LC - Earnings call 3 2023 | LendingClub Corporation

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Operator

Hello, everyone. Thank you for attending today's LendingClub's Third Quarter 2023 Earnings Conference Call. My name is Sierra, and I will be your moderator today. [Operator Instructions]I would now like to pass the conference over to our host, Artem Nalivayko, Vice President of Finance.

Artem Nalivayko

Thank you, and good afternoon. quarter call. third LendingClub's to earnings conference Welcome

Joining Scott CFO. Sanborn, to talk results are about our CEO; me today and Drew LaBenne,

can some platform to our accompanying Investor macroeconomic consideration presentation from analysts, addition find include services, release also questions business questions You forward-looking the be that with outlook, will respect will on conditions answering to our the and Relations the the email.Our website.On earnings strategy, of we statements call, and of today our future in remarks via section the advantages and submitted and for competitive products financial volume, and including future performance. were

differ undertake and as remarks on new to tangible this those assumptions, obligation update statements Our by cause statements.Factors make revenue. common and these and materially book actual include value presentation. non-GAAP that in we statements also or we based forward-looking are to could information our are press measures today's Any pre-provision relating may results per described materially these performance, expectations forward-looking release net from current on and to contemplated of that call results including differ no future result these share a events.Our

to presentation.And information and can now, most a reconciliation I'd directly of to You to Scott. more on release non-GAAP like find the the today's in comparable use our measures over call earnings and GAAP turn measures

Scott Sanborn

Welcome, and remains the Artem. what delivered Thanks, company thanks execution position proactive dynamic right. All appropriately disciplined profitable environment. a everyone. to We another quarter, efforts to in

by and $XXX is $XX above by which which less a current explain.The staffing decision of revenue difficult net on remains operating Drew items, our further which management quarter's the which market non-provision forward.I expenses, for us will guidance to marketplace. efforts end expense was well couple the aided originations providing our in million begin align in results supported revenue $X.X Our with were line position was high to and our side revenue, expectations.Total the pre-provision conditions was stay non-recurring of current and going the to context was particularly investor million, quarter billion by recent our of should to on challenging, resilient ongoing our environment, want

] from efficient in expect roughly capital and certificates doubled to We LendingClub to attract banking are much X new now now and again which investors, retains while we ability focused which also increasing moved signed on our visible replenish strength price. to anticipation remote of comprise immaterial senior in an is balance ever, rightsizing in performance our for build provision portfolio. loans provides have environment, this investors vintages positioned million capture Interest emerged to the we we we with QX.In been and for low-risk focused began are the therefore, the prime of low-friction, us launched Following far billion observed senior their in it growing, return turmoil as in our Not earlier the of the testament capital effectively total income our they're we, more note, investors. the based bank selling $X term.In they pool residual quarter.Now which to the a we banks than turn inflationary in the in QX from than more asset are buyer, on structured I adapted structures buyer, over and in unique, the our and year, have XX%. the uniquely equity credit. interest especially to of marketplace restricted and in around program assets in QX north This bank, the of near fortifying all to strong outlook. continue reposition interest certificate the $XXX underwriting we're a their note.Another issuance a deliver hold the credit to our our LendingClub portion in currently investors, for is buyer the essentially given which the on provisioning.As leaning that on short-duration earns of loans receiving productive is earlier to the to in bank residuals as increased to next have today's certificates sales us prime trends is focus performance the consistent off newer resulted environment.In sidelines have is capacity million sheet balance to our this remain to originated where to and helping We advantage marketplace, vintages clear program, structured We've capability discussions environment. high-yield, residual LendingClub liquidity are without the program in originated investors, marketplace and invest dynamics, use shift marketplace on in yield the remain QX We're in appeal to near is interest predetermined has CECL remains vintages.Inflationary in an sold are to representing risk as which double credit, tightening, loans serve this on in months. for certainty managers close a on future important new upfront let's something our of few on between. billion levels.While temporarily helping earning credit of market attractive better sheet bank and low-cost a income the of and with X-tier our $XXX retained a and a this which is at pressures $X make and historically and season [ note total, our securitization to QX financing private originations we sells into our XX% LendingClub, only to of exchange, for as for of orders credit program and likely QX, standards and before of

rates the the members. Credit as scale trillion we past XX%. data.Looking losses will Our several and key over than new based historic enhance value previously now within to our communicated been are Thanks credit steady have refinance to industry well balances expected our our and a to ability range card lifetime available us. we foundational forward, better remain to above proven competitive grown progress opportunity set awaits solutions on on normalize.We've proposition average investments that made interest powerful, quickly, we've differentiated are making $X.X meet and positioned along years, provide initiatives consumer demand both existing conditions with and to massive card

following: year, than end and we lending, mobile accomplished the included it sounds. provide member have to experience app will loan the our savings.That's across of into Before this banking harder spending servicing a seamless

powerful value way sweep credit of future seen to and the proven will also In into be And first amortizing performance on for and track, balances development, we plans. for a debt of from the verticals. accumulated revolving and a comprehensive a members prioritize fully to members. multiproduct phase product ultimately apps significant to payment a easily will payments, a give first that credit credit create line years testing have card launch in be way members.We'll early instead management vehicle our repeat approved members. credit allows card will product This of builds new generation we to members opted fact, of place, optimize product which many banks LendingClub single solutions have multiple experience.While the to With in mobile-first serving this the payments, especially engagement platform offering our specific line in paves debt of we've will monitoring

Chief hired Mark member drive Taken customer and fuel digital mobile focus effort, to strong in areas especially Officer. resilience to few should to LendingClubers JPMorgan Elliott a able, quarters. has dedication retail lifetime as together, unique Cap I'm want announce their forward these they'll to demonstrating experience growth. these doubt on Drew. With I foundation engagement.To in when brings LendingClub's are focusing well and happy efforts, willing coordinate itself.With our to value.Our to evolving credit which marketing I'm in changing is through Chase that ability it banking his that, led turn, and be focus, strategy, multiproduct continued proven leadership he I'll satisfaction, where that better have lead presents and the Mark building member turn Customer and translate One opportunity ready, innovations banking to no we're we've a engagement banking accelerate background from and been as higher at and thanking a close will to to a outcomes over trying business what employees as march their looking forward.I a for further by we as

Andrew LaBenne

Thanks, everyone. hello, Scott, and

originations, let's which charges investor through Let PPNR demand, to and whole in $XXX me quarter from loans, quarter, for of quarter and bank and the million walk benefit the also items: million and customer to certificates in approximately third our in originated first, benefit was Originations portfolio.Now program, held the investment over to pre-provision sale, PPNR or $XXX $XX were quarter, million were as revenue $X.X $XXX quarter the for million results the move for is mentioned.We approximately the the investor for in to for quarter held revenue, in included with showing primarily $X.X in channel. the forfeitures severance the billion marketplace, extended Scott million XXXX. seasoning PPNR. million meet incentives managers; future of our in net $XX for for $X on strong billion were to purchase XXXX.Of a compared program the $XXX of million loans to million prior season of details retained demand which sold third compared quarter were the starting related the third originations. we $XX prior you $X.X billion non-recurring structured our the third of X $XXX in billion accumulated asset in

by a from was will Importantly, the repeat approximately one-time in also included previously expected which of not compensation.This which severance $X to also PPNR, partially lower first those variable charges this individuals.Now quarter. of million the one-time And let's quarter. turn the component accrued compensation accrued a benefit, offset benefit, expense $X.X $X million not for PPNR is in million, revenue. a is fourth of reversal was recur second, which fourth to

of components revenue to million $XXX and $XXX in earnings revenue. presentation. year.Let's the the quarter prior can Page on our of million for find $XXX same prior million the detail was dig of the into quarter revenue the X Total You X compared our in quarter

million the First, non-interest million prior $XX and to quarter of $XXX quarter prior million in $XX quarter income same was compared in year. the the the in

quarter market the the coming X.X% Page the a million value in expenses.As the we to adjustments the was quarter revenue of sequential discipline continued the combination Scott lower across loan turn in As year. line. XX step was quarter for our current This was investment. talk million prior to as of lower were of gain $X.X Fed and held by prior revenue structured securities first, income due prior the align page, year. $XXX as sale the of and necessary that the income in net costs and help interest next sales the the This to net This incentives last to incurred to where result remote in in please on lower interest prior to compared period.Now the securities will structured X.X% earlier.On a and can risk-adjusted difficult as an mentioned driven compared decision the million and see I due PPNR, as to purchases high non-recurring marketplace third, the from $XX million of in in $XXX from rate annualized loans compared cost $XXX $XX the net variable remainder the to base expense fair implemented in quarter, in revenue partially margin $X.X to $XX compensation growth due presentation, partially income in first, benefit items X.X% second headcount marketing of when quarter from the Net interest compared quarter. made the volume; the to second, was in Non-interest head non-compensation items: average accrued reflects charges, million offset the which quarter.We see fewer our in same coming non-interest by we from primarily lower a compensation high-yielding, the million on was realize in the primarily mentioned X the the mitigate lower quarter, fourth well result this from year.The the earlier; approximately in I'll to benefit quarter million we million The impact funding in was quarter a held These income, mentioned, loans expect of to million on challenges. impact further the balances $XXX that and program same the expense fourth non-interest $XXX increase risk reflect sequential to to indicated by by prior expect banks.You primarily the lower $XXX in sale million fee to second company compared we change price return, increase purchase and our third XXXX. the reduce were of and interest percentage change certificates million change quarter, million higher about a prior into the I continued in program, partially can increases.On component forfeiture to macroeconomic a earnings items: to in of in quarter X an to for variable quarter benefited reduction our offset was conditions XXXX. originations; expense. hedging the early further in favorably expense of certificates.These generate quarter to change securities driven with severance-related $X.X you last of in the which due that also of third of second, This

expect marketing we of the lower fewer $XX moves prior quarter Given of partially are in the XXXX. was to reserves, underwriting to stable loss expense into $XX our million all in the to increase performance primarily XX% ROEs to the qualitative fourth increase and the and of million both third primarily provided tightened loss was Page result the let's XX day implemented the we've for that reserves.While million.Next, range. to decrease $XX of The in in several reserves for our to excluding quantitative to earnings the a presentation, you'll in quarters, the estimates the vintages. it's credit the early we see for and ultimate XX% have for continue investment are range our CECL XXXX and and million and Provision net quarter providing vintage, compared are still lifetime within million XXXX turn X.X% the include is retained quarter, expenses, ranges estimates $XXX over of provision. offset the last respectively, rate of the sequential initial X.X%, it non-interest incorporated in expense, XXXX $XXX losses in for the showing judge we XXXX XXXX held and loans The expected X an in quarter we for benefiting this observations on last due from updated by vintages.As and performance, the on quarter quarter

annual XX% are income. third Taxes all for taxes. pre-tax were of held ROE let's north move quarter or XX%.Now to for As mentioned, our million the current of Scott projections investment $X.X vintages in

at our effective the $X.X rate of quarter quarter-to-quarter, expectation use fair our sold assets for a additional growth and securities variation with between line portfolio loan for million units. As to program, grant reflecting More the a you'll our XX%.Now million, of price and capital. effective structured billion at was vesting seasoned XX.X% investment of increase sheet. on were we tax $XXX decrease seasoned with CETX have $XXX in to and that returns, structured we million balance the Year-to-date, roughly where in from XX%, in the the by in first up strong quarter. X/X certificate primarily the me we our X is the Page XX% before, of meaningful loans sale modestly earnings to sheet the as and balance rate I've levels to approximately efficient which of more approximately expect $X.X the presentation, see portfolio, the had consumer were to in million date the held increased we is Total restricted $XXX to as the structured our the held strong fourth for $XXX remained of This given held program.As variability certificates in risk-adjusted quarter due lead touch via stock XX% begin should shift certificates long-term consolidated to billion, the an compared end date specifically, XX to capital let originations in quarter the we've will capital quarter.Loans of from of end leverage mentioned value ultimately on Tier at quarter some stock future previous over modest held and production the a sales.Our volume growing during XX.X% ratios. the on

hand and Our with liquidity XX% deposits are billion cash $X.X available healthy remains of of on insured. our

substantial both XX.Now billion a of Bank, capacity $X.X Loan we guidance at fourth to of and unused Home amounts the for Additionally, approximately Reserve quarter. continue to Federal on borrowing with September the available let's move Federal Bank of maintain capacity the total at

investor This of on breakeven, go-forward nearing participation.The range $X.X are less pricing of offset meaningful the in program, the increase marketplace billion with a marketplace QX we're therefore, to certificate to economics in the as anticipating sales sensitive increase largely pressure first loan represent and a billion. $X.X will interest be in volume bank full originations marginal volume. earnings should will Given quarter incremental modest without our changes

year.As into We to to this have net to levels exiting pricing $XX $XX expect for we We expect difficult in growing environment, XXXX to improving taken a and the PPNR year, XXXX, a and certificate result, readiness to million including sheet providing shareholder we do investing company first capabilities permit.With steps outlook.So the guidance similar are at the while operate the up leveraging in quarter.While we balance have have to for that, to Q&A. as volume maintain QX plan we half more cost plan time, throughout conditions structured securities, to preserve positive profitable the position resiliency, remixing conditions remain by growth we to the income bank and of taken our when including our are our from range million. it to the new we'll at we with open capital, not current for capabilities actions persist

Operator

from Instructions] Ryan question first comes today [Operator Research Seaport Bill with Our Partners.

William Ryan

wondering of the amount know First for was at investment the related on based least about gives analysis quantify for portfolio? maybe true-up got I could one held the is sort that dollar you've your on you provision. the you confidence if -- the covered, it now macroenvironment? additional of that was you credit what what based in And you've And what

Andrew LaBenne

our reviewing that into $XX at Thanks the on. provision And discounted taking provision the up moved vintages our estimates, just of estimate X all kind the we're book, say continue in and that million took new the that under the on we're question. of it. has point. the the at best forth we're time, back I'd CECL scheme I was watch once.So, we grand put the losses when we're in this here that we'll about provision back book, for obviously, we the Yes, lifetime think this estimate X% to of that expected at additional how between provision QX on is putting But

of upfront move in ], today a in taking massive performance larger of this provision, So, it is while a [ the little the a all bit I it call would expected creates portfolio.

Scott Sanborn

least of at understanding when add right, other to outperformance. outperformance -- really initial is when just the kind strong, 'XX one the Bill, look that and Yes. it's that of the kind post-COVID book, dynamics -- was you thing been really at

of look heard charge-offs at provision.And about So -- losses if got there the we period didn't just in others that's a lifetime deferred, those what of seeing. kind a kind I you of they and outperformance kind talking where was of probably released go industry that, know actually within away, you're you

basically just initially what we we move and came It's like actually It are day now what it -- we thought. So we it it better, thought not thought X. meaningful and off got a to back. it had was of released taking back then

William Ryan

of And one volume follow-up on the side just the equation.

has of have is But I in mean, of So mean, competitors, marketing, Or volume, related about your of it the I buying channels XX% kind maybe different been to -- on withdrawing there's some originations, bank buyers competition. about just talked question the back you you market? anything pricing gone. which much been irrational -- from that's else investors mostly pretty volume? the up. historically question going is coming mostly is of just obviously, kind related bank XX% a dialed the or -- there in by also

Scott Sanborn

competitive borrower of a lot is talking dominant definitely piece you that right? lower side really capital. of is a at it's couple so, the There's the house. nuances on worth higher much the appetite of investor competition have bands most FICO, has back, of but in FICO lot competition pretty the piece When pulled profile just look a not the really people not The shifted moment.And particular may dominant people there. at have lessened, the for -- the is, about be of Yes, supply in space, investor

we always a optimized with processes data the have. we effective advantages and the highly have very competitor been We have

space. our see most efficient amongst marketing the the can You in remains

still either with at who the So you bank X kind new direct banks are charters, driving terms of we're categories, that X it's this And isn't I'd that really capital it.In competing, -- competing the within I'd years years, looked the if raised those competing. with, in bank visible -- in or haven't that significant of charters, raised Fintechs are competition still guess X last less I fintechs are obviously environment. last capital then say. they're say,

Operator

with from Our comes Chiaverini David Securities. next Wedbush question

David Chiaverini

value volume ask negative loans of loans sold to quarter. quarter? through what Wanted loans, at was $XX marketplace. par the adjustments I or fair curious, in about in million third sold the the net percent The are were of the at

Scott Sanborn

So sales where [ price XX% ] our average was in sold. of terms we low

about X-point discount, So just a a little less.

David Chiaverini

And I quarter, think should if I adjustments the fair to looking out fourth heard you par? you the Or allude prepared did forward? being right about comments, to we during that closer value to looking how the think

Scott Sanborn

going little be No, consistent. breakeven should to we pretty as where remain is think I of about a XX% [ we Probably near ] into drop there view But on go bit the QX. sales. it's a

issuance any going standpoint. to that that would from -- lower and than So really much an make us sense going not lower, lower than

David Chiaverini

side. follow-up then quality the on credit a And

So the X.X% net in rate, charge-off quarter. the

around past over stable quarters should here With this around $X as kind of range stable on we this going the stable -- portfolio net of charge-offs? of X% forward kind being it, the of call is kind think the in X billion,

Scott Sanborn

if move HFI No. upward we We'll don't portfolios. continue the grow to

half HFI more coming So as held program, which slick is at portfolio, you're for and just doing a more continue upwards average charge-offs we're going move should we'll I the and of sales that the effect the of still looking charge-off to slowdown have to 'XX, through age seasoning less -- rate we'll book probably is investment until increase.So, -- say. would have means which the extended on, see first also the

these under this a this through. reserves We've the is charge-offs mind, basis on are in coming that for discounted all again, -- keep taken Now seasonal. estimated

David Chiaverini

upper And a assume year a this over as next in we way equate assumption could if we life, the charge-off net where X.X%, that rate. to trend high and lifetime ], loss of that average roughly would let's X.X the use of X.X% to an kind about Is quarters? several of the the assume kind think example, end [ XXXX Xs

Scott Sanborn

as Yes. quite I isn't mean the as simple math that.

-- it If there, the on example, because what at we're weighted 'XX X.X. vintage the putting on. lower the lower we haven't in it's period. at estimate right The of have terms coming than of you the vintage life very -- where citing a ANCL to average you But you range, main given X% the and of the what And but beginning loan CECL if the now for our you're of on X% balances, the exactly in speed at X-month the payoff XXXX and difference ], ANCL, on look is the there. took isn't that's we're is the is depends [

So, taking very balances. few charge-offs and high we're

down ANCL overall over So it pulls the life. the

Andrew LaBenne

Yes.

of the dramatically. to Just speeds couple changed think over have the thing last the prepayment about years is pretty

really normalized today. to that paying down faster, So the that's they up short duration on excess liquidity through till the 'XX vintage is actually and fairly because consumers enough had were

David Chiaverini

fair then same quarter guidance at And the million expenses range, at if the of be that million, $XXX range, it we guidance, million, on expense one the of then and low the marketing on $XX commentary of end going then new as zooming if in on the recent be could we're marketing guidance to the me. most the $XX forward? Any that origination north of expense, top it $XX we're guide could roughly end million? assume the to Appreciate $XXX last ex-marketing, Kind for million. is

Scott Sanborn

think I about right. you're Yes, thinking it

repeat we really back And will still our in same versus growth optimized investing that building members, yes, -- are maintaining base Assuming hold historical Yes, math we for right assumption, mode. also customers get the which good balance membership once now hold. until cost should efficiency, new is the obviously that a channels. of We've today. right?So, marketing in we're the lowest

So, on get and movement into when that. growth mode higher channels, that. we do upward back there'll into But be go won't some we we cost

come on I pricing. on So, your back question

optimize I maybe amount a pricing pleased what selling for of because the to in price. tick said pressure we're remarks, programs We today. below lot in we're to as demand not offering.Our here think little Drew a seeing really goal right don't prepared his now going the there's really price we're at sell is of we're from we're with in down QX, on but see

would volume, better volume meaningfully or we're -- show not up going for be where that So more look doing pricing. we're to as for volume, us -- more and to going to

Operator

Our with Jefferies. from question Hecht next comes John

John Hecht

couple I that they on I 'XX, rates certificate other, call the mix structured it, like given of of drop? a how kind trajectory mean, you've then, do course sort the where relative what about think of into questions rates I Just about are And the are liquidating to mean, us does we the the use scenarios? those the program. different if NIM near-term. look versus outlets thinking over think of with

Scott Sanborn

Yes.

for to So I how ] a it's early, I little 'XX [ the bull we're to call to on this allocate going much think think program.

Our to was up think work it accomplished, think buyers get we demand we and up that to based be I price.As we going in, how to initial optimize which we return get and for obviously, balance a how also to then function there. and we're sheet, on on 'XX on goal but when about we'll start we into multiple go price the of, price allocate now we're program, allocate the as through getting capital through go set and to have going capital various structures we're it demand, will seek and

with obviously, details.As NIM given come making we're visibility more they certificates a a is also the we but of with 'XX I call -- to it's with on mean, from But going structured pretty before a in I as that think taking come they're next NIM, which no final terms -- allocation, So provisions. loss, they coupon, far bring risk the look remote back more come into to down. need that thinner

So, a well. where time NIM, to -- we over a we're going some have as going trade making we're to lower but have here should we're little bit pressure provision have on

David Chiaverini

I you guysâ€¦ mean

Scott Sanborn

clear I have probably as securities risk think from I now. XX% -- right the we think a on just those it's a but weighting reminder, presentation,

where next our a some year target our thinking to we're latitude should going levels, we're leverage and gives from capital about us be ratio. into as a that and more capital potentially risk-based think So, about

David Chiaverini

XX%, that's ratios? Or then we think on structured over that can what the topic, capital it weighting be change mentioned regulatory time? that program. something just Is the terms would in risk-adjusted -- whatever of the about you what -- that that certificate is like guys And Yes. for should

Scott Sanborn

outlook are capital. is as far securities, weighting for notes, as certainly these our That we is CETX holds, our could a -- But then risk-weighting, they're efficient booking XXX% situations go significantly credit are There as perspective. our I guess, That where a to are example, that risk a â€“ credit coming or -- these risk with deteriorated. XX% from very weighting. assuming they XX%

David Chiaverini

funnel the I wondering on last end of loans at approval trend fairly the pool TAM you kind so mean characteristics and then in application is kind -- that guys of growing high of of just are point applications rates this can the developing? that, front debt unsecured in I'm of and to characteristics of of side, of anything are just of And like there and you rates a in or changes question of terms funnel. your a kind you for the for kind cite the big you. interest, terms

Scott Sanborn

mostly I'd balances -- move continuing up, see say, remains coming bill their -- we're demand their from to they're plus their credit mean, up seeing intact, I their us, They're size proportion in of right? to that rate. move consumer card Yes. and

it remains So strong. on the demand side,

is manage and resume things same the touched we're the for have be your account, for the and on also cash, case moved continued people We when of away anticipating and in more to experience as of would ability use able card the service end approved we to in ready a from mobile loan.At alternative that you're our the a growth, -- that of time, use have allowing just are have said, debt. to be are that other result within loan due more given will we're overall even providing the your that app, mobile in. to origination ability in plan the who terms we're tighter personal for for on are That get we to we overall bank -- to environment.We credit and/or -- stress some approved I working on potential front app a inflationary strain the cases

and mortgage, One month, of very credit the you to your a things data rest, between.So way good on every your the varies see all based or manage have different based you those about of it payments, rate, in whether are on pay it most the debt card don't holistically. but both also of is, pay in that minimum all that's unlike and something really the consumers or payment car, card amount really your fixed debt off credit balance the

leverage that, working line them as we're are allow a sweep installment the kind an right, -- in and position is we those seeing with to help an now as we'll time of that a do into the plan.So, be the automatically plan kind to on will we're development -- but able of in build, time experience powerful think what be that balances right that all all will as right. of until when pretty is will we them So, be to be to to optimization credit background those we competitive well in moat of payoff product a that

Operator

comes question Regi JPMorgan. next Smith Our with from

Reginald Smith

comment kind just a I that towards credit to to wanted proceeds pivoted had opposed Did guess I that the clarify underwriting else? suggest were made. to using that something of you as you debt, your refinancing people card you

Scott Sanborn

credit kind their carrying case people, a right? basis to always our market, card. it's And say, points case. Half been able use our U.S. debt. on are consumers below been average, of it's big -- we've largest offer to price XXX because, It's of we're card all use always XXX dominant that's Well, let's a

who and with and we're can say other name cases, they Once for members. to it, them it use use it come repeat whole so, variety a And for they they improve LendingClub back that you.But and able out to of system, other for know in our especially how they're moving. easy a work reach know we are can and there deal better and are is got we you see things, weddings, home improvement,

of X.X have they But number alternative adapted We're of been loans the are of -- a We've but up many yes, one. environment. approval percentage That's we tightened ago.We're talking just years to one we've they're X they our about ways adopted. over with ago. how a latter still federal years those also about we've this rates ways not student what smaller for mix, people There's cases, in that talking the have significant So would on margin. shifts. the is use

Reginald Smith

Can originations you your maybe little average new period, maybe last period bit talk to a about X -- on APR this ago? compared contextualize year

Scott Sanborn

Yes.

of the where range I So coupons the XX% But anywhere towards in the average, originating, to we're end on population. we're XX%, XX%. mean space from higher product skewing that

probably to the, the passed borrower under We're So in low just teens books increases putting much in there's rate coupon, for to terms of they're the competition be in on roughly the where mentioned, going we're rate increase. of reps terms as pretty we're passed on all -- on of coupons space.We've that the the ourselves. call space. XXX And XXX we've prime in of that less it, near closer we prime in to the

Reginald Smith

contextualize a loans gross help your you frame there maybe guess, I sale maybe year XX% today versus it that or there? to was X during a net a at return the your on what buyers us are or the kind I required price or talked of remarks, range about either way kind difference is looking prepared of question think for, ago, earlier. guys

Scott Sanborn

mean for those -- return to like prime credit, X% to the near-prime. looking I call of today were prime and to for XX% increase, say that right, I'd call are prime X% more rate it, for to near-prime. you numbers north for X% prior on unlevered say of, X% at an X% Yes. the and, it, I'd

the thing So, losses is at other above selling this the way we coming were lower higher and there coupons, into a is, I rate get note par. guess or loans discount.And you to environment,

X.XX% we think I ]. were [ at

the And lower absorb without big managers of So pressure due -- are in a that prime can part given of the pretty with in return. returns. on difference that because on And the equation return, need banks, banks often that the higher return but warehouse that loss they the pricing to asset them right? mix funded, is

Andrew LaBenne

pretty for we're the lot -- there able a unique is economics one fact spaces you Reji, while of structure offered to efficient going look to can important I the the and that things with, marketplace. who differentiated. this maintain don't pretty I environment it's yield as where also just do A the And that take think competing in if we're that I this profitability we of capture note sustainable financing, some if businesses, in think a our continue are the that we said know to being differentiator it's ability giving well, And out the for to grinds right?The are be

Reginald Smith

maybe those different new of X-parter. managers just kind you like tranche, partners note of part given over spectrum, the down there have CECL asset over opportunity over possibly is, credit buyers remind Are of then tranche being moved second question to yield got more the equity that kind move moved structured partners to breach And be -- the security, an or non-reserved? anything question, the to can a enhance structure? is or that's able that of looks that the they I non-CECL would that this that support, On us, existing there one something are related to further

Scott Sanborn

the partners, that several But the added terms also we've partners back. had -- we've In to that brought some combination. it's platform. due lines investors the We of to new were of cost the a had sidelined warehouse

they to that months, significant to to got we to kind key capital -- X the over out in have the call next now billion on that terms and solid think, are down QX. -- go, as who've more for platform. do got to names the through Sort committed purchases looking from to longer-term moving the certainly credit it we're and grow have time to investor certainly into come players could returns appetite what of people structure -- bigger Andrew, we names agreements yes, we think got marginally. as able potentially really to strength.In real returns And right it's fact a anything to some we add? like the is the mentioned, comes deliver $X -- of data are that make it over private that won't we're most we that that on to what visibility lower. deploy these have in of tightened we've -- and this program. we that go certificate extend seeing keep show Obviously, have the come be the like structured of coming spectrum, at of not is of that the X the is was to further And we've But certainly the into that capital, got an segment.So, but opportunity signed flows.So, think we that up in us a for will area now, the and question longest out of

Andrew LaBenne

yes, different offer been of definitely structure. to would probably could seasoned we've that if advance we're a much even wanted loss some rate have through than on would we eventually a Yes, The though content doing now. has sell clearly loans able that structure our be We [ what credit ] right? structure, higher something that we lower But to.

possible. certainly yet, done we that but So, haven't

Reginald Smith

that's the That exactly to I question but book [ good for you not that, guys, it's was ]. another know had in

Operator

KBW. comes Our question with Tim from Switzer next

Timothy Switzer

I guys I'm maybe you among have into numbers your expand mentioned higher to quality, quantify FICO bit crept about -- question beginning earlier you from the lending curious. Mike competition stepped FICO higher guys any of hoping and maybe personal you I of if have session, higher little the space space -- just comments specifically? but impacted Perito. don't kind of a you who on FICO the up us competitors help market. behind your and in for was that's near could many know you lower that, credit market how share can And how where side on more there's the the made

Scott Sanborn

Credit look key of I of the has Karma. visible you that aggregators offers the if certainly are like a customers No. number down, place or guess Lending some come mean, at a to I like Tree --

be TU, lag.I'll comes big more consistently of the a of number And leader market. you, high the space It's is of which share, out yes, data will tell that FICO FICO. than participating come in terms source -- a we're best has pronounced So the not people down. lower on we've in in the the in been That long-term, for particular this in predictable a managing not some see that that is delivering to expect we're most for would we're return -- to focused But a metric ourselves certainly, our what on and buyers. I be of continue playing banks, that to to right, is sheet, model business the their are adding banks prime, balance are assets going the in that to the are of direct operate.

Timothy Switzer

is QX. help 'XX that assume way? there's similar Or expenses? first guys about should have Or if your we want comments lower a one of that you go the guys' on similar actions probably to looking any make it you'd up? could take mean maybe And Does about investment outlook probably there that could to half --

Scott Sanborn

next merit goes think of that through, on, as time would up a we roughly flat of increases, would little of say There's as things but always into I'd come say -- bit go I year. roughly slightly flat. nature expenses friction that to as within I being say

Andrew LaBenne

Roughly the Firm. QX from from the QXâ€¦ flat QX from number -- [indiscernible].

Scott Sanborn

from QX. Right,

Andrew LaBenne

QX. From

Operator

time. this at waiting questions no are There

to the Artem pass will Nalivayko for I So, some conference questions. over additional back

Artem Nalivayko

Thank Sierra. you,

questions shareholders. submitted our So, Scott, here for by were that couple got of a we've you

question now? The you is, to just lender name considered a more another than since rebranding have first LendingClub's

Scott Sanborn

Great question.

we we've ways evolving will to that is can a the members to lending. cover in where place get about, as we addition app savings integrated an talked and serve got our we as So spending

bring we the will new why brand talked we marketing, about his of that's expertise.So, that the brand to deposit that into of say things one what mind, will these integrate make. I So call, Mark, part expect the in who to the any but key brought and reason and shifts, may that oversee we evolutions need also how on offerings is don't I I communications -- be on imminent

Artem Nalivayko

here's And question. second the

is tangible shares? to buying the shares a reason with discount book back trading a there at So steep the company such is not value,

Scott Sanborn

Well, to our and everyone. of restrictions agreement just of worth the third for the We're around operating of reminder to I buyback part at probably that acquisition operating entered Yes. of year think in execute a make difficult the this as us some Radius we point. type it's share agreement it into that any

Andrew LaBenne

some largest have this lost earnings And open however, the recent on is I I'm believe we're -- in be us. represents with of certainly would But any shareholders be considering of shares. seeing the And selling the that indicated the meeting, it market add, we that if one I company, the surprised creating I individual will business. will that the the value discounts in been Board don't post members to did I wouldn't be the at I Board purchase and same. not that this not

Artem Nalivayko

you. Thank Great. right. All

we'll And third you. at with our So if that, additional you Thank us joining us e-mail quarter Thank you wrap questions, please up earnings any conference call. today. have ir@lendingclub.com. for

Operator

conference call. Thank all you today's your for conclude will That participation.

may You now disconnect lines. your

LendingClub (LC) 25 Oct 232023 Q3 Earnings call transcript