LendingClub posts bigger-than-expected loss; CFO resigns

By Sudarshan Varadhan and Heather Somerville

(Reuters) – LendingClub Corp, which matches borrowers and lenders online, on Monday posted a bigger-than-expected quarterly loss as growth slowed, and said its chief financial officer had resigned.

CFO Carrie Dolan is the first high-profile exit after the company’s founder and CEO, Renauld Laplanche, was ousted in May following an internal review over loan irregularities..

LendingClub’s shares were down about 1.7 percent at $4.71 in after-market trading on Monday. The shares had fallen 33 percent since Laplanche’s departure through Monday’s close.

Loan originations, a key metric indicating the volume of loans processed by the company, rose only 2.3 percent in the second quarter ended June 30, a steep drop from the 68 percent growth in the preceding quarter and 90 percent in the year-earlier quarter.

The company said it expects loan originations to be flat over the next two quarters.

The fall reflects the alternative lending industry’s struggles with faltering investor appetite for loans, rising defaults and the possibility of heightened regulation.

For the third quarter, the company expects operating revenue to range between $95 million to $105 million, below analysts’ current average estimate of $106.1 million, according to Thomson Reuters I/B/E/S.

LendingClub said its second-quarter net loss widened to $81.4 million, or 21 cents per share, from a loss of $4.1 million, or 1 cent per share, a year earlier.

Excluding items, LendingClub lost 9 cents per share, much bigger than the average analyst estimate of 2 cents, according to Thomson Reuters I/B/E/S.

Operating revenue rose 6.5 percent to $102.4 million.

Operating costs rose 87.5 percent to $188.7 million, as the company took an impairment charge and paid incentives to investors.

The company named Bradley Coleman as interim CFO while it seeks a replacement for Dolan, it said in a statement.

LendingClub also said it has appointed Timothy Mayopoulos, president and CEO of Fannie Mae, to its board as an independent director.

Also on Monday, fellow online lender On Deck Capital Inc reported a smaller-than-expected quarterly loss and said origination volume rose 41 percent in the second quarter.

(Reporting by Sudarshan Varadhan and Nikhil Subba in Bengaluru and Heather Somerville in San Francisco; Editing by Richard Chang and Matthew Lewis)