Lendingclub Corporation · NYSE:LC
Lendingclub — Q2 2023 Earnings Presentation
20 slides from Lendingclub's earnings presentation, Jul 26, 2023
Slide 1: Second Quarter 2023 Results
Second Quarter 2023 Results July 26, 2023
Slide 2: Disclaimer
Disclaimer Some of the statements in this presentation, including statements regarding our competitive advantages, macroeconomic and business outlook, loan and financial performance, are “forward-looking statements.” The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “outlook,
Slide 3: Award-Winning Member-Focused Digital Marketplace Bank
Award-Winning Member-Focused Digital Marketplace Bank Members1 Originations1 4.7+ $85+ Million Billion Best Overall Checking Account Best Checking Account Overall Average Customer Net Promoter Review2 Score (NPS)3 4.83 78 Out of 5 stars 1) Total members and originations based on lifetime volume acro
Slide 4: The Problem We're Solving
The Problem We’re Solving 43% of American households carry over LendingClub’s 4.7+ 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 $133 billion in fees and access lower-cost credit. While we vert
Slide 5: Total Addressable Market & Customer Value Proposition Has Never Been Greater
Total Addressable Market & Customer Value Proposition Has Never Been Greater Record High Outstanding Record High Credit Card Revolving Consumer Credit1 Interest Rates2 (in thousands; May 2008 to May 2023, seasonally adjusted) (May 2008 to May 2023) $1,250 $1.2T Total outstanding 21 20 20.7% Commerci
Slide 6: Strategically Positioned for Long-term Success
Strategically Positioned for Long-term Success 1 Fintechs Banks Ability to efficiently serve a broad range of customers Industry-leading marketing efficiency; 4.7M+ members ✓ ✓ ✗ Capital-light, high-ROE marketplace earnings stream $85.8M Non-Interest Income ✓ ✓ ✗ Economics Profitable earnings via lo
Slide 7: 2Q23 Highlights: Achieved Financial Targets
2Q23 Highlights: Achieved Financial Targets 2Q23 Guidance Targets Actuals Commentary Total originations within guidance range driven by increased marketplace sold volume offset by lower Q2 Total retained loan originations: Originations $1.9B to $2.1B $2.0B ▪ Marketplace loan originations of $1.4B ▪
Slide 8: Strong Capital & Liquidity Position
Strong Capital & Liquidity Position MAJORITY INSURED DEPOSITS AMPLE CASH ON HAND ADDED BORROWING CAPACITY 85% $1.2B $4.1B $5.9B of $6.9B total deposits are Cash represents 14% of Total Assets; Includes loans and securities pledged insured compared to 56% average for provides 160% coverage of uninsur
Slide 9: Resilient Net Interest Income Partially Offsetting Expected Pressure on Marketplace Revenue
Resilient Net Interest Income Partially Offsetting Expected Pressure on Marketplace Revenue Total Net Revenue1 ($ in millions) $330.1 $245.7 $232.5 NON-INTEREST INCOME $213.8 Declined QoQ due to lower price on loans sold through $99.0 $85.8 the marketplace as loan investors continue to face higher c
Slide 10: Maintained QoQ Net Interest Income
Maintained QoQ Net Interest Income Increasing consumer mix and yields offset rising deposit costs Average Held for Investment Balances1,2 Net Interest Income ($ in millions) ($ in millions) Consumer Loans $6,079 $6,188 Commercial / PPP Loans Loans Held for $671 Investment at Fair Value $836 $757 $79
Slide 11: Ongoing Balance Sheet Mix Shift to High-Yielding Consumer Loans Supports Strong Net Interest Margin
Ongoing Balance Sheet Mix Shift to High-Yielding Consumer Loans Supports Strong Net Interest Margin Average Balances Average Yield 2Q22 3Q22 4Q22 1Q23 2Q23 2Q22 3Q22 4Q22 1Q23 2Q23 Yield expanding primarily Unsecured consumer loans $2,692 $3,269 $3,826 $4,067 $4,361 14.19% 13.52% 13.16% 13.15% 13.33
Slide 12: Marketplace Revenue: Modest Increase in Marketplace Sold Loans at Lower Effective Price
Marketplace Revenue: Modest Increase in Marketplace Sold Loans at Lower Effective Price Quarterly Loan Originations1,2 Marketplace Sold Loans Quarterly Marketplace Revenue ($ in millions) ($ in millions) Retained Loans $3,840 $2,819 $2,288 $2,011 $206.4 $1,286 $1,353 $95.6 $82.8 $1,021 $1,002 $657 2
Slide 13: Disciplined Expense Management Supporting Efficiency Ratio
Disciplined Expense Management Supporting Efficiency Ratio Efficiency Ratio Total Non-Interest Expense1 (Non-Interest Expense as a % of Net Revenue1) ($ in millions) Efficiency Ratio Non-Interest Expense Less Marketing 2Q22 3Q22 4Q22 1Q23 2Q23 Marketing as % of Net Revenue 68.5% Compensation & Benef
Slide 14: Driving Continued Profitability
Driving Continued Profitability Pre-Provision Net Revenue (PPNR)1 Net Income ($ in millions) ($ in millions) $182.1 $135.3 Income Tax Benefit2 Earnings Excluding Income Tax Benefit $120.7 $88.4 $81.4 $46.8 $13.7 $10.1 2Q22 1Q23 2Q23 2Q22 1Q23 2Q23 Diluted Provision for ($70.6) ($70.6) ($66.6) EPS $1
Slide 15: Held for Investment Credit Performance by Vintage
Held for Investment Credit Performance by Vintage Expected Personal Loans Lifetime Net Loss Rate* 2021 Vintage 2022 Vintage 8.5 – 9.0% ▪ 2021 vintage maturing with expected lifetime 8.2 - 8.7% 7.9 – 8.2% net loss rates reflecting post-pandemic Future 7.7 - 8.0% 0.9% - 1.4% 0.0 - 0.3% outperformance
Slide 16: Targeting High Marginal ROEs for Balance Sheet Usage
Targeting High Marginal ROEs for Balance Sheet Usage 2023 HFI Vintage Estimated Outlook Personal Loans Marginal Return on Equity Higher Loss Loss Structured (Personal Loans) Estimate Estimate Certificates ▪ Attractive marginal ROE opportunity on personal loans Net Interest Margin1 9.1% 9.1% 2.3% ▪ U
Slide 17: 3Q23 Guidance
3Q23 Guidance Outlook Assumptions 3Q23 Guidance ▪ Originations reflect: ▪ Overall impact of rising rates on marketplace Total demand and the recent emergence of liquidity Originations $1.4B to $1.7B concerns for bank buyers ▪ Moderating balance sheet growth and related CECL impact to maintain positi
Slide 18: Reconciliation of GAAP to Non-GAAP Measures: Tangible Book Value Per Common Share
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. June 30, 2023 March 31, 2023 June 30, 2022 GAAP
Slide 19: 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 June 30, 2023 March 31, 2023 June 30, 2022 GAAP Net inco
Slide 20: LendingClub
-: LendingClub