LendingClub’s 4Q To Give Insight Into Consumer Appetite For Debt, Radius Roadmap


Headline numbers are all the rage on Wall Street — focused on top line and bottom line beats, or misses.

To that end, the Street is expecting $77.7 million for LendingClub’s top line, and losses are expected at about 25 cents a share.

But drill down a bit, and the data, earnings presentation and management commentary will triangulate to give a fuller picture of the alt lending company that is taking on — through its acquisition of Radius Bancorp — a slew of traditional banking characteristics, brought together to form what the firm has billed as the first publicly traded neobank in the U.S., focused on branchless, digital services.

As noted in this space previously, Anuj Nayar, vice president and U.S. financial health officer at LendingClub, has stated that the combined firm will launch a high yield savings account; other new offerings may come to populate a cycle of what he said would be “continuous underwriting” that would span the continuum of taking out and paying down loans.

When the company reports earnings on Wednesday (March 10) after the bell, we’ll look to see if there is a continuation of the trend that had been seen in the most recent earnings report — which of course, was for the third quarter — where loan demand snapped back by 80 percent.

Macro concerns will likely be part of management commentary — unemployment claims still are high, and though vaccines are being rolled out, the pandemic still is roiling families and businesses. Government stimulus remains front and center, and with recipients banking those payments, we may gain some incremental evidence of how they view taking on more debt, or if they actively intend to pay down what’s already on the books.  CEO Scott Sanborn has noted that U.S. consumers have been “behaving prudently” (as he stated in the last call).

No One-Off

Suddenly, this week, the notion of a platform buying a bank hardly seems like a “one-off” proposition. Or maybe two-off: Square said this month that it launched its industrial bank.

On Tuesday (March 9) came the news that startup Social Finance (SoFi) is acquiring Golden Pacific Bancorp (GPB), a community bank in Sacramento, California, for $22.3 million.

The deal gives SoFi a springboard toward pursuing a national bank charter, where, specifically, SoFi will develop a national bank subsidiary (SoFi, for its part, merged with SPAC Social Capital earlier this year).

SoFi is reportedly planning to invest $750 million for the bank’s capitalization (GPB has $150 million in assets), if it gets a national bank charter and at least some of that money will be steered toward digital efforts. SoFi already got preliminary approval for a national bank charter last year; buying the community bank assets would streamline the process — and back loans with deposits rather than through third-party activity.

SoFi, of course has Galileo in place (through a 2020 acquisition), thus has APIs that can help financial services firms tap into account, funding and deposit functionalities.  The community bank buy, then, is a strategic one.

As reported by CNBC Tuesday, SoFi CEO Anthony Noto said the firm, with banking charter in hand, will offer relatively higher rates on holders’ accounts.

“When we first launched SoFi Money [in 2019], we were able to launch with a high interest rate. We had a partnership that allowed us to offer 2.25% interest,” Noto said. “But because we’re not a bank, we have to rely on someone else to provide us a partnership that sets that interest rate for us, and so now our interest rate is very low because the federal funds rate has dropped to essentially zero.”

He told the site that “when we have a bank charter, we’ll be able to determine what interest rate that we want to provide and not be dependent on anyone else.”

Higher rates are the lure for savers on the platform, cross-selling the lure for the platforms. The alt lenders are (literally) banking on it.


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