LendingClub Reports First Quarter 2024 Results
LendingClub Reports First Quarter 2024 Results
April 30, 2024
Strong Originations and Credit Performance Drives 12th Consecutive Quarter of GAAP Profitability
SAN FRANCISCO, April 30, 2024 /PRNewswire/ -- LendingClub Corporation (NYSE: LC), the parent company of LendingClub Bank, America's leading digital marketplace bank, today announced financial results for the first quarter ended March 31, 2024.
"We're pleased to have started 2024 with another strong quarter, executing well against the factors we can control," said Scott Sanborn, LendingClub CEO. "Our operating discipline, strong credit performance, and continued innovation are resulting in a sustainable operating rhythm that is delivering real value to our members and has us well positioned to seize the historic opportunity in front of us."
First Quarter 2024 Results
Balance Sheet:
- Total assets of $9.2 billion compared to $8.8 billion in the prior quarter, primarily reflecting growth in securities related to the structured certificate program.
- Deposits of $7.5 billion compared to $7.3 billion in the prior quarter, primarily due to an increase in high yield savings and certificates of deposit, partially offset by a decrease in brokered deposits.
- FDIC-insured deposits represent approximately 87% of total deposits.
- Securities available for sale of $2.2 billion, compared to $1.6 billion in the prior quarter, primarily reflecting growth in the structured certificate program.
- Whole loans held on the balance sheet, which consists of loans and leases held for investment and loans held for sale, remained flat at $5.2 billion compared to the prior quarter, as the company increased loan retention and repurchased a portfolio of LendingClub-originated loans, largely offsetting amortization of the existing portfolio.
- Strong capital position with a consolidated Tier 1 leverage ratio of 12.5% and consolidated Common Equity Tier 1 capital ratio of 17.6%.
- Book value per common share increased to $11.40, compared to $11.34 in the prior quarter.
- Tangible book value per common share increased to $10.61, compared to $10.54 in the prior quarter.
Financial Performance:
- Loan originations of $1.6 billion, comparable to the prior quarter driven by promising initial results from new borrower initiatives, offsetting typical seasonal pressures.
- Total net revenue of $180.7 million, compared to $185.6 million in the prior quarter, driven by:
- Marketplace revenue of $55.9 million, compared to $52.2 million in the prior quarter, primarily reflecting improved loan pricing of marketplace loans.
- Net interest income of $122.9 million, compared to $131.5 million in the prior quarter, reflecting a shift in asset mix from held for investment loans to senior securities and higher deposit funding costs.
- Provision for credit losses of $31.9 million, compared to $41.9 million in the prior quarter due to lower incremental provision on seasoned vintages.
- Net income increased to $12.3 million, with diluted EPS of $0.11, compared to $10.2 million, or diluted EPS of $0.09, in the prior quarter. Net income was driven by strong execution, better-than-expected benchmark rates supporting loan sales pricing, and continued expense management combined with delays in expected expense increases.
- Pre-provision net revenue (PPNR) of $48.5 million, compared to $55.6 million in the prior quarter.
| Three Months Ended | |||
|---|---|---|---|
| ($ in millions, except per share amounts) | March 31, 2024 | December 31, 2023 | March 31, 2023 |
| --- | --- | --- | --- |
| Total net revenue | $ | 180.7 | 185.6 |
| Non-interest expense | 132.2 | 130.0 | |
| Pre-provision net revenue(1) | 48.5 | 55.6 | |
| Provision for credit losses | 31.9 | 41.9 | |
| Income before income tax expense | 16.5 | 13.7 | |
| Income tax expense | (4.3) | (3.5) | |
| Net income | $ | 12.3 | 10.2 |
| Diluted EPS | $ | 0.11 | 0.09 |
(1)See page 3 of this release for additional information on our use of non-GAAP financial measures.
For a calculation of Pre-Provision Net Revenue and Tangible Book Value Per Common Share, refer to the "Reconciliation of GAAP to Non-GAAP Financial Measures" tables at the end of this release.
Financial Outlook
| Second Quarter 2024 | |
|---|---|
| Loan Originations | $1.6B to $1.8B |
| Pre-Provision Net Revenue (PPNR) | $30M to $40M |
About LendingClub
LendingClub Corporation (NYSE: LC) is the parent company of LendingClub Bank, National Association, Member FDIC. LendingClub Bank is the leading digital marketplace bank in the U.S., where members can access a broad range of financial products and services designed to help them pay less when borrowing and earn more when saving. Based on more than 150 billion cells of data and over $90 billion in loans, our advanced credit decisioning and machine-learning models are used across the customer lifecycle to expand seamless access to credit for our members, while generating compelling risk-adjusted returns for our loan investors. Since 2007, more than 4.9 million members have joined the Club to help reach their financial goals. For more information about LendingClub, visit https://www.lendingclub.com.
LENDINGCLUB CORPORATION OPERATING HIGHLIGHTS (In thousands, except percentages or as noted) (Unaudited)
| As of and for the three months ended | % Change | ||||||
|---|---|---|---|---|---|---|---|
| March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | Q/Q | Y/Y | |
| Operating Highlights: | |||||||
| $ | $ | ||||||
| Non-interest income | 57,800 | 54,129 | 63,844 | 85,818 | 98,990 | 7% | (42)% |
| Net interest income | 122,888 | 131,477 | 137,005 | 146,652 | 146,704 | (7) | (16)% |
| Total net revenue | 180,688 | 185,606 | 200,849 | 232,470 | 245,694 | (3) | (26)% |
| Non-interest expense | 132,233 | 130,015 | 128,035 | 151,079 | 157,308 | 2% | (16)% |
| Pre-provision net revenue(1) | 48,455 | 55,591 | 72,814 | 81,391 | 88,386 | (13) | (45)% |
| Provision for credit losses | 31,927 | 41,907 | 64,479 | 66,595 | 70,584 | (24) | (55)% |
| Income before income tax expense | 16,528 | 13,684 | 8,335 | 14,796 | 17,802 | 21% | (7)% |
| Income tax expense | (4,278) | (3,529) | (3,327) | (4,686) | (4,136) | 21% | 3% |
| $ | $ | ||||||
| Net income | 12,250 | 10,155 | 5,008 | 10,110 | 13,666 | 21% | (10)% |
| Basic EPS | $0.11 | $0.09 | $0.05 | $0.09 | $0.13 | 22% | (15)% |
| Diluted EPS | $0.11 | $0.09 | $0.05 | $0.09 | $0.13 | 22% | (15)% |
| LendingClub Corporation Performance Metrics: | |||||||
| Net interest margin | 5.8% | 6.4% | 6.9% | 7.1% | 7.5% | ||
| Efficiency ratio(2) | 73.2% | 70.0% | 63.7% | 65.0% | 64.0% | ||
| Return on average equity (ROE)(3) | 3.9% | 3.3% | 1.7% | 3.4% | 4.6% | ||
| Return on average total assets (ROA)(4) | 0.5% | 0.5% | 0.2% | 0.5% | 0.7% | ||
| Marketing expense as a % of loan originations | 1.47% | 1.44% | 1.30% | 1.19% | 1.18% | ||
| LendingClub Corporation Capital Metrics: | |||||||
| Common equity Tier 1 capital ratio | 17.6% | 17.9% | 16.9% | 16.1% | 15.6% | ||
| Tier 1 leverage ratio | 12.5% | 12.9% | 13.2% | 12.4% | 12.8% | ||
| Book value per common share | $11.40 | $11.34 | $11.02 | $11.09 | $11.08 | 1% | 3% |
| $ | $ | ||||||
| Tangible book value per common share(1) | 10.61 | $10.54 | $10.21 | $10.26 | $10.23 | 1% | 4% |
Loan Originations (in millions)(5):
| $ | $ | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Total loan originations | 1,646 | $ | 1,630 | $ | 1,508 | $ | 2,011 | 2,288 | 1% (28)% |
| $ | $ | ||||||||
| Marketplace loans | 1,361 | $ | 1,432 | $ | 1,182 | $ | 1,353 | 1,286 | (5)% 6% |
| $ | |||||||||
| Loan originations held for investment | $285 | $ | 198 | $ | 326 | $ | 657 | 1,002 | 44% (72)% |
| Loan originations held for investment as a % of total loan originations | 17% | 12% | 22% | 33% | 44% | ||||
| Servicing Portfolio AUM(in millions)(6): | |||||||||
| $ | $ | ||||||||
| Total servicing portfolio | 13,437 | $ | 14,122 | $ | 14,818 | 15,669 | 16,060 | (5)% (16)% | |
| $ | $ | ||||||||
| Loans serviced for others | 8,671 | $ | 9,336 | $ | 9,601 | 10,204 | 10,504 | (7)% (17)% |
(1)Represents a non-GAAP financial measure. See "Reconciliation of GAAP to Non-GAAP Financial Measures." (2)Calculated as the ratio of non-interest expense to total net revenue. (3)Calculated as annualized net income divided by average equity for the period presented. (4)Calculated as annualized net income divided by average total assets for the period presented. (5)Includes unsecured personal loans and auto loans only. (6)Loans serviced on our platform, which includes unsecured personal loans, auto loans and education and patient finance loans serviced for others and held for investment by the company.
| As of and for the three months ended | % Change | ||||||
|---|---|---|---|---|---|---|---|
| March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | Q/Q | Y/Y | |
| Balance Sheet Data: | |||||||
| Securities available for sale | $2,228,500 | $1,620,262 | $795,669 | $523,579 | $380,028 | 38% | 486% |
| Loans held for sale at fair value | $550,415 | $407,773 | $362,789 | $250,361 | $44,647 | 35% | N/M |
| Loans and leases held for investment at amortized cost | $4,505,816 | $4,850,302 | $5,237,277 | $5,533,349 | $5,491,938 | (7)% | (18)% |
| Gross allowance for loan and lease losses(1) | (311,794) | (355,773) | (388,156) | (383,960) | (368,698) | (12)% | (15)% |
| Recovery asset value(2) | $52,644 | $45,386 | $37,661 | $28,797 | $19,841 | 16% | 165% |
| Loans and leases held for investment at amortized cost,net | $4,246,666 | $4,539,915 | $4,886,782 | $5,178,186 | $5,143,081 | (6)% | (17)% |
| Loans held for investment at fair value(3) | $427,396 | $272,678 | $344,417 | $430,956 | $787,473 | 57% | (46)% |
| Total loans and leases held for investment(3) | $4,674,062 | $4,812,593 | $5,231,199 | $5,609,142 | $5,930,554 | (3)% | (21)% |
| Whole loans held on balance sheet(4) | $5,224,477 | $5,220,366 | $5,593,988 | $5,859,503 | $5,975,201 | - | |
| Total assets | $9,244,828 | $8,827,463 | $8,472,351 | $8,342,506 | $8,754,018 | 5% | 6% |
| Total deposits | $7,521,655 | $7,333,486 | $7,000,263 | $6,843,535 | $7,218,854 | 3% | 4% |
| Total liabilities | $7,978,542 | $7,575,641 | $7,264,132 | $7,136,983 | $7,563,276 | 5% | 5% |
| Total equity | $1,266,286 | $1,251,822 | $1,208,219 | $1,205,523 | $1,190,742 | 1% | 6% |
Asset Quality Metrics
| As of and for the three months ended | |||||
|---|---|---|---|---|---|
| March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | |
| Asset Quality Metrics(1) | |||||
| Allowance for loan and lease losses to total loans and leases held for investment at amortized cost | 5.8% | 6.4% | 6.7% | 6.4% | 6.4% |
| Allowance for loan and lease losses to commercial loans and leases held for investment at amortized cost | 1.9% | 1.8% | 2.0% | 1.9% | 2.0% |
| Allowance for loan and lease losses to consumer loans and leases held for investment at amortized cost | 6.4% | 7.2% | 7.4% | 7.1% | 7.1% |
| Gross allowance for loan and lease losses to consumer loans and leases held for investment at amortized cost | 7.8% | 8.3% | 8.2% | 7.7% | 7.5% |
| Net charge-offs | 80,483 | 82,511 | 68,795 | 59,884 | 49,845 |
| Net charge-off ratio(2) | 6.9% | 6.6% | 5.1% | 4.4% | 3.8% |
Loans and Leases Held for Investment (In thousands) (Unaudited)
| March 31, 2024 | December 31, 2023 | |
|---|---|---|
| Unsecured personal | $3,397,853 | $3,726,830 |
| Residential mortgages | 180,697 | 183,050 |
| Secured consumer | 253,241 | 250,039 |
| Total consumer loans held for investment | 3,831,791 | 4,159,919 |
| Equipment finance(1) | 101,902 | 110,992 |
| Commercial real estate | 376,022 | 380,322 |
| Commercial and industrial | 196,101 | 199,069 |
| Total commercial loans and leases held for investment | 674,025 | 690,383 |
| Total loans and leases held for investment at amortized cost | 4,505,816 | 4,850,302 |
| Allowance for loan and lease losses | (259,150) | (310,387) |
| Loans and leases held for investment at amortized cost, net | $4,246,666 | $4,539,915 |
| Loans held for investment at fair value(2) | 427,396 | 272,678 |
| Total loans and leases held for investment | $4,674,062 | $4,812,593 |
Allowance for Loan and Lease Losses (In thousands) (Unaudited)
| Gross allowance for loan and lease losses(1) | $ | 311,794 | $ | 355,773 |
|---|---|---|---|---|
| Recovery asset value(2) | (52,644) | (45,386) | ||
| Allowance for loan and lease losses | $ | 259,150 | $ | 310,387 |
(1)Represents the allowance for future estimated net charge-offs on existing portfolio balances. (2)Represents the negative allowance for expected recoveries of amounts previously charged-off.
Past Due Loans and Leases Held for Investment (In thousands) (Unaudited)
| March 31, 2024 | 30-59 Days | 60-89 Days | 90 or More Days | Total Days Past Due | Guaranteed Amount(1) |
|---|---|---|---|---|---|
| Unsecured personal | $29,852 | $24,694 | $26,383 | $80,929 | $— |
| Residential mortgages | 1,171 | — | 151 | 1,322 | — |
| Secured consumer | 2,332 | 393 | 243 | 2,968 | — |
| Total consumer loans held for investment | $33,355 | $25,087 | $26,777 | $85,219 | $— |
| Equipment finance | $1,461 | $— | $— | $1,461 | $— |
| Commercial real estate | 4,335 | 400 | 4,321 | 9,056 | 7,755 |
| Commercial and industrial | 1,595 | 8,518 | 4,687 | 14,800 | 11,185 |
| Total commercial loans and leases held for investment | $7,391 | $8,918 | $9,008 | $25,317 | $18,940 |
| Total loans and leases held for investment at amortized cost | $40,746 | $34,005 | $35,785 | $110,536 | $18,940 |
(1)Represents loan balances guaranteed by the Small Business Association.
Condensed Consolidated Statements of Income
(In thousands, except share and per share data) (Unaudited)
| Three Months Ended | |||
|---|---|---|---|
| March 31, 2024 | December 31, 2023 | March 31, 2023 | |
| Non-interest income: | |||
| Origination fees | $70,079 | $76,702 | $70,543 |
| Servicing fees | 19,592 | 17,450 | 26,380 |
| Gain on sales of loans | 10,909 | 11,921 | 14,125 |
| Net fair value adjustments | (44,689) | (53,892) | (15,414) |
| Marketplace revenue | 55,891 | 52,181 | 95,634 |
| Other non-interest income | 1,909 | 1,948 | 3,356 |
| Total non-interest income | 57,800 | 54,129 | 98,990 |
| Total interest income | 207,351 | 208,319 | 202,413 | | Total interest expense | 84,463 | 76,842 | 55,709 | | Net interest income | 122,888 | 131,477 | 146,704 | | Total net revenue | 180,688 | 185,606 | 245,694 | | Provision for credit losses | 31,927 | 41,907 | 70,584 | | Non-interest expense: | | | | | Compensation and benefits | 59,554 | 58,591 | 73,307 | | Marketing | 24,136 | 23,465 | 26,880 | | Equipment and software | 12,684 | 13,190 | 13,696 | | Depreciation and amortization | 12,673 | 11,953 | 12,354 | | Professional services | 7,091 | 7,727 | 9,058 | | Occupancy | 3,861 | 3,926 | 4,310 | | Other non-interest expense | 12,234 | 11,163 | 17,703 | | Total non-interest expense | 132,233 | 130,015 | 157,308 | | Income before income tax expense | 16,528 | 13,684 | 17,802 | | Income tax expense | (4,278) | (3,529) | (4,136) | | Net income | $12,250 | $10,155 | $13,666 | | Net income per share: | | | | | Basic EPS | $0.11 | $0.09 | $0.13 | | Diluted EPS | $0.11 | $0.09 | $0.13 | | Weighted-average common shares-Basic | 110,685,796 | 109,948,785 | 106,912,139 | | Weighted-average common shares-Diluted | 110,687,380 | 109,949,371 | 106,917,770 |
Interest rate spread | 4.95% | | 5.68% | | 6.90% |
In thousands, except percentages or as noted (Unaudited)
| Consolidated LendingClub Corporation(1) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended March 31, 2024 | Three Months Ended December 31, 2023 | Three Months Ended March 31, 2023 | |||||||
| Average Balance | Interest Income/Expense | Average Yield/Rate | Average Balance | Interest Income/Expense | Average Yield/Rate | Average Balance | Interest Income/Expense | Average Yield/Rate | |
| Interest-earning assets(2) | |||||||||
| Cash, cash equivalents, restricted cash and other | $ | $ | $ | ||||||
| Securities available for sale at fair value | 1,217,395 | $16,503 | 5.42% | 1,190,539 | $16,271 | 5.47% | 1,220,677 | $13,714 | 4.49% |
| Loans held for sale at fair value | 1,972,561 | 35,347 | 7.17% | 1,197,625 | 20,920 | 6.99% | 362,960 | 3,900 | 4.30% |
| Loans and leases held for investment: | 467,275 | 14,699 | 12.58% | 501,850 | 15,883 | 12.66% | 110,580 | 5,757 | 20.83% |
| Unsecured personal loans | 3,518,101 | 116,055 | 13.20% | 3,890,041 | 128,190 | 13.18% | 4,066,713 | 133,687 | 13.15% |
| Commercial and other consumer loans | 1,115,931 | 16,338 | 5.86% | 1,126,010 | 17,033 | 6.05% | 1,175,504 | 16,780 | 5.71% |
| Total interest-earning assets | 8,547,598 | 207,351 | 9.70% | 8,212,701 | 208,319 | 10.15% | 7,819,272 | 202,413 | 10.35% |
| Total assets | 8,946,338 | ||||||||
| Total liabilities | 7,689,101 | ||||||||
| Total equity | 1,257,237 | ||||||||
| Total liabilities and equity | 8,946,338 |
(1)Consolidated presentation reflects intercompany eliminations. (2)Nonaccrual loans and any related income are included in their respective loan categories. (3)In the first quarter of 2024, "Retail and certificate loans held for investment at fair value" were combined within "Loans held for investment at fair value" and "Retail notes and certificates at fair value" were combined within "Other interest-bearing liabilities." Prior period amounts have been reclassified to conform to the current period presentation.
LENDINGCLUB CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In thousands, except share and per share data) (Unaudited)
Pre-Provision Net Revenue
| For the three months ended | ||||
|---|---|---|---|---|
| March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | |
| GAAP Net income | $12,250 | 10,155 | 5,008 | 10,110 |
| Less: Provision for credit losses | (31,927) | (41,907) | (64,479) | (66,595) |
| Less: Income tax expense | (4,278) | (3,529) | (3,327) | (4,686) |
| Pre-provision net revenue | $48,455 | 55,591 | 72,814 | 81,391 |
(1)Represents a non-GAAP financial measure. (2)Calculated as the ratio of non-interest expense to total net revenue. (3)Calculated as annualized net income divided by average equity for the period presented. (4)Calculated as annualized net income divided by average total assets for the period presented.