LendingClub(US:LC)2022-04-28 02:11Financial Data and Key Metrics Changes - Revenues increased by 10% sequentially and more than doubled year-over-year to $290 million [17] - Net income rose to $41 million, up 40% sequentially and nearly $90 million year-over-year [17] - Net interest margin increased to 8.6% from 8.3% in the prior quarter and 3.3% a year earlier [19] Business Line Data and Key Metrics Changes - Marketplace revenue grew 6% to $180 million, while loan origination increased by 5% [18] - Recurring net interest income grew to $100 million, a 20% increase reflecting growth in the health and investment portfolio [18] - Personal loans now comprise 69% of the held-for-investment (HFI) portfolio, up from 62% at the end of 2021 [19] Market Data and Key Metrics Changes - Deposits grew 27% sequentially to $4 billion, primarily in high-yield savings accounts [20] - The company retained 27% of new consumer loan originations, which is 7 points above the previously shared range [19] Company Strategy and Development Direction - The company is focused on maintaining discipline in underwriting while expanding its product offerings to enhance member engagement [9][12] - Investments are being made in loan retention, marketing, and technology to support long-term growth [12][13] - The company plans to continue growing its commercial loans, excluding PPP, which are secured by collateral or cash flow [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating potential changes in the economic environment, citing strong earnings and capital levels [15] - The company raised guidance for revenue, earnings, and loan originations for the full year, reflecting positive momentum from Q1 [26][27] - Management acknowledged the need to be thoughtful about passing increased funding costs to borrowers while maintaining value for members [15] Other Important Information - The company introduced a new metric, pre-tax, pre-provision income, to better communicate underlying performance and growth [25] - The CET ratio remains strong at 16%, and tangible book value increased to $792 million at the end of Q1 [24] Q&A Session Summary Question: Loan demand and pricing outlook - Management noted strong loan demand driven by increasing credit card balances and familiarity with their offerings, with expectations of continued momentum into Q2 [30][32] - On loan pricing, management indicated a decrease in yields on unsecured loans as part of a strategy to focus on higher quality loans [33][35] Question: Marketing expenses and efficiency - Management confirmed that they still target marketing expenses in the range of 1.9% to 2% of volume, emphasizing efficiency and the impact of retaining a higher percentage of originations [38][40] Question: Nature of loan buyers in the marketplace - Management highlighted a diverse investor base, with a significant portion not reliant on capital markets, which provides stability and strong demand for loans [52][54] Question: Customer base health and trends - Management expressed confidence in the health of their customer base, noting strong performance and low delinquency rates, while proactively monitoring economic indicators [60][62]