LendingClub Reports Fourth Quarter and Full Year 2020 Results

Originations Increase 56% Quarter-over-Quarter, Exceeding High End of Guidance Range Acquisition of Radius Bancorp Creates First Digital Marketplace Bank in the U.S.

March 10, 2021 4:06 PM EST

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SAN FRANCISCO, March 10, 2021 /PRNewswire/ -- LendingClub Corporation (NYSE: LC), America's first digital marketplace bank, today announced financial results for the fourth quarter and full year ended December 31, 2020.

"I am proud of our accomplishments in 2020, which led us to complete the groundbreaking acquisition of Radius Bank. Combining the award-winning digital bank with LendingClub's leading online marketplace provides us with substantial advantages over both traditional banks and fintech marketplace lenders," said Scott Sanborn, Chief Executive Officer of LendingClub. "Adding deposit capabilities builds on our tech and data advantages as it allows us to better serve our more than 3 million loyal and highly-motivated members and digitally manage their lending, spending, and savings. We are fully aligned with both our customers and shareholders to realize incremental long-term value for decades to come."

Fourth Quarter 2020 Results

GAAP Consolidated Net Loss for the quarter improved $7.7 million from the third quarter of 2020 to $(26.7) million. Quarter-over-quarter results reflected a 56% increase in origination volumes, a 77% increase in related transaction fees and a reduction in expenses from the third quarter of 2020. Origination volume of $912 million exceeded the high end of previously provided guidance. The improvement in expenses reflected tight control over fixed costs and lower legal expenses related to legacy issues. These benefits were partially offset by lower net interest income reflecting prior loan sales, as well as positive asset revaluations in the third quarter of 2020.

Year-over-year results primarily reflected an expected decrease in origination volume and transaction fees, and an expected reduction in net interest income, partially offset by an improvement in expenses. The change in loan origination volumes resulted in a 71% decline in transaction fees year-over-year. Lower net interest income reflected the sale of $470 million of loans in the second half of 2020 to accumulate capital in preparation for the company's acquisition of Radius. The improvement in expenses year-over-year primarily reflected significantly lower sales and marketing expense and the company's focus on originating loans to existing customers, which increased efficiency and resulted in lower marketing costs. The improvement in expenses also reflected proactive actions taken to improve efficiency, reduce costs and mitigate the impact of the pandemic.

"We are encouraged by the continued growth in loan originations with volume above the upper end of our fourth quarter guidance range," said Tom Casey, Chief Financial Officer. "With the addition of bank deposits, we enhance our resiliency and unleash a new recurring revenue stream that will drive significant long-term growth once the bank is fully integrated."

 

Earnings Guidance

First Quarter 2021

Full Year 2021

Commentary

Loan Originations

$1.2B to $1.3B

+45% YoY

Loan volumes and revenue reflecting continued growth

Net Revenue

$87M to $95M

+55% YoY

Impacted by deferral of origination fees for loans held for investment due to accounting conventions

GAAP Consolidated Net Loss

($75M) to ($85M)

($175M) to ($200M)

Impacted primarily by timing of earnings recognition due to growth in consumer loans held for investment (deferral of origination feesand current expected credit loss (CECL) provisions), as well as one-time acquisition costs

 

Fourth Quarter 2020 Financial Highlights

Three Months Ended  

Year EndedDecember 31,

($ in millions)

December 31,2020

September 30,2020

December 31,2019

2019

2020

Loan Originations

$

912.0

$

584.1

$

3,083.1

$

4,343.4

$

12,290.1

Net Revenue

$

75.9

$

74.7

$

188.5

$

314.7

$

758.6

GAAP Consolidated Net Income (Loss)

$

(26.7)

$

(34.3)

$

0.2

$

(187.5)

$

(30.7)

Adjusted EBITDA

$

3.9

$

4.3

$

39.0

$

(27.2)

$

134.8

Adjusted Net Income (Loss)

$

(22.1)

$

(23.1)

$

7.0

$

(138.6)

$

2.2

Loan Originations – Loan originations in the fourth quarter of 2020 were $912.0 million, down 70% compared to the same quarter last year and improving 56% sequentially.

Net Revenue – Net Revenue in the fourth quarter of 2020 was $75.9 million, down 60% compared to the same quarter last year and improving 2% sequentially.

GAAP Consolidated Net Income (Loss) – GAAP Consolidated Net Loss was $(26.7) million for the fourth quarter of 2020, compared to GAAP Consolidated Net Income of $0.2 million in the same quarter last year and $(34.3) million in the third quarter of 2020.

Adjusted EBITDA  Adjusted EBITDA was $3.9 million in the fourth quarter of 2020, compared to $39.0 million in the same quarter last year and $4.3 million in the third quarter of 2020.

Adjusted Net Income (Loss) Adjusted Net Loss was $(22.1) million in the fourth quarter of 2020, compared to Adjusted Net Income of $7.0 million in the same quarter last year and Adjusted Net Loss of $(23.1) million in the third quarter of 2020.

Contribution Contribution was $47.2 million in the fourth quarter of 2020, compared to $101.3 million in the same quarter last year and $53.4 million in the third quarter of 2020, with Contribution Margin of 62.1% compared to 53.7% in the same quarter last year and 71.5 % in the third quarter of 2020.

Earnings Per Share (EPS) – Basic and diluted EPS attributable to common stockholders was $(0.29) in the fourth quarter of 2020, compared to basic and diluted EPS attributable to common stockholders of $0.00 in the same quarter last year and $(0.38) in the third quarter of 2020.

Adjusted EPS – Adjusted EPS was $(0.24) in the fourth quarter of 2020, compared to Adjusted EPS of $0.08 in the same quarter last year and $(0.25) in the third quarter of 2020.

Cash and cash equivalents – As of December 31, 2020, Cash and cash equivalents totaled $525.0 million compared to $243.8 million as of December 31, 2019 and $445.2 million as of September 30, 2020.

For a calculation of Adjusted EBITDA, Adjusted Net Income (Loss), Contribution, and Adjusted EPS, refer to the "Reconciliation of GAAP to Non-GAAP Measures" tables at the end of this release.

About LendingClub

LendingClub Corporation (NYSE: LC) is the parent company of LendingClub Bank, National Association, Member FDIC. It is the first 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 fourth quarter 2020 webcast and teleconference is scheduled to begin at 2:00 p.m. Pacific Time (or 5:00 p.m. Eastern Time) on Wednesday, March 10, 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

Non-GAAP Financial Measures and Supplemental Financial Statement Information

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: Contribution, Contribution Margin, Adjusted Net Income (Loss), Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Earnings (Loss) Per Share (Adjusted EPS) and Net Cash and Other Financial Assets. Our non-GAAP measures do have limitations as analytical tools and you should not consider them in isolation or as a substitute for an analysis of our results under GAAP.

We believe these non-GAAP measures provide management and investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and enable comparison of our financial results with other public companies, many of which present similar non-GAAP financial measures.

In particular, we believe Contribution and Contribution Margin are useful measures of overall direct product profitability because the measures illustrate the relationship between costs most directly associated with revenue generating activities and the related revenue, and the effectiveness of the direct costs in obtaining revenue. Contribution is calculated as net revenue less "Sales and marketing" and "Origination and servicing" expenses on the Company's Statements of Operations, adjusted to exclude cost structure simplification, restructuring costs, other items (related to one-time expenses resulting from COVID-19) and non-cash stock-based compensation expenses within these captions and income or loss attributable to noncontrolling interests. The adjustment for cost structure simplification expense relates to a review of our cost structure and a number of expense initiatives underway, including the establishment of a site in the Salt Lake City area. The expense includes incremental and excess personnel-related expenses associated with establishing our Salt Lake City area site and external advisory fees. The adjustment for restructuring costs included severance and other personnel-related expenses, lease-related expenses and software impairment related to the impact of COVID-19 on the Company's business. Contribution Margin is a non-GAAP financial measure calculated by dividing Contribution by total net revenue.

We believe Adjusted Net Income (Loss) is an important measure because it directly reflects the financial performance of our business. Adjusted Net Income (Loss) adjusts for certain items that are either non-recurring, do not contribute directly to management's evaluation of its operating results, or non-cash items, such as (1) expenses related to our cost structure simplification, as discussed above, (2) goodwill impairment, (3) legal, regulatory and other expense related to legacy issues, (4) acquisition and related expenses, (5) restructuring costs and (6) other items (including certain non-legacy litigation and/or regulatory settlement expenses, gains on disposal of certain assets and expenses resulting from COVID-19), net of tax. Legacy items are generally those expenses that arose from the decisions of legacy management prior to the board review initiated in 2016 and resulted in the resignation of our former CEO, including legal and other costs associated with ongoing regulatory and government investigations, indemnification obligations, litigation, and termination of certain legacy contracts. In the second quarter of 2020, we added an adjustment to Adjusted Net Income (Loss) for "Restructuring costs" to adjust for severance and other personnel-related expenses, lease-related expenses and software impairment related to the impact of COVID-19 on the Company's business. In the fourth quarter of 2019, we added an adjustment to Adjusted Net Income (Loss) for "Acquisition and related expenses" to adjust for costs related to the acquisition of Radius. In the second quarter of 2019, we added an adjustment to Adjusted Net Income (Loss) and Adjusted EBITDA for Other items to adjust for expenses or gains that are not part of our core operating results.

We believe that Adjusted EBITDA and Adjusted EBITDA Margin are important measures of operating performance because they allow for the comparison of our core operating results, including our return on capital and operating efficiencies, from period to period. Adjusted EBITDA adjusts for certain items that are either non-recurring, do not contribute directly to management's evaluation of its operating results, or non-cash items, such as (1) cost structure simplification expense, (2) goodwill impairment, (3) legal, regulatory and other expense related to legacy issues, (4) acquisition and related expenses, (5) restructuring costs, (6) other items, as discussed above, (7) depreciation, impairment and amortization expense, (8) stock-based compensation expense and (9) income tax expense (benefit). Additionally, we utilize Adjusted EBITDA as an input into the Company's calculation of the annual bonus plan. Adjusted EBITDA Margin is a non-GAAP financial measure calculated by dividing Adjusted EBITDA by total net revenue.

We believe Adjusted EPS is an important measure because it directly reflects the financial performance of our business. Adjusted EPS is a non-GAAP financial measure calculated by dividing Adjusted Net Income (Loss) attributable to both common and preferred stockholders by the weighted-average diluted common and preferred shares outstanding.

We believe Net Cash and Other Financial Assets is a useful measure because it illustrates the overall financial stability and operating leverage of the Company. This measure is calculated as cash and certain other assets and liabilities, including loans and securities available for sale, which are partially secured and offset by related credit facilities, and working capital.

There are a number of limitations related to the use of these non-GAAP financial measures versus their most comparable GAAP measure. In particular, many of the adjustments to derive the non-GAAP financial measures reflect the exclusion of items that are recurring and will be reflected in our financial results for the foreseeable future. Other companies, including companies in our industry, may calculate these measures differently, which may reduce their usefulness as a comparative measure.

For more information on our non-GAAP financial measures and a reconciliation of such measures to the nearest GAAP measure, please see the "Reconciliation of GAAP to Non-GAAP Measures" tables at the end of this release.

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.

Information in this press release is not an offer to sell securities or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

 

LENDINGCLUB CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except share and per share data)(Unaudited)

Three Months Ended December 31,

Year EndedDecember 31,

2020

2019

2020

2019

Net revenue:

Transaction fees

$

43,151

$

149,951

$

207,640

$

598,760

Interest income

32,950

74,791

209,694

345,345

Interest expense

(27,056)

(49,251)

(141,503)

(246,587)

Net fair value adjustments

(8,435)

(42,659)

(117,247)

(144,990)

Net interest income and fair value adjustments

(2,541)

(17,119)

(49,056)

(46,232)

Investor fees

24,940

30,258

111,864

124,532

Gain on sales of loans

7,088

20,373

30,812

67,716

Net investor revenue

29,487

33,512

93,620

146,016

Other revenue

3,276

5,023

13,442

13,831

Total net revenue

75,914

188,486

314,702

758,607

Operating expenses: (1)

Sales and marketing

13,347

67,222

79,055

279,423

Origination and servicing

16,774

22,203

71,193

103,403

Engineering and product development

29,189

41,080

139,050

168,380

Other general and administrative

43,583

57,607

213,021

238,292

Total operating expenses

102,893

188,112

502,319

789,498

Income (Loss) before income tax expense (benefit)

(26,979)

374

(187,617)

(30,891)

Income tax expense (benefit)

(324)

140

(79)

(201)

Consolidated net income (loss)

(26,655)

234

(187,538)

(30,690)

Less: Income attributable to noncontrolling interests

55

LendingClub net income (loss)

$

(26,655)

$

234

$

(187,538)

$

(30,745)

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

$

(0.29)

$

0.00

$

(2.63)

$

(0.35)

Weighted-average common shares – Basic and Diluted

81,368,674

88,371,672

77,934,302

87,278,596

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

$

(0.29)

$

0.00

$

1.39

$

0.00

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

10,512,486

12,505,393

(1)  Includes stock-based compensation expense as follows:

Three Months Ended December 31,

Year EndedDecember 31,

2020

2019

2020

2019

Sales and marketing

$

830

$

1,479

$

4,104

$

6,095

Origination and servicing

610

533

2,689

3,155

Engineering and product development

2,833

4,417

13,411

19,860

Other general and administrative

9,805

10,312

41,329

44,529

Total stock-based compensation expense

$

14,078

$

16,741

$

61,533

$

73,639

(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 December 31,

Year EndedDecember 31,

2020

2019

2020

2019

Common Stock

PreferredStock

Common Stock

CommonStock

PreferredStock

Common Stock

Allocation of undistributed LendingClub net income (loss)

$

(23,605)

$

(3,050)

$

234

$

(154,664)

$

(32,874)

$

(30,745)

Deemed dividend

(50,204)

50,204

Net income (loss) attributable to stockholders (3)

$

(23,605)

$

(3,050)

$

234

$

(204,868)

$

17,330

$

(30,745)

Weighted-average common shares – Basic and Diluted

81,368,674

10,512,486

88,371,672

77,934,302

12,505,393

87,278,596

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

$

(0.29)

$

(0.29)

$

$

(2.63)

$

1.39

$

(0.35)

(3)  For the year ended December 31, 2020, reflects a deemed dividend paid to our largest stockholder in the first quarter of 2020 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 CORPORATIONOPERATING HIGHLIGHTS(In thousands, except percentages and number of employees, or as noted)(Unaudited)

Three Months Ended

% Change

December 31,2020

September 30,2020

June 30,2020

March 31,2020

December 31,2019

Q/Q

Y/Y

Operating Highlights:

Loan originations (in millions)

$

912

$

584

$

326

$

2,521

$

3,083

56

%

(70)

%

Net revenue

$

75,914

$

74,713

$

43,869

$

120,206

$

188,486

2

%

(60)

%

Consolidated net income (loss)

$

(26,655)

$

(34,325)

$

(78,471)

$

(48,087)

$

234

22

%

N/M

Contribution (1)

$

47,178

$

53,384

$

21,395

$

51,902

$

101,261

(12)

%

(53)

%

Contribution margin (1)

62.1

%

71.5

%

48.8

%

43.2

%

53.7

%

(13)

%

16

%

Adjusted EBITDA (1)

$

3,890

$

4,313

$

(27,619)

$

(7,831)

$

38,981

10

%

(90)

%

Adjusted EBITDA margin (1)

5.1

%

5.8

%

(63.0)

%

(6.5)

%

20.7

%

12

%

(75)

%

Adjusted net income (loss) (1)

$

(22,085)

$

(23,079)

$

(54,252)

$

(39,151)

$

6,981

4

%

N/M

EPS (common stockholders) – diluted (2)

$

(0.29)

$

(0.38)

$

(0.87)

$

(1.10)

$

0.00

24

%

N/M

Adjusted EPS – diluted (1)

$

(0.24)

$

(0.25)

$

(0.60)

$

(0.44)

$

0.08

4

%

N/M

Loan Originations by Investor Type:

Banks

33

%

41

%

68

%

43

%

32

%

Managed accounts

51

%

44

%

10

%

16

%

17

%

Self-directed retail investors

8

%

13

%

17

%

4

%

3

%

LendingClub inventory(3) 

1

%

2

%

5

%

20

%

23

%

Other institutional investors

7

%

%

%

17

%

25

%

Total

100

%

100

%

100

%

100

%

100

%

Loan Originations by Program:

Personal loans – standard program

68

%

68

%

68

%

70

%

68

%

Personal loans – custom program

17

%

8

%

3

%

23

%

26

%

Other – custom program (4)

15

%

24

%

29

%

7

%

6

%

Total

100

%

100

%

100

%

100

%

100

%

Personal Loan Originations by Loan Grade – Standard Loan Program (in millions):

A

$

323.5

$

214.4

$

105.7

$

620.0

$

654.1

51

%

(51)

%

B

183.1

114.0

74.5

544.6

644.7

61

%

(72)

%

C

109.9

69.8

38.4

357.3

479.6

57

%

(77)

%

D

3.0

249.1

309.1

0

%

(100)

%

Total

$

616.5

$

398.2

$

221.6

$

1,771.0

$

2,087.5

55

%

(70)

%

 

N/M – Not meaningful

(1) 

Represents a non-GAAP measure. See "Reconciliation of GAAP to Non-GAAP Measures."

(2) 

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.

(3)  

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

(4)  

Comprised of education and patient finance loans, auto refinance loans, and small business loans.

 

LENDINGCLUB CORPORATIONOPERATING HIGHLIGHTS (Continued)(In thousands, except percentages and number of employees, or as noted)(Unaudited)

Three Months Ended

% Change

December 31,2020

September 30,2020

June 30,2020

March 31,2020

December 31,2019

Q/Q

Y/Y

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

Whole loans sold

$

10,139

$

11,249

$

12,421

$

14,118

$

14,118

(10)

%

(28)

%

Notes

622

674

736

833

919

(8)

%

(32)

%

Certificates

57

79

109

147

211

(28)

%

(73)

%

Secured borrowings

1

3

6

11

19

(67)

%

(95)

%

Loans invested in by the Company

183

262

690

866

744

(30)

%

(75)

%

Total

$

11,002

$

12,267

$

13,962

$

15,975

$

16,011

(10)

%

(31)

%

Employees and contractors (4)

1,030

998

1,008

1,542

1,538

3

%

(33)

%

(4) 

As of the end of each respective period.

 

LENDINGCLUB CORPORATIONCondensed Consolidated Balance Sheets (In Thousands, Except Share and Per Share Amounts)(Unaudited)

December 31, 2020

December 31, 2019

Assets

Cash and cash equivalents

$

524,963

$

243,779

Restricted cash

103,522

243,343

Securities available for sale at fair value

142,226

270,927

Loans held for investment at fair value

636,686

1,079,315

Loans held for investment by the Company at fair value

49,954

43,693

Loans held for sale by the Company at fair value

121,902

722,355

Accrued interest receivable

5,205

12,857

Property, equipment and software, net

96,641

114,370

Operating lease assets

74,037

93,485

Intangible assets, net

11,427

14,549

Other assets

96,730

143,668

Total assets

$

1,863,293

$

2,982,341

Liabilities and Equity

Accounts payable

$

3,698

$

10,855

Accrued interest payable

4,572

9,260

Operating lease liabilities

94,538

112,344

Accrued expenses and other liabilities

101,457

142,636

Payable to investors

40,286

97,530

Notes, certificates and secured borrowings at fair value

636,774

1,081,466

Payable to Structured Program note and certificate holders at fair value

152,808

40,610

Credit facilities and securities sold under repurchase agreements

104,989

587,453

Total liabilities

1,139,122

2,082,154

Equity

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

Common stock, $0.01 par value; 180,000,000 shares authorized; 88,149,510 and 89,218,797 shares issued, respectively; 88,149,510 and 88,757,406 shares outstanding, respectively

881

892

Additional paid-in capital

1,508,020

1,467,882

Accumulated deficit

(786,214)

(548,472)

Treasury stock, at cost; 0 and 461,391 shares, respectively

(19,550)

Accumulated other comprehensive loss

1,484

(565)

Total equity

724,171

900,187

Total liabilities and equity

$

1,863,293

$

2,982,341

 

LENDINGCLUB CORPORATIONRECONCILIATION OF GAAP TO NON-GAAP MEASURES(In thousands, except percentages and per share data)(Unaudited)

Three Months Ended

Year Ended

December 31,2020

September 30,2020

June 30,2020

March 31,2020

December 31,2019

December 31,2020

December 31,2019

GAAP LendingClub net income (loss)

$

(26,655)

$

(34,325)

$

(78,471)

$

(48,087)

$

234

$

(187,538)

$

(30,745)

Engineering and product development expense

29,189

31,984

39,167

38,710

41,080

139,050

168,380

Other general and administrative expense

43,583

54,332

56,620

58,486

57,607

213,021

238,292

Cost structure simplification expense (1)

175

188

175

7,318

Restructuring costs (2)

(79)

(142)

2,285

2,064

Other items (2)

24

8

341

373

Stock-based compensation expense (2)

1,440

1,601

1,453

2,299

2,012

6,793

9,250

Income tax expense (benefit)

(324)

(74)

319

140

(79)

(201)

Contribution

$

47,178

$

53,384

$

21,395

$

51,902

$

101,261

$

173,859

$

392,294

Total net revenue

$

75,914

$

74,713

$

43,869

$

120,206

$

188,486

$

314,702

$

758,607

Contribution margin

62.1

%

71.5

%

48.8

%

43.2

%

53.7

%

55.2

%

51.7

%

(1)

Contribution excludes the portion of personnel-related expenses associated with establishing a site in the Salt Lake City area that is included in the "Sales and marketing" and "Origination and servicing" expense categories.

(2)

Contribution excludes the portion of expenses included in the "Sales and marketing" and "Origination and servicing" expense categories.

 

LENDINGCLUB CORPORATIONRECONCILIATION OF GAAP TO NON-GAAP MEASURES (Continued)(In thousands, except percentages and per share data)(Unaudited)

Three Months Ended

Year Ended

December 31, 2020

September 30,2020

June 30,2020

March 31,2020

December 31,2019

December 31, 2020

December 31, 2019

GAAP LendingClub net income (loss)

$

(26,655)

$

(34,325)

$

(78,471)

$

(48,087)

$

234

$

(187,538)

$

(30,745)

Cost structure simplification expense (1)

228

284

228

9,933

Legal, regulatory and other expense related to legacy issues (2)

183

6,120

4,354

4,476

4,531

15,133

19,609

Acquisition and related expenses (3)

4,744

4,373

456

3,611

932

13,184

932

Restructuring costs (4)

753

17,036

17,789

Other items (5)

(357)

2,373

621

1,000

2,637

2,453

Adjusted net income (loss)

$

(22,085)

$

(23,079)

$

(54,252)

$

(39,151)

$

6,981

$

(138,567)

$

2,182

Depreciation and impairment expense:

Engineering and product development

10,099

10,198

10,177

10,423

12,532

40,897

49,207

Other general and administrative

1,370

1,394

1,480

1,603

1,739

5,847

6,446

Amortization of intangible assets

752

752

772

846

848

3,122

3,499

Stock-based compensation expense

14,078

15,122

14,204

18,129

16,741

61,533

73,639

Income tax expense (benefit)

(324)

(74)

319

140

(79)

(201)

Adjusted EBITDA

$

3,890

$

4,313

$

(27,619)

$

(7,831)

$

38,981

$

(27,247)

$

134,772

Total net revenue

$

75,914

$

74,713

$

43,869

$

120,206

$

188,486

$

314,702

$

758,607

Adjusted EBITDA margin

5.1

%

5.8

%

(63.0)

%

(6.5)

%

20.7

%

(8.7)

%

17.8

%

(1) 

Includes personnel-related expenses associated with establishing a site in the Salt Lake City area. These expenses are included in "Sales and marketing," "Origination and servicing," "Engineering and product development" and "Other general and administrative" expense onthe Company's Condensed Consolidated Statements of Operations. In 2019, also includes external advisory fees which are included in"Other general and administrative" expense on the Company's Condensed Consolidated Statements of Operations.

(2) 

Consists of legal legacy expenses, which are included in "Other general and administrative" expense on the Company's Condensed Consolidated Statements of Operations. In 2019, also includes expense related to the dissolution of certain private funds previouslymanaged by LCAM and expense related to the termination of a legacy contract, which are included in "Net fair value adjustments" and "Other general and administrative" expense on the Company's Consolidated Statements of Operations, respectively.

(3) 

Represents costs related to the acquisition of Radius.

(4) 

Includes severance and other personnel-related expenses, lease-related expenses and software impairment related to the impact of COVID-19 on the Company's business.

(5) 

In 2020, includes expenses related to certain non-legacy litigation and regulatory matters, which are included in "Other general and administrative" expense on the Company's Condensed Consolidated Statements of Operations and one-time expenses resulting from COVID-19, which are included in "Sales and marketing," "Origination and servicing," "Engineering and product development" and "Other general and administrative" expense on the Company's Condensed Consolidated Statements of Operations. In 2019, includes expensesrelated to certain non-legacy litigation and regulatory matters and a gain on the sale of our small business operating segment, which are included in "Other general and administrative" expense on the Company's Condensed Consolidated Statements of Operations.

 

LENDINGCLUB CORPORATIONRECONCILIATION OF GAAP TO NON-GAAP MEASURES (Continued)(In thousands, except percentages and per share data)(Unaudited)

Three Months Ended

Year Ended

December 31,2020

September 30,2020

June 30,2020

March 31,2020

December 31,2019

December 31,2020

December 31,2019

Common and Preferred Stock (1)

Common and Preferred Stock (1)

Common andPreferred Stock (1)

Common Stock

Common Stock

Common and Preferred Stock (1)

Common Stock

Adjusted net income (loss) attributable to stockholders

$

(22,085)

$

(23,079)

$

(54,252)

$

(39,151)

$

6,981

$

(138,567)

$

2,182

Weighted-average GAAP diluted shares (2)

91,881,160

90,901,870

89,866,880

89,085,270

88,912,677

90,439,695

87,278,596

Non-GAAP diluted shares (2)

91,881,160

90,901,870

89,866,880

89,085,270

88,912,677

90,439,695

87,794,035

Adjusted EPS – diluted (3)

$

(0.24)

$

(0.25)

$

(0.60)

$

(0.44)

$

0.08

$

(1.53)

$

0.02

(1) 

Presented on an as-converted basis, as the preferred stock is considered common shares because it participates in earnings similar to common stock and does not receive any significant preferences over the common stock.

(2) 

Beginning in the first quarter of 2020, includes the total weighted-average shares outstanding of both common and preferred stock on an as-converted basis.

 

LENDINGCLUB CORPORATIONSUPPLEMENTAL 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.

December 31, 2020

December 31, 2019

Retail Program (1)

Consolidated VIEs (2) (4)

All Other LendingClub (3)

Condensed Consolidated Balance Sheet

Retail Program (1)

Consolidated VIEs (2)(4)

All Other LendingClub (3)

Condensed Consolidated Balance Sheet

Assets

Cash and cash equivalents

$

$

$

524,963

$

524,963

$

$

$

243,779

$

243,779

Restricted cash

13,473

90,049

103,522

2,894

240,449

243,343

Securities available for sale

142,226

142,226

270,927

270,927

Loans held for investment at fair value

584,066

52,620

636,686

881,473

197,842

1,079,315

Loans held for investment by the Company at fair value (4)

46,120

3,834

49,954

37,638

6,055

43,693

Loans held for sale by the Company at fair value (4)

92,802

29,100

121,902

722,355

722,355

Accrued interest receivable

3,797

1,134

274

5,205

5,930

1,815

5,112

12,857

Property, equipment and software, net

96,641

96,641

114,370

114,370

Operating lease assets

74,037

74,037

93,485

93,485

Intangible assets, net

11,427

11,427

14,549

14,549

Other assets

96,730

96,730

143,668

143,668

Total assets

$

587,863

$

206,149

$

1,069,281

$

1,863,293

$

887,403

$

240,189

$

1,854,749

$

2,982,341

Liabilities and Equity

Accounts payable

$

$

$

3,698

$

3,698

$

$

$

10,855

$

10,855

Accrued interest payable

3,797

721

54

4,572

5,930

1,737

1,593

9,260

Operating lease liabilities

94,538

94,538

112,344

112,344

Accrued expenses and other liabilities

101,457

101,457

142,636

142,636

Payable to investors

40,286

40,286

97,530

97,530

Notes, certificates and secured borrowings at fair value

584,066

52,620

88

636,774

881,473

197,842

2,151

1,081,466

Payable to Structured Program note and certificate holders at fair value (4)

152,808

152,808

40,610

40,610

Credit facilities and securities sold under repurchase agreements

104,989

104,989

587,453

587,453

Total liabilities

587,863

206,149

345,110

1,139,122

887,403

240,189

954,562

2,082,154

Total equity

724,171

724,171

900,187

900,187

Total liabilities and equity

$

587,863

$

206,149

$

1,069,281

$

1,863,293

$

887,403

$

240,189

$

1,854,749

$

2,982,341

(1) 

Represents loans held for investment at fair value that were 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 lendingmarketplace that were 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 $98.3 million and $148.0 million was equally matched and offset by interest income from the related loans of$98.3 million and $148.0 million in 2020 and 2019, respectively, resulting in no net effect on our Net interest income and fair value adjustments.

(2) 

Represents assets and equal and offsetting liabilities of certain VIEs that we are required to consolidate in accordance with GAAP, but which arenot legally ours. The liabilities are only payable from the cash flows generated by the associated assets. The creditors of the VIEs have no recourseto the general credit of the Company. Interest expense on these liabilities owned by third parties of $123.2 million and net fair value adjustmentsof $9.4 million in 2020 were equally matched and offset by interest income on the loans of $134.6 million, resulting in no net effect on our Net interest income and fair value adjustments. Interest expense on these liabilities owned by third parties of $70.8 million and net fair value adjustments of $13.5 million in 2019 were equally matched and offset by interest income on the loans of $84.3 million, resulting in no net effecton our Net interest income and fair value adjustments. Economic interests held by LendingClub, including retained interests, residuals and equityof the VIEs, are reflected in "Loans held for sale by the Company at fair value," "Loans held for investment by the Company 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 "Loans held for investment by the Company at fair value," "Loans held for sale by the Company at fair value" and the related "Payable to Structured Program note andcertificate holders at fair value."

 

LENDINGCLUB CORPORATIONRECONCILIATION OF GAAP TO NON-GAAP MEASURES (Continued)NET CASH AND OTHER FINANCIAL ASSETS(In thousands)(Unaudited)

December 31, 2020

September 30,2020

June 30,2020

March 31,2020

December 31,2019

Cash and cash equivalents (1)

$

524,963

$

445,180

$

338,394

$

294,345

$

243,779

Restricted cash committed for loan purchases (2)

2,692

308

290

4,572

68,001

Securities available for sale

142,226

187,375

221,930

256,554

270,927

Loans held for investment by the Company at fair value (3)

49,954

59,099

65,557

71,003

43,693

Loans held for sale by the Company at fair value (3)

121,902

180,801

587,093

741,704

722,355

Payable to Structured Program note and certificate holders at fair value (3)

(152,808)

(173,410)

(193,034)

(206,092)

(40,610)

Credit facilities and securities sold under repurchase agreements

(104,989)

(120,159)

(480,079)

(621,020)

(587,453)

Other assets and liabilities (4)

(7,792)

363

23,916

61,107

(6,226)

Net cash and other financial assets (5)

$

576,148

$

579,557

$

564,067

$

602,173

$

714,466

(1) 

Variations in cash and cash equivalents are primarily due to variations in the amount and timing of loan purchases invested in by the Company and the corresponding loan sales.

(2) 

Represents cash and cash equivalents that are transferred to restricted cash for loans that are pending purchase by the Company.

(3) 

The Company has sponsored Structured Program transactions that have been consolidated, resulting in an increase to "Loans held for investment by the Company at fair value" and the related "Payable to Structured Program note and certificate holders at fair value."

(4) 

"Other assets and liabilities" is a total of "Accrued interest receivable," "Other assets," "Accounts payable," "Accrued interest payable" and"Accrued expenses and other liabilities," included on our Consolidated Balance Sheets. This line item represents certain assets and liabilities that impact working capital and are affected by timing differences between revenue and expense recognition and related cashactivity.

(5) 

Comparable GAAP measure cannot be provided as not practicable.

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/lendingclub-reports-fourth-quarter-and-full-year-2020-results-301244909.html

SOURCE LendingClub Corporation



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