LendingClub (NYSE: LC) shares saw an uptick today following the release of its first-quarter earnings report, which surpassed expectations, particularly on the bottom line. As of 11:48 a.m. ET Wednesday, the stock had risen by 12.7%.
LendingClub shines in Q1
In a challenging lending landscape, LendingClub showcased a strong performance with its balance sheet expanding from $8.8 billion to $9.2 billion compared to the previous quarter. Additionally, the book value per share increased from $11.34 to $11.40, indicating that the stock is still trading at a considerable discount to its share price. Notably, the provision for credit losses decreased from $41.9 million to $31.9 million, signaling a reduction in the riskiness of its loan portfolio. Despite flat loan originations at $1.6 billion from the previous quarter, the company demonstrated resilience.
Financially, LendingClub reported a 26.5% decline in revenue from the same quarter last year, amounting to $180.7 million. However, the company significantly slashed its credit loss provision from the previous year. It closed the quarter with earnings per share of $0.11, down from $0.13 in the prior-year quarter but surpassing the $0.09 per share reported in the fourth quarter of 2023. This performance exceeded analyst expectations, with earnings per share far surpassing the consensus of $0.03.
CEO Scott Sanborn remarked, “Our operating discipline, strong credit performance, and continued innovation are resulting in a sustainable operating rhythm that is delivering real value to our members.”
What’s next for LendingClub
LendingClub’s second-quarter guidance anticipates loan originations in the range of $1.6 billion to $1.8 billion, indicating an improvement over the first quarter. However, the company forecasts a substantial decline in pre-provision net revenue, expected to be between $30 million to $40 million compared to the first quarter.
Persistently elevated interest rates have presented challenges for operators like LendingClub in recent quarters. Despite this, investors can find reassurance in the company’s performance surpassing expectations and its trading at a discount to book value. Over time, this discount may narrow if the business effectively executes its strategies.
