PowerPoint Presentation
LendingClub
Fourth Quarter 2021 Results
January 26, 2022
4Q 2021 Results & Financial Metrics
Disclaimer
Some of the statements below, including statements regarding our competitive advantages, ability to grow and evolve our business, anticipated future performance and financial results, are “forward-looking statements.” The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,” “predict,” “project,” “will,” “would” and similar expressions may identify forward-looking statements, although not all forward-looking statements contain these identifying words. Factors that could cause actual results to differ materially from those contemplated by these forward-looking statements include: our ability to continue to attract and retain new and existing customers; competition; overall economic conditions; the regulatory environment; demand for the types of loans facilitated by us; default rates and those factors set forth in the section titled “Risk Factors” in our most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K, each as filed with the Securities and Exchange Commission, as well as our subsequent reports on Form 10-Q and 10-K each as filed with the Securities and Exchange Commission. We may not actually achieve the plans, intentions or expectations disclosed in forward-looking statements, and you should not place undue reliance on forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in forward-looking statements. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
LendingClub Corporation (NYSE: LC) is the parent company of LendingClub Bank, National Association, Member FDIC.
The Problem We’re Solving
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Many American households have turned to credit cards to manage their finances, which has resulted in 40% of American households carrying over $1 trillion of revolving debt. Much of this debt is overpriced and LendingClub exists to provide Americans with a better way to access affordable credit.
LendingClub’s 3.9+ million members have already come to us to access lower-cost credit. Our members are generally high income (+$100K avg.) and high FICO (+700 avg.), but they also have high debt.
over $1 trillion of revolving debt.
And 83% tell us they want to do more!
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Our direct-to-consumer digital marketplace bank features a vertically integrated model that allows us to reimagine banking, including lending, spending, and savings for our members.
Award-Winning Member-Focused Digital Marketplace Bank
Customers¹
3.9+
Million
Originations¹
$70+
Billion
Become America’s Financial Health Club.
Vision
Mission
Empower Our Members on Their Path to Financial Health.
with fairness, Health Club. to Financial
Promise
To champion the financial success of our members with fairness, simplicity, and heart.
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Best Checking Account Overall
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Best Overall Checking Account, April 2021
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Best of Both Worlds
Positioned well against both the fintech and bank competitive sets
| LendingClub | Fintechs | Banks | ||
|---|---|---|---|---|
| Economics | Ability to efficiently serve a broad range of customers | √ | √ | X |
| Economics | Capital-light, high-ROE marketplace earnings stream | √ | √ | X |
| Economics | Highly profitable earnings via loan portfolio | √ | X | √ |
| Economics | Lower-cost deposit funding | √ | X | √ |
| Economics | Fully integrated originations and deposit model | √ | X | √ |
| Economics | National digital-first consumer footprint | √ | √ | X |
| Scale&Scalability | Vast data advantage from serving millions of personal loan customers | √ | X | X |
| Scale&Scalability | Unencumbered by high-cost branch network and legacy systems | √ | √ | X |
| Scale&Scalability | Strong growth trajectory | √ | √ | X |
| Resiliency | Recurring revenue stream | √ | X | √ |
| Resiliency | Stability of funding | √ | X | √ |
| Resiliency | Clear and consistent regulatory framework | √ | X | √ |
4Q21 Highlights: Exceeded All Targets
| 4Q21 Guidance Targets | Actuals | Commentary | |
|---|---|---|---|
| Originations | $2.8B to $3.0B | ✔ $3.1B | Leveraged our competitive advantages and data science capabilities to drive existing and new member response and conversion rates |
| Revenue | $240M to $250M | ✔ $262.2M | Revenue up 7% QoQ driven by growth in net interest income of 27% |
| GAAP Net Income | $20M to $25M | ✔ $29.1M | Record GAAP Net Income |
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Vertically Integrated Marketplace Bank Model
Continues to Drive Superior Performance
| Marketplace Only(4Q19) | Marketplace Bank(4Q21) | Variance | ||
|---|---|---|---|---|
| Originations | $3.1B | $3.1B | $0 | Same originations |
| Revenue | $188.5M | $262.2M | +$73.7M | Stronger economics on same volume levels driven by structural advantages of marketplace bank model |
| GAAP Net Income | $0.2M | $29.1M^{1}$ | +$28.9M | Stronger economics on same volume levels driven by structural advantages of marketplace bank model |
Topline Growth Driven by Recurring Net Interest Income Stream
Combined With Strong Marketplace Revenue
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- Note: There may be differences between the sum of the quarterly results due to rounding.
Net Interest Income Reflects recurring revenue stream driven by growing average consumer loan portfolio by 36% QoQ
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Non-interest Income
Marketplace revenue reflects ~$6M incremental deferred revenue in the period driven by retaining $125M more new consumer loan originations when compared to 3Q21
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Loan Originations Above Expectations
Marketplace Revenue Reflects Higher Loans Held for Investment
Quarterly Loan Originations 1,2
1,2 Quarterly Loan Originations ($ in millions)
Quarterly Marketplace Revenue ($ in millions)
Loan Origination Growth (% QoQ)
| 56% | 63% | 84% | 14% | (1%) |
|---|
Held for Investment % of Originations
Marketplace Originations Drive Marketplace Revenue
| 0% | 23% | 20% | 20% | 25% |
|---|
Marketplace Revenue Growth (% QoQ)
| 27% | 18% | 86% | 15% | (2%) |
|---|
- Note: There may be differences between the sum of the quarterly results due to rounding.
- Quarterly Loan Originations include Personal Loans, Education and Patient Finance Loans, and Auto Loans only.
Interest Income from HFI Portfolio Grew 34% QoQ as Consumer Loan Portfolio Momentum Builds
Bank Average Held for Investment Balances¹ ($ in millions)
Bank Interest Income from Held for Investment Loans² ($ in millions)
Bank HFI Balances (% QoQ)
| Bank HFI Balances (% QoQ) | 2Q21 | 3Q21 | 4Q21 |
|---|---|---|---|
| Consumer Loans | 56% | 39% | 36% |
| Commercial/PPP Loans | 1% | (15%) | (10%) |
| HFI Total | 21% | 10% | 17% |
HFI Portfolio Drives Interest Income
| Bank HFI Interest Income (% QoQ) | 2Q21 | 3Q21 | 4Q21 |
|---|---|---|---|
| Consumer Loans | 273% | 79% | 46% |
| Commercial/PPP Loans | 66% | (7%) | (7%) |
| HFI Total | 155% | 48% | 34% |
Growing Consumer Loan Portfolio Mix Drives
Net Interest Margin Expansion to 8.25%
Key Bank Balance Sheet Data
(Average balances; $ in millions)
| Average Balances | Average Yield | |||||||
|---|---|---|---|---|---|---|---|---|
| 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q21 | 2Q21 | 3Q21 | 4Q21 | |
| Unsecured consumer loans | $147 | $512 | $991 | $1,542 | 13.85% | 15.24% | 15.95% | 15.66% |
| Secured consumer loans | $521 | $532 | $464 | $436 | 3.70% | 3.89% | 4.04% | 3.69% |
| Commercial loans and leases | $605 | $624 | $617 | $620 | 5.07% | 5.81% | 5.11% | 5.59% |
| PPP loans | $621 | $616 | $437 | $325 | 3.45% | 3.46% | 5.07% | 4.78% |
| HFI Loans | $1,895 | $2,284 | $2,509 | $2,923 | 4.84% | 6.84% | 9.19% | 10.53% |
| Other interest-earning assets2 | $1,034 | $862 | $1,023 | $973 | 1.27% | 2.91% | 2.72% | 2.61% |
| Total Interest-earning Assets | $2,929 | $3,145 | $3,533 | $3,896 | 3.58% | 5.76% | 7.32% | 8.55% |
| Non-interest bearing deposits | $156 | $103 | $114 | $283 | ||||
| Interest-bearing deposits | $2,059 | $2,373 | $2,529 | $2,727 | 0.30% | 0.29% | 0.30% | 0.38% |
| Advances from PPPLF/Other | $411 | $315 | $417 | $343 | 0.35% | 0.35% | 0.36% | 0.36% |
| Total Interest-bearing Liabilities | $2,470 | $2,688 | $2,946 | $3,070 | 0.31% | 0.29% | 0.31% | 0.38% |
| Interest Rate Spread | 3.27% | 5.47% | 7.01% | 8.17% | ||||
| Net Interest Margin | 3.33% | 5.51% | 7.06% | 8.25% |
Maintaining Operating Leverage While Continuing to Invest in Long-term Growth
Total Non-interest Expense 1
Total Non-interest Expense as a % of Revenue¹ ($ in millions)
- Note: There may be differences between the sum of the quarterly results due to rounding.
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1 Total Non-interest Expense ($ in millions)
| 4Q20 | 1Q21 | 2Q21 | 3Q21 | 4Q21 | |
|---|---|---|---|---|---|
| Compensation&Benefits | 52.5 | 64.4 | 71.9 | 73.3 | 78.7 |
| Marketing | 8.5 | 19.5 | 35.1 | 50.8 | 50.7 |
| Equipment&Software | 5.9 | 7.9 | 9.3 | 10.3 | 12.0 |
| Occupancy | 5.6 | 6.9 | 6.2 | 6.5 | 4.7 |
| Depreciation&Amortization | 12.2 | 11.8 | 11.5 | 10.5 | 10.5 |
| ProfessionalServices | 9.1 | 11.6 | 11.5 | 11.7 | 12.7 |
| OtherNon-interestExpense | 9.1 | 12.1 | 14.6 | 15.6 | 18.9 |
| TotalNon-interestExpense | 102.9 | 134.3 | 160.1 | 178.8 | 188.2 |
Professional 30%
Other Non-interest 21% 19%
High Quality Customer Profile 1 Driving Strong Credit Performance
Driving Strong Credit Performance 1
| 2019 Total2 | 2021 Total2 | |
|---|---|---|
| Avg. FICO | 701 | 702 |
| Avg. Income ($000)4 | $108 | $108 |
| Avg. Debt-to-Income5 | 19% | 19% |
| Avg. Coupon | 14.6% | 14.9% |
| Projected Duration (months) | 16.3 | 15.9 |
Personal Loan Credit Performance
▪ 2021 originations focused on high quality prime customers, consistent with historical focus and expectations for credit to normalize
▪ Held for Investment (HFI) portfolio focused on highest quality segment
▪ 2021 assumption is for performance to revert to pre-pandemic levels, which was factored into underwriting and pricing and is captured in loss reserves
▪ 1H21 outperformance not assumed to continue
All metrics reflect personal loans and are issuance dollar weighted
Total metrics include all personal loans issued during the period
Represents applicant income on the average issued loan, which could include a co-borrower
Debt-to-Income ratio includes all credit bureau debt obligations except housing
HFI refers to loans held for investment at LendingClub Bank
Pre-pandemic performance adjusted for current credit policy and HFI loan mix
2022 Full Year Outlook
Driving strong revenue growth and expanding profitability while investing in long-term growth
| FY21 Results | FY22 Guidance | 1Q22 Guidance | Commentary | |
|---|---|---|---|---|
| Revenue | $818.6M | $1.1B to $1.2B+34% to 47% YoY | $255M to $265M+141% to 150% YoY | Estimate originations of approximately $13B in 2022 |
| GAAP Net Income | $18.6M | $130M to $150M+600% to 707% YoY | $25M to $30M+$72M to +$77M YoY | Expanding profitability while investing in HFI portfolio, member acquisition, and technology |