LendingClub 3Q22 Earnings Presentation
LendingClub
3Q 2022 Results & Financial Metrics
The Problem We’re Solving
40% of American households carry over $1 trillion of revolving debt, paying an estimated $111 billion in fees and interest in 2021 alone. And in the past 12 months they’ve seen their average credit card rate increase by over 250 3 bps. We exist to help Americans keep more of what they earn by providing access to more affordable credit.
LendingClub’s 4+ 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.
Award-Winning Member-Focused Digital Marketplace Bank
Members¹
4+
Million
Originations¹ $80+ Billion
Mission Become America’s Financial Health Club. Empower Our Members on Their Path to Financial Health.
3Q22 Highlights: Exceeded Revenue and Net Income Targets
| 3Q22 Guidance Targets | Actuals | Commentary | |
|---|---|---|---|
| Net Revenue | $280M to $300M | ✔$304.9M | Net Revenue up 24% YoY driven by: Marketplace revenue flat YoY Net interest income up 89% driven by growth in the consumer loan portfolio |
| Net Income | $30M to $40M | ✔$43.2M | GAAP Net Income of $43.2M, up 59% YoY includes: Income tax benefit of $7.2M, enabling higher loan retention in the quarter Provision impact of holding more loans on balance sheet |
3Q22 YoY Highlights: Marketplace Bank Model Supporting Strong Results Despite Less Favorable Environment
NET REVENUE 24% Net Revenue growth driven by Net Interest Income
NET INTEREST INCOME 89% Net Interest Income of $123.7M, driven by average HFI loan portfolio growth of 76%
AVG. HFI LOAN PORTFOLIO 76% Average Held for Investment (HFI) loan portfolio of $4.4B, up $1.9B YoY
NET INTEREST MARGIN 8.3% Maintained strong Net Interest Margin, up from 6.3% a year ago
EARNINGS PER SHARE 58% Diluted EPS of $0.41, up 58% or $0.15 YoY
BOOK VALUE PER COMMON SHARE 32% Book Value per Common Share of $10.67, up from $8.07 a year ago; Tangible Book Value per Common Share of $9.78, up from $7.08 a year ago
Best of Both Worlds
| LendingClub¹ | Fintechs | Banks | |
|---|---|---|---|
| Economics | Ability to efficiently serve a broad range of customers | Industry leading marketing efficiency;4M+ members | √ |
| Economics | Capital-light, high-ROE marketplace earnings stream | $181.2M Non-Interest Income | √ |
| Economics | Highly profitable earnings via loan portfolio | $123.7M Net Interest Income | √ |
| Economics | Lower-cost deposit funding | 1.35% average cost of funds | √ |
| Economics | Fully integrated originations and deposit model | $3.5B originations;$5.1B deposits | √ |
| Scale&Scalability | National digital-first consumer footprint | Multi-award-winning digital experience | √ |
| Scale&Scalability | Vast data advantage from serving millions of PL customers | 150B+ cells of data;2K+ attributes | √ |
| Scale&Scalability | Unencumbered by high-cost branches or legacy systems | Tech-first highly automated marketplace platform | √ |
| Scale&Scalability | Strong growth trajectory | 24% Net Revenue growth rate YoY | √ |
| Resiliency | Recurring revenue stream | 48% recurring revenue(NII+Servicing Fees) | √ |
| Resiliency | Stability of funding | Low-cost deposits and diverse investor funding | √ |
| Resiliency | Clear and consistent regulatory framework | Strong control & compliance infrastructure | √ |
A Self-Reinforcing Flywheel
Our capital-light core marketplace business drives scale and fee revenue
52% of total revenue
Dual income streams drive growth and provide flexibility through economic cycles
Our HFI portfolio delivers interest income from high-quality, high-yield loans funded by low-cost deposits
48% of total revenue
Non-Interest Income: Marketplace Revenue Flat on Higher Retained Loans
Quarterly Loan Originations
($ in millions)
| Marketplace Originations | Marketplace Sold Loans |
|---|---|
| $3,539 | $2,471 |
Guidance
| 4Q22 Guidance | FY22 Outlook | |
|---|---|---|
| Total Net Revenue | $255M to $265M | $1,180M to $1,190M |
| Net Income | $15M to $25M | $280M to $290M |
Reconciliation of GAAP to Non-GAAP Measures: Tangible Book Value Per Common Share
| In thousands, except share and per share data. | September 30,2022 | September 30,2021 | ||
|---|---|---|---|---|
| GAAP common equity | $1,121,410 | $804,790 | ||
| Less: Goodwill | (75,717) | (75,717) | ||
| Less: Intangible assets | (17,512) | (22,521) | ||
| Tangible common equity | $1,028,181 | $706,552 | ||
| Book value per common share | ||||
| GAAP common equity | $1,121,410 | $804,790 | ||
| Common shares issued and outstanding | 105,088,761 | 99,782,192 | ||
| Book value per common share | $10.67 | $8.07 | ||
| Tangible book value per common share | ||||
| Tangible common equity | $1,028,181 | $706,552 | ||
| Common shares issued and outstanding | 105,088,761 | 99,782,192 | ||
| Tangible book value per common share | $9.78 | $7.08 |