LendingClub Corporation (NYSE:LC) announced Thursday its financial results for the fourth quarter. The results show a return to growth, as well as transformed business economics through a recent bank acquisition, and increased efficiency in operations.
What Happened: Revenue stood at $818.6 million, up 157% from 2020, with marketplace revenue 136% higher and the new recurring stream of net interest income 259% higher year-over-year.
For the fourth quarter, results exceeded expectations; revenue came in at $262.2 million with sequential growth of 7% outpacing originations.
Overall, net income of $29.1 million was up 7% sequentially, while diluted earnings per share were 27 cents as strong revenue growth was in excess of the impact of investments in loan retention, marketing, and technology. The consensus estimate called for EPS of 22 cents.
“We have closed out a transformative year at LC by delivering the growth, innovation, and efficiency of a fintech along with the funding advantages, revenue diversity, and regulatory clarity of a bank,” said Scott Sanborn, LendingClub’s CEO.
“We expect our transformed business model and data and membership advantages to help drive more than $100 million in incremental earnings in 2022 as we continue to evolve our member-focused business into a multi-product, digital marketplace bank.”
Shares are down about 14% in after-hours trading.
See Also: What 4 Analyst Ratings Have To Say About LendingClub
Why It Matters: LendingClub acquired and integrated a bank, consolidated its personal, auto refinance, and purchase finance loans onto one origination platform, and accelerated membership acquisition.
Days before, Benzinga spoke with Anuj Nayar, the chief communications and financial health officer. He said the acquisition of Radius Bancorp was a pivotal moment for the company.
“Before the acquisition, we were a marketplace connecting borrowers and investors, from an opportunity to help people get unsecured loans,” Nayar said in reference to LendingClub leading in one of the quickest growing categories of retail banking.
“What we had prior to the acquisition was a very powerful business,” he added. “Fast forward to today, we’re one of the very small numbers of fintech with a bank charter … and what’s exciting is that you get all the growth potential of fintech, and all the resiliency and profitability of the bank.”
Going Forward: “I find financial services sometimes are unnecessarily complicated,” Nayar noted in a discussion on providing better products to new and existing customers.
LendingClub’s typical customer has a relatively high FICO score — in the 700s or so — and earns income somewhere in the range of $90,000 to $100,000. With acquisitions and additions to technology, LendingClub can make better decisions and lower costs for consumers.
“We think we have a wonderful combination of a high growth fintech business model with the profitability and resilience of the bank business model,” Nayar ended. “That is pretty unique in the industry and is also an incredible engine for sustained long-term growth.”
