LendingClub Reports First Quarter 2021 Results

Sequential Revenue Growth of 40% Exceeds High End of Guidance Raising Full Year Outlook

April 28, 2021 4:06 PM EDT

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SAN FRANCISCO, April 28, 2021 /PRNewswire/ -- LendingClub Corporation (NYSE: LC), America's leading digital marketplace bank, today announced financial results for the first quarter ended March 31, 2021.

"We had a great start to the year, accelerating personal loan origination growth by leveraging our strategic advantages including our customer base of 3 million members, our data and technology capabilities, and our newly acquired digital bank," said Scott Sanborn, CEO of LendingClub. "Personal loans are paving the road to our broader ambitions as our vertically integrated model delivers a new and recurring revenue stream, lowers our issuance costs and generates strong and sustained growth."

Results Reflect Completed Acquisition of Radius (now LendingClub Bank) and Strong Sequential Growth

  • 63% sequential growth in origination volume.
  • 40% sequential growth in total revenue, driven by growth in originations, partially offset by revenue deferrals on originations retained on the balance sheet.
    • 20% sequential growth in non-interest income, representing 83% of total revenue.
    • New, recurring revenue stream of net interest income of $18.5 million compared to $2.9 million in the fourth quarter of 2020.
  • Stronger first quarter revenue growth improved bottom line results versus our guidance.
  • First quarter 2021 net loss of $47 million included $44 million of the following notable items: $21 million of Current Expected Credit Loss (CECL) expenses related to acquired loans and loan growth, $14 million of net revenue deferrals on retained loans, and $9 million of non-recurring expenses related to the acquisition of Radius.

Three Months Ended  

($ in millions)

March 31, 2021

December 31, 2020

QoQ %

Loan originations

$

1,483.2

$

912.0

63

%

Total revenue

$

105.8

$

75.5

40

%

Consolidated net loss

$

(47.1)

$

(26.7)

76

%

Strategic and Financial Benefits of Digital Bank Acquisition Are Being Realized Immediately

  • Successfully transitioned to all new personal loan originations being issued through LendingClub Bank as we exited the quarter, saving on issuing fees previously paid to a third-party issuing bank partner.
  • Retained $344 million of personal loans, building an attractive and recurring revenue stream which generates approximately 3x the earnings of loans sold through the marketplace.
  • Benefited from a core deposit base of over $2 billion from the acquisition, reducing overall funding costs by approximately 300 basis points compared to 2020.
  • Leveraged new digital banking capabilities and extended support of the Paycheck Protection Program (PPP), which has cumulatively facilitated over $870 million of loans to help small businesses keep over 75,000 people employed.

 

Financial Outlook – Raising Full Year Targets

(millions)

Second Quarter

2021

Full Year

2021

Versus Prior

Full Year 2021 Guidance

Loan originations

$1.7B to $1.9B

$6.8B to $7.3B

+$500M to +$1B

Total revenue

$130M to $140M

$500M to $530M

+$12M to +$42M

Consolidated net loss

($40M) to ($30M)

($167M) to ($142M)

+$33M

 

Items Impacting Q1'21 Consolidated Net Loss

(millions)

Consolidated Net Loss Impact

Per ShareImpact

Commentary

Revenue deferrals, net of amortization

$(14.0)

$(0.14)

Deferred revenue, net of deferred expense and amortization during the period

Provision for credit losses

$(21.5)

$(0.22)

Includes $6.9 million Day 1 CECL adjustment for legacy Radius assets

Non-recurring expenses

$(8.9)

$(0.09)

Non-recurring expenses primarily related to the acquisition of Radius

Total

$(44.4)

$(0.46)

About LendingClub

LendingClub Corporation (NYSE: LC) is the parent company of LendingClub Bank, National Association, Member FDIC. It is the leading digital marketplace bank in the US. Members can gain access to a broad range of financial products and services through a technology-driven platform, designed to help them pay less when borrowing and earn more when saving. Since 2007, more than 3 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 first quarter 2021 webcast and teleconference is scheduled to begin at 2:00 p.m. Pacific Time (or 5:00 p.m. Eastern Time) on Wednesday, April 28, 2021. 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 (888) 317-6003, or outside the U.S. +1 (412) 317-6061, with conference ID 0419659, 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 March 17, 2021, by calling +1 (877) 344-7529 or outside the U.S. +1 (412) 317-0088, with Conference ID 10151870. LendingClub has used, and intends to use, its investor relations website, blog (http://blog.lendingclub.com), Twitter handle (@LendingClub) and Facebook page (https://www.facebook.com/LendingClubTeam) as a means of disclosing material non-public information and to comply with its disclosure obligations under Regulation FD.

Contacts

For Investors:IR@lendingclub.com

Media Contact:Press@lendingclub.com

Safe Harbor Statement

Some of the statements above, including statements regarding future products and services, our ability to effectuate and the effectiveness of certain strategy initiatives, anticipated future financial results, value delivery for customers and stockholders, and the impact of the Radius acquisition and resulting bank charter on our business 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: the outcomes of pending governmental investigations and pending or threatened litigation, which are inherently uncertain; the impact of management changes and the ability to continue to retain key personnel; our ability to achieve cost savings from restructurings; our ability to continue to attract and retain new and existing borrowers and investors; our ability to obtain or add bank functionality and a bank charter; competition; overall economic conditions; 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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

Three Months Ended

March 31,

December 31,

March 31,

2021

2020

2020

Non-interest income (1):

Marketplace revenue

$

81,727

$

69,322

$

102,477

Other non-interest income

5,607

3,276

4,511

Total non-interest income

87,334

72,598

106,988

Interest income (1):

Interest on loans held for sale

5,157

5,297

27,376

Interest and fees on loans and leases held for investment

15,301

Interest on retail and certificate loans held for investment at fair value

20,262

23,759

35,376

Interest on other loans held for investment at fair value

1,479

1,666

1,999

Interest on securities available for sale

2,235

2,194

3,779

Other interest income

156

34

881

Total interest income

44,590

32,950

69,411

Interest expense (1):

Interest on deposits

1,014

Interest on short-term borrowings

1,264

1,506

7,398

Interest on retail notes, certificates and secured borrowings

20,262

23,759

35,376

Interest on Structured Program borrowings

3,208

4,786

2,299

Interest on other long-term debt

336

140

Total interest expense

26,084

30,051

45,213

Net interest income (1)

18,506

2,899

24,198

Total net revenue (1)

105,840

75,497

131,186

Provision for credit losses (1)

21,493

(417)

10,980

Non-interest expense (1):

Compensation and benefits

64,420

52,527

75,545

Marketing

19,545

8,488

39,081

Equipment and software

7,893

5,911

6,490

Occupancy

6,900

5,629

6,813

Depreciation and amortization

11,766

12,198

12,873

Professional services

11,603

9,057

14,141

Other non-interest expense

12,125

9,083

13,031

Total non-interest expense

134,252

102,893

167,974

Loss before income tax expense

(49,905)

(26,979)

(47,768)

Income tax expense (benefit)

(2,821)

(324)

319

Consolidated net loss

$

(47,084)

$

(26,655)

$

(48,087)

Net loss per share attributable to common stockholders – Basic and Diluted (2)

$

(0.49)

$

(0.29)

$

(1.10)

Weighted-average common shares – Basic and Diluted (2)

92,666,169

81,368,674

86,505,560

Net income (loss) per share attributable to preferred stockholders – Basic and Diluted (2)

$

(0.49)

$

(0.29)

$

18.36

Weighted-average common shares, as converted – Basic and Diluted (2)

2,648,758

10,512,486

2,579,710

(1)      

Prior period amounts have been reclassified to conform to the current period presentation.

(2)   

The following table details the computation of the Company's basic and diluted net income (loss) per share of common stock and preferred stock (presented on an as-converted basis):

 

Three Months Ended

March 31, 2021

December 31, 2021

March 31, 2020

CommonStock

PreferredStock

Common Stock

PreferredStock

Common Stock

Preferred Stock

Allocation of undistributed consolidated net loss

$

(45,776)

$

(1,308)

$

(23,605)

$

(3,050)

$

(45,240)

$

(2,847)

Deemed dividend

(50,204)

50,204

Net income (loss) attributable to stockholders (3)

$

(45,776)

$

(1,308)

$

(23,605)

$

(3,050)

$

(95,444)

$

47,357

Weighted-average common shares – Basic and Diluted

92,666,169

2,648,758

81,368,674

10,512,486

86,505,560

2,579,710

Net income (loss) per share attributable to stockholders – Basic and Diluted

$

(0.49)

$

(0.49)

$

(0.29)

$

(0.29)

$

(1.10)

$

18.36

(3)     

For the first quarter of 2020, reflects a deemed dividend paid to our largest stockholder upon the exchange of all shares of LendingClub common stock held by it for newly issued shares of mandatorily convertible, non-voting, LendingClub Series A preferred stock.

 

LENDINGCLUB CORPORATION

OPERATING HIGHLIGHTS

(In thousands, except percentages and number of employees, or as noted)

(Unaudited)

Three Months Ended

% Change

March 31, 2021

December 31, 2020

September 30,2020

June 30,2020

March 31, 2020

Q/Q

Y/Y

Operating Highlights:

Loan originations (in millions) (1)

$

1,483

$

912

$

584

$

326

$

2,521

63

%

(41)

%

Total revenue (2)

$

105,840

$

75,497

$

71,043

$

40,357

$

131,187

40

%

(19)

%

Consolidated net loss

$

(47,084)

$

(26,655)

$

(34,325)

$

(78,471)

$

(48,087)

(77)

%

(2)

%

EPS (common stockholders) – diluted (3)

$

(0.49)

$

(0.29)

$

(0.38)

$

(0.87)

$

(1.10)

(69)

%

(55)

%

Loan Originations by Investor Type:

Banks

29

%

33

%

41

%

68

%

43

%

Self-directed retail investors

%

8

%

13

%

17

%

4

%

LendingClub Bank

23

%

%

%

%

%

LendingClub inventory (4)

5

%

1

%

2

%

5

%

20

%

Managed accounts and other institutional

43

%

58

%

44

%

10

%

33

%

Total

100

%

100

%

100

%

100

%

100

%

Servicing Portfolio by Method Financed (in millions, at end of period):

Whole loans sold

$

9,185

$

10,139

$

11,249

$

12,421

$

14,118

(9)

%

(35)

%

Retail notes, certificates and secured borrowings

537

680

756

851

991

(21)

%

(46)

%

LendingClub Bank

399

57

79

109

147

N/M

171

%

Other loans invested in by the Company

150

183

262

690

866

(18)

%

(83)

%

Total

$

10,271

$

11,002

$

12,267

$

13,962

$

15,975

(7)

%

(36)

%

Employees and contractors (5)

1,192

1,030

998

1,008

1,542

16

%

(23)

%

N/M – Not meaningful

(1)    

Includes unsecured personal loans, auto loans, and education and patient finance loans.

(2)    

Prior period total net revenue balances have been recast related to credit valuation adjustments on securities available for sale being reclassified from net fair value adjustments to provision for credit losses.

(3)    

For the first quarter of 2020, reflects a $50.2 million deemed dividend paid to our largest stockholder upon the exchange of all shares of LendingClub common stock held by it for newly issued shares of mandatorily convertible, non-voting, LendingClub Series A preferred stock.

(4)    

LendingClub inventory reflects loans purchased or pending purchase by the Company during the period, excluding loans held by the Company through consolidated trusts, if applicable, and not yet sold as of the period end.

(5)    

As of the end of each respective period.

 

LENDINGCLUB CORPORATION

ALLOWANCE FOR LOAN AND LEASE LOSSES

(In thousands, except percentages or as noted)

(Unaudited)

The activity in the allowance for expected credit losses for the quarter ended March 31, 2021 was as follows:

March 31, 2021

Allowance for loan and lease losses, beginning of period

$

Credit loss expense for loans and leases held for investment

23,553

Initial allowance for PCD assets acquired during the period

12,440

Charge-offs

Recoveries

139

Allowance for loan and lease losses, end of period

$

36,132

Reserve for unfunded lending commitments, beginning of period

$

Credit loss expense for unfunded lending commitments

410

Reserve for unfunded lending commitments, end of period

$

410

 

LENDINGCLUB CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share and Per Share Amounts)

(Unaudited)

March 31, 2021

December 31, 2020

Assets (1)

Cash and due from banks

$

34,261

$

5,197

Interest-bearing deposits in banks

797,539

519,766

Total cash and cash equivalents

831,800

524,963

Restricted cash

139,080

103,522

Securities available for sale at fair value (includes $273,331 and $159,164 at amortized cost, respectively)

274,419

142,226

Loans held for sale at fair value

166,623

121,902

Loans and leases held for investment

2,115,432

Allowance for loan and lease losses

(36,132)

Loans and leases held for investment, net

2,079,300

Retail and certificate loans held for investment at fair value

507,157

636,686

Other loans held for investment at fair value

42,485

49,954

Property, equipment and software, net

95,313

96,641

Goodwill

75,717

Other assets

279,195

187,399

Total assets

$

4,491,089

$

1,863,293

Liabilities and Equity (1)

Deposits:

Interest-bearing

$

2,229,827

$

Noninterest-bearing

143,610

Total deposits

2,373,437

Short-term borrowings

90,091

104,989

Advances from Paycheck Protection Program Liquidity Facility (PPPLF)

370,086

Retail notes, certificates and secured borrowings at fair value

507,203

636,774

Payable on Structured Program borrowings

133,499

152,808

Other long-term debt

18,572

Other liabilities

265,066

244,551

Total liabilities

3,757,954

1,139,122

Equity

Series A Preferred stock, $0.01 par value; 1,200,000 shares authorized; 0 and 43,000 shares issued and outstanding, respectively

Common stock, $0.01 par value; 180,000,000 shares authorized; 97,228,126 and 88,149,510 shares issued and outstanding, respectively

972

881

Additional paid-in capital 

1,563,865

1,508,020

Accumulated deficit

(833,298)

(786,214)

Treasury stock, at cost; 4,251 and 0 shares, respectively

(92)

Accumulated other comprehensive income

1,688

1,484

Total equity

733,135

724,171

Total liabilities and equity

$

4,491,089

$

1,863,293

(1) 

Prior period amounts have been reclassified to conform to the current period presentation.

 

LENDINGCLUB CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS BY SEGMENT

(In Thousands, Except Share and Per Share Amounts)

(Unaudited)

LendingClub

Corporation

(Parent only)

LendingClub

Bank

Intercompany

Eliminations

Total

March 31, 2021

December 31, 2020

March 31, 2021

December 31, 2020

March 31, 2021

December 31, 2020

March 31, 2021

December 31, 2020

Assets

Total cash and cash equivalents

$

75,950

$

524,963

$

792,701

$

$

(36,851)

$

$

831,800

$

524,963

Restricted cash

139,080

103,522

139,080

103,522

Securities available for sale at fair value

122,766

142,226

151,653

274,419

142,226

Loans held for sale at fair value

105,792

121,902

60,831

166,623

121,902

Loans and leases held for investment, net

2,079,300

2,079,300

Retail and certificate loans held for investment at fair value

507,157

636,686

507,157

636,686

Other loans held for investment at fair value

42,485

49,954

42,485

49,954

Property, equipment and software, net

88,364

96,641

6,949

95,313

96,641

Goodwill

75,717

75,717

Other assets

206,756

187,399

123,227

(50,788)

279,195

187,399

Total assets

1,747,267

1,863,293

3,290,378

(546,556)

4,491,089

1,863,293

Liabilities and Equity

Total deposits

2,410,288

(36,851)

2,373,437

Short-term borrowings

87,347

104,989

2,744

90,091

104,989

Advances from PPPLF

370,086

370,086

Retail notes, certificates and secured borrowings at fair value

507,203

636,774

507,203

636,774

Payable on Structured Program borrowings

133,499

152,808

133,499

152,808

Other long-term debt

15,738

2,834

18,572

Other liabilities

240,486

244,551

75,875

(51,295)

265,066

244,551

Total liabilities

984,273

1,139,122

2,861,827

(88,146)

3,757,954

1,139,122

Total equity

762,994

724,171

428,551

(458,410)

733,135

724,171

Total liabilities and equity

$

1,747,267

$

1,863,293

$

3,290,378

$

$

(546,556)

$

$

4,491,089

$

1,863,293

 

LENDINGCLUB CORPORATION

SUPPLEMENTAL FINANCIAL INFORMATION

(In thousands)

(Unaudited)

The following table is provided to delineate between the assets and liabilities belonging to our member payment dependent self-directed retail program (Retail Program) note holders and certain VIEs that we are required to consolidate in accordance with GAAP. Such assets are not legally ours and the associated liabilities are payable only from the cash flows generated by those assets (i.e. Pass-throughs). As such, these debt holders do not have a secured interest in any other assets of LendingClub. We believe this is a useful measure because it illustrates the overall financial stability and operating leverage of the Company.

March 31, 2021

December 31, 2020

Retail Program (1)

Consolidated VIEs (2)(4)

All OtherLendingClub (3)

Condensed ConsolidatedBalance Sheet

Retail Program (1)

Consolidated VIEs (2)(4)

All Other LendingClub (3)

Condensed ConsolidatedBalance Sheet

Assets (5)

Total cash and cash equivalents

$

$

$

831,800

$

831,800

$

$

$

524,963

$

524,963

Restricted cash

15,229

123,851

139,080

13,473

90,049

103,522

Securities available for sale at fair value

274,419

274,419

142,226

142,226

Loans held for sale at fair value (4)

79,281

87,342

166,623

92,802

29,100

121,902

Loans and leases held for investment, net

2,079,300

2,079,300

Retail and certificate loans held for investment at fair value

470,880

36,277

507,157

584,066

52,620

636,686

Other loans held for investment at fair value (4)

38,680

3,805

42,485

46,120

3,834

49,954

Property, equipment and software, net

95,313

95,313

96,641

96,641

Goodwill

75,717

75,717

Other assets 

2,879

828

275,488

279,195

3,797

1,134

182,468

187,399

Total assets

$

473,759

$

170,295

$

3,847,035

$

4,491,089

$

587,863

$

206,149

$

1,069,281

$

1,863,293

Liabilities and Equity(5)

Total deposits

$

$

$

2,373,437

$

2,373,437

$

$

$

$

Short-term borrowings

90,091

90,091

104,989

104,989

Advances from PPPLF

370,086

370,086

Retail notes, certificates and secured borrowings at fair value

470,880

36,277

46

507,203

584,066

52,620

88

636,774

Payable on Structured Program borrowings (4)

133,499

133,499

152,808

152,808

Other long-term debt

18,572

18,572

Other liabilities

2,879

519

261,668

265,066

3,797

721

240,033

244,551

Total liabilities

473,759

170,295

3,113,900

3,757,954

587,863

206,149

345,110

1,139,122

Total equity

733,135

733,135

724,171

724,171

Total liabilities and equity

$

473,759

$

170,295

$

3,847,035

$

4,491,089

$

587,863

$

206,149

$

1,069,281

$

1,863,293

(1)    

Represents loans held for investment at fair value that are funded directly by our Retail Program notes. The liabilities are only payable from the cash flows generated by the associated assets. We do not assume principal or interest rate risk on loans facilitated through our lending marketplace that are funded by our Retail Program because loan balances, interest rates and maturities are matched and offset by an equal balance of notes with the exact same interest rates and maturities. We do not retain any economic interests from our Retail Program. Interest expense on Retail Program notes of $18.4 million and $28.9 million was equally matched and offset by interest income from the related loans of $18.4 million and $28.9 million for the first quarters of 2021 and 2020, respectively, resulting in no net effect on our net interest income.

(2)    

Represents assets and equal and offsetting liabilities of certain VIEs that we are required to consolidate in accordance with GAAP, but which are not legally ours. The liabilities are only payable from the cash flows generated by the associated assets. The creditors of the VIEs have no recourse to the general credit of the Company. Interest expense on these liabilities owned by third parties of $5.1 million and $10.5 million was equally matched and offset by interest income on the loans of $5.1 million and $10.5 million for the first quarters of 2021 and 2020, respectively, resulting in no net effect on our net interest income. Economic interests held by LendingClub, including retained interests, residuals and equity of the VIEs, are reflected in "Loans held for sale at fair value," "Other loans held for investment at fair value" and "Restricted cash," respectively, within the "All Other LendingClub" column.

(3)    

Represents all other assets and liabilities of LendingClub, other than those related to our Retail Program and certain consolidated VIEs, but includes any economic interests held by LendingClub, including retained interests, residuals and equity of those consolidated VIEs.

(4)    

The Company has sponsored Structured Program transactions that have been consolidated, resulting in an increase to "Other loans held for investment at fair value," "Loans held for sale at fair value" and the related "Payable on Structured Program borrowings."

(5)    

Prior period amounts have been reclassified to conform to the current period presentation.

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/lendingclub-reports-first-quarter-2021-results-301279449.html

SOURCE LendingClub Corporation



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