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LendingClub CEO’s Focus on ‘Areas We Can Control’ Sends Stock Up

LendingClub CEO’s Focus on ‘Areas We Can Control’ Sends Stock Up

(Bloomberg) -- LendingClub Corp.’s chief executive officer was able to please investors on a dark day for financial stocks by showing the online lending marketplace is adept at reining in costs.

“We’ve been very focused, in what continues to be a dynamic environment...on areas we can control,” CEO Scott Sanborn said in a phone interview, noting that investors are looking for yield as interest rates decline for the first time in 10 years.

LendingClub CEO’s Focus on ‘Areas We Can Control’ Sends Stock Up

The company’s shares rose the most intraday since May 8 after second-quarter results showed better-than-expected adjusted Ebitda and success in cost initiatives. Marketing and sales expenses as a percent of originations were 2.15%, which compares to an average of 2.48% in 2017, 2.4% in 2018 and 2.37% in the first quarter, according to the conference call.

Sanborn said LendingClub is able to pivot for rate declines and for rate increases. In case there’s a recession, there are always “borrowers looking for credit and investors looking for yield,” he said. The CEO noted that personal loans are the fastest-growing loan category and LendingClub is growing even faster than the market.

Read more: LendingClub Shares Rally as Analysts Hail Expense Control

Looking at the big-picture, he said consumers appear healthy as “unemployment looks great” and “wages are going higher for the first time in forever.” However, broader macro issues -- like trade tensions and Brexit -- may have an impact.

LendingClub saw about 14 million applicants for loans in 2018 and applications are now up about 25% to 30% year-over-year, he said. That’s growing faster than originations, which gained 11%, as the company tightened standards.

Sanborn continues to view asset-backed securities as an attractive source of funding. That market “is an absolutely massive, scalable, repeatable source of capital we want to have the ability to tap into,” he said.

He added that LendingClub is well-prepared for its plan to see a bank charter, as it already has many of the functions of a regulated institution without “the benefits a charter provides.”

Sanborn also said he isn’t looking at a tie up with fintech company GreenSky Inc., which plans explore strategic alternatives. GreenSky shares are down for a sixth straight session.

--With assistance from Charles Williams.

To contact the reporter on this story: Felice Maranz in New York at fmaranz@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Will Daley

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