LendingClub Reports Second Quarter 2022 Results
LendingClub Reports Second Quarter 2022 Results
July 27, 2022
Record Revenue of $330 million
Reported Net Income of $182 million Including Income Tax Benefit of $135 million
Record Net Income of $47 million Excluding Income Tax Benefit
SAN FRANCISCO, July 27, 2022 /PRNewswire/ -- LendingClub Corporation (NYSE: LC), the parent company of LendingClub Bank, America's leading digital marketplace bank, today announced financial results for the second quarter ended June 30, 2022.
"Our strong execution, marketplace bank model, member and data advantages, and our continued focus on prudent underwriting have all contributed to an incredible first half of the year with records set for both revenue and profitability," said Scott Sanborn, LendingClub CEO. "Despite the more challenging economic backdrop and increased uncertainty, we are well positioned to navigate through this dynamic environment."
Record Second Quarter 2022 Results
Revenue of $330.1 million grew 61% year-over-year, driven by growth in net interest income and marketplace revenue. Recurring stream of net interest income increased 153% year-over-year to $116.2 million.
LendingClub Bank's net interest margin expanded to 8.7% from 5.5% a year earlier, primarily reflecting growth in consumer loans which generate a higher yield.
Total loans held for investment (excluding PPP) grew 106% from June 30, 2021, reflecting growth in personal loan originations and an increase in originations retained in the held for investment portfolio. The percentage of originations held for investment increased to 27% from 20% a year earlier as the company reinvested earnings into loan retention to drive growth in recurring revenue.
Marketplace revenue of $206.4 million grew 36% year-over-year, reflecting growth in marketplace originations.
Deposits of $4.5 billion were up 78% from June 30, 2021, supporting growth in loans held for investment.
The efficiency ratio improved to 63% from 78% a year earlier as the company continued to manage expenses prudently while generating strong revenue growth.
LendingClub's credit quality remained better than the industry, with delinquency rates remaining below pre-pandemic levels. Credit quality of the company's held for investment personal loan portfolio also remained strong reflecting the prime credit profile of its borrowers with an average FICO of 730.
Provision for credit losses increased to $70.6 million from $34.6 million in the second quarter of 2021, primarily reflecting growth of 106% in loans held for investment (excluding PPP) from June 30, 2021.
Net income of $182.1 million increased $172.7 million year-over-year. Net income for the second quarter of 2022 included an income tax benefit of $132.0 million, reflecting the release of a $135.3 million valuation allowance against the company's deferred tax assets, partially offset by a $3.3 million state income tax expense, due to the company's business model transition and resulting increase in profitability and the expectation of continued profitability.
Net income excluding the income tax benefit was $46.8 million, up 399% year-over-year.
Total equity was up $316.7 million or 42% from June 30, 2021 primarily reflecting net income generated over the period and the release of a deferred tax asset valuation allowance.
Diluted earnings per share of $1.73 compared to earnings of $0.09 per share in the second quarter of 2021. Results in the second quarter of 2022 included an income tax benefit of $1.28 per share due to the release of a deferred tax asset valuation allowance.
The improvement in diluted earnings per share from a year earlier reflected revenue growth and increased operating efficiency, as well as the benefit from the release of the deferred tax asset valuation allowance.
Excluding the income tax benefit, diluted earnings per share of $0.45 was up 400% year-over-year.
Pre-tax, pre-provision income of $120.7 million increased 173% year-over-year, consistent with revenue growth and improved operating efficiency which drove growth in net income.
| ($ in millions) | June 30,2022 | March 31,2022 | June 30,2021 |
|---|---|---|---|
| Total net revenue | $330.1 | $289.5 | $204.4 |
| Non-interest expense | 209.4 | 191.2 | 160.1 |
| Pre-tax, pre-provision income | 120.7 | 98.3 | 44.3 |
| Provision for credit losses | 70.6 | 52.5 | 34.6 |
| Income before income tax benefit (expense) | 50.1 | 45.8 | 9.6 |
| Income tax benefit (expense) | 132.0 | (5.0) | (0.2) |
| Net income | $182.1 | $40.8 | $9.4 |
| Diluted EPS | $1.73 | 0.39 | 0.09 |
| Income tax benefit from release of tax valuation allowance | $135.3 | — | — |
| Net income excluding income tax benefit (1) | $46.8 | $40.8 | $9.4 |
| Diluted EPS excluding income tax benefit (1) | $0.45 | 0.39 | 0.09 |
(1) Second quarter 2022 income tax benefit of $135.3 million due to the release of a deferred tax asset valuation allowance. See page 3 of this release for additional information on our use of Non-GAAP Financial Measures.
Financial Outlook
The company reaffirmed full year revenue and net income guidance for 2022 (excluding the income tax benefit from release of a deferred tax asset valuation allowance).
| (millions) | Third Quarter 2022 | Full Year 2022 |
|---|---|---|
| Total revenue | $280M to $300M | $1.15B to $1.25B |
| Net income | $30M to $40M | $280M to $300M |
| Income tax benefit from release of tax valuation allowance | — | $135.3M |
| Net income excluding income tax benefit | $30M to $40M | $145M to $165M |
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 $75 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 million members have joined the Club to help reach their financial goals.
For more information about LendingClub, visit https://www.lendingclub.com.
Conference Call and Webcast Information
The LendingClub second quarter 2022 webcast and teleconference is scheduled to begin at 2:00 p.m. Pacific Time (or 5:00 p.m. Eastern Time) on Wednesday, July 27, 2022. A live webcast of the call will be available at http://ir.lendingclub.com under the Filings & Financials menu in Quarterly Results. To access the call, please dial +1 (844) 200-6205, or outside the U.S. +1 (929) 526-1599, with Access Code 696569, ten minutes prior to 2:00 p.m. Pacific Time (or 5:00 p.m. Eastern Time). An audio archive of the call will be available at http://ir.lendingclub.com. An audio replay will also be available 1 hour after the end of the call until August 3, 2022, by calling +1 (866) 813-9403 or outside the U.S. +44 (204) 525-0658, with Access Code 945301.
Contacts
For Investors: IR@lendingclub.com
Media Contact: Press@lendingclub.com
Non-GAAP Financial Measures
To supplement our financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: Net Income Excluding Income Tax Benefit and Diluted EPS Excluding Income Tax Benefit. Our non-GAAP measures do have limitations as analytical tools and you should not consider them in isolation or as a substitute for an analysis of our results under GAAP.
We believe these non-GAAP measures provide management and investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and enable comparison of our financial results with other public companies.
We believe Net Income Excluding Income Tax Benefit and Diluted EPS Excluding Income Tax Benefit are important measures because they directly reflect the financial performance of our business operations. Net Income Excluding Income Tax Benefit adjusts for the release of a deferred tax asset valuation allowance in the second quarter of 2022. Diluted EPS Excluding Income Tax Benefit is a non-GAAP financial measure calculated by dividing Net Income Excluding Income Tax Benefit by the weighted-average diluted common shares outstanding.
For a reconciliation of such measures to the nearest GAAP measure, please refer to the table on page 2 of this release.