LendingClub 2Q23 Earnings Presentation
LendingClub
Second Quarter 2023 Results
July 26, 2023
Award-Winning Member-Focused Digital Marketplace Bank
Members¹
4.7+ Million
Average Customer Review²
4.83 Out of 5 stars
Originations¹
$85+ Billion
Net Promoter Score (NPS)
78
The Problem We’re Solving
43% of American households carry over $1 trillion of revolving debt, paying an estimated $133 billion in fees and interest in 2022 alone – up 23% over the prior year. In 2022, average credit card rates increased by more than 400 bps to over 20% and they are continuing to rise in 2023. We exist to help Americans keep more of what they earn by providing access to more affordable credit.
LendingClub’s 4.7+ million members have already come to us to access lower-cost credit. While we serve a broad range of borrowers, their average income is over $100K with a high FICO (700+ avg.), but they also have high debt.
And 83% tell us they want to do more with us!
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.
Total Addressable Market & Customer Value Proposition Has Never Been Greater
Record High Outstanding Record High Credit Card Revolving Consumer Credit Interest Rates
(May 2008 to May 2023)
| Month | Total outstanding revolving consumer credit (in trillions) |
|---|---|
| May 08 | $0.8T |
| May 09 | $0.7T |
| ... | ... |
| May 23 | $1.2T |
2Q23 Highlights: Achieved Financial Targets
| 2Q23 Guidance Targets | Actuals | Commentary | |
|---|---|---|---|
| Q2 Total Originations | $1.9B to $2.1B | ✔ $2.0B | Total originations within guidance range driven by increased marketplace sold volume offset by lower retained loan originations: Marketplace loan originations of $1.4B, Retained loan originations of $657M, or 33% of total originations |
| Q2 Pre-Provision Net Revenue (PPNR)¹ | $60M to $70M | ✔ $81.4M | Pre-Provision Net Revenue of $81.4M, above high end of guidance driven by full quarter benefit of Q1 cost actions and continued expense discipline |
Strong Capital & Liquidity Position
MAJORITY INSURED DEPOSITS
85%
$5.9B of $6.9B total deposits are insured compared to 56% average for all FDIC institutions as of 3/31/23
AMPLE CASH ON HAND
$1.2B
Cash represents 14% of Total Assets; provides 160% coverage of uninsured deposits
ADDED BORROWING CAPACITY
$4.1B
Includes loans and securities pledged as collateral with the Federal Reserve Bank and Federal Home Loan Bank
STRONG CAPITAL BUFFER
12.4%
Strong Tier 1 leverage provides substantial capital buffer above minimum thresholds
Maintained QoQ Net Interest Income
Increasing consumer mix and yields offset rising deposit costs
Net Interest Income
| Category | 2Q22 | 1Q23 | 2Q23 |
|---|---|---|---|
| Consumer Loans | $6,188 | $6,079 | $6,188 |
| Commercial / PPP Loans | $671 | $836 | $757 |
| Total Interest-earning Assets | $8,278 | ... | ... |
Driving Continued Profitability
Pre-Provision Net Revenue (PPNR) 1
| In thousands | June 30, 2023 | March 31, 2023 | June 30, 2022 |
|---|---|---|---|
| GAAP Net income | $10,110 | $13,666 | $182,060 |
| Less: Provision for credit losses | (66,595) | (70,584) | (70,566) |
| Pre-Provision Net Revenue | $81,391 | $88,386 | $120,672 |
Held for Investment Credit Performance by Vintage
Expected Personal Loans Lifetime Net Loss Rate*
| Vintage Year | Expected Lifetime Net Loss Rate |
|---|---|
| 2021 Vintage | 8.5 – 9.0% |
| 2022 Vintage | 7.9 – 8.2% |
| Future Estimate | 0.0 - 0.3% |
Targeting High Marginal ROEs for Balance Sheet Usage
| Marginal Return on Equity(Personal Loans) | Higher Loss Estimate | Loss Estimate | Structured Certificates |
|---|---|---|---|
| Net Interest Margin1 | 9.1% | 2.3% | ... |
| Marginal Levered Return on Equity(post-tax@28%) | 25% | 20% | ... |
3Q23 Guidance
| Total Originations | 3Q23 Guidance |
|---|---|
| Total Originations | $1.4B to $1.7B |
| Pre-Provision Net Revenue | $40M to $50M |
Reconciliation of GAAP to Non-GAAP Measures: Tangible Book Value Per Common Share
| In thousands, except share and per share data | June 30, 2023 | March 31, 2023 | June 30, 2022 |
|---|---|---|---|
| GAAP common equity | $1,205,523 | $1,190,742 | $1,079,117 |
| Less: Goodwill | (75,717) | (75,717) | (75,717) |
| Tangible common equity | $1,115,639 | $1,099,824 | $984,710 |
| Book value per common share | $11.09 | $11.08 | $10.41 |