• Loan Volume: $2 billion, a 21% increase year over year.
• Total Net Revenue: $218 million, up 20% from the previous year.
• Pre-Provision Net Revenue: $74 million, a 52% increase year over year.
• Net Interest Income: $150 million, up 22% year over year.
• Net Interest Margin: 6%.
• Non-Interest Income: $68 million, up 17% year over year.
• Non-Interest Expense: $144 million, up 9% from the previous year.
• Provision for Credit Losses: $58 million, compared to $32 million in the prior year.
• Net Charge-Off Ratio: 4.8%, down from 6.9% in the previous year.
• EPS: $0.10 per share.
• Tangible Book Value Per Share: $11.22.
• Guidance for Q2 Originations: $2.1 billion to $2.3 billion, up 16% to 27% year over year.
• Guidance for Q2 PPNR: $70 million to $80 million, up 27% to 46% year over year.

• Warning! GuruFocus has detected 3 Warning Signs with LC.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• LendingClub Corp (NYSE:LC) reported a 21% increase in loan volume, reaching $2 billion, indicating strong demand from borrowers and loan buyers.
• The company achieved a 20% growth in total net revenue, amounting to $218 million, with pre-provision net revenue increasing by 52% year over year.
• LendingClub Corp (NYSE:LC) secured an investment grade rating from Fitch for its first-rated certificate deal, enhancing its credibility and access to the insurance market.
• The acquisition of Cushion, an AI-powered spending intelligence app, is expected to enhance LendingClub's mobile experience and feature set.
• The company reported improved credit performance, with year-over-year delinquency and charge-off rates significantly improving, and maintained a disciplined underwriting approach.

Negative Points

• LendingClub Corp (NYSE:LC) increased its qualitative provision by $8.5 million due to macroeconomic uncertainty, impacting net income.
• The company reported a decrease in the fair value of its extended seasoning portfolio by $2.6 million, affecting financial results.
• Non-interest expense rose by 9% compared to the prior year, driven by increased marketing investments and other costs.
• The provision for credit losses increased to $58 million, up from $32 million in the same quarter of the prior year, due to higher Day 1 CECL and increased retention for held-for-investment loans.
• The company faces uncertainty in the macroeconomic environment, which could impact future financial performance and necessitate further adjustments to provisions.

Q & A Highlights

Q: Can you provide an update on investor demand and marketplace pricing given recent changes in the environment? A: Scott Sanborn, CEO, explained that despite broader market noise, LendingClub is maintaining its pricing discipline and credit standards. Transactions planned for April proceeded as expected, and the company continues to add new buyers to its pipeline. The company is not currently feeling the volatility seen in securitization markets due to its structured arrangements.

Q: The PPNR guidance for Q2 seems lower than consensus. Is this due to increased marketing investments? A: Andrew LaBenne, CFO, confirmed that the PPNR guidance reflects increased investments in marketing and technology, as well as people. The provision line looks strong, and unless the environment shifts significantly, the company expects credit performance to remain positive.

Q: The Q2 origination volume guidance appears to be increasing faster than expected. What is driving this growth? A: Scott Sanborn, CEO, noted that the company is rebuilding its data set in marketing channels, which will initially be less efficient. However, the market demand is strong, and the company is on a good trajectory to meet its Q4 targets, assuming the macro environment remains stable.

Q: Can you discuss the insurance opportunity for structured certificate transactions? A: Andrew LaBenne, CFO, highlighted the significant potential in the insurance market, noting that many asset managers already manage insurance money. The rated product unlocks this market, providing efficient capital treatment for insurers. However, the company will balance between selling rated products and retaining senior securities on its balance sheet.

Q: How did you decide to purchase a building instead of using capital for share buybacks? A: Andrew LaBenne, CFO, explained that purchasing the building in San Francisco was financially sensible. The capital used was comparable to renewing their lease, and owning the building offers potential rental income and asset appreciation, making it an efficient use of capital.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.