LendingClub Corp (NYSE:LC), the world’s largest online marketplace connecting borrowers and investors, announced today that the board of directors named Scott Sanborn as Lending Club’s CEO and President. Separately, Hans Morris, who had assumed the temporary role of Executive Chairman, has assumed the role of Chairman of the Board of Directors.
“Scott and the management team have demonstrated they can lead Lending Club through this turbulent time,” said Mr. Morris. “The board has decided this is the right time to hand full responsibility over to Scott in his role as the CEO. With today’s announcements and Scott at the helm, Lending Club is now in a position to move forward.”
“We have demonstrated the power of the Lending Club marketplace model to generate attractive, risk adjusted returns to investors,” said Lending Club CEO and President Scott Sanborn. “We are working closely with investors to rebuild confidence and are encouraged to see them returning to the platform.”
Annual Stockholder Meeting Topics
In addition to the formal business related to its Annual Stockholder Meeting (“Annual Meeting”), Lending Club will be addressing the following topics during its Annual Meeting call and webcast which occurs today at 11:00 a.m. Pacific Time (Tuesday, June 28, 2016, – see webcast and conference call information below):
- CEO and Independent Chairman Appointments – Lending Club announced that the company’s Board of Directors has appointed Scott Sanborn as CEO and President and that Hans Morris has assumed the role of independent Chairman of the Board.
- Substantial Conclusion of Internal Review, Two Items Identified – The first item related to adjustments to the valuation of assets held by six private funds managed by LC Advisors (“LCA”) that were not consistent with generally accepted accounting principles and impacted net asset values and monthly return figures for the LCA funds. In response, Lending Club and LCA engaged an independent valuation firm, with specific expertise in the valuation of marketplace assets, to provide valuation services to the LCA funds, and Lending Club and LCA have made several changes to improve governance of the funds, including establishing a majority independent Governing Board. The second item related to loans made in December 2009 to the company’s former CEO, and three of his family members.
- Q2 Origination Volume, Incentives and Certain Expenses – Investors continue to return to the Lending Club platform to invest in loans since pausing in early May. Based on quarter to date originations, the company expects loan originations in the second quarter of 2016 to be roughly one third lower than in the first quarter of 2016. In addition, the company expects to report investor incentives of roughly $9 million, $15 – $20 million of additional expenses related to employee retention, employee severance, advisory relationships, board review, remediation and due diligence activities, and a goodwill write-down of between $20 – $40 million related to slower growth expectations for Springstone, subject to finalization of this analysis.
- Organizational Changes – In light of lower loan volumes in the second quarter and recognizing that fully restoring investor confidence may take time, the company has decided to reduce 179 positions in the organization.
- Progress on Controls, Compliance and Governance – Over the last seven weeks, Lending Club initiated a comprehensive review of its controls, compliance and governance and has taken actions that included implementing KPMG best practice recommendations; increasing testing of data changes; increasing compliance and oversight resources; aligning business and control functions into a better risk management structure; and retraining employees on code of conduct and ethics and reinforcing the importance of a high compliance culture.
- Key Second Half of 2016 Drivers – In an effort to reignite the platform, Lending Club provided several investor incentives (to both retail and institutional investors) most of which are expected to continue into the third quarter. The company expects to transition away from these incentives in the fourth quarter and plans to resume revenue and EBITDA growth in the first half of 2017.
- New Policies on Anti-Pledging and Ecosystem Investing – Lending Club’s Board has established new policies prohibiting pledging of Lending Club shares, and prohibiting the company from making investments in ecosystem partners that invest in Lending Club loans. (Original Source)
Shares of LendingClub are up over 3% to $4.44 in pre-market trading. LC has a 1-year high of $15.14 and a 1-year low of $3.44. The stock’s 50-day moving average is $4.44 and its 200-day moving average is $7.59.
On the ratings front, LendingClub has been the subject of a number of recent research reports. In a report issued on June 21, Goldman Sachs analyst Heath Terry maintained a Hold rating on LC, with a price target of $4.30, which represents a slight downside potential from current levels. Separately, on June 16, FBR’s Bob Ramsey reiterated a Hold rating on the stock and has a price target of $4.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Heath Terry and Bob Ramsey have a total average return of 17.8% and -8.6% respectively. Terry has a success rate of 60.0% and is ranked #42 out of 3967 analysts, while Ramsey has a success rate of 36.5% and is ranked #3675.
Overall, 2 research analysts have rated the stock with a Sell rating, 10 research analysts have assigned a Hold rating and one research analyst has given a a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $5.83 which is 35.6% above where the stock closed yesterday.
LendingClub Corp. operates as an online credit marketplace. It engages in the provision of facilitating personal loans, business loans, and financing for elective medical procedures.