LendingClub Reports First Quarter 2023 Results
LendingClub Reports First Quarter 2023 Results
April 26, 2023
Net Income of $13.7M, Driven by 7% Sequential Increase in Pre-Provision Net Revenue (PPNR)
Deposits Up 13% Sequentially to $7.2B; $1.6B in Cash
SAN FRANCISCO, April 26, 2023 /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, 2023.
"We delivered a solid quarter driven by our strategic advantages, including over 15 years of cycle-tested data, prudent and agile underwriting, and our digital marketplace bank model," said Scott Sanborn, LendingClub CEO. "While we expect continued industry and macro headwinds, these significant advantages, along with our growing online consumer deposit franchise and high-yielding short duration assets, provide us with a range of options to navigate the current macro environment while we build toward an ambitious future for the company and our growing membership base."
First Quarter 2023 Results
Balance Sheet:
- Total assets grew 10% sequentially to $8.8 billion from $8.0 billion at December 31, 2022.
- Deposits up 13% sequentially to $7.2 billion; FDIC-insured deposits represent approximately 86% of total deposits.
- Cash of $1.6 billion increased 55% from December 31, 2022.
- Available aggregate borrowing capacity of $4.1 billion as of April 26, 2023.
- Loans and leases held for investment portfolio grew 4.6% sequentially from $5.6 billion to $5.9 billion.
- Substantial capital with a consolidated Tier 1 leverage ratio of 12.8% and consolidated Common Equity Tier 1 capital ratio of 15.6%.
- Book value per common share of $11.08, up 1.4% from $10.93 at December 31, 2022.
- Tangible book value per common share of $10.23, up 1.7% from $10.06 at December 31, 2022.
Financial Performance:
- Loan originations were $2.3 billion compared to $2.5 billion in the prior quarter.
- Total net revenue was $245.7 million compared to $262.7 million in the prior quarter, as growth in net interest income was offset by lower marketplace revenue.
- Net interest income increased 8% from the prior quarter to $146.7 million, primarily due to higher balance sheet growth and partially offset by lower net interest margin due to higher cost of deposits.
- Marketplace revenue was $95.6 million compared to $123.4 million in the prior quarter, reflecting a reduction in sold marketplace volumes.
- Net income of $13.7 million, or diluted EPS of $0.13, compared to $23.6 million, or diluted EPS of $0.22, in the prior quarter, reflecting higher credit provisioning due to growth in the held-for-investment portfolio as well as higher tax expense.
- Pre-provision net revenue (PPNR) of $88.4 million grew 7% over the prior quarter, driven by the Company's cost reduction actions and a $9.0 million one-time revenue benefit primarily due to slower prepayments.
- Credit quality of the held-for-investment prime loan portfolio performing in-line with expectations as portfolio seasons; provision for credit losses of $70.6 million primarily reflects $1.0 billion of quarterly loan originations held for investment.
- Efficiency ratio improved to 64.0% from 68.5% in the prior quarter due to cost reduction actions and marketing efficiency.
Financial Outlook
| Second Quarter 2023 | |
|---|---|
| Loan Originations | $1.9B to $2.1B |
| Pre-Provision Net Revenue(PPNR) | $60M to $70M |
Non-GAAP Financial Measures
To supplement our financial statements, we use the following non-GAAP financial measures: Pre-Provision Net Revenue, Net Income Excluding Income Tax Benefit, Diluted EPS Excluding Income Tax Benefit, and Tangible Book Value Per Common Share. These measures provide insight into the financial performance of our business, enable period comparisons and comparisons with other public companies.
LendingClub Corporation Operating Highlights (In thousands, except percentages or as noted) (Unaudited)
| As of and for the three months ended | % Change | ||||||
|---|---|---|---|---|---|---|---|
| March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | Q/Q | Y/Y | |
| ------------------------- | -------------------------------------- | ---------- | ---------- | ---------- | ---------- | ---------- | -- |
| Non-interest income | 98,990 | 127,465 | 181,237 | 213,832 | 189,857 | -22% | -48% |
| Net interest income | 146,704 | 135,243 | 123,676 | 116,226 | 99,680 | 8% | 47% |
| Total net revenue | 245,694 | 262,708 | 304,913 | 330,058 | 289,537 | -6% | -15% |
| Non-interest expense | 157,308 | 180,044 | 191,204 | 209,386 | 191,204 | -13% | -18% |
| Income before income tax benefit (expense) | 17,802 | 21,152 | 35,955 | 50,106 | 45,824 | -16% | -61% |
| Income tax benefit (expense) | (4,136) | 2,439 | (4,988) | - | - | N/M | -17% |
| Net income | 13,666 | 23,591 | 40,836 | - | - | -42% | -67% |
| Basic EPS-common stockholders | 0.13 | 0.22 | 0.40 | - | - | -41% | -68% |
| Diluted EPS-common stockholders | 0.13 | 0.22 | 0.39 | - | - | -41% | -67% |
Asset Quality Metrics: (In thousands)
| March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | |
|---|---|---|---|---|---|
| Allowance for loan and lease losses to total loans and leases held for investment | 6.4% | 6.5% | 6.3% | 6.0% | 5.5% |
| Net charge-offs | 49,845 | 37,148 | 22,658 | 14,778 | 8,632 |
| Net charge-off ratio(1) | 3.8% | 3.0% | 2.1% | 1.6% | 1.2% |
(1)Net charge-off ratio calculated as annualized net charge-offs divided by average outstanding loans and leases held for investment.
Past Due Loans And Leases Held For Investment
| Excel on bold headers | 30-59 Days | 60-89 Days | 90 or More Days | Total Days Past Due | |||
|---|---|---|---|---|---|---|---|
| Unsecured personal | $26,941 | $ | $19,759 | $ | $18,984 | $65,684 | |
| Total loans and leases held for investment | $41,305 | $22,131 | $21,820 | $85,256 |
Note: N/M – Not meaningful
Condensed Consolidated Statements Of Income
(In thousands, except share and per share data)
| Three Months Ended | Change(%) | ||||
|---|---|---|---|---|---|
| March 31, 2023 | December 31, 2022 | March 31, 2022 | |||
| ------------------------- | -------------------- | ------------------- | -------- | --- | |
| Net interest income | $146,704 | $135,243 | $99,680 | ||
| Net income per share: | Basic EPS | $0.13 | $0.22 | $0.40 | |
| Diluted EPS | $0.13 | $0.22 | $0.39 |
LendingClub Corporation Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands)
| | March 31, 2023 | | December 31, 2022 | | |-------------------------|--------------------|--------------------|--------------------| | GAAP Net income | $13,666 | | $23,591 | | Less: Provision for credit losses | (70,584) | | (61,512) | | Less: Income tax benefit (expense) | (4,136) | | 2,439 | | Pre-provision net revenue | 88,386 | | 82,664 |
(1)Represents a non-GAAP financial measure. For full reconciliation, refer to the detailed statement.