LendingClub Corp. plans to cut 14% of its employees and take pretax charges of about $5.7 million as demand for the company’s loans declines.
(Bloomberg) — LendingClub Corp. plans to cut 14% of its employees and take pretax charges of about $5.7 million as demand for the company’s loans declines.
The cuts will reduce the San Francisco-based company’s workforce by 225 employees, and trim compensation and benefits by about $25 million to $30 million this year on an annualized basis, the lender said in a statement Thursday. About $4.4 million of the charges will be in results for the fourth quarter of 2022.
“These measures enable us to more closely align our expense structure to loan volume and revenue, while ensuring effective execution against our strategic priorities and long-term vision,” Chief Executive Officer Scott Sanborn said in the statement.
LendingClub is different from many other financial-technology lenders in that it has a bank charter, the result of acquiring Radius Bancorp for $185 million. Some other fintechs, such as SoFi Technologies Inc., have followed suit, distinguishing them from the bevy of nonbank lenders.
Many fintechs are now struggling as the cost of borrowing has soared, cutting into consumer demand for debt, with online mortgage lenders in particular feeling the squeeze of the Federal Reserve’s interest-rate hikes on the housing market.
The company originated $2.5 billion of loans in the fourth quarter, with revenue of $260 million to $263 million for the period, according to preliminary results released Thursday. For the full 2022 fiscal year, revenue is expected to total $1.185 billion to $1.188 billion. Fourth-quarter and full-year earnings are scheduled to be announced Jan. 25.
LendingClub, which bills itself as one of the US’s leading providers of personal loans, said last month that it agreed to buy a $1.05 billion MUFG Union Bank loan portfolio. Each of the loans in the personal-loan portfolio, which are being serviced by LendingClub, was originated through LendingClub’s marketplace. The purchase is intended to support LendingClub’s revenue stream from recurring net interest income.
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