Lending Club CEO bullish as Q4 losses widen

By Daniel Lanyon on Wednesday 15 February 2017

Alternative Lending

The beleaguered firm’s President and CEO Scott Sanborn says despite Lending Club's total Q4 losses increasing last year compared to 2015, this year should see an improvement in the numbers.

Marketplace lending giant Lending Club saw its third consecutive year of losses in 2016 as the platform saw a corporate governance scandal prompt the exit of its founder and CEO as well as engulf the broader alternative finance industry.

The exit of Renaud Laplanche in May last year saw many question the future of online lending as volumes retreat, particularly from institutional investors – one of whom had been the presumptive victim of the scandal. Lending Club’s new CEO Scott Sanborn took over in June embarking on a fight back from the scandal that saw a fleet of top level hires, discounts for investors as well the firm’s first venture into the securitization market.

While loan originations in the fourth quarter of 2016 were $1.99bn, up 1 per cent compared to the $1.97bn reported in the third quarter of 2016, they were down 23 per cent compared to $2.58bn in the same quarter in 2015.

The firm saw net operating revenue for Q4 2016 down 4 per cent compared to the same period in 2015. This amounted to a GAAP net loss was $32.3m for the fourth quarter of 2016, improving by $4.2m compared to third quarter of 2016 and down compared to net income of $4.6m in the same quarter last year.

Sanborn says the fourth quarter net loss benefited sequentially from higher revenue but was offset by higher marketing expenses and the quarterly impact of the previously disclosed acceleration of the first quarter of 2017 stock grant.

“2016 was a very significant year for Lending Club. We were tested and we showed great resiliency,” he said.

“Q4 in particular was pivotal. Our objective was to deliver close to $2bn in originations without the use of an incentive program and with banks representing 25 per cent of our funding mix, while also working through remaining remediation items stemming from May events”

The firm said in a statement: “The results for the fourth quarter include approximately $16m of expenses from events related to our board review disclosure earlier in 2016, including employee retention, legal, audit, and other professional service fees.”

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