LendingClub Reports Third Quarter 2021 Results
LendingClub Reports Third Quarter 2021 Results
October 27, 2021
Record Revenues Up 20% Sequentially
Net Income up 190% Sequentially
Raising Full Year Outlook
SAN FRANCISCO, Oct. 27, 2021 /PRNewswire/ -- LendingClub Corporation (NYSE: LC), the parent company of LendingClub Bank, America's leading digital marketplace bank, today announced financial results for the third quarter ended September 30, 2021.
"Our strong revenue and earnings growth trajectory has become evident following our transformation into a digital marketplace bank," said Scott Sanborn, LendingClub's CEO. "Our success continues to be driven by our competitive advantages, including our growing base of 3.8 million members, our exceptional data science capabilities, and our proven marketplace model. With our enhanced operating leverage, digital first infrastructure, and the ongoing move of consumers toward online banking, there's no better time to grow a next generation digital bank like LendingClub."
Record Revenue and Net Income Reflects Strong Execution and Business Model Transformation.
Record revenue of $246.2 million with total sequential revenue growth of 20% outpacing origination growth of 14%. New recurring stream of net interest income grew 42% sequentially to $65.3 million, as the bank's loan portfolio (excluding PPP loans) grew 25% from June 30, 2021.
Marketplace revenue grew 15% sequentially, reflecting higher origination fees associated with loan origination growth.
Deposits grew 12% sequentially to $2.8 billion, in line with growth in our loans held for investment.
Record net income of $27.2 million, up 190% sequentially, highlighting positive operating leverage in the fully integrated digital bank business model.
Net income of $27.2 million and earnings per share of $0.26 were negatively impacted by $51.5 million of notable items: $34.0 million of Current Expected Credit Loss (CECL) provisioning and $17.5 million of net revenue deferrals both driven by strong retained loan growth. These items reduced our earnings per share by $0.49 in the third quarter of 2021.
| Three Months Ended | ||||
|---|---|---|---|---|
| ($ in millions) | September 30,2021 | June 30,2021 | QoQ$ Change | QoQChange |
| Loan originations(1) | $3106.7 | $2722.4 | $384.3 | 14% |
| Total revenue | $246.2 | $204.4 | $41.8 | 20% |
| Consolidated net income | 27.2 | 9.4 | 17.8 | 190% |
(1) Includes unsecured personal loans, auto loans, and education and patient finance loans only.
Financial Outlook – Raising Full Year Targets
| (millions) | Fourth Quarter2021 | Full Year2021 | Versus PriorFull Year 2021 Guidance |
|---|---|---|---|
| Loan originations(1) | $2.8B to $3.0B | $10.1B to $10.3B | +$100M to +$300M |
Notable Items Impacting Q3'21 Consolidated Net Income
| (millions) | Consolidated Net Income Impact(1) | Per Diluted Share Impact | Commentary |
|---|---|---|---|
| Revenue deferrals, net of amortization | $(17.5) | $0.17 | Origination fee and cost deferrals, net of interest income amortization during the period |
| Provision for credit losses, less net charge-offs | $(34.0) | $0.32 | Primarily for consumer loans originated and retained in the quarter |
| Total | $(51.5) | $0.49 |
(1) Amounts presented net of tax.
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 $65 billion in loans, our artificial intelligence-driven 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 3.8 million members have joined the Club to help reach their financial goals. For more information about LendingClub, visit www.lendingclub.com.
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LENDINGCLUB CORPORATION OPERATING HIGHLIGHTS (In thousands, except percentages or as noted) (Unaudited)
The information in the following tables is presented for the consolidated LendingClub Corporation, unless specifically noted for LendingClub Bank, the company's wholly-owned subsidiary:
| As of and for the three months ended | % Change | ||||||
|---|---|---|---|---|---|---|---|
| September 30,2021 | June 30,2021 | March 31,2021 | December 31,2020 | September 30,2020 | Q/Q | Y/Y | |
| Operating Highlights: | |||||||
| Non-interest income | $180,878 | $158,476 | $87,334 | $72,597 | $57,750 | 14% | 213% |
| Net interest income | $65,288 | $45,905 | $18,506 | $2,899 | 13,294 | 42% | 391% |
| Total net revenue | $246,166 | $204,381 | $105,840 | $75,496 | $71,044 | 20% | 246% |
| Consolidated net income (loss) | $27,185 | $9,371 | $(47,084) | $(26,655) | $(34,325) | 190% | N/M |
| EPS - basic | $0.27 | $0.10 | $(0.49) | $(0.29) | $(0.38) | 170% | N/M |
| EPS - diluted | $0.26 | $0.09 | $(0.49) | $(0.29) | $(0.38) | 189% | N/M |
| LendingClub Bank Performance Metrics: | |||||||
| Net interest margin | 7.1% | 5.5% | 3.3% | N/A | N/A | ||
| Efficiency ratio(1) | 67.5% | 69.0% | 104.8% | N/A | N/A | ||
| Return on average equity (ROE) | 26.5% | 34.7% | N/A | N/A | N/A | ||
| Return on average total assets (ROA) | 3.7% | 4.7% | N/A | N/A | N/A | ||
| LendingClub Bank Capital Ratios: | |||||||
| Common Equity Tier 1 Capital Ratio | 18.0% | 18.7% | 20.9% | N/A | N/A | ||
| Tier 1 Leverage Ratio | 14.1% | 13.5% | 12.9% | N/A | N/A | ||
| Consolidated LendingClub Corporation Performance Metrics: | |||||||
| Net interest margin | 6.3% | 4.7% | 1.8% | 0.7% | 2.9% | ||
| Efficiency ratio(1) | 72.6% | 78.4% | 126.8% | N/A | N/A | ||
| Return on average equity (ROE) | 13.8% | 5.0% | N/A | N/A | N/A | ||
| Return on average total assets (ROA) | 2.4% | 0.8% | N/A | N/A | N/A | ||
| Marketing expense as a % of loan originations | 1.6% | 1.3% | 1.3% | 0.9% | 0.4% | ||
| Loan originations(in millions)^{(2)}$ | |||||||
| Marketplace loans | $2,471 | $2,182 | $1,139 | $912 | $584 | 13% 323% | |
| Loan originations held for investment | $636 | $541 | $344 | $- | $- | 18% N/A | |
| Total loan originations | $3,107 | $2,722 | $1,483 | $912 | $584 | 14% 432% | |
| Servicing portfolio AUM(in millions)^{(3)}$ | $11,592 | $10,741 | $10,271 | $11,002 | $12,267 | 8% (6)% | |
| Balance Sheet Data: | |||||||
| Loans and leases held for investment, net,excluding PPP loans | $2,235,698 | $1,791,492 | $1,414,900 | $- | $- | 25% N/A | |
| PPP loans | $367,558 | $507,553 | $664,400 | $- | $- | (28)% N/A | |
| Total loans and leases held for investment,net | $2,603,256 | $2,299,045 | $2,079,300 | $- | $- | 13% N/A | |
| Total assets | $4,750,760 | $4,370,101 | $4,491,089 | $1,863,293 | $1,979,457 | 9% 140% | |
| Total deposits | $2,838,719 | $2,539,704 | $2,373,437 | $- | $- | 12% N/A | |
| Total liabilities | $3,945,970 | $3,607,742 | $3,757,954 | $1,139,122 | $1,245,565 | 9% 217% | |
| Total equity | $804,790 | $762,359 | $733,135 | $724,171 | $733,892 | 6% 10% | |
| Allowance Ratios: | |||||||
| Allowance for loan and lease losses to totalloans and leases held for investment | 3.9% | 3.0% | 1.7% | N/A | N/A | ||
| Allowance for loan and lease losses to totalloans and leases held for investment,excluding PPP loans | 4.5% | 3.8% | 2.5% | N/A | N/A | ||
| Allowance for loan and lease losses to consumer loans and leases held for investment | 5.2% | 4.3% | 2.3% | N/A | N/A | ||
| Allowance for loan and lease losses to commercial loans and leases held for investment | 1.6% | 1.5% | 1.3% | N/A | N/A | ||
| Allowance for loan and lease losses to commercial loans and leases held for investment,excluding PPP loans | 2.6% | 2.8% | 1.7% | N/A | N/A |
N/M – Not meaningful
N/A – Not applicable
(1)Calculated as the ratio of non-interest expense to total net revenue.
(2)Includes unsecured personal loans, auto loans, and education and patient finance loans only.
(3)Loans serviced on our platform, which includes personal and auto loans serviced for others and retained for investment by the Company.
LENDINGCLUB CORPORATION LOANS AND LEASES HELD FOR INVESTMENT (In thousands, except percentages or as noted)
(Unaudited)
| September 30,2021 | June 30,2021 | |
|---|---|---|
| Unsecured personal | $1,258,279 | $776,338 |
| Residential mortgages | 141,200 | 152,528 |
| Secured consumer | 314,539 | 326,318 |
| Other consumer | 1,220 | 157 |
| Total consumer loans held for investment | 1,715,238 | 1,255,341 |
| Equipment finance(1) | 157,457 | 161,465 |
| Commercial real estate | 316,135 | 294,954 |
| Commercial and industrial(2) | 519,162 | 658,366 |
| Total commercial loans and leases held for investment | 992,754 | 1,114,785 |
| Total loans and leases held for investment | 2,707,992 | 2,370,126 |
| Allowance for loan and lease losses | (104,736) | (71,081) |
| Loans and leases held for investment, net | $2,603,256 | $2,299,045 |
(1)Comprised of sales-type leases for equipment.
(2)Includes $367.6 million of Paycheck Protection Program (PPP) loans. The Company determined no allowance for expected credit losses is needed on these loans.
LENDINGCLUB CORPORATION
ALLOWANCE FOR LOAN AND LEASE LOSSES
(In thousands, except percentages or as noted) (Unaudited)
| Three Months Ended | ||||
|---|---|---|---|---|
| September 30,2021 | June 30,2021 | |||
| Consumer | Commercial | Total | Consumer | |
| Allowance for loan and lease losses, beginning of period | $54,058 | $17,023 | $71,081 | $19,785 |
| Credit loss expense for loans and leases held for investment | 37,695 | (562) | 37,133 | 34,317 |
| Charge-offs | (3,142) | (1,194) | (4,336) | (90) |
| Recoveries | 20 | 838 | 858 | 46 |
| Allowance for loan and lease losses, end of period | $88,631 | $16,105 | $104,736 | $54,058 |
LENDINGCLUB CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data) (Unaudited)
| Three Months Ended | Change(%) | ||
|---|---|---|---|
| September 30,2021 | June 30,2021 | Change(%) | |
| Non-interest income: | |||
| Marketplace revenue(1) | $174,556 | $151,735 | 15% |
| Other non-interest income | 6,322 | 6,741 | (6)% |
| Total non-interest income | 180,878 | 158,476 | 14% |
| Interest income: | |||
| Interest on loans held for sale | 8,536 | 8,694 | (2)% |
| Interest and fees on loans and leases held for investment | 57,644 | 39,068 | 48% |
| Interest on retail and certificate loans held for investment at fair value | 12,172 | 16,014 | (24)% |
| Interest on other loans held for investment at fair value | 973 | 1,222 | (20)% |
| Interest on securities available for sale | 3,180 | 2,539 | 25% |
| Other interest income | 355 | 190 | 87% |
| Total interest income | 82,860 | 67,727 | 22% |
| Interest expense: | |||
| Interest on deposits | 1,899 | 1,699 | 12% |
| Interest on short-term borrowings | 849 | 1,003 | (15)% |
| Interest on retail notes, certificates and secured borrowings | 12,172 | 16,014 | (24)% |
| Interest on Structured Program borrowings | 2,120 | 2,668 | (21)% |
| Interest on other long-term debt | 532 | 438 | 21% |
| Total interest expense | 17,572 | 21,822 | (19)% |
| Net interest income | 65,288 | 45,905 | 42% |
| Total net revenue | 246,166 | 204,381 | 20% |
| Provision for credit losses | 37,524 | 34,634 | 8% |
|---|---|---|---|
| Non-interest expense: | |||
| Compensation and benefits | 73,304 | 71,925 | 2% |
| Marketing | 50,782 | 35,107 | 45% |
| Equipment and software | 10,297 | 9,281 | 11% |
| Occupancy | 6,486 | 6,157 | 5% |
| Depreciation and amortization | 10,549 | 11,508 | (8)% |
| Professional services | 11,750 | 11,520 | 2% |
| Other non-interest expense | 15,607 | 14,641 | 7% |
| Total non-interest expense | 178,775 | 160,139 | 12% |
| Income before income tax expense | 29,867 | 9,608 | 211% |
| Income tax expense | 2,682 | 237 | N/M |
| Consolidated net income | $27,185 | $9,371 | 190% |
| Net income per share attributable to common stockholders-Basic | $0.27 | $0.10 | |
| Net income per share attributable to common stockholders-Diluted | $0.26 | $0.09 | |
| Weighted-average common shares-Basic | 99,073,507 | 97,785,089 | |
| Weighted-average common shares-Diluted | 106,108,662 | 102,031,088 | |
| N/M-Not meaningful |
LENDINGCLUB CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Continued) (In thousands, except share and per share data) (Unaudited)
(1) Marketplace revenue consists of the following:
| Three Months Ended | Change(%) | ||
|---|---|---|---|
| September 30,2021 | June 30,2021 | Change(%) | |
| Origination fees | $129,125 | $113,802 | 13% |
| Servicing fees | 20,819 | 22,714 | (8)% |
| Gain on sales of loans | 21,907 | 19,317 | 13% |
| Net fair value adjustments | 2,705 | (4,098) | |
| Total marketplace revenue | $ | 174,556 | $151,735 |