Author Topic: LC Retail Loan Volume  (Read 170 times)

YoungFred

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LC Retail Loan Volume
« on: February 19, 2020, 09:44:56 AM »
LC has posted around 20 loans per day through the retail distribution channel over the past few days (not a long-term issue, I admit, but still somewhat concerning). Moreover, the Q4 investor presentation shows a consistent decline in the % of $-originations allocated to the retail channel throughout every quarter of 2019.

With LC focused on growing LCX and keeping ~10% of all originations as part of their own balance starting in 2021 (following the completion of their Radius Bank acquisition), is the end of the retail channel near?


Fred93

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Re: LC Retail Loan Volume
« Reply #1 on: February 19, 2020, 11:25:34 AM »
I agree with you.  Twenty loans/day is not an ongoing business.

The end of the retail channel is near, because LC set this path in motion a long time ago.  They have steadily reduced the allocation to the retail market.  I believe they'd really like to just shut it immediately, but they fear the reaction of all the retail customers, so they're driving them away slowly.

LC makes more money by selling loans on the institutional side.  They fouled up long ago by making the retail fees too low.  Astonishingly they actually charge the institutional customers more!  The fee structure is different, so one has to do a bit of a calculation to see this.  And of course the retail operation has higher costs.  There's all the SEC regulatory stuff, information filed with SEC for every damn loan.  There's the customer service costs.  The web site and statements and 1099s and answering phone calls from thousands of retail lenders.  All the lawyer costs associated with complying with different regulations in each state re selling the notes to lenders.

Has nothing to do with LCX or intent of keeping 10% of originations.  LCX is an attempt to add a new way to package up the product for institutional customers, but they already have several ways the product is packaged.  LCX is just one more.


mark78

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Re: LC Retail Loan Volume
« Reply #2 on: February 19, 2020, 05:57:35 PM »
the Q4 investor presentation shows a consistent decline in the % of $-originations allocated to the retail channel throughout every quarter of 2019.

is the end of the retail channel near?

I only trade on the secondary market and am trying to see how much volume will be coming down the pipes in the next few years. The graphic shows the mix for 2019- Self-directed Investors volume is down to $103M, down from around $250M per quarter in 2017. Is it safe to assume that only Self-directed Investors will list notes on the secondary market? Or do the other categories also contribute to secondary market volume?