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LendingClub Corp - Quarter Report: 2022 March (Form 10-Q)



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 March 31, 2022
Commission File Number: 001-36771
 
LendingClub Corporation
(Exact name of registrant as specified in its charter)
Delaware51-0605731
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
595 Market Street, Suite 200,
San Francisco,CA94105
(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 classTrading SymbolName of each exchange on which registered
Common stock, par value $0.01 per shareLCNew 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 April 29, 2022, there were 102,194,037 shares of the registrant’s common stock outstanding.



LENDINGCLUB CORPORATION
TABLE OF CONTENTS




Glossary

The following is a list of common acronyms and terms LendingClub Corporation regularly uses in its financial reporting:
AcquisitionAcquisition of Radius Bancorp, Inc.
AFSAvailable for Sale
ACL
Allowance for Credit Losses (includes both the allowance for loan and lease losses and the reserve for unfunded lending commitments)
ALLLAllowance for Loan and Lease Losses
Annual ReportAnnual Report on Form 10-K for the year ended December 31, 2021
ASUAccounting Standards Update
AUM
Assets Under Management (outstanding balances of Loan Originations serviced by the Company including loans sold to investors as well as loans held for investment and held for sale by the Company)
Balance SheetCondensed Consolidated Balance Sheets
LC Bank or LendingClub BankLendingClub Bank, National Association
CECLCurrent Expected Credit Losses (Accounting Standards Update 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments)
CET1Common Equity Tier 1
CET1 Capital RatioCommon Equity Tier 1 capital divided by total risk-weighted assets as defined under the U.S. Basel III capital framework
DCFDiscounted Cash Flow
EPSNet Income (Loss) Per Share
Exchange ActSecurities Exchange Act of 1934, as amended
FRB or Federal ReserveBoard of Governors of the Federal Reserve System and, as applicable, Federal Reserve Bank(s)
GAAPAccounting Principles Generally Accepted in the United States of America
HFILoans which are retained by the Company and held for investment
HFSHeld for sale loans expected to be sold to investors, including Marketplace Loans
Income StatementCondensed Consolidated Statements of Operations
LendingClub, LC, the Company, we, us, or ourLendingClub 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 LoansLoan Originations designated as HFS and subsequently sold to investors
N/MNot meaningful
ParentLendingClub Corporation (the parent company of LendingClub Bank, National Association and other subsidiaries)
PPP LoansLoans originated pursuant to the U.S. Small Business Administration’s Paycheck Protection Program
RadiusRadius Bancorp, Inc.
ROAReturn on Average Total Assets
ROEReturn on Average Equity
SECUnited States Securities and Exchange Commission
Securities ActSecurities Act of 1933, as amended
Structured Program transactionsAsset-backed securitization transactions and Certificate Program transactions (CLUB and Levered certificates), 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 RatioTier 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 RatioTier 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 RatioTotal 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.
VIEVariable 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:

our ability to integrate LC Bank and the timing and ability to realize the expected financial and strategic benefits of the acquisition of Radius Bancorp, Inc.;
our ability to attract new 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 ability, and that of third-party partners or providers, to address stricter or heightened regulatory or supervisory requirements and expectations;
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 COVID-19 and our ability to effectuate, and the effectiveness of, certain operational and strategic initiatives in light of COVID-19;
our ability to successfully navigate the current economic climate;
our ability to sustain the business under adverse circumstances;
the effects of natural disasters, public health crises, acts of war or terrorism and other external events on our customers and business, including the Ukrainian-Russian conflict;
the impact of changes in laws or the regulatory or supervisory environment, including as a result of legislation, regulation, policies or changes in government officials or other personnel;
the impact of changes in monetary, fiscal, or trade laws or policies, including as a result of actions by governmental agencies, central banks, or supranational authorities;
the impact of new 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, and that of third-party partners or providers, to maintain an enterprise risk management framework that is effective in mitigating risk;
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 attract and retain loan borrowers;
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;
the ability of borrowers to repay loans and the plans of borrowers;
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LENDINGCLUB CORPORATION

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;
the performance of our loan products and expected rates of return for investors;
platform volume, pricing and balance;
the effectiveness of our platform’s credit scoring models;
our ability to innovate and the adoption and success of new products and services;
the adequacy of our corporate governance, risk-management framework and compliance programs;
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 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;
our ability, and that of third-party partners and providers, to maintain service and quality expectations;
capital expenditures;
our compliance with contractual obligations or restrictions;
the potential impact of macro-economic developments, including recessions, inflation or other adverse circumstances;
our ability to develop and maintain effective internal controls;
our ability to recruit and retain quality employees to support current operations and future growth;
changes in the effectiveness and reliability of our information technology and computer systems, including the impact of any security or privacy breach; 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 United States Securities and Exchange Commission (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, 2021, 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)
March 31, 2022December 31, 2021
Assets
Cash and due from banks$30,986 $35,670 
Interest-bearing deposits in banks1,022,239 651,456 
Total cash and cash equivalents1,053,225 687,126 
Restricted cash (1)
60,507 76,460 
Securities available for sale at fair value ($402,944 and $256,170 at amortized cost, respectively)
390,317 263,530 
Loans held for sale (includes $156,730 and $142,370 at fair value, respectively) (1)
156,730 391,248 
Loans and leases held for investment3,422,296 2,899,126 
Allowance for loan and lease losses(187,985)(144,389)
Loans and leases held for investment, net3,234,311 2,754,737 
Retail and certificate loans held for investment at fair value (1)
168,906 229,719 
Other loans held for investment at fair value (1)
15,384 21,240 
Property, equipment and software, net111,503 97,996 
Goodwill75,717 75,717 
Other assets (1)
307,825 302,546 
Total assets$5,574,425 $4,900,319 
Liabilities and Equity
Deposits:
Interest-bearing$3,715,847 $2,919,203 
Noninterest-bearing261,630 216,585 
Total deposits3,977,477 3,135,788 
Short-term borrowings13,188 27,780 
Advances from Paycheck Protection Program Liquidity Facility (PPPLF)193,371 271,933 
Retail notes, certificates and secured borrowings at fair value (1)
168,906 229,719 
Payable on Structured Program borrowings (1)
20,347 65,451 
Other long-term debt15,388 15,455 
Other liabilities (1)
298,314 303,951 
Total liabilities4,686,991 4,050,077 
Equity
Series A Preferred stock, $0.01 par value; 1,200,000 shares authorized; 0 shares issued and outstanding
— — 
Common stock, $0.01 par value; 180,000,000 shares authorized; 102,194,037 and 101,043,924 shares issued and outstanding, respectively
1,022 1,010 
Additional paid-in capital
1,576,147 1,559,616 
Accumulated deficit(676,594)(717,430)
Accumulated other comprehensive income (loss)(13,141)7,046 
Total equity887,434 850,242 
Total liabilities and equity$5,574,425 $4,900,319 
(1)    Includes amounts in consolidated variable interest entities (VIEs) presented separately in the table below.
3


The following table presents the assets and liabilities of consolidated VIEs, which are included in the Condensed Consolidated Balance Sheets (Balance Sheet) above. The assets in the table below may only be used to settle obligations of consolidated VIEs and are in excess of those obligations. Additionally, the assets and liabilities in the table below include third-party assets and liabilities of consolidated VIEs only and exclude intercompany balances that eliminate in consolidation.
March 31, 2022December 31, 2021
Assets of consolidated VIEs, included in total assets above
Restricted cash$9,602 $13,462 
Loans held for sale at fair value— 41,734 
 Retail and certificate loans held for investment at fair value 6,733 10,281 
Other loans held for investment at fair value15,014 20,929 
Other assets 322 584 
Total assets of consolidated VIEs$31,671 $86,990 
Liabilities of consolidated VIEs, included in total liabilities above
Retail notes, certificates and secured borrowings at fair value$6,733 $10,281 
Payable on Structured Program borrowings20,347 65,451 
Other liabilities83 467 
Total liabilities of consolidated VIEs$27,163 $76,199 

See Notes to Condensed Consolidated Financial Statements.
4


LENDINGCLUB CORPORATION
Condensed Consolidated Statements of Operations
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)
Three Months Ended
March 31,
 20222021
Non-interest income:
Marketplace revenue$179,966 $81,727 
Other non-interest income9,891 5,607 
Total non-interest income189,857 87,334 
Interest income:
Interest on loans held for sale7,450 5,157 
Interest and fees on loans and leases held for investment91,442 15,301 
Interest on retail and certificate loans held for investment at fair value6,969 20,262 
Interest on other loans held for investment at fair value593 1,479 
Interest on securities available for sale4,511 2,235 
Other interest income688 156 
Total interest income111,653 44,590 
Interest expense:
Interest on deposits3,438 1,014 
Interest on short-term borrowings435 1,264 
Interest on retail notes, certificates and secured borrowings6,969 20,262 
Interest on Structured Program borrowings764 3,208 
Interest on other long-term debt367 336 
Total interest expense11,973 26,084 
Net interest income99,680 18,506 
Total net revenue289,537 105,840 
Provision for credit losses52,509 21,493 
Non-interest expense:
Compensation and benefits81,610 64,420 
Marketing55,080 19,545 
Equipment and software11,046 7,893 
Occupancy6,019 6,900 
Depreciation and amortization11,039 11,766 
Professional services12,406 11,603 
Other non-interest expense14,004 12,125 
Total non-interest expense191,204 134,252 
Income (Loss) before income tax benefit (expense)45,824 (49,905)
Income tax benefit (expense)(4,988)2,821 
Consolidated net income (loss)$40,836 $(47,084)
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LENDINGCLUB CORPORATION
Condensed Consolidated Statements of Operations (Continued)
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)
Three Months Ended
March 31,
 20222021
Consolidated net income (loss)$40,836 $(47,084)
Net income (loss) per share: (1)
Basic EPS – common stockholders$0.40 $(0.49)
Diluted EPS – common stockholders$0.39 $(0.49)
Weighted-average common shares – Basic101,493,561 92,666,169 
Weighted-average common shares – Diluted105,052,904 92,666,169 
Basic EPS – preferred stockholders$0.00 $(0.49)
Diluted EPS – preferred stockholders$0.00 $(0.49)
Weighted-average common shares, as converted – Basic— 2,648,758 
Weighted-average common shares, as converted – Diluted— 2,648,758 
(1)    See “Notes to Condensed Consolidated Financial StatementsNote 3. Net Income (Loss) Per Share” for additional information.

See Notes to Condensed Consolidated Financial Statements.
6


LENDINGCLUB CORPORATION
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In Thousands)
(Unaudited)
Three Months Ended
March 31,
20222021
Consolidated net income (loss)$40,836 $(47,084)
Other comprehensive income (loss):
Net unrealized gain (loss) on securities available for sale
(19,987)204 
Other comprehensive income (loss), before tax(19,987)204 
Income tax effect
200 — 
Other comprehensive income (loss), net of tax(20,187)204 
Total comprehensive income (loss)$20,649 $(46,880)

See Notes to Condensed Consolidated Financial Statements.
7


LENDINGCLUB CORPORATION
Condensed Consolidated Statements of Changes in Equity
(In Thousands, Except Share Data)
(Unaudited)
 Preferred StockCommon StockAdditional
Paid-in
Capital
Treasury StockAccumulated Other Comprehensive Income (Loss)Accumulated
Deficit
Total
Equity
 SharesAmountSharesAmountSharesAmount
Balance at
December 31, 2021
 $ 101,043,924 $1,010 $1,559,616  $ $7,046 $(717,430)$850,242 
Stock-based compensation— — — — 17,187 — — — — 17,187 
Net issuances under equity incentive plans, net of tax (1)
— — 1,150,113 12 (656)— — — — (644)
Net unrealized loss on securities available for sale, net of tax— — — — — — — (20,187)— (20,187)
Net income— — — — — — — — 40,836 40,836 
Balance at
March 31, 2022
 $ 102,194,037 $1,022 $1,576,147  $ $(13,141)$(676,594)$887,434 
 Preferred StockCommon StockAdditional
Paid-in
Capital
Treasury StockAccumulated Other Comprehensive IncomeAccumulated
Deficit
Total
Equity
 SharesAmountSharesAmountSharesAmount
Balance at
December 31, 2020
43,000 $ 88,149,510 $881 $1,457,816  $ $1,484 $(736,010)$724,171 
Stock-based compensation— — — — 15,765 — — — — 15,765 
Net issuances under equity incentive plans, net of tax (1)
— — 1,017,502 10 (1,301)4,251 (92)— — (1,383)
Net issuances of stock related to
  acquisition (2)
— — 3,761,114 38 41,424 — — — — 41,462 
Exchange of preferred stock for common stock(43,000)— 4,300,000 43 (43)— — — — — 
Net unrealized gain on securities available for sale, net of tax— — — — — — — 204 — 204 
Net loss— — — — — — — — (47,084)(47,084)
Balance at
March 31, 2021
 $ 97,228,126 $972 $1,513,661 4,251 $(92)$1,688 $(783,094)$733,135 
Preferred StockCommon StockAdditional
Paid-in
Capital
Treasury StockAccumulated Other Comprehensive LossAccumulated
Deficit
Total
Equity
SharesAmountSharesAmountSharesAmount
Balance at
December 31, 2019
 $ 88,757,406 $892 $1,467,882 461,391 $(19,550)$(565)$(548,472)$900,187 
Stock-based compensation— — — — 19,699 — — — — 19,699 
Net issuances under equity incentive plans, net of tax (1)
— — 674,689 (4,623)5,658 (71)— — (4,687)
Issuance of preferred stock in exchange for common stock195,628 (19,562,881)(196)(50,010)— — — — (50,204)
Retirement of treasury stock— — — (4)(19,617)(467,049)19,621 — — — 
Net unrealized loss on securities available for sale, net of tax— — — — — — — (20,362)— (20,362)
Net loss— — — — — — — — (48,087)(48,087)
Balance at
March 31, 2020 (3)
195,628 $2 69,869,214 $699 $1,413,331  $ $(20,927)$(596,559)$796,546 
(1)    Includes shares that were transferred to the Company to satisfy payment of all or a portion of the exercise price in connection with the exercise of stock options.
(2)    Stock issued as part of the consideration paid related to the Acquisition.
(3)    The first quarter of 2020 is presented to reflect the full retrospective adoption of Accounting Standards Update (ASU) 2020-06. See “Note 1. Summary of Significant Accounting Policies” for additional information.
See Notes to Condensed Consolidated Financial Statements.
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LENDINGCLUB CORPORATION
Condensed Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
Three Months Ended
March 31,
 20222021
Cash Flows from Operating Activities:
Consolidated net income (loss)$40,836 $(47,084)
Adjustments to reconcile consolidated net income (loss) to net cash provided by (used for) operating activities:
Net fair value adjustments(15,249)5,321 
Provision for credit losses52,509 21,493 
Change in fair value of loan servicing assets16,979 11,837 
Accretion of loan deferred fees and costs(1)
(19,252)(3,273)
Stock-based compensation, net15,694 14,801 
Depreciation and amortization(1)
11,039 11,766 
Gain on sales of loans(24,110)(8,323)
Other, net(1)
1,559 5,505 
Net change to loans held for sale(29,601)(42,786)
Net change in operating assets and liabilities:
Other assets443 (10,290)
Other liabilities(10,174)(10,333)
Net cash provided by (used for) operating activities40,673 (51,366)
Cash Flows from Investing Activities:
Acquisition of company— (145,344)
Cash received from acquisition— 668,236 
Net change in loans and leases(258,829)(502,387)
Net decrease in retail and certificate loans64,280 138,288 
Purchases of securities available for sale(166,123)(9,911)
Proceeds from sales of securities available for sale— 106,192 
Proceeds from maturities and paydowns of securities available for sale24,990 34,239 
Purchases of property, equipment and software, net
(21,575)(6,365)
Other investing activities(2,967)4,960 
Net cash (used for) provided by investing activities(360,224)287,908 
Cash Flows from Financing Activities:
Net change in demand deposits and savings accounts841,689 343,787 
Repayment on PPPLF(78,562)(50,876)
Principal payments on retail notes and certificates(64,358)(138,376)
Principal payments on Structured Program borrowings(9,356)(22,391)
Principal payments on short-term borrowings(14,732)(24,908)
Other financing activities
(4,984)(1,383)
Net cash provided by financing activities669,697 105,853 
Net Increase in Cash, Cash Equivalents and Restricted Cash350,146 342,395 
Cash, Cash Equivalents and Restricted Cash, Beginning of Period763,586 628,485 
Cash, Cash Equivalents and Restricted Cash, End of Period$1,113,732 $970,880 
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LENDINGCLUB CORPORATION
Condensed Consolidated Statements of Cash Flows (Continued)
(In Thousands)
(Unaudited)
Three Months Ended
March 31,
 20222021
Supplemental Cash Flow Information:
Cash paid for interest$10,223 $22,645 
Cash paid for operating leases included in the measurement of lease liabilities
$4,895 $4,291 
Non-cash investing and financing activity:
Net issuances of stock related to acquisition$— $41,462 
Non-cash financing activity:
Derecognition of payable to securitization note and residual certificate holders held in consolidated VIE$36,072 $— 
(1)    Prior period amounts have been reclassified to conform to the current period presentation.

The following presents cash, cash equivalents and restricted cash by category within the Balance Sheet:
 March 31, 2022December 31, 2021
Cash and cash equivalents$1,053,225 $687,126 
Restricted cash60,507 76,460 
Total cash, cash equivalents and restricted cash
$1,113,732 $763,586 

See Notes to Condensed Consolidated Financial Statements.
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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. 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, consisting of only 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.

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, 2021 (Annual Report) filed on February 11, 2022.

Significant Accounting Policies

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 changes to these significant accounting policies for the three month period ended March 31, 2022.

Adoption of New Accounting Standards

The Company did not adopt any new accounting standards during the three month period ended March 31, 2022, except as noted below.

In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity including convertible instruments and contracts on an entity’s own equity. The guidance allows for either full or modified retrospective adoption for fiscal periods beginning after December 15, 2021. The Company adopted this ASU on January 1, 2022 under the full retrospective approach. As a result of the adoption, the deemed dividend recorded in the first quarter of 2020 related to the beneficial conversion feature of the convertible Series A Preferred Stock, was reclassified from Accumulated Deficit to Additional Paid-in Capital within Equity, as shown in the following table:
Three Months Ended March 31, 2020Additional Paid-in CapitalAccumulated Deficit
Issuance of preferred stock in exchange for common stock, as originally reported$194 $(50,204)
Adoption of ASU 2020-06(50,204)50,204 
Issuance of preferred stock in exchange for common stock, as adjusted$(50,010)$— 
11


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

In addition, since the beneficial conversion feature is no longer recorded as a deemed dividend the allocation of net income (loss) attributable to stockholders and the related Basic and Diluted net income (loss) per share (EPS) has been adjusted, as shown in the following table:
Three Months Ended March 31, 2020Common StockPreferred Stock
Net income (loss) attributable to stockholders, as originally reported$(95,444)$47,357 
Adoption of ASU 2020-0648,750 (48,750)
Net loss attributable to stockholders, as adjusted$(46,694)$(1,393)
Basic and Diluted EPS, as originally reported$(1.10)$18.36 
Adoption of ASU 2020-060.56 (18.90)
Basic and Diluted EPS, as adjusted$(0.54)$(0.54)

The adoption of this ASU did not impact the Company’s financial position and cash flows in the first quarter of 2020, nor did it change net loss reported in the period.

New Accounting Standards Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which, if certain criteria are met, provides optional expedients and exceptions for applying generally accepted accounting principles to transactions affected by reference rate reform. These transactions include contract modifications, hedging relationships, and sale or transfer of debt securities classified as held-to-maturity. The provisions of the new standard may be adopted as of the beginning of the reporting period when the election is made until December 31, 2022. The Company is evaluating the impact of this ASU and does not expect it to have a material impact on the Company’s financial position, results of operations, cash flows and disclosures. The Company has not elected an adoption date.

In March 2022, the FASB issued 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 CECL model and amends the guidance on “vintage disclosures” to require disclosure of current period gross write-offs by year of origination. The ASU also updates the requirements related to accounting for credit losses under Accounting Standards Codification 326 and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty. The provisions of this standard are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the impact of this ASU.

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: Origination fees are primarily fees earned related to originating and issuing 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 fair value of servicing assets.
12


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

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.

The following table presents components of marketplace revenue for the periods presented:
Three Months Ended
March 31,
20222021
Origination fees$122,093 $55,559 
Servicing fees18,514 23,166 
Gain on sales of loans24,110 8,323 
Net fair value adjustments15,249 (5,321)
Total marketplace revenue$179,966 $81,727 

3. Net Income (Loss) Per Share

The following table details the computation of the Company’s Basic and Diluted EPS of common stock and Series A Preferred Stock:
Three Months Ended March 31,20222021
Common StockCommon Stock
Preferred Stock (1)
Basic EPS:
Net income (loss) attributable to stockholders$40,836 $(45,776)$(1,308)
Weighted-average common shares – Basic101,493,561 92,666,169 2,648,758 
Basic EPS$0.40 $(0.49)$(0.49)
Diluted EPS:
Net income (loss) attributable to stockholders$40,836 $(45,776)$(1,308)
Weighted-average common shares – Diluted105,052,904 92,666,169 2,648,758 
Diluted EPS$0.39 $(0.49)$(0.49)
(1)    Presented on an as-converted basis.

The following table summarizes the weighted-average common shares that were excluded from the Company’s Diluted EPS computation because their effect would have been anti-dilutive for the first quarter of 2021:
Preferred stock2,648,758 
RSUs and PBRSUs1,468,191 
Stock options371,367 
Total
4,488,316 

There were no weighted-average common shares that were excluded from the Company’s Diluted EPS computation for the first quarter of 2022.

13


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, credit valuation allowance, and fair value of available for sale (AFS) securities were as follows:
March 31, 2022Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
U.S. agency residential mortgage-backed securities$242,359 $— $(15,224)$227,135 
U.S. agency securities66,455 — (4,530)61,925 
Commercial mortgage-backed securities30,360 — (1,942)28,418 
Other asset-backed securities25,008 78 (489)24,597 
Asset-backed senior securities21,868 36 — 21,904 
CLUB Certificate asset-backed securities10,016 3,418 — 13,434 
Asset-backed subordinated securities3,586 6,446 — 10,032 
Municipal securities3,292 — (420)2,872 
Total securities available for sale (1)(2)
$402,944 $9,978 $(22,605)$390,317 
December 31, 2021Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
U.S. agency residential mortgage-backed securities$125,985 $— $(2,286)$123,699 
Asset-backed senior securities28,057 72 — 28,129 
U.S. agency securities26,902 (731)26,172 
Other asset-backed securities26,112 151 (130)26,133 
Commercial mortgage-backed securities26,649 (552)26,098 
CLUB Certificate asset-backed securities15,049 3,236 — 18,285 
Asset-backed subordinated securities4,119 7,643 — 11,762 
Municipal securities3,297 — (45)3,252 
Total securities available for sale (1)(2)
$256,170 $11,104 $(3,744)$263,530 
(1)    As of March 31, 2022 and December 31, 2021, $0.7 million and $13.3 million, respectively, of the 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 March 31, 2022 and December 31, 2021, includes $361.7 million and $236.8 million, respectively, of securities pledged as collateral at fair value.

14


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
March 31, 2022Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
U.S. agency residential mortgage-backed securities$190,822 $(11,168)$36,313 $(4,056)$227,135 $(15,224)
U.S. agency securities49,880 (2,674)9,045 (1,856)58,925 (4,530)
Commercial mortgage-backed securities12,823 (928)12,609 (1,014)25,432 (1,942)
Other asset-backed securities16,552 (382)2,743 (107)19,295 (489)
Municipal securities2,730 (404)142 (16)2,872 (420)
Total securities with unrealized losses(1)
$272,807 $(15,556)$60,852 $(7,049)$333,659 $(22,605)
Less than
12 months
12 months
or longer
Total
December 31, 2021Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
U.S. agency residential mortgage-backed securities$123,668 $(2,286)$— $— $123,668 $(2,286)
U.S. agency securities24,175 (731)— — 24,175 (731)
Other asset-backed securities13,224 (130)— — 13,224 (130)
Commercial mortgage-backed securities25,927 (552)— — 25,927 (552)
Municipal securities3,252 (45)— — 3,252 (45)
Total securities with unrealized losses(1)
$190,246 $(3,744)$— $— $190,246 $(3,744)
(1)    The number of investment positions with unrealized losses at March 31, 2022 and December 31, 2021 totaled 206 and 145, respectively.

The following table presents the activity in the allowance for AFS securities, by major security type, during the first quarter of 2021:
Credit Valuation AllowanceCLUB Certificate asset-backed securitiesAsset-backed subordinated securitiesTotal
Balance at December 31, 2020$(4,190)$(14,546)$(18,736)
Reversal of credit loss expense188 2,282 2,470 
Reversal of allowance arising from PCD financial assets3,954 11,398 15,352 
Balance at March 31, 2021
$(48)$(866)$(914)

There was no activity in the allowance for AFS securities during the first quarter of 2022.
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 contractual maturities of AFS securities were as follows:
March 31, 2022Amortized CostFair Value
Weighted-
average
Yield(1)
Due after 5 years through 10 years:
U.S. agency residential mortgage-backed securities$682 $643 
Other asset-backed securities923 936 
Commercial mortgage-backed securities4,136 3,778 
U.S. agency securities6,848 6,527 
Municipal securities627 562 
Total due after 5 years through 10 years13,216 12,446 2.00 %
Due after 10 years:
U.S. agency residential mortgage-backed securities241,677 226,492 
Other asset-backed securities24,085 23,661 
Commercial mortgage-backed securities26,224 24,640 
U.S. agency securities59,607 55,398 
Municipal securities2,665 2,310 
Total due after 10 years354,258 332,501 2.11 %
Asset-backed securities related to Structured Program transactions
35,470 45,370 29.34 %
Total securities available for sale$402,944 $390,317 4.50 %
(1)    The weighted-average yield is computed using the amortized cost at March 31, 2022.

Proceeds and gross realized gains and losses from AFS securities during the first quarter of 2021 were as follows:
Proceeds$106,192 
Gross realized gains$708 
Gross realized losses$(952)

There were no sales of AFS securities during the first quarter of 2022.
16


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, Net of Allowance For Loan and Lease Losses

LendingClub records certain loans and leases held for investment (HFI) at amortized cost, whereas loans initially classified as held for sale (HFS) are recorded at fair value. 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. Accrued interest within that caption related to loans and leases HFI was $17.0 million and $15.6 million as of March 31, 2022 and December 31, 2021, respectively.

Loans and Leases Held for Investment

The Company defines its loans and leases HFI portfolio segments as (i) consumer and (ii) commercial. The following tables present the components of each portfolio segment by class of financing receivable:
March 31, 2022December 31, 2021
Unsecured personal$2,358,792 $1,804,578 
Residential mortgages169,117 151,362 
Secured consumer93,600 65,976 
Total consumer loans held for investment2,621,509 2,021,916 
Equipment finance (1)
143,780 149,155 
Commercial real estate313,710 310,399 
Commercial and industrial (2)
343,297 417,656 
Total commercial loans and leases held for investment800,787 877,210 
Total loans and leases held for investment3,422,296 2,899,126 
Allowance for loan and lease losses(187,985)(144,389)
Loans and leases held for investment, net (3)
$3,234,311 $2,754,737 
(1)    Comprised of sales-type leases for equipment. See “Note 16. Leases” for additional information.
(2)    Includes $185.0 million and $268.3 million of pledged loans under the Paycheck Protection Program (PPP) as of March 31, 2022 and December 31, 2021, respectively.
(3)    As of March 31, 2022 and December 31, 2021, the Company had $164.1 million and $149.2 million in loans pledged as collateral under the Federal Reserve Bank (FRB) Discount Window, respectively.

March 31, 2022GrossALLLNet
Allowance Ratios (1)
Total consumer loans held for investment$2,621,509 $173,857 $2,447,652 6.6 %
Total commercial loans and leases held for investment (2)
800,787 14,128 786,659 1.8 %
Total loans and leases held for investment (2)
$3,422,296 $187,985 $3,234,311 5.5 %
December 31, 2021GrossALLLNet
Allowance Ratios (1)
Total consumer loans held for investment$2,021,916 $128,812 $1,893,104 6.4 %
Total commercial loans and leases held for investment (2)
877,210 15,577 861,633 1.8 %
Total loans and leases held for investment (2)
$2,899,126 $144,389 $2,754,737 5.0 %
(1)    Calculated as the ratio of allowance for loan and lease losses (ALLL) to loans and leases HFI.
(2)    As of March 31, 2022, excluding the $185.0 million of PPP loans, the ALLL represented 2.3% of commercial loans and leases HFI and 5.8% of total loans and leases HFI. As of December 31, 2021, excluding $268.3 million of PPP loans, the ALLL represented 2.6% of commercial loans and leases HFI and 5.5% of total loans and leases HFI. PPP loans are guaranteed by the Small Business Administration (SBA) and, therefore, the Company determined no ACL is required on these loans.
17


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 March 31,
20222021
ConsumerCommercialTotalConsumerCommercialTotal
Allowance for loan and lease losses, beginning of period$128,812 $15,577 $144,389 $— $— $— 
Credit loss expense for loans and leases held for investment (1)
53,718 (1,490)52,228 19,182 4,371 23,553 
Initial allowance for PCD loans acquired during the period (2)
— — — 603 11,837 12,440 
Charge-offs (3)
(9,017)(72)(9,089)— — — 
Recoveries344 113 457 — 139 139 
Allowance for loan and lease losses, end of period$173,857 $14,128 $187,985 $19,785 $16,347 $36,132 
Reserve for unfunded lending commitments, beginning of period$— $1,231 $1,231 $— $— $— 
Credit loss expense for unfunded lending commitments — 281 281 404 410 
Reserve for unfunded lending commitments, end of period (4)
$— $1,512 $1,512 $$404 $410 
(1)    Includes $6.9 million of credit loss expense for Radius loans at Acquisition for the first quarter of 2021.
(2)    For acquired PCD loans, an ACL of $30.4 million was required with a corresponding increase to the amortized cost basis as of the acquisition date for the first quarter of 2021. For PCD loans where all or a portion of the loan balance had been previously written-off, or would be subject to write-off under the Company’s charge-off policy, an ACL of $18.0 million included as part of the grossed-up loan balance at Acquisition was immediately written-off during the first quarter of 2021. The net impact to the allowance for PCD assets on the acquisition date was $12.4 million for the first quarter of 2021.
(3)    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.
(4)    Relates to $109.5 million and $98.3 million of unfunded commitments as of March 31, 2022 and 2021, respectively.

18


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:
March 31, 2022 Term Loans and Leases by Origination Year
20222021202020192018PriorWithin Revolving PeriodTotal
Unsecured personal
Current $777,710 $1,566,687 $— $— $— $— $— $2,344,397 
30-59 days past due 617 5,902 — — — — — 6,519 
60-89 days past due — 4,783 — — — — — 4,783 
90 or more days past due — 3,093 — — — — — 3,093 
Total unsecured personal778,327 1,580,465 — — — — — 2,358,792 
Residential mortgages
Current 4,730 60,715 34,104 24,031 5,024 38,573 1,264 168,441 
30-59 days past due — — — — — — — — 
60-89 days past due — — — — — 92 — 92 
90 or more days past due — — — — — 584 — 584 
Total residential mortgages 4,730 60,715 34,104 24,031 5,024 39,249 1,264 169,117 
Secured consumer
Current27,301 56,289 — 2,602 — 4,005 11 90,208 
30-59 days past due— 293 — — — — — 293 
60-89 days past due— 74 — — — — — 74 
90 or more days past due— 17 — — 2,627 381 — 3,025 
Total secured consumer27,301 56,673 — 2,602 2,627 4,386 11 93,600 
Total consumer loans held for investment$810,358 $1,697,853 $34,104 $26,633 $7,651 $43,635 $1,275 $2,621,509 

19


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, 2021 Term Loans and Leases by Origination Year
20212020201920182017PriorWithin Revolving PeriodTotal
Unsecured personal
Current $1,796,678 $— $— $— $— $— $— $1,796,678 
30-59 days past due 3,624 — — — — — — 3,624 
60-89 days past due 2,600 — — — — — — 2,600 
90 or more days past due 1,676 — — — — — — 1,676 
Total unsecured personal1,804,578 — — — — — — 1,804,578 
Residential mortgages
Current 36,732 37,620 26,798 7,277 2,682 37,685 1,265 150,059 
30-59 days past due — — — — — 142 — 142 
60-89 days past due — — — — 92 — — 92 
90 or more days past due — — — — 251 818 — 1,069 
Total residential mortgages 36,732 37,620 26,798 7,277 3,025 38,645 1,265 151,362 
Secured consumer
Current62,731 — — — — — 10 62,741 
30-59 days past due171 — — — — — — 171 
60-89 days past due53 — — — — — — 53 
90 or more days past due— — — 2,629 382 — — 3,011 
Total secured consumer62,955 — — 2,629 382 — 10 65,976 
Total consumer loans held for investment$1,904,265 $37,620 $26,798 $9,906 $3,407 $38,645 $1,275 $2,021,916 

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 deserves 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.
20


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:
March 31, 2022 Term Loans and Leases by Origination Year
20222021202020192018PriorWithin Revolving PeriodTotal
Equipment finance
Pass $6,913 $51,075 $33,129 $26,302 $14,550 $11,349 $— $143,318 
Special mention— — — — — — — — 
Substandard — — — — 462 — — 462 
Doubtful — — — — — — — — 
Loss— — — — — — — — 
Total equipment finance6,913 51,075 33,129 26,302 15,012 11,349 — 143,780 
Commercial real estate
Pass 14,191 51,307 55,126 53,599 39,446 74,275 — 287,944 
Special mention— — 8,458 — 1,362 2,265 — 12,085 
Substandard — — — 271 2,503 10,350 — 13,124 
Doubtful — — — — — — — — 
Loss— — — — — 557 — 557 
Total commercial real estate14,191 51,307 63,584 53,870 43,311 87,447 — 313,710 
Commercial and industrial
Pass 12,402 199,717 67,396 19,613 6,568 20,262 641 326,599 
Special mention— 200 2,257 2,287 171 1,243 — 6,158 
Substandard — — 1,123 3,796 2,052 2,121 80 9,172 
Doubtful — — — — — 293 — 293 
Loss— — — — 1,068 — 1,075 
Total commercial and industrial (1)
12,402 199,917 70,776 25,696 8,798 24,987 721 343,297 
Total commercial loans and leases held for investment$33,506 $302,299 $167,489 $105,868 $67,121 $123,783 $721 $800,787 
(1)    Includes $185.0 million of PPP loans.

21


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, 2021 Term Loans and Leases by Origination Year
20212020201920182017PriorWithin Revolving PeriodTotal
Equipment finance
Pass $52,440 $35,398 $26,918 $15,457 $6,184 $8,814 $— $145,211 
Special mention1,531 — 1,810 — — — — 3,341 
Substandard — — — 603 — — — 603 
Doubtful — — — — — — — — 
Loss— — — — — — — — 
Total equipment finance53,971 35,398 28,728 16,060 6,184 8,814 — 149,155 
Commercial real estate
Pass 55,613 55,202 54,460 39,981 22,366 57,235 — 284,857 
Special mention— 8,397 — 1,366 1,018 7,242 — 18,023 
Substandard — — 277 2,496 — 4,179 — 6,952 
Doubtful — — — — — — — — 
Loss— — — — — 567 — 567 
Total commercial real estate55,613 63,599 54,737 43,843 23,384 69,223 — 310,399 
Commercial and industrial
Pass 241,368 108,574 24,106 7,874 14,756 8,058 599 405,335 
Special mention— — 2,207 463 1,467 40 — 4,177 
Substandard — 1,122 862 1,858 1,525 1,571 87 7,025 
Doubtful — — — — — — — — 
Loss— — — 52 1,063 — 1,119 
Total commercial and industrial (1)
241,368 109,696 27,175 10,247 17,752 10,732 686 417,656 
Total commercial loans and leases held for investment$350,952 $208,693 $110,640 $70,150 $47,320 $88,769 $686 $877,210 
(1)    Includes $268.3 million of PPP loans.

The following tables present an analysis of the past due loans and leases HFI within the commercial portfolio segment:
March 31, 202230-59
Days
60-89
Days
90 or More DaysTotal Days Past Due
Equipment finance$3,223 $— $— $3,223 
Commercial real estate— 104 600 704 
Commercial and industrial (1)
— 1,361 1,364 
Total commercial loans and leases held for investment$3,223 $107 $1,961 $5,291 
December 31, 202130-59
Days
60-89
Days
90 or More
Days
Total Days Past Due
Equipment finance$— $— $— $— 
Commercial real estate104 — 609 713 
Commercial and industrial (1)
— — 1,410 1,410 
Total commercial loans and leases held for investment$104 $— $2,019 $2,123 
(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
22


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

believes that the probability of collection does not warrant further accrual, and are charged-off no later than 120 days past due.

The following table presents nonaccrual loans and leases:
March 31, 2022December 31, 2021
Nonaccrual(1)
Nonaccrual with no related ACL(2)
Nonaccrual(1)
Nonaccrual with no related ACL(2)
Unsecured personal$3,093 $— $1,676 $— 
Residential mortgages875 875 1,373 1,373 
Secured consumer3,025 3,008 3,011 3,011 
Total nonaccrual consumer loans held for investment6,993 3,883 6,060 4,384 
Equipment finance462 — 603 — 
Commercial real estate1,079 975 989 989 
Commercial and industrial2,726 1,062 2,333 1,061 
Total nonaccrual commercial loans and leases held for investment4,267 2,037 3,925 2,050 
Total nonaccrual loans and leases held for investment$11,260 $5,920 $9,985 $6,434 
(1)     Excluding PPP loans, there were no loans and leases that were 90 days or more past due and accruing as of both March 31, 2022 and December 31, 2021.
(2)     Subset of total nonaccrual loans and leases.

March 31, 2022December 31, 2021
Nonaccrual
Nonaccrual Ratios (1)
Nonaccrual
Nonaccrual Ratios (1)
Total nonaccrual consumer loans held for investment$6,993 0.27 %$6,060 0.30 %
Total nonaccrual commercial loans and leases held for investment4,267 0.53 %3,925 0.45 %
Total nonaccrual loans and leases held for investment (2)
$11,260 0.33 %$9,985 0.34 %
(1)     Calculated as the ratio of nonaccruing loans and leases to loans and leases HFI.
(2)     Nonaccruing loans and leases represented 0.35% and 0.38% of total loans and leases HFI, excluding PPP loans, as of March 31, 2022 and December 31, 2021, respectively.

Collateral-Dependent Assets

Certain loans on non-accrual status and certain TDR loans 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.

Purchased Financial Assets with Credit Deterioration

Acquired loans are recorded at their fair value, which may result in the recognition of a discount or premium. In addition, the purchase price of PCD loans is grossed-up upon acquisition for the initial estimate of ACL. Subsequent changes to the ACLs are recorded as additions to or reversals of credit losses on the Condensed Consolidated Statements of Operations (Income Statement).

23


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

There were no acquired PCD loans during the first quarter of 2022. Acquired PCD loans during the first quarter of 2021 were as follows:
Purchase price$337,118 
Allowance for expected credit losses (1)
30,378 
Discount attributable to other factors12,204 
Par value$379,700 
(1)    For acquired PCD loans, an ACL of $30.4 million was required with a corresponding increase to the amortized cost basis as of the acquisition date for the first quarter of 2021. For PCD loans where all or a portion of the loan balance had been previously written-off, or would be subject to write-off under the Company’s charge-off policy, an ACL of $18.0 million included as part of the grossed-up loan balance at acquisition was immediately written-off during the first quarter of 2021. The net impact to the allowance for PCD assets on the acquisition date was $12.4 million for the first quarter of 2021.

6. Securitizations and Variable Interest Entities

VIE Assets and Liabilities

The following tables provide the classifications of assets and liabilities on the Balance Sheet for its transactions with consolidated and unconsolidated VIEs. Additionally, the assets and liabilities in the tables below exclude intercompany balances that eliminate in consolidation:
March 31, 2022Consolidated VIEsUnconsolidated VIEsTotal
Assets
Restricted cash$9,602 $— $9,602 
Securities available for sale at fair value— 45,371 45,371 
Retail and certificate loans held for investment at fair value6,733 — 6,733 
Other loans held for investment at fair value15,014 — 15,014 
Other assets322 14,989 15,311 
Total assets$31,671 $60,360 $92,031 
Liabilities
Retail notes, certificates and secured borrowings at fair value$6,733 $— $6,733 
Payable on Structured Program borrowings20,347 — 20,347 
Other liabilities83 — 83 
Total liabilities27,163 — 27,163 
Total net assets$4,508 $60,360 $64,868 
24


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, 2021Consolidated VIEsUnconsolidated VIEsTotal
Assets
Restricted cash$13,462 $— $13,462 
Securities available for sale at fair value— 58,177 58,177 
Loans held for sale at fair value41,734 — 41,734 
Retail and certificate loans held for investment at fair value10,281 — 10,281 
Other loans held for investment at fair value20,929 — 20,929 
Other assets584 17,156 17,740 
Total assets
$86,990 $75,333 $162,323 
Liabilities
Retail notes, certificates and secured borrowings at fair value$10,281 $— $10,281 
Payable on Structured Program borrowings65,451 — 65,451 
Other liabilities467 — 467 
Total liabilities76,199 — 76,199 
Total net assets$10,791 $75,333 $86,124 

Unconsolidated VIEs

The Company’s transactions with unconsolidated VIEs include Structured Program transactions. The Company has various forms of involvement with VIEs, including servicing of loans and holding senior or subordinated residual interests in the VIEs.

The following tables present total unconsolidated VIEs with which the Company has significant continuing involvement, but is not the primary beneficiary:
March 31, 2022Total VIE AssetsSecurities Available for SaleOther AssetsNet Assets
Carrying value$1,094,857 $45,371 $14,989 $60,360 
Total exposureN/A$45,371 $14,989 $60,360 
December 31, 2021Total VIE AssetsSecurities Available for SaleOther AssetsNet Assets
Carrying value$1,386,279 $58,177 $17,156 $75,333 
Total exposureN/A$58,177 $17,156 $75,333 
N/A – Not applicable

“Total VIE Assets” represents the remaining principal balance of loans held by unconsolidated VIEs. “Net Assets” continue to decline due to the ongoing paydown of loan balances from prior Structured Program transactions. “Securities Available for Sale” and “Other Assets” are the balances on the Balance Sheet related to its involvement with the unconsolidated VIEs. “Other Assets” primarily includes the Company’s servicing assets and servicing receivables. “Total Exposure” refers to the Company’s maximum exposure to loss from its involvement with unconsolidated VIEs. It 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.
25


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 activity related to the Unconsolidated Trusts and Certificate Program trusts, with the transfers accounted for as a sale on the Company’s financial statements:
Three Months Ended March 31,20222021
Unconsolidated TrustsUnconsolidated Certificate Program
Trusts
Unconsolidated TrustsUnconsolidated Certificate Program
Trusts
Principal derecognized from loans securitized or sold
$— $41,023 $— $— 
Net gains recognized from loans securitized or sold$— $259 $— $— 
Fair value of asset-backed senior and subordinated securities, and CLUB Certificate asset-backed securities retained upon settlement$— $2,180 $— $— 
Cash proceeds from servicing and other administrative fees on loans securitized or sold$1,259 $1,846 $3,017 $4,918 
Proceeds from sale of securities by consolidated VIE$— $5,320 $— $— 
Cash proceeds for interest received on senior securities and subordinated securities$828 $1,867 $608 $1,258 

The Company and other investors in the subordinated interests issued by trusts and Certificate Program trusts have rights to cash flows only after the investors holding the senior securities issued by the trusts have first received their contractual cash flows. The investors and the trusts have no direct recourse to the Company’s assets, and holders of the securities issued by the trusts can look only to the assets of the securitization trusts that issued their securities for payment. The beneficial interests held by the Company are subject principally to the credit and prepayment risk stemming from the underlying unsecured personal loans.

Off-Balance Sheet Loans

Off-balance sheet loans pursuant to unconsolidated VIE’s primarily relate to Structured Program transactions for which the Company has some form of continuing involvement, including as servicer.

As of March 31, 2022, the aggregate unpaid principal balance of the off-balance sheet loans related to Structured Program transactions was $1.0 billion, of which $25.5 million was attributable to off-balance sheet loans that were 31 days or more past due. As of December 31, 2021, the aggregate unpaid principal balance of the off-balance sheet loans related to Structured Program transactions was $1.3 billion, of which $35.0 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.

26


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

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.

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:
March 31, 2022Level 1 InputsLevel 2 InputsLevel 3 InputsBalance at
Fair Value
Assets:
Loans held for sale at fair value$— $— $156,730 $156,730 
Retail and certificate loans held for investment at fair value— — 168,906 168,906 
Other loans held for investment at fair value— — 15,384 15,384 
Securities available for sale:
U.S. agency residential mortgage-backed securities— 227,135 — 227,135 
U.S. agency securities— 61,925 — 61,925 
Asset-backed senior securities and subordinated securities— 21,904 10,032 31,936 
Commercial mortgage-backed securities— 28,418 — 28,418 
Other asset-backed securities— 24,597 — 24,597 
CLUB Certificate asset-backed securities— — 13,434 13,434 
Municipal securities— 2,872 — 2,872 
Total securities available for sale— 366,851 23,466 390,317 
Servicing assets— — 72,112 72,112 
Other assets— 2,550 2,408 4,958 
Total assets$— $369,401 $439,006 $808,407 
Liabilities:
Retail notes, certificates and secured borrowings$— $— $168,906 $168,906 
Payable on Structured Program borrowings— — 20,347 20,347 
Other liabilities— — 10,024 10,024 
Total liabilities$— $— $199,277 $199,277 

27


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, 2021
Level 1 InputsLevel 2 InputsLevel 3 InputsBalance at
Fair Value
Assets:
Loans held for sale at fair value$— $— $142,370 $142,370 
Retail and certificate loans held for investment at fair value— — 229,719 229,719 
Other loans held for investment at fair value— — 21,240 21,240 
Securities available for sale:
U.S. agency residential mortgage-backed securities— 123,699— 123,699
Asset-backed senior securities and subordinated securities
— 28,12911,762 39,891
U.S. agency securities— 26,172— 26,172
Other asset-backed securities— 26,133 — 26,133 
Commercial mortgaged-backed securities— 26,098 — 26,098 
CLUB Certificate asset-backed securities
— — 18,285 18,285 
Municipal securities— 3,252 — 3,252 
Total securities available for sale— 233,48330,047 263,530
Servicing assets— — 67,726 67,726
Other assets— 2,812 3,312 6,124 
Total assets$— $236,295 $494,414 $730,709 
Liabilities:
Retail notes, certificates and secured borrowings$— $— $229,719 $229,719 
Payable on Structured Program borrowings— — 65,451 65,451
Other liabilities— — 12,911 12,911
Total liabilities$— $— $308,081 $308,081 

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 first quarters of 2022 or 2021.

28


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 Sale at Fair Value

As of both March 31, 2022 and December 31, 2021, the majority of loans HFS were sold shortly after origination and at committed prices. Therefore, the Company is generally not exposed to fair value fluctuations as a result of adverse changes in key assumptions.

Fair Value Reconciliation

The following tables present additional information about Level 3 loans HFS on a recurring basis:
Outstanding Principal BalanceValuation AdjustmentFair Value
Balance at December 31, 2021
$147,193 $(4,823)$142,370 
Originations and purchases2,270,925 — 2,270,925 
Sales(2,247,648)(10,053)(2,257,701)
Principal payments and retirements(12,286)— (12,286)
Charge-offs, net of recoveries(532)(518)(1,050)
Change in fair value recorded in earnings— 14,472 14,472 
Balance at March 31, 2022
$157,652 $(922)$156,730 
Outstanding Principal BalanceValuation AdjustmentFair Value
Balance at December 31, 2020
$132,600 $(10,698)$121,902 
Originations and purchases941,945 (1,629)940,316 
Transfers to loans held for investment(63)— (63)
Sales(873,672)7,037 (866,635)
Principal payments and retirements(22,821)— (22,821)
Charge-offs, net of recoveries(3,859)3,186 (673)
Change in fair value recorded in earnings— (5,403)(5,403)
Balance at March 31, 2021
$174,130 $(7,507)$166,623 

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 March 31, 2022 and December 31, 2021, 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.
29


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:
March 31, 2022December 31, 2021
MinimumMaximumWeighted-
Average
MinimumMaximumWeighted-
Average
Discount rates7.5 %16.4 %10.0 %7.5 %16.4 %10.0 %
Net cumulative expected loss rates (1)
2.3 %26.8 %10.9 %2.4 %26.4 %10.2 %
Cumulative expected prepayment rates (1)
32.1 %46.2 %39.8 %32.1 %45.9 %38.4 %
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:
March 31, 2022December 31, 2021
Weighted-average market servicing rate assumptions
0.62 %0.62 %
Change in fair value from:
Servicing rate increase by 0.10%
$(9,852)$(9,495)
Servicing rate decrease by 0.10%
$9,852 $9,495 

The following table presents the fair value sensitivity of servicing assets to adverse changes in key assumptions:
March 31, 2022December 31, 2021
Fair value of Servicing Assets$72,112 $67,726 
Discount rates
100 basis point increase$(594)$(558)
200 basis point increase$(1,187)$(1,115)
Expected loss rates
10% adverse change$(560)$(693)
20% adverse change$(1,121)$(1,386)
Expected prepayment rates
10% adverse change$(1,935)$(2,401)
20% adverse change$(3,870)$(4,802)

30


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
March 31,
20222021
Fair value at beginning of period$67,726 $56,347 
Issuances (1)
22,365 7,235 
Change in fair value, included in Marketplace revenue(16,979)(11,837)
Other net changes included in Deferred revenue(1,000)2,368 
Fair value at end of period$72,112 $54,113 
(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:
March 31, 2022Carrying AmountLevel 1 InputsLevel 2 InputsLevel 3 InputsBalance at
Fair Value
Assets:
Loans and leases held for investment, net$3,234,311 $— $— $3,469,527 $3,469,527 
Other assets19,118 — 17,036 2,082 19,118 
Total assets$3,253,429 $— $17,036 $3,471,609 $3,488,645 
Liabilities:
Deposits (1)
$218,801 $— $— $218,801 $218,801 
Short-term borrowings13,188 — 12,417 771 13,188 
Advances from PPPLF193,371 — — 193,371 193,371 
Other long-term debt15,388 — — 15,388 15,388 
Other liabilities51,297 — 20,146 31,151 51,297 
Total liabilities$492,045 $— $32,563 $459,482 $492,045 
(1)    Excludes deposit liabilities with no defined or contractual maturities.
31


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, 2021Carrying AmountLevel 1 InputsLevel 2 InputsLevel 3 InputsBalance at
Fair Value
Assets:
Loans held for sale$248,878 $— $— $251,101 $251,101 
Loans and leases held for investment, net2,754,737 — — 2,964,691 2,964,691 
Other assets18,274 — 15,630 2,644 18,274 
Total assets$3,021,889 $— $15,630 $3,218,436 $3,234,066 
Liabilities:
Deposits (1)
$68,405 $— $— $68,405 $68,405 
Short-term borrowings27,780 — 17,595 10,185 27,780 
Advances from PPPLF271,933 — — 271,933 271,933 
Other long-term debt15,455 — — 15,455 15,455 
Other liabilities51,655 — 22,187 29,468 51,655 
Total liabilities$435,228 $— $39,782 $395,446 $435,228 
(1)    Excludes deposit liabilities with no defined or contractual maturities.

8. Property, Equipment and Software, Net

Property, equipment and software, net, consist of the following:
March 31, 2022December 31, 2021
Software (1)
$143,174 $121,102 
Leasehold improvements37,284 37,347 
Computer equipment29,614 29,598 
Furniture and fixtures7,342 8,346 
Total property, equipment and software217,414 196,393 
Accumulated depreciation and amortization(105,911)(98,397)
Total property, equipment and software, net$111,503 $97,996 
(1)     Includes $25.5 million and $14.7 million of development in progress for internally-developed software and $10.9 million and $2.5 million of development in progress to customize purchased software as of March 31, 2022 and December 31, 2021, respectively.

Depreciation and amortization expense on property, equipment and software was $9.5 million and $10.2 million for the first quarters of 2022 and 2021, respectively.

The Company recorded impairment expense on its internal-use software of $0.3 million for both of the first quarters of 2022 and 2021.

The Company records the above expenses in “Depreciation and amortization” expense on the Income Statement.

9. Goodwill and Intangible Assets

Goodwill

The Company’s goodwill balance was $75.7 million as of both March 31, 2022 and December 31, 2021. The Company did not record any goodwill impairment expense for the first quarters of 2022 and 2021. Goodwill is not
32


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

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.

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:
March 31, 2022December 31, 2021
Gross carrying value$54,500 $54,500 
Accumulated amortization(34,614)(33,319)
Net carrying value$19,886 $21,181 

The customer relationship intangible assets are amortized on an accelerated basis from ten to fourteen years. Amortization expense associated with intangible assets for the first quarters of 2022 and 2021 was $1.3 million and $1.2 million, respectively. There was no impairment loss for the first quarters of 2022 and 2021.

The expected future amortization expense for intangible assets as of March 31, 2022, is as follows:
2022$3,553 
20234,198 
20243,549 
20252,901 
20262,252 
Thereafter3,433 
Total$19,886 

10. Other Assets

Other assets consist of the following:
March 31, 2022December 31, 2021
Operating lease assets$74,882 $77,316 
Servicing assets (1)
74,195 70,370 
Nonmarketable equity investments34,694 31,726 
Intangible assets, net (2)
19,886 21,181 
Other104,168 101,953 
Total other assets$307,825 $302,546 
(1)    Loans underlying servicing assets had a total outstanding principal balance of $10.7 billion and $10.3 billion as of March 31, 2022 and December 31, 2021, respectively.
(2)    See “Note 9. Goodwill and Intangible Assets” for additional detail.

33


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

11. Deposits

Deposits consist of the following:
March 31, 2022December 31, 2021
Interest-bearing deposits:
Checking accounts$2,108,231 $1,993,809 
Savings and money market accounts1,388,815 856,989 
Certificates of deposit (1)
218,801 68,405 
Total$3,715,847 $2,919,203 
Noninterest-bearing deposits261,630 216,585 
Total deposits$3,977,477 $3,135,788 
(1)    Includes $16.9 million and $14.0 million in denominations exceeding the Federal Deposit Insurance Corporation (FDIC) limit of $250 thousand as of March 31, 2022 and December 31, 2021, respectively.

Total certificates of deposit at March 31, 2022 are scheduled to mature as follows:
2022$46,338 
2023109,851 
202461,050 
2025618 
2026944 
Total certificates of deposit$218,801 

12. Short-term Borrowings and Long-term Debt

Short-term Borrowings:

Repurchase Agreements

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. As of March 31, 2022 and December 31, 2021, the Company had $13.2 million and $27.8 million in aggregate debt outstanding under its repurchase agreements, respectively, which is amortized over time through regular principal and interest payments collected from the pledged securities. At March 31, 2022, a majority of the Company’s repurchase agreements have contractual repurchase dates ranging from September 2022 to March 2028. These contractual repurchase dates correspond to either a set repurchase schedule or to the maturity dates of the underlying securities, which have a remaining weighted-average estimated life of less than one year. At March 31, 2022 and December 31, 2021, the repurchase agreements bore interest rates ranging from 3.2% to 6.91% and 3.12% to 6.72%, respectively, which are either fixed or based on a benchmark of the weighted-average interest rate of the securities sold plus a spread. Underlying securities retained and pledged as collateral under repurchase agreements were $39.3 million and $50.5 million at March 31, 2022 and December 31, 2021, respectively.

34


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:

Advances from PPPLF

As of March 31, 2022 and December 31, 2021, outstanding PPPLF borrowings were $193.4 million and $271.9 million, respectively, and are collateralized by SBA PPP loans originated by the Company. The maturity date of the PPPLF borrowings matches the maturity date of the SBA PPP loans. When loans are forgiven by the SBA, the corresponding PPPLF advance is paid by the Company. The interest rate on the PPPLF borrowings is fixed at 0.35%.

Retail Notes, Certificates, and Secured Borrowings

The Company issued member payment-dependent notes, or retail notes, and certificates as a means to allow investors to invest in the corresponding loans. Investors were able to purchase these retail notes and certificates, where the cash flows to investors were dependent upon principal and interest payments made by borrowers of the underlying unsecured personal loans. As of December 31, 2020, LendingClub ceased offering and selling retail notes and certificates. The total balance of outstanding retail notes and certificates will continue to decline as underlying borrower payments are made. The Company does not assume principal or interest rate risk on loans that were funded by retail notes and certificates because loan balances, interest rates and maturities were matched and offset by an equal balance of notes and certificates with the exact same interest rates and maturities.

The following table provides the balances of retail notes, certificates and secured borrowings at fair value as of the periods presented:
March 31, 2022December 31, 2021
Retail notes$162,171 $219,435 
Certificates and secured borrowings6,735 10,284 
Total retail notes, certificates and secured borrowings$168,906 $229,719 

Payable on Structured Program Borrowings

As of March 31, 2022 and December 31, 2021, the certificate participations and securities of certain consolidated VIEs held by third-party investors of $20.3 million and $65.5 million, respectively, are included in “Payable on Structured Program borrowings” on the Balance Sheet and were secured by “Other loans held for investment at fair value” and “Loans held for sale” of $15.0 million and $62.7 million and restricted cash of $7.3 million and $11.2 million, respectively.

Other Long-term Debt

The Company has subordinated notes with an outstanding amount of $15.3 million as of both March 31, 2022 and December 31, 2021. The subordinated notes are at a 6.5% fixed to floating rate and are due June 30, 2027. Fixed interest payments are due semiannually in arrears on June 30 and December 30. Subsequent to June 30, 2022, the rate resets quarterly at a rate equal to 3-month London Interbank Offered Rate (LIBOR) plus 4.64%. The subordinated notes are junior in right to the repayment in full of all existing claims of creditors and depositors of the Company. The subordinated notes may be redeemed, in whole or in part, at par plus accrued unpaid interest after June 2022 at the option of the Company.

35


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

13. Other Liabilities

Other liabilities consist of the following:
March 31, 2022December 31, 2021
Accounts payable and accrued expenses$92,737 $100,972 
Operating lease liabilities88,180 91,588 
Payable to investors20,146 22,187 
Other97,251 89,204 
Total other liabilities$298,314 $303,951 

14. Employee Incentive Plans

The Company’s equity incentive plans provide for granting awards, including RSUs, 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
March 31,
20222021
RSUs and PBRSUs$15,674 $14,743 
Stock options20 450 
Total stock-based compensation expense$15,694 $15,193 

The Company capitalized $1.7 million and $1.0 million of stock-based compensation expense associated with developing software for internal use during the first quarters of 2022 and 2021, respectively.

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, 2021
9,703,751 $12.44 
Granted3,784,854 $14.24 
Vested(1,199,296)$11.88 
Forfeited/expired(540,695)$14.42 
Unvested at March 31, 2022
11,748,614 $12.98 

During the first quarter of 2022, the Company granted 3,784,854 RSUs with an aggregate fair value of $53.9 million.

36


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

During the first quarters of 2022 and 2021, the Company recognized $13.8 million and $13.5 million in stock-based compensation expense related to RSUs, respectively.

As of March 31, 2022, there was $140.4 million of unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over the next 2.2 years.

Performance-based Restricted Stock Units

PBRSUs are restricted stock unit awards that are earned and eligible for vesting (if applicable) based upon the achievement of certain pre-established performance metrics over a specific performance period. The Company’s PBRSU awards have a separate market-based component and/or a performance-based component. Certain of the Company’s PBRSU awards have additional time-based vesting for any earned shares. With respect to PBRSU awards with market-based metrics, 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 and vesting period. With respect to PBRSU awards with performance-based metrics, the compensation expense of the award is set at the time of grant (assuming a target level of achievement), adjusted for actual performance during the performance period and expensed over the performance and vesting period.

The following table summarizes the activities for the Company’s PBRSUs:
Number
of Units
Weighted-
Average
Grant Date
Fair Value
Unvested at December 31, 2021
1,771,869 $9.72 
Granted510,911 $8.26 
Unvested at March 31, 2022
2,282,780 $9.40 

During the first quarter of 2022, the Company granted 510,911 PBRSUs with an aggregate fair value of $4.2 million.

During the first quarters of 2022 and 2021, the Company recognized $1.9 million and $1.2 million in stock-based compensation expense related to PBRSUs, respectively.

As of March 31, 2022, there was $11.7 million of unrecognized compensation cost related to unvested PBRSUs, which is expected to be recognized over the next 1.6 years.

15. Income Taxes

For the first quarter of 2022, the Company recorded an income tax expense of $5.0 million primarily related to income tax expense for state jurisdictions that limit net operating loss utilization. For the first quarter 2021, the Company recorded an income tax benefit of $2.8 million primarily related to changes in the deferred tax asset valuation allowance resulting from a deferred tax liability assumed with the Acquisition.

The Company continues to recognize a full valuation allowance against net deferred tax assets. This determination was based on the assessment of the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets.

37


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

16. 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 first quarters of 2022 and 2021, interest earned on Equipment Finance was $2.6 million and $1.9 million, respectively, and is included in “Interest and fees on loans and leases held for investment” on the Income Statement.

The components of Equipment Finance assets are as follows:
March 31, 2022December 31, 2021
Lease receivables$118,512 $122,927 
Unguaranteed residual asset values35,916 36,837 
Unearned income(11,206)(10,989)
Deferred fees558 380 
Total$143,780 $149,155 

Future minimum lease payments based on maturity of the Company’s lessor arrangements as of March 31, 2022 were as follows:
2022$32,709 
202336,881 
202428,710 
202517,570 
202610,100 
Thereafter4,541 
Total lease payments$130,511 
Discount effect(11,999)
Present value of future minimum lease payments$118,512 

Lessee Arrangements

The Company has operating leases for its headquarters in San Francisco, California, as well as additional office space in the Salt Lake City, Utah, and Boston, Massachusetts areas. As of March 31, 2022, the lease agreements have remaining lease terms ranging from approximately two years to nine years. Some of the lease agreements include options to extend the lease term for up to an additional fifteen years. In addition, the Company is the sublessor of a portion of its office space in San Francisco, with remaining lease terms of less than one year. As of March 31, 2022, the Company pledged $0.9 million of cash and $5.5 million in letters of credit as security deposits in connection with its lease agreements.

The Company reviewed operating lease right-of-use (ROU) assets for impairment. For the first quarter of 2021, the Company recognized an impairment expense of $1.0 million on operating lease assets, included in Occupancy expense on the Income Statement. The Company did not recognize an impairment expense during the first quarter of 2022.

38


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

Balance sheet information related to leases was as follows:
ROU Assets and Lease LiabilitiesBalance Sheet ClassificationMarch 31, 2022December 31, 2021
Operating lease assetsOther assets$74,882 $77,316 
Operating lease liabilities (1)
Other liabilities$88,180 $91,588 
(1)    The difference between operating lease assets and operating lease liabilities is the unamortized balance of deferred rent.

Components of net lease costs were as follows:
Three Months Ended
March 31,
Net Lease CostsIncome Statement Classification20222021
Operating lease costs (1)
Occupancy$(4,480)$(4,977)
Sublease revenueOther non-interest income1,537 1,537 
Net lease costs$(2,943)$(3,440)
(1)    Includes variable lease costs of $0.4 million and $0.1 million for the first quarters of 2022 and 2021, respectively.

Supplemental cash flow information related to the Company’s operating leases was as follows:
Three Months Ended
March 31,
20222021
Non-cash operating activity:
Leased assets obtained in exchange for new and amended operating lease liabilities (1)
$— $12,914 
(1)    Represents non-cash activity and, accordingly, is not reflected in the Condensed Consolidated Statements of Cash Flows. Amount includes noncash remeasurements of the operating lease ROU asset.

The Company’s future minimum undiscounted lease payments under operating leases and anticipated sublease revenue as of March 31, 2022 were as follows:
Operating Lease
Payments
Sublease
Revenue
Net
2022$11,135 $(1,229)$9,906 
202312,554 — 12,554 
202412,810 — 12,810 
202513,163 — 13,163 
202613,375 — 13,375 
Thereafter48,975 — 48,975 
Total lease payments$112,012 $(1,229)$110,783 
Discount effect(23,832)
Present value of future minimum lease payments$88,180 

39


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

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 RateMarch 31, 2022
Weighted-average remaining lease term (in years)8.33
Weighted-average discount rate5.43 %

17. Commitments and Contingencies

Operating Lease Commitments

For discussion regarding the Company’s operating lease commitments, see “Note 16. Leases.

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 March 31, 2022 and December 31, 2021, the contractual amount of unfunded loan commitments was $109.5 million and $110.8 million, respectively. See “Note 5. Loans and Leases Held for Investment, 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.

40


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

Regulatory Examinations and Actions Relating to the Company’s Business Practices and Licensing

The Company is and has been subject to periodic inquiries 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 its manner of operating in accordance with the requirements of its licenses and the regulatory framework applicable to its business.

The Company is routinely subject to examination for compliance with applicable laws and regulations in the states in which it is licensed. The Company is subject to examination by the New York Department of Financial Services (NYDFS) and other regulators. The Company periodically has discussions with various regulatory agencies regarding its business model and has engaged in similar discussions with the NYDFS. During the course of such discussions with the NYDFS, which remain ongoing, the Company decided to voluntarily comply with certain rules and regulations of the NYDFS while it was not a bank holding company operating a national bank.

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.

Putative Class Actions

In February 2020, a putative class action lawsuit was filed against the Company in the U.S. District Court for the Northern District of California (Erceg v. LendingClub Corporation, No. 4:20-cv-01153). The lawsuit alleged violations of California and Massachusetts law based on allegations that the Company recorded a call with plaintiff without notifying him that it would be recorded. Plaintiff sought to represent a purported class of similarly situated individuals who had phone calls recorded by the Company without their knowledge and consent. The Company filed a motion to dismiss certain of plaintiff’s claims, strike nationwide class allegations, and, alternatively, to stay the litigation. Rather than oppose that motion, plaintiff filed an amended complaint. The Company again filed a motion to stay, or alternatively to dismiss certain of the claims in the amended complaint and to strike nationwide class allegations. That motion was heard by the Court on July 9, 2020. On July 28, 2020, the Court entered an order granting the Company’s motion to stay plaintiff’s California claims pending a decision by the California Supreme Court in a case involving the California Invasion of Privacy Act (Smith v. LoanMe, Inc.), dismissing with prejudice plaintiff’s claim under Massachusetts law, and denying the Company’s motion to strike plaintiff’s nationwide class allegations. In April 2021, the California Supreme Court issued a decision in the LoanMe case in a manner that permitted plaintiff’s claims in the Company’s case to continue. The Company then filed its answer to plaintiff’s complaint and discovery began. The parties have since reached a settlement, the terms of which are not material to the Company. This matter is now concluded.

In February 2021, a putative class action lawsuit was filed against the Company in the U.S. District Court for the Southern District of Texas (Bradford v. Lending Club Corporation, No. 4:21-cv-00588). The lawsuit asserted a cause of action under the Fair Credit Reporting Act (FCRA) based on allegations that the Company obtained plaintiff’s credit report without his consent or authorization and without a permissible purpose under the FCRA. Plaintiff sought to represent a class of allegedly similarly situated persons in the case and sought monetary, injunctive, and declaratory relief, among other relief. Plaintiff amended the complaint to assert additional allegations regarding the Company’s purported requests for plaintiff’s credit report from another credit reporting agency. The Company has since filed its answer to plaintiff’s complaint and discovery began. The Court scheduled this matter for trial in September 2022. The parties have since reached a settlement, the terms of which are not material to the Company. This matter is now concluded.

41


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

Certain Financial Considerations Relating to Litigation and Investigations

The Company had $2.5 million in accrued contingent liabilities at both March 31, 2022 and December 31, 2021.

In addition to the foregoing, the Company is subject to, and may continue to be subject to, legal proceedings and regulatory actions in the ordinary course of business. No assurances can be given as to the timing, outcome or consequences of any of these matters.

18. 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 LC Bank’s regulatory capital amounts and ratios (in millions):
LendingClub BankMarch 31, 2022December 31, 2021
Required Minimum plus Required CCB for
Non-Leverage Ratios
AmountRatioAmountRatio
CET1 capital (1)
$577.6 16.0 %$523.7 16.7 %7.0 %
Tier 1 capital$577.6 16.0 %$523.7 16.7 %8.5 %
Total capital$623.8 17.3 %$563.7 18.0 %10.5 %
Tier 1 leverage$577.6 13.2 %$523.7 14.3 %4.0 %
Risk-weighted assets$3,606.6 N/A$3,130.4 N/AN/A
Quarterly adjusted average assets$4,379.8 N/A$3,667.7 N/AN/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.

42


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 regulatory capital and ratios of the Company (in millions):
LendingClubMarch 31, 2022December 31, 2021
Required Minimum plus Required CCB for
Non-Leverage Ratios
AmountRatioAmountRatio
CET1 capital (1)
$756.0 20.6 %$710.0 21.3 %7.0 %
Tier 1 capital$756.0 20.6 %$710.0 21.3 %8.5 %
Total capital$818.7 22.3 %$767.9 23.0 %10.5 %
Tier 1 leverage$756.0 15.6 %$710.0 16.5 %4.0 %
Risk-weighted assets$3,668.1 N/A$3,333.2 N/AN/A
Quarterly adjusted average assets$4,859.8 N/A$4,301.7 N/AN/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. 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 $35.5 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. Accordingly, the capital benefit included in CET1 capital was reduced to $26.7 million at March 31, 2022.

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 March 31, 2022 and December 31, 2021, 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 March 31, 2022 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 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 quarters of 2022 and 2021.

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.

43


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

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

Other non-interest income consists of the following:
Three Months Ended
March 31,
20222021
Referral revenue$3,691 $2,594 
Realized gains (losses) on sales of securities available for sale and other investments36 (244)
Other6,164 3,257 
Total other non-interest income$9,891 $5,607 

Other non-interest expense consists of the following:
Three Months Ended
March 31,
20222021
Consumer credit services$5,524 $3,292 
Other8,480 8,833 
Total other non-interest expense$14,004 $12,125 

20. 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. 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. Differences between separate entity and consolidated tax returns are eliminated upon consolidation.

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.

All of the Company’s revenue is generated in the United States. No individual borrower or investor accounted for 10% or more of consolidated net revenue for any of the periods presented.

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.

44


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 March 31,Two Months Ended March 31,Three Months Ended March 31,Three Months Ended March 31,Two Months Ended March 31,Three Months Ended March 31,
 20222021202220212022202120222021
Non-interest income:
Marketplace revenue$164,835 $36,062 $15,131 $45,665 $— $— $179,966 $81,727 
Other non-interest income19,498 19,700 4,223 4,098 (13,830)(18,191)9,891 5,607 
Total non-interest income184,333 55,762 19,354 49,763 (13,830)(18,191)189,857 87,334 
Interest income:
Interest income99,823 17,498 11,830 27,092 — — 111,653 44,590 
Interest expense(3,644)(1,247)(8,329)(24,837)— — (11,973)(26,084)
Net interest income96,179 16,251 3,501 2,255 — — 99,680 18,506 
Total net revenue280,512 72,013 22,855 52,018 (13,830)(18,191)289,537 105,840 
(Provision for) reversal of credit losses(52,509)(23,963)— 2,470 — — (52,509)(21,493)
Non-interest expense(178,459)(75,499)(26,575)(76,944)13,830 18,191 (191,204)(134,252)
Income (Loss) before income tax benefit (expense)49,544 (27,449)(3,720)(22,456)— — 45,824 (49,905)
Income tax benefit (expense)(12,355)23 17,727 2,292 (10,360)506 (4,988)2,821 
Consolidated net income (loss)$37,189 $(27,426)$14,007 $(20,164)$(10,360)$506 $40,836 $(47,084)
Capital expenditures$21,575 $4,554 $— $1,811 $— $— $21,575 $6,365 
Depreciation and amortization$3,500 $616 $7,539 $11,150 $— $— $11,039 $11,766 

45


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

LendingClub BankLendingClub Corporation
(Parent only)
Intercompany
Eliminations
Consolidated Total
 March 31, 2022December 31, 2021March 31, 2022December 31, 2021March 31, 2022December 31, 2021March 31, 2022December 31, 2021
Assets
Total cash and cash equivalents$1,014,464 $659,919 $119,711 $88,268 $(80,950)$(61,061)$1,053,225 $687,126 
Restricted cash— — 64,165 76,540 (3,658)(80)60,507 76,460 
Securities available for sale at fair value345,964 205,730 44,353 57,800 — — 390,317 263,530 
Loans held for sale145,117 335,449 11,613 55,799 — — 156,730 391,248 
Loans and leases held for investment, net3,234,311 2,754,737 — — — — 3,234,311 2,754,737 
Retail and certificate loans held for investment at fair value— — 168,906 229,719 — — 168,906 229,719 
Other loans held for investment at fair value— — 15,384 21,240 — — 15,384 21,240 
Property, equipment and software, net57,482 36,424 54,021 61,572 — — 111,503 97,996 
Investment in subsidiary— — 591,051 557,577 (591,051)(557,577)— — 
Goodwill75,717 75,717 — — — — 75,717 75,717 
Other assets292,043 254,075 149,099 168,042 (133,317)(119,571)307,825 302,546 
Total assets5,165,098 4,322,051 1,218,303 1,316,557 (808,976)(738,289)5,574,425 4,900,319 
Liabilities and Equity
Total deposits4,062,084 3,196,929 — — (84,607)(61,141)3,977,477 3,135,788 
Short-term borrowings164 165 13,024 27,615 — — 13,188 27,780 
Advances from PPPLF193,371 271,933 — — — — 193,371 271,933 
Retail notes, certificates and secured borrowings at fair value— — 168,906 229,719 — — 168,906 229,719 
Payable on Structured Program borrowings— — 20,347 65,451 — — 20,347 65,451 
Other long-term debt— — 15,388 15,455 — — 15,388 15,455 
Other liabilities218,365 218,775 143,701 150,727 (63,752)(65,551)298,314 303,951 
Total liabilities4,473,984 3,687,802 361,366 488,967 (148,359)(126,692)4,686,991 4,050,077 
Total equity691,114 634,249 856,937 827,590 (660,617)(611,597)887,434 850,242 
Total liabilities and equity$5,165,098 $4,322,051 $1,218,303 $1,316,557 $(808,976)$(738,289)$5,574,425 $4,900,319 

46


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, 2021 (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.

47


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 (the Acquisition) of an award-winning digital bank, 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 bank in the United States.

Executive Summary

Loan originations: Total loan originations for the first quarter of 2022 were $3.2 billion, improving 117% year-over-year and 5% sequentially. The increase was primarily driven by the growth in unsecured personal loan origination volume.

Total net revenue: Total net revenue for the first quarter of 2022 was $289.5 million, improving 174% year-over-year and 10% sequentially, outpacing origination growth of 117% and 5%, respectively. The increase was primarily due to the growth in marketplace revenue and increased net interest income.
Marketplace revenue: Marketplace revenue for the first quarter of 2022 was $180.0 million, improving 120% year-over-year and 6% sequentially. The increase was primarily driven by a higher volume of marketplace loans sold.
Net interest income: Net interest income for the first quarter of 2022 was $99.7 million, improving 439% year-over-year and 20% sequentially. The increase was primarily due to an increase in unsecured personal loans retained in current and prior periods as held for investment (HFI).

Provision for credit losses: Provision for credit losses for the first quarter of 2022 was $52.5 million, increasing 144% year-over-year and 16% sequentially. The increase was primarily due to an increase in unsecured personal loans retained as HFI.

Total non-interest expense: Total non-interest expense for the first quarter of 2022 was $191.2 million, increasing 42% year-over-year and 2% sequentially. The increase was primarily driven by an increase in variable marketing expenses based on higher origination volume.

Consolidated net income: Consolidated net income for the first quarter of 2022 was $40.8 million, improving by $87.9 million year-over-year and 40% sequentially.

Loans and leases held for investment: Loans and leases held for investment, net of allowance for loan and lease losses, were $3.2 billion at March 31, 2022, growing 56% year-over-year and 17% sequentially.

Deposits: Total deposits at March 31, 2022 were $4.0 billion, growing 68% year-over-year and 27% sequentially, supporting growth in loans HFI.

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.”

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)
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:
Three Months Ended
March 31,
2022
December 31,
2021
March 31,
2021
Non-interest income$189,857 $179,111 $87,334 
Net interest income$99,680 $83,132 $18,506 
Total net revenue$289,537 $262,243 $105,840 
Consolidated net income (loss)$40,836 $29,108 $(47,084)
Basic EPS$0.40 $0.29 $(0.49)
Diluted EPS$0.39 $0.27 $(0.49)
LendingClub Bank Performance Metrics:
Efficiency ratio (1)
63.6 %69.5 %104.8 %
Return on average equity (ROE)22.5 %21.7 %N/A
Return on average total assets (ROA)3.1 %3.1 %N/A
LendingClub Bank Capital Ratios:
CET1 1 Capital Ratio16.0 %16.7 %20.9 %
Tier 1 Leverage Ratio13.2 %14.3 %12.9 %
Consolidated LendingClub Corporation Performance Metrics:
Net interest margin8.3 %7.6 %1.8 %
Efficiency ratio (1)
66.0 %71.8 %126.8 %
Return on average equity (ROE)18.7 %14.1 %N/A
Return on average total assets (ROA)3.1 %2.4 %N/A
Marketing as a % of loan originations1.7 %1.7 %1.3 %
Loan Originations (in millions):
Marketplace loans$2,360 $2,308 $1,139 
Loan originations held for investment856 761 344 
Total loan originations$3,217 $3,069 $1,483 
AUM (in millions) (2)
$13,341 $12,463 $10,271 
N/A – Not applicable
(1)    Calculated as the ratio of non-interest expense to total net revenue.
(2)    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.

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)
As of the Three Months Ended
March 31,
2022
December 31,
2021
March 31,
2021
Balance Sheet Data:
Loans and leases held for investment, net, excluding PPP loans$3,049,325 $2,486,440 $1,414,900 
PPP loans$184,986 $268,297 $664,400 
Total loans and leases held for investment, net$3,234,311 $2,754,737 $2,079,300 
Total assets$5,574,425 $4,900,319 $4,491,089 
Total deposits$3,977,477 $3,135,788 $2,373,437 
Total liabilities$4,686,991 $4,050,077 $3,757,954 
Total equity$887,434 $850,242 $733,135 
Allowance Ratios:
ALLL to total loans and leases held for investment5.5 %5.0 %1.7 %
ALLL to total loans and leases held for investment, excluding PPP loans5.8 %5.5 %2.5 %
ALLL to consumer loans and leases held for investment6.6 %6.4 %2.3 %
ALLL to commercial loans and leases held for investment1.8 %1.8 %1.3 %
ALLL to commercial loans and leases held for investment, excluding PPP loans2.3 %2.6 %1.7 %

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)
Results of Operations
The following table sets forth the Condensed Consolidated Statements of Operations (Income Statement) data for each of the periods presented:
Three Months EndedChange (%)
March 31,
2022
December 31,
2021
March 31,
2021
Q1 2022
vs
Q1 2021
Q1 2022
vs
Q4 2021
Non-interest income:
Marketplace revenue$179,966 $170,562 $81,727 120 %%
Other non-interest income9,891 8,549 5,607 76 %16 %
Total non-interest income189,857 179,111 87,334 117 %%
Interest income:
Interest on loans held for sale7,450 7,153 5,157 44 %%
Interest and fees on loans and leases held for investment91,442 76,964 15,301 498 %19 %
Interest on retail and certificate loans held for investment at fair value6,969 9,236 20,262 (66)%(25)%
Interest on other loans held for investment at fair value593 762 1,479 (60)%(22)%
Interest on securities available for sale4,511 3,071 2,235 102 %47 %
Other688 469 156 N/M47 %
Total interest income111,653 97,655 44,590 150 %14 %
Interest expense:
Interest on deposits3,438 2,616 1,014 239 %31 %
Interest on short-term borrowings435 561 1,264 (66)%(22)%
Interest on retail notes, certificates and secured borrowings6,969 9,236 20,262 (66)%(25)%
Interest on Structured Program borrowings764 1,642 3,208 (76)%(53)%
Interest on other long-term debt367 468 336 %(22)%
Total interest expense11,973 14,523 26,084 (54)%(18)%
Net interest income99,680 83,132 18,506 439 %20 %
Total net revenue289,537 262,243 105,840 174 %10 %
Provision for credit losses52,509 45,149 21,493 144 %16 %
Non-interest expense:
Compensation and benefits81,610 78,741 64,420 27 %%
Marketing55,080 50,708 19,545 182 %%
Equipment and software11,046 12,019 7,893 40 %(8)%
Occupancy6,019 4,706 6,900 (13)%28 %
Depreciation and amortization11,039 10,462 11,766 (6)%%
Professional services12,406 12,699 11,603 %(2)%
Other non-interest expense14,004 18,885 12,125 15 %(26)%
Total non-interest expense191,204 188,220 134,252 42 %%
Income (Loss) before income tax benefit (expense)45,824 28,874 (49,905)N/M59 %
Income tax benefit (expense)(4,988)234 2,821 N/MN/M
Consolidated net income (loss)$40,836 $29,108 $(47,084)N/M40 %

The analysis below is presented for the following periods: First quarter of 2022 compared to the first quarter of
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)
2021 (Quarter Over Quarter) and first quarter of 2022 compared to the fourth quarter of 2021 (Sequential). As a result of the timing of the Company’s acquisition of Radius on February 1, 2021, our results of operations discussed below for the three month period ended March 31, 2021 only reflect the revenue and expenses generated by LendingClub Bank for two months of such period.

Marketplace Revenue

Marketplace revenue consists of the following:
Three Months EndedChange (%)
March 31,
2022
December 31,
2021
March 31,
2021
Q1 2022
vs
Q1 2021
Q1 2022
vs
Q4 2021
Origination fees$122,093 $118,353 $55,559 120 %%
Servicing fees18,514 20,940 23,166 (20)%(12)%
Gain on sales of loans24,110 20,569 8,323 190 %17 %
Net fair value adjustments15,249 10,700 (5,321)N/M43 %
Total marketplace revenue$179,966 $170,562 $81,727 120 %%

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. In addition, origination fees include transaction fees that were paid to us by issuing bank partners or education and patient service providers for the work performed in facilitating the origination of loans by the issuing banks. Following the Acquisition, LC Bank became the originator and lender for all unsecured personal and auto refinance loans and the majority of education and patient finance loans.

The following table presents loan origination volume during each of the periods set forth below:
Three Months Ended
March 31,
2022
December 31,
2021
March 31,
2021
Marketplace loans$2,360,238 $2,307,601 $1,138,736 
Loan originations held for investment856,312 761,455344,414 
Total loan originations$3,216,550 $3,069,056 $1,483,150 
Origination fees were $122.1 million and $55.6 million for the first quarters of 2022 and 2021, respectively, an increase of 120%. The increase was due to higher origination volume of marketplace loans. Loan origination volume of marketplace loans increased to $2.4 billion for the first quarter of 2022 compared to $1.1 billion for the first quarter of 2021, an increase of 107%.

Origination fees were $122.1 million and $118.4 million for the first quarter of 2022 and fourth quarter of 2021, respectively, an increase of 3%. The increase was due to higher origination volume of marketplace loans. Loan origination volume of marketplace loans increased to $2.4 billion for the first quarter of 2022 compared to $2.3 billion for the fourth quarter of 2021, an increase of 2%.

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)
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. Loans sold and subsequently serviced on behalf of the investor represent a key driver of our servicing fee revenue.
Three Months EndedChange (%)
March 31,
2022
December 31,
2021
March 31,
2021
Q1 2022
vs
Q1 2021
Q1 2022
vs
Q4 2021
AUM (in millions):
Loans sold$10,475 $10,124 $9,185 14 %%
Loans held by LendingClub Bank2,669 2,026 399 N/M32 %
Retail notes, certificates and secured borrowings175 238 537 (67)%(26)%
Other loans invested in by the Company22 75 150 (85)%(71)%
Total$13,341 $12,463 $10,271 30 %%

In addition to the loans serviced on our marketplace platform, we earned servicing fee revenue on $197.4 million, $214.0 million and $259.6 million in outstanding principal balance of commercial loans sold as of March 31, 2022, December 31, 2021 and March 31, 2021, respectively.

Servicing fees were $18.5 million and $23.2 million for the first quarters of 2022 and 2021, respectively, a decrease of 20%. The decrease in revenue was primarily due to changes in the fair value of our servicing asset and higher expected prepayment rates, partially offset by a higher principal balance of loans serviced.

Servicing fees were $18.5 million and $20.9 million for the first quarter of 2022 and fourth quarter of 2021, respectively, a decrease of 12%. The decrease in revenue was primarily due to changes in the fair value of our servicing asset and higher expected prepayment rates, partially offset by a higher principal balance of loans serviced.

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. Additionally, we recognize transaction costs, if any, as a loss on sale of loans.

Gain on sales of loans was $24.1 million and $8.3 million for the first quarters of 2022 and 2021, respectively, an increase of 190%. The increase was primarily due to an increase in the volume of marketplace loans sold.

Gain on sales of loans was $24.1 million and $20.6 million for the first quarter of 2022 and fourth quarter of 2021, respectively, an increase of 17%. The increase was primarily due to an increase in the volume of marketplace loans sold.

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)
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.

Net fair value adjustments were $15.2 million and $(5.3) million for the first quarters of 2022 and 2021, respectively, an increase of $20.5 million. The increase was primarily due to higher loan sale prices and an increase in the volume of marketplace loans sold.

Net fair value adjustments were $15.2 million and $10.7 million for the first quarter of 2022 and fourth quarter of 2021, respectively, an increase of $4.5 million. The increase was primarily due to higher loan sale prices and an increase in the volume of marketplace loans sold.

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 table below illustrates the composition of other non-interest income for each period presented:
Three Months EndedChange (%)
March 31,
2022
December 31,
2021
March 31,
2021
Q1 2022
vs
Q1 2021
Q1 2022
vs
Q4 2021
Referral revenue$3,691 $4,585 $2,594 42 %(19)%
Realized gains (losses) on sales of securities available for sale and other investments36 (244)(115)%N/M
Other6,164 3,961 3,257 89 %56 %
Other non-interest income$9,891 $8,549 $5,607 76 %16 %

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)
Net Interest Income

The tables below present net interest income information corresponding to interest-earning assets and interest-bearing funding sources on a consolidated basis for the Company.
Consolidated LendingClub Corporation (1)
Three Months Ended
March 31, 2022
Three Months Ended
December 31, 2021
Three Months Ended
March 31, 2021
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 (2)
Cash, cash equivalents, restricted cash and other$892,921 $688 0.31 %$710,472 $469 0.26 %$918,148 $156 0.10 %
Securities available for sale at fair value325,155 4,511 5.55 %265,140 3,071 4.63 %362,621 2,235 2.71 %
Loans held for sale255,139 7,450 11.68 %184,708 7,153 15.49 %198,592 5,157 12.01 %
Loans and leases held for investment:
Unsecured personal loans2,060,323 78,376 15.22 %1,542,285 60,384 15.66 %146,925 3,392 13.85 %
Secured consumer loans232,235 2,275 3.92 %436,260 4,029 3.69 %521,399 3,215 3.70 %
Commercial loans and leases620,660 7,588 4.89 %619,648 8,663 5.59 %605,495 5,119 5.07 %
PPP loans222,517 3,203 5.76 %325,133 3,888 4.78 %621,292 3,575 3.45 %
Loans and leases held for investment3,135,735 91,442 11.66 %2,923,326 76,964 10.53 %1,895,111 15,301 4.84 %
Retail and certificate loans held for investment at fair value198,813 6,969 14.02 %262,548 9,236 14.07 %574,158 20,262 14.12 %
Other loans held for investment at fair value18,523 593 12.80 %24,184 762 12.60 %46,212 1,479 12.80 %
Total interest-earning assets4,826,286 111,653 9.25 %4,370,378 97,655 8.94 %3,994,842 44,590 5.34 %
Cash and due from banks and restricted cash92,683 73,258 137,216 
Allowance for loan and lease losses(163,631)(125,120)(30,357)
Other non-interest earning assets486,363 465,010 326,040 
Total assets$5,241,701 $4,783,526 $4,427,741 
Interest-bearing liabilities
Interest-bearing deposits:
Checking and money market accounts$2,240,450 $1,724 0.31 %$2,146,687 $1,716 0.32 %$1,735,274 $913 0.33 %
Savings accounts and certificates of deposit1,071,133 1,714 0.64 %580,361 900 0.62 %323,800 101 0.19 %
Interest-bearing deposits3,311,583 3,438 0.42 %2,727,048 2,616 0.38 %2,059,074 1,014 0.30 %
Short-term borrowings20,371 435 8.56 %36,823 561 6.08 %98,818 1,264 5.12 %
Advances from PPPLF234,872 206 0.35 %342,335 307 0.36 %405,989 233 0.35 %
Retail notes, certificates and secured borrowings198,813 6,969 14.02 %262,548 9,236 14.07 %574,192 20,262 14.12 %
Structured Program borrowings42,026 764 7.29 %77,354 1,642 8.49 %143,045 3,208 8.97 %
Other long-term debt15,421 161 4.19 %15,514 161 4.15 %18,605 103 2.21 %
Total interest-bearing liabilities3,823,086 11,973 1.25 %3,461,622 14,523 1.68 %3,299,723 26,084 3.24 %
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)
Consolidated LendingClub Corporation (1)
Three Months Ended
March 31, 2022
Three Months Ended
December 31, 2021
Three Months Ended
March 31, 2021
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 deposits227,337 211,692 119,272 
Other liabilities319,241 282,339 286,907 
Total liabilities$4,369,664 $3,955,653 $3,705,902 
Total equity$872,037 $827,873 $721,839 
Total liabilities and equity$5,241,701 $4,783,526 $4,427,741 
Interest rate spread8.00 %7.26 %2.11 %
Net interest income and net interest margin$99,680 8.26 %$83,132 7.61 %$18,506 2.67 %
(1)    Consolidated presentation reflects intercompany eliminations.
(2)    Nonaccrual loans and any related income are included in their respective loan categories.

An analysis of the year-to-year changes in the categories of interest revenue and interest expense resulting from changes in volume and rate is as follows:
Three Months Ended March 31, 2022
Compared to
Three Months Ended March 31, 2021
Increase (Decrease) Due to Change in:
Average Volume(1)
Average Rate(1)
Total
Interest-earning assets
Cash, cash equivalents, restricted cash and other$(5)$537 $532 
Securities available for sale at fair value(258)2,534 2,276 
Loans held for sale2,391 (98)2,293 
Loans and leases held for investment24,167 51,974 76,141 
Retail and certificate loans held for investment at fair value(13,157)(136)(13,293)
Other loans held for investment at fair value(886)— (886)
Total increase in interest income on interest-earning assets$12,252 $54,811 $67,063 
Interest-bearing liabilities
Checking and money market accounts$813 $(2)$811 
Savings accounts and certificates of deposit803 810 1,613 
Interest-bearing deposits1,616 808 2,424 
Short-term borrowings(1,369)540 (829)
Advances from PPPLF(28)(27)
Retail notes, certificates and secured borrowings(13,158)(135)(13,293)
Structured Program borrowings(1,931)(513)(2,444)
Other long-term debt(20)78 58 
Total increase (decrease) in interest expense on interest-bearing liabilities$(14,890)$779 $(14,111)
Increase in net interest income$27,142 $54,032 $81,174 
(1)     Volume and rate changes have been allocated on a consistent basis using the respective percentage changes in average balances and average rates.
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)
Three Months Ended March 31, 2022
Compared to
Three Months Ended December 31, 2021
Increase (Decrease) Due to Change in:
Average Volume(1)
Average Rate(1)
Total
Interest-earning assets
Cash, cash equivalents, restricted cash and other$127 $92 $219 
Securities available for sale at fair value767 673 1,440 
Loans held for sale2,320 (2,023)297 
Loans and leases held for investment5,831 8,647 14,478 
Retail and certificate loans held for investment at fair value(2,235)(32)(2,267)
Other loans held for investment at fair value(181)12 (169)
Total increase in interest income on interest-earning assets$6,629 $7,369 $13,998 
Interest-bearing liabilities
Checking and money market accounts$72 $(64)$
Savings accounts and certificates of deposit781 33 814 
Interest-bearing deposits853 (31)822 
Short-term borrowings(304)178 (126)
Advances from PPPLF(94)(7)(101)
Retail notes, certificates and secured borrowings(2,235)(32)(2,267)
Structured Program borrowings(670)(208)(878)
Other long-term debt(1)— 
Total decrease in interest expense on interest-bearing liabilities$(2,451)$(99)$(2,550)
Increase in net interest income$9,080 $7,468 $16,548 
(1)     Volume and rate changes have been allocated on a consistent basis using the respective percentage changes in average balances and average rates.

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)
Provision for Credit Losses

The allowance for loan and lease losses (ALLL) for lifetime expected losses under CECL on HFI loans and leases 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 net present value of expected cash flows. The net present value from the DCF approach is then compared to the amortized cost basis of the loans and leases to derive expected credit losses. The provision for credit losses includes the credit loss expense for HFI loans and leases, 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:
Three Months Ended
March 31,
2022
December 31,
2021
March 31,
2021
Credit loss expense for Radius loans at acquisition$— $— $6,929 
Credit loss expense for loans and leases held for investment52,228 45,289 16,624 
Credit loss (reversal of) expense for unfunded lending commitments281 (46)410 
Total credit loss expense52,509 45,243 23,963 
Reversal of credit loss expense on securities available for sale— (94)(2,470)
Total provision for credit losses$52,509 $45,149 $21,493 

The provision for credit losses was $52.5 million and $21.5 million for the first quarters of 2022 and 2021, respectively. The increase was primarily due to higher balances of unsecured personal loans retained as HFI. Total volume of loans retained as HFI was $856.3 million and $344.4 million for the first quarters of 2022 and 2021, respectively.

The provision for credit losses was $52.5 million and $45.1 million for the first quarter of 2022 and fourth quarter of 2021, respectively. The increase was primarily due to higher balances of unsecured personal loans retained as HFI. Total volume of loans retained as HFI was $856.3 million and $761.5 million for the first quarter of 2022 and fourth quarter of 2021, respectively.

The activity in the ACL was as follows:
Three Months Ended
March 31,
2022
December 31,
2021
March 31,
2021
Allowance for loan and lease losses, beginning of period$144,389 $104,736 $— 
Credit loss expense for loans and leases held for investment
52,228 45,289 23,553 
Initial allowance for purchased credit deteriorated (PCD) loans acquired during the period (1)
— — 12,440 
Charge-offs(9,089)(5,870)— 
Recoveries457 234 139 
Allowance for loan and lease losses, end of period$187,985 $144,389 $36,132 
Reserve for unfunded lending commitments, beginning of period$1,231 $1,277 $— 
Credit loss expense for unfunded lending commitments 281 (46)410 
Reserve for unfunded lending commitments, end of period (2)
$1,512 $1,231 $410 
(1)    For acquired PCD loans, an ACL of $30.4 million was required with a corresponding increase to the amortized cost basis as of the acquisition date. For PCD loans where all or a portion of the loan balance had been previously written-off, or would be subject to write-off under the Company’s charge-off policy, an ACL of $18.0 million included as part of the grossed-up loan balance at acquisition was immediately written-off. The net impact to the allowance for PCD assets on the acquisition date was $12.4 million.
(2)    Relates to $109.5 million, $110.8 million and $98.3 million of unfunded commitments as of March 31, 2022, December 31, 2021 and March 31, 2021, respectively.
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)
Three Months Ended
March 31,
2022
December 31,
2021
March 31,
2021
Ratio of allowance for loan and lease losses to total loans and leases held for investment5.49 %4.98 %1.71 %
Ratio of allowance for loan and lease losses to total loans and leases held for investment, excluding PPP loans5.81 %5.49 %2.49 %
Average loans and leases held for investment$3,135,735 $2,923,326 $1,895,111 
Ratio of net charge-offs to average loans and leases held for investment0.28 %0.19 %— %

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. The following table presents nonaccrual loans and leases as of the periods presented (1):
March 31, 2022December 31, 2021
Unsecured personal$3,093 $1,676 
Residential mortgages875 1,373 
Secured consumer3,025 3,011 
Total nonaccrual consumer loans held for investment6,993 6,060 
Equipment finance462 603 
Commercial real estate1,079 989 
Commercial and industrial2,726 2,333 
Total nonaccrual commercial loans and leases held for investment4,267 3,925 
Total nonaccrual loans and leases held for investment$11,260 $9,985 
(1)    Excluding PPP loans, there were no loans that were 90 days or more past due and accruing as of both March 31, 2022 and December 31, 2021.

As of March 31, 2022, nonaccrual loans and leases represented 0.33% of total loans and leases HFI, or 0.35% of total loans and leases HFI excluding PPP loans. As of December 31, 2021, nonaccrual loans and leases represented 0.34% of total loans and leases HFI, or 0.38% of total loans and leases HFI excluding PPP loans.

For additional information on the allowance for expected credit losses and nonaccrual loans and leases, see “ Notes to Consolidated Financial StatementsNote 1. Summary of Significant Accounting Policies” of our Annual Report and “Note 5. Loans and Leases Held for Investment, Net of Allowance For Loan and Lease Losses” in this Report.

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)
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 acquisition efforts and building general brand awareness, (iii) equipment and software, (iv) occupancy, which includes rent expense and all other costs related to occupying our office spaces, (v) depreciation and amortization and (vi) professional services, which primarily consist of legal and accounting fees.
Three Months EndedChange (%)
March 31,
2022
December 31,
2021
March 31,
2021
Q1 2022
vs
Q1 2021
Q1 2022
vs
Q4 2021
Non-interest expense:
Compensation and benefits$81,610 $78,741 $64,420 27 %%
Marketing55,080 50,708 19,545 182 %%
Equipment and software11,046 12,019 7,893 40 %(8)%
Occupancy6,019 4,706 6,900 (13)%28 %
Depreciation and amortization11,039 10,462 11,766 (6)%%
Professional services12,406 12,699 11,603 %(2)%
Other non-interest expense14,004 18,885 12,125 15 %(26)%
Total non-interest expense$191,204 $188,220 $134,252 42 %%

Compensation and benefits expense was $81.6 million and $64.4 million for first quarters of 2022 and 2021, respectively, an increase of 27%. The increase was primarily due to an increase in headcount.

Compensation and benefits expense was $81.6 million and $78.7 million for the first quarter of 2022 and fourth quarter of 2021, respectively, an increase of 4%. The increase was primarily due to an increase in headcount.

Marketing expense was $55.1 million and $19.5 million for the first quarters of 2022 and 2021, respectively, an increase of 182%. The increase was primarily due to an increase in variable marketing expenses based on higher origination volume, partially offset by the deferral of applicable marketing expenses for HFI loans.

Marketing expense was $55.1 million and $50.7 million for the first quarter of 2022 and fourth quarter of 2021, respectively, an increase of 9%. The increase was primarily due to an increase in variable marketing expenses based on higher origination volume and an increase in deposits, partially offset by the deferral of applicable marketing expenses for HFI loans.

Equipment and software expense was $11.0 million and $7.9 million for the first quarters of 2022 and 2021, respectively, an increase of 40%. The increase was primarily due to an increase in hosting fees and subscription costs.

Equipment and software expense was $11.0 million and $12.0 million for the first quarter of 2022 and fourth quarter of 2021, respectively, a decrease of 8%. The decrease was primarily due to a decrease in equipment purchases and lower cloud hosting fees.

Occupancy expense was $6.0 million, $4.7 million, and $6.9 million for the first quarter of 2022, fourth quarter of 2021, and first quarter of 2021, respectively.

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)
Depreciation and amortization expense was $11.0 million and $11.8 million for the first quarters of 2022 and 2021, respectively, a decrease of 6%. The decrease was primarily due to an increase in fully depreciated assets, partially offset by an increase in the amortization of intangible assets resulting from the Acquisition.

Depreciation and amortization expense remained relatively flat at $11.0 million and $10.5 million for the first quarter of 2022 and fourth quarter of 2021, respectively.

Professional services were $12.4 million and $11.6 million for the first quarters of 2022 and 2021, respectively, an increase of 7%. The increase was primarily due to an increase in consulting fees.

Professional services remained relatively flat at $12.4 million and $12.7 million for the first quarter of 2022 and fourth quarter of 2021, respectively.

Income Taxes

For the first quarter of 2022, we recorded an income tax expense of $5.0 million primarily related to income tax expense for state jurisdictions that limit net operating loss utilization. For the first quarter 2021, we recorded an income tax benefit of $2.8 million primarily related to changes in the deferred tax asset valuation allowance resulting from a deferred tax liability assumed with the Acquisition.

We continue to recognize a full valuation allowance against net deferred tax assets. This determination was based on the assessment of the available positive and negative evidence. Our improved and accelerated profitability are examples of positive evidence that there is a reasonable possibility that a portion of our valuation allowance is no longer needed in 2022. A release of the valuation allowance will result in a material tax benefit recognized in the quarter of release.

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. Differences between separate entity and consolidated tax returns are eliminated upon consolidation.

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.

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
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)
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.

Financial information for the segments is presented in the following table:
LendingClub
Bank
LendingClub
Corporation
(Parent only)
Intercompany
Eliminations
Consolidated Total
Three Months Ended March 31,Two Months Ended March 31,Three Months Ended March 31,Three Months Ended March 31,Two Months Ended March 31,Three Months Ended March 31,
 20222021202220212022202120222021
Non-interest income:
Marketplace revenue$164,835 $36,062 $15,131 $45,665 $— $— $179,966 $81,727 
Other non-interest income19,498 19,700 4,223 4,098 (13,830)(18,191)9,891 5,607 
Total non-interest income184,333 55,762 19,354 49,763 (13,830)(18,191)189,857 87,334 
Interest income:
Interest income99,823 17,498 11,830 27,092 — — 111,653 44,590 
Interest expense(3,644)(1,247)(8,329)(24,837)— — (11,973)(26,084)
Net interest income96,179 16,251 3,501 2,255 — — 99,680 18,506 
Total net revenue280,512 72,013 22,855 52,018 (13,830)(18,191)289,537 105,840 
(Provision for) reversal of credit losses(52,509)(23,963)— 2,470 — — (52,509)(21,493)
Non-interest expense(178,459)(75,499)(26,575)(76,944)13,830 18,191 (191,204)(134,252)
Income (Loss) before income tax benefit (expense)49,544 (27,449)(3,720)(22,456)— — 45,824 (49,905)
Income tax benefit (expense)(12,355)23 17,727 2,292 (10,360)506 (4,988)2,821 
Consolidated net income (loss)$37,189 $(27,426)$14,007 $(20,164)$(10,360)$506 $40,836 $(47,084)

The Company integrated the Acquisition into its reportable segments in the first quarter of 2021. As the Company’s reportable segments are based on legal organizational structure and LC Bank was formed upon the Acquisition, an analysis of the Company’s results of operations and material trends for the first quarter of 2022 compared to the first quarter of 2021 is provided on a consolidated basis in “Results of Operations.”

Supervision and Regulatory Environment

We are regularly subject to claims, individual and class action lawsuits, and lawsuits alleging regulatory violations. Further, 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. The number and significance of these claims, lawsuits, exams, investigations, inquiries, requests and proceedings have been increasing in part because our products and services have been increasing in scope and complexity and in part because we have become a bank holding company operating a national bank. 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.
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)
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. Given the ongoing nature of the pandemic, 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 manage 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.

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
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)
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 18. Regulatory Requirements” in this Report for additional information.

The following table summarizes LC Bank’s regulatory capital amounts and ratios (in millions):
LendingClub BankMarch 31, 2022December 31, 2021
Required Minimum plus Required CCB for
Non-Leverage Ratios
AmountRatioAmountRatio
CET1 capital (1)
$577.6 16.0 %$523.7 16.7 %7.0 %
Tier 1 capital$577.6 16.0 %$523.7 16.7 %8.5 %
Total capital$623.8 17.3 %$563.7 18.0 %10.5 %
Tier 1 leverage$577.6 13.2 %$523.7 14.3 %4.0 %
Risk-weighted assets$3,606.6 N/A$3,130.4 N/AN/A
Quarterly adjusted average assets$4,379.8 N/A$3,667.7 N/AN/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 following table presents the regulatory capital and ratios of the Company (in millions):
March 31, 2022December 31, 2021
Required Minimum plus Required CCB for
Non-Leverage Ratios
LendingClubAmountRatioAmountRatio
CET1 capital (1)
$756.0 20.6 %$710.0 21.3 %7.0 %
Tier 1 capital$756.0 20.6 %$710.0 21.3 %8.5 %
Total capital$818.7 22.3 %$767.9 23.0 %10.5 %
Tier 1 leverage$756.0 15.6 %$710.0 16.5 %4.0 %
Risk-weighted assets$3,668.1 N/A$3,333.2 N/AN/A
Quarterly adjusted average assets$4,859.8 N/A$4,301.7 N/AN/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.

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)
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 CET1 capital benefit of $35.5 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. Accordingly, the capital benefit included in CET1 capital was reduced to $26.7 million at March 31, 2022.

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 making 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 wholesale borrowings, pay operating expenses and support extraordinary funding requirements when necessary.

LendingClub Bank Liquidity

The primary sources of LC Bank short-term liquidity include cash, unencumbered AFS debt securities, and unused borrowing capacity with the Federal Home Loan Bank (FHLB). Additionally, customer deposits provide LC Bank with a significant source of relatively low-cost funds. The primary uses of LC Bank liquidity include the funding 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 $21.6 million, or 7.7% of total net revenue and $4.6 million or 6.3% of total net revenue, for the first quarters of 2022 and 2021, respectively. Capital expenditures in 2022 are expected to be approximately $65 million, primarily related to costs associated with the continued development and support of our online lending marketplace platform, including regulatory compliance costs.

As of March 31, 2022 and December 31, 2021, cash and cash equivalents at LC Bank were $1.0 billion and $659.9 million, respectively, reflecting the continued growth in LC Bank deposits during the first quarter of 2022. Outstanding PPPLF borrowings were $193.4 million and $271.9 million at March 31, 2022 and December 31, 2021, respectively, and are collateralized by PPP loans originated by the Company. In addition, LC Bank has available Federal Home Loan Bank of Des Moines secured borrowing capacity totaling $299.6 million and $173.4 million at March 31, 2022 and December 31, 2021, respectively. As of March 31, 2022 and December 31, 2021, LC Bank also has secured borrowing capacity available under the FRB Discount Window totaling $105.0 million and $75.2 million, respectively.

LendingClub Holding Company Liquidity

The primary source of liquidity at the holding company is $119.7 million and $88.3 million in cash and cash equivalents as of March 31, 2022 and December 31, 2021, 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
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)
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, AFS securities, available funds, and cash flow from operations is 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.

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

Interest Rate Sensitivity

LendingClub Bank

Loans HFI at LC Bank are funded primarily through our deposit base, and the majority of loans on LC Bank’s balance sheet, at any point in time, are retained in the HFI portfolio and accounted for at amortized cost. 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 measure this sensitivity by assessing the impact of hypothetical changes in interest rates on our net interest income results.

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 as of March 31, 2022:
200 basis point increase(0.4)%
100 basis point decrease(0.3)%

The impact of these hypothetical interest rate changes are not significant to LC Bank’s net interest income. Non-maturity deposit rates at March 31, 2022 are below the 100 basis point hypothetical interest rate reduction which results in an insignificant negative impact to net interest income.

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)
The following table presents the maturities of loans and leases HFI as of March 31, 2022:
Due in
1 Year or Less
Due After
1 Year Through
5 Years
Due After
5 Years
Through
15 Years
March 31, 2022
Unsecured personal$— $2,335,146 $23,646 $2,358,792 
Residential mortgages1,574 743 166,800 169,117 
Secured consumer12 45,471 48,117 93,600 
Total consumer loans held for investment1,586 2,381,360 238,563 2,621,509 
Equipment finance11,355 105,983 26,442 143,780 
Commercial real estate18,812 70,844 224,054 313,710 
Commercial and industrial19,589 199,103 124,605 343,297 
Total commercial loans and leases held for investment49,756 375,930 375,101 800,787 
Total loans and leases held for investment$51,342 $2,757,290 $613,664 $3,422,296 
Loans and leases due after one year at fixed interest rates$2,701,715 $256,786 $2,958,501 
Loans and leases due after one year at variable interest rates$55,575 $356,878 $412,453 

For the weighted-average yields on our 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 at fair value 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 March 31, 2022, see Item 1. Financial Statements – Notes to Condensed Consolidated Financial Statements – Note 17. 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 quarter of 2022.
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LENDINGCLUB CORPORATION

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 March 31, 2022. 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 March 31, 2022, 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 first quarter of 2022, 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 17. 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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LENDINGCLUB CORPORATION

Our business operations may be adversely impacted by political events, terrorism, military conflict or acts of war, cyber-attacks, public health issues, natural disasters, severe weather, climate change, infrastructure failure or outages, labor disputes and other business interruptions.

Our business operations are subject to interruption by, among other things, political events, terrorism, military conflict or acts of war (including the war in Ukraine), cyber-attacks, public health issues, natural disasters, severe weather, climate change, infrastructure failure or outages, labor disputes and other events which could: (i) decrease demand for our products and services, (ii) adversely affect the macroeconomy and/or our customers, or (iii) make it difficult or impossible for us to deliver a satisfactory experience to our customers. Any such events could also affect the Company by impacting the stability of our deposit base, impairing the ability of our borrowers to repay their outstanding loans, causing significant property damage or otherwise impair the value of collateral securing our loans, and/or resulting in loss of revenue and/or cause us to incur additional expenses. Furthermore, in the event of any disruption to our operations or those of the companies with whom we do business with, we could incur significant losses, require substantial recovery time and experience significant expenditures in order to resume or maintain operations, any of which could have a material adverse impact on our business, financial condition and results of operations.

For example, the Ukrainian-Russian conflict, the responses thereto (such as sanctions imposed by the United States and other countries) and any expansion thereof is likely to have unpredictable and/or adverse effects on the domestic and global economy and financial markets. Although we have not yet experienced any material direct impact from the Ukrainian-Russian conflict, in part because our business is conducted exclusively in the United States, our business, financial condition or results of operations may be impacted if the conflict prolongs and/or its impact exacerbates. Further, the Ukrainian-Russian conflict 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 escalating inflation, elevating the possibility of a decline in economic conditions and increasing cybersecurity risk.

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

Not applicable.
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LENDINGCLUB CORPORATION

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 DescriptionFormFile No.ExhibitFiling
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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LENDINGCLUB CORPORATION

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:May 4, 2022/s/ SCOTT SANBORN
Scott Sanborn
Chief Executive Officer
Date:May 4, 2022/s/ THOMAS W. CASEY
Thomas W. Casey
Chief Financial Officer

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