LendingClub turmoil takes toll as company posts widening losses

Tue Aug 9, 2016 12:27am EDT
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By Sudarshan Varadhan and Heather Somerville

(Reuters) - LendingClub Corp (LC.N: Quote) on Monday reported its largest quarterly loss in a year as it struggles to bring banks back to its online lending platform following the departure of its chief executive and a scandal involving altered loan documents.

LendingClub, which matches borrowers and lenders via an online marketplace, reported a second-quarter loss of $81.4 million, or 21 cents per share, compared to a loss of $4.1 million, or 1 cent per share, a year ago.

The company also continued its executive shakeup, with the resignation of Chief Financial Officer Carrie Dolan. Her departure is the first high-profile exit since the departure of Renaud Laplanche, the company's founder, as chief executive on May 9.

Dolan, who joined six years ago when LendingClub had just 40 employees, gave notice early this year, but the board of directed asked her to delay moving on, executives said on a call with investors.

Accounting officer Bradley Coleman was named interim CFO. In addition, LendingClub appointed Timothy Mayopoulos, president and CEO of Fannie Mae (FNMA.PK: Quote), to its board as an independent director.

The second-quarter earnings report follows a tumultuous period for LendingClub, once considered the standard bearer in a new generation of online lenders but which has been pummeled by revelations of lending improprieties, a U.S. Department of Justice investigation, the departure of loan investors and layoffs of 179 employees.

"The good thing is (the second quarter) is now behind us," said Scott Sanborn, who took over as president and CEO in June. "We have accomplished quite a bit since the events of May 9."

LendingClub's shares were down more than 2 percent at about $4.68 in after-hours trading. That puts the company's market cap at about $1.8 billion, about one-third its market value of about $5.4 billion when it went public in December 2014 in an offering priced at $15 a share.   Continued...

A woman looks at her phone as she passes by a Lending Club banner on the facade of the the New York Stock Exchange December 11, 2014. REUTERS/Brendan McDermid