- Supporting data: LendingClub reported fourth-quarter net income of $41.6 million, surpassing the analyst consensus of $0.33 per share.
- Key insight: The bank is switching to Fair Value Option accounting, which removes the upfront provision for credit losses required under the previous standard.
- What's at stake: The accounting change introduces more volatility, as loan values will now drop immediately if the market views them as risky.
Overview bullets generated by AI with editorial review
LendingClub reported fourth-quarter results on Wednesday that surpassed analyst expectations and forecasted continued profit growth in 2026, aided by a shift in accounting methodology and expansion into the home improvement lending market.
However, the accounting noise led to a 14% drop in the company's stock price — a dip that analysts chalked up to misplaced expectations related to the book changes.
The San Francisco-based digital bank's results validate its hybrid "marketplace bank" model, which combines a fintech's digital reach with a bank's stable funding, according to the analysts.
By retaining loans on its balance sheet while selling others to investors, LendingClub continues to navigate a complex interest rate environment effectively, according to company leadership.
Beats across the board
LendingClub beat analyst expectations across the board in the fourth quarter.
The bank reported Pre-Provision Net Revenue (PPNR) of $97.2 million, surpassing the consensus mean of $96.07 million derived from six analyst estimates collected by S&P Capital IQ. This figure also landed inside the company's own guidance range of $90 million to $100 million.
For the quarter, LendingClub reported net income of $41.6 million, or $0.35 per diluted share, beating the analyst consensus of $0.33 per share.
Total net revenue reached $266.5 million, topping the $261.99 million anticipated by analysts.
Full-year results also exceeded expectations.
The bank generated $135.7 million in net income for 2025, beating the consensus estimate of $133 million. Loan originations for the fourth quarter climbed to $2.6 billion, meeting management's guidance and representing a 40% increase year-over-year.
"Our results are validating our strategy and demonstrating our commitment to deliver a combination of growth, profitability and shareholder returns," said Scott Sanborn, CEO of LendingClub, during the Wednesday afternoon earnings call.
Accounting shift aids 2026 outlook
Management forecasted continued growth in 2026 above what had previously analysts estimated, likely because analysts had not priced into their estimates accounting changes LendingClub announced Wednesday.
For the first quarter, LendingClub expects diluted earnings per share between $0.34 and $0.39, well above the analyst consensus of $0.31
The company also guided for full-year 2026 EPS of $1.65 to $1.80, above the consensus expectation of $1.63.
A major driver behind this outlook seems to be the bank's decision to adopt the Fair Value Option (FVO) accounting method for all new loans beginning Jan. 1, 2026.
This change eliminates the upfront provision for credit losses required under its previous Current Expected Credit Losses (CECL) standard for held loans, aligning the timing of revenue recognition with losses.
"This change is about simplifying our financials by better aligning the timing of revenue recognition and losses and creating a consistent accounting framework across our marketplace and bank businesses," said Drew LaBenne, CFO of LendingClub, during the earnings call.
The change also provides an accounting windfall LendingClub can use for aggressive marketing to acquire new customers.
What the new accounting means
Under LendingClub's old accounting regime (CECL), when it originated a loan that it planned to keep on its own books (rather than sell on the marketplace), it had to estimate all the money it expected to lose on that loan over its entire life and book that loss as an expense immediately.
This creates a growth penalty. Under CECL, if LendingClub issues a large loan today, it hasn't earned any interest yet, but it has to record a big expense instantly.
The faster the company grows, the lower its current earnings look, even if the loans are profitable in the long run.
Under the new rule (FVO), the bank values the loan based on what it is worth in the market right now. This has the upside of not needing to book the lifetime expected losses upfront.
Instead, the loan's value is adjusted over time. So, the tradeoff is that, if the market changes its mind to view the loan as risky, the value of the loan drops, directly impacting LendingClub's balance sheet.
The new rule introduces more volatility to the company's reported results.
Marketplace loans are already treated closer to fair value, so moving the bank's held loans to FVO makes the accounting consistent across the whole company, according to LaBenne.
Analysts dismiss stock price dip
Despite the earnings beat, LendingClub shares fell 14% between market open Wednesday and midday Thursday, following the earnings results.
David Scharf, an analyst with Citizens JMP Securities, described the market reaction as a result of "misplaced expectations" regarding the day one impact of the accounting switch and said that quarterly volatility around the company's earnings release "is almost a rite of passage," referring to the regularity with which LendingClub's stock price dips during its earnings releases.
Scharf noted that some investors likely anticipated a "material positive mark up on the portfolio" that would mark the loans above par, providing an immediate one-time boost to earnings and book value.
"Instead of correctly modeling very close to par... investors were likely disappointed by management's initial 2026 earnings guide that did not include a one-time boost," Scharf wrote in a Thursday note.
He characterized the sell-off as a "temporary (and opportunistic) mismatch" rather than a shift in the business's quality, calling the stock a buying opportunity.
Tim Switzer, an analyst at Keefe, Bruyette & Woods, similarly dismissed the reaction as "accounting noise."
While the bank's 2026 guidance surpassed the official consensus, Switzer noted that it fell short of elevated "whisper" numbers. He argues that the street overestimated the immediate positive impact of the accounting switch, failing to account for the technical volatility it introduces in the near term.
Giuliano Bologna, an analyst at Compass Point, pinpointed a specific source of investor anxiety: the bank's projection of approximately $80 million in net fair value adjustment expenses for the first quarter of 2026. This figure is roughly double the level seen in the fourth quarter of 2025.
Bologna explained that this increase is driven by the accounting change and the bank holding more major purchase finance loans, which carry lower initial fair values, on its books. He emphasized that these are technical headwinds that do not impact the long-term earnings upside.
Switzer advised clients to look past the complexity.
"We believe investors should focus on the company's fundamentals rather than accounting adjustments, particularly the accelerating originations and strong [net investment income] growth," he wrote.
Analysts probe expenses and accounting mechanics
During the call, analysts focused heavily on the implications of the accounting shift and rising expenses.
Tim Switzer, an analyst with Keefe, Bruyette & Woods, questioned LendingClub's increase in marketing spend and its potential impact on the bank's efficiency ratio. LendingClub reported marketing expenses of $45.7 million in the fourth quarter of 2025, a 95% jump from $23.4 million in the same quarter the year prior
LaBenne responded that the bank is investing now in marketing channels such as paid social and TV and staffing for the new home improvement lending vertical and expecting returns in the second half of 2026.
While these investments may temporarily elevate the efficiency ratio, the accounting shift provides a "tailwind" that supports these expenditures, LaBenne said.
Other analysts, including Vincent Caintic of BTIG and John Hecht of Jefferies, sought clarity on the discount rates used for the new fair value calculations and how they correlate with credit performance.
LaBenne said that while the discount rate will vary based on loan mix, the underlying credit performance remains stable as net charge-offs on vintage loans continue to perform well.
Leadership focus and recent developments
Company leadership used the call to highlight that LendingClub is expanding into the $500 billion home improvement market.
This move follows a November announcement regarding a partnership with Wisetack, which offers financing on large purchases from home service businesses (e.g. renovators, cleaners, repairs, and landscaping), and the acquisition of technology assets from Mosaic, a bankrupted fintech lender that provided loans for home solar installations.
"Our significant advantages in funding reliability, underwriting and user experience are allowing us to win over the competition and expand our major purchase finance business," Sanborn said during the earnings call.
Additionally, the bank is executing on a $100 million share repurchase program announced in November 2025. In the fourth quarter, LendingClub put approximately $12 million toward buybacks.
Sanborn also teased a future rebranding effort scheduled for later in 2026, aimed at better reflecting the institution's status as a full-service digital bank rather than just a lender.
