Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
LendingClub Reports Strong 2nd Quarter Results, Shares Rise Dramatically
Crowdfund Insider | | Jul 28, 2021
LendingClub (NYSE:LC), a Fintech that started as a peer-to-peer lender and now operating as a digital bank, has posted strong 2nd quarter results that easily topped expectations. LendingClub finally turned the corner on profitability shredding guidance that had expected a loss. Shares moved considerably higher in after-hours trading during a crowded earnings announcement day.
At the start of 2021, LendingClub completed the acquisition of Radius Bank thus entering the red hot digital banking sector. This quarter is the first earnings round as a nationally chartered digital bank.
According to LendingClub sequential revenue increased by 93%, driven by growth in marketplace lending revenue and increased net interest income from the retained portfolio of consumer loans. Total revenue was $204.4 million, almost double the previous quarter, with net income jumping to $9.4 million – in stark contrast to the $47.1 million loss delivered in Q1.
See: Why LendingClub’s Acquisition Of Radius Bank Is A Smart Deal
The fact that LendingClub will now be able to hold deposits as a bank means a lower cost of funding for its online lending segment.
LendingClub CEO Scott Sanborn, issued the following statement:
“Our first full quarter operating a digital bank was the most profitable quarter in LendingClub’s history. This is the beginning of a dramatically enhanced earnings trajectory for the business. Our transformation is fueled by our competitive advantages, which include our 3.5 million-plus members, deep data capabilities, marketplace model as well as our more efficient operating platform. Our earnings are being bolstered by our bank, which is generating a new stream of recurring net interest income that is only beginning to contribute to our bottom-line results.”
LendingClub highlighted the following stats:
- Marketplace revenue grew 86% sequentially, primarily reflecting 105% growth in origination fees and a 132% increase in gains on loan sales as loans sold through the marketplace doubled.
- Net interest income grew 148% sequentially to $45.9 million, as the bank’s loan portfolio (excluding PPP loans) grew 27% sequentially, propelled by growth in the consumer loan portfolio of 145% to $795M.
- Deposits grew to $2.5 billion, helping fund growth in the bank’s loan portfolio.
Updates:
Shares in LendingClub have rocketed higher today jumping by over 55% (as of this moment).
The few analysts that participated in the earnings call congratulated LendingClub on its performance. Earlier today, Wedbush analyst Henry Coffey boosted his price target to $33.50 (from $25), reiterating an outperform call, after calling the results “amazing.”
See: Fintech Startups Broke Apart Financial Services. Now The Sector Is Rebundling
By becoming a nationally chartered bank, via its acquisition of Radius Bank, LendingClub is now financing its own loans, alongside a growing number of other institutions – including other banks (which now account for more than half of funding including LendingClub Bank).
Management also said there were some unanticipated benefits by becoming a bank as being regulated as a bank helped boost confidence for bank investors. There is a lot of confidence in credit quality.
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