LendingClub reported strong loan and revenue growth in the first quarter, but legacy issues continued to weigh on results and it could be a while before the San Francisco lender turns a profit.
The company said after the markets closed Tuesday that first-quarter revenue increased 22% year over year to $151.7 million as loan originations climbed 18% to $2.3 billion.
But LendingClub reported a loss of $31.2 million in the quarter, compared with a $29.9 million loss in the year-ago quarter. The company said the loss was driven largely by $17 million worth of costs related to ongoing government investigations and indemnification costs resulting from previous management.
In 2016, the company’s board of directors forced out its previous CEO, Renaud Laplanche, after it determined that senior executives had falsified documentation related to certain loans. More recently, the Federal Trade Commission filed a lawsuit contending that LendingClub has charged borrowers fees that it did not disclose upfront.
LendingClub also projected a net loss of $10 to $20 million for the second quarter and $55 to $70 million for the full year.
The company runs an online marketplace that connects borrowers, usually people looking to refinance credit card debt, with investors, who could be individuals, hedge funds or banks.
In the earnings report, LendingClub said it saw success in the first quarter with two new initiatives: a direct payoff option for borrowers and a new certificate for investors.
With the direct payoff program, LendingCub will make loans to certain higher-risk borrowers so long as at least 80% of the loan is used pay off outstanding debt and LendingClub transmits the funds directly to creditors. The certificate is a fundraising mechanism that offers investors whole loans structured as a pass-through security. The company said that the certificate attracted $160 million in new funding during the quarter.
“We feel good about how we've kicked off the year and the fundamentals of our business continue to be strong,” CEO Scott Sanborn said in a press release.