December 3, 2025 • 11 mins
LendingClub CEO Scott Sanborn discusses consumer credit amid holiday season spending. Sanborn spoke with Bloomberg's Carol Massar and Tim Stenovec.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:07):
We promised you that we were going to continue on
the US economy and really the US consumer, the online
lending marketplace and platform for loans, credit cards, deposit accounts, insurance,
and where we're talking about Lending Club. They announced one
hundred million dollars share buyback just about one month ago.
It was about fifty not fifty, nearly five percent of
the company's market value on the day of the announcement. Now,
(00:27):
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.
Speaker 3 (00:45):
Yeah, it is. Shares of the two point one billion
dollar market cap company about fourteen percent of more than
twelve percent since reporting those earnings back on October twenty second.
Delighted to have with us Scott Sanborn, CEO of Lending Club,
also CEO for close to a decade at Lending Club
for fifteen years now also with us here in the
Bloomberg BusinessWeek studio. Herman Chan a Bloomberg Intelligence senior analysts
for US regional banks. He helped bring all of this together, Scott,
(01:08):
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.
Speaker 1 (01:16):
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 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 credits.
So there's this middle group that are high income, heavy
(01:39):
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'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 mortgages, also larger than average. That's
(02:01):
what we serve.
Speaker 2 (02:01):
How much do these people usually make our average.
Speaker 1 (02:04):
And you know, obviously misleading averages can be misleading. But
average is about one hundred and twenty five thousand dollars.
But you can think of it of ranging between call
it eighty thousand dollars in individual income to about two
hundred thousand is where we really over index.
Speaker 4 (02:18):
Great. One of the real highlights of your recent investor
day last we last month was the panel discussion with
Marketplace investors, and we talked about this earlier before your
appearance here on radio. One of the panelts talked about
being aligning performance expectations partnering with better operators. Are you
seeing that with the private private credit space.
Speaker 3 (02:41):
Yeah, we do. So.
Speaker 1 (02:43):
You know, we were born as a marketplace. Initially, everything
we originated we sold. When we acquired the bank in
twenty one, we started to hold a portion 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
(03:04):
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.
(03:26):
Let's try longer duration, let's try a larger loan size,
let's try a new marketing channel. We hold that first,
own it, we own it, we make sure it performs
the way we expect, and then we release that to
the marketplace. If you don't have a balance sheet, you
can't really do that. And so that's visible in our
results across every aspect of underwriting. So lower delinquencies than
(03:48):
the rest of the industry thirty or forty percent below,
lower roll rates, higher recovery rates, lower prepayments, lower fraud,
literally every aspect that you can measure of credit out
performing on.
Speaker 3 (04:01):
Has that remained consistent this year, in recent months, in
recent weeks, like you have a great real time view
of the consumer in the form of how well they
are doing in terms of paying back their loans. That's right,
still looking good.
Speaker 1 (04:14):
Yeah, So that's been consistent for you know, we release
four years of data we put out there, and so
it's remained consistent but you know it's not it's kind
of like a duck on a pond. It's remained consistent
because we're doing a lot of work underneath the cover.
So you know, something that we shared an investor day is,
at any given time, we have more than two hundred
tests in the market where we're evaluating price points changes
(04:37):
to the credit. So we're constantly adjusting to reflect what's
happening with the consumer, and that's what's giving us the
consistent results.
Speaker 2 (04:46):
Well, so that to me says you're very picky about
who you lend to.
Speaker 1 (04:50):
That's true.
Speaker 2 (04:51):
We are so in terms of your test. So tell
me what it is I mean, and how many of
people who apply or want to access your platform. You're like,
I'm out.
Speaker 1 (05:00):
Yeah. So we're pretty good at selecting who we want
to have in our portfolio and reaching out to those
people and then both delivering the price and product experience,
but also, let's call it the user experience that gets
them all the way through. So we look for areas where,
for example, we can control the use of the fun proceeds.
(05:23):
If you come to me and say I want twenty
thousand dollars because I'm going to do whatever my kid
needs braces, or I'm moving cross country. Great, but unless
I'm paying the orthodontists, I don't actually know that that's
what you're using it for. Yeah, So we try to
set ourselves up so that we are in some ways
(05:45):
controlling the use of proceeds and then making the experience
such that it makes it really easy. So our largest
use cases for people who already have debt, credit card debt,
most notably, which at this point more than half of
all Americans are carrying. They're carrying it at really high
rates to three percent interest rate. It's highest they've ever
been in history. And we say, great, you should do
(06:05):
this instead. It takes less than five minutes. We're going
to save you seven hundred basis points. And by the way,
check all the credit cards that you have that you
want us to pay off, like we see you have
Chase or a cap On. Great, check those and we're
going to pay them directly, so we know you are
paying off your credit card debt. You're not just saying
you're going to pay off your credit card debt and
taking out more money. We are paying it off for you.
(06:27):
Benefit for you is you know you've consolidated everything into
one bill. Other benefit is your FYCO score usually goes
up by thirty thirty five points, right, because you've lowered,
you know, your your utilization.
Speaker 2 (06:38):
How much can you lower? Like I'm going to tell you.
Credit card rates just blow my mind about how high
they are. And I'm just curious, why are they so high?
Are people so bad? Is it to cover? No, I'm curious.
Speaker 1 (06:48):
Yeah, No, it's a great question.
Speaker 2 (06:49):
It just seems like it's out of control, and I
think it prevents people from becoming financially solvent or creating,
you know, kind of getting ahead of the game if
you will.
Speaker 1 (06:59):
Yeah. Yeah, there's a lot to unpack in that.
Speaker 4 (07:02):
It is.
Speaker 1 (07:02):
No, No, it's a great question, and you know there's
a number of questions underneath. But I'd say the biggest
thing is if you think about how people choose credit cards,
it is not based on the interest rate. Yeah right,
it's my Skymiles card or whatever, my retail store card.
I'm going to get rewards for this. They don't even
(07:22):
know what the interest rate is, or it's a promotional
rate that resets, so that's one they don't choose based
on that. Half of the people don't revolve on the
card they're collecting these rewards. Yeah, but they're not carrying
a balance. Well, guess who's paying for that? All the
people that are carrying a balance. Those people don't know
what their rates are. The research we've done is half
(07:43):
of all customers don't say they don't know the interest
rate on their credit cards, and half that say they do.
More than half of them are wrong, right. They think
they know their rate, but they don't. And so cards
have been able And one of the big resets with
the cards was was driven by the car Act, which
limited how much cards could increase rates, so they factored
(08:04):
in higher rates.
Speaker 3 (08:05):
I just want to jump in real quick. We are
speaking with Scott Sandborn, CEO of a lending club. He's
been CEO for close to a decade. We're also just
getting some breaking news too on Apple. Apple's design executive
Alan Dye poached by Meta in at major coup This
is the most prominent design executives executive at Apple. This
underscore is a push by the social networking giant into
(08:26):
AI equipped consumer devices. We also have here with us
Herman Chan. He's Bloomberg Intelligence Senior analyst for US regional banks.
Speaker 2 (08:34):
Thanks.
Speaker 4 (08:34):
I wanted to follow up with you, Scott on some
of the medium term expectations you laid out an investor day.
You talked about doubling loan originations. We're talking about eighteen
to twenty billion dollars a year. What are some of
the levers to get you to that level? You mentioned
use cases. Maybe you talk about home improvement as a
use case, and how do you maintain solid credit quality
(08:56):
as you ramp.
Speaker 2 (08:57):
Up that home improvement is something you're getting into, right.
Speaker 1 (08:59):
That's right, yep. So first and foremost is as I mentioned,
you know, credit card refinding people out of their credit
card debt into a fixed rate, lower rate loan is
number one use case. It's it's about eighty percent of
what we do. That market is the largest it's ever been.
There's one point three.
Speaker 2 (09:17):
Trillion eighty percent of what you do. Is that? Wow?
Go ahead?
Speaker 4 (09:20):
Sorry?
Speaker 1 (09:20):
So that is you know, one point three trillion in
balances priced at really really high rates. We you know,
when the rate environment shifted and the inflationary pressure shifted,
we pulled back on a lot of our marketing. So
we're currently running today at sort of below our historical volumes.
So we're just going back into that market turning back
(09:43):
on marketing channels that we had turned off, and then
the other areas. You know, personal loans can be used
literally for anything, right and before credit cards came around
and came to be, they were the dominant way consumers
accessed you know, credit for everyday need. So we have
a major purchase and business that's growing today, call it
fifty plus percent year on year. That's allowing things like
(10:07):
elective medical procedures, you know, lay six races for your kid,
you know, all kinds of procedure of fertility treatments, teeth implants,
so things that insurance doesn't pay for but you want
to do and you want to do right away. Private
school education it's another one. So home improvement is sort
(10:27):
of an next adjacency. People right now are staying in
their homes longer. You know, seventy five percent of Americans,
their mortgage rate is under five percent. They're not going anywhere,
and the homes are getting older. So the homes need
to be invested in, they need to be improved. So
effectively enabling home improvement through an unsecured loan, where again
(10:49):
we are controlling the use of proceeds. We can pay
the supplier we can pay the contractor. We've got the
capability through an acquisition we announced to you know, disperse
this in phases to multiple parties. So we're really excited
to kick that off.
Speaker 2 (11:06):
We've only got like thirty seconds left. Hair consumer doing okay.
Speaker 1 (11:10):
I'd say the consumer we serve is demonstrating themselves to
be remarkably resilient.
Speaker 3 (11:17):
That a lot.
Speaker 1 (11:17):
It's a drinking game, but we'll acknowledge that the sentiment
isn't great.
Speaker 2 (11:24):
Yeah, come back soon. I have to tell you that
I think we're all like, I want to go, I
want to go. Please come back late, because I think
you have a great advantage and view into what's going
on in the economy. We'd love to Okay, we would too.
Scott Sandborn, chief executive officer of Lending Club, are amazing.
Herman Chen Bloomberg, Intelligence Senior Analyst for US regional banks
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:07):
We promised you that we were going to continue on
the US economy and really the US consumer, the online
lending marketplace and platform for loans, credit cards, deposit accounts, insurance,
and where we're talking about Lending Club. They announced one
hundred million dollars share buyback just about one month ago.
It was about fifty not fifty, nearly five percent of
the company's market value on the day of the announcement. Now,
(00:27):
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.
Speaker 3 (00:45):
Yeah, it is. Shares of the two point one billion
dollar market cap company about fourteen percent of more than
twelve percent since reporting those earnings back on October twenty second.
Delighted to have with us Scott Sanborn, CEO of Lending Club,
also CEO for close to a decade at Lending Club
for fifteen years now also with us here in the
Bloomberg BusinessWeek studio. Herman Chan a Bloomberg Intelligence senior analysts
for US regional banks. He helped bring all of this together, Scott,
(01:08):
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.
Speaker 1 (01:16):
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 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 credits.
So there's this middle group that are high income, heavy
(01:39):
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'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 mortgages, also larger than average. That's
(02:01):
what we serve.
Speaker 2 (02:01):
How much do these people usually make our average.
Speaker 1 (02:04):
And you know, obviously misleading averages can be misleading. But
average is about one hundred and twenty five thousand dollars.
But you can think of it of ranging between call
it eighty thousand dollars in individual income to about two
hundred thousand is where we really over index.
Speaker 4 (02:18):
Great. One of the real highlights of your recent investor
day last we last month was the panel discussion with
Marketplace investors, and we talked about this earlier before your
appearance here on radio. One of the panelts talked about
being aligning performance expectations partnering with better operators. Are you
seeing that with the private private credit space.
Speaker 3 (02:41):
Yeah, we do. So.
Speaker 1 (02:43):
You know, we were born as a marketplace. Initially, everything
we originated we sold. When we acquired the bank in
twenty one, we started to hold a portion 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
(03:04):
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.
(03:26):
Let's try longer duration, let's try a larger loan size,
let's try a new marketing channel. We hold that first,
own it, we own it, we make sure it performs
the way we expect, and then we release that to
the marketplace. If you don't have a balance sheet, you
can't really do that. And so that's visible in our
results across every aspect of underwriting. So lower delinquencies than
(03:48):
the rest of the industry thirty or forty percent below,
lower roll rates, higher recovery rates, lower prepayments, lower fraud,
literally every aspect that you can measure of credit out
performing on.
Speaker 3 (04:01):
Has that remained consistent this year, in recent months, in
recent weeks, like you have a great real time view
of the consumer in the form of how well they
are doing in terms of paying back their loans. That's right,
still looking good.
Speaker 1 (04:14):
Yeah, So that's been consistent for you know, we release
four years of data we put out there, and so
it's remained consistent but you know it's not it's kind
of like a duck on a pond. It's remained consistent
because we're doing a lot of work underneath the cover.
So you know, something that we shared an investor day is,
at any given time, we have more than two hundred
tests in the market where we're evaluating price points changes
(04:37):
to the credit. So we're constantly adjusting to reflect what's
happening with the consumer, and that's what's giving us the
consistent results.
Speaker 2 (04:46):
Well, so that to me says you're very picky about
who you lend to.
Speaker 1 (04:50):
That's true.
Speaker 2 (04:51):
We are so in terms of your test. So tell
me what it is I mean, and how many of
people who apply or want to access your platform. You're like,
I'm out.
Speaker 1 (05:00):
Yeah. So we're pretty good at selecting who we want
to have in our portfolio and reaching out to those
people and then both delivering the price and product experience,
but also, let's call it the user experience that gets
them all the way through. So we look for areas where,
for example, we can control the use of the fun proceeds.
(05:23):
If you come to me and say I want twenty
thousand dollars because I'm going to do whatever my kid
needs braces, or I'm moving cross country. Great, but unless
I'm paying the orthodontists, I don't actually know that that's
what you're using it for. Yeah, So we try to
set ourselves up so that we are in some ways
(05:45):
controlling the use of proceeds and then making the experience
such that it makes it really easy. So our largest
use cases for people who already have debt, credit card debt,
most notably, which at this point more than half of
all Americans are carrying. They're carrying it at really high
rates to three percent interest rate. It's highest they've ever
been in history. And we say, great, you should do
(06:05):
this instead. It takes less than five minutes. We're going
to save you seven hundred basis points. And by the way,
check all the credit cards that you have that you
want us to pay off, like we see you have
Chase or a cap On. Great, check those and we're
going to pay them directly, so we know you are
paying off your credit card debt. You're not just saying
you're going to pay off your credit card debt and
taking out more money. We are paying it off for you.
(06:27):
Benefit for you is you know you've consolidated everything into
one bill. Other benefit is your FYCO score usually goes
up by thirty thirty five points, right, because you've lowered,
you know, your your utilization.
Speaker 2 (06:38):
How much can you lower? Like I'm going to tell you.
Credit card rates just blow my mind about how high
they are. And I'm just curious, why are they so high?
Are people so bad? Is it to cover? No, I'm curious.
Speaker 1 (06:48):
Yeah, No, it's a great question.
Speaker 2 (06:49):
It just seems like it's out of control, and I
think it prevents people from becoming financially solvent or creating,
you know, kind of getting ahead of the game if
you will.
Speaker 1 (06:59):
Yeah. Yeah, there's a lot to unpack in that.
Speaker 4 (07:02):
It is.
Speaker 1 (07:02):
No, No, it's a great question, and you know there's
a number of questions underneath. But I'd say the biggest
thing is if you think about how people choose credit cards,
it is not based on the interest rate. Yeah right,
it's my Skymiles card or whatever, my retail store card.
I'm going to get rewards for this. They don't even
(07:22):
know what the interest rate is, or it's a promotional
rate that resets, so that's one they don't choose based
on that. Half of the people don't revolve on the
card they're collecting these rewards. Yeah, but they're not carrying
a balance. Well, guess who's paying for that? All the
people that are carrying a balance. Those people don't know
what their rates are. The research we've done is half
(07:43):
of all customers don't say they don't know the interest
rate on their credit cards, and half that say they do.
More than half of them are wrong, right. They think
they know their rate, but they don't. And so cards
have been able And one of the big resets with
the cards was was driven by the car Act, which
limited how much cards could increase rates, so they factored
(08:04):
in higher rates.
Speaker 3 (08:05):
I just want to jump in real quick. We are
speaking with Scott Sandborn, CEO of a lending club. He's
been CEO for close to a decade. We're also just
getting some breaking news too on Apple. Apple's design executive
Alan Dye poached by Meta in at major coup This
is the most prominent design executives executive at Apple. This
underscore is a push by the social networking giant into
(08:26):
AI equipped consumer devices. We also have here with us
Herman Chan. He's Bloomberg Intelligence Senior analyst for US regional banks.
Speaker 2 (08:34):
Thanks.
Speaker 4 (08:34):
I wanted to follow up with you, Scott on some
of the medium term expectations you laid out an investor day.
You talked about doubling loan originations. We're talking about eighteen
to twenty billion dollars a year. What are some of
the levers to get you to that level? You mentioned
use cases. Maybe you talk about home improvement as a
use case, and how do you maintain solid credit quality
(08:56):
as you ramp.
Speaker 2 (08:57):
Up that home improvement is something you're getting into, right.
Speaker 1 (08:59):
That's right, yep. So first and foremost is as I mentioned,
you know, credit card refinding people out of their credit
card debt into a fixed rate, lower rate loan is
number one use case. It's it's about eighty percent of
what we do. That market is the largest it's ever been.
There's one point three.
Speaker 2 (09:17):
Trillion eighty percent of what you do. Is that? Wow?
Go ahead?
Speaker 4 (09:20):
Sorry?
Speaker 1 (09:20):
So that is you know, one point three trillion in
balances priced at really really high rates. We you know,
when the rate environment shifted and the inflationary pressure shifted,
we pulled back on a lot of our marketing. So
we're currently running today at sort of below our historical volumes.
So we're just going back into that market turning back
(09:43):
on marketing channels that we had turned off, and then
the other areas. You know, personal loans can be used
literally for anything, right and before credit cards came around
and came to be, they were the dominant way consumers
accessed you know, credit for everyday need. So we have
a major purchase and business that's growing today, call it
fifty plus percent year on year. That's allowing things like
(10:07):
elective medical procedures, you know, lay six races for your kid,
you know, all kinds of procedure of fertility treatments, teeth implants,
so things that insurance doesn't pay for but you want
to do and you want to do right away. Private
school education it's another one. So home improvement is sort
(10:27):
of an next adjacency. People right now are staying in
their homes longer. You know, seventy five percent of Americans,
their mortgage rate is under five percent. They're not going anywhere,
and the homes are getting older. So the homes need
to be invested in, they need to be improved. So
effectively enabling home improvement through an unsecured loan, where again
(10:49):
we are controlling the use of proceeds. We can pay
the supplier we can pay the contractor. We've got the
capability through an acquisition we announced to you know, disperse
this in phases to multiple parties. So we're really excited
to kick that off.
Speaker 2 (11:06):
We've only got like thirty seconds left. Hair consumer doing okay.
Speaker 1 (11:10):
I'd say the consumer we serve is demonstrating themselves to
be remarkably resilient.
Speaker 3 (11:17):
That a lot.
Speaker 1 (11:17):
It's a drinking game, but we'll acknowledge that the sentiment
isn't great.
Speaker 2 (11:24):
Yeah, come back soon. I have to tell you that
I think we're all like, I want to go, I
want to go. Please come back late, because I think
you have a great advantage and view into what's going
on in the economy. We'd love to Okay, we would too.
Scott Sandborn, chief executive officer of Lending Club, are amazing.
Herman Chen Bloomberg, Intelligence Senior Analyst for US regional banks
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