LendingClub Corporation Q4 FY2025 earnings call

• Strong Q4 and full-year 2025 results with originations growth, improved return on tangible common equity (nearly 12% in Q4 and 10.2% for the full year).
• Substantial originations growth driven by product innovation, marketing expansion, improved marketplace pricing, and strong credit performance (40-50% better credit performance vs. competitive set).
• Introduced rated structured certificate product for insurance capital, initiated direct forward flow agreement with top US insurance company.
• Bank balance sheet growing, net interest income up 14% YOY, deposit products driving ongoing engagement.
• Entered home improvement financing market, integrating acquired technology, on track to launch partnership midyear.
• Upcoming rebrand later in 2026 to better reflect company's scale and ambition.

In the quarter, loan originations grew 40% year on year to $2.6 billion. For the full year, originations grew by 33% to nearly $10 billion. Noninterest income grew 38% to $103 million, benefiting from higher marketplace sales volumes and improved loan sales prices. Net interest income increased 14% to $163 million, supported by a larger portfolio of interest-earning assets. The balance sheet ended the quarter with $9.8 billion in deposits, an 8% increase compared to the prior year. Deposit products like LevelUp Savings and LevelUp Checking are driving engagement, with LevelUp Savings growing double digits and LevelUp Checking also growing double digits.

• Q1 2026 loan originations expected $2.55 billion to $2.65 billion (28-33% YOY growth).
• Full-year 2026 originations expected $11.6 billion to $12.6 billion (21-31% YOY growth).
• Q1 2026 diluted EPS $0.34 to $0.39 (240-290% increase YOY).
• Full-year 2026 EPS $1.65 to $1.80, consistent with 13-15% near-term ROTCE target.
• Move to fair value option to simplify financials, with first-quarter fair value adjustments roughly double Q4 2025 levels due to volume transition and portfolio mix.

• Factors causing actual results to differ from forward-looking statements, including market conditions, credit performance variability, and regulatory changes that could impact business and financial performance.

Q: On the expense trajectory, is the increase in expenses indicative of higher investment cost as the company ramps up?

A: Drew LaBenne said marketing spend was a major contributor to the increase, with investment in ramping marketing channels and other initiatives for 2026 growth, and expected to continue in Q1 with investments in people for home improvement and rebrand expenses.

Q: On the fair value adjustment, how do the assumptions about discount rate evolve with new products?

A: Drew LaBenne said the discount rate depends on the mix of loans in the fair value portfolio, with product categories like major purchase finance having longer duration and higher discount rates, and over time depending on the mix of held-for-sale portfolio.

Q: On macro and competitive environment, thoughts on operating market and competition?

A: Drew LaBenne said marketplace is healthy with active capital deployment, and Scott Sanborn noted competitive market with changes in competitors, but LendingClub confident in competitive ability with strong credit performance and pull-through rate in marketing.

Q: On Q1 origination outlook and loss rate in fair value mark?

A: Scott Sanborn said larger tax refund season may affect payment and loan demand temporarily but factored into guidance, and Drew LaBenne said assuming stable environment with no major shift in annual loss rates despite asset mix changes like longer duration from purchase finance.