LendingClub (NYSE:LC), a digital bank, reported Q4 earnings yesterday, touting a rise in loan originations by 13%, an increase in revenue of 17%, and growth in total assets of 20% when compared to Q4 of 2023. While revenue rose, net income declined quarter over quarter as Q4 booked $9.7 million, compared to a net income of $10.2 million in the prior year. Unfortunately, the results were unsatisfactory for Wall Street, with shares tanking in after hours, a decline that is looking to continue today.
Of note is that LendingClub took an impairment charge of $3.2 million pertaining to its acquisition of Tally, which impacted net income.
Top line revenue was reported at $217.2 million – beating consensus as analysts anticipated $206.5 million. EPS was expected at $0.9 but disappointed at $0.08.
Lending Club CEO Scott Sanborn said they executive well during the quarter reporting more than 5 million members while adding new products
“From this strong foundation, we are well-positioned to accelerate as we move through 2025 and further grow originations, revenue, and return on equity while continuing to innovate for our members.”
LendingClub provided the following guidance on Q1 2025 of loan originations of $1.8 billion to $1.9 billion and pre-provision net revenue (PPNR) of $60 million to $70 million.
The LendingClub earnings presentation is available here.
While some analysts responded positively to the earnings report, shareholders of LendingClub will not be pleased with the market’s response to the quarter. While many Fintechs have performed relatively well in recent months, LendingClub shares continue to meander. The big question is how LendingClub recaptures the excitement driven by future expectations. As everyone knows, investors buy shares based on what they expect to happen, not what has happened in the past.
Highlights of the quarter include:
- Total assets of $10.6 billion increased 20% compared to $8.8 billion in the prior year, driven primarily by the success of the Structured Certificates program as well as the purchase of a $1.3 billion LendingClub-issued loan portfolio in the third quarter of 2024.
- Deposits of $9.1 billion increased 24% compared to $7.3 billion in the prior year, driven by the continued success of our savings and CD offerings.
- LevelUp Savings, launched in the third quarter of 2024, reached balances of nearly $1.2 billion at year end.
- Loan originations increased 13% to $1.85 billion, compared to $1.63 billion in the prior year, driven by the successful execution of new consumer loan initiatives combined with strong marketplace investor demand.
- Total net revenue increased 17% to $217.2 million, compared to $185.6 million in the prior year, driven by improved marketplace loan sales pricing and higher net interest income on a larger balance sheet.
- Provision for credit losses of $63.2 million, compared to $41.9 million in the prior year, primarily driven by higher held-for-investment whole loan retention.
- Net income of $9.7 million, compared to $10.2 million in the prior year.
