LendingClub (NYSE: LC) 2025 Investor Day Summary Company Overview - **Company**: LendingClub - **Event**: 2025 Investor Day - **Date**: November 5, 2025 - **Significance**: First Investor Day since becoming a bank Key Points and Arguments Strategic Transformation - LendingClub has transformed significantly since acquiring a bank charter, unlocking strategic potential and targeting a valuable audience for lifetime lending and banking [6][12] - The company emphasizes a clear strategy: acquire customers through lending, engage them, and provide additional products and services [7][10] Competitive Advantages - **Underwriting**: LendingClub utilizes advanced machine learning and AI for underwriting, with a data advantage from over $1.6 trillion in validated loan demand and 150 billion data cells [8][36] - **Performance Metrics**: - 40% lower delinquency rates compared to competitors [37] - One of the lowest fraud loss rates in the industry [49] - 25% better recovery rates through smart collections [37] Target Customer Base - Focus on the "motivated middle" (income between $50,000 and $200,000), representing 32% of the U.S. population but nearly half of the non-mortgage credit wallet [16][18] - This demographic is digitally savvy, value-conscious, and has a higher-than-average income, leading to better access to credit [17] Market Dynamics - Shift from branch-based banking to mobile banking, with LendingClub positioned to capitalize on this trend [21][22] - The average credit card interest rate is 23%, while LendingClub offers unsecured credit at 30% lower rates [22][23] - Savings accounts at large banks yield minimal interest, while LendingClub offers 420 basis points with no minimum balance [24] Customer Engagement and Retention - 83% of customers express a desire to engage more with LendingClub, indicating strong customer loyalty [27] - Repeat borrowers account for 50% of annual issuance, with many returning multiple times [68][69] Growth Projections - Anticipated growth in personal loans from $10 billion to $18-22 billion over the medium term, driven by funnel efficiency, marketing channel expansion, and product innovation [79][95] - Major purchase financing and home improvement financing are identified as significant growth opportunities, with a combined addressable market of $250 billion [89][95] Product Innovations - Introduction of a top-up loan product allowing customers to consolidate existing loans and add new expenses, achieving a 93% customer satisfaction rate [77][78] - Expansion into home improvement financing through strategic partnerships and technology acquisitions [91][92] Customer Experience Enhancements - Development of a mobile app that has increased digital engagement from 25% to 42% of borrowers, leading to a significant rise in loan issuance through the app [105][108] - Introduction of DebtIQ, providing free debt and credit insights to encourage ongoing engagement [110] Additional Important Insights - The company has a strong focus on data-driven decision-making and continuous improvement through high-frequency testing and real-time adjustments to credit strategies [45][46] - LendingClub's approach to collections is proactive, utilizing AI to identify potential delinquencies early and engage customers effectively [51][54] This summary encapsulates the core themes and insights from LendingClub's 2025 Investor Day, highlighting the company's strategic direction, competitive advantages, and growth potential in the evolving financial landscape.

Investor Day 2025 NOVEMBER 5, 2025 Agenda 10:35-10:50 BREAK 1:20-1:30 CLOSE SCOTT SANBORN, CHIEF EXECUTIVE OFFICER 2 9:05-9:25 WELCOME SCOTT SANBORN, CHIEF EXECUTIVE OFFICER 9:25-9:45 CREDIT KIRAN AWARE, HEAD OF CREDIT STRATEGY & PRICING 9:45-10:05 LENDING STEVE MATTICS, CHIEF LENDING OFFICER 10:05-10:25 ENGAGEMENT MARK ELLIOT, CHIEF CUSTOMER OFFICER 10:25-10:35 Questions & Answers 10:50-11:10 TECHNOLOGY LUKASZ STROZEK, CHIEF TECHNOLOGY OFFICER 11:10-11:30 OUR MODEL DREW LABENNE, CHIEF FINANCIAL OFFICER 11: ...

Core Viewpoint - LendingClub Corporation announced a stock repurchase program to acquire up to $100 million of its common stock through December 31, 2026, reflecting confidence in its financial strength and long-term earnings potential [1][2]. Financial Performance - The company reported record pre-tax net income in the third quarter of 2025, indicating a significant improvement in its financial profile since becoming a bank holding company in 2021 [2]. Stock Repurchase Program - The stock repurchase program is designed to enhance shareholder value and will be executed based on market conditions, stock price, and other factors [2][7]. - The program includes the potential acquisition of shares through open market purchases and the holding back of vesting restricted stock units [2][7]. Business Strategy - LendingClub is focused on leveraging innovative technology and mobile-first experiences to provide an integrated suite of financial products, aiming to help members retain more of their earnings and increase savings [3]. - The company emphasizes the importance of effective credit management, supported by advanced underwriting models informed by extensive proprietary data [4]. Market Expansion - LendingClub is expanding into the $500 billion home improvement financing market, which is seen as a natural extension of its business model [8].

Core Insights - The Federal Reserve has cut the federal funds rate three times in late 2024 and recently announced a second rate cut for 2025, leading to a decline in deposit rates [1][5] - High-yield savings accounts offer significantly higher interest rates compared to traditional savings accounts, with rates reaching up to 4% APY or higher [2][3] Group 1: Current Savings Rates - The average savings account rate is only 0.40%, while high-yield savings accounts typically offer rates around 4% to 4.5% APY [3] - As of November 5, 2025, the highest savings account rate available is 4.2% APY, offered by Openbank, Jenius Bank, and LendingClub [4] Group 2: Future Rate Expectations - Deposit account rates are closely tied to the federal funds rate; when the Fed lowers its target rate, deposit rates tend to fall [4][5] - Experts predict that additional rate cuts may occur, suggesting that savings account rates will continue to decline [5] Group 3: Considerations for Savings Accounts - High-yield savings accounts are recommended for short-term savings goals due to their competitive interest rates and security [6] - While high-yield savings accounts offer attractive rates, they may not match the long-term growth potential of stock market investments [6] - Accessibility is a key advantage of high-yield savings accounts compared to other investment options like certificates of deposit (CDs), which may impose penalties for early withdrawals [7]

Core Insights - Concerns about consumer strength are rising due to record-high credit card debt, but the Federal Reserve's interest rate reductions may alleviate borrowing costs and encourage debt consolidation [1] Company Overview - LendingClub has transformed from a peer-to-peer lending pioneer to a digital bank, enhancing its resilience through the acquisition of Radius Bank in 2021, which provided full-stack banking capabilities [4][5] Financial Performance - In Q3, LendingClub originated over $2.6 billion in loans, marking a 37% year-over-year increase, and generated a record $158 million in net interest income [7][8] Business Strategy - The acquisition of Radius Bank allows LendingClub to retain high-quality loans while selling the rest, contributing significantly to its growth in a rising interest rate environment [6]

Core Insights - LendingClub's lower valuation compared to peers like SoFi and Upstart is attributed to its original business model and slower growth in loan originations [1][6] - The company is planning a rebranding to create new opportunities while maintaining its high customer satisfaction metrics [2][3] - Despite lower originations growth, LendingClub demonstrates higher efficiency in converting loans into revenue and profits [8][11] Company Performance - LendingClub has a customer satisfaction rating of 4.83 out of 5 and a net promoter score of 81, indicating strong customer loyalty [1] - The company reported a 37% growth in loan originations last quarter, primarily in unsecured personal loans, but this is lower than SoFi's 53% and Upstart's 154% [6][8] - LendingClub's revenue growth was 32% year-over-year, with earnings/contribution profit growth at 185%, showcasing its efficiency in loan performance [8][11] Market Position - LendingClub is the oldest among new-age lenders and has performed better than newer competitors during economic downturns [4] - The company has shifted from a retail model to primarily selling loans to institutional investors, including a $1 billion agreement with BlackRock [5][6] - The upcoming Investor Day is expected to outline a long-term vision and potentially new business ventures, which may attract investor interest [16] Underwriting and Risk Management - LendingClub's underwriting practices have resulted in 37% to 47% lower 30-day delinquencies compared to competitors [11] - The company focuses on quality over quantity in borrower selection, which has led to better loan performance and pricing [12][14] - Unlike competitors, LendingClub sells loans without credit enhancements, contributing to its superior bottom-line performance [14]

Financial Performance - Loan originations for Q3 2025 increased by $708.8 million, or 37%, year over year, driven by a rise in unsecured personal loan origination volume [170] - Total net revenue for Q3 2025 rose by $64.4 million, or 32%, year over year, with marketplace revenue increasing by $43.8 million, or 75% [170] - Net income for Q3 2025 increased by $29.8 million, or 206%, year over year, with diluted earnings per share growing to $0.37 from $0.13 in Q3 2024 [170] - Total loan originations for Q3 2025 were $2.622 billion, compared to $2.391 billion in Q3 2024 [174] - Net income for Q3 2025 was $44,274, representing a 16% increase from Q2 2025 and a 206% increase from Q3 2024 [180] - Total net revenue for the nine months ended September 30, 2025, was $747.5 million, a 27.1% increase from $588.0 million in the same period of 2024 [269] - Net income for the nine months ended September 30, 2025, was $94.1 million, compared to $41.6 million in 2024, representing a 126% increase [269] Assets and Liabilities - Total assets as of September 30, 2025, were $11.1 billion, comparable to $11.0 billion in the prior year, due to a portfolio acquisition [172] - Total liabilities as of September 30, 2025, were $9,610,302, compared to $9,369,298 in Q2 2025 [177] - Total equity increased to $1,462,213 as of September 30, 2025, from $1,406,035 in Q2 2025 [177] - Total liabilities increased to $9,240,903 as of September 30, 2025, compared to $9,095,865 in the previous quarter [212] - Total equity rose to $1,424,538, up from $1,381,199 in the previous quarter [212] - Total liabilities increased to $9,139,195 thousand in September 2025 from $8,304,569 thousand in September 2024, marking a growth of 10.1% [216] Income and Expenses - Total non-interest expense for Q3 2025 increased by $26.4 million, or 19%, year over year, mainly due to higher marketing expenses [170] - Total non-interest income for Q3 2025 reached $107,792, a 14% increase from Q2 2025 and a 75% increase from Q3 2024 [180] - Total non-interest expense for the third quarter of 2025 was $162,713, a 5% increase from $154,718 in the previous quarter and a 19% increase from $136,332 in the same quarter of 2024 [235] - Total non-interest income for the nine months ended September 30, 2025, was $284.9 million, a 45% increase from $196.3 million in 2024 [269] - Total non-interest expense for the nine months ended September 30, 2025, was $476.4 million, up from $419.0 million in 2024, indicating a 13.7% increase [269] Credit and Provisioning - Provision for credit losses decreased by $1.3 million, or 3%, year over year, reflecting improved credit performance [170] - Provision for credit losses for Q3 2025 was $46,280, a 16% increase from Q2 2025 [180] - The provision for credit losses for the first nine months of 2025 was $144,162 thousand, an increase of 25% from $115,029 thousand in 2024, primarily due to a higher volume of originated loans [223] - The allowance for loan and lease losses (ALLL) was estimated using a discounted cash flow approach, reflecting the expected credit losses on held-for-investment loans [220] - The allowance for loan and lease losses increased to $267,774 as of September 30, 2025, compared to $252,989 as of June 30, 2025, and $220,564 in the same period of 2024, resulting in an allowance ratio of 6.1% [228] Capital and Ratios - The common equity tier 1 capital ratio was 18.0% as of September 30, 2025, up from 17.5% in the previous quarter [174] - As of September 30, 2025, LendingClub Corporation's Common Equity Tier 1 (CET1) capital ratio was 18.0%, significantly above the minimum requirement of 7.0% [288] - LendingClub Bank's total capital ratio was 17.1% as of September 30, 2025, exceeding the minimum requirement of 10.5% [288] - Tangible Book Value (TBV) per common share increased to $11.95 as of September 30, 2025, compared to $11.19 in 2024 [278] - Return on Tangible Common Equity (ROTCE) for the nine months ended September 30, 2025, was 9.6%, compared to 4.7% in 2024 [279] Market and Loan Performance - Marketplace revenue for Q3 2025 was $102,155, reflecting a 14% increase from Q2 2025 and a 75% increase from Q3 2024 [184] - Marketplace loans originated reached $2,027,406 thousand in Q3 2025, a 19% increase from Q2 2025 and a 44% increase from Q3 2024 [187] - Marketplace revenue for the nine months ended September 30, 2025, reached $238.7 million, up 58% from $150.5 million in 2024 [269] Capital Expenditures and Investments - Capital expenditures for the third quarter of 2025 were $21.003 million, up from $12.436 million in the same period of 2024 [265] - Capital expenditures for the nine months ended September 30, 2025, totaled $124.8 million, significantly higher than $37.1 million in 2024 [269] - Capital expenditures in 2025 are projected to be approximately $155 million, driven by a $74.5 million acquisition of an office building and related improvements [295] Regulatory and Compliance - LendingClub Corporation is subject to ongoing supervision and regulation by multiple federal banking regulatory bodies, including the Federal Reserve and the Office of the Comptroller of the Currency [282] - The company has invested in regulatory compliance to meet the requirements set forth by banking regulations, which may impact its business operations [283] Interest Rate Sensitivity - Projected net interest income is expected to decrease by 7.7% and 7.1% under hypothetical increases of 200 basis points in interest rates for September 30, 2025, and December 31, 2024, respectively [305] - Conversely, net interest income is projected to increase by 3.3% and 1.1% under hypothetical decreases of 100 basis points in interest rates for September 30, 2025, and December 31, 2024, respectively [305] Miscellaneous - The company reported an increase in net interest income of $4,190 compared to the previous quarter, driven by changes in volume and yield [212] - The liquidity management strategy includes maintaining sufficient liquidity to meet daily cash flow requirements and unexpected funding needs [289] - The holding company had cash and cash equivalents of $140.9 million as of September 30, 2025, up from $66.0 million at the end of 2024, primarily due to a $50 million cash dividend from LC Bank [297]

Core Insights - The article emphasizes the potential of undervalued stocks that are mispriced by the market as a strategic investment opportunity for the start of Q4 [1]. Group 1 - The article suggests that investors should consider joining platforms that provide insights on undervalued stocks [1].

Core Viewpoint - LendingClub (LC) has received an upgrade to a Zacks Rank 1 (Strong Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling actions that affect stock prices [4]. Recent Performance of LendingClub - For the fiscal year ending December 2025, LendingClub is expected to earn $1.12 per share, unchanged from the previous year, but the Zacks Consensus Estimate has increased by 71.6% over the past three months [8]. - The upgrade reflects an improvement in LendingClub's underlying business, which is expected to drive the stock price higher as investor sentiment improves [5][10]. 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 [7]. - Only the top 5% of Zacks-covered stocks receive a "Strong Buy" rating, indicating superior earnings estimate revisions and potential for market-beating returns [9][10].

Core Viewpoint - The article suggests that investors should diversify their portfolios by looking beyond the top tech stocks, often referred to as the "Magnificent 7," and the S&P 500, which is heavily influenced by these leading technology companies [1]. Group 1: Investment Strategy - Investors are encouraged to allocate more resources outside of the dominant tech stocks to mitigate risk and enhance diversification [1]. Group 2: Analyst Background - Gary Alexander has extensive experience in covering technology companies on Wall Street and has worked in Silicon Valley, providing him with insights into current industry trends [1]. - He has been a contributor to Seeking Alpha since 2017 and has been featured in various web publications, indicating a strong presence in the investment community [1].