The San Francisco-based company, the biggest listed online lender in America, said on Tuesday that net losses for the fourth quarter almost tripled from a year earlier, to $92m, as it agreed a $125m settlement to resolve suits stemming from the loan-mis-selling scandal that blew up almost two years ago.
About $48m of the sum would be covered by insurance, the company said, with the remainer to be paid from liquid assets of about $650m.
The loss for the full year came to $154m, wider than the previous year’s $146m.
The shares dropped more than 10 per cent in after-hours trading on Tuesday, having risen about 5 per cent on the day.
When it went public in December 2014, Lending Club vowed to upend the traditional banking model, supplying loans to creditworthy borrowers with an efficiency that the big brick-and-mortar lenders could not match.
But the governance scandal, combined with rising defaults on the riskiest classes of loans, has dealt a serious blow to the company’s business model. Lending Club expects to lose more money in 2018, it said on Tuesday, predicting net losses in the range of $38m to $53m.
The company’s recent woes include a bizarre, crypto-fuelled activist campaign waged by a Las Vegas-based payday lender called Paul Mathieson.
Among other criticisms, Mr Mathieson has attacked the company’s cost structure, noting that chief executive Scott Sanborn received a package worth $11.4m in 2016, according to last year’s proxy statement. Chairman Hans Morris, who sat on the board during Mr Laplanche’s reign, was paid $1m. The four heads of finance, risk, technology and compliance all got more than $5m.
The company’s board has described Mr Mathieson’s approach, which includes a tender offer, as “grossly inadequate,” and has urged shareholders “not to be misled into tendering into the offer.”
On Tuesday Mr Sanborn described 2017 as “a year of rebuilding and transforming our core business,” noting that the company returned to quarterly growth in originations while diversifying its base of investors.
Get alerts on LendingClub Corp when a new story is published