LendingClub Corp Q3 FY2024 earnings call

• Balance sheet: Acquired a $1.3 billion portfolio of previously sold loans, balance sheet grew 25% since年初 to over $11 billion. - Marketplace demand: Reengaged banks, sold $75 million and $400 million pools of loans, anticipating over $1 billion in additional loan purchases from banks in next 12 months. - Credit performance: Credit remains strong, consistently 40%-50% better than competitive set in core consumer segments. - Member base: Crossed 5 million mark. - Consumer strategy: 1. Efficiently acquire customers by providing savings on credit card debt refinancing via personal loans, with 83% of members wanting to do more with the company. 2. Engage members through mobile app, user base increased ~20% monthly since June, App Store ratings 4.7 and 4.8. 3. Offer additional products via enhanced app, launched DebtIQ for debt monitoring and management, and acquired Tally's technology to accelerate product roadmap. - LevelUp Savings: Launched to reward members for positive savings behavior, gathered over $500 million in deposits since launching two months ago.

Originations grew 6% sequentially to $1.9 billion. Revenue grew 8% to over $200 million. Pre-provision net revenue grew 19% to $65.5 million. Structured certificate program accounted for $830 million of originations. Whole loans sold through the marketplace were $335 million, held-for-sale extended seasoning loans were $240 million, and held-for-investment portfolio was $510 million. The whole loan portfolio grew 17% sequentially to $6 billion, and total assets reached $11 billion at the end of the quarter.

• Fourth quarter originations anticipated between $1.8 billion and $1.9 billion. - PPNR guidance increased to $60 million to $70 million, reflecting growing revenue, improving operating leverage, expenses, and $6 million benefit from $400 million portfolio sale. - Plan to retain roughly $550 million to $650 million of held-for-investment loans under CECL per quarter for next couple of quarters.

Q: On loan sale price improvement, what's driving it and expectation going forward?

A: Drew LaBenne said it's driven by performance of loans, interest rate environment, and better pricing leading to mark on held-for-sale portfolio. Going forward, changing mix to more banks, consistency of performance, and rate environment will be helpful.

Q: How should we think about balance sheet growth from here?

A: Drew LaBenne said goal is to continue growing balance sheet, this portfolio acquisition put them to $11 billion, expect one quarter of possible decline in balance sheet before growing again in 2025.

Q: How to think about loan performance between different consumer cohorts?

A: Scott Sanborn said stability across all segments, higher yielding stuff performing very strong, sustained returns quarter after quarter, delinquencies stable to declining on vintage basis.

Q: What's the framework for deciding where to place loans?

A: Drew LaBenne said balancing filling orders and setting aside volume for balance sheet growth, with price optimization exercise, and Scott Sanborn added held-for-investment at amortized cost is 3x higher earnings than selling, but big upfront provision drags earnings, and banks come in at premium to asset manager pricing for whole loan sales.