In a sign that consumer appetite for loan products has been resilient even in the pandemic — and that borrowers continue to online platforms to tap into those loans, LendingClub’s latest quarterly results Wednesday (Oct. 27) showed double-digit percentage gains in its core and adjacent businesses.
LendingClub’s model, of course, also shows a continued appetite for institutional investors to make those loans. And with its acquisition of Radius Bancorp in the rearview mirror (as of February of this year), the ability to offer members a range of financial products in a vertically integrated model is gaining traction.
According to company materials, the company has identified a $1 trillion total addressable market tied to revolving debt.
CEO Scott Sanborn noted on the call that the $3.1 billion in loan originations reflects levels similar to what had been seen just before the pandemic. Still, the higher revenue rates attached to that loan activity reflect the benefits of the digital banking model, leveraging data streams and vertical integration. Roughly 80% of issued loans were automated, according to commentary on the call. During the quarter, he said, the company added 100,000 consumers; the consumer base now stands at 3.8 million.
Management pointed to significant opportunities within vehicle financing; Sanborn noted that about two-thirds of LendingClub members have auto loans; the company saw 85% growth quarter over quarter in its auto refinancing business.
Looking ahead, the company sees potential in buy now, pay later (BNPL) loans for larger ticket items; delinquencies, according to commentary on the call, are performing better than the industry average — a nod to using advanced technologies for underwriting and risk analysis. Fraud losses, management said on the call, came in at less than five basis points.
Materials showed some of the leverage inherent in the marketplace banking model: The bank helped drive an incremental $57.7 million of revenue.
LendingClub’s third-quarter loan originations surged 14% quarter over quarter to $3.1 billion, as the company said that its activity had neared pre-pandemic levels — and its transition to a digital marketplace bank model proceeds apace.
As a result, those originations helped drive marketplace revenues up by 15% to $174.6 million. Total revenues were $246.2 million, gaining 20% sequentially.
In its supplemental materials that accompanied the earnings report, the company said that its held-for-investment loans stood at $2.5 billion in the third quarter, up from $2.3 billion in the second quarter. In the latest period, unsecured personal loans were $991 million, up from $512 million in the second quarter; PPP loans held on the balance sheet dipped from $616 million in the second quarter to $437 million in the third quarter. According to commentary on the call with analysts, “runoff” of the PPP loans was, and is, to be expected.
As reported in recent weeks, research done jointly between PYMNTS and LendingClub shows that personal loans have helped roughly a third of paycheck to paycheck consumers, who represent a majority (54%) of the population.