LendingClub CEO Scott Sanborn Talks Credit & Holiday Spending
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What insights does LendingClub CEO Scott Sanborn share about consumer credit?
Hello and welcome. This is The Michelle Hussein Show. I'm Michelle Hussein. I speak with people like Elon Musk. I think I've done enough. And Shonda Rhimes. That's so cute. This will be a place where every weekend you can count on one essential conversation to help make sense of the world. So please join me, listen and subscribe to The Michelle Hussein Show from Bloomberg Weekend, wherever you get your podcasts.
You certainly ask interesting questions.
Bloomberg Audio Studios. Podcasts. Radio. News. We promised you that we were going to continue on the U.S. economy and really the U.S. consumer. The online lending marketplace and platform for loans, credit cards, deposit accounts, insurance and more. We're talking about Lending Club. They announced $100 million share buyback just about one month ago. It was about 50, not 50, nearly 5% of the company's market value on the day of the announcement. Now, Atlas have been raising their price targets on the stock this year, most recently again raising them since the company reported earnings late October. The company posted third quarter results that beat estimates. They provided a guidance range for new fourth quarter originations with a midpoint above estimates.
And the stock, it's actually up this year.
Yeah, it is. Shares of the $2.1 billion market cap company, about 14%, up more than 12% since reporting those earnings back on October 22nd. Delighted to have with us Scott Sanborn, CEO of Lending Club, also CEO for close to a decade at Lending Club for 15 years now. Also with us here in the Bloomberg Businessweek studio, Herman Chan, Bloomberg Intelligence Senior Analyst for U.S. Regional Banks. He helped bring all of this together. Scott, I want to start with you and just give us some size and scope of the business, the consumers that you're working with, who's interacting with the platform.
Yeah, so we serve a customer base we call the middle majority. They are, if you think about credit, which we are a credit-centric bank, if you've got a lot of money, you don't need a lot of access to credit. You pay cash for a car. You save up to send your kids to college. If you're on the other end of the spectrum, you can't really access credit. So there's this middle group that are high-income people. heavy users of credit so they can afford a car they can afford to send their kids to school but they need to use credit to do it that that's who we serve it's a really big customer base it represents about a third of the us population but it's close to half of the credit wallet so they are more likely than average to have every form of credit and that credit is with the exception of mortgages also larger than average that's what we serve how much do these people usually make
Our average and you know, obviously misleading average is gonna be misleading, but average is about $125,000. But you can think of it as ranging between call it $80,000 in individual income to about 200,000 is where we really over index.
Great. One of the real highlights of your recent investor day last month was the panel discussion with marketplace investors. And we talked about this earlier before your appearance here on radio. One of the panelists talked about being aligning performance expectations, partnering with better operators. Are you seeing that with the private credit space?
yeah we we do so you know we were born as a marketplace initially everything we originated we sold um when we acquired the bank in 21 we started to hold a portion of of our loans on our balance sheet that both gives us a stronger and more resilient earnings profile, also allows us to do other things, innovate using our balance sheet. And what we found is just by aligning our interest with our loan buyers, we're the largest eater of our own cooking. We're the largest holder of Lending Club loans. We care very deeply about the performance of the credit. And credit is always evolving. It's very dynamic. Because we have a balance sheet, what we can do is when we want to test something new, we test it on our balance sheet.
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