Troubles at First Republic Bank continue
Fintech Headlines for April 26, 2023: Troubles at First Republic Bank continue, LendingClub reports deposit growth, and Upstart lands Mercedes-Benz as its Latest Client
Yesterday, LendingClub kicked off the earnings season for Fintech companies, and the report wasn’t that bad! Can’t wait for the next week, when we will hear from Block, Shopify, Coinbase, MercadoLibre, Shift4 Payments, SoFi, BILL, and a few others! In the meantime:
Troubles at First Republic Bank continue, with the stock in freefall
LendingClub reports deposit growth (and origination decline), and
Upstart secures Mercedes-Benz as its latest Upstart Auto Retail client
Troubles at First Republic Bank Continue
The First Republic Bank’s (NYSE: FRC) drama continued yesterday, with the stock losing 29.75% after the news broke that the bank is planning to sell a part of its bond portfolio and issue new stock to institutional buyers in an attempt to shore up capital. Earlier in the week, First Republic reported an outflow of more than $100 billion in deposits during the first quarter of 2023. The announcement of the stock sale has led to some concerns among investors, as the issuance of new shares can dilute the value of existing shares.
In addition, the bank is reportedly facing a potential curb on its borrowing from the Federal Reserve. According to Bloomberg, the Federal Deposit Insurance Corporation has been giving the bank time to negotiate a private agreement to bolster its finances. However, with each passing week without any progress, high-ranking officials are contemplating lowering the bank’s rating, which would limit its access to the Federal Reserve's discount window and an emergency facility that was recently introduced.
✔️ First Republic Faces Potential Curb on Borrowing From Fed
✔️ First Republic Plunges on Report of Buyers for New Shares
✔️ First Republic Bank Is a Problem With No Easy Solution
LendingClub Reports Deposit Growth
LendingClub (NYSE: LC), the pioneer of online lending reported its Q1 2023 results yesterday. The company reported $2.3 billion in loan originations, beating its own guidance of $1.9 - 2.2 billion, and finished the quarter with $5.9 billion in loans and leases held for investment and $8.8 billion in total assets. Deposits increased 13% sequentially to $7.2 billion despite the turbulence in the market and outflow of deposits to money market funds at other banks. As a reminder, LendingClub became a bank holding company after completing the acquisition of Radius Bank in 2021.
LendingClub reported Net revenue of $245.7 million, down 6.5% compared to $262.7 million in the prior quarter, as “growth in net interest income was offset by lower marketplace revenue.” Net interest income increased 8% from the prior quarter to $146.7 million, while Non-interest income declined 22% from the prior quarter to $99.0 million. Net income for the quarter was $13.7 million, or diluted EPS of $0.13, compared to $23.6 million, or diluted EPS of $0.22, in the prior quarter, reflecting higher provisions and tax expense. The company guided for $1.9 - 2.1 billion in originations in Q2 2023.
✔️ LendingClub Saw Deposits Climb 13% During Regional Banking Tumult
✔️ LendingClub Grew Deposits by $826 Million After SVB Collapse
✔️ LendingClub Reports First Quarter 2023 Results
Upstart Auto Retail Secures Mercedes-Benz as its Latest Client
Upstart (NASDAQ: UPST), a Fintech company primarily known for its AI-powered lending marketplace, announced signing Mercedes-Benz as its new client for Upstart Auto Retail. Mercedes-Benz selected Upstart as an "approved digital retail provider for its dealerships.” Mercedes-Benz is the ninth manufacturer to name Upstart Auto Retail as an approved digital retail provider. Other OEMs using Upstart Auto Retail include Acura, Honda, Kia, Lexus, Mitsubishi, Subaru of America, Toyota, and Volkswagen.
Upstart Auto Retail is a suite of digital products that allow dealers to offer online and in-store car-buying experiences, including search, financing, and signing. In 2021, Upstart acquired Prodigy, a provider of cloud-based automotive retail software, with the goal to offer auto loans via auto dealers. Prodigy’s software became the foundation of Upstart Auto Retail. In Q4 2022, the company’s software was used by 780 dealerships across the U.S. Upstart will report its Q1 2023 results on May 9, 2023, after market close.
Image source: Upstart
✔️ Mercedes-Benz Names Upstart Auto Retail an Approved Digital Retail Provider
✔️ Acura Names Upstart Auto Retail a Preferred Digital Retail Provider
✔️ Upstart Introduces Digital Finance and Online Sales Applications to Offer a Fully Digital Auto Retail Experience
Chart of the Day
Out of the top Fintech lenders in the U.S., LendingClub is doing the worst in terms of stock price performance this year. SoFi and Upstart shares are up 22.99% and 8.25% respectively since the beginning of the year, while shares of LendingClub are down 20.0%. SoFi will report its Q1 2023 results on Monday (May 1), and Upstart will report the following Tuesday (May 9).
Chart made with Koyfin
Jobs in Fintech
Vice President of Sales, Auto Retail
Remote, United States
Principal Product Manager, Lending Partnerships
Remote, United States
Senior Director, Product Design
San Francisco, CA, United States
Senior Product Manager, Personal Loans
San Francisco, CA, United States
Consumer Deposits Pricing and Strategy Lead
UT, NY, CA or TX, United States
That’s it for today! Thank you for reading and see you tomorrow!
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Disclaimer: Information contained in this newsletter is intended for educational and informational purposes only and should not be considered financial advice. You should do your own research or seek professional advice before making any investment decisions.