株探米国株
英語
エドガーで原本を確認する
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
Commission File Number: 001-36771
 
LendingClub Corporation
(Exact name of registrant as specified in its charter)
Delaware 51-0605731
(State or other jurisdiction of
incorporation or organization)		 (I.R.S. Employer
Identification No.)
595 Market Street, Suite 200,
San Francisco, CA 94105
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (415) 632-5600
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Common stock, par value $0.01 per share LC New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer   ☒ Accelerated filer ☐
Non-accelerated filer   ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ☐    No  ☒
As of October 20, 2023, there were 109,648,769 shares of the registrant’s common stock outstanding.


LENDINGCLUB CORPORATION
TABLE OF CONTENTS



Glossary

The following is a list of acronyms and terms LendingClub Corporation regularly uses in its financial reporting:
Acquisition Acquisition of Radius Bancorp, Inc.
AFS Available for Sale
ACL
Allowance for Credit Losses (includes both the allowance for loan and lease losses and the reserve for unfunded lending commitments)
ALLL Allowance for Loan and Lease Losses
Annual Report Annual Report on Form 10-K for the year ended December 31, 2022
ASU Accounting Standards Update
AUM
Assets Under Management (outstanding balances of Loan Originations serviced by the Company including loans serviced for others as well as loans held for investment and held for sale by the Company)
Balance Sheet Condensed Consolidated Balance Sheets
LC Bank or LendingClub Bank LendingClub Bank, National Association
CECL Current Expected Credit Losses (Accounting Standards Update 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments)
CET1 Common Equity Tier 1
CET1 Capital Ratio Common Equity Tier 1 capital divided by total risk-weighted assets as defined under the U.S. Basel III capital framework
DCF Discounted Cash Flow
EPS Earnings Per Share
Exchange Act Securities Exchange Act of 1934, as amended
FRB or Federal Reserve Board of Governors of the Federal Reserve System and, as applicable, Federal Reserve Bank(s)
GAAP Accounting Principles Generally Accepted in the United States of America
HFI Loans which are retained by the Company and held for investment
HFS Held for sale loans expected to be sold to investors, including Marketplace Loans
Income Statement Condensed Consolidated Statements of Income
LendingClub, LC, the Company, we, us, or our LendingClub Corporation and its subsidiaries
Loan Originations
Unsecured personal loans and auto refinance loans originated by the Company or facilitated by third-party issuing banks
Marketplace Loans Loan Originations designated as HFS and subsequently sold to investors
N/M Not meaningful
OCC Office of the Comptroller of the Currency
Parent LendingClub Corporation (the parent company of LendingClub Bank, National Association and other subsidiaries)
PPP Loans Loans originated pursuant to the U.S. Small Business Administration’s Paycheck Protection Program
Radius Radius Bancorp, Inc.
ROA Return on Average Total Assets
ROE Return on Average Equity
SEC United States Securities and Exchange Commission
Securities Act Securities Act of 1933, as amended
Structured Program transactions Asset-backed securitization transactions where certain accredited investors and qualified institutional buyers have the opportunity to invest in securities backed by a pool of unsecured personal whole loans.


Tier 1 Capital Ratio Tier 1 capital, which includes Common Equity Tier 1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by total risk-weighted assets as defined under the U.S. Basel III capital framework.
Tier 1 Leverage Ratio Tier 1 capital, which includes Common Equity Tier 1 capital plus non-cumulative perpetual preferred equity that qualifies as additional tier 1 capital, divided by quarterly adjusted average assets as defined under the U.S. Basel III capital framework.
Total Capital Ratio Total capital, which includes Common Equity Tier 1 capital, Tier 1 capital and allowance for credit losses and qualifying subordinated debt that qualifies as Tier 2 capital, divided by total risk-weighted assets as defined under the U.S. Basel III capital framework.
Unsecured personal loans
Unsecured personal loans originated on the Company’s platforms, including an online direct to consumer platform and a platform connected with a network of education and patient finance providers.
VIE Variable Interest Entity


LENDINGCLUB CORPORATION

Except as the context requires otherwise, as used herein, “LendingClub,” “Company,” “we,” “us,” and “our,” refer to LendingClub Corporation, a Delaware corporation, and, where appropriate, its consolidated subsidiaries and consolidated variable interest entities (VIEs), including LendingClub Bank, National Association (LC Bank), and various entities established to facilitate loan sale transactions under LendingClub’s Structured Program.

Forward-looking Statements

This Quarterly Report on Form 10-Q (Report) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). Forward-looking statements in this Report include, without limitation, statements regarding borrowers, credit scoring, our strategy, future operations, expected losses, future financial position, future revenue, projected costs, prospects, plans, objectives of management, expected market growth and the impact on our business. You can identify these forward-looking statements by words such as “anticipate,” “appear,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “intend,” “may,” “opportunity,” “plan,” “predict,” “project,” “should,” “strategy,” “target,” “will,” “would,” or similar expressions.

These forward-looking statements include, among other things, statements about:

•The impact of, and our ability to successfully navigate, the current interest rate and economic climate, a potential recession and the resumption of Federal student loan payments;
•our ability to sustain the business under adverse circumstances;
•our ability to attract and retain members, to expand our product offerings and services, to improve revenue and generate recurring earnings, to capture expense benefits, to increase resiliency, and to enhance regulatory clarity;
•our compliance, and that of third-party partners or providers, with applicable local, state and federal laws, regulations and regulatory developments or court decisions affecting our business;
•the impact of accounting standards or policies, including the Current Expected Credit Losses (CECL) standard;
•the results of examinations of us by regulatory authorities and the possibility that any such regulatory authority may, among other things, limit our business activities, increase our allowance for loan losses, increase our capital levels, or affect our ability to borrow funds or maintain or increase deposits;
•our ability to effectively manage capital or liquidity to support our evolving business or operational needs, while remaining compliant with regulatory or supervisory requirements and appropriate risk-management standards;
•our ability to develop and maintain a strong core deposit base or other low cost funding sources necessary to fund our activities;
•the impact of changes in consumer spending, borrowing and saving habits;
•the impact of the continuation of or changes in the short-term and long-term interest rate environment;
•our expectations on the interplay among origination volume, underwriting standards and interest rates;
•the ability of borrowers to repay loans;
•our belief that certain loans and leases in our commercial loan portfolio will be fully repaid in accordance with the contractual loan terms;
•our ability to maintain investor confidence in the operation of our platform;
•our ability to retain existing sources and secure new or additional sources of investor commitments for our platform;
•our expectation that platform investor demand for our loans will remain depressed until interest rates and the macro environment stabilize;
•our expectation of pressure on net interest margin to continue during 2023;
•the performance of our loan products and expected rates of return for investors;
•the impact of, and our ability to resolve, pending litigation and governmental inquiries and investigations;
•the use of our own capital to purchase loans and the impact of holding loans on and our ability to sell loans off our balance sheet;
•our intention not to sell our AFS investment portfolio;
1

LENDINGCLUB CORPORATION

•our financial condition and performance, including the impact that management’s estimates have on our financial performance and the relationship between interim period and full year results;
•the fair value estimates used in the valuation of our financial instruments;
•our estimate of our interest rate sensitivity;
•our calculation of expected credit losses for our collateral-dependent loans;
•our estimated maximum exposure to losses;
•our expectation of loan servicing fee revenue based on forecasted prepayments and estimated market rate of servicing at the time of loan sale;
•capital expenditures;
•our compliance with contractual obligations or restrictions;
•the potential impact of macro-economic developments, including recessions, inflation or other adverse circumstances;
•the impact of COVID-19;
•our ability to develop and maintain effective internal controls;
•our ability to continue to realize the financial and strategic benefits of our digital marketplace bank business model;
•the impact of expense initiatives and our ability to control our cost structure;
•our ability to manage and repay our indebtedness; and
•other risk factors listed from time to time in reports we file with the SEC.

We caution you that the foregoing list may not contain all of the forward-looking statements in this Report. We may not actually achieve the plans, intentions or expectations disclosed in forward-looking statements, and you should not place undue reliance on forward-looking statements. We have included important factors in the “Risk Factors” section of this Report and our Annual Report on Form 10-K for the year ended December 31, 2022, as well as in our condensed consolidated financial statements, related notes, and other information appearing elsewhere in this Report and our other filings with the SEC that could, among other things, cause actual results or events to differ materially from forward-looking statements contained in this Report. Forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

You should read this Report carefully and completely and with the understanding that actual future results may be materially different from what we expect. We do not assume any obligation to update or revise any forward-looking statements, whether as a result of new information, actual results, future events or otherwise, other than as required by law.

2

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
LENDINGCLUB CORPORATION
Condensed Consolidated Balance Sheets
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)
September 30,
2023		 December 31, 2022
Assets
Cash and due from banks $ 19,220  $ 23,125 
Interest-bearing deposits in banks 1,288,550  1,033,905 
Total cash and cash equivalents 1,307,770  1,057,030 
Restricted cash (1)
 42,487  67,454 
Securities available for sale at fair value ($872,341 and $399,668 at amortized cost, respectively)
 795,669  345,702 
Loans held for sale at fair value 362,789  110,400 
Loans and leases held for investment 5,237,277  5,033,154 
Allowance for loan and lease losses (350,495) (327,852)
Loans and leases held for investment, net 4,886,782  4,705,302 
Loans held for investment at fair value (1)
 326,299  925,938 
Retail and certificate loans held for investment at fair value (1)
 18,118  55,425 
Property, equipment and software, net 159,768  136,473 
Goodwill 75,717  75,717 
Other assets (1)
 496,952  500,306 
Total assets $ 8,472,351  $ 7,979,747 
Liabilities and Equity
Deposits:
Interest-bearing $ 6,687,069  $ 6,158,560 
Noninterest-bearing 313,194  233,993 
Total deposits 7,000,263  6,392,553 
Borrowings (1)
 10,717  74,858 
Retail notes, certificates and secured borrowings at fair value (1)
 18,118  55,425 
Other liabilities (1)
 235,034  292,617 
Total liabilities 7,264,132  6,815,453 
Equity
Common stock, $0.01 par value; 180,000,000 shares authorized; 109,648,769 and 106,546,995 shares issued and outstanding, respectively
 1,096  1,065 
Additional paid-in capital
1,660,236  1,628,590 
Accumulated deficit (398,961) (427,745)
Accumulated other comprehensive loss (54,152) (37,616)
Total equity 1,208,219  1,164,294 
Total liabilities and equity $ 8,472,351  $ 7,979,747 
(1)    Includes amounts in consolidated variable interest entities (VIEs). See “Notes to Condensed Consolidated Financial Statements – Note 6. Securitizations and Variable Interest Entities.”

See Notes to Condensed Consolidated Financial Statements.
3

LENDINGCLUB CORPORATION
Condensed Consolidated Statements of Income
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)
Three Months Ended
September 30,		 Nine Months Ended
September 30,
  2023 2022 2023 2022
Non-interest income:
Marketplace revenue $ 60,886  $ 173,837  $ 239,303  $ 560,187 
Other non-interest income 2,958  7,400  9,349  24,739 
Total non-interest income 63,844  181,237  248,652  584,926 
Interest income:
Interest on loans held for sale 9,582  5,879  19,772  20,459 
Interest and fees on loans and leases held for investment 158,960  124,028  471,512  324,381 
Interest on loans held for investment at fair value 11,788  791  60,372  2,015 
Interest on retail and certificate loans held for investment at fair value 817  3,685  3,694  15,745 
Interest on securities available for sale 9,467  3,820  19,315  12,757 
Other interest income 16,798  5,017  49,646  7,984 
Total interest income 207,412  143,220  624,311  383,341 
Interest expense:
Interest on deposits 69,509  15,184  189,303  24,700 
Interest on retail notes, certificates and secured borrowings 817  3,685  3,694  15,745 
Other interest expense 81  675  953  3,314 
Total interest expense 70,407  19,544  193,950  43,759 
Net interest income 137,005  123,676  430,361  339,582 
Total net revenue 200,849  304,913  679,013  924,508 
Provision for credit losses 64,479  82,739  201,658  205,814 
Non-interest expense:
Compensation and benefits 58,497  84,916  203,357  251,629 
Marketing 19,555  46,031  70,375  162,608 
Equipment and software 12,631  12,491  40,295  35,998 
Depreciation and amortization 11,250  10,681  35,242  32,277 
Professional services 8,414  11,943  27,446  40,487 
Occupancy 4,612  5,051  13,606  17,279 
Other non-interest expense 13,076  15,106  46,101  46,531 
Total non-interest expense 128,035  186,219  436,422  586,809 
Income before income tax benefit (expense) 8,335  35,955  40,933  131,885 
Income tax benefit (expense) (3,327) 7,243  (12,149) 134,209 
Net income $ 5,008  $ 43,198  $ 28,784  $ 266,094 
Earnings per share: (1)
Basic EPS $ 0.05  $ 0.41  $ 0.27  $ 2.59 
Diluted EPS $ 0.05  $ 0.41  $ 0.27  $ 2.56 
Weighted-average common shares – Basic 109,071,180  104,215,594  107,966,544  102,838,645 
Weighted-average common shares – Diluted 109,073,194  105,853,938  107,969,920  104,116,240 
(1)    See “Notes to Condensed Consolidated Financial Statements – Note 3. Earnings Per Share” for additional information.
See Notes to Condensed Consolidated Financial Statements.
4

LENDINGCLUB CORPORATION
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In Thousands)
(Unaudited)
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2023 2022 2023 2022
Net income $ 5,008  $ 43,198  $ 28,784  $ 266,094 
Other comprehensive loss:
Net unrealized loss on securities available for sale (20,547) (24,112) (22,706) (63,929)
Other comprehensive loss, before tax (20,547) (24,112) (22,706) (63,929)
Income tax effect (1)
 5,583  6,121  6,170  17,049 
Other comprehensive loss, net of tax (14,964) (17,991) (16,536) (46,880)
Total comprehensive income (loss)
 $ (9,956) $ 25,207  $ 12,248  $ 219,214 
(1) Income tax effect for the three and nine months ended September 30, 2022 reflects the release of the deferred tax asset valuation allowance on the securities available for sale portfolio.

See Notes to Condensed Consolidated Financial Statements.
5

LENDINGCLUB CORPORATION
Condensed Consolidated Statements of Changes in Equity
(In Thousands, Except Share Data)
(Unaudited)
  Common Stock Additional
Paid-in
Capital		 Treasury Stock
Accumulated Other Comprehensive Loss
 Accumulated
Deficit		 Total
Equity
  Shares Amount Shares Amount
Balance at June 30, 2023
 108,694,120  $ 1,087  $ 1,647,593  —  $ —  $ (39,188) $ (403,969) $ 1,205,523 
Stock-based compensation —  —  16,783  —  —  —  —  16,783 
Net issuances under equity incentive plans 954,649  9  (4,140) —  —  —  —  (4,131)
Net unrealized loss on securities available for sale, net of tax —  —  —  —  —  (14,964) —  (14,964)
Net income
 —  —  —  —  —  —  5,008  5,008 
Balance at September 30, 2023
 109,648,769  $ 1,096  $ 1,660,236  —  $ —  $ (54,152) $ (398,961) $ 1,208,219 
Common Stock Additional
Paid-in
Capital		 Treasury Stock
Accumulated Other Comprehensive Loss
 Accumulated
Deficit		 Total
Equity
Shares Amount Shares Amount
Balance at December 31, 2022
 106,546,995  $ 1,065  $ 1,628,590  —  $ —  $ (37,616) $ (427,745) $ 1,164,294 
Stock-based compensation —  —  48,874  —  —  —  —  48,874 
Net issuances under equity incentive plans 3,101,774  31  (17,228) —  —  —  —  (17,197)
Net unrealized loss on securities available for sale, net of tax —  —  —  —  —  (16,536) —  (16,536)
Net income
 —  —  —  —  —  —  28,784  28,784 
Balance at September 30, 2023
 109,648,769  $ 1,096  $ 1,660,236  —  $ —  $ (54,152) $ (398,961) $ 1,208,219 
Common Stock Additional
Paid-in
Capital		 Treasury Stock Accumulated Other Comprehensive Loss Accumulated
Deficit		 Total
Equity
Shares Amount Shares Amount
Balance at June 30, 2022
 103,630,776  $ 1,036  $ 1,594,458  —  $ —  $ (21,843) $ (494,534) $ 1,079,117 
Stock-based compensation —  —  18,757  —  —  —  —  18,757 
Net issuances under equity incentive plans 1,457,985  15  (1,588) 7,751  (98) —  —  (1,671)
Net unrealized loss on securities available for sale, net of tax —  —  —  —  —  (17,991) —  (17,991)
Net income —  —  —  —  —  —  43,198  43,198 
Balance at September 30, 2022
 105,088,761  $ 1,051  $ 1,611,627  7,751  $ (98) $ (39,834) $ (451,336) $ 1,121,410 
  Common Stock Additional
Paid-in
Capital		 Treasury Stock Accumulated Other Comprehensive Income (Loss) Accumulated
Deficit		 Total
Equity
  Shares Amount Shares Amount
Balance at December 31, 2021
 101,043,924  $ 1,010  $ 1,559,616  —  $ —  $ 7,046  $ (717,430) $ 850,242 
Stock-based compensation —  —  55,608  —  —  —  —  55,608 
Net issuances under equity incentive plans 4,044,837  41  (3,597) 7,751  (98) —  —  (3,654)
Net unrealized loss on securities available for sale, net of tax —  —  —  —  —  (46,880) —  (46,880)
Net income —  —  —  —  —  —  266,094  266,094 
Balance at September 30, 2022
 105,088,761  $ 1,051  $ 1,611,627  7,751  $ (98) $ (39,834) $ (451,336) $ 1,121,410 

See Notes to Condensed Consolidated Financial Statements.
6

LENDINGCLUB CORPORATION
Condensed Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
Nine Months Ended
September 30,
  2023 2022
Cash Flows from Operating Activities:
Net income $ 28,784  $ 266,094 
Adjustments to reconcile net income to net cash (used for) provided by operating activities:
Net fair value adjustments 80,222  (24,277)
Change in fair value of loan servicing assets 41,750  53,928 
Gain on sales of loans (35,918) (76,983)
Provision for credit losses 201,658  205,814 
Accretion of loan deferred fees and costs (74,486) (63,486)
Stock-based compensation, net 42,122  50,210 
Depreciation and amortization 35,242  32,277 
Income tax benefit from release of tax valuation allowance —  (140,315)
Other, net (8,474) 515 
Net change to loans held for sale (590,400) 42,991 
Net change in operating assets and liabilities:
Other assets 23,622  (11,152)
Other liabilities (65,917) 6,602 
Net cash (used for) provided by operating activities
 (321,795) 342,218 
Cash Flows from Investing Activities:
Net change in loans and leases 101,884  (1,630,858)
Net decrease in retail and certificate loans 39,337  148,963 
Purchases of securities available for sale (59,336) (222,534)
Proceeds from maturities and paydowns of securities available for sale 42,856  69,776 
Purchases of property, equipment and software, net
 (48,239) (54,659)
Other investing activities (8,606) (5,704)
Net cash provided by (used for) investing activities
 67,896  (1,695,016)
Cash Flows from Financing Activities:
Net change in deposits 599,054  1,987,718 
Principal payments on borrowings (62,850) (222,271)
Principal payments on retail notes and certificates (39,337) (149,115)
Other financing activities
 (17,195) (7,994)
Net cash provided by financing activities 479,672  1,608,338 
Net Increase in Cash, Cash Equivalents and Restricted Cash $ 225,773  $ 255,540 
Cash, Cash Equivalents and Restricted Cash, Beginning of Period $ 1,124,484  $ 763,586 
Cash, Cash Equivalents and Restricted Cash, End of Period $ 1,350,257  $ 1,019,126 
7

LENDINGCLUB CORPORATION
Condensed Consolidated Statements of Cash Flows (Continued)
(In Thousands)
(Unaudited)
Nine Months Ended
September 30,
  2023 2022
Supplemental Cash Flow Information:
Cash paid for interest $ 180,167  $ 43,623 
Cash paid for taxes $ 7,757  $ 14,003 
Cash paid for operating leases included in the measurement of lease liabilities
 $ 9,581  $ 12,394 
Non-cash investing activity:
Net asset-backed securities retained from Structured Program transactions
 $ 454,831  $ — 
Non-cash financing activity:
Derecognition of payable to securitization note and residual certificate holders held in consolidated VIE $ —  $ 36,072 

The following presents cash, cash equivalents and restricted cash by category within the Balance Sheet:
  September 30,
2023		 December 31, 2022
Cash and cash equivalents $ 1,307,770  $ 1,057,030 
Restricted cash 42,487  67,454 
Total cash, cash equivalents and restricted cash
 $ 1,350,257  $ 1,124,484 

See Notes to Condensed Consolidated Financial Statements.
8

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)


1. Summary of Significant Accounting Policies

Basis of Presentation

On February 1, 2021, LendingClub Corporation (LendingClub) completed the acquisition (the Acquisition) of Radius Bancorp, Inc. (Radius), whereby LendingClub became a bank holding company and formed LendingClub Bank, National Association (LC Bank) as its wholly-owned subsidiary. The Company operates the vast majority of its business through LC Bank, as a lender and originator of loans and as a regulated bank in the United States.

All intercompany balances and transactions have been eliminated in consolidation. These condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and, in the opinion of management, contain all adjustments, including normal recurring adjustments, necessary for the fair statement of the results and financial position for the periods presented. These accounting principles require management to make certain estimates and assumptions that affect the amounts in the accompanying financial statements. These estimates and assumptions are inherently subjective in nature and actual results may differ from these estimates and assumptions, and the differences could be material. Results reported in interim periods are not necessarily indicative of results for the full year or any other interim period. Certain prior period amounts in the condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period presentation.

The accompanying interim condensed consolidated financial statements and these related notes should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (Annual Report) filed on February 9, 2023.

Significant Accounting Policies

Derivative Instruments and Hedging Activities

The Company recognizes all derivative instruments at fair value, on a gross basis, as either “Other assets” or “Other liabilities” on the Balance Sheet. Changes in fair value of the derivative instruments are recognized in current period earnings.

For derivative instruments that qualify as hedges, the Company designates the hedging instrument based on the exposure being hedged. The Company’s existing hedging instruments are designated as fair value hedges under the portfolio layer method, whereby changes in the fair value of the hedging instrument are substantially offset by changes in the fair value of the hedged item, both of which are recognized in “Interest and fees on loans held for investment at amortized cost” on the Income Statement. Interest payments made and/or received related to these derivative instruments are presented within the “Operating activities” section on the Statements of Cash Flows.

To qualify for hedge accounting, the derivatives and related hedged items must be designated as a hedge at inception of the hedge relationship. In addition, a derivative must be highly effective at reducing the risk associated with the exposure being hedged. For accounting hedge relationships, the Company formally assesses, both at the inception of the hedge and on an ongoing basis, if the derivatives are highly effective in offsetting designated changes in the fair value of the hedged item. The Company assesses effectiveness using a statistical regression analysis. Effectiveness may be assessed qualitatively where the critical terms of the derivative and hedged item match.

The Company’s significant accounting policies are discussed in “Part II – Item 8. Financial Statements and Supplementary Data – Note 1. Summary of Significant Accounting Policies” in the Annual Report. There have been no other changes to these significant accounting policies for the nine-month period ended September 30, 2023, except for the impact of the new adopted accounting standards noted below.
9

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)


Adoption of New Accounting Standards

The Company adopted the following new accounting standards during the nine-month period ended September 30, 2023:

The FASB issued Accounting Standards Update (ASU) 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which eliminates the accounting guidance on troubled debt restructurings (TDRs) for creditors that have adopted the Current Expected Credit Losses (CECL) model and adds a requirement to disclose current period gross charge-offs by year of origination. The Company adopted ASU 2022-02 as of January 1, 2023, on a prospective basis. The ASU updates the requirements related to accounting for credit losses under Accounting Standards Codification 326, including removing anticipatory TDRs and requiring the use of the post-modified effective interest rate when a discounted cash flow method is used in the CECL calculation. The ASU updates disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty.

The FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which, if certain criteria are met, provide optional expedients and exceptions for applying GAAP to transactions affected by reference rate reform. The provisions of this topic are elective and may be applied prospectively as of the beginning of the reporting period when the election is made through December 31, 2024. The Company adopted this standard as of April 1, 2023. The adoption of this standard did not have a material impact on the Company’s financial position, results of operations, cash flows, and disclosures.

2. Marketplace Revenue

Marketplace revenue consists of (i) origination fees, (ii) servicing fees, (iii) gain (loss) on sales of loans and (iv) net fair value adjustments, as described below.

Origination Fees: The Company receives fees from borrowers for the origination of unsecured personal loans that are held for sale.

Servicing Fees: The Company receives servicing fees to compensate it for servicing loans on behalf of investors, including managing payments and collections from borrowers and payments to those investors. The amount of servicing fee revenue earned is predominantly affected by the servicing rates paid by investors and the outstanding principal balance of loans serviced for investors. Servicing fee revenue related to loans sold also includes the associated change in the fair value of servicing assets.

Gain (Loss) on Sales of Loans: In connection with loan sales, the Company recognizes a gain or loss on the sale of loans based on the level to which the contractual servicing fee is above or below an estimated market rate of servicing. Additionally, the Company recognizes transaction costs, if any, as a loss on sale of loans.

Net Fair Value Adjustments: The Company records fair value adjustments on loans that are recorded at fair value, including gains or losses from sale prices in excess of or less than the loan principal amount sold.

10

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

The following table presents components of marketplace revenue for the periods presented:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2023 2022 2023 2022
Origination fees $ 60,912  $ 127,142  $ 202,444  $ 398,487 
Servicing fees 32,768  23,760  81,163  60,440 
Gain on sales of loans 8,572  23,554  35,918  76,983 
Net fair value adjustments (41,366) (619) (80,222) 24,277 
Total marketplace revenue $ 60,886  $ 173,837  $ 239,303  $ 560,187 

3. Earnings Per Share

The following table details the computation of the Company’s Basic and Diluted EPS:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2023 2022 2023 2022
Basic EPS:
Net income attributable to stockholders $ 5,008  $ 43,198  $ 28,784  $ 266,094 
Weighted-average common shares – Basic 109,071,180  104,215,594  107,966,544  102,838,645 
Basic EPS $ 0.05  $ 0.41  $ 0.27  $ 2.59 
Diluted EPS:
Net income attributable to stockholders $ 5,008  $ 43,198  $ 28,784  $ 266,094 
Weighted-average common shares – Diluted 109,073,194  105,853,938  107,969,920  104,116,240 
Diluted EPS $ 0.05  $ 0.41  $ 0.27  $ 2.56 

11

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

4. Securities Available for Sale

The amortized cost, gross unrealized gains and losses, and fair value of available for sale (AFS) securities were as follows:
September 30, 2023 Amortized
Cost		 Gross
Unrealized
Gains		 Gross
Unrealized
Losses		 Fair
Value
Senior asset-backed securities related to Structured Program transactions $ 413,850  $ —  $ (1,453) $ 412,397 
U.S. agency residential mortgage-backed securities 263,568  —  (52,331) 211,237 
U.S. agency securities 93,451  —  (18,372) 75,079 
Mortgage-backed securities 43,162  —  (7,013) 36,149 
Other asset-backed securities related to Structured Program transactions (1)
 26,831  4,540  (309) 31,062 
Other asset-backed securities 28,217  34  (787) 27,464 
Municipal securities 3,262  —  (981) 2,281 
Total securities available for sale (2)
 $ 872,341  $ 4,574  $ (81,246) $ 795,669 
December 31, 2022 Amortized
Cost		 Gross
Unrealized
Gains		 Gross
Unrealized
Losses		 Fair
Value
U.S. agency residential mortgage-backed securities $ 255,675  $ —  $ (41,248) $ 214,427 
U.S. agency securities 90,447  —  (16,053) 74,394 
Mortgage-backed securities 26,988  —  (4,470) 22,518 
Asset-backed securities related to Structured Program transactions 8,322  9,395  —  17,717 
Other asset-backed securities 14,959  29  (785) 14,203 
Municipal securities 3,277  —  (834) 2,443 
Total securities available for sale (2)
 $ 399,668  $ 9,424  $ (63,390) $ 345,702 
(1)    As of September 30, 2023, $24.8 million of the other asset-backed securities related to Structured Program transactions at fair value are subject to restrictions on transfer pursuant to the Company’s obligations as a “sponsor” under the U.S. Risk Retention Rules.
(2)    As of September 30, 2023 and December 31, 2022, includes $341.6 million and $319.0 million, respectively, of fair value securities pledged as collateral.

12

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

A summary of AFS securities with unrealized losses for which a credit valuation allowance has not been recorded, aggregated by period of continuous unrealized loss, is as follows:
Less than
12 months		 12 months
or longer		 Total
September 30, 2023 Fair
Value		 Unrealized
Losses		 Fair
Value		 Unrealized
Losses		 Fair
Value		 Unrealized
Losses
Senior asset-backed securities related to Structured Program transactions $ 372,388  $ (1,453) $ —  $ —  $ 372,388  $ (1,453)
U.S. agency residential mortgage-backed securities 21,064  (892) 190,173  (51,439) 211,237  (52,331)
U.S. agency securities 2,960  (40) 72,119  (18,332) 75,079  (18,372)
Mortgage-backed securities 16,278  (1,387) 19,871  (5,626) 36,149  (7,013)
Other asset-backed securities 14,112  (47) 8,233  (740) 22,345  (787)
Other asset-backed securities related to Structured Program transactions 21,486  (309) —  —  21,486  (309)
Municipal securities —  —  2,281  (981) 2,281  (981)
Total securities with unrealized losses $ 448,288  $ (4,128) $ 292,677  $ (77,118) $ 740,965  $ (81,246)
Less than
12 months		 12 months
or longer		 Total
December 31, 2022 Fair
Value		 Unrealized
Losses		 Fair
Value		 Unrealized
Losses		 Fair
Value		 Unrealized
Losses
U.S. agency residential mortgage-backed securities $ 111,843  $ (15,831) $ 102,584  $ (25,417) $ 214,427  $ (41,248)
U.S. agency securities 50,352  (7,213) 24,042  (8,840) 74,394  (16,053)
Mortgage-backed securities 2,441  (229) 20,077  (4,241) 22,518  (4,470)
Other asset-backed securities 4,086  (73) 6,945  (712) 11,031  (785)
Municipal securities —  —  2,443  (834) 2,443  (834)
Total securities with unrealized losses $ 168,722  $ (23,346) $ 156,091  $ (40,044) $ 324,813  $ (63,390)

There was no activity in the allowance for AFS securities during the third quarters and first nine months of 2023 and 2022. At September 30, 2023, the majority of the Company’s AFS investment portfolio was comprised of senior asset-backed securities related to Structured Program transactions and U.S. agency-backed securities. Management considers U.S. agency-backed securities to be of the highest credit quality and rating given the guarantee of principal and interest by certain U.S. government agencies. Most of the remaining securities in an unrealized loss position in the Company’s AFS investment portfolio at September 30, 2023, were rated investment grade. Substantially all of these unrealized losses in the AFS investment portfolio were caused by interest rate increases. The Company does not intend to sell the investment portfolio, and it is not more likely than not that it will be required to sell any investment before recovery of its amortized cost basis. For a description of management’s quarterly evaluation of AFS securities in an unrealized loss position, see “Part II – Item 8. Financial Statements and Supplementary Data – Note 1. Summary of Significant Accounting Policies” in our Annual Report.

13

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)


The contractual maturities of AFS securities were as follows:
September 30, 2023 Amortized Cost Fair Value
Weighted-
average
Yield (1)
Due within 1 year:
Senior asset-backed securities related to Structured Program transactions $ 230  $ 230 
Total due within 1 year 230  230  46.15  %
Due after 1 year through 5 years:
Senior asset-backed securities related to Structured Program transactions 413,620  412,167 
Other asset-backed securities related to Structured Program transactions 26,831  31,062 
U.S. agency securities 9,000  8,567 
Mortgage-backed securities 1,774  1,556 
Other asset-backed securities 441  443 
U.S. agency residential mortgage-backed securities 4  3 
Total due after 1 year through 5 years 451,670  453,798  3.17  %
Due after 5 years through 10 years:
U.S. agency securities 18,848  16,768 
Other asset-backed securities 15,567  15,545 
U.S. agency residential mortgage-backed securities 5,177  4,696 
Mortgage-backed securities 2,036  1,634 
Municipal securities 621  516 
Total due after 5 years through 10 years 42,249  39,159  4.27  %
Due after 10 years:
U.S. agency residential mortgage-backed securities 258,387  206,538 
U.S. agency securities 65,603  49,744 
Mortgage-backed securities 39,352  32,959 
Other asset-backed securities 12,209  11,476 
Municipal securities 2,641  1,765 
Total due after 10 years 378,192  302,482  2.80  %
Total securities available for sale $ 872,341  $ 795,669  3.07  %
(1)    The weighted-average yield is computed using the amortized cost at September 30, 2023.

There were no sales of AFS securities during the third quarters and first nine months of 2023 and 2022.

14

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

5. Loans and Leases Held for Investment at Amortized Cost, Net of Allowance for Loan and Lease Losses

LendingClub records certain loans and leases held for investment (HFI) at amortized cost. Other HFI and all held for sale (HFS) loans are recorded at fair value with the Company’s election of the fair value option. Net accrued interest receivable is excluded from the amortized cost basis of loans and leases HFI and is reported within “Other assets” on the Balance Sheet. Net accrued interest receivable related to loans and leases HFI at amortized cost was $34.3 million and $27.9 million as of September 30, 2023 and December 31, 2022, respectively.

Loans and Leases Held for Investment at Amortized Cost

The Company defines its loans and leases HFI portfolio segments as (i) consumer and (ii) commercial. The following table presents the components of each portfolio segment by class of financing receivable:
September 30, 2023 December 31, 2022
Unsecured personal $ 4,094,748  $ 3,866,373 
Residential mortgages 186,510  199,601 
Secured consumer 254,105  194,634 
Total consumer loans held for investment 4,535,363  4,260,608 
Equipment finance (1)
 125,289  160,319 
Commercial real estate 373,246  373,501 
Commercial and industrial (2)
 203,379  238,726 
Total commercial loans and leases held for investment 701,914  772,546 
Total loans and leases held for investment 5,237,277  5,033,154 
Allowance for loan and lease losses (350,495) (327,852)
Loans and leases held for investment, net (3)
 $ 4,886,782  $ 4,705,302 
(1)    Comprised of sales-type leases for equipment. See “Note 17. Leases” for additional information.
(2)    Includes $7.6 million and $67.0 million of pledged loans under the Paycheck Protection Program (PPP) as of September 30, 2023 and December 31, 2022, respectively.
(3)    As of September 30, 2023 and December 31, 2022, the Company had $4.0 billion and $283.6 million in loans pledged as collateral under the Federal Reserve Bank (FRB) Discount Window, respectively. In addition, as of September 30, 2023 and December 31, 2022, the Company had $511.2 million and $156.2 million in loans pledged to the Federal Home Loan Bank (FHLB) of Des Moines, respectively.

September 30, 2023 Gross ALLL Net
Allowance Ratios (1)
Total consumer loans held for investment $ 4,535,363  $ 336,288  $ 4,199,075  7.4  %
Total commercial loans and leases held for investment 701,914  14,207  687,707  2.0  %
Total loans and leases held for investment $ 5,237,277  $ 350,495  $ 4,886,782  6.7  %
December 31, 2022 Gross ALLL Net
Allowance Ratios (1)
Total consumer loans held for investment $ 4,260,608  $ 312,489  $ 3,948,119  7.3  %
Total commercial loans and leases held for investment 772,546  15,363  757,183  2.0  %
Total loans and leases held for investment $ 5,033,154  $ 327,852  $ 4,705,302  6.5  %
(1)    Calculated as the ratio of allowance for loan and lease losses (ALLL) to loans and leases HFI at amortized cost.

15

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

The activity in the ACL by portfolio segment was as follows:
Three Months Ended September 30,
2023 2022
Consumer Commercial Total Consumer Commercial Total
Allowance for loan and lease losses, beginning of period $ 341,161  $ 14,002  $ 355,163  $ 228,184  $ 15,076  $ 243,260 
Credit loss expense for loans and leases held for investment
 63,733  394  64,127  81,935  664  82,599 
Charge-offs (1)
 (73,644) (534) (74,178) (22,944) (784) (23,728)
Recoveries 5,038  345  5,383  963  107  1,070 
Allowance for loan and lease losses, end of period $ 336,288  $ 14,207  $ 350,495  $ 288,138  $ 15,063  $ 303,201 
Reserve for unfunded lending commitments, beginning of period $ —  $ 2,017  $ 2,017  $ 136  $ 1,889  $ 2,025 
Credit loss expense for unfunded lending commitments —  352  352  (78) 218  140 
Reserve for unfunded lending commitments, end of period (2)
 $ —  $ 2,369  $ 2,369  $ 58  $ 2,107  $ 2,165 
Nine Months Ended September 30,
2023 2022
Consumer Commercial Total Consumer Commercial Total
Allowance for loan and lease losses, beginning of period $ 312,489  $ 15,363  $ 327,852  $ 128,812  $ 15,577  $ 144,389 
Credit loss expense for loans and leases held for investment
 201,291  (124) 201,167  203,967  913  204,880 
Charge-offs (1)
 (189,201) (1,809) (191,010) (46,668) (2,001) (48,669)
Recoveries 11,709  777  12,486  2,027  574  2,601 
Allowance for loan and lease losses, end of period $ 336,288  $ 14,207  $ 350,495  $ 288,138  $ 15,063  $ 303,201 
Reserve for unfunded lending commitments, beginning of period $ 18  $ 1,860  $ 1,878  $ —  $ 1,231  $ 1,231 
Credit loss expense for unfunded lending commitments (18) 509  491  58  876  934 
Reserve for unfunded lending commitments, end of period (2)
 $ —  $ 2,369  $ 2,369  $ 58  $ 2,107  $ 2,165 
(1)    Unsecured personal loans are charged-off when a borrower is (i) contractually 120 days past due or (ii) two payments past due and has filed for bankruptcy or is deceased.
(2)    Relates to $89.5 million and $144.0 million of unfunded commitments, associated primarily with the commercial loan portfolio, as of September 30, 2023 and 2022, respectively.

16

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

The following table presents year-to-date gross charge-offs by origination year for the period presented:
Nine Months Ended September 30, 2023
Gross Charge-Offs by Origination Year
2023 2022 2021 2020 2019 Prior Total
Unsecured personal $ 7,730  $ 106,835  $ 72,330  $ —  $ —  $ —  $ 186,895 
Residential mortgages —  —  —  —  —  —  — 
Secured consumer 93  1,668  545  —  —  —  2,306 
Total consumer loans held for investment 7,823  108,503  72,875  —  —  —  189,201 
Equipment finance —  —  —  —  —  —  — 
Commercial real estate —  —  —  —  —  —  — 
Commercial and industrial —  —  1,369  —  318  122  1,809 
Total commercial loans and leases held for investment —  —  1,369  —  318  122  1,809 
Total loans and leases held for investment $ 7,823  $ 108,503  $ 74,244  $ —  $ 318  $ 122  $ 191,010 

The Company has programs to modify loans for borrowers experiencing financial difficulty. Such modifications primarily include principal forgiveness, term extensions and/or interest rate reductions. Given that unsecured personal loans typically charge-off within a few months following modification, the total amortized cost balances are not significant for the period presented.

17

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

Consumer Lending Credit Quality Indicators

The Company evaluates the credit quality of its consumer loan portfolio based on the aging status of the loan and by payment activity. Loan delinquency reporting is based upon borrower payment activity relative to the contractual terms of the loan. The following tables present the classes of financing receivables within the consumer portfolio segment by credit quality indicator based on delinquency status and origination year:
September 30, 2023  Term Loans and Leases by Origination Year
2023 2022 2021 2020 2019 Prior Total
Unsecured personal
Current $ 1,500,780  $ 1,954,955  $ 552,491  $ —  $ —  $ —  $ 4,008,226 
30-59 days past due 6,728  18,780  7,968  —  —  —  33,476 
60-89 days past due 4,159  15,830  6,679  —  —  —  26,668 
90 or more days past due 4,409  16,987  8,002  —  —  —  29,398 
Total unsecured personal (1)
 1,516,076  2,006,552  575,140  —  —  —  4,097,768 
Residential mortgages
Current —  48,934  56,128  30,204  20,403  30,678  186,347 
30-59 days past due —  —  —  —  —  —  — 
60-89 days past due —  —  —  —  —  —  — 
90 or more days past due —  —  —  —  —  163  163 
Total residential mortgages —  48,934  56,128  30,204  20,403  30,841  186,510 
Secured consumer
Current 114,186  109,327  25,434  —  2,481  —  251,428 
30-59 days past due 199  1,188  291  —  —  —  1,678 
60-89 days past due 45  484  261  —  —  —  790 
90 or more days past due —  149  60  —  —  —  209 
Total secured consumer 114,430  111,148  26,046  —  2,481  —  254,105 
Total consumer loans held for investment $ 1,630,506  $ 2,166,634  $ 657,314  $ 30,204  $ 22,884  $ 30,841  $ 4,538,383 
(1)    Excludes cumulative basis adjustment for loans designated in fair value hedges under the portfolio layer method. As of September 30, 2023, the basis adjustment totaled $3.0 million and represents a reduction to the amortized cost of the hedged loans. See “Note 8. Derivative Instruments and Hedging Activities” for additional information.

18

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

December 31, 2022  Term Loans and Leases by Origination Year
2022 2021 2020 2019 2018 Prior Total
Unsecured personal
Current $ 2,835,460  $ 977,224  $ —  $ —  $ —  $ —  $ 3,812,684 
30-59 days past due 11,149  9,867  —  —  —  —  21,016 
60-89 days past due 7,785  8,633  —  —  —  —  16,418 
90 or more days past due 6,813  9,442  —  —  —  —  16,255 
Total unsecured personal 2,861,207  1,005,166  —  —  —  —  3,866,373 
Residential mortgages
Current 49,721  58,353  31,465  21,683  4,546  33,248  199,016 
30-59 days past due —  —  —  —  —  —  — 
60-89 days past due —  —  —  —  —  254  254 
90 or more days past due —  —  —  —  —  331  331 
Total residential mortgages 49,721  58,353  31,465  21,683  4,546  33,833  199,601 
Secured consumer
Current 151,725  38,076  —  2,543  —  —  192,344 
30-59 days past due 1,017  703  —  —  —  —  1,720 
60-89 days past due 235  147  —  —  —  —  382 
90 or more days past due 116  72  —  —  —  —  188 
Total secured consumer 153,093  38,998  —  2,543  —  —  194,634 
Total consumer loans held for investment $ 3,064,021  $ 1,102,517  $ 31,465  $ 24,226  $ 4,546  $ 33,833  $ 4,260,608 

Commercial Lending Credit Quality Indicators

The Company evaluates the credit quality of its commercial loan portfolio based on regulatory risk ratings. The Company categorizes loans and leases into risk ratings based on relevant information about the quality and realizable value of collateral, if any, and the ability of borrowers to service their debts, such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans and leases individually by classifying the loans and leases based on their associated credit risk and performs this analysis whenever credit is extended, renewed or modified, or when an observable event occurs indicating a potential decline in credit quality, and no less than annually for large balance loans. Risk rating classifications consist of the following:

Pass – Loans and leases that the Company believes will fully repay in accordance with the contractual loan terms.

Special Mention – Loans and leases with a potential weakness that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or the Company’s credit position at some future date.

Substandard – Loans and leases that are inadequately protected by the current sound worth and paying capacity of the obligator or of the collateral pledged, if any. Loans and leases so classified have a well-defined weakness or weaknesses that jeopardize the repayment and liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Normal payment from the borrower is in jeopardy, although loss of principal, while still possible, is not imminent.

Doubtful – Loans and leases that have all the weaknesses inherent in those classified as Substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable.

Loss – Loans and leases that are considered uncollectible and of little value.
19

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)


The following tables present the classes of financing receivables within the commercial portfolio segment by risk rating and origination year:
September 30, 2023  Term Loans and Leases by Origination Year
2023 2022 2021 2020 2019 Prior Total
Guaranteed Amount (1)
Equipment finance
Pass $ 3,266  $ 36,438  $ 29,017  $ 9,088  $ 8,963  $ 8,797  $ 95,569  $ — 
Special mention —  15,059  2,435  6,085  2,872  —  26,451  — 
Substandard —  —  —  536  —  2,733  3,269  — 
Doubtful —  —  —  —  —  —  —  — 
Loss —  —  —  —  —  —  —  — 
Total equipment finance 3,266  51,497  31,452  15,709  11,835  11,530  125,289  — 
Commercial real estate
Pass 39,237  94,645  35,078  43,382  52,066  76,254  340,662  33,681 
Special mention —  —  —  —  —  9,362  9,362  — 
Substandard —  3,641  6,738  —  221  10,571  21,171  8,515 
Doubtful —  —  —  —  —  —  —  — 
Loss —  —  1,515  —  —  536  2,051  1,471 
Total commercial real estate 39,237  98,286  43,331  43,382  52,287  96,723  373,246  43,667 
Commercial and industrial
Pass 35,793  64,912  42,901  10,287  9,136  11,054  174,083  107,266 
Special mention —  10,734  1,252  1,297  115  385  13,783  9,469 
Substandard —  1,102  5,133  787  3,691  3,253  13,966  7,986 
Doubtful —  —  —  —  —  286  286  216 
Loss —  —  —  —  —  1,261  1,261  1,229 
Total commercial and industrial 35,793  76,748  49,286  12,371  12,942  16,239  203,379  126,166 
Total commercial loans and leases held for investment $ 78,296  $ 226,531  $ 124,069  $ 71,462  $ 77,064  $ 124,492  $ 701,914  $ 169,833 
(1)    Represents loan balances guaranteed by the Small Business Association (SBA).

20

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

December 31, 2022  Term Loans and Leases by Origination Year
2022 2021 2020 2019 2018 Prior Total
Guaranteed Amount (1)
Equipment finance
Pass $ 59,227  $ 38,218  $ 25,014  $ 15,785  $ 11,880  $ 3,444  $ 153,568  $ — 
Special mention —  2,094  —  3,759  —  —  5,853  — 
Substandard —  —  859  —  39  —  898  — 
Doubtful —  —  —  —  —  —  —  — 
Loss —  —  —  —  —  —  —  — 
Total equipment finance 59,227  40,312  25,873  19,544  11,919  3,444  160,319  — 
Commercial real estate
Pass 100,602  53,445  47,497  52,834  35,992  60,976  351,346  40,693 
Special mention —  —  8,415  260  1,237  405  10,317  — 
Substandard —  —  —  643  2,404  8,215  11,262  — 
Doubtful —  —  —  —  —  —  —  — 
Loss —  —  —  —  —  576  576  — 
Total commercial real estate 100,602  53,445  55,912  53,737  39,633  70,172  373,501  40,693 
Commercial and industrial
Pass 61,076  99,264  24,726  13,866  5,174  10,831  214,937  141,858 
Special mention —  —  —  483  163  455  1,101  44 
Substandard —  9,361  4,529  3,623  797  2,820  21,130  5,716 
Doubtful —  —  —  —  —  286  286  216 
Loss —  —  —  —  1  1,271  1,272  1,229 
Total commercial and industrial 61,076  108,625  29,255  17,972  6,135  15,663  238,726  149,063 
Total commercial loans and leases held for investment $ 220,905  $ 202,382  $ 111,040  $ 91,253  $ 57,687  $ 89,279  $ 772,546  $ 189,756 
(1)    Represents loan balances guaranteed by the SBA.

The following tables present an analysis of the past due loans and leases HFI within the commercial portfolio segment:
September 30, 2023 30-59
Days		 60-89
Days		 90 or More
Days		 Total
Equipment finance $ —  $ 3,150  $ —  $ 3,150 
Commercial real estate 4,493  434  1,618  6,545 
Commercial and industrial (1)
 1,514  29  1,515  3,058 
Total commercial loans and leases held for investment $ 6,007  $ 3,613  $ 3,133  $ 12,753 
December 31, 2022 30-59
Days		 60-89
Days		 90 or More
Days		 Total
Equipment finance $ 3,172  $ —  $ 859  $ 4,031 
Commercial real estate —  102  —  102 
Commercial and industrial (1)
 —  —  1,643  1,643 
Total commercial loans and leases held for investment $ 3,172  $ 102  $ 2,502  $ 5,776 
(1)    Past due PPP loans are excluded from the tables.

Nonaccrual Assets

Nonaccrual loans and leases are those for which accrual of interest has been suspended. Loans and leases are generally placed on nonaccrual status when contractually past due 90 days or more, or earlier if management believes that the probability of collection does not warrant further accrual, and are charged-off no later than 120 days past due.
21

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)


The following table presents nonaccrual loans and leases:
September 30, 2023 December 31, 2022
Nonaccrual (1)
Nonaccrual with no related ACL (2)
Nonaccrual (1)
Nonaccrual with no related ACL (2)
Unsecured personal $ 29,398  $ —  $ 16,255  $ — 
Residential mortgages 316  316  331  331 
Secured consumer 209  —  188  — 
Total nonaccrual consumer loans held for investment 29,923  316  16,774  331 
Equipment finance 2,733  —  898  39 
Commercial real estate 10,113  2,431  1,018  1,018 
Commercial and industrial 7,230  1,892  16,137  1,229 
Total nonaccrual commercial loans and leases held for investment (3)
 20,076  4,323  18,053  2,286 
Total nonaccrual loans and leases held for investment $ 49,999  $ 4,639  $ 34,827  $ 2,617 
(1)     Excluding PPP loans, there were no loans and leases that were 90 days or more past due and accruing as of both September 30, 2023 and December 31, 2022.
(2)     Subset of total nonaccrual loans and leases.
(3)     Includes $12.7 million and $4.9 million in loan balances guaranteed by the SBA as of September 30, 2023 and December 31, 2022, respectively.

September 30, 2023 December 31, 2022
Nonaccrual
Nonaccrual Ratios (1)
 Nonaccrual
Nonaccrual Ratios (1)
Total nonaccrual consumer loans held for investment $ 29,923  0.7  % $ 16,774  0.4  %
Total nonaccrual commercial loans and leases held for investment 20,076  2.9  % 18,053  2.3  %
Total nonaccrual loans and leases held for investment $ 49,999  1.0  % $ 34,827  0.7  %
(1)     Calculated as the ratio of nonaccruing loans and leases to loans and leases HFI at amortized cost.

Collateral-Dependent Assets

Certain loans on non-accrual status may be considered collateral-dependent loans if the borrower is experiencing financial difficulty and repayment of the loan is expected to be substantially through sale or operation of the collateral. Expected credit losses for the Company’s collateral-dependent loans are calculated as the difference between the amortized cost basis and the fair value of the underlying collateral less costs to sell, if applicable.

22

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

6. Securitizations and Variable Interest Entities

VIE Assets and Liabilities

The following table presents the classifications of assets and liabilities on the Company’s Balance Sheet for its transactions with consolidated and unconsolidated VIEs. The Company’s transactions with VIEs include Structured Program transactions. The Company has also various forms of involvement with VIEs, including servicing loans and holding senior asset-backed securities or subordinated interests in the VIEs. Additionally, the assets and liabilities in the table below exclude intercompany balances that were eliminated in consolidation.

September 30, 2023 December 31, 2022
Consolidated Unconsolidated Total Consolidated Unconsolidated Total
Assets
Restricted cash $ 3,813  $ —  $ 3,813  $ 8,048  $ —  $ 8,048 
Securities available for sale at fair value —  443,460  443,460  —  17,717  17,717 
Loans held for investment at fair value 1,095  —  1,095  3,994  —  3,994 
Retail and certificate loans held for investment at fair value 637  —  637  1,946  —  1,946 
Other assets 19  17,161  17,180  206  10,464  10,670 
Total assets $ 5,564  $ 460,621  $ 466,185  $ 14,194  $ 28,181  $ 42,375 
Liabilities
Borrowings $ 3,329  $ —  $ 3,329  $ 8,085  $ —  $ 8,085 
Retail notes, certificates and secured borrowings at fair value 637  —  637  1,946  —  1,946 
Other liabilities 5  980  985  29  —  29 
Total liabilities 3,971  980  4,951  10,060  —  10,060 
Total net assets (maximum loss exposure) $ 1,593  $ 459,641  $ 461,234  $ 4,134  $ 28,181  $ 32,315 

Maximum loss exposure represents estimated loss that would be incurred under severe, hypothetical circumstances, for which the Company believes the possibility is extremely remote, such as where the value of interests and any associated collateral declines to zero. Accordingly, this required disclosure is not an indication of expected losses.

23

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

Unconsolidated VIEs

The following table summarizes activity related to unconsolidated VIEs where the transfers were accounted for as a sale on the Company’s financial statements:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2023 2022 2023 2022
Fair value of consideration received:
Cash $ 40,994  $ —  $ 59,045  $ 5,320 
Asset-backed securities retained 301,602  —  454,831  2,180 
Other assets (liabilities) 3,790  —  6,089  (3,794)
Total consideration 346,386  —  519,965  3,706 
Deconsolidation of debt —  —  —  36,072 
Fair value of loans sold (343,142) —  (514,701) (39,519)
Gain on sales of loans (1)
 $ 3,244  $ —  $ 5,264  $ 259 
Cash proceeds from continuing involvement:
Servicing and other administrative fees $ 1,234  $ 1,782  $ 3,110  $ 7,294 
Interest received on asset-backed securities retained $ 5,142  $ 1,294  $ 8,736  $ 6,373 
(1)    Consists primarily of servicing assets recognized at the time of sale, less any transaction costs, and excludes origination fees and fair value adjustments recognized prior to the sale. Prior period amounts have been reclassified to conform to the current period presentation.

Beginning in the second quarter of 2023, the Company resumed its sponsoring of Structured Program transactions in which it retains the senior securities at a contractual interest rate, in addition to the amount required pursuant to the U.S. Risk Retention Rules, and sells the residual certificates. See “Note 4. Securities Available for Sale” for the securities retained in the Company’s investment portfolio related to such transactions.

Holders of the senior securities issued by the unconsolidated VIEs have rights to their contractual cash flows prior to those that hold subordinated interests. There is no direct recourse to the Company’s assets, and holders of the securities can look only to those assets of the VIEs that issued their securities for payment. The beneficial interests are subject principally to the credit and prepayment risk stemming from the underlying unsecured personal loans.

As of September 30, 2023, the aggregate unpaid principal balance held by unconsolidated VIEs was $678.5 million, of which $7.7 million was attributable to off-balance sheet loans that were 31 days or more past due. As of December 31, 2022, the aggregate unpaid principal balance held by unconsolidated VIEs was $433.5 million, of which $14.8 million was attributable to off-balance sheet loans that were 31 days or more past due. For such loans, the Company would only experience a loss if it was required to repurchase a loan due to a breach in representations and warranties associated with its loan sale or servicing contracts.

7. Fair Value of Assets and Liabilities

For a description of the fair value hierarchy and the Company’s fair value methodologies, see “Part II – Item 8. Financial Statements and Supplementary Data – Note 1. Summary of Significant Accounting Policies” in the Annual Report. The Company records certain assets and liabilities at fair value as listed in the following tables.

24

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

Financial Instruments, Assets and Liabilities Recorded at Fair Value

The following tables present the fair value hierarchy for assets and liabilities measured at fair value:
September 30, 2023 Level 1 Inputs Level 2 Inputs Level 3 Inputs Balance at
Fair Value
Assets:
Loans held for sale at fair value $ —  $ —  $ 362,789  $ 362,789 
Loans held for investment at fair value —  —  326,299  326,299 
Retail and certificate loans held for investment at fair value —  —  18,118  18,118 
Securities available for sale:
Senior asset-backed securities related to Structured Program transactions —  —  412,397  412,397 
U.S. agency residential mortgage-backed securities —  211,237  —  211,237 
U.S. agency securities —  75,079  —  75,079 
Mortgage-backed securities —  36,149  —  36,149 
Other asset-backed securities related to Structured Program transactions —  —  31,062  31,062 
Other asset-backed securities —  27,464  —  27,464 
Municipal securities —  2,281  —  2,281 
Total securities available for sale —  352,210  443,459  795,669 
Servicing assets —  —  81,760  81,760 
Other assets —  8,965  —  8,965 
Total assets $ —  $ 361,175  $ 1,232,425  $ 1,593,600 
Liabilities:
Borrowings $ —  $ —  $ 3,329  $ 3,329 
Retail notes, certificates and secured borrowings —  —  18,118  18,118 
Other liabilities —  5,482  4,614  10,096 
Total liabilities $ —  $ 5,482  $ 26,061  $ 31,543 

25

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

December 31, 2022
 Level 1 Inputs Level 2 Inputs Level 3 Inputs Balance at
Fair Value
Assets:
Loans held for sale at fair value $ —  $ —  $ 110,400  $ 110,400 
Loans held for investment at fair value —  —  925,938  925,938 
Retail and certificate loans held for investment at fair value —  —  55,425  55,425 
Securities available for sale:
U.S. agency residential mortgage-backed securities —  214,427  —  214,427 
U.S. agency securities —  74,394  —  74,394 
Mortgaged-backed securities —  22,518  —  22,518 
Other asset-backed securities —  14,203  —  14,203 
Asset-backed securities related to Structured Program transactions —  5,248  12,469  17,717 
Municipal securities —  2,443  —  2,443 
Total securities available for sale —  333,233  12,469  345,702 
Servicing assets —  —  84,308  84,308 
Other assets —  —  5,099  5,099 
Total assets $ —  $ 333,233  $ 1,193,639  $ 1,526,872 
Liabilities:
Borrowings $ —  $ —  $ 8,085  $ 8,085 
Retail notes, certificates and secured borrowings —  —  55,425  55,425 
Other liabilities —  —  8,583  8,583
Total liabilities $ —  $ —  $ 72,093  $ 72,093 

Financial instruments are categorized in the valuation hierarchy based on the significance of observable or unobservable factors in the overall fair value measurement. For the financial instruments listed in the tables above that do not trade in an active market with readily observable prices, the Company uses significant unobservable inputs to measure the fair value of these assets and liabilities. These fair value estimates may also include observable, actively quoted components derived from external sources. As a result, changes in fair value for assets and liabilities within the Level 2 or Level 3 categories may include changes in fair value that were attributable to observable and unobservable inputs, respectively. The Company primarily uses a discounted cash flow (DCF) model to estimate the fair value of Level 3 instruments based on the present value of estimated future cash flows. This model uses inputs that are inherently judgmental and reflect the Company’s best estimates of the assumptions a market participant would use to calculate fair value. The Company did not transfer any assets or liabilities in or out of Level 3 during the third quarters and first nine months of 2023 or 2022.

Loans Held for Sale at Fair Value

In the third quarter of 2023, as part of its new extended seasoning program, the Company began accumulating loans into the HFS portfolio to meet investor demand for seasoned loans. Prior year comparative disclosures for the tables below are not presented as the comparability between periods would not be meaningful given that the current period relates primarily to the new extended seasoning program whereas in previous periods the majority of HFS loans were sold shortly after origination and at committed prices. As such, the Company was generally not exposed to fluctuations in the fair value of HFS loans in the prior period.
26

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)



Significant Unobservable Inputs

The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 loans HFS at fair value:
September 30, 2023
Minimum
Maximum
Weighted-
Average
Discount rates
 8.8  % 11.2  % 9.6  %
Net cumulative expected loss rates (1)
 3.5  % 23.4  % 10.9  %
Cumulative expected prepayment rates (1)
 27.7  % 37.3  % 32.5  %
(1)    Expressed as a percentage of the acquired principal balance of the loan.

Significant Recurring Level 3 Fair Value Input Sensitivity

The sensitivity of loans HFS at fair value to adverse changes in key assumptions are as follows:
September 30, 2023
Loans held for sale at fair value
 $ 362,789 
Expected weighted-average life (in years) 1.5
Discount rates:
100 basis point increase $ (4,628)
200 basis point increase $ (9,160)
Expected credit loss rates on underlying loans:
10% increase $ (4,292)
20% increase $ (8,530)
Expected prepayment rates:
10% increase $ (660)
20% increase $ (1,244)

Fair Value Reconciliation

The following table presents additional information about Level 3 loans HFS on a recurring basis:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2023 2023
Fair value at beginning of period $ 250,361  $ 110,400 
Originations and purchases 1,107,771  3,584,918 
Sales (950,451) (3,435,949)
Principal payments (22,372) (33,972)
Transfers 3,299  195,106 
Fair value adjustments recorded in earnings (25,819) (57,714)
Fair value at end of period $ 362,789  $ 362,789 

27

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

Loans Held for Investment at Fair Value

Significant Unobservable Inputs

The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 loans HFI at fair value:
September 30, 2023
December 31, 2022
Minimum
Maximum
Weighted-
Average
Minimum
Maximum
Weighted-
Average
Discount rates
 8.5  % 16.5  % 12.8  % 8.8  % 17.1  % 12.7  %
Net cumulative expected loss rates (1)
 2.5  % 11.0  % 7.1  % 2.1  % 9.8  % 5.7  %
Cumulative expected prepayment rates (1)
 20.6  % 28.5  % 25.2  % 26.2  % 35.3  % 30.8  %
(1)    Expressed as a percentage of the acquired principal balance of the loan.

Significant Recurring Level 3 Fair Value Input Sensitivity

The sensitivity of loans HFI at fair value to adverse changes in key assumptions are as follows:
September 30, 2023 December 31, 2022
Loans held for investment at fair value $ 326,299  $ 925,938 
Expected weighted-average life (in years) 0.9 0.9
Discount rates:
100 basis point increase $ (2,633) $ (7,471)
200 basis point increase $ (5,226) $ (14,830)
Expected credit loss rates on underlying loans:
10% increase $ (2,028) $ (5,574)
20% increase $ (3,985) $ (11,307)
Expected prepayment rates:
10% increase $ (1,519) $ (4,311)
20% increase $ (2,636) $ (7,480)

Fair Value Reconciliation

The following table presents additional information about Level 3 loans HFI at fair value on a recurring basis:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2023 2022 2023 2022
Fair value at beginning of period $ 404,119  $ 20,583  $ 925,938  $ 21,240 
Purchases 112  136  4,149  150 
Principal payments (76,495) (5,913) (419,233) (17,660)
Transfers (3,472) —  (195,106) 11,966 
Interest income accretion and fair value adjustments recorded in earnings 2,035  251  10,551  (639)
Fair value at end of period $ 326,299  $ 15,057  $ 326,299  $ 15,057 

28

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

Retail and Certificate Loans and Related Notes, Certificates and Secured Borrowings

The Company does not assume principal or interest rate risk on loans that were funded by its member payment- dependent self-directed retail program (Retail Program) because loan balances, interest rates and maturities are matched and offset by an equal balance of notes with the exact same interest rates and maturities. At September 30, 2023 and December 31, 2022, the DCF methodology used to estimate the retail note, certificate and secured borrowings’ fair values used the same projected net cash flows as their related loans. Therefore, the fair value adjustments for retail loans held for investment were largely offset by the corresponding fair value adjustments due to the payment dependent design of the retail notes, certificates and secured borrowings.

Asset-Backed Securities Related to Structured Program Transactions

Prior year comparative disclosures related to significant unobservable inputs, fair value sensitivities and fair value rollforwards for asset-backed securities related to Structured Program transactions are not presented below as the comparability between periods would not be meaningful given that the current period consists primarily of a new type of Structured Program transaction that the Company began entering into in the second quarter of 2023. See “Note 6. Securitizations and Variable Interest Entities” for more information.

Senior Asset-Backed Securities Related to Structured Program Transactions

As of September 30, 2023, the fair value of the senior asset-backed securities related to Structured Program transactions was $412.4 million with an expected weighted-average life of 1.5 years. Discount rates were the significant unobservable input used to measure the fair value of this Level 3 asset. The minimum, maximum and weighted-average discount rates assumptions were 7.7% as of September 30, 2023. A hypothetical 100 and 200 basis point increase in discount rates would decrease the fair value by $6.2 million and $12.3 million, respectively.

The following table presents additional information about Level 3 senior asset-backed securities related to Structured Program transactions measured at fair value on a recurring basis:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2023 2023
Fair value at beginning of period $ 142,785  $ — 
Additions 284,704  429,384 
Cash received (14,244) (15,534)
Change in unrealized loss (848) (1,453)
Fair value at end of period $ 412,397  $ 412,397 

29

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

Other Asset-Backed Securities Related to Structured Program Transactions

Significant Unobservable Inputs

The following table presents quantitative information about the significant unobservable inputs used for the
Company’s Level 3 fair value measurements for other asset-backed securities related to Structured Program transactions:
September 30, 2023
Minimum Maximum Weighted-
Average
Discount rates 8.8  % 11.2  % 9.5  %
Net cumulative expected loss rates (1)
 3.6  % 23.0  % 9.3  %
Cumulative expected prepayment rates (1)
 27.7  % 37.3  % 32.7  %
(1)    Expressed as a percentage of the outstanding collateral balance.

Significant Recurring Fair Value Input Sensitivity

The following table presents adverse changes to the fair value sensitivity of Level 3 other asset-backed securities related to Structured Program transactions to changes in key assumptions:
September 30, 2023
Fair value of interests held $ 31,062 
Expected weighted-average life (in years) 1.5
Discount rates
100 basis point increase $ (369)
200 basis point increase $ (735)
Expected loss rates
10% increase $ (523)
20% increase $ (1,058)
Expected prepayment rates
10% increase $ (190)
20% increase $ (425)

Fair Value Reconciliation

The following table presents additional information about Level 3 other asset-backed securities related to Structured Program transactions measured at fair value on a recurring basis:
Three Months Ended September 30, Nine Months Ended September 30,
2023 2023
Fair value at beginning of period $ 16,980  $ 12,469 
Additions 17,190  25,970 
Cash received (2,812) (7,081)
Change in unrealized loss
 (296) (296)
Fair value at end of period $ 31,062  $ 31,062 

30

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

Servicing Assets

Significant Unobservable Inputs

The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for servicing assets relating to loans sold to investors:
September 30, 2023 December 31, 2022
Minimum Maximum Weighted-
Average		 Minimum Maximum Weighted-
Average
Discount rates 8.7  % 17.3  % 11.6  % 7.5  % 16.4  % 10.1  %
Net cumulative expected loss rates (1)
 3.5  % 37.7  % 15.6  % 2.1  % 36.7  % 15.6  %
Cumulative expected prepayment rates (1)
 18.5  % 44.6  % 32.7  % 15.8  % 47.2  % 35.9  %
Total market servicing rates (% per annum on outstanding principal balance) (2)
 0.62  % 0.62  % 0.62  % 0.62  % 0.62  % 0.62  %
(1)    Expressed as a percentage of the original principal balance of the loan.
(2)    Includes collection fees estimated to be paid to a hypothetical third-party servicer.

Significant Recurring Level 3 Fair Value Input Sensitivity

The Company’s selection of the most representative market servicing rates for servicing assets is inherently judgmental. The Company reviews third-party servicing rates for its loans, loans in similar credit sectors, and market servicing benchmarking analyses provided by third-party valuation firms, when available. The table below shows the impact on the estimated fair value of servicing assets, calculated using different market servicing rate assumptions:
September 30,
2023		 December 31, 2022
Weighted-average market servicing rate assumptions
 0.62  % 0.62  %
Change in fair value from:
Servicing rate increase by 0.10%
 $ (8,759) $ (10,505)
Servicing rate decrease by 0.10%
 $ 8,759  $ 10,505 

The following table presents the fair value sensitivity of servicing assets to adverse changes in key assumptions:
September 30,
2023		 December 31, 2022
Fair value of servicing assets $ 81,760  $ 84,308 
Discount rates
100 basis point increase $ (695) $ (726)
200 basis point increase $ (1,391) $ (1,451)
Expected loss rates
10% increase $ (1,026) $ (1,037)
20% increase $ (2,051) $ (2,074)
Expected prepayment rates
10% increase $ (1,720) $ (1,994)
20% increase $ (3,440) $ (3,989)

31

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

Fair Value Reconciliation

The following table presents additional information about Level 3 servicing assets measured at fair value on a recurring basis:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2023 2022 2023 2022
Fair value at beginning of period $ 85,387  $ 79,427  $ 84,308  $ 67,726 
Issuances (1)
 11,568  22,319  39,269  73,774 
Change in fair value, included in Marketplace revenue (12,100) (14,689) (41,750) (52,702)
Other net changes (3,095) (539) (67) (2,280)
Fair value at end of period $ 81,760  $ 86,518  $ 81,760  $ 86,518 
(1)    Represents the gains or losses on sales of the related loans.

Financial Instruments, Assets and Liabilities Not Recorded at Fair Value

The following tables present the fair value hierarchy for financial instruments, assets, and liabilities not recorded at fair value:
September 30, 2023 Carrying Amount Level 1 Inputs Level 2 Inputs Level 3 Inputs Balance at
Fair Value
Assets:
Loans and leases held for investment, net $ 4,886,782  $ —  $ —  $ 5,060,962  $ 5,060,962 
Other assets 39,727  —  38,885  1,118  40,003 
Total assets $ 4,926,509  $ —  $ 38,885  $ 5,062,080  $ 5,100,965 
Liabilities:
Deposits (1)
 $ 1,169,593  $ —  $ —  $ 1,164,915  $ 1,164,915 
Borrowings 7,388  —  27  7,361  7,388 
Other liabilities 62,572  —  37,270  25,302  62,572 
Total liabilities $ 1,239,553  $ —  $ 37,297  $ 1,197,578  $ 1,234,875 
December 31, 2022 Carrying Amount Level 1 Inputs Level 2 Inputs Level 3 Inputs Balance at
Fair Value
Assets:
Loans and leases held for investment, net $ 4,705,302  $ —  $ —  $ 4,941,825  $ 4,941,825 
Other assets 36,646  —  35,300  1,397  36,697 
Total assets $ 4,741,948  $ —  $ 35,300  $ 4,943,222  $ 4,978,522 
Liabilities:
Deposits (1)
 $ 860,808  $ —  $ —  $ 860,808  $ 860,808 
Borrowings 66,773  —  2,619  64,154  66,773 
Other liabilities 62,247  —  30,311  31,936  62,247 
Total liabilities $ 989,828  $ —  $ 32,930  $ 956,898  $ 989,828 
(1)    Excludes deposit liabilities with no defined or contractual maturities.

32

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

8. Derivative Instruments and Hedging Activities

Credit Derivatives

Beginning in the second quarter of 2023, the Company entered into credit support agreements related to loan sales, whereby it is obligated to make payments to a limited number of strategic investors approximately 18 months after sale if credit losses exceed certain initial agreed-upon thresholds, subject to a maximum dollar amount. Accordingly, these are accounted for as credit derivative liabilities, measured at fair value, and recorded in “Other liabilities” on the Balance Sheet. The initial fair value of the derivative liabilities is recorded in “Gain on sales of loans” with changes in the fair value recorded in “Net fair value adjustments,” both within “Marketplace revenue” on the Income Statement.

As of September 30, 2023, the total notional amount, or maximum dollar exposure, of the credit derivative liabilities was $3.8 million, with a fair value of $3.3 million which was based on the combined impact of both the quantitative and qualitative credit loss forecast. For the three and nine months ended September 30, 2023, the Company recognized a loss of $2.3 million and $3.3 million in earnings, respectively.

Hedging

The Company is exposed to changes in the fair value of its fixed-rate loans due to changes in benchmark interest rates. Beginning in the third quarter of 2023, the Company entered into interest rate swaps to manage its exposure to changes in fair value of these loans attributable to changes in the Secured Overnight Financing Rate (SOFR). The interest rate swaps qualify as fair value hedges and involve the payment of fixed-rate amounts to a counterparty in exchange for the receipt of variable-rate payments over the life of the agreements, ranging from approximately one to three years.

The table below presents the notional and gross fair value amounts of the Company’s derivatives used for hedging as of September 30, 2023:
Notional
Gross Derivative Asset Fair Value (1)
Derivatives used for hedging:
Interest rate swaps
 $ 1,500,000  $ 3,483 
(1)    Recorded in “Other assets” on the Balance Sheet.

The following table summarizes the gains (losses) recognized on the Company’s fair value hedges for both the three and nine months ended September 30, 2023:
Gains (losses) recognized on:
Hedged item
 $ (3,020)
Derivatives used for hedging
 3,483 
Interest settlement on derivative (1)
 883 
Total gains on fair value hedges (2)
 $ 1,346 
(1)    Includes accrued interest receivable and accrued interest payable.
(2)    Recorded in “Interest and fees on loans held for investment at amortized cost” on the Income Statement.

33

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

The following table presents the cumulative basis adjustments for fair value hedges as of September 30, 2023:
Balance Sheet Line Item
Carrying Amount of Closed Portfolio (1)
Cumulative Fair Value Adjustment to Hedged Item
Loans and leases held for investment at amortized cost $ 3,586,394  $ (3,020)
(1)    Represents the amortized cost of the total closed portfolio of loans designated in a portfolio method hedge relationship in which the hedged item is a stated layer that is expected to be remaining at the end of the hedging relationship. At September 30, 2023, the amortized cost of loans designated as the hedged item in the portfolio layer hedging relationship was $1.5 billion.

9. Property, Equipment and Software, Net

Property, equipment and software, net, consist of the following:
September 30, 2023 December 31, 2022
Software (1)
 $ 206,311  $ 174,360 
Leasehold improvements 31,249  31,214 
Computer equipment 23,753  27,410 
Furniture and fixtures 6,088  6,088 
Total property, equipment and software 267,401  239,072 
Accumulated depreciation and amortization (107,633) (102,599)
Total property, equipment and software, net $ 159,768  $ 136,473 
(1)    Includes $71.7 million and $43.7 million of development in progress for internally-developed software and $4.7 million and $3.0 million of development in progress to customize purchased software as of September 30, 2023 and December 31, 2022, respectively.

Depreciation and amortization expense on property, equipment and software was $10.3 million and $32.1 million for the third quarter and first nine months of 2023, respectively. Depreciation and amortization expense on property, equipment and software was $9.5 million and $28.3 million for the third quarter and first nine months of 2022, respectively.

10. Goodwill and Intangible Assets

Goodwill

The Company’s goodwill balance was $75.7 million as of both September 30, 2023 and December 31, 2022. The Company did not record any goodwill impairment expense for the third quarters and first nine months of 2023 and 2022. Goodwill is not amortized, but is subject to annual impairment tests that are performed in the fourth quarter of each calendar year. For additional detail, see “Part II – Item 8. Financial Statements and Supplementary Data – Note 1. Summary of Significant Accounting Policies” in the Annual Report.

34

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

Intangible Assets

Intangible assets consist of customer relationships. Intangible assets, net of accumulated amortization, are included in “Other assets” on the Balance Sheet. The gross and net carrying values and accumulated amortization were as follows:
September 30, 2023 December 31, 2022
Gross carrying value $ 54,500  $ 54,500 
Accumulated amortization (41,349) (38,166)
Net carrying value $ 13,151  $ 16,334 

The customer relationship intangible assets are amortized on an accelerated basis from ten to fourteen years. Amortization expense associated with intangible assets for the third quarter and first nine months of 2023 was $1.0 million and $3.2 million, respectively. Amortization expense associated with intangible assets for the third quarter and first nine months of 2022 was $1.2 million and $3.7 million, respectively. There was no impairment loss for the third quarters and first nine months of 2023 and 2022.

The expected future amortization expense for intangible assets as of September 30, 2023, is as follows:
2023 $ 1,015 
2024 3,549 
2025 2,901 
2026 2,252 
2027 1,603 
Thereafter 1,831 
Total $ 13,151 

11. Other Assets

Other assets consist of the following:
September 30,
2023		 December 31,
2022
Deferred tax asset, net (1)
 $ 171,766  $ 173,687 
Servicing assets (2)
 82,602  85,654 
Operating lease assets 53,510  63,872 
Nonmarketable equity investments 46,812  38,320 
Intangible assets, net (3)
 13,151  16,334 
Other 129,111  122,439 
Total other assets $ 496,952  $ 500,306 
(1)    See “Note 16. Income Taxes” for additional detail.
(2)    Loans underlying servicing assets had a total outstanding principal balance of $9.7 billion and $11.0 billion as of September 30, 2023 and December 31, 2022, respectively.
(3)    See “Note 10. Goodwill and Intangible Assets” for additional detail.

35

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

12. Deposits

Deposits consist of the following:
September 30,
2023		 December 31,
2022
Interest-bearing deposits:
Savings and money market accounts 4,537,503  3,616,657 
Certificates of deposit 1,169,593  860,808 
Checking accounts 979,973  1,681,095 
Total 6,687,069  6,158,560 
Noninterest-bearing deposits 313,194  233,993 
Total deposits $ 7,000,263  $ 6,392,553 

Total certificates of deposit at September 30, 2023 are scheduled to mature as follows:
2023 $ 310,816 
2024 833,003 
2025 14,075 
2026 1,252 
2027 9,228 
Thereafter 1,219 
Total certificates of deposit $ 1,169,593 

The following table presents the amount of certificates of deposit with denominations exceeding the Federal Deposit Insurance Corporation (FDIC) limit of $250 thousand, segregated by time remaining until maturity, as of September 30, 2023:
Three months or less Over 3 months through
6 months		 Over 6 months through
12 months		 Over
12 months		 Total
Certificates of deposit $ 4,949  $ 5,117  $ 43,598  $ 3,674  $ 57,338 

13. Borrowings

Short-term Borrowings

The Company entered into repurchase agreements pursuant to which the Company sold securities (subject to an obligation to repurchase such securities at a specified future date and price) in exchange for cash. The aggregate debt outstanding under the Company’s repurchase agreements was $27 thousand and $2.6 million at September 30, 2023 and December 31, 2022, respectively.

In addition, the Company has available borrowing capacity with the FRB and FHLB of Des Moines totaling $3.8 billion and $605.5 million with pledged collateral totaling $4.9 billion and $754.0 million at September 30, 2023 and December 31, 2022, respectively.

36

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

Long-term Debt

The following table summarizes the Company’s long-term debt, as of the dates indicated:
September 30, 2023 December 31, 2022
Advances from PPPLF (1):
Aggregate debt outstanding (fixed interest rate of 0.35%)
 $ 7,361  $ 64,154 
Pledged collateral
 $ 7,560  $ 66,971 
Retail notes, certificates and secured borrowings (2):
Aggregate debt outstanding
 $ 18,118  $ 55,425 
Payable on Structured Program borrowings (3):
Aggregate debt outstanding
 $ 3,329  $ 8,085 
Pledged collateral
 $ 4,828  $ 9,708 
(1)    Collateralized by SBA PPP loans originated by the Company. The maturity date of the PPPLF borrowings matches the maturity date of the pledged SBA PPP loans. When loans are forgiven by the SBA, the corresponding PPPLF advance is paid by the Company.
(2)    The Company does not assume principal or interest rate risk on loans that were funded by Retail Notes because loan balances, interest rates and maturities were matched and offset by an equal balance of notes with the exact same interest rates and maturities. As of December 31, 2020, LendingClub ceased offering and selling Retail Notes. The total balance of outstanding Retail Notes will continue to decline as underlying borrower payments are made.
(3)    Consists of certificate participations and securities of certain consolidated VIEs held by third-party investors and secured by “Loans held for investment at fair value” totaling $1.1 million and $4.0 million and “Restricted cash” of $3.7 million and $5.7 million as of September 30, 2023 and December 31, 2022, respectively.

14. Other Liabilities

Other liabilities consist of the following:
September 30,
2023		 December 31, 2022
Operating lease liabilities $ 65,747  $ 77,291 
Accounts payable and accrued expenses 54,179  98,173 
Payable to investors (1)
 37,270  30,311 
Other 77,838  86,842 
Total other liabilities $ 235,034  $ 292,617 
(1)    Represents principal and interest on loans collected by the Company and pending disbursement to investors.

37

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

15. Employee Incentive Plans

The Company’s equity incentive plans provide for granting awards, including restricted stock units (RSUs), performance-based restricted stock units (PBRSUs), cash awards and stock options to employees, officers and directors.

Stock-based Compensation

Stock-based compensation expense, included in “Compensation and benefits” expense on the Income Statement, was as follows for the periods presented:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2023 2022 2023 2022
RSUs and PBRSUs $ 16,855  $ 18,931  $ 49,292  $ 56,098 
Stock options —  6  —  46 
Stock-based compensation expense, gross 16,855  18,937  49,292  56,144 
Less: Capitalized stock-based compensation expense 2,449  2,194  7,170  5,934 
Stock-based compensation expense, net $ 14,406  $ 16,743  $ 42,122  $ 50,210 

Restricted Stock Units

The following table summarizes the activities for the Company’s RSUs:
Number
of Units		 Weighted-
Average
Grant Date
Fair Value
Unvested at December 31, 2022
 8,672,626  $ 12.94 
Granted 6,533,732  $ 7.68 
Vested (4,329,854) $ 11.63 
Forfeited/expired (1,772,768) $ 12.42 
Unvested at September 30, 2023
 9,103,736  $ 9.89 

During the first nine months of 2023, the Company granted 6,533,732 RSUs with an aggregate fair value of $50.2 million.

As of September 30, 2023, there was $81.9 million of unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a weighted-average period of approximately 1.9 years, subject to any forfeitures.

Performance-based Restricted Stock Units

PBRSUs are restricted stock unit awards that are earned based upon the achievement of certain pre-established performance metrics over a pre-established performance period. The Company’s outstanding PBRSU awards each have a market-based performance metric with a three-year performance period, following which any earned portion is immediately vested. For these PBRSU awards, the compensation expense of the award is fixed at the time of grant (incorporating the probability of achieving the market-based metrics) and expensed over the performance period.
38

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)


The following table summarizes the activities for the Company’s PBRSUs:
Number
of Units		 Weighted-
Average
Grant Date
Fair Value
Unvested at December 31, 2022
 1,754,898  $ 11.19 
Granted 807,499  $ 7.15 
Vested (870,766) $ 4.22 
Forfeited/expired (104,084) $ 11.77 
Unvested at September 30, 2023
 1,587,547  $ 12.63 

During the first nine months of 2023, the Company granted 807,499 PBRSUs with an aggregate fair value of $5.8 million.

As of September 30, 2023, there was $7.9 million of unrecognized compensation cost related to unvested PBRSUs, which is expected to be recognized over a weighted-average period of approximately 1.6 years, subject to any forfeitures.

16. Income Taxes

For the third quarter and first nine months of 2023, the Company recorded an income tax expense of $3.3 million and $12.1 million, representing an effective tax rate of 39.9% and 29.7%, respectively. The third quarter effective tax rate differs from the statutory rate as it was favorably affected by recurring items such as tax credits and was unfavorably affected by nondeductible portions of executive compensation. Additionally, the effective tax rate was unfavorably impacted by the discrete tax impact recognized during the period related to stock-based compensation, which had a larger impact in the third quarter.

For the third quarter of 2022, the Company recorded an income tax benefit of $7.2 million, primarily due to the release of a $5.0 million valuation allowance against the Company’s deferred tax assets and a $4.6 million tax credit, partially offset by a $2.4 million state income tax expense. For the first nine months of 2022, the Company recorded an income tax benefit of $134.2 million, primarily due to the release of a $140.3 million valuation allowance against the Company’s deferred tax assets.

The following table summarizes the Company’s net deferred tax assets:
September 30,
2023		 December 31, 2022
Deferred tax assets, net of liabilities $ 219,329  $ 221,408 
Valuation allowance (47,563) (47,721)
Deferred tax assets, net of valuation allowance $ 171,766  $ 173,687 

17. Leases

Lessor Arrangements

The Company has lessor arrangements which consist of sales-type leases for equipment (Equipment Finance). Such arrangements may include options to renew or to purchase the leased equipment at the end of the lease term. For the third quarter and first nine months of 2023, interest earned on Equipment Finance was $2.0 million and $7.2 million, respectively, and is included in “Interest and fees on loans and leases held for investment” on the Income Statement.
39

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

For the third quarter and first nine months of 2022, interest earned on Equipment Finance was $2.5 million and $7.7 million, respectively.

The components of Equipment Finance assets are as follows:
September 30,
2023		 December 31, 2022
Lease receivables $ 103,750  $ 137,969 
Unguaranteed residual asset values 33,264  39,262 
Unearned income (12,397) (17,786)
Deferred fees 672  874 
Total $ 125,289  $ 160,319 

Future minimum lease payments based on maturity of the Company’s lessor arrangements as of September 30, 2023 were as follows:
2023 $ 15,167 
2024 35,355 
2025 27,288 
2026 16,796 
2027 7,447 
Thereafter 5,538 
Total lease payments $ 107,591 
Discount effect (3,841)
Present value of future minimum lease payments $ 103,750 

Lessee Arrangements

The Company has various operating leases, including with respect to its headquarters in San Francisco, California, and office spaces in the Salt Lake City, Utah, and Boston, Massachusetts areas. As of September 30, 2023, the lease agreements have remaining lease terms ranging from approximately three months to eight years. Some of the lease agreements include options to extend the lease term for up to an additional fifteen years. As of September 30, 2023, the Company pledged $0.4 million of cash and $1.1 million in letters of credit as security deposits in connection with its lease agreements.

Balance sheet information related to leases was as follows:
ROU Assets and Lease Liabilities Balance Sheet Classification September 30, 2023 December 31, 2022
Operating lease assets Other assets $ 53,510  $ 63,872 
Operating lease liabilities Other liabilities $ 65,747  $ 77,291 

40

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

Components of net lease costs were as follows:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
Net Lease Costs Income Statement Classification 2023 2022 2023 2022
Operating lease costs Occupancy $ (3,114) $ (3,195) $ (9,376) $ (12,041)
Sublease revenue Other non-interest income —  —  —  2,847 
Net lease costs $ (3,114) $ (3,195) $ (9,376) $ (9,194)

Supplemental cash flow information related to the Company’s operating leases was as follows:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2023 2022 2023 2022
Non-cash operating activity:
Leased assets obtained or adjusted in exchange for new, amended, and modified operating lease liabilities $ —  $ —  $ (4,664) $ — 

The Company’s future minimum undiscounted lease payments under operating leases as of September 30, 2023 were as follows:
Operating Lease
Payments
2023 $ 3,220 
2024 12,798 
2025 13,129 
2026 11,710 
2027 10,987 
Thereafter 27,238 
Total lease payments $ 79,082 
Discount effect (13,335)
Present value of future minimum lease payments $ 65,747 

The weighted-average remaining lease term and discount rate used in the calculation of the Company’s operating lease assets and liabilities were as follows:
Lease Term and Discount Rate September 30, 2023
Weighted-average remaining lease term (in years) 6.49
Weighted-average discount rate 5.40  %

18. Commitments and Contingencies

Operating Lease Commitments

For discussion regarding the Company’s operating lease commitments, see “Note 17. Leases.”

41

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

Loan Repurchase Obligations

The Company is generally required to repurchase loans or interests therein in the event of identity theft or certain other types of fraud on the part of the borrower or education and patient service providers. The Company may also repurchase loans or interests therein in connection with certain customer accommodations. In connection with certain loan sales, the Company agreed to repurchase loans if representations and warranties made with respect to such loans were breached under certain circumstances. The Company believes such provisions are customary and consistent with institutional loan and securitization market standards.

Unfunded Loan Commitments

As of September 30, 2023 and December 31, 2022, the contractual amount of unfunded loan commitments was $89.5 million and $138.0 million, respectively. See “Note 5. Loans and Leases Held for Investment at Amortized Cost, Net of Allowance For Loan and Lease Losses” for additional detail related to the reserve for unfunded lending commitments.

Legal

The Company is subject to various claims brought in a litigation or regulatory context. These matters include lawsuits, including but not limited to, putative class action lawsuits and routine litigation matters arising in the ordinary course of business. In addition, the Company, and its business practices and compliance with licensing and other regulatory requirements, is subject to periodic exams, investigations, inquiries or requests, enforcement actions and other proceedings from federal and state regulatory agencies, including from the federal banking regulators that directly regulate the Company and/or LC Bank. The majority of these claims and proceedings relate to or arise from alleged state or federal law and regulatory violations, or are alleged commercial disputes or consumer complaints. The Company accrues for costs related to contingencies when a loss from such claims is probable and the amount of loss can be reasonably estimated. In determining whether a loss from a claim is probable and the loss can be reasonably estimated, the Company reviews and evaluates its litigation and regulatory matters on at least a quarterly basis in light of potentially relevant factual and legal developments. If the Company determines an unfavorable outcome is not probable or the amount of loss cannot be reasonably estimated, the Company does not accrue for a potential litigation loss. In those situations, the Company discloses an estimate or range of the reasonably possible losses, if such estimates can be made. Except as otherwise specifically noted below, at this time, the Company does not believe that it is possible to estimate the reasonably possible losses or a range of reasonably possible losses related to the matters described below.

Regulatory Examinations and Actions Relating to the Company’s Business Practices, Licensing and Compliance with Applicable Laws

The Company is and has been subject to periodic inquiries, exams and enforcement actions brought by federal and state regulatory agencies relating to the Company’s business practices, the required licenses to operate its business, and operating in compliance with applicable laws, including the requirements of its licenses and the regulatory framework applicable to its business.

In the past, the Company has successfully resolved such matters in a manner that was not material to its results of financial operations in any period and that did not materially limit the Company’s ability to conduct its business. However, no assurances can be given as to the timing, outcome or consequences of these matters or other similar matters if or as they arise.

42

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

19. Regulatory Requirements

LendingClub and LC Bank are subject to comprehensive supervision, examination and enforcement, and regulation by the FRB and the Office of the Comptroller of the Currency (OCC), including generally similar capital adequacy requirements adopted by the FRB and the OCC, respectively. These requirements establish required minimum ratios for Common Equity Tier 1 (CET1) risk-based capital, Tier 1 risk-based capital, total risk-based capital and a Tier 1 leverage ratio; set risk-weighting for assets and certain other items for purposes of the risk-based capital ratios; and define what qualifies as capital for purposes of meeting the capital requirements. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company.

The minimum capital requirements under the Basel Committee on Banking Supervision standardized approach for U.S. banking organizations (U.S. Basel III) capital framework are: a CET1 risk-based capital ratio of 4.5%, a Tier 1 risk-based capital ratio of 6.0%, a total risk-based capital ratio of 8.0%, and a Tier 1 leverage ratio of 4.0%. Additionally, a Capital Conservation Buffer (CCB) of 2.5% must be maintained above the minimum risk-based capital requirements in order to avoid certain limitations on capital distributions, stock repurchases, and certain discretionary bonus payments. In addition to these guidelines, the regulators assess any particular institution’s capital adequacy based on numerous factors and may require a particular banking organization to maintain capital at levels higher than the generally applicable minimums prescribed under the U.S. Basel III capital framework. In this regard, and unless otherwise directed by the FRB and the OCC, we have made commitments for the Company and LC Bank (until February 2024) to maintain a CET1 risk-based capital ratio of 11.0%, a Tier 1 risk-based capital ratio above 11.0%, a total risk-based capital ratio above 13.0%, and a Tier 1 leverage ratio of 11.0%.

The following table summarizes the Company’s and LC Bank’s regulatory capital amounts (in millions) and ratios:
September 30, 2023 December 31, 2022
Required Minimum plus Required CCB for
Non-Leverage Ratios
Amount Ratio Amount Ratio
LendingClub Corporation:
CET1 capital (1)
 $ 1,078.7  16.9  % $ 1,005.8  15.8  % 7.0  %
Tier 1 capital $ 1,078.7  16.9  % $ 1,005.8  15.8  % 8.5  %
Total capital $ 1,161.7  18.2  % $ 1,088.1  17.1  % 10.5  %
Tier 1 leverage $ 1,078.7  13.2  % $ 1,005.8  14.1  % 4.0  %
Risk-weighted assets $ 6,388.6  N/A $ 6,360.7  N/A N/A
Quarterly adjusted average assets $ 8,200.3  N/A $ 7,119.0  N/A N/A
LendingClub Bank:
CET1 capital (1)
 $ 949.7  15.1  % $ 852.2  13.8  % 7.0  %
Tier 1 capital $ 949.7  15.1  % $ 852.2  13.8  % 8.5  %
Total capital $ 1,031.2  16.5  % $ 932.4  15.1  % 10.5  %
Tier 1 leverage $ 949.7  11.8  % $ 852.2  12.5  % 4.0  %
Risk-weighted assets $ 6,268.6  N/A $ 6,194.0  N/A N/A
Quarterly adjusted average assets $ 8,016.0  N/A $ 6,795.2  N/A N/A
N/A – Not applicable
(1)     Consists of common stockholders’ equity as defined under U.S. GAAP and certain adjustments made in accordance with regulatory capital guidelines, including the addition of the CECL transitional benefit and deductions for goodwill and other intangible assets.

In response to the COVID-19 pandemic, the FRB, OCC, and FDIC adopted a final rule related to the regulatory capital treatment of the allowance for credit losses under CECL.
43

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

As permitted by the rule, the Company elected to delay the estimated impact of CECL on regulatory capital resulting in a CET1 capital benefit of $35 million at December 31, 2021. This benefit is phased out over a three-year transition period that commenced on January 1, 2022 at a rate of 25% each year through January 1, 2025.

The Federal Deposit Insurance Act provides for a system of “prompt corrective action” (PCA). The PCA regime provides for capitalization categories ranging from “well-capitalized” to “critically undercapitalized.” An institution’s PCA category is determined primarily by its regulatory capital ratios. The PCA requires remedial actions and imposes limitations that become increasingly stringent as its PCA capitalization category declines, including the ability to accept and/or rollover brokered deposits. At September 30, 2023 and December 31, 2022, the Company’s and LC Bank’s regulatory capital ratios exceeded the thresholds required to be regarded as well-capitalized institutions and met all capital adequacy requirements to which they are subject. There have been no events or conditions since September 30, 2023 that management believes would change the Company’s categorization.

Federal laws and regulations limit the dividends that a national bank may pay. Dividends that may be paid by a national bank without the express approval of the OCC are limited to that bank’s retained net profits for the preceding two calendar years plus retained net profits up to the date of any dividend declaration in the current calendar year. Retained net profits, as defined by the OCC, consist of net income less dividends declared during the period. Additionally, under an Operating Agreement with the OCC (Operating Agreement), LC Bank is required to obtain a written determination of non-objection from the OCC before declaring any dividend. No dividends were declared by LC Bank during the first nine months of 2023 or during 2022. See “Part I – Item 1. Business – Regulation and Supervision – Broad Powers to Ensure Safety and Soundness” in our Annual Report for further discussion regarding the Operating Agreement.

Federal law restricts the amount and the terms of both credit and non-credit transactions between a bank and its nonbank affiliates. These covered transactions may not exceed 10% of the bank’s capital and surplus (which for this purpose represents tier 1 and tier 2 capital, as calculated under the risk-based capital rules, plus the balance of the ACL excluded from tier 2 capital) with any single nonbank affiliate and 20% of the bank’s capital and surplus with all its nonbank affiliates. Covered transactions that are extensions of credit may require collateral to be pledged to provide added security to the bank.

20. Other Non-interest Income and Non-interest Expense

Other non-interest income consists of the following:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2023 2022 2023 2022
Referral revenue $ 1,029  $ 3,144  $ 4,008  $ 10,860 
Realized gains on sales of securities available for sale —  —  —  36 
Other 1,929  4,256  5,341  13,843 
Total other non-interest income $ 2,958  $ 7,400  $ 9,349  $ 24,739 

44

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

Other non-interest expense consists of the following:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2023 2022 2023 2022
Consumer credit services $ 2,930  $ 4,610  $ 10,377  $ 15,804 
Other 10,146  10,496  35,724  30,727 
Total other non-interest expense $ 13,076  $ 15,106  $ 46,101  $ 46,531 

21. Segment Reporting

The Company defines operating segments to be components of the Company for which discrete financial information is evaluated regularly by the Company’s Chief Executive Officer and Chief Financial Officer to allocate resources and evaluate financial performance. This information is reviewed according to the legal organizational structure of the Company’s operations with products and services presented separately for the parent bank holding company and its wholly-owned subsidiary, LC Bank. Income taxes are recorded on a separate entity basis whereby each operating segment determines income tax expense or benefit as if it filed a separate tax return.

All of the Company’s revenue is generated in the United States. The Company has experienced reductions in marketplace investor demand in connection with increases in interest rates and volatility in the macro economy. During the third quarter of 2023, no individual borrower or marketplace investor accounted for 10% or more of total net revenue. During the first nine months of 2023, one marketplace bank investor accounted for 12% of total net revenue. No other individual borrower or marketplace investor accounted for 10% or more of total net revenue for the first nine months of 2023.

LendingClub Bank

The LC Bank operating segment represents the national bank legal entity and reflects post-Acquisition operating activities. This segment provides a full complement of financial products and solutions, including loans, leases and deposits. It originates loans to individuals and businesses, retains loans for investment, sells loans to investors and manages relationships with deposit holders.

LendingClub Corporation (Parent Only)

The LendingClub Corporation (Parent only) operating segment represents the holding company legal entity and predominately reflects the operations of the Company prior to the Acquisition. This activity includes, but is not limited to, servicing fee revenue for loans serviced prior to the Acquisition, and interest income and interest expense related to the Retail Program and Structured Program transactions entered into prior to the Acquisition.

45

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

Financial information for the segments is presented in the following tables:
LendingClub
Bank		 LendingClub
Corporation
(Parent only)		 Intercompany
Eliminations		 Consolidated Total
Three Months Ended September 30, Three Months Ended September 30, Three Months Ended September 30, Three Months Ended September 30,
2023 2022 2023 2022 2023 2022 2023 2022
Non-interest income:
Marketplace revenue $ 37,439  $ 153,504  $ 12,320  $ 9,015  $ 11,127  $ 11,318  $ 60,886  $ 173,837 
Other non-interest income 18,783  25,240  2,478  4,794  (18,303) (22,634) 2,958  7,400 
Total non-interest income 56,222  178,744  14,798  13,809  (7,176) (11,316) 63,844  181,237 
Interest income:
Interest income 203,961  137,142  3,451  6,078  —  —  207,412  143,220 
Interest expense (69,517) (15,277) (890) (4,267) —  —  (70,407) (19,544)
Net interest income 134,444  121,865  2,561  1,811  —  —  137,005  123,676 
Total net revenue 190,666  300,609  17,359  15,620  (7,176) (11,316) 200,849  304,913 
Provision for credit losses (64,463) (82,739) (16) —  —  —  (64,479) (82,739)
Non-interest expense (122,142) (177,714) (13,069) (19,821) 7,176  11,316  (128,035) (186,219)
Income (Loss) before income tax benefit (expense) 4,061  40,156  4,274  (4,201) —  —  8,335  35,955 
Income tax benefit (expense) (2,380) (9,440) (947) 16,683  —  —  (3,327) 7,243 
Net income
 $ 1,681  $ 30,716  $ 3,327  $ 12,482  $ —  $ —  $ 5,008  $ 43,198 
Capital expenditures $ 15,984  $ 17,301  $ —  $ —  $ —  $ —  $ 15,984  $ 17,301 
Depreciation and amortization $ 7,579  $ 4,099  $ 3,671  $ 6,582  $ —  $ —  $ 11,250  $ 10,681 

46

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

LendingClub
Bank		 LendingClub
Corporation
(Parent only)		 Intercompany
Eliminations		 Consolidated Total
Nine Months Ended September 30, Nine Months Ended September 30, Nine Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022 2023 2022 2023 2022
Non-interest income:
Marketplace revenue $ 172,133  $ 509,426  $ 33,200  $ 35,313  $ 33,970  $ 15,448  $ 239,303  $ 560,187 
Other non-interest income 59,687  64,779  7,462  12,931  (57,800) (52,971) 9,349  24,739 
Total non-interest income 231,820  574,205  40,662  48,244  (23,830) (37,523) 248,652  584,926 
Interest income:
Interest income 612,805  357,117  11,506  26,224  —  —  624,311  383,341 
Interest expense (189,959) (25,134) (3,991) (18,625) —  —  (193,950) (43,759)
Net interest income 422,846  331,983  7,515  7,599  —  —  430,361  339,582 
Total net revenue 654,666  906,188  48,177  55,843  (23,830) (37,523) 679,013  924,508 
Provision for credit losses (201,658) (205,814) —  —  —  —  (201,658) (205,814)
Non-interest expense (413,088) (552,809) (47,164) (71,523) 23,830  37,523  (436,422) (586,809)
Income (Loss) before income tax benefit (expense) 39,920  147,565  1,013  (15,680) —  —  40,933  131,885 
Income tax benefit (expense) (12,065) (39,113) (84) 120,274  —  53,048  (12,149) 134,209 
Net income
 $ 27,855  $ 108,452  $ 929  $ 104,594  $ —  $ 53,048  $ 28,784  $ 266,094 
Capital expenditures $ 48,239  $ 54,659  $ —  $ —  $ —  $ —  $ 48,239  $ 54,659 
Depreciation and amortization $ 21,546  $ 11,109  $ 13,696  $ 21,168  $ —  $ —  $ 35,242  $ 32,277 
47

LENDINGCLUB CORPORATION
Notes to Condensed Consolidated Financial Statements
(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)
(Unaudited)

LendingClub Bank LendingClub Corporation
(Parent only)		 Intercompany
Eliminations		 Consolidated Total
  September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022
Assets
Total cash and cash equivalents $ 1,283,549  $ 1,020,874  $ 93,060  $ 56,475  $ (68,839) $ (20,319) $ 1,307,770  $ 1,057,030 
Restricted cash —  —  48,102  75,409  (5,615) (7,955) 42,487  67,454 
Securities available for sale at fair value 790,542  329,287  5,127  16,415  —  —  795,669  345,702 
Loans held for sale at fair value 362,789  110,400  —  —  —  —  362,789  110,400 
Loans and leases held for investment, net 4,886,782  4,705,302  —  —  —  —  4,886,782  4,705,302 
Loans held for investment at fair value 316,622  906,711  9,677  19,227  —  —  326,299  925,938 
Retail and certificate loans held for investment at fair value —  —  18,118  55,425  —  —  18,118  55,425 
Property, equipment and software, net 139,269  102,274  20,499  34,199  —  —  159,768  136,473 
Investment in subsidiary —  —  813,436  755,319  (813,436) (755,319) —  — 
Goodwill 75,717  75,717  —  —  —  —  75,717  75,717 
Other assets 352,072  339,341  162,490  173,851  (17,610) (12,886) 496,952  500,306 
Total assets 8,207,342  7,589,906  1,170,509  1,186,320  (905,500) (796,479) 8,472,351  7,979,747 
Liabilities and Equity
Total deposits 7,074,717  6,420,827  —  —  (74,454) (28,274) 7,000,263  6,392,553 
Borrowings 7,361  64,154  3,356  10,704  —  —  10,717  74,858 
Retail notes, certificates and secured borrowings at fair value —  —  18,118  55,425  —  —  18,118  55,425 
Other liabilities 136,543  189,185  116,101  116,318  (17,610) (12,886) 235,034  292,617 
Total liabilities 7,218,621  6,674,166  137,575  182,447  (92,064) (41,160) 7,264,132  6,815,453 
Total equity 988,721  915,740  1,032,934  1,003,873  (813,436) (755,319) 1,208,219  1,164,294 
Total liabilities and equity $ 8,207,342  $ 7,589,906  $ 1,170,509  $ 1,186,320  $ (905,500) $ (796,479) $ 8,472,351  $ 7,979,747 

48

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and related notes that appear in this Quarterly Report on Form 10-Q (Report). In addition to historical condensed consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Report, and in “Part I – Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (Annual Report) as modified by “Part II – Item 1A. Risk Factors” in this Report. The forward-looking statements included in this Report are made only as of the date hereof.

49

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Overview

LendingClub is America’s leading digital marketplace bank. The Company was founded in 2006 and brought a traditional credit product – the installment loan – into the digital age by leveraging technology, data science, and a unique marketplace model. In doing so, we became one of the largest providers of unsecured personal loans in the United States. In February 2021, LendingClub completed the acquisition of Radius, becoming a bank holding company and forming LC Bank as its wholly-owned subsidiary. We operate the vast majority of our business through LC Bank, as a lender and originator of loans and as a regulated and award-winning digital bank in the United States.

Executive Summary

The interest rate environment and broader economic volatility is adversely impacting our business, predominantly through investor demand and pricing for marketplace loans. While we expect these headwinds to persist, we’re leveraging Structured Program transactions to drive marketplace originations and managing the business prudently by aligning our expense base to current market conditions. We maintained strong liquidity and capital levels and delivered the following results, despite a challenging economic environment. In addition, in October 2023, we implemented a cost reduction plan, reducing our workforce by 172 employees, or 14%, to ensure our ability to navigate through the challenging macroenvironment. We anticipate that this workforce reduction will result in annualized run-rate compensation and benefits savings of approximately $30 to $35 million compared to the second quarter of 2023.

•Loan originations: Loan originations for the third quarter of 2023 decreased $502.4 million, or 25%, sequentially and $2.0 billion, or 57%, year over year, primarily driven by a decrease in unsecured personal loan origination volume. We attribute the decrease in volume and investor demand to the rising interest rate environment.
◦Loan originations held for investment (HFI) at amortized cost of $326.3 million for the third quarter of 2023 decreased $331.1 million, or 50%, sequentially and $826.6 million, or 72%, year over year.
◦Loan originations HFI at amortized cost as a percentage of loan originations was 22% and 33% for the third and second quarters of 2023, respectively, and 33% for the third quarter of 2022. The percentage of loan originations HFI in any period is dependent on many factors, including quarterly loan origination volume, risk-adjusted returns, liquidity and general regulatory capital considerations.
◦We accumulated $250 million into held for sale (HFS) loans for our extended seasoning program to meet future investor demand for seasoned loans. Additionally, marketplace loan originations were sold as whole loan sales or through Structured Program transactions.

•Total net revenue: Total net revenue for the third quarter of 2023 decreased $31.6 million, or 14%, sequentially and $104.1 million, or 34%, year over year.
◦Marketplace revenue: Marketplace revenue for the third quarter of 2023 decreased $21.9 million, or 26%, sequentially and $113.0 million, or 65%, year over year. The decrease was primarily due to a decrease in loan origination volume and lower loan sales prices resulting from a shift in investor demand from banks to asset managers. This decrease was partially offset by a one-time benefit related to recouping volume-based purchase incentives from certain bank investors.
◦Net interest income: Net interest income for the third quarter of 2023 decreased $9.6 million, or 7%, sequentially and increased $13.3 million, or 11%, year over year. The sequential decrease was primarily driven by a lower balance of HFI loans and higher deposit funding costs. The year over year increase was primarily driven by higher interest income due to a higher average balance of loans retained as HFI in the current period and higher interest rates earned on cash and cash equivalents, partially offset by higher interest rates paid on deposits.
◦Net interest margin: Net interest margin for the third quarter of 2023 was 6.9%, decreasing from 7.1% in the second quarter of 2023 and from 8.3% in the third quarter of 2022.
50

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)

•Provision for credit losses: Provision for credit losses for the third quarter of 2023 decreased $2.1 million, or 3%, sequentially and $18.3 million, or 22%, year over year. The decrease was due to the lower volume of originated loans retained as HFI at amortized cost and the related initial provision for credit losses, partially offset by an increase in quantitative and qualitative allowance due to an increase in expected losses and a less favorable economic outlook.

•Total non-interest expense: Total non-interest expense for the third quarter of 2023 decreased $23.0 million, or 15%, sequentially and $58.2 million, or 31%, year over year. The sequential decrease was primarily driven by a decrease in the accrual of variable compensation expense. The year over year decrease was primarily driven by a decrease in headcount as a result of the cost reduction and reorganization plan we implemented in January 2023, a decrease in the accrual of variable compensation expense and a decrease in variable marketing expenses based on lower origination volume and prudent management of expenses.

•Net income: Net income for the third quarter of 2023 decreased $5.1 million, or 50%, sequentially and $38.2 million, or 88%, year over year. Net income for the third quarter of 2022 included a tax benefit of $5.0 million due to the reversal of the majority of our valuation allowance against our deferred tax assets.

•Diluted EPS: Diluted EPS for the third quarter of 2023 was $0.05, compared to $0.09 for the second quarter of 2023 and $0.41 for the same quarter last year. Diluted EPS for the third quarter of 2022 included a $0.05 per share benefit from the deferred tax valuation allowance reversal.

•Pre-provision net revenue: Pre-provision net revenue for the third quarter of 2023 decreased $8.6 million, or 11%, sequentially and $45.9 million, or 39%, year over year.

•Cash and cash equivalents: Total cash and cash equivalents as of September 30, 2023 increased $103.8 million, or 9%, sequentially and $354.9 million, or 37%, year over year. The increase is primarily due to an increase in deposits.

•Total assets: Total assets as of September 30, 2023 increased $129.8 million, or 2%, sequentially and $1.7 billion, or 25%, year over year. The year over year increase primarily reflects growth in loans HFI, growth in securities related to the Structured Program transactions and an increase in cash and cash equivalents due to the growth in deposits.

•Deposits: Total deposits as of September 30, 2023 increased $156.7 million, or 2%, sequentially, and $1.9 billion, or 37%, year over year. The sequential increase was primarily due to an increase in customer certificates of deposit. Federal Deposit Insurance Corporation (FDIC)-insured deposits represent approximately 86% of total deposits as of September 30, 2023.

•Total equity: Total equity as of September 30, 2023 increased $2.7 million, or 0%, sequentially, and $86.8 million, or 8%, year over year, primarily reflecting net income generated over the period.

The above summary should be read in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations in its entirety. For additional discussion related to our operating segments, see “Segment Information.”

51

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Financial Highlights
We regularly review several metrics to evaluate our business, measure our performance, identify trends, formulate financial projections and make strategic decisions. The following presents our select financial metrics for the periods presented:
As of and for the Three Months Ended
As of and for the Nine Months Ended September 30,
September 30,
2023		 June 30,
2023		 September 30,
2022		 2023 2022
Non-interest income $ 63,844  $ 85,818  $ 181,237  $ 248,652  $ 584,926 
Net interest income 137,005  146,652  123,676  430,361  339,582 
Total net revenue 200,849  232,470  304,913  679,013  924,508 
Non-interest expense 128,035  151,079  186,219  436,422  586,809 
Pre-provision net revenue (1)
 72,814  81,391  118,694  242,591  337,699 
Provision for credit losses 64,479  66,595  82,739  201,658  205,814 
Income before income tax benefit (expense) 8,335  14,796  35,955  40,933  131,885 
Income tax benefit (expense) (3,327) (4,686) 7,243  (12,149) 134,209 
Net income 5,008  10,110  43,198  28,784  266,094 
Income tax benefit from release of tax valuation allowance N/A N/A 5,015  N/A 140,315 
Net income excluding income tax benefit (1)(2)
 $ 5,008  $ 10,110  $ 38,183  $ 28,784  $ 125,779 
Basic EPS $ 0.05  $ 0.09  $ 0.41  $ 0.27  $ 2.59 
Diluted EPS $ 0.05  $ 0.09  $ 0.41  $ 0.27  $ 2.56 
Diluted EPS excluding income tax benefit (1)(2)
 $ 0.05  $ 0.09  $ 0.36  $ 0.27  $ 1.21 
LendingClub Corporation Performance Metrics:
Net interest margin 6.9  % 7.1  % 8.3  % 7.2  % 8.3  %
Efficiency ratio (3)
 63.7  % 65.0  % 61.1  % 64.3  % 63.5  %
Return on average equity (ROE) 1.7  % 3.4  % 14.2  % 3.2  % 40.6  %
Return on average total assets (ROA) 0.2  % 0.5  % 2.5  % 0.5  % 6.8  %
Marketing as a % of loan originations 1.3  % 1.2  % 1.3  % 1.2  % 1.5  %
LendingClub Corporation Capital Metrics:
Common equity tier 1 capital ratio 16.9  % 16.1  % 18.3  %
Tier 1 leverage ratio 13.2  % 12.4  % 15.7  %
Book value per common share $ 11.02  $ 11.09  $ 10.67 
Tangible book value per common share (1)
 $ 10.21  $ 10.26  $ 9.78 
Loan Originations (in millions) (4):
Marketplace loans $ 1,182  $ 1,353  $ 2,386  $ 3,821  $ 7,566 
Loan originations held for investment 326  657  1,153  1,986  3,030 
Total loan originations $ 1,508  $ 2,011  $ 3,539  $ 5,806  $ 10,596 
Loan originations held for investment as % of total loan originations 22  % 33  % 33  % 34  % 29  %
Servicing portfolio AUM (in millions) (5):
Total servicing portfolio $ 14,818  $ 15,669  $ 15,929 
Loans serviced for others $ 9,601  $ 10,204  $ 11,807 
(1)    Represents a non-GAAP financial measure. See “Non-GAAP Financial Measures” for additional information.
(2) The third quarter and first nine months of 2022 excludes an income tax benefit of $5.0 million and $140.3 million due to the release of our deferred tax asset valuation allowance.
52

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
(3)    Calculated as the ratio of non-interest expense to total net revenue.
(4)    Includes unsecured personal loans and auto loans only.
(5)    Assets under management (AUM) reflects loans serviced on our platform, which includes outstanding balances of unsecured personal loans, auto refinance loans and education and patient finance loans serviced for others and retained for investment by the Company.

As of and for the Three Months Ended
September 30,
2023		 June 30,
2023		 September 30,
2022
Balance Sheet Data:
Loans and leases held for investment at amortized cost, net, excluding PPP loans $ 4,879,222  $ 5,160,546  $ 4,414,347 
PPP loans $ 7,560  $ 17,640  $ 89,379 
Total loans and leases held for investment at amortized cost, net (1)
 $ 4,886,782  $ 5,178,186  $ 4,503,726 
Loans held for investment at fair value $ 326,299  $ 404,119  $ 15,057 
Total loans and leases held for investment $ 5,213,081  $ 5,582,305  $ 4,518,783 
Total assets $ 8,472,351  $ 8,342,506  $ 6,775,074 
Total deposits $ 7,000,263  $ 6,843,535  $ 5,123,506 
Total liabilities $ 7,264,132  $ 7,136,983  $ 5,653,664 
Total equity $ 1,208,219  $ 1,205,523  $ 1,121,410 
Allowance Ratios(1):
ALLL to total loans and leases held for investment 6.7  % 6.4  % 6.3  %
ALLL to consumer loans and leases held for investment 7.4  % 7.1  % 7.2  %
ALLL to commercial loans and leases held for investment 2.0  % 1.9  % 1.9  %
Net charge-offs $ 68,795  $ 59,884  $ 22,658 
Net charge-off ratio(2)
 5.1  % 4.4  % 2.1  %
(1)    Excludes loans held for investment at fair value, which primarily consists of a loan portfolio that was acquired at the end of 2022.
(2)    Calculated as annualized net charge-offs divided by average outstanding loans and leases HFI at amortized cost during the period, excluding PPP loans.
53

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Results of Operations
The following table sets forth the Condensed Consolidated Statements of Income (Income Statement) data for each of the periods presented:
Three Months Ended Change (%)
September 30,
2023		 June 30,
2023		 September 30,
2022		 Q3 2023
vs
Q2 2023		 Q3 2023
vs
Q3 2022
Non-interest income:
Marketplace revenue $ 60,886  $ 82,783  $ 173,837  (26) % (65) %
Other non-interest income 2,958  3,035  7,400  (3) % (60) %
Total non-interest income 63,844  85,818  181,237  (26) % (65) %
Interest income:
Interest on loans held for sale 9,582  4,433  5,879  116  % 63  %
Interest and fees on loans and leases held for investment 158,960  162,085  124,028  (2) % 28  %
Interest on loans held for investment at fair value 11,788  21,692  791  (46) % N/M
Interest on retail and certificate loans held for investment at fair value 817  1,194  3,685  (32) % (78) %
Interest on securities available for sale 9,467  5,948  3,820  59  % 148  %
Other 16,798  19,134  5,017  (12) % 235  %
Total interest income 207,412  214,486  143,220  (3) % 45  %
Interest expense:
Interest on deposits 69,509  66,521  15,184  4  % 358  %
Interest on retail notes, certificates and secured borrowings 817  1,194  3,685  (32) % (78) %
Other interest expense 81  119  675  (32) % (88) %
Total interest expense 70,407  67,834  19,544  4  % 260  %
Net interest income 137,005  146,652  123,676  (7) % 11  %
Total net revenue 200,849  232,470  304,913  (14) % (34) %
Provision for credit losses 64,479  66,595  82,739  (3) % (22) %
Non-interest expense:
Compensation and benefits 58,497  71,553  84,916  (18) % (31) %
Marketing 19,555  23,940  46,031  (18) % (58) %
Equipment and software 12,631  13,968  12,491  (10) % 1  %
Depreciation and amortization 11,250  11,638  10,681  (3) % 5  %
Professional services 8,414  9,974  11,943  (16) % (30) %
Occupancy 4,612  4,684  5,051  (2) % (9) %
Other non-interest expense 13,076  15,322  15,106  (15) % (13) %
Total non-interest expense 128,035  151,079  186,219  (15) % (31) %
Income before income tax benefit (expense) 8,335  14,796  35,955  (44) % (77) %
Income tax benefit (expense) (3,327) (4,686) 7,243  (29) % (146) %
Net income $ 5,008  $ 10,110  $ 43,198  (50) % (88) %

54

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Nine Months Ended September 30,
2023 2022 Change (%)
Non-interest income:
Marketplace revenue $ 239,303  $ 560,187  (57) %
Other non-interest income 9,349  24,739  (62) %
Total non-interest income 248,652  584,926  (57) %
Interest income:
Interest on loans held for sale 19,772  20,459  (3) %
Interest and fees on loans and leases held for investment 471,512  324,381  45  %
Interest on loans held for investment at fair value 60,372  2,015  N/M
Interest on retail and certificate loans held for investment at fair value 3,694  15,745  (77) %
Interest on securities available for sale 19,315  12,757  51  %
Other 49,646  7,984  522  %
Total interest income 624,311  383,341  63  %
Interest expense:
Interest on deposits 189,303  24,700  666  %
Interest on retail notes, certificates and secured borrowings 3,694  15,745  (77) %
Other interest expense 953  3,314  (71) %
Total interest expense 193,950  43,759  343  %
Net interest income 430,361  339,582  27  %
Total net revenue 679,013  924,508  (27) %
Provision for credit losses 201,658  205,814  (2) %
Non-interest expense:
Compensation and benefits 203,357  251,629  (19) %
Marketing 70,375  162,608  (57) %
Equipment and software 40,295  35,998  12  %
Depreciation and amortization 35,242  32,277  9  %
Professional services 27,446  40,487  (32) %
Occupancy 13,606  17,279  (21) %
Other non-interest expense 46,101  46,531  (1) %
Total non-interest expense 436,422  586,809  (26) %
Income before income tax benefit (expense) 40,933  131,885  (69) %
Income tax benefit (expense) (12,149) 134,209  (109) %
Net income $ 28,784  $ 266,094  (89) %

The analysis below is presented for the following periods: Third quarter of 2023 compared to the second quarter of 2023 (sequential), third quarter of 2023 compared to the third quarter of 2022 (year over year) and first nine months of 2023 compared to the first nine months of 2022 (nine months over nine months).

55

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Marketplace Revenue

Marketplace revenue consists of the following:
Three Months Ended Change (%)
September 30,
2023		 June 30,
2023		 September 30,
2022		 Q3 2023
vs
Q2 2023		 Q3 2023
vs
Q3 2022
Origination fees $ 60,912  $ 70,989  $ 127,142  (14) % (52) %
Servicing fees 32,768  22,015  23,760  49  % 38  %
Gain on sales of loans 8,572  13,221  23,554  (35) % (64) %
Net fair value adjustments (41,366) (23,442) (619) 76  % N/M
Total marketplace revenue $ 60,886  $ 82,783  $ 173,837  (26) % (65) %

Nine Months Ended September 30,
2023 2022 Change (%)
Origination fees $ 202,444  $ 398,487  (49) %
Servicing fees 81,163  60,440  34  %
Gain on sales of loans 35,918  76,983  (53) %
Net fair value adjustments (80,222) 24,277  N/M
Total marketplace revenue $ 239,303  $ 560,187  (57) %

We elected to account for HFS loans under the fair value option. With the election of the fair value option, origination fees, net fair value adjustments prior to sale of the loans, and servicing asset gains on the sales of the loans, are reported as separate components of “Marketplace revenue.”

Origination Fees

Origination fees recorded as a component of marketplace revenue are primarily fees earned related to originating and issuing unsecured personal loans that are held for sale. The following table presents loan origination volume during each of the periods set forth below:
Three Months Ended Change (%)
September 30,
2023		 June 30,
2023		 September 30,
2022		 Q3 2023
vs
Q2 2023		 Q3 2023
vs
Q3 2022
Marketplace loans $ 1,181,858  $ 1,353,134  $ 2,386,319  (13) % (50) %
Loan originations held for investment 326,290  657,380 1,152,870  (50) % (72) %
Total loan originations (1)
 $ 1,508,148  $ 2,010,514  $ 3,539,189  (25) % (57) %
(1)    Includes unsecured personal loans and auto loans only.

56

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Nine Months Ended September 30,
2023 2022 Change (%)
Marketplace loans $ 3,820,640  $ 7,565,820  (50) %
Loan originations held for investment 1,985,659  3,030,292  (34) %
Total loan originations (1)
 $ 5,806,299  $ 10,596,112  (45) %
(1)    Includes unsecured personal loans and auto loans only.

Sequential: Origination fees were $60.9 million and $71.0 million for the third and second quarters of 2023, respectively, a decrease of 14%. The decrease was due to lower origination volume of marketplace loans. Loan origination volume of marketplace loans decreased to $1.2 billion for the third quarter of 2023 compared to $1.4 billion for the second quarter of 2023, a decrease of 13%, resulting from lower investor demand due to the rising interest rate environment.

Year Over Year: Origination fees were $60.9 million and $127.1 million for the third quarters of 2023 and 2022, respectively, a decrease of 52%. The decrease was due to lower origination volume of marketplace loans. Loan origination volume of marketplace loans decreased to $1.2 billion for the third quarter of 2023 compared to $2.4 billion for the third quarter of 2022, a decrease of 50%, resulting from lower investor demand due to the rising interest rate environment.

Nine Months Over Nine Months: Origination fees were $202.4 million and $398.5 million for the first nine months of 2023 and 2022, respectively, a decrease of 49%. The decrease was due to lower origination volume of marketplace loans. Loan origination volume of marketplace loans decreased to $3.8 billion for the first nine months of 2023 compared to $7.6 billion for the first nine months of 2022, a decrease of 50%, resulting from lower investor demand due to the rising interest rate environment.

Servicing Fees

We receive servicing fees to compensate us for servicing loans on behalf of investors, including managing payments from borrowers, collections and payments to those investors. Servicing fee revenue related to loans sold also includes the change in fair value of servicing assets associated with the loans.

The table below illustrates AUM serviced on our platform by the method in which the loans were financed as of the periods presented. Loans sold and subsequently serviced on behalf of the investor represent a key driver of our servicing fee revenue.
Change (%)
September 30,
2023		 June 30,
2023		 September 30,
2022		 Q3 2023
vs
Q2 2023		 Q3 2023
vs
Q3 2022
AUM (in millions):
Loans serviced for others $ 9,601  $ 10,204  $ 11,807  (6) % (19) %
Loans held by LendingClub Bank 5,189  5,425  4,019  (4) % 29  %
Retail notes, certificates and secured borrowings 19  28  92  (32) % (79) %
Other loans invested in by the Company 9  12  11  (25) % (18) %
Total $ 14,818  $ 15,669  $ 15,929  (5) % (7) %

57

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
In addition to the loans serviced on our marketplace platform, we serviced $138.8 million, $146.9 million and $174.1 million in outstanding principal balance of commercial loans sold as of September 30, 2023, June 30, 2023 and September 30, 2022, respectively.

Sequential: Servicing fees were $32.8 million and $22.0 million for the third and second quarters of 2023, respectively, an increase of 49%. This was primarily due to a one-time benefit related to recouping volume-based purchase incentives and an increase in the fair value of the servicing asset based on higher expected servicing fee revenue, partially offset by a decrease in loan balances serviced for others.

Year Over Year: Servicing fees were $32.8 million and $23.8 million for the third quarters of 2023 and 2022, respectively, an increase of 38%. This was primarily due to a one-time benefit related to recouping volume-based purchase incentives and an increase in the fair value of the servicing asset based on higher expected servicing fee revenue, partially offset by a decrease in loan balances serviced for others.

Nine Months Over Nine Months: Servicing fees were $81.2 million and $60.4 million for the first nine months of 2023 and 2022, respectively, an increase of 34%. This was primarily due to a one-time benefit related to recouping volume-based purchase incentives and an increase in the fair value of the servicing asset based on higher expected servicing fee revenue, partially offset by a decrease in loan balances serviced for others.

Gain on Sales of Loans

In connection with loan sales, we recognize a gain or loss on the sale of loans based on the level to which the contractual servicing fee is above or below an estimated market rate of servicing at the time of sale. Additionally, we recognize transaction costs, if any, as a loss on sale of loans.

Sequential: Gain on sales of loans was $8.6 million and $13.2 million for the third and second quarters of 2023, respectively, a decrease of 35%. The decrease was primarily due to a decrease in the volume of marketplace loans sold.

Year Over Year: Gain on sales of loans was $8.6 million and $23.6 million for the third quarters of 2023 and 2022, respectively, a decrease of 64%. The decrease was primarily due to a decrease in the volume of marketplace loans sold.

Nine Months Over Nine Months: Gain on sales of loans was $35.9 million and $77.0 million for the first nine months of 2023 and 2022, respectively, a decrease of 53%. The decrease was primarily due to a decrease in the volume of marketplace loans sold.

Net Fair Value Adjustments

We record fair value adjustments on loans that are recorded at fair value, including gains or losses from sale prices in excess of or less than the loan principal amount sold.

Sequential: Net fair value adjustments were $(41.4) million and $(23.4) million for the third and second quarters of 2023, respectively, an increased loss of $17.9 million. The increase in loss was primarily due to lower loan sale prices due to lower investor demand.

Year Over Year: Net fair value adjustments were $(41.4) million and $(0.6) million for the third quarters of 2023 and 2022, respectively, an increased loss of $40.7 million. The increase in loss was primarily due to lower loan sale prices due to lower investor demand.

58

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Nine Months Over Nine Months: Net fair value adjustments were $(80.2) million and $24.3 million for the first nine months of 2023 and 2022, respectively, an increased loss of $104.5 million. The change to a loss from a gain was primarily due to lower loan sale prices.

Other Non-interest Income

Other non-interest income primarily consists of referral revenue that relates to fees earned from third-party companies when customers referred by us consider or purchase products or services from such third-party companies. The tables below illustrate the composition of other non-interest income for each period presented:
Three Months Ended Change (%)
September 30,
2023		 June 30,
2023		 September 30,
2022		 Q3 2023
vs
Q2 2023		 Q3 2023
vs
Q3 2022
Referral revenue $ 1,029  $ 1,531  $ 3,144  (33) % (67) %
Other 1,929  1,504  4,256  28  % (55) %
Other non-interest income $ 2,958  $ 3,035  $ 7,400  (3) % (60) %

Nine Months Ended September 30, Change (%)
2023 2022
Referral revenue $ 4,008  $ 10,860  (63) %
Realized gains on sales of securities available for sale —  36  (100) %
Other 5,341  13,843  (61) %
Other non-interest income $ 9,349  $ 24,739  (62) %

59

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Net Interest Income

The tables below present net interest income information corresponding to interest-earning assets and interest-bearing funding sources. The average yield/rate is calculated by dividing the annualized period-end interest income/expense by the average balance.
Three Months Ended
September 30, 2023
Three Months Ended
June 30, 2023
Three Months Ended
September 30, 2022
Average
Balance		 Interest Income/
Expense		 Average Yield/
Rate		 Average
Balance		 Interest Income/
Expense		 Average Yield/
Rate		 Average
Balance		 Interest Income/
Expense		 Average Yield/
Rate
Interest-earning assets (1)
Cash, cash equivalents, restricted cash and other $ 1,249,087  $ 16,798  5.38  % $ 1,512,700  $ 19,134  5.06  % $ 893,655  $ 5,017  2.25  %
Securities available for sale at fair value 601,512  9,467  6.30  % 437,473  5,948  5.44  % 396,556  3,820  3.85  %
Loans held for sale at fair value 286,111  9,582  13.40  % 106,865  4,433  16.59  % 126,487  5,879  18.59  %
Loans and leases held for investment at amortized cost:
Unsecured personal loans (2)
 4,257,360  142,118  13.35  % 4,360,506  145,262  13.33  % 3,268,649  110,446  13.52  %
Secured consumer loans 414,436  4,501  4.34  % 399,488  4,088  4.09  % 337,191  3,039  3.60  %
Commercial loans and leases 720,895  12,240  6.79  % 728,588  11,605  6.37  % 692,783  9,262  5.35  %
PPP loans 11,799  101  3.44  % 28,675  1,130  15.76  % 105,500  1,281  4.86  %
Loans and leases held for investment at amortized cost 5,404,490  158,960  11.76  % 5,517,257  162,085  11.75  % 4,404,123  124,028  11.26  %
Loans held for investment at fair value 362,837  11,788  13.00  % 670,969  21,692  12.93  % 17,763  791  17.83  %
Total loans and leases held for investment 5,767,327  170,748  11.84  % 6,188,226  183,777  11.88  % 4,421,886  124,819  11.29  %
Retail and certificate loans held for investment at fair value 22,311  817  14.65  % 32,760  1,194  14.57  % 104,010  3,685  14.17  %
Total interest-earning assets 7,926,348  207,412  10.47  % 8,278,024  214,486  10.36  % 5,942,594  143,220  9.64  %
Cash and due from banks and restricted cash 69,442  78,221  58,411 
Allowance for loan and lease losses (354,263) (354,348) (254,849)
Other non-interest earning assets 691,641  686,956  597,169 
Total assets $ 8,333,168  $ 8,688,853  $ 6,343,325 
Interest-bearing liabilities
Interest-bearing deposits:
Checking and money market accounts $ 1,271,720  $ 9,541  2.98  % $ 1,397,302  $ 7,760  2.23  % $ 2,192,904  $ 4,575  0.83  %
Savings accounts and certificates of deposit 5,357,717  59,968  4.44  % 5,546,862  58,761  4.25  % 2,260,170  10,609  1.86  %
Interest-bearing deposits (2)
 6,629,437  69,509  4.16  % 6,944,164  66,521  3.84  % 4,453,074  15,184  1.35  %
Retail notes, certificates and secured borrowings 22,311  817  14.65  % 32,760  1,194  14.57  % 104,010  3,685  14.17  %
Other interest-bearing liabilities 13,567  81  2.42  % 31,409  119  1.51  % 140,904  675  1.92  %
Total interest-bearing liabilities 6,665,315  70,407  4.19  % 7,008,333  67,834  3.88  % 4,697,988  19,544  1.65  %
60

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Three Months Ended
September 30, 2023
Three Months Ended
June 30, 2023
Three Months Ended
September 30, 2022
Average
Balance		 Interest Income/
Expense		 Average Yield/
Rate		 Average
Balance		 Interest Income/
Expense		 Average Yield/
Rate		 Average
Balance		 Interest Income/
Expense		 Average Yield/
Rate
Non-interest bearing deposits 183,728  205,750  284,134 
Other liabilities 271,118  272,142  250,086 
Total liabilities $ 7,120,161  $ 7,486,225  $ 5,232,208 
Total equity $ 1,213,007  $ 1,202,628  $ 1,111,117 
Total liabilities and equity $ 8,333,168  $ 8,688,853  $ 6,343,325 
Interest rate spread 6.28  % 6.48  % 7.99  %
Net interest income and net interest margin $ 137,005  6.91  % $ 146,652  7.09  % $ 123,676  8.32  %
(1)    Nonaccrual loans and any related income are included in their respective loan categories.
(2)    The average yield/rate for unsecured personal loans increased sequentially primarily due to higher coupon loans in the portfolio. The average yield/rate for unsecured personal loans decreased year over year primarily due to a shift in the mix toward higher credit quality loans, which generally have lower interest rates. The average yield/rate for interest-bearing deposits increased due to a higher federal funds rate and an increasing concentration of online deposits. We expect pressure on net interest margin to continue for the remainder of 2023.

An analysis of the sequential and year-over-year changes in the categories of interest revenue and interest expense resulting from changes in volume and rate is as follows:
Three Months Ended September 30, 2023
Compared to
Three Months Ended June 30, 2023
Increase (Decrease) Due to Change in:
Average Volume(1)
Average Rate(1)
 Total
Interest-earning assets
Cash, cash equivalents, restricted cash and other $ (3,488) $ 1,152  $ (2,336)
Securities available for sale at fair value 2,477  1,042  3,519 
Loans held for sale at fair value 6,151  (1,002) 5,149 
Loans and leases held for investment at amortized cost (3,852) 727  (3,125)
Loans and leases held for investment at fair value (10,010) 106  (9,904)
Retail and certificate loans held for investment at fair value (383) 6  (377)
Total increase (decrease) in interest income on interest-earning assets
 $ (9,105) $ 2,031  $ (7,074)
Interest-bearing liabilities
Checking and money market accounts $ (750) $ 2,531  $ 1,781 
Savings accounts and certificates of deposit (2,053) 3,260  1,207 
Interest-bearing deposits (2,803) 5,791  2,988 
Retail notes, certificates and secured borrowings (383) 6  (377)
Other interest-bearing liabilities (87) 49  (38)
Total increase (decrease) in interest expense on interest-bearing liabilities
 $ (3,273) $ 5,846  $ 2,573 
Decrease in net interest income
 $ (5,832) $ (3,815) $ (9,647)
(1)    Volume and rate changes have been allocated on a consistent basis using the respective percentage changes in average balances and average rates.
61

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Three Months Ended September 30, 2023
Compared to
Three Months Ended September 30, 2022
Increase (Decrease) Due to Change in:
Average Volume(1)
Average Rate(1)
 Total
Interest-earning assets
Cash, cash equivalents, restricted cash and other $ 2,613  $ 9,168  $ 11,781 
Securities available for sale at fair value 2,536  3,111  5,647 
Loans held for sale at fair value 5,722  (2,019) 3,703 
Loans and leases held for investment at amortized cost 33,293  1,639  34,932 
Loans and leases held for investment at fair value 11,269  (272) 10,997 
Retail and certificate loans held for investment at fair value (2,989) 121  (2,868)
Total increase in interest income on interest-earning assets $ 52,444  $ 11,748  $ 64,192 
Interest-bearing liabilities
Checking and money market accounts $ (2,606) $ 7,572  $ 4,966 
Savings accounts and certificates of deposit 24,321  25,038  49,359 
Interest-bearing deposits 21,715  32,610  54,325 
Retail notes, certificates and secured borrowings (2,989) 121  (2,868)
Other interest-bearing liabilities (733) 139  (594)
Total increase in interest expense on interest-bearing liabilities $ 17,993  $ 32,870  $ 50,863 
Increase (Decrease) in net interest income $ 34,451  $ (21,122) $ 13,329 
(1)    Volume and rate changes have been allocated on a consistent basis using the respective percentage changes in average balances and average rates.
62

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)

Nine Months Ended
September 30, 2023
Nine Months Ended
September 30, 2022
Average
Balance		 Interest Income/
Expense		 Average Yield/
Rate		 Average
Balance		 Interest Income/
Expense		 Average Yield/
Rate
Interest-earning assets (1)
Cash, cash equivalents, restricted cash and other $ 1,327,592  $ 49,646  4.99  % $ 936,592  $ 7,984  1.14  %
Securities available for sale at fair value 468,189  19,315  5.50  % 377,274  12,757  4.51  %
Loans held for sale at fair value 168,495  19,772  15.65  % 178,905  20,459  15.25  %
Loans and leases held for investment at amortized cost:
Unsecured personal loans (2)
 4,228,891  421,066  13.28  % 2,678,133  284,350  14.16  %
Secured consumer loans 398,681  12,295  4.11  % 279,556  7,665  3.66  %
Commercial loans and leases 728,410  36,030  6.60  % 652,745  25,583  5.23  %
PPP loans 32,600  2,121  8.67  % 158,729  6,783  5.70  %
Loans and leases held for investment at amortized cost 5,388,582  471,512  11.67  % 3,769,163  324,381  11.47  %
Loans held for investment at fair value 621,639  60,372  12.95  % 17,756  2,015  15.13  %
Total loans and leases held for investment 6,010,221  531,884  11.80  % 3,786,919  326,396  11.49  %
Retail and certificate loans held for investment at fair value 33,776  3,694  14.58  % 148,798  15,745  14.11  %
Total interest-earning assets 8,008,273  624,311  10.39  % 5,428,488  383,341  9.42  %
Cash and due from banks and restricted cash 73,171  75,412 
Allowance for loan and lease losses (349,049) (207,462)
Other non-interest earning assets 681,841  525,053 
Total assets $ 8,414,236  $ 5,821,491 
Interest-bearing liabilities
Interest-bearing deposits:
Checking and money market accounts $ 1,432,912  $ 24,869  2.32  % $ 2,298,847  $ 8,964  0.52  %
Savings accounts and certificates of deposit 5,219,587  164,434  4.21  % 1,633,325  15,736  1.29  %
Interest-bearing deposits (2)
 6,652,499  189,303  3.80  % 3,932,172  24,700  0.84  %
Retail notes, certificates and secured borrowings 33,776  3,694  14.58  % 148,798  15,745  14.11  %
Other interest-bearing liabilities 50,489  953  2.52  % 215,884  3,314  2.05  %
Total interest-bearing liabilities 6,736,764  193,950  3.85  % 4,296,854  43,759  1.36  %
Non-interest bearing deposits 210,264  268,281 
Other liabilities 269,068  276,788 
Total liabilities $ 7,216,096  $ 4,841,923 
Total equity $ 1,198,140  $ 979,568 
Total liabilities and equity $ 8,414,236  $ 5,821,491 
Interest rate spread 6.55  % 8.06  %
Net interest income and net interest margin $ 430,361  7.17  % $ 339,582  8.34  %
(1)    Nonaccrual loans and any related income are included in their respective loan categories.
(2)    The average yield/rate for unsecured personal loans decreased year over year primarily due to a shift in the mix toward higher credit quality loans, which generally have lower interest rates. The average yield/rate for interest-bearing deposits increased due to a higher federal funds rate and an increasing concentration of online deposits. We expect pressure on net interest margin to continue for the remainder of 2023.

63

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Provision for Credit Losses

The allowance for loan and lease losses (ALLL) for lifetime expected losses under CECL on HFI loans and leases at amortized cost is initially recognized as “Provision for credit losses” at the time of origination. The ALLL is estimated using a discounted cash flow (DCF) approach, where effective interest rates are used to calculate the NPV of expected cash flows. The effective interest rates are calculated based on the periodic interest income received from the loan’s contractual cash flows and the net investment in the loan, which includes deferred origination fees and costs, to provide a constant rate of return over the loan term. The NPV from the DCF approach is then compared to the amortized cost basis of the loans and leases to derive expected credit losses. Under the DCF approach, the provision for credit losses in subsequent periods includes a credit loss expense relating to the discounting effect due to the passage of time after the initial recognition of ALLL on originated HFI loans at amortized cost.

The provision for credit losses includes the credit loss expense for HFI loans and leases at amortized cost, available for sale (AFS) securities and unfunded lending commitments. The table below illustrates the composition of the provision for credit losses for each period presented, as well as the loan originations held for investment in each period, which is a key driver for credit loss expense:
Three Months Ended Nine Months Ended September 30,
September 30,
2023		 June 30,
2023		 September 30,
2022		 2023 2022
Credit loss expense for loans and leases held for investment $ 64,127  $ 66,190  $ 82,599  $ 201,167  $ 204,880 
Credit loss expense for unfunded lending commitments
 352  405  140  491  934 
Total provision for credit losses $ 64,479  $ 66,595  $ 82,739  $ 201,658  $ 205,814 
Loan originations held for investment $ 326,290  $ 657,380  $ 1,152,870  $ 1,985,659  $ 3,030,292 

Sequential: The provision for credit losses was $64.5 million and $66.6 million for the third and second quarters of 2023, respectively, a decrease of 3%. The decrease was due to the lower volume of originated loans retained as HFI at amortized cost and the related initial provision for credit losses, partially offset by an increase in quantitative and qualitative allowance due to an increase in expected losses and a less favorable economic outlook.

Year Over Year: The provision for credit losses was $64.5 million and $82.7 million for the third quarters of 2023 and 2022, respectively, a decrease of 22%. The decrease was primarily due to the lower volume of originated loans retained as HFI at amortized cost and the related initial provision for credit losses, partially offset by an increase in quantitative and qualitative allowance due to an increase in expected losses and a less favorable economic outlook.

Nine Months Over Nine Months: The provision for credit losses was $201.7 million and $205.8 million for the first nine months of 2023 and 2022, respectively, a decrease of 2%. The decrease was primarily due to the lower volume of originated loans retained as HFI at amortized cost and the related initial provision for credit losses, partially offset by an increase in quantitative and qualitative allowance due to an increase in expected losses and a less favorable economic outlook.

64

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
The activity in the allowance for credit losses (ACL) was as follows:
Three Months Ended Nine Months Ended September 30,
September 30,
2023		 June 30,
2023		 September 30,
2022		 2023 2022
Allowance for loan and lease losses, beginning of period $ 355,163  $ 348,857  $ 243,260  $ 327,852  $ 144,389 
Credit loss expense for loans and leases held for investment 64,127  66,190  82,599  201,167  204,880 
Charge-offs (74,178) (64,269) (23,728) (191,010) (48,669)
Recoveries 5,383  4,385  1,070  12,486  2,601 
Allowance for loan and lease losses, end of period $ 350,495  $ 355,163  $ 303,201  $ 350,495  $ 303,201 
Reserve for unfunded lending commitments, beginning of period $ 2,017  $ 1,612  $ 2,025  $ 1,878  $ 1,231 
Credit loss expense for unfunded lending commitments
352  405  140  491  934 
Reserve for unfunded lending commitments, end of period (1)
 $ 2,369  $ 2,017  $ 2,165  $ 2,369  $ 2,165 
(1)    Relates to $89.5 million, $108.9 million and $144.0 million of unfunded commitments as of September 30, 2023, June 30, 2023 and September 30, 2022, respectively.

Three Months Ended Nine Months Ended September 30,
September 30,
2023		 June 30,
2023		 September 30,
2022		 2023 2022
Ratio of allowance for loan and lease losses to total loans and leases held for investment at amortized cost 6.7  % 6.4  % 6.3  % 6.7  % 6.3  %
Average loans and leases held for investment at amortized cost, excluding PPP loans $ 5,392,691 $ 5,488,582 $ 4,298,623 $ 5,355,982 $ 3,610,434
Net charge-off ratio (1)
 5.1  % 4.4  % 2.1  % 4.4  % 1.7  %
(1)    Calculated as annualized net charge-offs divided by average outstanding loans and leases held for investment during the period, excluding PPP loans.

Loans and leases are generally placed on nonaccrual status when contractually past due 90 days or more, or earlier if management believes that the probability of collection does not warrant further accrual. Unsecured personal loans are charged-off no later than 120 days past due. The following table presents nonaccrual loans and leases(1):
September 30, 2023 December 31, 2022
Total nonaccrual loans and leases held for investment $ 49,999  $ 34,827 
Ratio of total nonaccrual loans and leases held for investment to total loans and leases held for investment 1.0  % 0.7  %
(1)    Excluding PPP loans, there were no loans that were 90 days or more past due and accruing as of both September 30, 2023 and December 31, 2022.

65

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
For additional information on the ACL and nonaccrual loans and leases, see “Notes to Consolidated Financial Statements – Note 1. Summary of Significant Accounting Policies” in our Annual Report and “Note 5. Loans and Leases Held for Investment at Amortized Cost, Net of Allowance For Loan and Lease Losses” in this Report.

Non-Interest Expense

Non-interest expense primarily consists of (i) compensation and benefits, which include salaries and wages, benefits and stock-based compensation expense, (ii) marketing, which includes costs attributable to borrower and deposit customer acquisition efforts and building general brand awareness, (iii) equipment and software, (iv) depreciation and amortization, (v) professional services, which primarily consist of consulting fees, and (vi) occupancy, which includes rent expense and all other costs related to occupying our office spaces.
Three Months Ended Change (%)
September 30,
2023		 June 30,
2023		 September 30,
2022		 Q3 2023
vs
Q2 2023		 Q3 2023
vs
Q3 2022
Non-interest expense:
Compensation and benefits $ 58,497  $ 71,553  $ 84,916  (18) % (31) %
Marketing 19,555  23,940  46,031  (18) % (58) %
Equipment and software 12,631  13,968  12,491  (10) % 1  %
Depreciation and amortization 11,250  11,638  10,681  (3) % 5  %
Professional services 8,414  9,974  11,943  (16) % (30) %
Occupancy 4,612  4,684  5,051  (2) % (9) %
Other non-interest expense 13,076  15,322  15,106  (15) % (13) %
Total non-interest expense $ 128,035  $ 151,079  $ 186,219  (15) % (31) %

Nine Months Ended September 30,
2023 2022 Change (%)
Non-interest expense:
Compensation and benefits $ 203,357  $ 251,629  (19) %
Marketing 70,375  162,608  (57) %
Equipment and software 40,295  35,998  12  %
Depreciation and amortization 35,242  32,277  9  %
Professional services 27,446  40,487  (32) %
Occupancy 13,606  17,279  (21) %
Other non-interest expense 46,101  46,531  (1) %
Total non-interest expense $ 436,422  $ 586,809  (26) %

Compensation and Benefits

Sequential: Compensation and benefits expense decreased $13.1 million, or 18%, for the third quarter of 2023 compared to the second quarter of 2023. The decrease was primarily due to a decrease in the accrual of variable compensation expense.

Year Over Year: Compensation and benefits expense decreased $26.4 million, or 31%, for the third quarter of 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in headcount as a result of the cost reduction and reorganization plan we implemented in January 2023 and a decrease in the accrual of variable compensation expense.
66

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)

Nine Months Over Nine Months: Compensation and benefits expense decreased $48.3 million, or 19%, for the first nine months of 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in headcount as a result of the cost reduction and reorganization plan we implemented in January 2023 and a decrease in the accrual of variable compensation expense.

Marketing

Sequential: Marketing expense decreased $4.4 million, or 18%, for the third quarter of 2023 compared to the second quarter of 2023. The decrease was primarily due to a decrease in variable marketing expenses based on lower origination volume.

Year Over Year: Marketing expense decreased $26.5 million, or 58%, for the third quarter of 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in variable marketing expenses based on lower origination volume.

Nine Months Over Nine Months: Marketing expense decreased $92.2 million, or 57%, for the first nine months of 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in variable marketing expenses based on lower origination volume.

Equipment and Software

Sequential: Equipment and software expense decreased $1.3 million, or 10%, for the third quarter of 2023 compared to the second quarter of 2023. The decrease was primarily due to a decrease in subscription costs.

Year Over Year: Equipment and software expense remained relatively flat for the third quarter of 2023 compared to the same period in 2022.

Nine Months Over Nine Months: Equipment and software expense increased $4.3 million, or 12%, for the first nine months of 2023 compared to the same period in 2022. The increase was primarily due to an increase in subscription costs and hosting fees, partially offset by a decrease in support and maintenance expense.

Depreciation and Amortization

Sequential: Depreciation and amortization expense remained relatively flat for the third quarter of 2023 compared to the second quarter of 2023.

Year Over Year: Depreciation and amortization expense increased $0.6 million, or 5%, for the third quarter of 2023 compared to the same period in 2022. The increase was primarily due to an increase in purchased software and the amortization of internally-developed software.

Nine Months Over Nine Months: Depreciation and amortization expense increased $3.0 million, or 9%, for the first nine months of 2023 compared to the same period in 2022. The increase was primarily due to an increase in the amortization of internally-developed software and an increase in purchased software.

Professional Services

Sequential: Professional services decreased $1.6 million, or 16%, for the third quarter of 2023 compared to the second quarter of 2023. The decrease was primarily due to a decrease in consulting fees.

67

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Year Over Year: Professional services decreased $3.5 million, or 30%, for the third quarter of 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in consulting fees.

Nine Months Over Nine Months: Professional services decreased $13.0 million, or 32%, for the first nine months of 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in consulting fees.

Occupancy

Sequential: Occupancy expense remained relatively flat for the third quarter of 2023 compared to the second quarter of 2023.

Year Over Year: Occupancy expense decreased $0.4 million, or 9%, for the third quarter of 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in rent expense.

Nine Months Over Nine Months: Occupancy expense decreased $3.7 million, or 21%, for the first nine months of 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in rent expense.

Income Taxes

For the third quarter and first nine months of 2023, we recorded an income tax expense of $3.3 million and $12.1 million, representing an effective tax rate of 39.9% and 29.7%, respectively. The third quarter effective tax rate differs from the statutory rate as it was favorably affected by recurring items such as tax credits and was unfavorably affected by nondeductible portions of executive compensation. Additionally, the effective tax rate was unfavorably impacted by the discrete tax impact recognized during the period related to stock-based compensation, which had a larger impact in the third quarter.

For the third quarter of 2022, we recorded an income tax benefit of $7.2 million, primarily due to the release of a $5.0 million valuation allowance against our deferred tax assets and a $4.6 million tax credit, partially offset by a $2.4 million state income tax expense. For the first nine months of 2022, we recorded an income tax benefit of $134.2 million, primarily due to the release of a $140.3 million valuation allowance against our deferred tax assets.

As of September 30, 2023, we maintained a valuation allowance of $47.6 million related to net operating loss carryforwards (NOLs) and tax credit carryforwards. The realization and timing of any remaining state NOLs and tax credit carryforwards, based on the allocation of taxable income to the Parent, is uncertain and may expire before being utilized. Changes to deferred tax asset valuation allowances and liabilities related to uncertain tax positions are recorded as current period income tax expense or benefit.

Income taxes are recorded on a separate entity basis whereby each operating segment determines income tax expense or benefit as if it filed a separate tax return.

Segment Information

The Company defines operating segments to be components of the Company for which discrete financial information is evaluated regularly by the Company’s Chief Executive Officer and Chief Financial Officer to allocate resources and evaluate financial performance. This information is reviewed according to the legal organizational structure of the Company’s operations with products and services presented separately for the parent bank holding company and its wholly-owned subsidiary, LC Bank.

68

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
LendingClub Bank

The LC Bank operating segment represents the national bank legal entity and reflects post-Acquisition operating activities. This segment provides a full complement of financial products and solutions, including loans, leases and deposits. It originates loans to individuals and businesses, retains loans for investment, sells loans to investors and manages relationships with deposit holders.

LendingClub Corporation (Parent Only)

The LendingClub Corporation (Parent only) operating segment represents the holding company legal entity and predominately reflects the operations of the Company prior to the Acquisition. This activity includes, but is not limited to, servicing fee revenue for loans serviced prior to the Acquisition, and interest income and interest expense related to the Retail Program and Structured Program transactions entered into prior to the Acquisition.

Financial information for the segments is presented in the following tables:
LendingClub
Bank		 LendingClub
Corporation
(Parent only)		 Intercompany
Eliminations		 Consolidated Total
Three Months Ended September 30, Three Months Ended September 30, Three Months Ended September 30, Three Months Ended September 30,
  2023 2022 2023 2022 2023 2022 2023 2022
Non-interest income:
Marketplace revenue $ 37,439  $ 153,504  $ 12,320  $ 9,015  $ 11,127  $ 11,318  $ 60,886  $ 173,837 
Other non-interest income 18,783  25,240  2,478  4,794  (18,303) (22,634) 2,958  7,400 
Total non-interest income 56,222  178,744  14,798  13,809  (7,176) (11,316) 63,844  181,237 
Interest income:
Interest income 203,961  137,142  3,451  6,078  —  —  207,412  143,220 
Interest expense (69,517) (15,277) (890) (4,267) —  —  (70,407) (19,544)
Net interest income 134,444  121,865  2,561  1,811  —  —  137,005  123,676 
Total net revenue 190,666  300,609  17,359  15,620  (7,176) (11,316) 200,849  304,913 
Provision for credit losses (64,463) (82,739) (16) —  —  —  (64,479) (82,739)
Non-interest expense (122,142) (177,714) (13,069) (19,821) 7,176  11,316  (128,035) (186,219)
Income (Loss) before income tax benefit (expense) 4,061  40,156  4,274  (4,201) —  —  8,335  35,955 
Income tax benefit (expense) (2,380) (9,440) (947) 16,683  —  —  (3,327) 7,243 
Net income
 $ 1,681  $ 30,716  $ 3,327  $ 12,482  $ —  $ —  $ 5,008  $ 43,198 

69

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
LendingClub
Bank		 LendingClub
Corporation
(Parent only)		 Intercompany
Eliminations		 Consolidated Total
Nine Months Ended September 30, Nine Months Ended September 30, Nine Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022 2023 2022 2023 2022
Non-interest income:
Marketplace revenue $ 172,133  $ 509,426  $ 33,200  $ 35,313  $ 33,970  $ 15,448  $ 239,303  $ 560,187 
Other non-interest income 59,687  64,779  7,462  12,931  (57,800) (52,971) 9,349  24,739 
Total non-interest income 231,820  574,205  40,662  48,244  (23,830) (37,523) 248,652  584,926 
Interest income:
Interest income 612,805  357,117  11,506  26,224  —  —  624,311  383,341 
Interest expense (189,959) (25,134) (3,991) (18,625) —  —  (193,950) (43,759)
Net interest income 422,846  331,983  7,515  7,599  —  —  430,361  339,582 
Total net revenue 654,666  906,188  48,177  55,843  (23,830) (37,523) 679,013  924,508 
Provision for credit losses (201,658) (205,814) —  —  —  —  (201,658) (205,814)
Non-interest expense (413,088) (552,809) (47,164) (71,523) 23,830  37,523  (436,422) (586,809)
Income (Loss) before income tax benefit (expense) 39,920  147,565  1,013  (15,680) —  —  40,933  131,885 
Income tax benefit (expense) (12,065) (39,113) (84) 120,274  —  53,048  (12,149) 134,209 
Net income
 $ 27,855  $ 108,452  $ 929  $ 104,594  $ —  $ 53,048  $ 28,784  $ 266,094 

The material drivers and trends of the financial results of the segments presented above for the third quarter and first nine months of 2023 compared to the second quarter of 2023 and third quarter and first nine months of 2022 are consistent with those provided on a consolidated basis in "Results of Operations."

Non-GAAP Financial Measures

To supplement our financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: Pre-Provision Net Revenue (PPNR), Net Income Excluding Income Tax Benefit, Diluted EPS Excluding Income Tax Benefit, and Tangible Book Value (TBV) Per Common Share. Our non-GAAP financial measures do have limitations as analytical tools and you should not consider them in isolation or as a substitute for an analysis of our results under GAAP.

We believe these non-GAAP financial measures provide management and investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and enable comparison of our financial results with other public companies.

We believe PPNR, Net Income Excluding Income Tax Benefit and Diluted EPS Excluding Income Tax Benefit are important measures because they reflect the underlying financial performance of our business operations. PPNR is a non-GAAP financial measure calculated by subtracting the provision for credit losses and income tax benefit/expense from net income. Net Income Excluding Income Tax Benefit adjusts for the release of a deferred tax asset valuation allowance in 2022. Diluted EPS Excluding Income Tax Benefit is a non-GAAP financial measure calculated by dividing Net Income Excluding Income Tax Benefit by the weighted-average diluted common shares outstanding.

70

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
We believe TBV Per Common Share is an important measure used to evaluate the Company’s use of equity. TBV Per Common Share is a non-GAAP financial measure representing the book value of common equity reduced by goodwill and intangible assets, divided by ending number of common shares issued and outstanding.

The following tables provide a reconciliation of PPNR to the nearest GAAP measure:
Three Months Ended Nine Months Ended
September 30, 2023 June 30,
2023		 September 30, 2022 September 30, 2023 September 30, 2022
GAAP Net income $ 5,008  $ 10,110  $ 43,198  $ 28,784  $ 266,094 
Less: Provision for credit losses (64,479) (66,595) (82,739) (201,658) (205,814)
Less: Income tax benefit (expense) (3,327) (4,686) 7,243  (12,149) 134,209 
Pre-provision net revenue $ 72,814  $ 81,391  $ 118,694  $ 242,591  $ 337,699 

Three Months Ended Nine Months Ended
September 30, 2023 June 30,
2023		 September 30, 2022 September 30, 2023 September 30, 2022
Non-interest income $ 63,844  $ 85,818  $ 181,237  $ 248,652  $ 584,926 
Net interest income 137,005  146,652  123,676  430,361  339,582 
Total net revenue 200,849  232,470  304,913  679,013  924,508 
Non-interest expense (128,035) (151,079) (186,219) (436,422) (586,809)
Pre-provision net revenue 72,814  81,391  118,694  242,591  337,699 
Provision for credit losses (64,479) (66,595) (82,739) (201,658) (205,814)
Income before income tax benefit (expense) 8,335  14,796  35,955  40,933  131,885 
Income tax benefit (expense) (3,327) (4,686) 7,243  (12,149) 134,209 
GAAP Net income $ 5,008  $ 10,110  $ 43,198  $ 28,784  $ 266,094 

71

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
The following table provides a reconciliation of Net Income Excluding Income Tax Benefit and Diluted EPS Excluding Income Tax Benefit to the nearest GAAP measures:
As of and For The Three Months Ended
As of and For The Nine Months Ended
September 30, 2023 June 30,
2023		 September 30, 2022 September 30, 2023 September 30, 2022
GAAP Net income $ 5,008  $ 10,110  $ 43,198  $ 28,784  $ 266,094 
Income tax benefit from release of tax valuation allowance —  —  5,015  —  140,315 
Net income excluding income tax benefit $ 5,008  $ 10,110  $ 38,183  $ 28,784  $ 125,779 
GAAP Diluted EPS – common stockholders $ 0.05  $ 0.09  $ 0.41  $ 0.27  $ 2.56 
(A) Income tax benefit from release of tax valuation allowance N/A N/A $ 5,015  N/A $ 140,315 
(B) Weighted-average common shares – Diluted N/A N/A 105,853,938  N/A 104,116,240 
(A/B) Diluted EPS impact of income tax benefit N/A N/A $ 0.05  N/A $ 1.35 
Diluted EPS excluding income tax benefit $ 0.05  $ 0.09  $ 0.36  $ 0.27  $ 1.21 
N/A – Not applicable

The following table provides a reconciliation of TBV Per Common Share to the nearest GAAP measure:
As of September 30,
2023		 June 30,
2023		 September 30,
2022
GAAP common equity $ 1,208,219  $ 1,205,523  $ 1,121,410 
Less: Goodwill (75,717) (75,717) (75,717)
Less: Intangible assets (13,151) (14,167) (17,512)
Tangible common equity $ 1,119,351  $ 1,115,639  $ 1,028,181 
Book value per common share
GAAP common equity $ 1,208,219  $ 1,205,523  $ 1,121,410 
Common shares issued and outstanding 109,648,769  108,694,120  105,088,761 
Book value per common share $ 11.02  $ 11.09  $ 10.67 
Tangible book value per common share
Tangible common equity $ 1,119,351  $ 1,115,639  $ 1,028,181 
Common shares issued and outstanding 109,648,769  108,694,120  105,088,761 
Tangible book value per common share $ 10.21  $ 10.26  $ 9.78 

Supervision and Regulatory Environment

We are subject to periodic exams, investigations, inquiries or requests, enforcement actions and other proceedings from federal and state regulatory agencies, including the federal banking regulators that directly regulate the Company and/or LC Bank. Further, we are subject to claims, individual and class action lawsuits, and lawsuits alleging regulatory violations. The number and/or significance of these exams, investigations, inquiries, requests, proceedings, claims and lawsuits have been increasing since the Acquisition in part because our products and services increased in scope and in part because we became a bank holding company operating a national bank.
72

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Although historically the Company has generally resolved these matters in a manner that was not materially adverse to its financial results or business operations, no assurance can be given as to the timing, outcome or consequences of any of these matters in the future.

Regulatory Actions Taken in Relation to COVID-19

Regulators and government officials at the federal government level and in states across the country have issued orders, passed laws or otherwise issued guidance in connection with COVID-19. Some of these orders and laws have placed restrictions on debt collection activity, all or certain types of communications with delinquent borrowers or others, required that borrowers be allowed to defer payments on outstanding debt, governed credit reporting and the use of credit reporting, and placed certain restrictions and requirements on operations in the workplace. We have taken steps to monitor regulatory developments relating to COVID-19 and to comply with orders and laws applicable to our business. Although many of the orders, laws or guidance related to COVID-19 have since reverted, it is possible that additional orders, laws, or regulatory guidance may still be issued. We are not able to predict the extent of the impact on our business from any regulatory activity relating to or resulting from COVID-19.

Federal Banking Regulator Supervision

Since the Acquisition, we are subject to supervision, regulation, examination and enforcement by multiple federal banking regulatory bodies. Specifically, as a bank holding company, the Company is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the Board of Governors of the Federal Reserve System (FRB). Further, as a national bank, LC Bank is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the OCC. Accordingly, we have been and continue to invest in regulatory compliance and be subject to certain parameters, obligations and/or limitations set forth by the banking regulations and regulators with respect to the operation of our business.

Consequences

If we are found to not have complied with applicable laws, regulations or requirements, we could: (i) lose one or more of our licenses or authorizations, (ii) become subject to a consent order or administrative enforcement action, (iii) face lawsuits (including class action lawsuits), sanctions, penalties, or other monetary losses due to judgments, orders, or settlements, (iv) be in breach of certain contracts, which may void or cancel such contracts, (v) decide or be compelled to modify or suspend certain of our business practices, (vi) be unable to execute on certain Company initiatives, or (vii) be required to obtain a license in such jurisdiction, which may have an adverse effect on our ability to operate and/or evolve our lending marketplace and other products and/or services; any of which may harm our business or financial results.

See “Part I – Item 1. Business – Regulation and Supervision,” “Part I – Item 1A. Risk Factors – Risks Related to Regulation, Supervision and Compliance,” and “Part I – Item 1A. Risk Factors – Risks Related to Operating Our Business” in our Annual Report for further discussion regarding our supervision and regulatory environment.

Capital Management

The prudent management of capital is fundamental to the successful achievement of our business initiatives. We actively review capital through a process that continuously assesses and monitors the Company’s overall capital adequacy. Our objective is to maintain capital at an amount commensurate with our risk profile and risk tolerance objectives, and to meet both regulatory and market expectations.

73

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
The formation of LC Bank as a nationally chartered association and the organization of the Company as a bank holding company subjects us to various capital adequacy guidelines issued by the OCC and the FRB, including the requirement to maintain regulatory capital ratios in accordance with the Basel Committee on Banking Supervision standardized approach for U.S. banking organizations (U.S. Basel III). As a U.S. Basel III standardized approach institution, we selected the one-time election to opt-out of the requirements to include all the components of accumulated other comprehensive income included in common stockholder’s equity. The minimum capital requirements under the U.S. Basel III capital framework are: a CET1 risk-based capital ratio of 4.5%, a Tier 1 risk-based capital ratio of 6.0%, a total risk-based capital ratio of 8.0%, and a Tier 1 leverage ratio of 4.0%. Additionally, a Capital Conservation Buffer (CCB) of 2.5% must be maintained above the minimum risk-based capital requirements in order to avoid certain limitations on capital distributions, stock repurchases, and certain discretionary bonus payments. In addition to these guidelines, the banking regulators may require a banking organization to maintain capital at levels higher than the minimum ratios prescribed under the U.S. Basel III capital framework. In this regard, and unless otherwise directed by the FRB and the OCC, we have made commitments for the Company and LC Bank (until February 2024) to maintain a CET1 risk-based capital ratio of 11.0%, a Tier 1 risk-based capital ratio above 11.0%, a total risk-based capital ratio above 13.0%, and a Tier 1 leverage ratio of 11.0%. See “Part I – Item 1. Business – Regulation and Supervision – Regulatory Capital Requirements and Prompt Corrective Action” in our Annual Report and “Notes to Condensed Consolidated Financial Statements – Note 19. Regulatory Requirements” in this Report for additional information.

The following table summarizes the Company’s and LC Bank’s regulatory capital amounts (in millions) and ratios:
September 30, 2023 December 31, 2022
Required Minimum plus Required CCB for
Non-Leverage Ratios
Amount Ratio Amount Ratio
LendingClub Corporation:
CET1 capital (1)
 $ 1,078.7  16.9  % $ 1,005.8  15.8  % 7.0  %
Tier 1 capital $ 1,078.7  16.9  % $ 1,005.8  15.8  % 8.5  %
Total capital $ 1,161.7  18.2  % $ 1,088.1  17.1  % 10.5  %
Tier 1 leverage $ 1,078.7  13.2  % $ 1,005.8  14.1  % 4.0  %
Risk-weighted assets $ 6,388.6  N/A $ 6,360.7  N/A N/A
Quarterly adjusted average assets $ 8,200.3  N/A $ 7,119.0  N/A N/A
LendingClub Bank:
CET1 capital (1)
 $ 949.7  15.1  % $ 852.2  13.8  % 7.0  %
Tier 1 capital $ 949.7  15.1  % $ 852.2  13.8  % 8.5  %
Total capital $ 1,031.2  16.5  % $ 932.4  15.1  % 10.5  %
Tier 1 leverage $ 949.7  11.8  % $ 852.2  12.5  % 4.0  %
Risk-weighted assets $ 6,268.6  N/A $ 6,194.0  N/A N/A
Quarterly adjusted average assets $ 8,016.0  N/A $ 6,795.2  N/A N/A
N/A – Not applicable
(1)    Consists of common stockholders’ equity as defined under U.S. GAAP and certain adjustments made in accordance with regulatory capital guidelines, including the addition of the CECL transitional benefit and deductions for goodwill and other intangible assets.

The higher risk-based capital ratios for the Company reflect generally lower risk-weights for assets held by LendingClub Corporation as compared with LC Bank.

74

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
In response to the COVID-19 pandemic, the FRB, OCC, and FDIC adopted a final rule related to the regulatory capital treatment of the allowance for credit losses under CECL. As permitted by the rule, the Company elected to delay the estimated impact of CECL on regulatory capital resulting in a capital benefit of $35 million at December 31, 2021. This benefit is phased out over a three-year transition period that commenced on January 1, 2022 at a rate of 25% each year through January 1, 2025.

Liquidity

We manage liquidity to meet our cash flow and collateral obligations in a timely manner at a reasonable cost. We must maintain operating liquidity to meet our expected daily and forecasted cash flow requirements, as well as contingent liquidity to meet unexpected funding requirements.

As our primary business at LC Bank involves taking deposits and originating loans, a key role of liquidity management is to ensure that customers have timely access to funds from deposits and for loans. Liquidity management also involves maintaining sufficient liquidity to repay borrowings, pay operating expenses and support extraordinary funding requirements when necessary.

LendingClub Bank Liquidity

The following table summarizes LC Bank’s primary sources of short-term liquidity as of the periods presented:
September 30, 2023 December 31, 2022
Cash and cash equivalents $ 1,283,549  $ 1,020,874 
Securities available for sale (1)
 $ 352,210  $ 329,287 
Deposits $ 7,074,717  $ 6,420,827 
Available borrowing capacity:
FHLB of Des Moines borrowing capacity (2)
 $ 656,190  $ 414,528 
FRB Discount Window borrowing capacity (3)
 $ 3,108,772  $ 191,021 
Total available borrowing capacity $ 3,764,962  $ 605,549 
(1)    Excludes illiquid securities available for sale.
(2)    Includes both loans and securities available for sale pledged as collateral.
(3)    LC Bank’s available borrowing capacity under the FRB Discount Window increased upon including its unsecured personal loan portfolio among the loans pledged as collateral beginning in the second quarter of 2023.

The primary uses of LC Bank liquidity include the funding/acquisition of loans and securities purchases; withdrawals, maturities and the payment of interest on deposits; compensation and benefits expense; taxes; capital expenditures, including internally developed software, leasehold improvements and computer equipment; and costs associated with the continued development and support of our online lending marketplace platform.

Net capital expenditures were $48.2 million, or 7.4% of total net revenue, and $54.7 million, or 6.0% of total net revenue, for the first nine months of 2023 and 2022, respectively. Capital expenditures in 2023 are expected to be approximately $60 million, primarily related to costs associated with the continued development and support of our online lending marketplace platform, including regulatory compliance costs.

75

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
LendingClub Holding Company Liquidity

The primary source of liquidity at the holding company is $93.1 million and $56.5 million in cash and cash equivalents as of September 30, 2023 and December 31, 2022, respectively. Additionally, the holding company has the ability to access the capital markets through additional registrations and public equity offerings.

Uses of cash at the holding company include the routine cash flow requirements as a bank holding company, such as interest and expenses (including those associated with our office leases), the needs of LC Bank for additional equity and, as required, its need for debt financing and support for extraordinary funding requirements when necessary.

Factors Impacting Liquidity

The Company’s liquidity could be adversely impacted by deteriorating financial and market conditions, the inability or unwillingness of a creditor to provide funding, an idiosyncratic event (e.g., a major loss, causing a perceived or actual deterioration in its financial condition), an adverse systemic event (e.g., default or bankruptcy of a significant capital markets participant), or others.

We believe, based on our projections, that our cash on hand, liquid AFS securities, available borrowing capacity, and net cash flows from operating, investing and financing activities are sufficient to meet our liquidity needs for the next twelve months, as well as beyond the next twelve months. See “Item 1. Financial Statements – Condensed Consolidated Statements of Cash Flows” for additional detail regarding our cash flows.

Market Risk

Market risk represents the risk of potential losses arising from changes in interest rates, foreign exchange rates, equity prices, commodity prices, and/or other relevant market rates or prices. The primary market risk to which we are exposed is interest rate risk. Interest rate risk arises from financial instruments including loans, securities and borrowings, all entered into for purposes other than trading.

Interest Rate Sensitivity

LendingClub Bank

Our net interest income is affected by changes in the level of interest rates, the impact of interest rate fluctuations on asset prepayments, and the level and composition of deposits and liabilities, among other factors.

Loans HFI at LC Bank are funded primarily through our deposit base. The majority of loans HFI are fixed-rate instruments over the term of the loans. As a result, the primary component of interest rate risk on our financial instruments at LC Bank arises from the impact of fluctuations in loan and deposit rates on our net interest income. Therefore, we use a sensitivity analysis to assess the impact of hypothetical changes in interest rates on our net interest income results. The outcome of the analysis is influenced by a variety of assumptions, including the maturity profile and prepayment level of our unsecured consumer loans and expected consumer responses to changes in rates paid on non-maturity deposit products. Our assumptions are periodically calibrated to observed data and/or expected outcomes. We actively monitor the level of exposure to movements in interest rates and have entered into interest rate swaps, which qualify for hedge accounting treatment, to manage such risk. See “Note 8. Derivative Instruments and Hedging Activities” for additional information.

76

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
The following table presents the change in projected net interest income for the next twelve months due to a hypothetical instantaneous parallel change in interest rates relative to current rates:
  September 30, 2023 December 31, 2022
Instantaneous Change in Interest Rates:
 + 200 basis points (4.7) % (6.9) %
 + 100 basis points (2.3) % (3.3) %
 – 100 basis points 0.4  % 1.9  %
 – 200 basis points 0.6  % 3.5  %

As illustrated in the table above, net interest income is projected to decrease over the next twelve months during hypothetical rising interest rate environments primarily as a result of higher rates paid on interest-bearing deposits, partially offset by higher rates earned on new loans, investment purchases, and cash and cash equivalents as well as by the impact of our hedging activity. Conversely, net interest income is projected to increase over the next twelve months during hypothetical declining interest rate environments. The decrease in sensitivity as of September 30, 2023 relative to December 31, 2022 is primarily due to the composition of our loans and deposits, and recent hedging activity. Furthermore, during fluctuating interest rate environments, the increased sensitivity of repricing interest-bearing deposits is more impactful than that of repricing fixed-rate loans.

Although we believe that these measurements provide an estimate of our interest rate sensitivity, they do not account for potential changes in credit quality, balance sheet mix, size of our balance sheet, or other business developments that could affect net income. Actual results could differ materially from the estimated outcomes of our simulations.

For additional details regarding maturities of loans and leases HFI, see “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Risk” in our Annual Report.

For the contractual maturities and weighted-average yields on the Company’s AFS securities portfolio, see “Notes to Condensed Consolidated Financial Statements – Note 4. Securities Available for Sale.”

LendingClub Holding Company

At the holding company level, we continue to measure interest rate sensitivity by evaluating the change in fair value of certain assets and liabilities due to a hypothetical change in interest rates. Principal payments on our loans HFI continue to reduce the outstanding balance of this portfolio, and, as a result, the fair value impact from changes in interest rates continues to diminish.

Contingencies

For a comprehensive discussion of contingencies as of September 30, 2023, see “Item 1. Financial Statements – Notes to Condensed Consolidated Financial Statements – Note 18. Commitments and Contingencies.”

Critical Accounting Estimates

Certain of the Company’s accounting policies that involve a higher degree of judgment and complexity are discussed in “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” in our Annual Report. There have been no significant changes to these critical accounting estimates during the first nine months of 2023.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

For a comprehensive discussion regarding quantitative and qualitative disclosures about market risk, see “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Risk.”

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management evaluated, with the participation of the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of September 30, 2023. In designing and evaluating its disclosure controls and procedures, the Company’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance, not absolute assurance, of achieving the desired control objectives, and is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures as of September 30, 2023, were designed and functioned effectively to provide reasonable assurance that the information required to be disclosed by the Company in reports filed under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to management, including the principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

No change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the third quarter of 2023, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For a comprehensive discussion of legal proceedings, see “Part I. Financial Information – Item 1. Financial Statements – Notes to Condensed Consolidated Financial Statements – Note 18. Commitments and Contingencies – Legal,” which is incorporated herein by reference.

Item 1A. Risk Factors

The risks described in “Part I – Item 1A. Risk Factors” in our Annual Report, could materially and adversely affect our business, financial condition, operating results and prospects, and the trading price of our common stock could decline. While we believe the risks and uncertainties described therein include all material risks currently known by us, it is possible that these may not be the only ones we face. Due to risks and uncertainties, known and unknown, our past financial results may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. The Risk Factors section of our Annual Report remains current in all material respects, with the exception of the below.

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The current economic environment, including a potential recession and the resumption of Federal student loan payments, could negatively affect our business and operating results.

The U.S. economy is undergoing a period of rapid change and significant uncertainty. A number of factors are causing this change and uncertainty, including elevated inflation, increasing interest rates, evolving government policies and changing U.S. consumer spending patterns. Inflation reached a 40-year high of 9.1% in June 2022, and the annual inflation rate for the U.S. was 6.5% for the twelve months ended December 31, 2022. In response to elevated inflation, the FRB increased interest rates eleven times since early 2022, from a federal funds rate range of 0.00% to 0.25% in early 2022 to 5.25% to 5.50% as of September 2023, and has indicated that it will conduct additional rate increases as it deems necessary to combat inflation. The increases in, and uncertainty with respect to, inflation and interest rates are changing lending and spending patterns, and thereby prompting fears that the U.S. is currently experiencing or will soon experience an economic downturn or prolonged period of slow economic growth.

Our business is sensitive to, and may be adversely impacted by, the current inflation and interest rate environment. Among other things, as inflation and interest rates are elevated: (i) existing borrowers may allocate more of their income to necessities such as housing and food, thereby potentially increasing their risk of default by reducing their ability to make loan payments, (ii) the rate we offer on our deposit products will increase to remain competitive, thereby increasing our cost of funding and reducing our net interest margin, (iii) the return our loan products generate may be less attractive relative to other investment options, thereby reducing platform investor demand in our loan products, and (iv) we may need to increase interest rates and/or tighten credit standards for new originations, thereby potentially making it more challenging to source enough interested and qualified borrowers to enable sufficient origination volume. Further, the pace of recent increases in inflation and interest rates creates unique challenges in our ability to operate our business. For example, the rapid increase in interest rates has quickly increased the cost of capital for our non-bank platform investors and thereby increased their return expectations. However, because our consumer loans are fixed interest rate products, we are unable to re-price existing loans and, with respect to new originations, we need to re-price methodically to remain competitive and mitigate the adverse impacts of doing so. Therefore, until the pace of interest rate environment stabilizes, we may be challenged to fully meet the return expectations for certain of our platform investors which may adversely impact our marketplace volume and related revenue.

In addition, changes in, and uncertainty with respect to, government policies in response to the current economic climate may adversely impact our business. For example, in response to the COVID-19 pandemic, in March 2020 the U.S. Department of Education implemented a student loan relief program which included a suspension of: (i) federal loan payments, (ii) interest rate accrual and (iii) collections on defaulted loans (collectively, the Student Loan Forbearance Program). However, in connection with an agreement to raise the borrowing capacity of the Federal government, the Student Loan Forbearance Program recently lapsed and interest accruals resumed in September 2023 and payments resumed in October 2023 (collectively, the Student Loan Payment Resumption).

We are monitoring the Student Loan Payment Resumption and currently believe that its impact on our loan performance should be muted because of: (i) the 12-month “on ramp” period announced by the U.S. Department of Education over which federal student loan borrowers can resume their student loan payments without being considered delinquent, reported to credit bureaus, placed in default or referred to debt collection agencies, (ii) hardship programs from the government and LendingClub, (iii) initiatives to proactively inform our borrowers impacted by the Student Loan Payment Resumption of their payment obligations and available hardship programs, and (iv) our expectation that certain borrowers may prioritize other debt payments, including personal loans, over the repayment of student loans. Further, in anticipation of the potential impact of the Student Loan Payment Resumption, we began undertaking certain changes to our underwriting standards in 2022 that were intended to proactively incorporate the potential impact of the Federal Student Loan Resumption on the credit profile of loan applicants. However, the Student Loan Payment Resumption is unprecedented and therefore its impact is inherently uncertain and there can be no assurance that the factors listed above will materialize or mute the impact of the Student Loan Payment Resumption on our loan performance. We estimate that approximately 20% of the current outstanding unpaid principal balance on LendingClub loans is held by borrowers that have federal student loan payments that resumed pursuant to the Student Loan Payment Resumption.
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It is possible that the Federal Student Loan Resumption may reduce the ability of these borrowers to make other payments and thereby potentially increase their risk of default on their LendingClub loan(s). It is also possible that the Federal government may extend the Student Loan Forbearance Program or implement or leverage another program to mitigate the impact of the Student Loan Payment Resumption.

Finally, an economic downturn or recession could increase the risk of borrower default, reduce investor participation on our marketplace bank platform, cause us to change, postpone or cancel our strategic initiatives, or otherwise negatively affect our business, financial condition and results of operations.

The current economic environment, and its impact, may also have the effect of heightening many of the other risks described in “Item 1A. Risk Factors” and elsewhere in our Annual Report, such as our exposure to the credit and default risk of borrowers, maintaining and increasing loan originations, maintaining our deposit base and retaining our platform investors.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Rule 10b5-1 Trading Plans

During the third quarter of 2023, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company’s securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

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Item 6. Exhibits

Exhibit Index

The exhibits noted in the accompanying Exhibit Index are filed or incorporated by reference as a part of this Report and such Exhibit Index is incorporated herein by reference.
Incorporated by Reference
Exhibit
Number		 Exhibit Description Form File No. Exhibit Filing
Date		 Filed Herewith
101.INS
XBRL Instance Document‡
 X
101.SCH
XBRL Taxonomy Extension Schema Document
 X
101.CAL
XBRL Taxonomy Extension Calculation Linkbase
 X
101.DEF
XBRL Taxonomy Extension Definition Linkbase
 X
101.LAB
XBRL Taxonomy Extension Label Linkbase
 X
101.PRE
XBRL Taxonomy Extension Presentation Linkbase
 X
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
‡    The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
LENDINGCLUB CORPORATION
(Registrant)
Date: October 30, 2023 /s/ SCOTT SANBORN
Scott Sanborn
Chief Executive Officer
Date: October 30, 2023 /s/ ANDREW LABENNE
Andrew LaBenne
Chief Financial Officer

82
EX-31.1 2 lc09302023q3ex311.htm EX-31.1 Document

Exhibit 31.1
CERTIFICATION

I, Scott Sanborn, certify that:
 
1.I have reviewed this Quarterly Report on Form 10-Q of LendingClub Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
Date: October 30, 2023
 
/s/ SCOTT SANBORN
Scott Sanborn
Chief Executive Officer
(Principal Executive Officer)


EX-31.2 3 lc09302023q3ex312.htm EX-31.2 Document

Exhibit 31.2
CERTIFICATION

I, Andrew LaBenne, certify that:

1.    I have reviewed this Quarterly Report on Form 10-Q of LendingClub Corporation; 
2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 
3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 
4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 
a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; 
b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; 
c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 
d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 
5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): 
a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and 
b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 Date: October 30, 2023  

/s/ ANDREW LABENNE
Andrew LaBenne
Chief Financial Officer

EX-32.1 4 lc09302023q3ex321.htm EX-32.1 Document

Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of LendingClub Corporation (the “Company”) on Form 10-Q for the quarter ended September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:
 
1.    The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
2.    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
/s/ SCOTT SANBORN
Scott Sanborn
Chief Executive Officer
(Principal Executive Officer)
/s/ ANDREW LABENNE
Andrew LaBenne
Chief Financial Officer
Dated: October 30, 2023