Lendingclub Corporation · NYSE:LC
Lendingclub — Q4 2022 Earnings Presentation
23 slides from Lendingclub's earnings presentation, Jan 25, 2023
Slide 1: Fourth Quarter and Full Year 2022 Results
Fourth Quarter and Full Year 2022 Results January 25, 2023
Slide 2: 2022 Results & Financial Metrics
2022 Results & Financial Metrics
Slide 3: Disclaimer
Disclaimer Some of the statements below, including statements regarding our competitive advantages, macroeconomic outlook and future business, loan and financial performance, are “forward-looking statements.” The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,
Slide 4: Award-Winning Member-Focused Digital Marketplace Bank
Award-Winning Member-Focused Digital Marketplace Bank Members1 Originations1 Vision Mission Promise Become To champion the 4.5+ $80+ America’s Empower Our Members financial success of our members Million Billion Financial Health Club. on Their Path to Financial with fairness, simplicity, and Health.
Slide 5: The Problem We're Solving
The Problem We’re Solving 40% of American households carry over LendingClub’s 4.5+ million Our direct-to-consumer digital $1 trillion of revolving debt, paying an members have already come to us to marketplace bank features a estimated $111 billion in fees and access lower-cost credit. While we vert
Slide 6: Positioned for Long-term Success
Positioned for Long-term Success 1 Fintechs Banks Ability to efficiently serve a broad range of customers Industry-leading marketing efficiency; 4.5M+ members ✓ ✓ ✗ Capital-light, high-ROE marketplace earnings stream $127.5M Non-Interest Income ✓ ✓ ✗ Economics Highly profitable earnings via loan por
Slide 7: 4Q22 Highlights: Achieved Revenue and Net Income Targets
4Q22 Highlights: Achieved Revenue and Net Income Targets 4Q22 Guidance Targets Actuals Commentary Net Revenue flat YoY driven by: ▪ Net interest income up 63% driven by Q4 Net Revenue $255M to $265M $262.7M growth in the consumer loan portfolio ▪ Marketplace revenue down 28% as marketplace continues
Slide 8: 2022 Demonstrated Power of Marketplace Bank Model
2022 Demonstrated Power of Marketplace Bank Model Despite More Challenging Second Half Environment NET REVENUE NET INTEREST INCOME ENDING HFI LOAN PORTFOLIO 45% 123% Net Interest Income of $474.8M, 104% Held for Investment (HFI) loan portfolio Net Revenue growth driven by Net Interest Income (+123%)
Slide 9: Marketplace Revenue Down on Lower Sold Loans
Marketplace Revenue Down on Lower Sold Loans Quarterly Loan Originations1,2 Quarterly Marketplace Revenue ($ in millions) ($ in millions) Marketplace Originations Retained Loans $3,069 $2,524 Marketplace $2,308 Sold Loans $170.6 $1,824 Deliver Marketplace Revenue $123.4 $761 $701 4Q21 4Q22 4Q21 4Q22
Slide 10: Net Interest Income up 63% YoY as Consumer Loan Portfolio Balances Grew
Net Interest Income up 63% YoY as Consumer Loan Portfolio Balances Grew Average Held for Investment Balances1,2 Net Interest Income YoY ($ in millions) ($ in millions) 63% Consumer Loans Commercial / PPP Loans 80% Loans Held for Investment $5,299 at Fair Value $309 $800 HFI Portfolio $2,948 Drives I
Slide 11: Revenue Mix Shifting With Growing Net Interest Income
Revenue Mix Shifting With Growing Net Interest Income Offsetting Current Decline in Marketplace Revenue Total Net Revenue1 Net Interest Income ($ in millions) Non-Interest Income $262.2 $262.7 NET INTEREST INCOME $83.1 Increased from 32% to 51% of total net revenue, reflecting $135.2 growth of HFI p
Slide 12: Ongoing Balance Sheet Remix to High-Yielding Consumer Loans
Ongoing Balance Sheet Remix to High-Yielding Consumer Loans Supports Strong Net Interest Margin Average Balances Average Yield 4Q21 1Q22 2Q22 3Q22 4Q22 4Q21 1Q22 2Q22 3Q22 4Q22 Unsecured consumer loans $1,542 $2,060 $2,692 $3,269 $3,826 15.66% 15.22% 14.19% 13.52% 13.16% Yield declining due to mix t
Slide 13: Marketing Efficiency and Expense Management Partially Offset Change in Revenue
Marketing Efficiency and Expense Management Partially Offset Change in Revenue Efficiency Ratio Total Non-Interest Expense1 (Non-Interest Expense as a % of Net Revenue1) ($ in millions) Efficiency Ratio 4Q21 1Q22 2Q22 3Q22 4Q22 Non-Interest Expense Less Marketing Marketing % Revenue Compensation & B
Slide 14: Proactive Steps Taken in 4Q to Enhance Performance
Proactive Steps Taken in 4Q to Enhance Performance REVENUE ACCELERATION EXPENSE REDUCTION Acquired $1.05B Seasoned Reduction in Force Loan Portfolio ▪ $25M to $30M annualized run rate savings in ▪ Deployed excess capital to generate attractive returns Compensation & Benefits ▪ High-confidence return
Slide 15: Pre-Provision Net Revenue Up on Increased Held Volume
Pre-Provision Net Revenue Up on Increased Held Volume and Continued Expense Management Net Income impacted by higher provision due to higher portfolio Pre-provision Net Income Net Revenue (PPNR)1 ($ in millions) ($ in millions) 12% $82.7 $74.0 $29.1 $23.6 4Q21 4Q22 4Q21 4Q22 Diluted Provision for EP
Slide 16: High Quality Prime Personal Loan Portfolio Supporting Strong HFI Credit Performance
High Quality Prime Personal Loan Portfolio Supporting Strong HFI Credit Performance1 30+ Day Delinquencies Personal Loan Credit Performance 2.42% 2.16% ▪ PL Prime originations focused 1.28% PL Prime2 on customers with average Normalizing as loans age and portfolio FICO 700+ and average growth slows
Slide 17: Prime Held for Investment Vintages Continue To Perform
Prime Held for Investment Vintages Continue To Perform Majority of Expected Charge-offs Have Already Been Expensed through CECL Methodology Expected Personal Loans Lifetime Net Loss Rate* ▪ Lifetime Net Loss Rates translate to Annualized Net Credit Losses of approximately 5% 8.2% – 8.7% 7.7% – 8.0%
Slide 18: Continued Focus on Retaining High Return Personal Loans
Continued Focus on Retaining High Return Personal Loans 2023 HFI Vintage Estimated Outlook Marginal Return on Equity Higher Loss Loss (Personal Loans) Estimate Estimate ▪ Attractive marginal ROE opportunity on personal loans; targeting levered PL Net Interest Margin1 10.1% 10.1% returns between 30%
Slide 19: 1Q23 Guidance
1Q23 Guidance Outlook Assumptions 1Q23 Guidance ▪ Originations reflect continued focus on disciplined credit underwriting combined with impact of rising Total rates on marketplace demand Originations $1.9B to $2.2B ▪ Plan to maintain HFI balances, which equates to 30-40% loan retention Pre-Provision
Slide 20: Reconciliation of GAAP to Non-GAAP Measures: Diluted EPS
Reconciliation of GAAP to Non-GAAP Measures: Diluted EPS Excluding Income Tax Benefit We believe Diluted EPS Excluding Income Tax Benefit is an important measure reflecting the financial performance of our business operations. For the year ended In thousands, except share and per share data. Decembe
Slide 21: Reconciliation of GAAP to Non-GAAP Measures: Tangible Book Value
Reconciliation of GAAP to Non-GAAP Measures: Tangible Book Value Per Common Share We believe Tangible Book Value (TBV) Per Common Share is an important measure used to evaluate the company’s use of equity. In thousands, except share and per share data. December 31, 2022 December 31, 2021 GAAP common
Slide 22: Reconciliation of GAAP to Non-GAAP Measures: Pre-Provision Net Revenue
Reconciliation of GAAP to Non-GAAP Measures: Pre-Provision Net Revenue We believe Pre-Provision Net Revenue (PPNR) is an important measure reflecting the financial performance of our business operations. For the three months ended In thousands December 31, 2022 December 31, 2021 GAAP Net income $ 23
Slide 23: LendingClub
-: LendingClub