4Q of LendingClub to provide insight to consumers

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Headlines are all the rage on Wall Street – focused on the best and the best results, or the failures.

To this end, the The street is waiting LendingClub’s $ 77.7 million in revenue, and losses are expected at around 25 cents a share.

But dig a little deeper, and the data, earnings presentation and management commentary will be triangulated to give a more complete picture of the alternative lending company that is undertaking – through its acquisition of Radius Bancorp – a host of traditional banking features, brought together to form what the company billed as the first publicly traded neobank in the United States, focused on branchless digital services.

As stated earlier in this space, Anuj Nayar, Vice President and Head of Financial Health in the United States at Loan Club, said the combined business will launch a high-yield savings account; other new offerings could come into a cycle of what he said was “continuous underwriting” that would span the continuum of loan underwriting and repayment.

When the company releases its results on Wednesday (March 10) after the bell, we will be looking to see if there is a continuation of the trend that was seen in the last earnings report – which, of course, was for the third. quarter – where loan demand fell by 80%.

Macroeconomic concerns will likely be part of management’s comments – jobless claims are still high, and although vaccines are being rolled out, the pandemic continues to devastate families and businesses. Government stimulus measures remain at the forefront, and with recipients cashing in these payments, we can get further evidence of how they plan to take on more debt, or whether they actively intend to repay this. which is already in the books. CEO Scott Sanborn noted that US consumers were “behaving cautiously” (as he said on the last call).

Not unique

Suddenly, this week, the idea of ​​a platform buying a bank hardly seems to be a “one-off” proposition. Or maybe two: Square announced this month the launch of its industrial bank.

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

The deal gives SoFi a stepping stone towards pursuing a national banking charter, where, more specifically, SoFi will develop a national banking subsidiary (SoFi, for its part, merged with SPAC Social Capital earlier this year).

SoFi reportedly intends to invest $ 750 million for the bank’s capitalization (GPB has $ 150 million in assets), if it obtains a national banking charter and at least some of that money will be spent to digital efforts. SoFi already obtained preliminary approval for a national banking charter last year; purchasing the assets of the community bank would streamline the process – and secure loans with deposits rather than through third party activities.

SoFi, of course, has Galileo in place (via an acquisition in 2020), therefore has APIs that can help financial services companies leverage account, fund, and deposit functionality. The purchase of the community bank is therefore strategic.

As reported by CNBC on Tuesday, SoFi CEO Anthony Noto said the company, with a banking charter in hand, will offer relatively higher rates on cardholder 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 a 2.25% interest, ”Noto said. “But because we’re not a bank, we have to rely on someone else to provide us with a partnership that sets this interest rate for us, and so now our interest rate is very low because the federal funds rate fell to virtually zero. “

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

Higher rates are the attraction for savers on the platform, cross-selling the attraction for the platforms. Alternative lenders are (literally) betting on it.

Learn more about the earnings:

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