Consumer Still Strong, Even With ‘Anxiety,’ LendingClub CEO Says

(Bloomberg) -- Explore what’s moving the global economy in the new season of the Stephanomics podcast. Subscribe via Pocket Cast or iTunes.

Consumer spending continues to drive the U.S. economy, even amid hints of inconsistency in the broader economy, according to the chief executive officer of online personal loan company LendingClub Corp.

“While the consumer remains strong, there’s volatility and a bit of anxiety,” CEO Scott Sanborn said in a phone interview after the company posted earnings. Consumers haven’t yet felt the impact of trade tensions, he added, but they may if higher tariffs start to bite.

Big bank results last month showed vigorous consumer spending, with CEOs including JPMorgan Chase’s Jamie Dimon calling the consumer “healthy” and Bank of America Corp. getting an upgrade on consumer strength. Analysts called credit cards a “bright spot” in earnings. That contrasted with slower commercial lending, as per American Express Co. earnings and a recent Federal Reserve loan officer survey.

LendingClub shares on Wednesday soared as much as 16%, the most intraday since May 8, after the company reported better-than-expected third-quarter results. Analysts highlighted progress on trimming expenses as employees move to Utah from San Francisco.

Read more: LendingClub Jumps as Wall Street Cheers Profits and Cost Cuts

Sanborn said he’s “thrilled” with LendingClub’s move to Utah. He noted that the company’s post-move real estate costs have fallen 50% and salary expenses have dropped 25%.

LendingClub’s fastest-growing segment is now super-prime lending to the highest credit-quality borrowers, Sanborn said. Meanwhile, loans with “mature vintages” continue to see solid performance. The company’s number one “use case” continues to be customers swapping expensive credit card debt for cheaper personal loans, he said, adding that the spread between personal loans and credit cards is at a high.

LendingClub is forging ahead with efforts to secure a bank charter, though “the timelines are tough to call,” he said. The company is already highly engaged with regulators and would like the “clarity” of having a primary charter.

“We have all the procedures,” including costs, of a bank charter, Sanborn said. But LendingClub isn’t “getting the benefits.”

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, Jennifer Bissell-Linsk

©2019 Bloomberg L.P.