Credit quality at LendingClub remained better than the industry, with delinquency rates remaining below pre-pandemic levels.

“Our strong execution, marketplace bank model, member and data advantages, and our continued focus on prudent underwriting have all contributed to an incredible first half of the year with records set for both revenue and profitability,” said Scott Sanborn, LendingClub CEO, when announcing LendingClub’s (NYSE: LC) Second Quarter results. “Despite the more challenging economic backdrop and increased uncertainty, we are well positioned to navigate through this dynamic environment.”

Key lending metrics:

• LendingClub Bank’s net interest margin expanded to 8.7% from 5.5% a year earlier, primarily reflecting growth in consumer loans which generate a higher yield.
• Total loans held for investment (excluding PPP) grew 106% from June 30, 2021, reflecting growth in personal loan originations and an increase in originations retained in the held for investment portfolio.
• Credit quality of the company’s held for investment personal loan portfolio also remained strong reflecting the prime credit profile of its borrowers with an average FICO of 730.
• Provision for credit losses increased to $70.6 million from $34.6 million in the second quarter of 2021, primarily reflecting growth of 106% in loans held for investment (excluding PPP) from June 30, 2021.

From The LendingClub Earnings Call

• “Our digital marketplace bank model is proving to be resilient and we are reiterating our guidance for the full-year.
• The fed has become more hawkish in their battle with inflation, which has implications for our business and for the economy overall.
• Credit card balances are now back above pre pandemic levels, and credit card rates are rising. This is driving strong borrower demand for personal loans.
• Our loans are currently performing very well on both an absolute and relative basis.
• We are primarily focused on time borrowers who’ve proven to be more resilient through economic cycles. Our core consumer has an average income of 112,000 and a FICO score of 7.21.
• In a bull market, we can leverage the capitalized advantages of our pure FinTech to seize market share. And in a bear market, we can lean on the funding stability and advantages of a bank to drive resiliency and profitability.
• Average deposits increased 79% year over year, helping support strong growth in our health investment portfolio. The advantage of having access to stable deposit funding has become even more apparent as interest rates have risen rapidly in a short period of time.
• Outlook for the year: We are maintaining our guidance of revenues of $1.15 billion to $1.25 billion and earnings of $145 million to $165 million.”

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