LendingClub(US:LC)2023-10-29 16:00Financial 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].