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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
Commission File Number: 001-36771
 
LendingClub Corporation
(Exact name of registrant as specified in its charter)
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 October 20, 2023, there were 109,648,769 shares of the registrant’s common stock outstanding.


LENDINGCLUB CORPORATION
TABLE OF CONTENTS



Glossary

The following is a list of acronyms and terms LendingClub Corporation regularly uses in its financial reporting:
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, 2022
ASUAccounting Standards Update
AUM
Assets Under Management (outstanding balances of Loan Originations serviced by the Company including loans serviced for others as well as loans held for investment and held for sale by the Company)
Balance 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
EPSEarnings 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 Income
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
OCCOffice of the Comptroller of the Currency
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 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:

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

LENDINGCLUB CORPORATION

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

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

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

2

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
LENDINGCLUB CORPORATION
Condensed Consolidated Balance Sheets
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)
September 30,
2023		December 31, 2022
Assets
Cash and due from banks$19,220 $23,125 
Interest-bearing deposits in banks1,288,550 1,033,905 
Total cash and cash equivalents1,307,770 1,057,030 
Restricted cash (1)
42,487 67,454 
Securities available for sale at fair value ($872,341 and $399,668 at amortized cost, respectively)
795,669 345,702 
Loans held for sale at fair value362,789 110,400 
Loans and leases held for investment5,237,277 5,033,154 
Allowance for loan and lease losses(350,495)(327,852)
Loans and leases held for investment, net4,886,782 4,705,302 
Loans held for investment at fair value (1)
326,299 925,938 
Retail and certificate loans held for investment at fair value (1)
18,118 55,425 
Property, equipment and software, net159,768 136,473 
Goodwill75,717 75,717 
Other assets (1)
496,952 500,306 
Total assets$8,472,351 $7,979,747 
Liabilities and Equity
Deposits:
Interest-bearing$6,687,069 $6,158,560 
Noninterest-bearing313,194 233,993 
Total deposits7,000,263 6,392,553 
Borrowings (1)
10,717 74,858 
Retail notes, certificates and secured borrowings at fair value (1)
18,118 55,425 
Other liabilities (1)
235,034 292,617 
Total liabilities7,264,132 6,815,453 
Equity
Common stock, $0.01 par value; 180,000,000 shares authorized; 109,648,769 and 106,546,995 shares issued and outstanding, respectively
1,096 1,065 
Additional paid-in capital
1,660,236 1,628,590 
Accumulated deficit(398,961)(427,745)
Accumulated other comprehensive loss(54,152)(37,616)
Total equity1,208,219 1,164,294 
Total liabilities and equity$8,472,351 $7,979,747 
(1)    Includes amounts in consolidated variable interest entities (VIEs). See “Notes to Condensed Consolidated Financial Statements – Note 6. Securitizations and Variable Interest Entities.”

See Notes to Condensed Consolidated Financial Statements.
3

LENDINGCLUB CORPORATION
Condensed Consolidated Statements of Income
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
 2023202220232022
Non-interest income:
Marketplace revenue$60,886 $173,837 $239,303 $560,187 
Other non-interest income2,958 7,400 9,349 24,739 
Total non-interest income63,844 181,237 248,652 584,926 
Interest income:
Interest on loans held for sale9,582 5,879 19,772 20,459 
Interest and fees on loans and leases held for investment158,960 124,028 471,512 324,381 
Interest on loans held for investment at fair value11,788 791 60,372 2,015 
Interest on retail and certificate loans held for investment at fair value817 3,685 3,694 15,745 
Interest on securities available for sale9,467 3,820 19,315 12,757 
Other interest income16,798 5,017 49,646 7,984 
Total interest income207,412 143,220 624,311 383,341 
Interest expense:
Interest on deposits69,509 15,184 189,303 24,700 
Interest on retail notes, certificates and secured borrowings817 3,685 3,694 15,745 
Other interest expense81 675 953 3,314 
Total interest expense70,407 19,544 193,950 43,759 
Net interest income137,005 123,676 430,361 339,582 
Total net revenue200,849 304,913 679,013 924,508 
Provision for credit losses64,479 82,739 201,658 205,814 
Non-interest expense:
Compensation and benefits58,497 84,916 203,357 251,629 
Marketing19,555 46,031 70,375 162,608 
Equipment and software12,631 12,491 40,295 35,998 
Depreciation and amortization11,250 10,681 35,242 32,277 
Professional services8,414 11,943 27,446 40,487 
Occupancy4,612 5,051 13,606 17,279 
Other non-interest expense13,076 15,106 46,101 46,531 
Total non-interest expense128,035 186,219 436,422 586,809 
Income before income tax benefit (expense)8,335 35,955 40,933 131,885 
Income tax benefit (expense)(3,327)7,243 (12,149)134,209 
Net income$5,008 $43,198 $28,784 $266,094 
Earnings per share: (1)
Basic EPS$0.05 $0.41 $0.27 $2.59 
Diluted EPS$0.05 $0.41 $0.27 $2.56 
Weighted-average common shares – Basic109,071,180 104,215,594 107,966,544 102,838,645 
Weighted-average common shares – Diluted109,073,194 105,853,938 107,969,920 104,116,240 
(1)    See “Notes to Condensed Consolidated Financial Statements – Note 3. Earnings Per Share” for additional information.
See Notes to Condensed Consolidated Financial Statements.
4

LENDINGCLUB CORPORATION
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In Thousands)
(Unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Net income$5,008 $43,198 $28,784 $266,094 
Other comprehensive loss:
Net unrealized loss on securities available for sale(20,547)(24,112)(22,706)(63,929)
Other comprehensive loss, before tax(20,547)(24,112)(22,706)(63,929)
Income tax effect (1)
5,583 6,121 6,170 17,049 
Other comprehensive loss, net of tax(14,964)(17,991)(16,536)(46,880)
Total comprehensive income (loss)
$(9,956)$25,207 $12,248 $219,214 
(1) Income tax effect for the three and nine months ended September 30, 2022 reflects the release of the deferred tax asset valuation allowance on the securities available for sale portfolio.

See Notes to Condensed Consolidated Financial Statements.
5

LENDINGCLUB CORPORATION
Condensed Consolidated Statements of Changes in Equity
(In Thousands, Except Share Data)
(Unaudited)
 Common StockAdditional
Paid-in
Capital		Treasury Stock
Accumulated Other Comprehensive Loss
Accumulated
Deficit		Total
Equity
 SharesAmountSharesAmount
Balance at June 30, 2023
108,694,120 $1,087 $1,647,593 — $— $(39,188)$(403,969)$1,205,523 
Stock-based compensation— — 16,783 — — — — 16,783 
Net issuances under equity incentive plans954,649 9 (4,140)— — — — (4,131)
Net unrealized loss on securities available for sale, net of tax— — — — — (14,964)— (14,964)
Net income
— — — — — — 5,008 5,008 
Balance at September 30, 2023
109,648,769 $1,096 $1,660,236 — $— $(54,152)$(398,961)$1,208,219 
Common StockAdditional
Paid-in
Capital		Treasury Stock
Accumulated Other Comprehensive Loss
Accumulated
Deficit		Total
Equity
SharesAmountSharesAmount
Balance at December 31, 2022
106,546,995 $1,065 $1,628,590 — $— $(37,616)$(427,745)$1,164,294 
Stock-based compensation— — 48,874 — — — — 48,874 
Net issuances under equity incentive plans3,101,774 31 (17,228)— — — — (17,197)
Net unrealized loss on securities available for sale, net of tax— — — — — (16,536)— (16,536)
Net income
— — — — — — 28,784 28,784 
Balance at September 30, 2023
109,648,769 $1,096 $1,660,236 — $— $(54,152)$(398,961)$1,208,219 
Common StockAdditional
Paid-in
Capital		Treasury StockAccumulated Other Comprehensive LossAccumulated
Deficit		Total
Equity
SharesAmountSharesAmount
Balance at June 30, 2022
103,630,776 $1,036 $1,594,458 — $— $(21,843)$(494,534)$1,079,117 
Stock-based compensation— — 18,757 — — — — 18,757 
Net issuances under equity incentive plans1,457,985 15 (1,588)7,751 (98)— — (1,671)
Net unrealized loss on securities available for sale, net of tax— — — — — (17,991)— (17,991)
Net income— — — — — — 43,198 43,198 
Balance at September 30, 2022
105,088,761 $1,051 $1,611,627 7,751 $(98)$(39,834)$(451,336)$1,121,410 
 Common StockAdditional
Paid-in
Capital		Treasury StockAccumulated Other Comprehensive Income (Loss)Accumulated
Deficit		Total
Equity
 SharesAmountSharesAmount
Balance at December 31, 2021
101,043,924 $1,010 $1,559,616 — $— $7,046 $(717,430)$850,242 
Stock-based compensation— — 55,608 — — — — 55,608 
Net issuances under equity incentive plans4,044,837 41 (3,597)7,751 (98)— — (3,654)
Net unrealized loss on securities available for sale, net of tax— — — — — (46,880)— (46,880)
Net income— — — — — — 266,094 266,094 
Balance at September 30, 2022
105,088,761 $1,051 $1,611,627 7,751 $(98)$(39,834)$(451,336)$1,121,410 

See Notes to Condensed Consolidated Financial Statements.
6

LENDINGCLUB CORPORATION
Condensed Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
Nine Months Ended
September 30,
 20232022
Cash Flows from Operating Activities:
Net income$28,784 $266,094 
Adjustments to reconcile net income to net cash (used for) provided by operating activities:
Net fair value adjustments80,222 (24,277)
Change in fair value of loan servicing assets41,750 53,928 
Gain on sales of loans(35,918)(76,983)
Provision for credit losses201,658 205,814 
Accretion of loan deferred fees and costs(74,486)(63,486)
Stock-based compensation, net42,122 50,210 
Depreciation and amortization35,242 32,277 
Income tax benefit from release of tax valuation allowance— (140,315)
Other, net(8,474)515 
Net change to loans held for sale(590,400)42,991 
Net change in operating assets and liabilities:
Other assets23,622 (11,152)
Other liabilities(65,917)6,602 
Net cash (used for) provided by operating activities
(321,795)342,218 
Cash Flows from Investing Activities:
Net change in loans and leases101,884 (1,630,858)
Net decrease in retail and certificate loans39,337 148,963 
Purchases of securities available for sale(59,336)(222,534)
Proceeds from maturities and paydowns of securities available for sale42,856 69,776 
Purchases of property, equipment and software, net
(48,239)(54,659)
Other investing activities(8,606)(5,704)
Net cash provided by (used for) investing activities
67,896 (1,695,016)
Cash Flows from Financing Activities:
Net change in deposits599,054 1,987,718 
Principal payments on borrowings(62,850)(222,271)
Principal payments on retail notes and certificates(39,337)(149,115)
Other financing activities
(17,195)(7,994)
Net cash provided by financing activities479,672 1,608,338 
Net Increase in Cash, Cash Equivalents and Restricted Cash$225,773 $255,540 
Cash, Cash Equivalents and Restricted Cash, Beginning of Period$1,124,484 $763,586 
Cash, Cash Equivalents and Restricted Cash, End of Period$1,350,257 $1,019,126 
7

LENDINGCLUB CORPORATION
Condensed Consolidated Statements of Cash Flows (Continued)
(In Thousands)
(Unaudited)
Nine Months Ended
September 30,
 20232022
Supplemental Cash Flow Information:
Cash paid for interest$180,167 $43,623 
Cash paid for taxes$7,757 $14,003 
Cash paid for operating leases included in the measurement of lease liabilities
$9,581 $12,394 
Non-cash investing activity:
Net asset-backed securities retained from Structured Program transactions
$454,831 $— 
Non-cash financing activity:
Derecognition of payable to securitization note and residual certificate holders held in consolidated VIE$— $36,072 

The following presents cash, cash equivalents and restricted cash by category within the Balance Sheet:
 September 30,
2023		December 31, 2022
Cash and cash equivalents$1,307,770 $1,057,030 
Restricted cash42,487 67,454 
Total cash, cash equivalents and restricted cash
$1,350,257 $1,124,484 

See Notes to Condensed Consolidated Financial Statements.
8

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


1. Summary of Significant Accounting Policies

Basis of Presentation

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

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

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

Significant Accounting Policies

Derivative Instruments and Hedging Activities

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

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

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

The Company’s significant accounting policies are discussed in “Part II – Item 8. Financial Statements and Supplementary Data – Note 1. Summary of Significant Accounting Policies” in the Annual Report. There have been
9

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

no other changes to these significant accounting policies for the nine-month period ended September 30, 2023, except for the impact of the new adopted accounting standards noted below.

Adoption of New Accounting Standards

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

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

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

2. Marketplace Revenue

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

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

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

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

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

10

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

The following table presents components of marketplace revenue for the periods presented:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Origination fees$60,912 $127,142 $202,444 $398,487 
Servicing fees32,768 23,760 81,163 60,440 
Gain on sales of loans8,572 23,554 35,918 76,983 
Net fair value adjustments(41,366)(619)(80,222)24,277 
Total marketplace revenue$60,886 $173,837 $239,303 $560,187 

3. Earnings Per Share

The following table details the computation of the Company’s Basic and Diluted EPS:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Basic EPS:
Net income attributable to stockholders$5,008 $43,198 $28,784 $266,094 
Weighted-average common shares – Basic109,071,180 104,215,594 107,966,544 102,838,645 
Basic EPS$0.05 $0.41 $0.27 $2.59 
Diluted EPS:
Net income attributable to stockholders$5,008 $43,198 $28,784 $266,094 
Weighted-average common shares – Diluted109,073,194 105,853,938 107,969,920 104,116,240 
Diluted EPS$0.05 $0.41 $0.27 $2.56 

11

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

4. Securities Available for Sale

The amortized cost, gross unrealized gains and losses, and fair value of available for sale (AFS) securities were as follows:
September 30, 2023Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
Senior asset-backed securities related to Structured Program transactions$413,850 $— $(1,453)$412,397 
U.S. agency residential mortgage-backed securities263,568 — (52,331)211,237 
U.S. agency securities93,451 — (18,372)75,079 
Mortgage-backed securities43,162 — (7,013)36,149 
Other asset-backed securities related to Structured Program transactions (1)
26,831 4,540 (309)31,062 
Other asset-backed securities28,217 34 (787)27,464 
Municipal securities3,262 — (981)2,281 
Total securities available for sale (2)
$872,341 $4,574 $(81,246)$795,669 
December 31, 2022Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
U.S. agency residential mortgage-backed securities$255,675 $— $(41,248)$214,427 
U.S. agency securities90,447 — (16,053)74,394 
Mortgage-backed securities26,988 — (4,470)22,518 
Asset-backed securities related to Structured Program transactions8,322 9,395 — 17,717 
Other asset-backed securities14,959 29 (785)14,203 
Municipal securities3,277 — (834)2,443 
Total securities available for sale (2)
$399,668 $9,424 $(63,390)$345,702 
(1)    As of September 30, 2023, $24.8 million of the other asset-backed securities related to Structured Program transactions at fair value are subject to restrictions on transfer pursuant to the Company’s obligations as a “sponsor” under the U.S. Risk Retention Rules.
(2)    As of September 30, 2023 and December 31, 2022, includes $341.6 million and $319.0 million, respectively, of fair value securities pledged as collateral.

12

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

A summary of AFS securities with unrealized losses for which a credit valuation allowance has not been recorded, aggregated by period of continuous unrealized loss, is as follows:
Less than
12 months		12 months
or longer		Total
September 30, 2023Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses
Senior asset-backed securities related to Structured Program transactions$372,388 $(1,453)$— $— $372,388 $(1,453)
U.S. agency residential mortgage-backed securities21,064 (892)190,173 (51,439)211,237 (52,331)
U.S. agency securities2,960 (40)72,119 (18,332)75,079 (18,372)
Mortgage-backed securities16,278 (1,387)19,871 (5,626)36,149 (7,013)
Other asset-backed securities14,112 (47)8,233 (740)22,345 (787)
Other asset-backed securities related to Structured Program transactions21,486 (309)— — 21,486 (309)
Municipal securities— — 2,281 (981)2,281 (981)
Total securities with unrealized losses$448,288 $(4,128)$292,677 $(77,118)$740,965 $(81,246)
Less than
12 months		12 months
or longer		Total
December 31, 2022Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses
U.S. agency residential mortgage-backed securities$111,843 $(15,831)$102,584 $(25,417)$214,427 $(41,248)
U.S. agency securities50,352 (7,213)24,042 (8,840)74,394 (16,053)
Mortgage-backed securities2,441 (229)20,077 (4,241)22,518 (4,470)
Other asset-backed securities4,086 (73)6,945 (712)11,031 (785)
Municipal securities— — 2,443 (834)2,443 (834)
Total securities with unrealized losses$168,722 $(23,346)$156,091 $(40,044)$324,813 $(63,390)

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

13

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


The contractual maturities of AFS securities were as follows:
September 30, 2023Amortized CostFair Value
Weighted-
average
Yield (1)
Due within 1 year:
Senior asset-backed securities related to Structured Program transactions$230 $230 
Total due within 1 year230 230 46.15 %
Due after 1 year through 5 years:
Senior asset-backed securities related to Structured Program transactions413,620 412,167 
Other asset-backed securities related to Structured Program transactions26,831 31,062 
U.S. agency securities9,000 8,567 
Mortgage-backed securities1,774 1,556 
Other asset-backed securities441 443 
U.S. agency residential mortgage-backed securities4 3 
Total due after 1 year through 5 years451,670 453,798 3.17 %
Due after 5 years through 10 years:
U.S. agency securities18,848 16,768 
Other asset-backed securities15,567 15,545 
U.S. agency residential mortgage-backed securities5,177 4,696 
Mortgage-backed securities2,036 1,634 
Municipal securities621 516 
Total due after 5 years through 10 years42,249 39,159 4.27 %
Due after 10 years:
U.S. agency residential mortgage-backed securities258,387 206,538 
U.S. agency securities65,603 49,744 
Mortgage-backed securities39,352 32,959 
Other asset-backed securities12,209 11,476 
Municipal securities2,641 1,765 
Total due after 10 years378,192 302,482 2.80 %
Total securities available for sale$872,341 $795,669 3.07 %
(1)    The weighted-average yield is computed using the amortized cost at September 30, 2023.

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

14

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

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

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

Loans and Leases Held for Investment at Amortized Cost

The Company defines its loans and leases HFI portfolio segments as (i) consumer and (ii) commercial. The following table presents the components of each portfolio segment by class of financing receivable:
September 30, 2023December 31, 2022
Unsecured personal$4,094,748 $3,866,373 
Residential mortgages186,510 199,601 
Secured consumer254,105 194,634 
Total consumer loans held for investment4,535,363 4,260,608 
Equipment finance (1)
125,289 160,319 
Commercial real estate373,246 373,501 
Commercial and industrial (2)
203,379 238,726 
Total commercial loans and leases held for investment701,914 772,546 
Total loans and leases held for investment5,237,277 5,033,154 
Allowance for loan and lease losses(350,495)(327,852)
Loans and leases held for investment, net (3)
$4,886,782 $4,705,302 
(1)    Comprised of sales-type leases for equipment. See “Note 17. Leases” for additional information.
(2)    Includes $7.6 million and $67.0 million of pledged loans under the Paycheck Protection Program (PPP) as of September 30, 2023 and December 31, 2022, respectively.
(3)    As of September 30, 2023 and December 31, 2022, the Company had $4.0 billion and $283.6 million in loans pledged as collateral under the Federal Reserve Bank (FRB) Discount Window, respectively. In addition, as of September 30, 2023 and December 31, 2022, the Company had $511.2 million and $156.2 million in loans pledged to the Federal Home Loan Bank (FHLB) of Des Moines, respectively.

September 30, 2023GrossALLLNet
Allowance Ratios (1)
Total consumer loans held for investment$4,535,363 $336,288 $4,199,075 7.4 %
Total commercial loans and leases held for investment701,914 14,207 687,707 2.0 %
Total loans and leases held for investment$5,237,277 $350,495 $4,886,782 6.7 %
December 31, 2022GrossALLLNet
Allowance Ratios (1)
Total consumer loans held for investment$4,260,608 $312,489 $3,948,119 7.3 %
Total commercial loans and leases held for investment772,546 15,363 757,183 2.0 %
Total loans and leases held for investment$5,033,154 $327,852 $4,705,302 6.5 %
(1)    Calculated as the ratio of allowance for loan and lease losses (ALLL) to loans and leases HFI at amortized cost.

15

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

The activity in the ACL by portfolio segment was as follows:
Three Months Ended September 30,
20232022
ConsumerCommercialTotalConsumerCommercialTotal
Allowance for loan and lease losses, beginning of period$341,161 $14,002 $355,163 $228,184 $15,076 $243,260 
Credit loss expense for loans and leases held for investment
63,733 394 64,127 81,935 664 82,599 
Charge-offs (1)
(73,644)(534)(74,178)(22,944)(784)(23,728)
Recoveries5,038 345 5,383 963 107 1,070 
Allowance for loan and lease losses, end of period$336,288 $14,207 $350,495 $288,138 $15,063 $303,201 
Reserve for unfunded lending commitments, beginning of period$— $2,017 $2,017 $136 $1,889 $2,025 
Credit loss expense for unfunded lending commitments — 352 352 (78)218 140 
Reserve for unfunded lending commitments, end of period (2)
$— $2,369 $2,369 $58 $2,107 $2,165 
Nine Months Ended September 30,
20232022
ConsumerCommercialTotalConsumerCommercialTotal
Allowance for loan and lease losses, beginning of period$312,489 $15,363 $327,852 $128,812 $15,577 $144,389 
Credit loss expense for loans and leases held for investment
201,291 (124)201,167 203,967 913 204,880 
Charge-offs (1)
(189,201)(1,809)(191,010)(46,668)(2,001)(48,669)
Recoveries11,709 777 12,486 2,027 574 2,601 
Allowance for loan and lease losses, end of period$336,288 $14,207 $350,495 $288,138 $15,063 $303,201 
Reserve for unfunded lending commitments, beginning of period$18 $1,860 $1,878 $— $1,231 $1,231 
Credit loss expense for unfunded lending commitments(18)509 491 58 876 934 
Reserve for unfunded lending commitments, end of period (2)
$— $2,369 $2,369 $58 $2,107 $2,165 
(1)    Unsecured personal loans are charged-off when a borrower is (i) contractually 120 days past due or (ii) two payments past due and has filed for bankruptcy or is deceased.
(2)    Relates to $89.5 million and $144.0 million of unfunded commitments, associated primarily with the commercial loan portfolio, as of September 30, 2023 and 2022, respectively.

16

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

The following table presents year-to-date gross charge-offs by origination year for the period presented:
Nine Months Ended September 30, 2023
Gross Charge-Offs by Origination Year
20232022202120202019PriorTotal
Unsecured personal$7,730 $106,835 $72,330 $— $— $— $186,895 
Residential mortgages— — — — — — — 
Secured consumer93 1,668 545 — — — 2,306 
Total consumer loans held for investment7,823 108,503 72,875 — — — 189,201 
Equipment finance— — — — — — — 
Commercial real estate— — — — — — — 
Commercial and industrial— — 1,369 — 318 122 1,809 
Total commercial loans and leases held for investment— — 1,369 — 318 122 1,809 
Total loans and leases held for investment$7,823 $108,503 $74,244 $— $318 $122 $191,010 

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

17

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

Consumer Lending Credit Quality Indicators

The Company evaluates the credit quality of its consumer loan portfolio based on the aging status of the loan and by payment activity. Loan delinquency reporting is based upon borrower payment activity relative to the contractual terms of the loan. The following tables present the classes of financing receivables within the consumer portfolio segment by credit quality indicator based on delinquency status and origination year:
September 30, 2023 Term Loans and Leases by Origination Year
20232022202120202019PriorTotal
Unsecured personal
Current $1,500,780 $1,954,955 $552,491 $— $— $— $4,008,226 
30-59 days past due 6,728 18,780 7,968 — — — 33,476 
60-89 days past due 4,159 15,830 6,679 — — — 26,668 
90 or more days past due 4,409 16,987 8,002 — — — 29,398 
Total unsecured personal (1)
1,516,076 2,006,552 575,140 — — — 4,097,768 
Residential mortgages
Current — 48,934 56,128 30,204 20,403 30,678 186,347 
30-59 days past due — — — — — — — 
60-89 days past due — — — — — — — 
90 or more days past due — — — — — 163 163 
Total residential mortgages — 48,934 56,128 30,204 20,403 30,841 186,510 
Secured consumer
Current114,186 109,327 25,434 — 2,481 — 251,428 
30-59 days past due199 1,188 291 — — — 1,678 
60-89 days past due45 484 261 — — — 790 
90 or more days past due— 149 60 — — — 209 
Total secured consumer114,430 111,148 26,046 — 2,481 — 254,105 
Total consumer loans held for investment$1,630,506 $2,166,634 $657,314 $30,204 $22,884 $30,841 $4,538,383 
(1)    Excludes cumulative basis adjustment for loans designated in fair value hedges under the portfolio layer method. As of September 30, 2023, the basis adjustment totaled $3.0 million and represents a reduction to the amortized cost of the hedged loans. See “Note 8. Derivative Instruments and Hedging Activities” for additional information.

18

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

December 31, 2022 Term Loans and Leases by Origination Year
20222021202020192018PriorTotal
Unsecured personal
Current $2,835,460 $977,224 $— $— $— $— $3,812,684 
30-59 days past due 11,149 9,867 — — — — 21,016 
60-89 days past due 7,785 8,633 — — — — 16,418 
90 or more days past due 6,813 9,442 — — — — 16,255 
Total unsecured personal2,861,207 1,005,166 — — — — 3,866,373 
Residential mortgages
Current 49,721 58,353 31,465 21,683 4,546 33,248 199,016 
30-59 days past due — — — — — — — 
60-89 days past due — — — — — 254 254 
90 or more days past due — — — — — 331 331 
Total residential mortgages 49,721 58,353 31,465 21,683 4,546 33,833 199,601 
Secured consumer
Current151,725 38,076 — 2,543 — — 192,344 
30-59 days past due1,017 703 — — — — 1,720 
60-89 days past due235 147 — — — — 382 
90 or more days past due116 72 — — — — 188 
Total secured consumer153,093 38,998 — 2,543 — — 194,634 
Total consumer loans held for investment$3,064,021 $1,102,517 $31,465 $24,226 $4,546 $33,833 $4,260,608 

Commercial Lending Credit Quality Indicators

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

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

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

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

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

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

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


The following tables present the classes of financing receivables within the commercial portfolio segment by risk rating and origination year:
September 30, 2023 Term Loans and Leases by Origination Year
20232022202120202019PriorTotal
Guaranteed Amount (1)
Equipment finance
Pass $3,266 $36,438 $29,017 $9,088 $8,963 $8,797 $95,569 $— 
Special mention— 15,059 2,435 6,085 2,872 — 26,451 — 
Substandard — — — 536 — 2,733 3,269 — 
Doubtful — — — — — — — — 
Loss— — — — — — — — 
Total equipment finance3,266 51,497 31,452 15,709 11,835 11,530 125,289 — 
Commercial real estate
Pass 39,237 94,645 35,078 43,382 52,066 76,254 340,662 33,681 
Special mention— — — — — 9,362 9,362 — 
Substandard — 3,641 6,738 — 221 10,571 21,171 8,515 
Doubtful — — — — — — — — 
Loss— — 1,515 — — 536 2,051 1,471 
Total commercial real estate39,237 98,286 43,331 43,382 52,287 96,723 373,246 43,667 
Commercial and industrial
Pass 35,793 64,912 42,901 10,287 9,136 11,054 174,083 107,266 
Special mention— 10,734 1,252 1,297 115 385 13,783 9,469 
Substandard — 1,102 5,133 787 3,691 3,253 13,966 7,986 
Doubtful — — — — — 286 286 216 
Loss— — — — — 1,261 1,261 1,229 
Total commercial and industrial35,793 76,748 49,286 12,371 12,942 16,239 203,379 126,166 
Total commercial loans and leases held for investment$78,296 $226,531 $124,069 $71,462 $77,064 $124,492 $701,914 $169,833 
(1)    Represents loan balances guaranteed by the Small Business Association (SBA).

20

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

December 31, 2022 Term Loans and Leases by Origination Year
20222021202020192018PriorTotal
Guaranteed Amount (1)
Equipment finance
Pass $59,227 $38,218 $25,014 $15,785 $11,880 $3,444 $153,568 $— 
Special mention— 2,094 — 3,759 — — 5,853 — 
Substandard — — 859 — 39 — 898 — 
Doubtful — — — — — — — — 
Loss— — — — — — — — 
Total equipment finance59,227 40,312 25,873 19,544 11,919 3,444 160,319 — 
Commercial real estate
Pass 100,602 53,445 47,497 52,834 35,992 60,976 351,346 40,693 
Special mention— — 8,415 260 1,237 405 10,317 — 
Substandard — — — 643 2,404 8,215 11,262 — 
Doubtful — — — — — — — — 
Loss— — — — — 576 576 — 
Total commercial real estate100,602 53,445 55,912 53,737 39,633 70,172 373,501 40,693 
Commercial and industrial
Pass 61,076 99,264 24,726 13,866 5,174 10,831 214,937 141,858 
Special mention— — — 483 163 455 1,101 44 
Substandard — 9,361 4,529 3,623 797 2,820 21,130 5,716 
Doubtful — — — — — 286 286 216 
Loss— — — — 1 1,271 1,272 1,229 
Total commercial and industrial61,076 108,625 29,255 17,972 6,135 15,663 238,726 149,063 
Total commercial loans and leases held for investment$220,905 $202,382 $111,040 $91,253 $57,687 $89,279 $772,546 $189,756 
(1)    Represents loan balances guaranteed by the SBA.

The following tables present an analysis of the past due loans and leases HFI within the commercial portfolio segment:
September 30, 202330-59
Days		60-89
Days		90 or More
Days		Total
Equipment finance$— $3,150 $— $3,150 
Commercial real estate4,493 434 1,618 6,545 
Commercial and industrial (1)
1,514 29 1,515 3,058 
Total commercial loans and leases held for investment$6,007 $3,613 $3,133 $12,753 
December 31, 202230-59
Days		60-89
Days		90 or More
Days		Total
Equipment finance$3,172 $— $859 $4,031 
Commercial real estate— 102 — 102 
Commercial and industrial (1)
— — 1,643 1,643 
Total commercial loans and leases held for investment$3,172 $102 $2,502 $5,776 
(1)    Past due PPP loans are excluded from the tables.

Nonaccrual Assets

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

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


The following table presents nonaccrual loans and leases:
September 30, 2023December 31, 2022
Nonaccrual (1)
Nonaccrual with no related ACL (2)
Nonaccrual (1)
Nonaccrual with no related ACL (2)
Unsecured personal$29,398 $— $16,255 $— 
Residential mortgages316 316 331 331 
Secured consumer209 — 188 — 
Total nonaccrual consumer loans held for investment29,923 316 16,774 331 
Equipment finance2,733 — 898 39 
Commercial real estate10,113 2,431 1,018 1,018 
Commercial and industrial7,230 1,892 16,137 1,229 
Total nonaccrual commercial loans and leases held for investment (3)
20,076 4,323 18,053 2,286 
Total nonaccrual loans and leases held for investment$49,999 $4,639 $34,827 $2,617 
(1)     Excluding PPP loans, there were no loans and leases that were 90 days or more past due and accruing as of both September 30, 2023 and December 31, 2022.
(2)     Subset of total nonaccrual loans and leases.
(3)     Includes $12.7 million and $4.9 million in loan balances guaranteed by the SBA as of September 30, 2023 and December 31, 2022, respectively.

September 30, 2023December 31, 2022
Nonaccrual
Nonaccrual Ratios (1)
Nonaccrual
Nonaccrual Ratios (1)
Total nonaccrual consumer loans held for investment$29,923 0.7 %$16,774 0.4 %
Total nonaccrual commercial loans and leases held for investment20,076 2.9 %18,053 2.3 %
Total nonaccrual loans and leases held for investment$49,999 1.0 %$34,827 0.7 %
(1)     Calculated as the ratio of nonaccruing loans and leases to loans and leases HFI at amortized cost.

Collateral-Dependent Assets

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

22

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

6. Securitizations and Variable Interest Entities

VIE Assets and Liabilities

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

September 30, 2023December 31, 2022
Consolidated Unconsolidated TotalConsolidatedUnconsolidatedTotal
Assets
Restricted cash$3,813 $— $3,813 $8,048 $— $8,048 
Securities available for sale at fair value— 443,460 443,460 — 17,717 17,717 
Loans held for investment at fair value1,095 — 1,095 3,994 — 3,994 
Retail and certificate loans held for investment at fair value637 — 637 1,946 — 1,946 
Other assets19 17,161 17,180 206 10,464 10,670 
Total assets$5,564 $460,621 $466,185 $14,194 $28,181 $42,375 
Liabilities
Borrowings$3,329 $— $3,329 $8,085 $— $8,085 
Retail notes, certificates and secured borrowings at fair value637 — 637 1,946 — 1,946 
Other liabilities5 980 985 29 — 29 
Total liabilities3,971 980 4,951 10,060 — 10,060 
Total net assets (maximum loss exposure)$1,593 $459,641 $461,234 $4,134 $28,181 $32,315 

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

23

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

Unconsolidated VIEs

The following table summarizes activity related to unconsolidated VIEs where the transfers were accounted for as a sale on the Company’s financial statements:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Fair value of consideration received:
Cash$40,994 $— $59,045 $5,320 
Asset-backed securities retained301,602 — 454,831 2,180 
Other assets (liabilities)3,790 — 6,089 (3,794)
Total consideration346,386 — 519,965 3,706 
Deconsolidation of debt— — — 36,072 
Fair value of loans sold(343,142)— (514,701)(39,519)
Gain on sales of loans (1)
$3,244 $— $5,264 $259 
Cash proceeds from continuing involvement:
Servicing and other administrative fees$1,234 $1,782 $3,110 $7,294 
Interest received on asset-backed securities retained $5,142 $1,294 $8,736 $6,373 
(1)    Consists primarily of servicing assets recognized at the time of sale, less any transaction costs, and excludes origination fees and fair value adjustments recognized prior to the sale. Prior period amounts have been reclassified to conform to the current period presentation.

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

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

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

7. Fair Value of Assets and Liabilities

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

24

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

Financial Instruments, Assets and Liabilities Recorded at Fair Value

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

25

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

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

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

Loans Held for Sale at Fair Value

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

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



Significant Unobservable Inputs

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

Significant Recurring Level 3 Fair Value Input Sensitivity

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

Fair Value Reconciliation

The following table presents additional information about Level 3 loans HFS on a recurring basis:
Three Months Ended
September 30,		Nine Months Ended
September 30,
20232023
Fair value at beginning of period$250,361 $110,400 
Originations and purchases1,107,771 3,584,918 
Sales(950,451)(3,435,949)
Principal payments(22,372)(33,972)
Transfers3,299 195,106 
Fair value adjustments recorded in earnings(25,819)(57,714)
Fair value at end of period$362,789 $362,789 

27

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

Loans Held for Investment at Fair Value

Significant Unobservable Inputs

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

Significant Recurring Level 3 Fair Value Input Sensitivity

The sensitivity of loans HFI at fair value to adverse changes in key assumptions are as follows:
September 30, 2023December 31, 2022
Loans held for investment at fair value$326,299 $925,938 
Expected weighted-average life (in years)0.90.9
Discount rates:
100 basis point increase$(2,633)$(7,471)
200 basis point increase$(5,226)$(14,830)
Expected credit loss rates on underlying loans:
10% increase$(2,028)$(5,574)
20% increase$(3,985)$(11,307)
Expected prepayment rates:
10% increase$(1,519)$(4,311)
20% increase$(2,636)$(7,480)

Fair Value Reconciliation

The following table presents additional information about Level 3 loans HFI at fair value on a recurring basis:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Fair value at beginning of period$404,119 $20,583 $925,938 $21,240 
Purchases112 136 4,149 150 
Principal payments(76,495)(5,913)(419,233)(17,660)
Transfers(3,472)— (195,106)11,966 
Interest income accretion and fair value adjustments recorded in earnings2,035 251 10,551 (639)
Fair value at end of period$326,299 $15,057 $326,299 $15,057 

28

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

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

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

Asset-Backed Securities Related to Structured Program Transactions

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

Senior Asset-Backed Securities Related to Structured Program Transactions

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

The following table presents additional information about Level 3 senior asset-backed securities related to Structured Program transactions measured at fair value on a recurring basis:
Three Months Ended
September 30,		Nine Months Ended
September 30,
20232023
Fair value at beginning of period$142,785 $— 
Additions284,704 429,384 
Cash received(14,244)(15,534)
Change in unrealized loss(848)(1,453)
Fair value at end of period$412,397 $412,397 

29

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

Other Asset-Backed Securities Related to Structured Program Transactions

Significant Unobservable Inputs

The following table presents quantitative information about the significant unobservable inputs used for the
Company’s Level 3 fair value measurements for other asset-backed securities related to Structured Program transactions:
September 30, 2023
MinimumMaximumWeighted-
Average
Discount rates8.8 %11.2 %9.5 %
Net cumulative expected loss rates (1)
3.6 %23.0 %9.3 %
Cumulative expected prepayment rates (1)
27.7 %37.3 %32.7 %
(1)    Expressed as a percentage of the outstanding collateral balance.

Significant Recurring Fair Value Input Sensitivity

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

Fair Value Reconciliation

The following table presents additional information about Level 3 other asset-backed securities related to Structured Program transactions measured at fair value on a recurring basis:
Three Months Ended September 30,Nine Months Ended September 30,
20232023
Fair value at beginning of period$16,980 $12,469 
Additions17,190 25,970 
Cash received(2,812)(7,081)
Change in unrealized loss
(296)(296)
Fair value at end of period$31,062 $31,062 

30

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

Servicing Assets

Significant Unobservable Inputs

The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for servicing assets relating to loans sold to investors:
September 30, 2023December 31, 2022
MinimumMaximumWeighted-
Average		MinimumMaximumWeighted-
Average
Discount rates8.7 %17.3 %11.6 %7.5 %16.4 %10.1 %
Net cumulative expected loss rates (1)
3.5 %37.7 %15.6 %2.1 %36.7 %15.6 %
Cumulative expected prepayment rates (1)
18.5 %44.6 %32.7 %15.8 %47.2 %35.9 %
Total market servicing rates (% per annum on outstanding principal balance) (2)
0.62 %0.62 %0.62 %0.62 %0.62 %0.62 %
(1)    Expressed as a percentage of the original principal balance of the loan.
(2)    Includes collection fees estimated to be paid to a hypothetical third-party servicer.

Significant Recurring Level 3 Fair Value Input Sensitivity

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

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

31

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

Fair Value Reconciliation

The following table presents additional information about Level 3 servicing assets measured at fair value on a recurring basis:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Fair value at beginning of period$85,387 $79,427 $84,308 $67,726 
Issuances (1)
11,568 22,319 39,269 73,774 
Change in fair value, included in Marketplace revenue(12,100)(14,689)(41,750)(52,702)
Other net changes(3,095)(539)(67)(2,280)
Fair value at end of period$81,760 $86,518 $81,760 $86,518 
(1)    Represents the gains or losses on sales of the related loans.

Financial Instruments, Assets and Liabilities Not Recorded at Fair Value

The following tables present the fair value hierarchy for financial instruments, assets, and liabilities not recorded at fair value:
September 30, 2023Carrying AmountLevel 1 InputsLevel 2 InputsLevel 3 InputsBalance at
Fair Value
Assets:
Loans and leases held for investment, net$4,886,782 $— $— $5,060,962 $5,060,962 
Other assets39,727 — 38,885 1,118 40,003 
Total assets$4,926,509 $— $38,885 $5,062,080 $5,100,965 
Liabilities:
Deposits (1)
$1,169,593 $— $— $1,164,915 $1,164,915 
Borrowings7,388 — 27 7,361 7,388 
Other liabilities62,572 — 37,270 25,302 62,572 
Total liabilities$1,239,553 $— $37,297 $1,197,578 $1,234,875 
December 31, 2022Carrying AmountLevel 1 InputsLevel 2 InputsLevel 3 InputsBalance at
Fair Value
Assets:
Loans and leases held for investment, net$4,705,302 $— $— $4,941,825 $4,941,825 
Other assets36,646 — 35,300 1,397 36,697 
Total assets$4,741,948 $— $35,300 $4,943,222 $4,978,522 
Liabilities:
Deposits (1)
$860,808 $— $— $860,808 $860,808 
Borrowings66,773 — 2,619 64,154 66,773 
Other liabilities62,247 — 30,311 31,936 62,247 
Total liabilities$989,828 $— $32,930 $956,898 $989,828 
(1)    Excludes deposit liabilities with no defined or contractual maturities.

32

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

8. Derivative Instruments and Hedging Activities

Credit Derivatives

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

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

Hedging

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

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

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

33

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

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

9. Property, Equipment and Software, Net

Property, equipment and software, net, consist of the following:
September 30, 2023December 31, 2022
Software (1)
$206,311 $174,360 
Leasehold improvements31,249 31,214 
Computer equipment23,753 27,410 
Furniture and fixtures6,088 6,088 
Total property, equipment and software267,401 239,072 
Accumulated depreciation and amortization(107,633)(102,599)
Total property, equipment and software, net$159,768 $136,473 
(1)    Includes $71.7 million and $43.7 million of development in progress for internally-developed software and $4.7 million and $3.0 million of development in progress to customize purchased software as of September 30, 2023 and December 31, 2022, respectively.

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

10. Goodwill and Intangible Assets

Goodwill

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

34

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

Intangible Assets

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

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

The expected future amortization expense for intangible assets as of September 30, 2023, is as follows:
2023$1,015 
20243,549 
20252,901 
20262,252 
20271,603 
Thereafter1,831 
Total$13,151 

11. Other Assets

Other assets consist of the following:
September 30,
2023		December 31,
2022
Deferred tax asset, net (1)
$171,766 $173,687 
Servicing assets (2)
82,602 85,654 
Operating lease assets53,510 63,872 
Nonmarketable equity investments46,812 38,320 
Intangible assets, net (3)
13,151 16,334 
Other129,111 122,439 
Total other assets$496,952 $500,306 
(1)    See “Note 16. Income Taxes” for additional detail.
(2)    Loans underlying servicing assets had a total outstanding principal balance of $9.7 billion and $11.0 billion as of September 30, 2023 and December 31, 2022, respectively.
(3)    See “Note 10. Goodwill and Intangible Assets” for additional detail.

35

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

12. Deposits

Deposits consist of the following:
September 30,
2023		December 31,
2022
Interest-bearing deposits:
Savings and money market accounts4,537,503 3,616,657 
Certificates of deposit1,169,593 860,808 
Checking accounts979,973 1,681,095 
Total6,687,069 6,158,560 
Noninterest-bearing deposits313,194 233,993 
Total deposits$7,000,263 $6,392,553 

Total certificates of deposit at September 30, 2023 are scheduled to mature as follows:
2023$310,816 
2024833,003 
202514,075 
20261,252 
20279,228 
Thereafter1,219 
Total certificates of deposit$1,169,593 

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

13. Borrowings

Short-term Borrowings

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

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

36

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

Long-term Debt

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

14. Other Liabilities

Other liabilities consist of the following:
September 30,
2023		December 31, 2022
Operating lease liabilities$65,747 $77,291 
Accounts payable and accrued expenses54,179 98,173 
Payable to investors (1)
37,270 30,311 
Other77,838 86,842 
Total other liabilities$235,034 $292,617 
(1)    Represents principal and interest on loans collected by the Company and pending disbursement to investors.

37

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

15. Employee Incentive Plans

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

Stock-based Compensation

Stock-based compensation expense, included in “Compensation and benefits” expense on the Income Statement, was as follows for the periods presented:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
RSUs and PBRSUs$16,855 $18,931 $49,292 $56,098 
Stock options— 6 — 46 
Stock-based compensation expense, gross16,855 18,937 49,292 56,144 
Less: Capitalized stock-based compensation expense2,449 2,194 7,170 5,934 
Stock-based compensation expense, net$14,406 $16,743 $42,122 $50,210 

Restricted Stock Units

The following table summarizes the activities for the Company’s RSUs:
Number
of Units		Weighted-
Average
Grant Date
Fair Value
Unvested at December 31, 2022
8,672,626 $12.94 
Granted6,533,732 $7.68 
Vested(4,329,854)$11.63 
Forfeited/expired(1,772,768)$12.42 
Unvested at September 30, 2023
9,103,736 $9.89 

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

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

Performance-based Restricted Stock Units

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

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


The following table summarizes the activities for the Company’s PBRSUs:
Number
of Units		Weighted-
Average
Grant Date
Fair Value
Unvested at December 31, 2022
1,754,898 $11.19 
Granted807,499 $7.15 
Vested(870,766)$4.22 
Forfeited/expired(104,084)$11.77 
Unvested at September 30, 2023
1,587,547 $12.63 

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

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

16. Income Taxes

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

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

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

17. Leases

Lessor Arrangements

The Company has lessor arrangements which consist of sales-type leases for equipment (Equipment Finance). Such arrangements may include options to renew or to purchase the leased equipment at the end of the lease term. For the third quarter and first nine months of 2023, interest earned on Equipment Finance was $2.0 million and
39

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

$7.2 million, respectively, and is included in “Interest and fees on loans and leases held for investment” on the Income Statement. For the third quarter and first nine months of 2022, interest earned on Equipment Finance was $2.5 million and $7.7 million, respectively.

The components of Equipment Finance assets are as follows:
September 30,
2023		December 31, 2022
Lease receivables$103,750 $137,969 
Unguaranteed residual asset values33,264 39,262 
Unearned income(12,397)(17,786)
Deferred fees672 874 
Total$125,289 $160,319 

Future minimum lease payments based on maturity of the Company’s lessor arrangements as of September 30, 2023 were as follows:
2023$15,167 
202435,355 
202527,288 
202616,796 
20277,447 
Thereafter5,538 
Total lease payments$107,591 
Discount effect(3,841)
Present value of future minimum lease payments$103,750 

Lessee Arrangements

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

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

40

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

Components of net lease costs were as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
Net Lease CostsIncome Statement Classification2023202220232022
Operating lease costsOccupancy$(3,114)$(3,195)$(9,376)$(12,041)
Sublease revenueOther non-interest income— — — 2,847 
Net lease costs$(3,114)$(3,195)$(9,376)$(9,194)

Supplemental cash flow information related to the Company’s operating leases was as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Non-cash operating activity:
Leased assets obtained or adjusted in exchange for new, amended, and modified operating lease liabilities$— $— $(4,664)$— 

The Company’s future minimum undiscounted lease payments under operating leases as of September 30, 2023 were as follows:
Operating Lease
Payments
2023$3,220 
202412,798 
202513,129 
202611,710 
202710,987 
Thereafter27,238 
Total lease payments$79,082 
Discount effect(13,335)
Present value of future minimum lease payments$65,747 

The weighted-average remaining lease term and discount rate used in the calculation of the Company’s operating lease assets and liabilities were as follows:
Lease Term and Discount RateSeptember 30, 2023
Weighted-average remaining lease term (in years)6.49
Weighted-average discount rate5.40 %

18. Commitments and Contingencies

Operating Lease Commitments

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

41

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

Loan Repurchase Obligations

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

Unfunded Loan Commitments

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

Legal

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

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

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

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

42

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

19. Regulatory Requirements

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

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

The following table summarizes the Company’s and LC Bank’s regulatory capital amounts (in millions) and ratios:
September 30, 2023December 31, 2022
Required Minimum plus Required CCB for
Non-Leverage Ratios
AmountRatioAmountRatio
LendingClub Corporation:
CET1 capital (1)
$1,078.7 16.9 %$1,005.8 15.8 %7.0 %
Tier 1 capital$1,078.7 16.9 %$1,005.8 15.8 %8.5 %
Total capital$1,161.7 18.2 %$1,088.1 17.1 %10.5 %
Tier 1 leverage$1,078.7 13.2 %$1,005.8 14.1 %4.0 %
Risk-weighted assets$6,388.6 N/A$6,360.7 N/AN/A
Quarterly adjusted average assets$8,200.3 N/A$7,119.0 N/AN/A
LendingClub Bank:
CET1 capital (1)
$949.7 15.1 %$852.2 13.8 %7.0 %
Tier 1 capital$949.7 15.1 %$852.2 13.8 %8.5 %
Total capital$1,031.2 16.5 %$932.4 15.1 %10.5 %
Tier 1 leverage$949.7 11.8 %$852.2 12.5 %4.0 %
Risk-weighted assets$6,268.6 N/A$6,194.0 N/AN/A
Quarterly adjusted average assets$8,016.0 N/A$6,795.2 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
43

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

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 million at December 31, 2021. This benefit is phased out over a three-year transition period that commenced on January 1, 2022 at a rate of 25% each year through January 1, 2025.

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

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

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

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

Other non-interest income consists of the following:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Referral revenue$1,029 $3,144 $4,008 $10,860 
Realized gains on sales of securities available for sale— — — 36 
Other1,929 4,256 5,341 13,843 
Total other non-interest income$2,958 $7,400 $9,349 $24,739 

44

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

Other non-interest expense consists of the following:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Consumer credit services$2,930 $4,610 $10,377 $15,804 
Other10,146 10,496 35,724 30,727 
Total other non-interest expense$13,076 $15,106 $46,101 $46,531 

21. Segment Reporting

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

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

LendingClub Bank

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

LendingClub Corporation (Parent Only)

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

45

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

Financial information for the segments is presented in the following tables:
LendingClub
Bank		LendingClub
Corporation
(Parent only)		Intercompany
Eliminations		Consolidated Total
Three Months Ended September 30,Three Months Ended September 30,Three Months Ended September 30,Three Months Ended September 30,
20232022202320222023202220232022
Non-interest income:
Marketplace revenue$37,439 $153,504 $12,320 $9,015 $11,127 $11,318 $60,886 $173,837 
Other non-interest income18,783 25,240 2,478 4,794 (18,303)(22,634)2,958 7,400 
Total non-interest income56,222 178,744 14,798 13,809 (7,176)(11,316)63,844 181,237 
Interest income:
Interest income203,961 137,142 3,451 6,078 — — 207,412 143,220 
Interest expense(69,517)(15,277)(890)(4,267)— — (70,407)(19,544)
Net interest income134,444 121,865 2,561 1,811 — — 137,005 123,676 
Total net revenue190,666 300,609 17,359 15,620 (7,176)(11,316)200,849 304,913 
Provision for credit losses(64,463)(82,739)(16)— — — (64,479)(82,739)
Non-interest expense(122,142)(177,714)(13,069)(19,821)7,176 11,316 (128,035)(186,219)
Income (Loss) before income tax benefit (expense) 4,061 40,156 4,274 (4,201)— — 8,335 35,955 
Income tax benefit (expense)(2,380)(9,440)(947)16,683 — — (3,327)7,243 
Net income
$1,681 $30,716 $3,327 $12,482 $— $— $5,008 $43,198 
Capital expenditures$15,984 $17,301 $— $— $— $— $15,984 $17,301 
Depreciation and amortization$7,579 $4,099 $3,671 $6,582 $— $— $11,250 $10,681 

46

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

LendingClub
Bank		LendingClub
Corporation
(Parent only)		Intercompany
Eliminations		Consolidated Total
Nine Months Ended September 30,Nine Months Ended September 30,Nine Months Ended September 30,Nine Months Ended September 30,
20232022202320222023202220232022
Non-interest income:
Marketplace revenue$172,133 $509,426 $33,200 $35,313 $33,970 $15,448 $239,303 $560,187 
Other non-interest income59,687 64,779 7,462 12,931 (57,800)(52,971)9,349 24,739 
Total non-interest income231,820 574,205 40,662 48,244 (23,830)(37,523)248,652 584,926 
Interest income:
Interest income612,805 357,117 11,506 26,224 — — 624,311 383,341 
Interest expense(189,959)(25,134)(3,991)(18,625)— — (193,950)(43,759)
Net interest income422,846 331,983 7,515 7,599 — — 430,361 339,582 
Total net revenue654,666 906,188 48,177 55,843 (23,830)(37,523)679,013 924,508 
Provision for credit losses(201,658)(205,814)— — — — (201,658)(205,814)
Non-interest expense(413,088)(552,809)(47,164)(71,523)23,830 37,523 (436,422)(586,809)
Income (Loss) before income tax benefit (expense)39,920 147,565 1,013 (15,680)— — 40,933 131,885 
Income tax benefit (expense)(12,065)(39,113)(84)120,274 — 53,048 (12,149)134,209 
Net income
$27,855 $108,452 $929 $104,594 $— $53,048 $28,784 $266,094 
Capital expenditures$48,239 $54,659 $— $— $— $— $48,239 $54,659 
Depreciation and amortization$21,546 $11,109 $13,696 $21,168 $— $— $35,242 $32,277 
47

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

LendingClub BankLendingClub Corporation
(Parent only)		Intercompany
Eliminations		Consolidated Total
 September 30, 2023December 31, 2022September 30, 2023December 31, 2022September 30, 2023December 31, 2022September 30, 2023December 31, 2022
Assets
Total cash and cash equivalents$1,283,549 $1,020,874 $93,060 $56,475 $(68,839)$(20,319)$1,307,770 $1,057,030 
Restricted cash— — 48,102 75,409 (5,615)(7,955)42,487 67,454 
Securities available for sale at fair value790,542 329,287 5,127 16,415 — — 795,669 345,702 
Loans held for sale at fair value362,789 110,400 — — — — 362,789 110,400 
Loans and leases held for investment, net4,886,782 4,705,302 — — — — 4,886,782 4,705,302 
Loans held for investment at fair value316,622 906,711 9,677 19,227 — — 326,299 925,938 
Retail and certificate loans held for investment at fair value— — 18,118 55,425 — — 18,118 55,425 
Property, equipment and software, net139,269 102,274 20,499 34,199 — — 159,768 136,473 
Investment in subsidiary— — 813,436 755,319 (813,436)(755,319)— — 
Goodwill75,717 75,717 — — — — 75,717 75,717 
Other assets352,072 339,341 162,490 173,851 (17,610)(12,886)496,952 500,306 
Total assets8,207,342 7,589,906 1,170,509 1,186,320 (905,500)(796,479)8,472,351 7,979,747 
Liabilities and Equity
Total deposits7,074,717 6,420,827 — — (74,454)(28,274)7,000,263 6,392,553 
Borrowings7,361 64,154 3,356 10,704 — — 10,717 74,858 
Retail notes, certificates and secured borrowings at fair value— — 18,118 55,425 — — 18,118 55,425 
Other liabilities136,543 189,185 116,101 116,318 (17,610)(12,886)235,034 292,617 
Total liabilities7,218,621 6,674,166 137,575 182,447 (92,064)(41,160)7,264,132 6,815,453 
Total equity988,721 915,740 1,032,934 1,003,873 (813,436)(755,319)1,208,219 1,164,294 
Total liabilities and equity$8,207,342 $7,589,906 $1,170,509 $1,186,320 $(905,500)$(796,479)$8,472,351 $7,979,747 

48

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

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

49

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

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

Executive Summary

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

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

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

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

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

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

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

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

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

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

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

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

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

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

51

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Financial Highlights
We regularly review several metrics to evaluate our business, measure our performance, identify trends, formulate financial projections and make strategic decisions. The following presents our select financial metrics for the periods presented:
As of and for the Three Months Ended
As of and for the Nine Months Ended September 30,
September 30,
2023		June 30,
2023		September 30,
2022		20232022
Non-interest income$63,844 $85,818 $181,237 $248,652 $584,926 
Net interest income137,005 146,652 123,676 430,361 339,582 
Total net revenue200,849 232,470 304,913 679,013 924,508 
Non-interest expense128,035 151,079 186,219 436,422 586,809 
Pre-provision net revenue (1)
72,814 81,391 118,694 242,591 337,699 
Provision for credit losses64,479 66,595 82,739 201,658 205,814 
Income before income tax benefit (expense)8,335 14,796 35,955 40,933 131,885 
Income tax benefit (expense)(3,327)(4,686)7,243 (12,149)134,209 
Net income5,008 10,110 43,198 28,784 266,094 
Income tax benefit from release of tax valuation allowanceN/AN/A5,015 N/A140,315 
Net income excluding income tax benefit (1)(2)
$5,008 $10,110 $38,183 $28,784 $125,779 
Basic EPS$0.05 $0.09 $0.41 $0.27 $2.59 
Diluted EPS$0.05 $0.09 $0.41 $0.27 $2.56 
Diluted EPS excluding income tax benefit (1)(2)
$0.05 $0.09 $0.36 $0.27 $1.21 
LendingClub Corporation Performance Metrics:
Net interest margin6.9 %7.1 %8.3 %7.2 %8.3 %
Efficiency ratio (3)
63.7 %65.0 %61.1 %64.3 %63.5 %
Return on average equity (ROE)1.7 %3.4 %14.2 %3.2 %40.6 %
Return on average total assets (ROA)0.2 %0.5 %2.5 %0.5 %6.8 %
Marketing as a % of loan originations1.3 %1.2 %1.3 %1.2 %1.5 %
LendingClub Corporation Capital Metrics:
Common equity tier 1 capital ratio16.9 %16.1 %18.3 %
Tier 1 leverage ratio13.2 %12.4 %15.7 %
Book value per common share$11.02 $11.09 $10.67 
Tangible book value per common share (1)
$10.21 $10.26 $9.78 
Loan Originations (in millions) (4):
Marketplace loans$1,182 $1,353 $2,386 $3,821 $7,566 
Loan originations held for investment326 657 1,153 1,986 3,030 
Total loan originations$1,508 $2,011 $3,539 $5,806 $10,596 
Loan originations held for investment as % of total loan originations22 %33 %33 %34 %29 %
Servicing portfolio AUM (in millions) (5):
Total servicing portfolio$14,818 $15,669 $15,929 
Loans serviced for others$9,601 $10,204 $11,807 
(1)    Represents a non-GAAP financial measure. See “Non-GAAP Financial Measures” for additional information.
(2)    The third quarter and first nine months of 2022 excludes an income tax benefit of $5.0 million and
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)
$140.3 million due to the release of our deferred tax asset valuation allowance.
(3)    Calculated as the ratio of non-interest expense to total net revenue.
(4)    Includes unsecured personal loans and auto loans only.
(5)    Assets under management (AUM) reflects loans serviced on our platform, which includes outstanding balances of unsecured personal loans, auto refinance loans and education and patient finance loans serviced for others and retained for investment by the Company.

As of and for the Three Months Ended
September 30,
2023		June 30,
2023		September 30,
2022
Balance Sheet Data:
Loans and leases held for investment at amortized cost, net, excluding PPP loans$4,879,222 $5,160,546 $4,414,347 
PPP loans$7,560 $17,640 $89,379 
Total loans and leases held for investment at amortized cost, net (1)
$4,886,782 $5,178,186 $4,503,726 
Loans held for investment at fair value$326,299 $404,119 $15,057 
Total loans and leases held for investment$5,213,081 $5,582,305 $4,518,783 
Total assets$8,472,351 $8,342,506 $6,775,074 
Total deposits$7,000,263 $6,843,535 $5,123,506 
Total liabilities$7,264,132 $7,136,983 $5,653,664 
Total equity$1,208,219 $1,205,523 $1,121,410 
Allowance Ratios(1):
ALLL to total loans and leases held for investment6.7 %6.4 %6.3 %
ALLL to consumer loans and leases held for investment7.4 %7.1 %7.2 %
ALLL to commercial loans and leases held for investment2.0 %1.9 %1.9 %
Net charge-offs$68,795 $59,884 $22,658 
Net charge-off ratio(2)
5.1 %4.4 %2.1 %
(1)    Excludes loans held for investment at fair value, which primarily consists of a loan portfolio that was acquired at the end of 2022.
(2)    Calculated as annualized net charge-offs divided by average outstanding loans and leases HFI at amortized cost during the period, excluding PPP loans.
53

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Results of Operations
The following table sets forth the Condensed Consolidated Statements of Income (Income Statement) data for each of the periods presented:
Three Months EndedChange (%)
September 30,
2023		June 30,
2023		September 30,
2022		Q3 2023
vs
Q2 2023		Q3 2023
vs
Q3 2022
Non-interest income:
Marketplace revenue$60,886 $82,783 $173,837 (26)%(65)%
Other non-interest income2,958 3,035 7,400 (3)%(60)%
Total non-interest income63,844 85,818 181,237 (26)%(65)%
Interest income:
Interest on loans held for sale9,582 4,433 5,879 116 %63 %
Interest and fees on loans and leases held for investment158,960 162,085 124,028 (2)%28 %
Interest on loans held for investment at fair value11,788 21,692 791 (46)%N/M
Interest on retail and certificate loans held for investment at fair value817 1,194 3,685 (32)%(78)%
Interest on securities available for sale9,467 5,948 3,820 59 %148 %
Other16,798 19,134 5,017 (12)%235 %
Total interest income207,412 214,486 143,220 (3)%45 %
Interest expense:
Interest on deposits69,509 66,521 15,184 4 %358 %
Interest on retail notes, certificates and secured borrowings817 1,194 3,685 (32)%(78)%
Other interest expense81 119 675 (32)%(88)%
Total interest expense70,407 67,834 19,544 4 %260 %
Net interest income137,005 146,652 123,676 (7)%11 %
Total net revenue200,849 232,470 304,913 (14)%(34)%
Provision for credit losses64,479 66,595 82,739 (3)%(22)%
Non-interest expense:
Compensation and benefits58,497 71,553 84,916 (18)%(31)%
Marketing19,555 23,940 46,031 (18)%(58)%
Equipment and software12,631 13,968 12,491 (10)%1 %
Depreciation and amortization11,250 11,638 10,681 (3)%5 %
Professional services8,414 9,974 11,943 (16)%(30)%
Occupancy4,612 4,684 5,051 (2)%(9)%
Other non-interest expense13,076 15,322 15,106 (15)%(13)%
Total non-interest expense128,035 151,079 186,219 (15)%(31)%
Income before income tax benefit (expense)8,335 14,796 35,955 (44)%(77)%
Income tax benefit (expense)(3,327)(4,686)7,243 (29)%(146)%
Net income$5,008 $10,110 $43,198 (50)%(88)%

54

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Nine Months Ended September 30,
20232022Change (%)
Non-interest income:
Marketplace revenue$239,303 $560,187 (57)%
Other non-interest income9,349 24,739 (62)%
Total non-interest income248,652 584,926 (57)%
Interest income:
Interest on loans held for sale19,772 20,459 (3)%
Interest and fees on loans and leases held for investment471,512 324,381 45 %
Interest on loans held for investment at fair value60,372 2,015 N/M
Interest on retail and certificate loans held for investment at fair value3,694 15,745 (77)%
Interest on securities available for sale19,315 12,757 51 %
Other49,646 7,984 522 %
Total interest income624,311 383,341 63 %
Interest expense:
Interest on deposits189,303 24,700 666 %
Interest on retail notes, certificates and secured borrowings3,694 15,745 (77)%
Other interest expense953 3,314 (71)%
Total interest expense193,950 43,759 343 %
Net interest income430,361 339,582 27 %
Total net revenue679,013 924,508 (27)%
Provision for credit losses201,658 205,814 (2)%
Non-interest expense:
Compensation and benefits203,357 251,629 (19)%
Marketing70,375 162,608 (57)%
Equipment and software40,295 35,998 12 %
Depreciation and amortization35,242 32,277 9 %
Professional services27,446 40,487 (32)%
Occupancy13,606 17,279 (21)%
Other non-interest expense46,101 46,531 (1)%
Total non-interest expense436,422 586,809 (26)%
Income before income tax benefit (expense)40,933 131,885 (69)%
Income tax benefit (expense)(12,149)134,209 (109)%
Net income$28,784 $266,094 (89)%

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

55

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

Marketplace revenue consists of the following:
Three Months EndedChange (%)
September 30,
2023		June 30,
2023		September 30,
2022		Q3 2023
vs
Q2 2023		Q3 2023
vs
Q3 2022
Origination fees$60,912 $70,989 $127,142 (14)%(52)%
Servicing fees32,768 22,015 23,760 49 %38 %
Gain on sales of loans8,572 13,221 23,554 (35)%(64)%
Net fair value adjustments(41,366)(23,442)(619)76 %N/M
Total marketplace revenue$60,886 $82,783 $173,837 (26)%(65)%

Nine Months Ended September 30,
20232022Change (%)
Origination fees$202,444 $398,487 (49)%
Servicing fees81,163 60,440 34 %
Gain on sales of loans35,918 76,983 (53)%
Net fair value adjustments(80,222)24,277 N/M
Total marketplace revenue$239,303 $560,187 (57)%

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

Origination Fees

Origination fees recorded as a component of marketplace revenue are primarily fees earned related to originating and issuing unsecured personal loans that are held for sale. The following table presents loan origination volume during each of the periods set forth below:
Three Months EndedChange (%)
September 30,
2023		June 30,
2023		September 30,
2022		Q3 2023
vs
Q2 2023		Q3 2023
vs
Q3 2022
Marketplace loans$1,181,858 $1,353,134 $2,386,319 (13)%(50)%
Loan originations held for investment326,290 657,3801,152,870 (50)%(72)%
Total loan originations (1)
$1,508,148 $2,010,514 $3,539,189 (25)%(57)%
(1)    Includes unsecured personal loans and auto loans only.

56

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Nine Months Ended September 30,
20232022Change (%)
Marketplace loans$3,820,640 $7,565,820 (50)%
Loan originations held for investment1,985,659 3,030,292 (34)%
Total loan originations (1)
$5,806,299 $10,596,112 (45)%
(1)    Includes unsecured personal loans and auto loans only.

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

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

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

Servicing Fees

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

The table below illustrates AUM serviced on our platform by the method in which the loans were financed as of the periods presented. Loans sold and subsequently serviced on behalf of the investor represent a key driver of our servicing fee revenue.
Change (%)
September 30,
2023		June 30,
2023		September 30,
2022		Q3 2023
vs
Q2 2023		Q3 2023
vs
Q3 2022
AUM (in millions):
Loans serviced for others$9,601 $10,204 $11,807 (6)%(19)%
Loans held by LendingClub Bank5,189 5,425 4,019 (4)%29 %
Retail notes, certificates and secured borrowings19 28 92 (32)%(79)%
Other loans invested in by the Company9 12 11 (25)%(18)%
Total$14,818 $15,669 $15,929 (5)%(7)%

57

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

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

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

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

Gain on Sales of Loans

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

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

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

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

Net Fair Value Adjustments

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

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

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

58

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

Other Non-interest Income

Other non-interest income primarily consists of referral revenue that relates to fees earned from third-party companies when customers referred by us consider or purchase products or services from such third-party companies. The tables below illustrate the composition of other non-interest income for each period presented:
Three Months EndedChange (%)
September 30,
2023		June 30,
2023		September 30,
2022		Q3 2023
vs
Q2 2023		Q3 2023
vs
Q3 2022
Referral revenue$1,029 $1,531 $3,144 (33)%(67)%
Other1,929 1,504 4,256 28 %(55)%
Other non-interest income$2,958 $3,035 $7,400 (3)%(60)%

Nine Months Ended September 30,Change (%)
20232022
Referral revenue$4,008 $10,860 (63)%
Realized gains on sales of securities available for sale— 36 (100)%
Other5,341 13,843 (61)%
Other non-interest income$9,349 $24,739 (62)%

59

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

The tables below present net interest income information corresponding to interest-earning assets and interest-bearing funding sources. The average yield/rate is calculated by dividing the annualized period-end interest income/expense by the average balance.
Three Months Ended
September 30, 2023
Three Months Ended
June 30, 2023
Three Months Ended
September 30, 2022
Average
Balance		Interest Income/
Expense		Average Yield/
Rate		Average
Balance		Interest Income/
Expense		Average Yield/
Rate		Average
Balance		Interest Income/
Expense		Average Yield/
Rate
Interest-earning assets (1)
Cash, cash equivalents, restricted cash and other$1,249,087 $16,798 5.38 %$1,512,700 $19,134 5.06 %$893,655 $5,017 2.25 %
Securities available for sale at fair value601,512 9,467 6.30 %437,473 5,948 5.44 %396,556 3,820 3.85 %
Loans held for sale at fair value286,111 9,582 13.40 %106,865 4,433 16.59 %126,487 5,879 18.59 %
Loans and leases held for investment at amortized cost:
Unsecured personal loans (2)
4,257,360 142,118 13.35 %4,360,506 145,262 13.33 %3,268,649 110,446 13.52 %
Secured consumer loans414,436 4,501 4.34 %399,488 4,088 4.09 %337,191 3,039 3.60 %
Commercial loans and leases720,895 12,240 6.79 %728,588 11,605 6.37 %692,783 9,262 5.35 %
PPP loans11,799 101 3.44 %28,675 1,130 15.76 %105,500 1,281 4.86 %
Loans and leases held for investment at amortized cost5,404,490 158,960 11.76 %5,517,257 162,085 11.75 %4,404,123 124,028 11.26 %
Loans held for investment at fair value362,837 11,788 13.00 %670,969 21,692 12.93 %17,763 791 17.83 %
Total loans and leases held for investment5,767,327 170,748 11.84 %6,188,226 183,777 11.88 %4,421,886 124,819 11.29 %
Retail and certificate loans held for investment at fair value22,311 817 14.65 %32,760 1,194 14.57 %104,010 3,685 14.17 %
Total interest-earning assets7,926,348 207,412 10.47 %8,278,024 214,486 10.36 %5,942,594 143,220 9.64 %
Cash and due from banks and restricted cash69,442 78,221 58,411 
Allowance for loan and lease losses(354,263)(354,348)(254,849)
Other non-interest earning assets691,641 686,956 597,169 
Total assets$8,333,168 $8,688,853 $6,343,325 
Interest-bearing liabilities
Interest-bearing deposits:
Checking and money market accounts$1,271,720 $9,541 2.98 %$1,397,302 $7,760 2.23 %$2,192,904 $4,575 0.83 %
Savings accounts and certificates of deposit5,357,717 59,968 4.44 %5,546,862 58,761 4.25 %2,260,170 10,609 1.86 %
Interest-bearing deposits (2)
6,629,437 69,509 4.16 %6,944,164 66,521 3.84 %4,453,074 15,184 1.35 %
Retail notes, certificates and secured borrowings22,311 817 14.65 %32,760 1,194 14.57 %104,010 3,685 14.17 %
Other interest-bearing liabilities13,567 81 2.42 %31,409 119 1.51 %140,904 675 1.92 %
Total interest-bearing liabilities6,665,315 70,407 4.19 %7,008,333 67,834 3.88 %4,697,988 19,544 1.65 %
60

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Three Months Ended
September 30, 2023
Three Months Ended
June 30, 2023
Three Months Ended
September 30, 2022
Average
Balance		Interest Income/
Expense		Average Yield/
Rate		Average
Balance		Interest Income/
Expense		Average Yield/
Rate		Average
Balance		Interest Income/
Expense		Average Yield/
Rate
Non-interest bearing deposits183,728 205,750 284,134 
Other liabilities271,118 272,142 250,086 
Total liabilities$7,120,161 $7,486,225 $5,232,208 
Total equity$1,213,007 $1,202,628 $1,111,117 
Total liabilities and equity$8,333,168 $8,688,853 $6,343,325 
Interest rate spread6.28 %6.48 %7.99 %
Net interest income and net interest margin$137,005 6.91 %$146,652 7.09 %$123,676 8.32 %
(1)    Nonaccrual loans and any related income are included in their respective loan categories.
(2)    The average yield/rate for unsecured personal loans increased sequentially primarily due to higher coupon loans in the portfolio. The average yield/rate for unsecured personal loans decreased year over year primarily due to a shift in the mix toward higher credit quality loans, which generally have lower interest rates. The average yield/rate for interest-bearing deposits increased due to a higher federal funds rate and an increasing concentration of online deposits. We expect pressure on net interest margin to continue for the remainder of 2023.

An analysis of the sequential and year-over-year changes in the categories of interest revenue and interest expense resulting from changes in volume and rate is as follows:
Three Months Ended September 30, 2023
Compared to
Three Months Ended June 30, 2023
Increase (Decrease) Due to Change in:
Average Volume(1)
Average Rate(1)
Total
Interest-earning assets
Cash, cash equivalents, restricted cash and other$(3,488)$1,152 $(2,336)
Securities available for sale at fair value2,477 1,042 3,519 
Loans held for sale at fair value6,151 (1,002)5,149 
Loans and leases held for investment at amortized cost(3,852)727 (3,125)
Loans and leases held for investment at fair value(10,010)106 (9,904)
Retail and certificate loans held for investment at fair value(383)6 (377)
Total increase (decrease) in interest income on interest-earning assets
$(9,105)$2,031 $(7,074)
Interest-bearing liabilities
Checking and money market accounts$(750)$2,531 $1,781 
Savings accounts and certificates of deposit(2,053)3,260 1,207 
Interest-bearing deposits(2,803)5,791 2,988 
Retail notes, certificates and secured borrowings(383)6 (377)
Other interest-bearing liabilities(87)49 (38)
Total increase (decrease) in interest expense on interest-bearing liabilities
$(3,273)$5,846 $2,573 
Decrease in net interest income
$(5,832)$(3,815)$(9,647)
(1)    Volume and rate changes have been allocated on a consistent basis using the respective percentage changes in average balances and average rates.
61

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Three Months Ended September 30, 2023
Compared to
Three Months Ended September 30, 2022
Increase (Decrease) Due to Change in:
Average Volume(1)
Average Rate(1)
Total
Interest-earning assets
Cash, cash equivalents, restricted cash and other$2,613 $9,168 $11,781 
Securities available for sale at fair value2,536 3,111 5,647 
Loans held for sale at fair value5,722 (2,019)3,703 
Loans and leases held for investment at amortized cost33,293 1,639 34,932 
Loans and leases held for investment at fair value11,269 (272)10,997 
Retail and certificate loans held for investment at fair value(2,989)121 (2,868)
Total increase in interest income on interest-earning assets$52,444 $11,748 $64,192 
Interest-bearing liabilities
Checking and money market accounts$(2,606)$7,572 $4,966 
Savings accounts and certificates of deposit24,321 25,038 49,359 
Interest-bearing deposits21,715 32,610 54,325 
Retail notes, certificates and secured borrowings(2,989)121 (2,868)
Other interest-bearing liabilities(733)139 (594)
Total increase in interest expense on interest-bearing liabilities$17,993 $32,870 $50,863 
Increase (Decrease) in net interest income$34,451 $(21,122)$13,329 
(1)    Volume and rate changes have been allocated on a consistent basis using the respective percentage changes in average balances and average rates.
62

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

Nine Months Ended
September 30, 2023
Nine Months Ended
September 30, 2022
Average
Balance		Interest Income/
Expense		Average Yield/
Rate		Average
Balance		Interest Income/
Expense		Average Yield/
Rate
Interest-earning assets (1)
Cash, cash equivalents, restricted cash and other$1,327,592 $49,646 4.99 %$936,592 $7,984 1.14 %
Securities available for sale at fair value468,189 19,315 5.50 %377,274 12,757 4.51 %
Loans held for sale at fair value168,495 19,772 15.65 %178,905 20,459 15.25 %
Loans and leases held for investment at amortized cost:
Unsecured personal loans (2)
4,228,891 421,066 13.28 %2,678,133 284,350 14.16 %
Secured consumer loans398,681 12,295 4.11 %279,556 7,665 3.66 %
Commercial loans and leases728,410 36,030 6.60 %652,745 25,583 5.23 %
PPP loans32,600 2,121 8.67 %158,729 6,783 5.70 %
Loans and leases held for investment at amortized cost5,388,582 471,512 11.67 %3,769,163 324,381 11.47 %
Loans held for investment at fair value621,639 60,372 12.95 %17,756 2,015 15.13 %
Total loans and leases held for investment6,010,221 531,884 11.80 %3,786,919 326,396 11.49 %
Retail and certificate loans held for investment at fair value33,776 3,694 14.58 %148,798 15,745 14.11 %
Total interest-earning assets8,008,273 624,311 10.39 %5,428,488 383,341 9.42 %
Cash and due from banks and restricted cash73,171 75,412 
Allowance for loan and lease losses(349,049)(207,462)
Other non-interest earning assets681,841 525,053 
Total assets$8,414,236 $5,821,491 
Interest-bearing liabilities
Interest-bearing deposits:
Checking and money market accounts$1,432,912 $24,869 2.32 %$2,298,847 $8,964 0.52 %
Savings accounts and certificates of deposit5,219,587 164,434 4.21 %1,633,325 15,736 1.29 %
Interest-bearing deposits (2)
6,652,499 189,303 3.80 %3,932,172 24,700 0.84 %
Retail notes, certificates and secured borrowings33,776 3,694 14.58 %148,798 15,745 14.11 %
Other interest-bearing liabilities50,489 953 2.52 %215,884 3,314 2.05 %
Total interest-bearing liabilities6,736,764 193,950 3.85 %4,296,854 43,759 1.36 %
Non-interest bearing deposits210,264 268,281 
Other liabilities269,068 276,788 
Total liabilities$7,216,096 $4,841,923 
Total equity$1,198,140 $979,568 
Total liabilities and equity$8,414,236 $5,821,491 
Interest rate spread6.55 %8.06 %
Net interest income and net interest margin$430,361 7.17 %$339,582 8.34 %
(1)    Nonaccrual loans and any related income are included in their respective loan categories.
(2)    The average yield/rate for unsecured personal loans decreased year over year primarily due to a shift in the mix toward higher credit quality loans, which generally have lower interest rates. The average yield/rate for interest-bearing deposits increased due to a higher federal funds rate and an increasing concentration of online deposits. We expect pressure on net interest margin to continue for the remainder of 2023.

63

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

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

The provision for credit losses includes the credit loss expense for HFI loans and leases at amortized cost, available for sale (AFS) securities and unfunded lending commitments. The table below illustrates the composition of the provision for credit losses for each period presented, as well as the loan originations held for investment in each period, which is a key driver for credit loss expense:
Three Months EndedNine Months Ended September 30,
September 30,
2023		June 30,
2023		September 30,
2022		20232022
Credit loss expense for loans and leases held for investment$64,127 $66,190 $82,599 $201,167 $204,880 
Credit loss expense for unfunded lending commitments
352 405 140 491 934 
Total provision for credit losses$64,479 $66,595 $82,739 $201,658 $205,814 
Loan originations held for investment$326,290 $657,380 $1,152,870 $1,985,659 $3,030,292 

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

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

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

64

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
The activity in the allowance for credit losses (ACL) was as follows:
Three Months EndedNine Months Ended September 30,
September 30,
2023		June 30,
2023		September 30,
2022		20232022
Allowance for loan and lease losses, beginning of period$355,163 $348,857 $243,260 $327,852 $144,389 
Credit loss expense for loans and leases held for investment64,127 66,190 82,599 201,167 204,880 
Charge-offs(74,178)(64,269)(23,728)(191,010)(48,669)
Recoveries5,383 4,385 1,070 12,486 2,601 
Allowance for loan and lease losses, end of period$350,495 $355,163 $303,201 $350,495 $303,201 
Reserve for unfunded lending commitments, beginning of period$2,017 $1,612 $2,025 $1,878 $1,231 
Credit loss expense for unfunded lending commitments
352 405 140 491 934 
Reserve for unfunded lending commitments, end of period (1)
$2,369 $2,017 $2,165 $2,369 $2,165 
(1)    Relates to $89.5 million, $108.9 million and $144.0 million of unfunded commitments as of September 30, 2023, June 30, 2023 and September 30, 2022, respectively.

Three Months EndedNine Months Ended September 30,
September 30,
2023		June 30,
2023		September 30,
2022		20232022
Ratio of allowance for loan and lease losses to total loans and leases held for investment at amortized cost6.7 %6.4 %6.3 %6.7 %6.3 %
Average loans and leases held for investment at amortized cost, excluding PPP loans$5,392,691$5,488,582$4,298,623$5,355,982$3,610,434
Net charge-off ratio (1)
5.1 %4.4 %2.1 %4.4 %1.7 %
(1)    Calculated as annualized net charge-offs divided by average outstanding loans and leases held for investment during the period, excluding PPP loans.

Loans and leases are generally placed on nonaccrual status when contractually past due 90 days or more, or earlier if management believes that the probability of collection does not warrant further accrual. Unsecured personal loans are charged-off no later than 120 days past due. The following table presents nonaccrual loans and leases(1):
September 30, 2023December 31, 2022
Total nonaccrual loans and leases held for investment$49,999 $34,827 
Ratio of total nonaccrual loans and leases held for investment to total loans and leases held for investment1.0 %0.7 %
(1)    Excluding PPP loans, there were no loans that were 90 days or more past due and accruing as of both September 30, 2023 and December 31, 2022.

65

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

Non-Interest Expense

Non-interest expense primarily consists of (i) compensation and benefits, which include salaries and wages, benefits and stock-based compensation expense, (ii) marketing, which includes costs attributable to borrower and deposit customer acquisition efforts and building general brand awareness, (iii) equipment and software, (iv) depreciation and amortization, (v) professional services, which primarily consist of consulting fees, and (vi) occupancy, which includes rent expense and all other costs related to occupying our office spaces.
Three Months EndedChange (%)
September 30,
2023		June 30,
2023		September 30,
2022		Q3 2023
vs
Q2 2023		Q3 2023
vs
Q3 2022
Non-interest expense:
Compensation and benefits$58,497 $71,553 $84,916 (18)%(31)%
Marketing19,555 23,940 46,031 (18)%(58)%
Equipment and software12,631 13,968 12,491 (10)%1 %
Depreciation and amortization11,250 11,638 10,681 (3)%5 %
Professional services8,414 9,974 11,943 (16)%(30)%
Occupancy4,612 4,684 5,051 (2)%(9)%
Other non-interest expense13,076 15,322 15,106 (15)%(13)%
Total non-interest expense$128,035 $151,079 $186,219 (15)%(31)%

Nine Months Ended September 30,
20232022Change (%)
Non-interest expense:
Compensation and benefits$203,357 $251,629 (19)%
Marketing70,375 162,608 (57)%
Equipment and software40,295 35,998 12 %
Depreciation and amortization35,242 32,277 9 %
Professional services27,446 40,487 (32)%
Occupancy13,606 17,279 (21)%
Other non-interest expense46,101 46,531 (1)%
Total non-interest expense$436,422 $586,809 (26)%

Compensation and Benefits

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

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

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

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

Marketing

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

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

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

Equipment and Software

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

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

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

Depreciation and Amortization

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

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

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

Professional Services

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

67

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

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

Occupancy

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

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

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

Income Taxes

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

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

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

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

Segment Information

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

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

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

LendingClub Corporation (Parent Only)

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

Financial information for the segments is presented in the following tables:
LendingClub
Bank		LendingClub
Corporation
(Parent only)		Intercompany
Eliminations		Consolidated Total
Three Months Ended September 30,Three Months Ended September 30,Three Months Ended September 30,Three Months Ended September 30,
 20232022202320222023202220232022
Non-interest income:
Marketplace revenue$37,439 $153,504 $12,320 $9,015 $11,127 $11,318 $60,886 $173,837 
Other non-interest income18,783 25,240 2,478 4,794 (18,303)(22,634)2,958 7,400 
Total non-interest income56,222 178,744 14,798 13,809 (7,176)(11,316)63,844 181,237 
Interest income:
Interest income203,961 137,142 3,451 6,078 — — 207,412 143,220 
Interest expense(69,517)(15,277)(890)(4,267)— — (70,407)(19,544)
Net interest income134,444 121,865 2,561 1,811 — — 137,005 123,676 
Total net revenue190,666 300,609 17,359 15,620 (7,176)(11,316)200,849 304,913 
Provision for credit losses(64,463)(82,739)(16)— — — (64,479)(82,739)
Non-interest expense(122,142)(177,714)(13,069)(19,821)7,176 11,316 (128,035)(186,219)
Income (Loss) before income tax benefit (expense) 4,061 40,156 4,274 (4,201)— — 8,335 35,955 
Income tax benefit (expense) (2,380)(9,440)(947)16,683 — — (3,327)7,243 
Net income
$1,681 $30,716 $3,327 $12,482 $— $— $5,008 $43,198 

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LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
LendingClub
Bank		LendingClub
Corporation
(Parent only)		Intercompany
Eliminations		Consolidated Total
Nine Months Ended September 30,Nine Months Ended September 30,Nine Months Ended September 30,Nine Months Ended September 30,
20232022202320222023202220232022
Non-interest income:
Marketplace revenue$172,133 $509,426 $33,200 $35,313 $33,970 $15,448 $239,303 $560,187 
Other non-interest income59,687 64,779 7,462 12,931 (57,800)(52,971)9,349 24,739 
Total non-interest income231,820 574,205 40,662 48,244 (23,830)(37,523)248,652 584,926 
Interest income:
Interest income612,805 357,117 11,506 26,224 — — 624,311 383,341 
Interest expense(189,959)(25,134)(3,991)(18,625)— — (193,950)(43,759)
Net interest income422,846 331,983 7,515 7,599 — — 430,361 339,582 
Total net revenue654,666 906,188 48,177 55,843 (23,830)(37,523)679,013 924,508 
Provision for credit losses(201,658)(205,814)— — — — (201,658)(205,814)
Non-interest expense(413,088)(552,809)(47,164)(71,523)23,830 37,523 (436,422)(586,809)
Income (Loss) before income tax benefit (expense)39,920 147,565 1,013 (15,680)— — 40,933 131,885 
Income tax benefit (expense)(12,065)(39,113)(84)120,274 — 53,048 (12,149)134,209 
Net income
$27,855 $108,452 $929 $104,594 $— $53,048 $28,784 $266,094 

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

Non-GAAP Financial Measures

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

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

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

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

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

Three Months EndedNine Months Ended
September 30, 2023June 30,
2023		September 30, 2022September 30, 2023September 30, 2022
Non-interest income$63,844 $85,818 $181,237 $248,652 $584,926 
Net interest income137,005 146,652 123,676 430,361 339,582 
Total net revenue200,849 232,470 304,913 679,013 924,508 
Non-interest expense(128,035)(151,079)(186,219)(436,422)(586,809)
Pre-provision net revenue72,814 81,391 118,694 242,591 337,699 
Provision for credit losses(64,479)(66,595)(82,739)(201,658)(205,814)
Income before income tax benefit (expense)8,335 14,796 35,955 40,933 131,885 
Income tax benefit (expense)(3,327)(4,686)7,243 (12,149)134,209 
GAAP Net income$5,008 $10,110 $43,198 $28,784 $266,094 

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LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
The following table provides a reconciliation of Net Income Excluding Income Tax Benefit and Diluted EPS Excluding Income Tax Benefit to the nearest GAAP measures:
As of and For The Three Months Ended
As of and For The Nine Months Ended
September 30, 2023June 30,
2023		September 30, 2022September 30, 2023September 30, 2022
GAAP Net income$5,008 $10,110 $43,198 $28,784 $266,094 
Income tax benefit from release of tax valuation allowance— — 5,015 — 140,315 
Net income excluding income tax benefit$5,008 $10,110 $38,183 $28,784 $125,779 
GAAP Diluted EPS – common stockholders$0.05 $0.09 $0.41 $0.27 $2.56 
(A)Income tax benefit from release of tax valuation allowanceN/AN/A$5,015 N/A$140,315 
(B)Weighted-average common shares – DilutedN/AN/A105,853,938 N/A104,116,240 
(A/B)Diluted EPS impact of income tax benefitN/AN/A$0.05 N/A$1.35 
Diluted EPS excluding income tax benefit$0.05 $0.09 $0.36 $0.27 $1.21 
N/A – Not applicable

The following table provides a reconciliation of TBV Per Common Share to the nearest GAAP measure:
As ofSeptember 30,
2023		June 30,
2023		September 30,
2022
GAAP common equity$1,208,219 $1,205,523 $1,121,410 
Less: Goodwill(75,717)(75,717)(75,717)
Less: Intangible assets(13,151)(14,167)(17,512)
Tangible common equity$1,119,351 $1,115,639 $1,028,181 
Book value per common share
GAAP common equity$1,208,219 $1,205,523 $1,121,410 
Common shares issued and outstanding109,648,769 108,694,120 105,088,761 
Book value per common share$11.02 $11.09 $10.67 
Tangible book value per common share
Tangible common equity$1,119,351 $1,115,639 $1,028,181 
Common shares issued and outstanding109,648,769 108,694,120 105,088,761 
Tangible book value per common share$10.21 $10.26 $9.78 

Supervision and Regulatory Environment

We are subject to periodic exams, investigations, inquiries or requests, enforcement actions and other proceedings from federal and state regulatory agencies, including the federal banking regulators that directly regulate the Company and/or LC Bank. Further, we are subject to claims, individual and class action lawsuits, and lawsuits alleging regulatory violations. The number and/or significance of these exams, investigations, inquiries, requests, proceedings, claims and lawsuits have been increasing since the Acquisition in part because our products and services increased in scope and in part because we became a bank holding company operating a national bank.
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LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Although historically the Company has generally resolved these matters in a manner that was not materially adverse to its financial results or business operations, no assurance can be given as to the timing, outcome or consequences of any of these matters in the future.

Regulatory Actions Taken in Relation to COVID-19

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

Federal Banking Regulator Supervision

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

Consequences

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

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

Capital Management

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

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

The following table summarizes the Company’s and LC Bank’s regulatory capital amounts (in millions) and ratios:
September 30, 2023December 31, 2022
Required Minimum plus Required CCB for
Non-Leverage Ratios
AmountRatioAmountRatio
LendingClub Corporation:
CET1 capital (1)
$1,078.7 16.9 %$1,005.8 15.8 %7.0 %
Tier 1 capital$1,078.7 16.9 %$1,005.8 15.8 %8.5 %
Total capital$1,161.7 18.2 %$1,088.1 17.1 %10.5 %
Tier 1 leverage$1,078.7 13.2 %$1,005.8 14.1 %4.0 %
Risk-weighted assets$6,388.6 N/A$6,360.7 N/AN/A
Quarterly adjusted average assets$8,200.3 N/A$7,119.0 N/AN/A
LendingClub Bank:
CET1 capital (1)
$949.7 15.1 %$852.2 13.8 %7.0 %
Tier 1 capital$949.7 15.1 %$852.2 13.8 %8.5 %
Total capital$1,031.2 16.5 %$932.4 15.1 %10.5 %
Tier 1 leverage$949.7 11.8 %$852.2 12.5 %4.0 %
Risk-weighted assets$6,268.6 N/A$6,194.0 N/AN/A
Quarterly adjusted average assets$8,016.0 N/A$6,795.2 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.

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

Liquidity

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

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

LendingClub Bank Liquidity

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

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

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

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

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

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

Factors Impacting Liquidity

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

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

Market Risk

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

Interest Rate Sensitivity

LendingClub Bank

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

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

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LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
The following table presents the change in projected net interest income for the next twelve months due to a hypothetical instantaneous parallel change in interest rates relative to current rates:
 September 30, 2023December 31, 2022
Instantaneous Change in Interest Rates:
 + 200 basis points(4.7)%(6.9)%
 + 100 basis points(2.3)%(3.3)%
 – 100 basis points0.4 %1.9 %
 – 200 basis points0.6 %3.5 %

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

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

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

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

LendingClub Holding Company

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

Contingencies

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

Critical Accounting Estimates

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

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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 September 30, 2023. In designing and evaluating its disclosure controls and procedures, the Company’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance, not absolute assurance, of achieving the desired control objectives, and is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

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

Changes in Internal Control Over Financial Reporting

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

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

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

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

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

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

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

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

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

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

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Rule 10b5-1 Trading Plans

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

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Item 6. Exhibits

Exhibit Index

The exhibits noted in the accompanying Exhibit Index are filed or incorporated by reference as a part of this Report and such Exhibit Index is incorporated herein by reference.
Incorporated by Reference
Exhibit
Number		Exhibit 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
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
‡    The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

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

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