LendingClub Corporation

Hello, everyone. Thank you for attending today's Lending Club fourth quarter 2023 earnings conference call. My name is Sierra, and I will be your moderator today. All lines will be muted during the presentation portion of the call. We'll have an opportunity for questions and answers at the end. If you would like to ask a question, press star 1 on your telephone keypad. I would now like to pass the conference over to our host, Artem Naliveko, Head of Investor Relations.

Thank you and good afternoon. Welcome to LendingClub's fourth quarter and full year 2023 earnings conference call. Joining me today to talk about our results are Scott Sanborn, CEO, and Drew Laben, CFO. You can find the presentation accompanying our earnings release on the investor relations section of our website. On the call, in addition to questions from analysts, we will also be answering some of the questions that were submitted for consideration via email. Our remarks today will include forward-looking statements Factors that could cause these results to differ materially are described in today's press release and presentation. Any forward looking statements that we make on this call are based on current expectations and assumptions. And we undertake no obligation to update these statements as a result of new information or future events. Our remarks also include non gap measures relating to our performance. You can find more information on our use of non-GAAP measures and a reconciliation to the most directly comparable GAAP measures in today's earnings release and presentation. And now, I'd like to turn the call over to Scott.

All right. Thank you, Artem. Welcome, everyone. We're pleased with how we closed out the year, delivering an 8% increase in originations quarter on quarter, supported by a 21% increase in marketplace loans. This growth in originations, which is our first since the Fed began rapidly increasing rates, was driven by marketplace demand for our new structured certificates program. These results are a clear indication that our strategy is working and that we're finding equilibrium in this current high rate environment. Pre-provision net revenue was 56 million, thanks to disciplined expense management. And importantly, we delivered another quarter of profitability doubling net income quarter over quarter to 10 million. Turning to credit, on page eight of our earnings presentation, you'll see that we've delivered three years of lower delinquencies compared to our competitive set. Of note, the most recent data point shows roughly 40% lower delinquencies across all prime FICO segments, which is key to us delivering strong returns for ourselves and our marketplace investors. These results are a testament to the talent of our team, the capabilities of our platform, and our strong data advantage derived from over 90 billion in originations issued through multiple credit environments over the past 16 years. Our current originations are focused on prime consumers, with loans coming onto our balance sheet having a weighted average FICO of around 750. Stepping back, We're only a few days away from celebrating the third anniversary of acquiring our national bank charter. We have worked diligently to address and satisfy the requirements of the operating agreement we entered into as a new bank. And we believe we're well positioned to move forward, which will be an important milestone in our evolution and maturation. Since acquiring the bank, we have fundamentally transformed our business and financial profile. We took over the origination of our own loans, introduced and scaled a full set of award-winning banking services, evolved our mobile technology foundation, introduced new bank-enabled structures to enhance the marketplace, built a resilient balance sheet and corresponding income stream, and have remained durably profitable. For perspective, in the last three years, we have tripled the size of our balance sheet to almost $9 billion at year end, nearly quadrupled our deposit base to $7.4 billion at year end, with 87% of those deposits fully FDIC insured, more than tripled quarterly net interest income, a recurring and resilient revenue stream, and nearly doubled our tangible book value per share to $10.54 as we exited the year. We have also made progress towards a differentiated, multi-product, mobile-first membership experience. Following the RADIUS acquisition, we began building the systems and technical infrastructure necessary to take deposits at scale and support a national digital platform, a process that took some time but enabled us to build our balance sheet, sustain profitability, and enable future mobile experiences. In December, we introduced mobile loan servicing through the app, giving our borrowers the ability to make payments, view progress, change due dates, and more. While we are in beta and have not yet promoted the existence of the app to our loan customers, 20% of our visits from recent personal loan customers are coming through the app. And these users are visiting us at a higher frequency, which bodes well for driving future engagement. We have also launched the first phase of what will ultimately be a comprehensive debt monitoring and management tool. While in early stages, This will ultimately give members a way to track, prioritize, and optimize debt payments using new information and tools. While the recent reduction in force has us proceeding with application development at a more measured pace than we'd like, we continue to make progress and will provide updates as appropriate. At the same time, we've been preparing our personal loans franchise to meet the historic refinance opportunity ahead by further improving and Differentiating Lending Club with two experiences unique to us. We're currently testing and reading credit performance on the first generation of a line of credit product that allows approved members to easily sweep accumulated credit card balances into fully amortizing payment plans. We'll be gaining important insight that will benefit us in developing future revolving products down the road. We also recently launched the option for qualified members to top up an existing personal loan For example, to manage newly accumulated debt. Members can easily secure additional funds while maintaining one single payment, and Lending Club earns an origination fee on the incremental loan amount. Together, these efforts are further differentiating our personal loans franchise and creating a powerful entry point into our broader Lending Club offerings. In closing, I'm proud of how we continue to effectively execute in a challenging environment. We are quickly and successfully innovating to meet evolving opportunities. We continue to outperform on credit, and we remain consistently profitable. Importantly, we also continue to produce real value for our members, saving them on their cost of credit, improving their credit profile, and helping them earn more on what they save. For that, I want to thank our employees who have remained focused and innovative throughout a turbulent year. I look forward to working together in the year ahead to capture the historic opportunity in front of us. And with that, I'll turn it over to you, Drew.