LendingClub delivers better than expected earnings in Q4 2023

LendingClub reported Q4 2023 earnings after the bell today and overall it was quite a strong quarter given the economic headwinds for lenders of all stripes. It beat estimates both in revenue and in earnings for the quarter.

Here are some of the key highlights from the report:

  • Revenue and Earnings: LendingClub reported total revenue of $185.6 million for Q4, a year-over-year decline of 29.4%. However, the company outperformed Wall Street expectations, which had forecasted revenue of $180.7 million. The company’s earnings per share (EPS) were reported at $0.09, surpassing the average analyst estimate of $0.02.
  • Net Income: The company achieved a net income of $10.2 million in Q4, reflecting an improvement over the previous quarter’s $5.0 million.
  • Loan Originations: There was an increase in total loan originations to $1.6 billion, up from $1.5 billion in the previous quarter. This growth is attributed to increased purchases by loan investors and a 21% growth in marketplace originations compared to the prior quarter.
  • Balance Sheet Strength: LendingClub ended the year with $8.8 billion in total assets, a significant growth from the previous quarter. This growth primarily came from an increase in securities related to the structured certificate program.
  • Deposits Growth: The company’s deposits grew to $7.3 billion, with FDIC-insured deposits constituting approximately 87% of the total.
  • Efficiency Ratio: The efficiency ratio worsened to 70.0% from 63.7% in the previous quarter, indicating higher costs relative to revenue.
  • Provision for Credit Losses: The provision for credit losses decreased to $41.9 million in Q4 from $64.5 million in Q3.
  • Capital Position: LendingClub’s strong capital position is evident with a consolidated Tier 1 leverage ratio of 12.9% and a consolidated Common Equity Tier 1 capital ratio of 17.9%.
  • Yearly Performance: For the full year, LendingClub reported a profit of $38.9 million, or 36 cents per share, on revenue of $864.6 million.

The fintech pioneer also provided guidance for Q1 2024 saying that originations would remain in line with the previous quarter and that it would maintain positive GAAP net income with a lower provision for credit losses.

Here is commentary from CEO Scott Sanborn:

“Since acquiring our bank charter three years ago, we have transformed our financial profile and business – tripling our balance sheet, building tangible book value by approximately 2X, growing deposits by almost 4X, and delivering 12 straight quarters of credit out performance. Furthermore, we continue to innovate with offerings like our structured certificates and we’ve made tangible progress towards a multi-product mobile-first experience. This foundation will enable us to capture the ongoing historic multi-billion-dollar refinance opportunity, engage our members in entirely new ways, and build long-term shareholder value.”

The markets were not thrilled with LendingClub’s earnings report as the stock was down close to 4% in after-hours trading this evening.