LC

LendingClub has finished its transformation from a marketplace into a bank holding company (LC Bank), and FY2025 is the cleanest year of the new model: net income of $136M (+164% YoY) and diluted EPS of $1.16 (+158%), on $11.6B of assets funded by deposits rather than debt — long-term debt is $0.00 and equity grew to $1.50B. The balance sheet is a genuine strength. The 10-K shows the Company at a 17.4% CET1 ratio and LC Bank at 15.5%, both far above the 7.0% required minimum and the well-capitalized thresholds, with a 12.0% Tier 1 leverage ratio. That capital cushion is what makes this investable and, under the Basel III capital conservation buffer, leaves room for future capital returns. The unqualified audit opinion and clean internal-control report add comfort.

The problem is quality and price, not solvency. Returns are still mediocre — ROE is just 9.0% — yet the stock trades at $20.46, about 1.6x the ~$13.0 book value per share ($1.50B equity / 115M shares) and 17.6x earnings. That is a full multiple for a credit-cyclical lender earning single-digit returns on equity. The earnings stream is also lumpy: net income ran $18.6M (2021) → $290M (2022) → $38.9M (2023) → $51.3M (2024) → $136M (2025), so FY2025's jump is a recovery off depressed years, not proven durable compounding. Retained earnings remain a -$202M accumulated deficit (improving, but still negative). The headline 'net margin 43.1%' and the P/S of 7.5 should be discounted — the revenue figure provided is tagged to FY2020 and is not a meaningful denominator for a bank; judge this name on EPS, ROE, book value and capital instead.