Banking

LendingClub says 2021 losses will be lower than expected

LendingClub Corp. is projecting that its full-year losses will be smaller than previously expected after loan growth rebounded in the first quarter.

The San Francisco company said Wednesday that it now expects a net loss in 2021 of between $142 million and $167 million, down from its earlier guidance of losses between $175 million and $200 million.

CEO Scott Sanborn did not provide a timeline for profitability, saying that the company is prioritizing higher long-term profits over quick returns. “We’re building this business for the long term,” he said during a call with analysts.

LendingClub, which has long operated an online platform where consumers who want to consolidate their credit-card debt get matched with lenders, now bills itself as the nation’s first digital marketplace bank. The company’s $185 million acquisition of Radius Bancorp closed earlier this year.

In the past, LendingClub relied heavily on upfront revenue by collecting origination fees on the consumer loans that it facilitated. It is now putting 15% to 25% of those loans on its balance sheet, a move it says will lead to longer term profits.

The company plans to sell the remaining 75% to 85% of its new loans in its online marketplace.

“For us there is obviously a tradeoff between the timing of the profits, versus the size of the eventual profits,” Sanborn said. “And we’re going for the latter.”

During the first quarter, LendingClub reported a net loss of $47.1 million, largely due to accounting costs and expenses related to the Radius acquisition.

Loan originations of $1.5 billion exceeded the guidance that the company gave three months earlier of $1.2 billion to $1.3 billion. Originations were down 41% from the first quarter of 2020, which largely preceded the pandemic, but were up 63% from the fourth quarter of last year.



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