00:00So set the scene for us here, because as I mentioned, you have seen some cracks start to emerge, a lot of concerns as well.
00:07Give us a read on the type of client that you serve and what the current state of play looks like.
00:11Yeah, and what I distinguish is cracks in the job market, not cracks in credit.
00:15You've seen a lot of the private credit people have reported, most of the banks and finance companies have reported,
00:20and the consumer is showing themselves to be very, very resilient.
00:23Certainly the consumer we serve, which is they represent people with an average income of about $125,000 who make heavy use of credit going with their high income.
00:36And we've seen very, very stable performance for several years now.
00:40Well, as I mentioned, you recently launched home improvement lending.
00:44This is interesting because it's not mortgages that you're providing here, but help me understand.
00:49So if I wanted to add a debt to my home or something like that, Lending Club is now in a position to extend a loan to me.
00:56Not that I have a home to add a debt to, but anyway.
00:58Yeah, that's right.
00:59So, you know, an unsecured personal loan you can use for anything.
01:02You know, one of the core use cases we offer is people to pay down their credit card debt, which is at a record high.
01:07But people also use it to make purchases, large ticket purchases.
01:11We're already in a B2B2C space where we help people afford, you know, elective treatments like fertility treatments or braces for their kids.
01:19And so this is a natural extension of our underwriting capabilities to this category.
01:24We've acquired a company called Mosaic, which is a code base and a team.
01:30And so we're going to be basically applying our leading underwriting capabilities to this use case so that, you know, when you're in the process of, you know, renovating your home, you basically have access to instant credit.
01:42Did you have to, like, make improvements to your underwriting procedures as you took on this new business?
01:47Yeah, they require a slightly different, you know, these are larger loans, which we make today, but they also require the ability to disperse it in stages and to be able to disperse it to multiple providers.
01:58So that's some of the feature and functionality that we're adding.
02:02Now, just to get a feel for what your customers are doing, are you finding that most of the borrowing that they're doing and, in effect, the money that they're, the things that they're spending that on,
02:13is it more on discretionary type things or things that are a little bit more essential?
02:17And that could even include something like, like I said, braces for kids is basically an obsessive.
02:21Yeah, so our customers are very deliberate, responsible borrowers.
02:25And, you know, if you think about the income split across the U.S. census, really high income people, they can pay cash.
02:33Lower income people don't have as much access to credit.
02:36There's this, what we call middle majority that we serve that make heavy, heavy use of credit.
02:40They over-index, they're more likely than average to have student loan, car loan, you know, unsecured loan, credit cards.
02:48And what, you know, one of the largest use cases for us is actually people who put an expense, you know,
02:54the dominant way people access unsecured credit is a credit card.
02:57Interest rates are currently at 23% if you're carrying a balance, which is the highest rate it's been in history.
03:03It's nearly doubled over the last two decades.
03:05So we find those people and say, hey, you have a loan, it's not a good one, do this instead.
03:11We save them about 30% off their interest rate.
03:14Do you think that the economic conditions, assuming that they are weakening, as some of the data suggests,
03:17does that help your business, meaning does it drive more people to you, or do you have to retrench too?
03:21Well, our, you know, our ability to provide savings is helpful in any environment.
03:27So we certainly see, you know, when we can, we can knock down their payment pretty materially, save thousands of dollars in interest.
03:34So it works in any environment.
03:36And I'd say right now the demand is high just because those credit card balances are high and those interest rates are very high.
03:43Well, that's something I was wondering about because, Scott, if I take a look at your resume, so to speak,
03:47I mean, you've been at LendingClub since 2010, you were appointed CEO in 2016,
03:52you've seen a number of different interest rate cycles at this point.
03:56So now that we do have interest rates actually coming down from a pretty lofty peak relative to at least recent history,
04:03I mean, how do you see that evolving in 2026 as this rate-cutting cycle really gets underway?
04:09Yeah, it's a positive for us and for our customers.
04:12It's a tailwind.
04:12And it allows, you know, it triggers, it wakes people up to the fact that rates might be moving.
04:17It makes them aware that there could be the potential for savings.
04:20And when they go online to look for savings, they find us.
04:24So that's a positive.
04:25It will help boost our margins, net interest margin.
04:28We also, in addition to the bank balance sheet, we also have a marketplace business where we sell loans to banks and private credit.
04:35And so as the cost of capital comes down for them, that's also a positive in terms of boosting the sales prices on the loans.
04:42Yeah, and we should point out, I mean, you're here in New York for an Investor Day.
04:45Investors are receptive to the message of the trade.
04:47Yeah, they sure were.
04:48The stock ended up 8% yesterday.
04:50We were able to really lay out, for the first time since acquiring the bank, kind of how our strategic potential has evolved.
04:57We were able to really lay out, for the first time since acquiring the bank, kind of how our strategic potential has evolved.
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