Lending Club Reports Fourth Quarter and Full Year 2016 Results

Lending Club (NYSE: LC), the world’s leading online marketplace connecting borrowers and shareholders, recently declared financial results for the fourth quarter and full year ended December 31, 2016  and full year 2017.

“Last quarter we accomplished the foundational work required to prepare Lending Club for the growth to come,” said CEO Scott Sanborn. “With a diverse, stable and scalable mix of shareholders, and an improved control environment, we are entering 2017 in a stronger position than ever to serve the needs of our customers.”

Key accomplishments in the fourth quarter across the Lending Club platform include:

Shareholders

  • Banks returned to purchasing at scale, funding 31% of total originations for the quarter, up from 13% in the third quarter – a clear testament to the strength of Lending Club’s control environment, and the attractiveness of the asset in assisting banks efficiently deploy their capital and gain access to consumer credit
  • Lending Club supported the first rated securitization of Lending Club loans

Borrowers

  • Achieved targeted originations of nearly $2 billion, up 1% contrast to third quarter 2016
  • Continued the company’s lead as the leading personal loan provider in the U.S. with a borrower base of over 1.8 million individuals
  • Lending Club has now facilitated nearly $25 billion in loans since inception

Other developments

  • Ended the year with a servicing portfolio of $11.1 billion, up 24% from the same period last year and delivering $1.8 billion of principal and interest payments to shareholders throughout the quarter
  • Accomplished planned remediation steps related to historical material weakness
  • Ended 2016 with cash, cash equivalents and securities available for sale totaling $803 million, with no outstanding debt

Fourth Quarter 2016 Financial Highlights

“2016 was a year of investment in the company. We developed better internal processes, stronger controls, and a diversified shareholder base that will assist us compete in the future,” said Tom Casey, CFO. “Going forward, we are starting to redeploy resources into areas of the business that will drive long-term growth and value creation.”

Originations – Loan originations in the fourth quarter of 2016 were $1.99 billion, up 1% contrast to the $1.97 billion we stated in the third quarter of 2016 and down 23% contrast to $2.58 billion in the same quarter last year.

Net Operating Revenue – Net operating revenue in the fourth quarter of 2016 was $129.2 million, up 15% quarter over quarter and down 4% contrast to the same period last year. Net operating revenue as a percent of originations, or revenue yield, was 6.50% in the fourth quarter, up 79 basis points sequentially, driven mainly by a $4.3 million favorable adjustment to the servicing asset valuation and the elimination of $10.7 million in incentives recognized in the third quarter of 2016.

Net Loss – GAAP net loss was $(32.3) million for the fourth quarter of 2016, improving by $4.2 million contrast to third quarter of 2016 and down contrast to net income of $4.6 million in the same quarter last year. The fourth quarter net loss benefited sequentially from higher revenue but was offset by higher marketing expenses and the quarterly impact of the formerly revealed acceleration of the first quarter of 2017 stock grant. The results for the fourth quarter include about $16 million of expenses from events related to our board review disclosure earlier in 2016, counting employee retention, legal, audit, and other professional service fees.

Adjusted EBITDA   Adjusted EBITDA was $(2.2) million in the fourth quarter of 2016, contrast to $(11.1) million in the third quarter of 2016, and $24.6 million in the same quarter last year. As a percent of net operating revenue, Adjusted EBITDA margin raised to (1.7)% in the fourth quarter of 2016, up 8.2% from the third quarter and down from 18.3% in the same quarter last year. The results for the fourth quarter include about $13 million of expenses from events related to our board review disclosure earlier in 2016, counting employee retention, legal, audit, and other professional service fees.

Earnings Per Share (EPS) – Basic and diluted EPS was $(0.08) for the fourth quarter of 2016, contrast to basic and diluted EPS of $(0.09) in the third quarter of 2016 and $0.01 in the same quarter last year.

Adjusted EPS – Adjusted EPS was $(0.02) for the fourth quarter of 2016, contrast to adjusted EPS of $(0.04) in the third quarter of 2016 and $0.05 in the same quarter last year.

Cash, Cash Equivalents and Securities Available for Sale – As of December 31, 2016, cash, cash equivalents and securities available for sale totaled $803 million, with no outstanding debt.

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