What happened

Shares of the artificial intelligence lender Upstart (UPST 0.46%) traded roughly 6% lower as of 2:41 p.m. ET today as broader markets struggled and after the company released its annual report over the weekend.

So what

The Nasdaq Composite had fallen more than 2% today, and most tech stocks struggled in the wake of rising tensions between Russia and Ukraine.

Upstart also released its annual 10-K report over the weekend, which provided some interesting details on the business after the company just reported strong earnings results for the fourth quarter of 2021. 

Red squiggly line moving downward.

Image source: Getty Images.

Notably, Upstart said that only 16% of the unsecured personal loans originated through its platform were retained by bank partners in 2021. A big part of the company's model is for banks and credit unions to fund loans through their platform with cheap deposits and retain those loans on their balance sheets.

The 16% number is down from 21% in 2020. However, total loan-origination volume was way higher in 2021 than 2020, so the total volume of retained loans by banks was also much higher in 2021. The flip side to that argument is that Upstart greatly expanded the number of bank partners it is working with in 2021.

Now what

Getting banks to retain more Upstart loans and use the company's proprietary underwriting technology is key to Upstart's success. The company added many new bank partners in 2021 and got several of those lenders to drop traditional FICO requirements in favor of Upstart's models.

But if I were a shareholder, I would like to see the percentage of loans retained by bank partners be up more, especially with a much tougher monetary and credit environment on the horizon.