Earnings For The American Fintech Council, Which Will Promote Fintechs (LC, GSKY)
This week, we concentrated on establishing the American Fintech Council, SoFi’s purchase of Golden Pacific Bank, and highlights from LendingClub’s and Greensky quarterly reports, among other topics. Let’s get to it.
Stimulus Payments Will Increase the Net Worth of Record U.S. Households
The number of people filing for unemployment decreased by 42,000, bringing the total number of claims for the week ending March 6 to 712,000. In addition to providing billions of dollars in financing for the distribution and research of vaccines, President Biden’s $1.9 trillion economic stimulus plan will provide many Americans with a check for $1,400. As a result of skyrocketing prices for stocks, real estate, and other assets, the net worth of U.S. households reached a new all-time high of $130,2 trillion in the fourth quarter of 2018, surpassing previous records.
MLA and OLPI Consolidate to Form the American Fintech Council (“AFC”)
The American Fintech Council (abbreviated as “AFC”) was established via a collaboration between the Marketplace Lending Association and the Online Lending Policy Institute. Within the financial services field, the AFC will primarily emphasize the promotion of policies that foster responsible innovation and diversity.
Richard Neiman, Head of Regulation and Public Policy at LendingClub, stated, “Together, we will make a more extensive fintech association of companies that foster reliable innovation and growth while encouraging sound public policy.” “Together, we will make a more extensive fintech association of companies that foster accountable innovation and growth while encouraging sound public policy.”
To be eligible for membership, lenders must agree to adhere to the Small Business Borrower’s Bill of Rights, support a ceiling on the annual percentage rate (APR) charged on loans, and maintain openness on products and costs.
SoFi Acquires Golden Pacific Bank
SoFi has announced spending $22.3 million to buy the Sacramento-based community bank, Golden Pacific. Even though SoFi had previously submitted an application to the OCC for a national bank charter, this purchase speeds up how SoFi will get a bank charter since a change of control applications at the OCC are processed more quickly than de novo applications.
Golden Pacific’s community bank operation will continue to function as a part of SoFi Bank after the acquisition, which will result in an increase in SoFi Bank’s book of assets by $150 million. According to an article that Peter Renton wrote for Lend Academy, this might begin a new trend.
Many fintech companies see the advantages of having a national charter. The year before last, LendingClub purchased Radius Bank, a former community bank that transitioned into a digital bank in 2012. Jiko purchased Mid-Central Federal Savings Bank, located in Minnesota. Both of these acquisitions took place in the United States.
Earnings highlights include LendingClub and GreenSky
LendingClub (P/E N/A, Market cap $1.41 Bn, P/S 1.86x)
⦁ In the fourth region of 2020, loan originations totaled $912 M. (Up 56 percent vs. Q3 20, but down 70 percent vs. Q4 19).
⦁ While LC Bank (formerly known as Radius Bank) was responsible for 15–25 percent of originations, the typical marketplace product was responsible for about 75–85 percent.
⦁ Radius Bank provided access to regular deposits and offered them at affordable charges, which helped minimize financing volatility and bring down borrowing costs.
⦁ “The epidemic has proved that our borrowers value LendingClub loans over many of their other debt commitments, including credit cards,” stated LendingClub’s CEO, Scott Sanborn.
⦁ In 2021, you should make plans to increase revenue by 55 percent and originations by 45 percent.
GreenSky GSKY (Market cap $1.29 Bn, P/E 54.35x, P/S 1.79)
⦁ The Loan Servicing portfolio increased by 4.4 percent year over year.
⦁ GSKY recorded a revenue of $9.5 billion for the quarter, a 2% increase over the $9.3 billion it reported for the previous quarter.
⦁ The yearly transaction volume in 2020 was $5.5 billion, which was 8.3 percent lower than in 2019 when it was $6 billion. This is the first time that the number of transactions has fallen in the last five years.
⦁ At 0.99 percent, the percentage of delinquencies is at a record low compared to the previous four years.
The following table displays statistics on the publicly listed fintech market as of March 12, 2021.
BlockFi Achieves $350 Million in Series D Funding
The cryptocurrency lender, BlockFi, run by CEO Zac Prince and secured $350 million in Series D investment, is now valued at $3 billion. BlockFi provides investors in the cryptocurrency market with a retail and institutional suite of products via a platform that resembles a bank.
Users of the mobile app have the opportunity to earn a dividend of 6% on their bitcoin holdings and a yield of 8.6% on stable coins. The Series D fundraising round was co-led by Bain Capital Ventures, partners of DST Global, Pomp Investments, and Tiger Global, among other investors.
Valar Ventures, Breyer Capital, Susquehanna Government Products, Jump Capital, and Paradigm are some other investors in this company. BlockFi will be able to extend its product portfolio, expand into new worldwide markets, perform strategic acquisitions, and quadruple its personnel by the end of the year with additional capital.
NFTs: A Fresh Chance for Finech?
Non-fungible tokens, also known as NFTs, began as an online pastime shared by a small group of financial and technology enthusiasts. However, this pastime has now exploded into the mainstream, as seen by the fact that Twitter CEO Jack Dorsey lists his very first tweet as an NFT.