LendingClub saw its third-quarter loan originations and net revenue grow substantially from second-quarter lows, although both metrics declined year-on-year.
The US peer-to-peer lending platform, which is closing to retail investors at the end of the year, reported an 83 per cent year-on-year decline in loan originations to reach $584.1m (£446.7m) in the third quarter of 2020. However, this was a 79 per cent increase from $325.8m in the second quarter.
Net revenue in the third quarter was $74.7m, down 64 per cent compared to the same period in 2019, but a 70 per cent improvement from $43.9m in the previous quarter.
The third-quarter update also revealed that 217,000 of LendingClub’s borrowers have benefited from forbearance relief or hardship plans from the platform.
Forbearance usage is tapering off, with new requests down significantly and approximately two per cent of the platform’s loans remaining on these plans at the end of the third quarter.
LendingClub said it has preserved liquidity, growing cash and cash equivalents to $445.2m in the third quarter from $338.4m at the end of the second quarter. This was completed via cashflows from operations and additional loan sales.
During July, August and September, the platform said it also fully paid off a $70m revolving credit facility and paid down other debt facilities by approximately $290m.
The lender said this significantly reduces leverage and further strengthens its balance sheet, which positions it well for completing the acquisition of US digital lender Radius and for navigating through the current economic environment.
LendingClub said it is continuing to work with regulators as part of the process to becoming a bank holding company after entering into a plan to acquire Radius Bancorp in February in a cash-and-stock deal valued at $185m.
“While there is uncertainty about the economic outlook in the near-term, we are managing LendingClub for long-term success and the actions we are taking to strengthen our business post-Covid are bearing fruit,” said Scott Sanborn, chief executive of LendingClub.
“Our loans are performing well, investor confidence is returning, we have improved cost efficiency, and have built a substantial amount of liquidity as we work towards completing the acquisition of Radius, which remains our top strategic priority.”
“As anticipated, we are seeing a recovery in originations from a low point in the second quarter and a corresponding growth in revenue,” said Tom Casey, chief financial officer at LendingClub.
“We also ended the quarter with a substantial increase in cash and cash equivalents as we executed on a strategic decision to sell loans and generate additional liquidity while paying down a significant amount of debt and de-risking the balance sheet.”