% compared to $82.7 million in the third quarter of 2022, primarily due to lower loan origination volumes [300]. - Total provision for credit losses for the nine months ended September 30, 2023, was $201.7 million, a decrease of 2% from $205.8 million in the same period of 2022 [300]. - Net charge-offs for Q3 2023 were $68.8 million, an increase from $59.9 million in Q2 2023 and significantly higher than $22.7 million in Q3 2022 [256]. Interest Income and Margins - Net interest margin for Q3 2023 was 6.9%, down from 7.1% in Q2 2023 and 8.3% in Q3 2022 [243]. - Total interest income for Q3 2023 was $207,412, a decrease of 3% from Q2 2023 but an increase of 45% from Q3 2022 [260]. - Net interest income for Q3 2023 was $137,005, down 7% from Q2 2023 but up 11% from Q3 2022 [260]. - The interest rate spread narrowed to 6.28% from 6.48% in the previous quarter, indicating pressure on net interest margins [287]. - The average yield for unsecured personal loans was 13.35%, slightly up from 13.33% in the previous quarter, while the year-over-year yield decreased due to a shift towards higher credit quality loans [288]. Regulatory and Economic Environment - The company has been subject to increasing regulatory scrutiny since its acquisition, impacting its operational scope and compliance requirements [338]. - The company is committed to maintaining capital levels above the minimum ratios prescribed under the U.S. Basel III capital framework to support its business initiatives [344]. - The company anticipates capital expenditures of approximately $60 million in 2023, primarily for the development of its online lending marketplace platform [352]. - Elevated inflation and interest rates may lead to increased borrower defaults and reduced investor participation on the marketplace bank platform [374]. - The company has begun adjusting its underwriting standards in anticipation of the potential impact of the Student Loan Payment Resumption [376].

Financial Data and Key Metrics Changes - Total revenue for Q3 2023 was $201 million, down from $232 million in the prior quarter and $305 million in the same quarter of the previous year [18] - Pre-provisioned net revenue (PPNR) was $73 million, compared to $81 million in the prior quarter and $119 million in Q3 2022 [17] - Net interest income was $137 million, down from $147 million in the prior quarter and up from $124 million in the same quarter of the previous year [19] - Non-interest income was $64 million, down from $86 million in the prior quarter and $181 million in the same quarter of the previous year [18] - Provision for credit losses was $64 million, compared to $67 million in the prior quarter and $83 million in Q3 2022 [23] - Net interest margin was 6.9%, down from 7.1% in the prior quarter and 8.3% in the prior year [20] Business Line Data and Key Metrics Changes - Originations were $1.5 billion, down from $2 billion in the prior quarter and $3.5 billion in Q3 2022 [16] - Approximately $500 million of originations were whole loans for the marketplace, primarily sold to asset managers [16] - The structured certificates program originated $450 million, showing strong demand [16] - Non-interest expense was $128 million, down from $151 million in the prior quarter and $186 million in the same quarter last year [21] Market Data and Key Metrics Changes - The company noted a significant reduction in bank investor participation, which historically comprised 50% of the marketplace [6] - The average sales price for loans sold was low-96s, indicating a 4-point discount [38] - The company has close to $2 billion of signed orders for structured certificates over the next six months [9] Company Strategy and Development Direction - The company is focusing on adapting its underwriting standards to the inflationary environment and maintaining prime originations [10] - A new structured certificates program was launched to attract asset managers and provide low-cost financing [7] - The company plans to enhance its mobile app to integrate loan servicing, spending, and savings [12] - The hiring of a Chief Customer Officer aims to improve marketing and customer engagement [14] Management's Comments on Operating Environment and Future Outlook - The operating environment remains challenging, particularly on the investor side, due to banking turmoil earlier in the year [6] - Management expects a modest increase in originations for Q4, with a range of $1.5 billion to $1.7 billion [27] - The company anticipates PPNR to range from $35 million to $45 million for Q4 [27] - Management expressed confidence in the company's ability to remain profitable and preserve shareholder capital while investing in new capabilities [28] Other Important Information - The company has a strong capital position with a Tier 1 leverage ratio of 13.2% and a CET1 capital ratio of 16.9% [26] - Total assets increased to $8.5 billion, reflecting a shift towards more securities from structured certificates [25] - The company has $1.3 billion in cash on hand and substantial unused borrowing capacity of approximately $3.8 billion [26] Q&A Session Questions and Answers Question: What is the dollar amount of the additional true-up for the held for investment portfolio? - The additional provision taken on the back book was about $20 million between the two vintages [31] Question: Is there irrational pricing by competitors affecting volume? - The dominant issue is the investor supply of capital, with competition in lower FICO bands lessening [34] Question: What percent of par were loans sold at in Q3? - The average sales price was low-96s, indicating a 4-point discount [38] Question: What is the outlook for marketing expenses? - Marketing expenses are expected to remain consistent with current levels, assuming the same marketing efficiency [46] Question: Can you clarify the structured certificate program's buyers? - The buyers include both existing partners and new partners, with significant capital to deploy [73]

Third Quarter 2023 Results Disclaimer Some of the statements in this presentation, including statements regarding our competitive advantages, macroeconomic and business outlook, participation in the SLCLC program, loan and financial performance, 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 sta ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 Commission File Number: 001-36771 | --- | --- | |--------------------------------------------------------------------------------|--------------------------------------| | | | | LendingClub Corporation (Exact name of registrant as specified in its charter) | | | Delaware | 51-0605731 | | (State ...

LendingClub Corporation (NYSE:LC) Q2 2023 Earnings Conference Call July 26, 2023 5:00 PM ET Company Participants Artem Nalivayko - Vice President of Finance Scott Sanborn - Chief Executive Officer Drew LaBenne - Chief Financial Officer Conference Call Participants Bill Ryan - Seaport Research Partners Reggie Smith - JPMorgan Alexander Villalobos - Jefferies Giuliano Bologna - Compass Point Tim Switzer - KBW Operator Hello, everyone. Thank you for attending today's LendingClub's Second Quarter Earnings Confe ...