LendingClub reported better-than-expected quarterly earnings as it originated more loans, but net income took a hit from legal costs related to government investigations of its lending practices.
For the first quarter, the peer-to-peer lending pioneer said Tuesday its revenues rose 22% from a year earlier to $152 million after an 18% bump in originations, to $2.3 billion.
LendingClub’s net loss widened to $31.2 million, or 7 cents per share, from a loss of $29.8 million, or 7 cents per share. The company took an accrual of $17 million in the quarter for legal costs related to outstanding probes by the U.S. Department of Justice and the Securities and Exchange Commission, as well as indemnification costs for its previous management team.
Excluding one-time items, LendingClub earned 1 cent per share, versus analysts’ estimates of a loss of 1 cent per share.
“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 news release. “Our strategic initiatives are working on both sides of our marketplace and we’ll keep innovating to help more Americans on their journey to financial success.”
As The Financial Times reports, Lending Club “has been battling to stabilize its business after revelations in May 2016 that it mis-sold a parcel of loans to one of its big institutional clients.” The scandal led to the ouster of its founder and then-CEO.
The Federal Trade Commission last month charged the company with deceiving consumers by advertising loans as having no hidden fees when it in fact collected “hundreds or even thousands of dollars” as an upfront fee.
Borrower fees accounted for 78% of Lending Club’s revenues last year. But the FT said the first-quarter results may fuel hopes that the lender “can shake off the effects of a two year-old governance scandal and a big regulatory squeeze.”
The company on Tuesday also maintained its 2018 revenue forecast of between $680 million and $705 million. Its shares rose around 1% to $2.85 in after-hours trading.