Shares of LendingClub Corporation (LC) gained nearly 6% after the world's leading online financial community announced a new affiliation with Alliance Partners, an asset manager which manages a consortium of about 200 community banks named BancAlliance.
Partnership Detail
Under the joint effort, members of BancAlliance will be able to use the Lending Club platform and thus provide co-branded personal loans to their customers. This will help in offering loans to individuals and construct new portfolios of consumer loans or upgrade existing ones.
Moreover, this partnership is expected to lift the performance of these community banks with the help of the Lending Club platform's low cost of operations and match with the performance of large banks that hold majority of loans given to the customers.
In addition, the banks' low cost of capital will aid in reducing the cost of credit for consumers. The partnership will assist small banks in lowering the cost of underwriting a large pool of loans and at the same time meeting the heightening regulatory requirements.
Our Take
BancAlliance was established in 2011 to overcome the lack of economies of scale, which overshadow the extraordinary service and high customer satisfaction delivered by the community banks. The new association with Lending Club will provide BancAlliance with an effective tool to achieve its target by expanding loan offering to clients.
Currently, LendingClub holds a Zacks Rank #2 (Buy). Some better-ranked companies in the same space include Healthstream Inc. (HSTM), Limelight Networks, Inc. (LLNW) and Sohu.com Inc. (SOHU). All these stocks hold a Zacks Rank #1 (Strong Buy).
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