LendingClub said Friday that it will buy more than $1 billion in personal loans from the parent company of MUFG Union Bank.
The portfolio went on sale after U.S. Bancorp completed its acquisition of MUFG Union Bank, a subsidiary of Tokyo-based Mitsubishi UFJ Financial. Lending Club had previously originated the loans and sold them to MUFG while retaining the servicing rights.
The purchase will help LendingClub to mitigate a "slowdown in [loan] marketplace revenue," CEO Scott Sanborn said in a statement.
The portfolio addition represents about 32% of LendingClub's own personal loan book, which stood near $3.27 billion at the end of the third quarter. It should help the San Francisco company boost growth and use some of its excess capital, Giuliano Bologna, managing director at Compass Point Research & Trading, wrote in a research note.
Loans in the portfolio had an average FICO score of 729, LendingClub said. The online lender described the loans as having a "short remaining duration."
LendingClub said that it expects to complete the portfolio acquisition by the end of the year. The purchase price was not disclosed. The deal will prompt about $4 million in expenses because the loans will no longer be classified as servicing assets.
LendingClub, which primarily refinances existing consumer debt, has been
Now that it can collect deposits, LendingClub has more options to fund the high-yielding consumer loans on its balance sheet. The company's deposits totaled $5.1 billion in the third quarter, about 80% higher than a year ago. Sanborn said in October that he expected high-yield savings accounts to serve as a growth engine for LendingClub.
Shares of LendingClub fell more than 2% after the market opened Friday but closed down by less than 1%.
