Lending Club CFO Quits; Firm Posts $81M Loss
Lending Club announced the resignation of its chief financial officer while reporting an $81.4 million quarterly loss due largely to fallout from the scandal that rocked the firm in May.
The beleaguered marketplace lender has been seeking to limit the damage from the ouster of Chief Executive Officer Renaud Laplanche in May. But the departure of CFO Carrie Dolan, who had been with the company for six years, is yet another blow.
San Francisco-based Lending Club said in a press release that Dolan first broached the idea of leaving early this year, but after Laplanche's hasty exit, she was asked to postpone her plans.
The scandal-plagued marketplace lender is set to report earnings Monday, and the results aren't likely to be pretty. The big question going forward is how quickly can it reverse the damage and win back the trust of investors.August 5
Following the scandal-tinged departure of CEO Renaud Laplanche, the company is contemplating drastic steps to restore the confidence of loan buyers. Scenarios that would have been far-fetched a short time ago such as diluting shareholders and funding loans off its own balance sheet are now under consideration.May 17
Seven weeks into a crisis precipitated by the ouster of the company's longtime CEO, the embattled marketplace lender is trying to convince shareholders that it is turning a corner.June 28
Dolan is leaving to pursue a new opportunity, according to the company.
"I remain a passionate believer in this business model and this company, and it has been a deeply rewarding experience to help build Lending Club from 40 employees to over 1,500," Dolan said in the press release.
Her job will be filled on an interim basis by Bradley Coleman, the company's corporate comptroller, Lending Club stated. The firm also said that it has hired a global executive search firm to manage the recruitment of a new CFO.
During the second quarter, Lending Club facilitated $1.96 billion in loans, which was up 2% from the same period a year earlier, but down by 29% from the first quarter of 2016.
Lending Club uses an online platform to match consumers who are looking to borrow, often to consolidate their credit card debt, with loan investors. The company generates most of its revenue from origination fees, and its business model depends on quickly selling its loans to investors so it can originate new ones.
The firm's $81.4 million loss compared with a $4.1 million loss in the second quarter of 2015 and a $4.1 million profit in the first quarter of this year.
Lending Club's results were hurt by $14.9 million spent on professional service fees related to the events that led to Laplanche's departure; $14 million in incentives paid to loan buyers in an effort to persuade them to continue investing in the wake of the scandal; and $6.5 million in severance costs and an employee retention program.
"Our efforts to reengage investors are working, with fifteen or our top twenty investors back on the platform today," Lending Club CEO Scott Sanborn said in a press release Monday. "Despite the unusual disruption to our supply of capital in May, we facilitated nearly $2 billion of loans to nearly 170,000 borrowers."
Lending Club also said Monday that Sanborn, who was elevated to the job in the wake of Laplanche's exit, has joined the company's board.
In addition, Fannie Mae CEO Timothy Mayopolous joined the Lending Club board as an independent director, the company stated.
Lending Club announced in June that it was laying off 179 employees, about 12% of its workforce.
Laplanche, the company's founder and longtime CEO, was forced out on May 9 after the firm's board discovered that executives had falsified loan data in order to fit a buyer's specifications.