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Boom. LendingClub Reports Strong Results, Boosts Guidance, Shares Rise in After Hours Trading

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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.

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.

LendingClub said that consolidated net income of $9.4 million included $56.7 million of notable items: $34.6 million of Current Expected Credit Loss (CECL) provisioning which reduced reported earnings and reflects rapid growth in the bank’s loan portfolio, $19.6 million of net revenue deferrals on retained loans, and $2.5 million of non-recurring expenses.

LendingClub said it was raising full-year revenue guidance by +45% with net income guidance of $25-$35 million for the rest of 2021. Q3 guidance anticipates $2.8 to $3 billion in loan originations, top-line revenue of $215 to $230 million, and a net income of $10 to $15 million.

LendingClub reports more than 3.5 million customers and lifetime loan originations of $65 billion.

Shares in LendingClub have jumped by over 40% in late trading. The earnings call should shed more light on operations.


LendingClub Q2 2021 Earnings

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Source: https://www.crowdfundinsider.com/2021/07/178452-boom-lendingclub-reports-strong-results-boosts-guidance-shares-rise-in-after-hours-trading/

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