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~~June 30, ~~2022~~2023

Commission File Number: 001-36771


LendingClub Corporation
(Exact name of registrant as specified in its charter)


Delaware			51-0605731
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

595 Market Street, Suite 200,

San Francisco,

94105

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (415) 632-5600

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, par value $0.01 per share	LC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October 27, 2022,~~July 21, 2023, there were ~~105,088,696~~108,694,120 shares of the registrant’s common stock outstanding.

LENDINGCLUB CORPORATION

TABLE OF CONTENTS



PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Income	54
	Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~	75
	Condensed Consolidated Statements of Changes in Equity	86
	Condensed Consolidated Statements of Cash Flows	107
	Notes to Condensed Consolidated Financial Statements	129
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5147
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	8276
Item 4.	Controls and Procedures	8276

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	8276
Item 1A.	Risk Factors	8276
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	8378
Item 3.	Defaults Upon Senior Securities	8378
Item 4.	Mine Safety Disclosures	8378
Item 5.	Other Information	8478
Item 6.	Exhibits	8579
Signatures		8680

Glossary

The following is a list of ~~common~~ acronyms and terms LendingClub Corporation regularly uses in its financial reporting:



Acquisition			Acquisition of Radius Bancorp, Inc.
AFS			Available for Sale
ACL			Allowance for Credit Losses (includes both the allowance for loan and lease losses and the reserve for unfunded lending commitments)
ALLL			Allowance for Loan and Lease Losses
Annual Report			Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022
ASU			Accounting Standards Update
AUM			Assets Under Management (outstanding balances of Loan Originations serviced by the Company including loans serviced for others as well as loans held for investment and held for sale by the Company)
Balance Sheet			Condensed Consolidated Balance Sheets
LC Bank or LendingClub Bank			LendingClub Bank, National Association
CECL			Current Expected Credit Losses (Accounting Standards Update 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments)
CET1			Common Equity Tier 1
CET1 Capital Ratio			Common Equity Tier 1 capital divided by total risk-weighted assets as defined under the U.S. Basel III capital framework
DCF			Discounted Cash Flow

EPS			~~Net Income (Loss)~~Earnings Per Share
Exchange Act			Securities Exchange Act of 1934, as amended
FRB or Federal Reserve			Board of Governors of the Federal Reserve System and, as applicable, Federal Reserve Bank(s)
GAAP			Accounting Principles Generally Accepted in the United States of America
HFI			Loans which are retained by the Company and held for investment
HFS			Held for sale loans expected to be sold to investors, including Marketplace Loans
Income Statement			Condensed Consolidated Statements of Income
LendingClub, LC, the Company, we, us, or our			LendingClub Corporation and its subsidiaries
Loan Originations			Unsecured personal loans and auto refinance loans originated by the Company or facilitated by third-party issuing banks
Marketplace Loans			Loan Originations designated as HFS and subsequently sold to investors

N/M			Not meaningful
OCC			Office of the Comptroller of the Currency
Parent			LendingClub Corporation (the parent company of LendingClub Bank, National Association and other subsidiaries)

PPP Loans			Loans originated pursuant to the U.S. Small Business Administration’s Paycheck Protection Program

Radius			Radius Bancorp, Inc.


ROA			Return on Average Total Assets
ROE			Return on Average Equity

SEC			United States Securities and Exchange Commission
Securities Act			Securities Act of 1933, as amended

Structured Program transactions			Asset-backed securitization transactions ~~and Certificate Program transactions (CLUB and Levered certificates),~~ where certain accredited investors and qualified institutional buyers have the opportunity to invest in securities backed by a pool of unsecured personal whole loans.


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

LENDINGCLUB CORPORATION

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

Forward-looking Statements

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

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

•The impact of, and our ability to ~~integrate LC Bank~~successfully navigate, the current interest rate and economic climate, a potential recession and the ~~timing and~~resumption of Federal student loan payments;

•our ability to ~~realize~~sustain the ~~expected financial and strategic benefits of the acquisition of Radius Bancorp, Inc.;~~business under adverse circumstances;

•our ability to attract ~~new~~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 ability, and that of third-party partners or providers, to address stricter or heightened regulatory or supervisory requirements and expectations;~~

•our compliance, and that of third-party partners or providers, with applicable local, state and federal laws, regulations and regulatory developments or court decisions affecting our business;

•the impact of ~~COVID-19 and our ability to effectuate, and the effectiveness of, certain operational and strategic initiatives in light of COVID-19;~~

•~~our ability to successfully navigate the current economic climate;~~

•~~our ability to sustain the business under adverse circumstances;~~

•~~the effects of natural disasters, public health crises, acts of war or terrorism and other external events on our customers and business, including the Ukrainian-Russian conflict;~~

•~~the impact of changes in laws or the regulatory or supervisory environment, including as a result of legislation, regulation, policies or changes in government officials or other personnel;~~

•~~the impact of changes in monetary, fiscal, or trade laws or policies, including as a result of actions by governmental agencies, central banks, or supranational authorities;~~

•~~the impact of new~~ accounting standards or policies, including the Current Expected Credit Losses (CECL) standard;

•the results of examinations of us by regulatory authorities and the possibility that any such regulatory authority may, among other things, limit our business activities, increase our allowance for loan losses, increase our capital levels, or affect our ability to borrow funds or maintain or increase deposits;

•our ability ~~and that of third-party partners or providers, to maintain an enterprise risk management framework that is effective in mitigating risk;~~

•~~our ability~~ to effectively manage capital or liquidity to support our evolving business or operational needs, while remaining compliant with regulatory or supervisory requirements and appropriate risk-management standards;

•our ability to ~~attract and retain loan borrowers;~~

•~~our ability to~~ develop and maintain a strong core deposit base or other ~~low-cost~~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;

~~LENDINGCLUB CORPORATION~~

•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 ~~plans of borrowers;~~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;

•~~platform volume, pricing and balance;~~

•~~the effectiveness of our platform’s credit scoring models;~~

•~~our ability to innovate and the adoption and success of new products and services;~~

•~~the adequacy of our corporate governance, risk-management framework and compliance programs;~~

•the impact of, and our ability to resolve, pending litigation and governmental inquiries and investigations;

•the use of our own capital to purchase loans and the impact of holding loans on and our ability to sell loans off our balance sheet;

•our intention not to sell our AFS investment portfolio;

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 ~~ability,~~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 ~~that~~estimated market rate of ~~third-party partners and providers, to maintain service and quality expectations;~~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 ~~recruit~~continue to realize the financial and ~~retain quality employees to support current operations and future growth;~~

•~~changes in the effectiveness and reliability~~strategic benefits of our ~~information technology and computer systems, including the impact of any security or privacy breach;~~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 ~~United States Securities and Exchange Commission (SEC).~~SEC.

We caution you that the foregoing list may not contain all of the forward-looking statements in this Report. We may not actually achieve the plans, intentions or expectations disclosed in forward-looking statements, and you should not place undue reliance on forward-looking statements. We have included important factors in the “Risk Factors” section of this Report and our Annual Report on Form 10-K for the year ended December 31, ~~2021,~~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.

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, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Assets	Assets					Assets
Cash and due from banks	Cash and due from banks	$	23,211	$	35,670	Cash and due from banks	$	20,950	$	23,125
Interest-bearing deposits in banks	Interest-bearing deposits in banks	929,630		651,456		Interest-bearing deposits in banks	1,182,974		1,033,905
Total cash and cash equivalents	Total cash and cash equivalents	952,841		687,126		Total cash and cash equivalents	1,203,924		1,057,030
Restricted cash (1)	Restricted cash (1)	66,285		76,460		Restricted cash (1)	34,792		67,454
Securities available for sale at fair value ($415,726 and $256,170 at amortized cost, respectively)		359,157		263,530
Loans held for sale (includes $90,058 and $142,370 at fair value, respectively) (1)		90,058		391,248
Securities available for sale at fair value ($579,704 and $399,668 at amortized cost, respectively)						Securities available for sale at fair value ($579,704 and $399,668 at amortized cost, respectively)	523,579		345,702
Loans held for sale at fair value						Loans held for sale at fair value	250,361		110,400
Loans and leases held for investment	Loans and leases held for investment	4,806,927		2,899,126		Loans and leases held for investment	5,533,349		5,033,154
Allowance for loan and lease losses	Allowance for loan and lease losses	(303,201)		(144,389)		Allowance for loan and lease losses	(355,163)		(327,852)
Loans and leases held for investment, net	Loans and leases held for investment, net	4,503,726		2,754,737		Loans and leases held for investment, net	5,178,186		4,705,302
Loans held for investment at fair value (1)						Loans held for investment at fair value (1)	404,119		925,938
Retail and certificate loans held for investment at fair value (1)	Retail and certificate loans held for investment at fair value (1)	87,144		229,719		Retail and certificate loans held for investment at fair value (1)	26,837		55,425
Other loans held for investment at fair value (1)		15,057		21,240
Property, equipment and software, net	Property, equipment and software, net	129,957		97,996		Property, equipment and software, net	151,608		136,473
Goodwill	Goodwill	75,717		75,717		Goodwill	75,717		75,717
Other assets (1)	Other assets (1)	495,132		302,546		Other assets (1)	493,383		500,306
Total assets	Total assets	$	6,775,074	$	4,900,319	Total assets	$	8,342,506	$	7,979,747
Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Deposits:	Deposits:					Deposits:
Interest-bearing	Interest-bearing	$	4,868,132	$	2,919,203	Interest-bearing	$	6,653,749	$	6,158,560
Noninterest-bearing	Noninterest-bearing	255,374		216,585		Noninterest-bearing	189,786		233,993
Total deposits	Total deposits	5,123,506		3,135,788		Total deposits	6,843,535		6,392,553
Short-term borrowings		4,803		27,780
Advances from Paycheck Protection Program Liquidity Facility (PPPLF)		91,671		271,933
Borrowings (1)						Borrowings (1)	15,675		74,858
Retail notes, certificates and secured borrowings at fair value (1)	Retail notes, certificates and secured borrowings at fair value (1)	87,144		229,719		Retail notes, certificates and secured borrowings at fair value (1)	26,837		55,425
Payable on Structured Program borrowings (1)		11,185		65,451
Other long-term debt		15,300		15,455

Other liabilities (1)	Other liabilities (1)	320,055		303,951		Other liabilities (1)	250,936		292,617
Total liabilities	Total liabilities	5,653,664		4,050,077		Total liabilities	7,136,983		6,815,453
Equity	Equity					Equity
Series A Preferred stock, $0.01 par value; 1,200,000 shares authorized; 0 shares issued and outstanding		—		—
Common stock, $0.01 par value; 180,000,000 shares authorized; 105,088,761 and 101,043,924 shares issued and outstanding, respectively		1,051		1,010

Common stock, $0.01 par value; 180,000,000 shares authorized; 108,694,120 and 106,546,995 shares issued and outstanding, respectively						Common stock, $0.01 par value; 180,000,000 shares authorized; 108,694,120 and 106,546,995 shares issued and outstanding, respectively	1,087		1,065
Additional paid-in capital	Additional paid-in capital	1,611,627		1,559,616		Additional paid-in capital	1,647,593		1,628,590
Accumulated deficit	Accumulated deficit	(451,336)		(717,430)		Accumulated deficit	(403,969)		(427,745)
Treasury stock, at cost; 7,751 and 0 shares, respectively		(98)		—
Accumulated other comprehensive income (loss)		(39,834)		7,046

Accumulated other comprehensive loss						Accumulated other comprehensive loss	(39,188)		(37,616)

Total equity	Total equity	1,121,410		850,242		Total equity	1,205,523		1,164,294
Total liabilities and equity	Total liabilities and equity	$	6,775,074	$	4,900,319	Total liabilities and equity	$	8,342,506	$	7,979,747

(1) Includes amounts in consolidated variable interest entities (VIEs) ~~presented separately in the table below.~~. See “

~~LENDINGCLUB CORPORATION~~

Notes to Condensed Consolidated ~~Balance Sheets (Continued)~~

~~(In Thousands, Except Share~~Financial Statements – Note 6. Securitizations and ~~Per Share Amounts)~~

~~(Unaudited)~~

Variable Interest Entities
.”

The following table presents the assets and liabilities of consolidated VIEs, which are included in the Condensed Consolidated Balance Sheets (Balance Sheet) above. The assets in the table below may only be used to settle obligations of consolidated VIEs and are in excess of those obligations. Additionally, the assets and liabilities in the table below include third-party assets and liabilities of consolidated VIEs only and exclude intercompany balances that eliminate in consolidation.

September 30, 2022 December 31, 2021
Assets of consolidated VIEs, included in total assets above
Restricted cash $ 8,600 $ 13,462
Loans held for sale at fair value — 41,734
Retail and certificate loans held for investment at fair value 2,940 10,281
Other loans held for investment at fair value 6,375 20,929
Other assets 218 584
Total assets of consolidated VIEs $ 18,133 $ 86,990
Liabilities of consolidated VIEs, included in total liabilities above
Retail notes, certificates and secured borrowings at fair value $ 2,940 $ 10,281
Payable on Structured Program borrowings 11,185 65,451
Other liabilities 39 467
Total liabilities of consolidated VIEs $ 14,164 $ 76,199

See Notes to Condensed Consolidated Financial Statements.

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,
2022 2021 2022 2021
Non-interest income:
Marketplace revenue $ 173,837 $ 174,556 $ 560,187 $ 408,018
Other non-interest income 7,400 6,322 24,739 18,670
Total non-interest income 181,237 180,878 584,926 426,688
Interest income:
Interest on loans held for sale 5,879 8,536 20,459 22,387
Interest and fees on loans and leases held for investment 124,028 57,644 324,381 112,013
Interest on retail and certificate loans held for investment at fair value 3,685 12,172 15,745 48,448
Interest on other loans held for investment at fair value 791 973 2,015 3,674
Interest on securities available for sale 3,820 3,180 12,757 7,954
Other interest income 5,017 355 7,984 701
Total interest income 143,220 82,860 383,341 195,177
Interest expense:
Interest on deposits 15,184 1,899 24,700 4,612
Interest on short-term borrowings 87 849 939 3,116
Interest on retail notes, certificates and secured borrowings 3,685 12,172 15,745 48,448
Interest on Structured Program borrowings 225 2,120 1,349 7,996
Interest on other long-term debt 363 532 1,026 1,306
Total interest expense 19,544 17,572 43,759 65,478
Net interest income 123,676 65,288 339,582 129,699
Total net revenue 304,913 246,166 924,508 556,387
Provision for credit losses 82,739 37,524 205,814 93,651
Non-interest expense:
Compensation and benefits 84,916 73,304 251,629 209,649
Marketing 46,031 50,782 162,608 105,434
Equipment and software 12,491 10,297 35,998 27,471
Occupancy 5,051 6,486 17,279 19,543
Depreciation and amortization 10,681 10,549 32,277 33,823
Professional services 11,943 11,750 40,487 34,873
Other non-interest expense 15,106 15,607 46,531 42,373
Total non-interest expense 186,219 178,775 586,809 473,166
Income (Loss) before income tax benefit (expense) 35,955 29,867 131,885 (10,430)
Income tax benefit (expense) 7,243 (2,682) 134,209 (98)
Net income (loss) $ 43,198 $ 27,185 $ 266,094 $ (10,528)

~~LENDINGCLUB CORPORATION~~

~~Condensed Consolidated Statements of Income (Continued)~~

~~(In Thousands, Except Share and Per Share Amounts)~~

~~(Unaudited)~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2022 2021 2022 2021
Net income (loss) $ 43,198 $ 27,185 $ 266,094 $ (10,528)
Net income (loss) per share: (1)
Basic EPS – common stockholders $ 0.41 $ 0.27 $ 2.59 $ (0.11)
Diluted EPS – common stockholders $ 0.41 $ 0.26 $ 2.56 $ (0.11)
Weighted-average common shares – Basic 104,215,594 99,073,507 102,838,645 96,531,725
Weighted-average common shares – Diluted 105,853,938 106,108,662 104,116,240 96,531,725
Basic EPS – preferred stockholders $ — $ — $ — $ (0.11)
Diluted EPS – preferred stockholders $ — $ — $ — $ (0.11)
Weighted-average common shares, as converted – Basic — — — 873,217
Weighted-average common shares, as converted – Diluted — — — 873,217


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Non-interest income:
Marketplace revenue	$	82,783	$	206,384	$	178,417	$	386,350
Other non-interest income	3,035		7,448		6,391		17,339
Total non-interest income	85,818		213,832		184,808		403,689

Interest income:
Interest on loans held for sale	4,433		7,130		10,190		14,580
Interest and fees on loans and leases held for investment	162,085		108,911		312,552		200,353
Interest on loans held for investment at fair value	21,692		631		48,584		1,224
Interest on retail and certificate loans held for investment at fair value	1,194		5,091		2,877		12,060
Interest on securities available for sale	5,948		4,426		9,848		8,937
Other interest income	19,134		2,279		32,848		2,967
Total interest income	214,486		128,468		416,899		240,121

Interest expense:
Interest on deposits	66,521		6,078		119,794		9,516
Interest on retail notes, certificates and secured borrowings	1,194		5,091		2,877		12,060
Other interest expense	119		1,073		872		2,639
Total interest expense	67,834		12,242		123,543		24,215

Net interest income	146,652		116,226		293,356		215,906

Total net revenue	232,470		330,058		478,164		619,595

Provision for credit losses	66,595		70,566		137,179		123,075

Non-interest expense:
Compensation and benefits	71,553		85,103		144,860		166,713
Marketing	23,940		61,497		50,820		116,577
Equipment and software	13,968		12,461		27,664		23,507
Depreciation and amortization	11,638		10,557		23,992		21,596
Professional services	9,974		16,138		19,032		28,544
Occupancy	4,684		6,209		8,994		12,228
Other non-interest expense	15,322		17,421		33,025		31,425
Total non-interest expense	151,079		209,386		308,387		400,590

Income before income tax benefit (expense)	14,796		50,106		32,598		95,930
Income tax benefit (expense)	(4,686)		131,954		(8,822)		126,966
Net income	$	10,110	$	182,060	$	23,776	$	222,896


Earnings per share: (1)
Basic EPS	$	0.09	$	1.77	$	0.22	$	2.18
Diluted EPS	$	0.09	$	1.73	$	0.22	$	2.13
Weighted-average common shares – Basic	107,892,590		102,776,867		107,405,072		102,138,760
Weighted-average common shares – Diluted	107,895,072		105,042,626		107,409,129		104,644,825

(1) See “Notes to Condensed Consolidated Financial Statements – Note 3. ~~Net Income (Loss)~~Earnings Per Share” for additional information.

See Notes to Condensed Consolidated Financial Statements.

LENDINGCLUB CORPORATION

Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~

(In Thousands)

(Unaudited)

Three Months Ended
September 30, Nine Months Ended
September 30,
2022 2021 2022 2021
Net income (loss) $ 43,198 $ 27,185 $ 266,094 $ (10,528)
Other comprehensive income (loss):
Net unrealized gain (loss) on securities available for sale (24,112) 1,106 (63,929) 4,496
Other comprehensive income (loss), before tax (24,112) 1,106 (63,929) 4,496
Income tax effect (1)
(6,121) — (17,049) —
Other comprehensive income (loss), net of tax (17,991) 1,106 (46,880) 4,496
Total comprehensive income (loss) $ 25,207 $ 28,291 $ 219,214 $ (6,032)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	10,110	$	182,060	$	23,776	$	222,896
Other comprehensive loss:
Net unrealized loss on securities available for sale	(7,758)		(19,830)		(2,159)		(39,817)
Other comprehensive loss, before tax	(7,758)		(19,830)		(2,159)		(39,817)
Income tax effect (1)	2,107		11,128		587		10,928
Other comprehensive loss, net of tax	(5,651)		(8,702)		(1,572)		(28,889)
Total comprehensive income	$	4,459	$	173,358	$	22,204	$	194,007

(1) Income tax effect for the ~~three~~second quarter and ~~nine months ended September 30,~~first half of 2022 ~~after~~reflects the release ~~in the second quarter~~ of ~~2022 of the valuation allowance against~~ the deferred tax asset valuation allowance on the securities available for sale ~~securities.~~portfolio.

See Notes to Condensed Consolidated Financial Statements.

LENDINGCLUB CORPORATION

Condensed Consolidated Statements of Changes in Equity

(In Thousands, Except Share Data)

(Unaudited)

Preferred Stock Common Stock Additional
Paid-in
Capital Treasury Stock Accumulated Other Comprehensive Loss Accumulated
Deficit Total
Equity
Shares Amount Shares Amount Shares Amount
Balance at
June 30, 2022
— $ — 103,630,776 $ 1,036 $ 1,594,458 — $ — $ (21,843) $ (494,534) $ 1,079,117
Stock-based compensation — — — — 18,757 — — — — 18,757
Net issuances under equity incentive plans, net of tax (1)
— — 1,457,985 15 (1,588) 7,751 (98) — — (1,671)
Net unrealized loss on securities available for sale, net of tax — — — — — — — (17,991) — (17,991)
Net income — — — — — — — — 43,198 43,198
Balance at
September 30, 2022
— $ — 105,088,761 $ 1,051 $ 1,611,627 7,751 $ (98) $ (39,834) $ (451,336) 1,121,410
Preferred Stock Common Stock Additional
Paid-in
Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Accumulated
Deficit Total
Equity
Shares Amount Shares Amount Shares Amount
Balance at
December 31, 2021
— $ — 101,043,924 $ 1,010 $ 1,559,616 — $ — $ 7,046 $ (717,430) $ 850,242
Stock-based compensation — — — — 55,608 — — — — 55,608
Net issuances under equity incentive plans, net of tax (1)
— — 4,044,837 41 (3,597) 7,751 (98) — — (3,654)
Net unrealized loss on securities available for sale, net of tax — — — — — — — (46,880) — (46,880)
Net income — — — — — — — — 266,094 266,094
Balance at
September 30, 2022
— $ — 105,088,761 $ 1,051 $ 1,611,627 7,751 $ (98) $ (39,834) $ (451,336) $ 1,121,410
Preferred Stock Common Stock Additional
Paid-in
Capital Treasury Stock Accumulated Other Comprehensive Income Accumulated
Deficit Total
Equity
Shares Amount Shares Amount Shares Amount
Balance at
June 30, 2021
— $ — 98,601,148 $ 986 $ 1,530,314 4,251 $ (92) $ 4,874 $ (773,723) $ 762,359
Stock-based compensation — — — — 17,971 — — — — 17,971
Net issuances under equity incentive plans, net of tax — — 1,181,044 12 (3,843) — — — — (3,831)
Net unrealized gain on securities available for sale, net of tax — — — — — — — 1,106 — 1,106
Net income — — — — — — — — 27,185 27,185
Balance at
September 30, 2021
— $ — 99,782,192 $ 998 $ 1,544,442 4,251 $ (92) $ 5,980 $ (746,538) $ 804,790
Preferred Stock Common Stock Additional
Paid-in
Capital Treasury Stock Accumulated Other Comprehensive Income Accumulated
Deficit Total
Equity
Shares Amount Shares Amount Shares Amount
Balance at
December 31, 2020
43,000 $ — 88,149,510 $ 881 $ 1,457,816 — $ — $ 1,484 $ (736,010) $ 724,171
Stock-based compensation — — — — 52,637 — — — — 52,637
Net issuances under equity incentive plans, net of tax (1)
— — 3,571,568 36 (7,392) 4,251 (92) — — (7,448)
Net issuances of stock related to
acquisition (2)
— — 3,761,114 38 41,424 — — — — 41,462
Exchange of preferred stock for common stock (43,000) — 4,300,000 43 (43) — — — — —
Net unrealized gain on securities available for sale, net of tax — — — — — — — 4,496 — 4,496
Net loss — — — — — — — — (10,528) (10,528)
Balance at
September 30, 2021
— $ — 99,782,192 $ 998 $ 1,544,442 4,251 $ (92) $ 5,980 $ (746,538) $ 804,790

~~LENDINGCLUB CORPORATION~~

~~Condensed Consolidated Statements of Changes in Equity (Continued)~~

~~(In Thousands, Except Share Data)~~

~~(Unaudited)~~

~~(1)~~ ~~Includes shares that were transferred to the Company to satisfy payment of all or a portion of the exercise price in connection with the exercise of stock options.~~

~~(2)~~ ~~Stock issued as part of the consideration paid related to the Acquisition.~~

~~(3)~~ The first nine months of 2020 is presented to reflect the full retrospective adoption of Accounting Standards Update (ASU) 2020-06. See “Note 1. Summary of Significant Accounting Policies” for additional information.



	Common Stock		Additional Paid-in Capital				Accumulated Other Comprehensive Loss	Accumulated Deficit	Total Equity
		Shares			Amount
Balance at March 31, 2023		107,460,734	$	1,075	$	1,637,283			$	(33,537)	$	(414,079)	$	1,190,742
Stock-based compensation		—	—		18,021				—		—		18,021
Net issuances under equity incentive plans		1,233,386	12		(7,711)				—		—		(7,699)



Net unrealized loss on securities available for sale, net of tax		—	—		—				(5,651)		—		(5,651)

Net income		—	—		—				—		10,110		10,110
Balance at June 30, 2023		108,694,120	$	1,087	$	1,647,593			$	(39,188)	$	(403,969)	$	1,205,523


	Common Stock		Additional Paid-in Capital				Accumulated Other Comprehensive Loss	Accumulated Deficit	Total Equity
		Shares			Amount
Balance at December 31, 2022		106,546,995	$	1,065	$	1,628,590			$	(37,616)	$	(427,745)	$	1,164,294
Stock-based compensation		—	—		32,091				—		—		32,091
Net issuances under equity incentive plans		2,147,125	22		(13,088)				—		—		(13,066)



Net unrealized loss on securities available for sale, net of tax		—	—		—				(1,572)		—		(1,572)

Net income		—	—		—				—		23,776		23,776
Balance at June 30, 2023		108,694,120	$	1,087	$	1,647,593			$	(39,188)	$	(403,969)	$	1,205,523

	Common Stock		Additional Paid-in Capital				Accumulated Other Comprehensive Loss	Accumulated Deficit	Total Equity
		Shares			Amount
Balance at March 31, 2022		102,194,037	$	1,022	$	1,576,147			$	(13,141)	$	(676,594)	$	887,434
Stock-based compensation		—	—		19,664				—		—		19,664
Net issuances under equity incentive plans		1,436,739	14		(1,353)				—		—		(1,339)



Net unrealized loss on securities available for sale, net of tax		—	—		—				(8,702)		—		(8,702)
Net income		—	—		—				—		182,060		182,060
Balance at June 30, 2022		103,630,776	$	1,036	$	1,594,458			$	(21,843)	$	(494,534)	$	1,079,117

	Common Stock		Additional Paid-in Capital				Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Total Equity
		Shares			Amount
Balance at December 31, 2021		101,043,924	$	1,010	$	1,559,616			$	7,046	$	(717,430)	$	850,242
Stock-based compensation		—	—		36,851				—		—		36,851
Net issuances under equity incentive plans		2,586,852	26		(2,009)				—		—		(1,983)



Net unrealized loss on securities available for sale, net of tax		—	—		—				(28,889)		—		(28,889)
Net income		—	—		—				—		222,896		222,896
Balance at June 30, 2022		103,630,776	$	1,036	$	1,594,458			$	(21,843)	$	(494,534)	$	1,079,117

See Notes to Condensed Consolidated Financial Statements.

LENDINGCLUB CORPORATION

Condensed Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)


		Nine Months Ended September 30,					Six Months Ended June 30,
		2022		2021			2023		2022
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net income (loss)		$	266,094	$	(10,528)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net income						Net income	$	23,776	$	222,896
Adjustments to reconcile net income to net cash provided by operating activities:						Adjustments to reconcile net income to net cash provided by operating activities:
Net fair value adjustments	Net fair value adjustments	(24,277)		6,714		Net fair value adjustments	38,856		(24,896)
Change in fair value of loan servicing assets						Change in fair value of loan servicing assets	29,650		38,013
Gain on sales of loans						Gain on sales of loans	(27,346)		(53,429)
Provision for credit losses	Provision for credit losses	205,814		93,651		Provision for credit losses	137,179		123,075
Change in fair value of loan servicing assets		53,928		39,584
Accretion of loan deferred fees and costs(1)		(63,486)		(24,996)
Accretion of loan deferred fees and costs						Accretion of loan deferred fees and costs	(50,292)		(41,392)
Stock-based compensation, net	Stock-based compensation, net	50,210		49,321		Stock-based compensation, net	27,716		33,467

Depreciation and amortization(1)		32,277		33,823
Gain on sales of loans		(76,983)		(49,547)
Depreciation and amortization						Depreciation and amortization	23,992		21,596
Income tax benefit from release of tax valuation allowance	Income tax benefit from release of tax valuation allowance	(140,315)		—		Income tax benefit from release of tax valuation allowance	—		(135,300)
Other, net~~(1)~~	Other, net~~(1)~~	515		8,631		Other, net~~(1)~~	(6,363)		2,520

Net change to loans held for sale	Net change to loans held for sale	42,991		(14,756)		Net change to loans held for sale	(138,347)		66,787

Net change in operating assets and liabilities:	Net change in operating assets and liabilities:					Net change in operating assets and liabilities:

Other assets	Other assets	(11,152)		(7,610)		Other assets	14,065		(6,648)

Other liabilities	Other liabilities	6,602		(6,000)		Other liabilities	(49,751)		(14,734)

Net cash provided by operating activities	Net cash provided by operating activities	342,218		118,287		Net cash provided by operating activities	23,135		231,955
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Acquisition of company		—		(145,344)
Cash received from acquisition		—		668,236

Net change in loans and leases	Net change in loans and leases	(1,630,858)		(1,072,274)		Net change in loans and leases	(222,167)		(881,279)
Net decrease in retail and certificate loans	Net decrease in retail and certificate loans	148,963		362,005		Net decrease in retail and certificate loans	30,222		113,422

Purchases of securities available for sale	Purchases of securities available for sale	(222,534)		(78,914)		Purchases of securities available for sale	(45,120)		(222,534)
Proceeds from sales of securities available for sale		—		106,192

Proceeds from maturities and paydowns of securities available for sale	Proceeds from maturities and paydowns of securities available for sale	69,776		108,640		Proceeds from maturities and paydowns of securities available for sale	19,022		49,645
Purchases of property, equipment and software, net	Purchases of property, equipment and software, net	(54,659)		(24,435)		Purchases of property, equipment and software, net	(32,255)		(37,358)

Other investing activities	Other investing activities	(5,704)		480		Other investing activities	(7,600)		(4,023)

Net cash used for investing activities	Net cash used for investing activities	(1,695,016)		(75,414)		Net cash used for investing activities	(257,898)		(982,127)
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:
Net change in demand deposits and savings accounts		1,987,718		809,488
Proceeds from PPPLF		—		325,194
Repayment on PPPLF		(180,262)		(354,211)
Net change in deposits						Net change in deposits	450,559		1,391,884

Principal payments on borrowings						Principal payments on borrowings	(58,276)		(183,244)

Principal payments on retail notes and certificates	Principal payments on retail notes and certificates	(149,115)		(362,160)		Principal payments on retail notes and certificates	(30,222)		(113,498)

Principal payments on Structured Program borrowings		(18,613)		(70,496)

Principal payments on short-term borrowings		(23,396)		(69,163)
Principal payments on long-term debt		—		(2,834)

Other financing activities	Other financing activities	(7,994)		(7,448)		Other financing activities	(13,066)		(6,324)
Net cash provided by financing activities	Net cash provided by financing activities	1,608,338		268,370		Net cash provided by financing activities	348,995		1,088,818
Net Increase in Cash, Cash Equivalents and Restricted Cash	Net Increase in Cash, Cash Equivalents and Restricted Cash	$	255,540	$	311,243	Net Increase in Cash, Cash Equivalents and Restricted Cash	$	114,232	$	338,646
Cash, Cash Equivalents and Restricted Cash, Beginning of Period	Cash, Cash Equivalents and Restricted Cash, Beginning of Period	$	763,586	$	628,485	Cash, Cash Equivalents and Restricted Cash, Beginning of Period	$	1,124,484	$	763,586
Cash, Cash Equivalents and Restricted Cash, End of Period	Cash, Cash Equivalents and Restricted Cash, End of Period	$	1,019,126	$	939,728	Cash, Cash Equivalents and Restricted Cash, End of Period	$	1,238,716	$	1,102,232

107

LENDINGCLUB CORPORATION

Condensed Consolidated Statements of Cash Flows (Continued)

(In Thousands)

(Unaudited)

Nine Months Ended
September 30,
2022 2021
Supplemental Cash Flow Information:
Cash paid for interest $ 43,623 $ 62,926
Cash paid for income taxes $ 14,003 $ 3,295
Cash paid for operating leases included in the measurement of lease liabilities $ 12,394 $ 15,895
Non-cash investing activity:
Loans and leases held for investment transferred to loans held for sale $ — $ 154,082
Non-cash investing and financing activity:
Net issuances of stock related to acquisition $ — $ 41,462
Non-cash financing activity:
Derecognition of payable to securitization note and residual certificate holders held in consolidated VIE $ 36,072 $ —

~~(1)~~ ~~Prior period amounts have been reclassified to conform to the current period presentation.~~


	Six Months Ended June 30,
	2023		2022

Supplemental Cash Flow Information:
Cash paid for interest	$	115,112	$	19,463
Cash paid for taxes	$	7,245	$	10,840
Cash paid for operating leases included in the measurement of lease liabilities	$	6,364	$	9,253

Non-cash investing activity:

Net securities retained from Structured Program transactions	$	153,229	$	—





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, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Cash and cash equivalents	Cash and cash equivalents	$	952,841	$	687,126	Cash and cash equivalents	$	1,203,924	$	1,057,030
Restricted cash	Restricted cash	66,285		76,460		Restricted cash	34,792		67,454
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	1,019,126	$	763,586	Total cash, cash equivalents and restricted cash	$	1,238,716	$	1,124,484

See Notes to Condensed Consolidated Financial Statements.

118

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, ~~2021~~2022 (Annual Report) filed on February ~~11, 2022.~~9, 2023.

Significant Accounting Policies

The Company’s significant accounting policies are discussed in “Part II – Item 8. Financial Statements and Supplementary Data – Note 1. Summary of Significant Accounting Policies” in the Annual Report. There have been no changes to these significant accounting policies for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2022.~~2023, except for the impact of the new adopted accounting standards noted below.

Adoption of New Accounting Standards

The Company ~~did not adopt any~~adopted the following new accounting ~~standards~~standard during the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2022, except as noted below.~~2023:

~~In August 2020, the Financial~~The FASB issued Accounting Standards ~~Board (FASB) issued ASU 2020-06,~~Update (ASU) 2022-02,Financial Instruments – Credit Losses (Topic 326): Troubled Debt ~~with Conversion~~Restructurings and ~~Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,~~ Vintage Disclosures,which ~~simplifies~~eliminates the accounting guidance on troubled debt restructurings (TDRs) for ~~certain financial instruments with characteristics~~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 liabilities and equity including convertible instruments and contracts on an entity’s own equity. The guidance allows for either full or modified retrospective adoption for fiscal periods beginning after December 15, 2021.origination. The Company adopted ~~this~~ ASU on2022-02 as of January 1, ~~2022~~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 ~~full retrospective approach. As a result~~use of the ~~adoption, the deemed dividend recorded~~post-modified effective interest rate when a discounted cash flow method is used in the ~~first quarter of 2020 related~~CECL calculation. The ASU updates disclosures for creditors with respect to ~~the beneficial conversion feature~~loan refinancings and restructurings for borrowers experiencing financial difficulty.

The FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the ~~convertible Series A Preferred Stock, was reclassified from Accumulated Deficit~~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 ~~Additional Paid-in Capital within Equity,~~transactions affected by reference rate reform. The provisions of this topic are elective and may be applied prospectively as ~~shown in~~of the ~~following table:~~beginning of the reporting period when the election is made through December 31, 2024.

Nine Months Ended September 30, 2020 Additional Paid-in Capital Accumulated Deficit
Issuance of preferred stock in exchange for common stock, as originally reported $ 149 $ (50,204)
Adoption of ASU 2020-06 (50,204) 50,204
Issuance of preferred stock in exchange for common stock, as adjusted $ (50,055) $ —

129

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

~~In addition, since the beneficial conversion feature is no longer recorded~~The Company adopted this standard as ~~a deemed dividend, the allocation~~ of ~~net income (loss) attributable to stockholders and the related Basic and Diluted net income (loss) per share (EPS) has been adjusted, as shown in the following table:~~

Nine Months Ended September 30, 2020 Common Stock Preferred Stock
Net income (loss) attributable to stockholders, as originally reported $ (180,172) $ 19,289
Adoption of ASU 2020-06 42,851 (42,851)
Net loss attributable to stockholders, as adjusted $ (137,321) $ (23,562)
Basic and Diluted EPS, as originally reported $ (2.35) $ 1.46
Adoption of ASU 2020-06 0.56 (3.25)
Basic and Diluted EPS, as adjusted $ (1.79) $ (1.79)

April

1, 2023. The adoption of this ~~ASU~~standard did not have a material impact on the Company’s financial position, ~~and~~results of operations, cash flows, ~~in the first nine months of 2020, nor did it change net loss reported in the period.~~

~~New Accounting Standards Not Yet Adopted~~

~~In March 2020, the FASB issued ASU 2020-04,~~ ~~Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting,~~ ~~which, if certain criteria are met, provides optional expedients~~ and exceptions for applying GAAP to transactions affected by reference rate reform. These transactions include contract modifications, hedging relationships, and sale or transfer of debt securities classified as held-to-maturity. The provisions of the new standard are elective and may be applied prospectively upon adoption to reporting periods through December 31, 2022. The FASB has issued an exposure draft that would extend the sunset of the adoption period through December 31, 2024. The Company has not made an election to adopt this ASU and does not expect its impact would be material to the financial statements if adopted in future reporting periods.

~~In March 2022, the FASB issued ASU 2022-02,~~ ~~Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures,~~ which eliminates the accounting guidance on troubled debt restructurings (TDRs) for creditors that have adopted the CECL model and amends the guidance on “vintage disclosures” to require disclosure of current period gross write-offs by year of origination. The ASU also updates the requirements related to accounting for credit losses under Accounting Standards Codification 326 and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty. The provisions of this standard are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the impact of this ASU.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: ~~Origination~~The Company receives fees ~~are primarily fees earned related to originating and issuing~~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.

~~LENDINGCLUB CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)~~

~~(Unaudited)~~

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

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

The following table presents components of marketplace revenue for the periods presented:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Origination fees	Origination fees	$	127,142	$	129,125	$	398,487	$	298,486	Origination fees	$	70,989	$	149,252	$	141,532	$	271,345
Servicing fees	Servicing fees	23,760		20,819		60,440		66,699		Servicing fees	22,015		18,166		48,395		36,680
Gain on sales of loans	Gain on sales of loans	23,554		21,907		76,983		49,547		Gain on sales of loans	13,221		29,319		27,346		53,429
Net fair value adjustments	Net fair value adjustments	(619)		2,705		24,277		(6,714)		Net fair value adjustments	(23,442)		9,647		(38,856)		24,896
Total marketplace revenue	Total marketplace revenue	$	173,837	$	174,556	$	560,187	$	408,018	Total marketplace revenue	$	82,783	$	206,384	$	178,417	$	386,350

1410

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

3. ~~Net Income (Loss)~~Earnings Per Share

The following ~~tables detail~~table details the computation of the Company’s Basic and Diluted ~~EPS of common stock and Series A Preferred Stock:~~EPS:

Three Months Ended September 30, 2022 2021
Common Stock Common Stock
Basic EPS:
Net income attributable to stockholders $ 43,198 $ 27,185
Weighted-average common shares – Basic 104,215,594 99,073,507
Basic EPS $ 0.41 $ 0.27
Diluted EPS:
Net income attributable to stockholders $ 43,198 $ 27,185
Weighted-average common shares – Diluted 105,853,938 106,108,662
Diluted EPS $ 0.41 $ 0.26

Nine Months Ended September 30, 2022 2021
Common Stock Common Stock
Preferred Stock (1)
Basic EPS:
Net income (loss) attributable to stockholders $ 266,094 $ (10,434) $ (94)
Weighted-average common shares – Basic 102,838,645 96,531,725 873,217
Basic EPS $ 2.59 $ (0.11) $ (0.11)
Diluted EPS:
Net income (loss) attributable to stockholders $ 266,094 $ (10,434) $ (94)
Weighted-average common shares – Diluted 104,116,240 96,531,725 873,217
Diluted EPS $ 2.56 $ (0.11) $ (0.11)

~~(1)~~ ~~Presented on an as-converted basis.~~

There were no weighted-average common shares that were excluded from the Company’s Diluted EPS computation during the third quarters of 2022 and 2021 or during the first nine months of 2022. The following table summarizes the weighted-average common shares that were excluded from the Company’s Diluted EPS computation because their effect would have been anti-dilutive during the first nine months of 2021:

~~Restricted Stock Units (RSUs) and Performance-based RSUs (PBRSUs)~~

~~3,076,073~~

~~Preferred stock~~

~~873,217~~

~~Stock options~~

~~139,868~~

~~Total~~

~~4,089,158~~


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Basic EPS:
Net income attributable to stockholders	$	10,110	$	182,060	$	23,776	$	222,896
Weighted-average common shares – Basic	107,892,590		102,776,867		107,405,072		102,138,760
Basic EPS	$	0.09	$	1.77	$	0.22	$	2.18

Diluted EPS:
Net income attributable to stockholders	$	10,110	$	182,060	$	23,776	$	222,896
Weighted-average common shares – Diluted	107,895,072		105,042,626		107,409,129		104,644,825
Diluted EPS	$	0.09	$	1.73	$	0.22	$	2.13

1511

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

4. Securities Available for Sale

The amortized cost, gross unrealized gains and losses, credit valuation allowance and fair value of available for sale (AFS) securities were as follows:

September 30, 2022 Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair
Value
U.S. agency residential mortgage-backed securities $ 260,286 $ — $ (43,576) $ 216,710
U.S. agency securities 90,445 — (15,060) 75,385
Commercial mortgage-backed securities 28,007 — (4,275) 23,732
Other asset-backed securities 19,313 38 (818) 18,533
Asset-backed senior securities 9,154 — — 9,154
Asset-backed subordinated securities 2,221 5,223 — 7,444
CLUB Certificate asset-backed securities 3,018 2,830 — 5,848
Municipal securities 3,282 — (931) 2,351
Total securities available for sale (1)
$ 415,726 $ 8,091 $ (64,660) $ 359,157


June 30, 2023	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. agency residential mortgage-backed securities	$	254,999	$	—	$	(40,483)	$	214,516
Senior asset-backed securities related to Structured Program transactions	144,529		—		(605)		143,924
U.S. agency securities	93,449		—		(14,409)		79,040
Mortgage-backed securities	43,723		—		(5,580)		38,143
Other asset-backed securities	29,187		44		(765)		28,466
Other asset-backed securities related to Structured Program transactions (1)	10,550		6,452		(22)		16,980
Municipal securities	3,267		—		(757)		2,510

Total securities available for sale (2)	$	579,704	$	6,496	$	(62,621)	$	523,579

December 31, 2021 Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair
Value
U.S. agency residential mortgage-backed securities $ 125,985 $ — $ (2,286) $ 123,699
Asset-backed senior securities 28,057 72 — 28,129
U.S. agency securities 26,902 1 (731) 26,172
Other asset-backed securities 26,112 151 (130) 26,133
Commercial mortgage-backed securities 26,649 1 (552) 26,098
CLUB Certificate asset-backed securities 15,049 3,236 — 18,285
Asset-backed subordinated securities 4,119 7,643 — 11,762
Municipal securities 3,297 — (45) 3,252
Total securities available for sale (1)
$ 256,170 $ 11,104 $ (3,744) $ 263,530


December 31, 2022	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. agency residential mortgage-backed securities	$	255,675	$	—	$	(41,248)	$	214,427
U.S. agency securities	90,447		—		(16,053)		74,394
Mortgage-backed securities	26,988		—		(4,470)		22,518
Asset-backed securities related to Structured Program transactions	8,322		9,395		—		17,717
Other asset-backed securities	14,959		29		(785)		14,203






Municipal securities	3,277		—		(834)		2,443
Total securities available for sale (2)	$	399,668	$	9,424	$	(63,390)	$	345,702

(1) As of ~~September~~June 30, ~~2022~~2023, $8.5 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 June 30, 2023 and December 31, ~~2021,~~2022, includes ~~$325.9~~$352.1 million and ~~$236.8~~$319.0 million, respectively, of fair value securities pledged as collateral.

1612

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					Less than 12 months				12 months or longer				Total
September 30, 2022		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
June 30, 2023														June 30, 2023	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. agency residential mortgage-backed securities	U.S. agency residential mortgage-backed securities	$	142,629	$	(23,204)	$	74,081	$	(20,372)	$	216,710	$	(43,576)	U.S. agency residential mortgage-backed securities	$	22,653	$	(1,331)	$	191,863	$	(39,152)	$	214,516	$	(40,483)
Senior asset-backed securities related to Structured Program transactions														Senior asset-backed securities related to Structured Program transactions	94,552		(605)		—		—		94,552		(605)
U.S. agency securities	U.S. agency securities	61,949		(9,608)		13,436		(5,452)		75,385		(15,060)		U.S. agency securities	5,878		(122)		73,162		(14,287)		79,040		(14,409)
Commercial mortgage-backed securities		6,388		(1,013)		17,344		(3,262)		23,732		(4,275)
Mortgage-backed securities														Mortgage-backed securities	16,946		(787)		21,197		(4,793)		38,143		(5,580)
Other asset-backed securities	Other asset-backed securities	8,973		(156)		5,388		(662)		14,361		(818)		Other asset-backed securities	14,035		(48)		8,479		(717)		22,514		(765)

Other asset-backed securities related to Structured Program transactions														Other asset-backed securities related to Structured Program transactions	5,703		(22)		—		—		5,703		(22)
Municipal securities	Municipal securities	—		—		2,351		(931)		2,351		(931)		Municipal securities	—		—		2,510		(757)		2,510		(757)
Total securities with unrealized losses	Total securities with unrealized losses	$	219,939	$	(33,981)	$	112,600	$	(30,679)	$	332,539	$	(64,660)	Total securities with unrealized losses	$	159,767	$	(2,915)	$	297,211	$	(59,706)	$	456,978	$	(62,621)

		Less than 12 months				12 months or longer				Total					Less than 12 months				12 months or longer				Total
December 31, 2021		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
December 31, 2022														December 31, 2022	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. agency residential mortgage-backed securities	U.S. agency residential mortgage-backed securities	$	123,668	$	(2,286)	$	—	$	—	$	123,668	$	(2,286)	U.S. agency residential mortgage-backed securities	$	111,843	$	(15,831)	$	102,584	$	(25,417)	$	214,427	$	(41,248)
U.S. agency securities	U.S. agency securities	24,175		(731)		—		—		24,175		(731)		U.S. agency securities	50,352		(7,213)		24,042		(8,840)		74,394		(16,053)
Mortgage-backed securities														Mortgage-backed securities	2,441		(229)		20,077		(4,241)		22,518		(4,470)
Other asset-backed securities	Other asset-backed securities	13,224		(130)		—		—		13,224		(130)		Other asset-backed securities	4,086		(73)		6,945		(712)		11,031		(785)
Commercial mortgage-backed securities		25,927		(552)		—		—		25,927		(552)
Municipal securities	Municipal securities	3,252		(45)		—		—		3,252		(45)		Municipal securities	—		—		2,443		(834)		2,443		(834)
Total securities with unrealized losses	Total securities with unrealized losses	$	190,246	$	(3,744)	$	—	$	—	$	190,246	$	(3,744)	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 quarter~~second quarters and first ~~nine months~~halves of 2023 and 2022. ~~The following table presents~~At June 30, 2023, the ~~activity~~majority of the Company’s AFS investment portfolio was comprised of U.S. agency-backed securities and asset-backed securities related to Structured Program transactions. 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 ~~allowance for~~Company’s AFS investment portfolio at June 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 ~~by major security type, during the third quarter~~in an unrealized loss position, see “Part II – Item 8. Financial Statements and ~~first nine months~~Supplementary Data – Note 1. Summary of ~~2021:~~Significant Accounting Policies” in our Annual Report.

Credit Valuation Allowance CLUB Certificate asset-backed securities Asset-backed subordinated securities Total
Balance at June 30, 2021 $ (40) $ (552) $ (592)
Reversal of credit loss expense 40 456 496
Balance at September 30, 2021 $ — $ (96) $ (96)

Credit Valuation Allowance CLUB Certificate asset-backed securities Asset-backed subordinated securities Total
Balance at December 31, 2020 $ (4,190) $ (14,546) $ (18,736)
Reversal of credit loss expense 236 3,052 3,288
Reversal of allowance arising from PCD financial assets 3,954 11,398 15,352
Balance at September 30, 2021 $ — $ (96) $ (96)

1713

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, 2022		Amortized Cost		Fair Value		Weighted- average Yield(1)
June 30, 2023								June 30, 2023	Amortized Cost		Fair Value		Weighted- average Yield (1)

Due after 1 year through 5 years:	Due after 1 year through 5 years:							Due after 1 year through 5 years:
Senior asset-backed securities related to Structured Program transactions								Senior asset-backed securities related to Structured Program transactions	$	144,529	$	143,924
Other asset-backed securities related to Structured Program transactions								Other asset-backed securities related to Structured Program transactions	10,550		16,980
U.S. agency securities	U.S. agency securities	9,000		8,640				U.S. agency securities	9,000		8,595
Commercial mortgage-backed securities		1,042		919
Mortgage-backed securities								Mortgage-backed securities	1,788		1,583
U.S. agency residential mortgage-backed securities								U.S. agency residential mortgage-backed securities	4		4
Total due after 1 year through 5 years	Total due after 1 year through 5 years	10,042		9,559		3.33	%	Total due after 1 year through 5 years	165,871		171,086		5.19	%
Due after 5 years through 10 years:	Due after 5 years through 10 years:							Due after 5 years through 10 years:
U.S. agency securities								U.S. agency securities	18,847		17,257
Other asset-backed securities								Other asset-backed securities	16,491		16,471

U.S. agency residential mortgage-backed securities	U.S. agency residential mortgage-backed securities	6,604		6,093				U.S. agency residential mortgage-backed securities	5,512		5,127
U.S. agency securities		12,847		11,287
Commercial mortgage-backed securities		2,871		2,367
Other asset-backed securities		649		656
Mortgage-backed securities								Mortgage-backed securities	2,047		1,693
Municipal securities	Municipal securities	625		516				Municipal securities	622		541
Total due after 5 years through 10 years	Total due after 5 years through 10 years	23,596		20,919		2.63	%	Total due after 5 years through 10 years	43,519		41,089		4.19	%
Due after 10 years:	Due after 10 years:							Due after 10 years:
U.S. agency residential mortgage-backed securities	U.S. agency residential mortgage-backed securities	253,682		210,617				U.S. agency residential mortgage-backed securities	249,483		209,385
U.S. agency securities	U.S. agency securities	68,598		55,458				U.S. agency securities	65,602		53,188
Commercial mortgage-backed securities		24,094		20,446
Mortgage-backed securities								Mortgage-backed securities	39,888		34,867
Other asset-backed securities	Other asset-backed securities	18,664		17,877				Other asset-backed securities	12,696		11,995
Municipal securities	Municipal securities	2,657		1,835				Municipal securities	2,645		1,969
Total due after 10 years	Total due after 10 years	367,695		306,233		2.44	%	Total due after 10 years	370,314		311,404		2.69	%
Asset-backed securities related to Structured Program transactions		14,393		22,446		56.16	%
Total securities available for sale	Total securities available for sale	$	415,726	$	359,157	4.33	%	Total securities available for sale	$	579,704	$	523,579	3.52	%

(1) The weighted-average yield is computed using the amortized cost at ~~September~~June 30, ~~2022.~~2023.

There were no sales of AFS securities during the ~~third~~second quarters and first halves of ~~2022~~2023 and ~~2021 or the first nine months of~~ 2022. ~~Proceeds and gross realized gains and losses from sales of AFS securities during the first nine months of 2021 were as follows:~~

~~Proceeds~~

~~106,192~~

~~Gross realized gains~~

~~708~~

~~Gross realized losses~~

~~(952)~~

1814

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~~for Loan and Lease Losses

LendingClub records certain loans and leases held for investment (HFI) at amortized ~~cost, whereas loans initially classified as~~cost. Other HFI and all held for sale (HFS) loans are recorded at fair ~~value.~~ value with the Company’s election of the fair value option. Net a~~Accrued~~ccrued interest receivable is excluded from the amortized cost basis of loans and leases HFI and is reported within “Other assets” on the Balance Sheet. ~~Accrued~~Net accrued interest ~~within that caption~~receivable related to loans and leases HFI at amortized cost was ~~$27.0~~$32.2 million and ~~$15.6~~$27.9 million as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~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 ~~tables present~~table presents the components of each portfolio segment by class of financing receivable:


		September 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Unsecured personal	Unsecured personal	$	3,642,254	$	1,804,578	Unsecured personal	$	4,371,330	$	3,866,373
Residential mortgages	Residential mortgages	197,776		151,362		Residential mortgages	192,256		199,601
Secured consumer	Secured consumer	180,768		65,976		Secured consumer	237,372		194,634

Total consumer loans held for investment	Total consumer loans held for investment	4,020,798		2,021,916		Total consumer loans held for investment	4,800,958		4,260,608
Equipment finance (1)	Equipment finance (1)	167,447		149,155		Equipment finance (1)	142,073		160,319
Commercial real estate	Commercial real estate	372,406		310,399		Commercial real estate	382,738		373,501
Commercial and industrial (2)	Commercial and industrial (2)	246,276		417,656		Commercial and industrial (2)	207,580		238,726
Total commercial loans and leases held for investment	Total commercial loans and leases held for investment	786,129		877,210		Total commercial loans and leases held for investment	732,391		772,546
Total loans and leases held for investment	Total loans and leases held for investment	4,806,927		2,899,126		Total loans and leases held for investment	5,533,349		5,033,154
Allowance for loan and lease losses	Allowance for loan and lease losses	(303,201)		(144,389)		Allowance for loan and lease losses	(355,163)		(327,852)
Loans and leases held for investment, net (3)	Loans and leases held for investment, net (3)	$	4,503,726	$	2,754,737	Loans and leases held for investment, net (3)	$	5,178,186	$	4,705,302

(1) Comprised of sales-type leases for equipment. See ~~“Note~~“Note 16. ~~Leases”~~Leases” for additional information.

(2) Includes ~~$89.4~~$17.6 million and ~~$268.3~~$67.0 million of pledged loans under the Paycheck Protection Program (PPP) as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

(3) As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company had ~~$278.4 million~~$4.8 billion and ~~$149.2~~$283.6 million in loans pledged as collateral under the Federal Reserve Bank (FRB) Discount Window, respectively. In addition, as of June 30, 2023 and December 31, 2022, the Company had $151.2 million and $156.2 million in loans pledged to the Federal Home Loan Bank (FHLB) of Des Moines, respectively.


September 30, 2022		Gross		ALLL		Net		Allowance Ratios (1)
June 30, 2023										June 30, 2023	Gross		ALLL		Net		Allowance Ratios (1)
Total consumer loans held for investment	Total consumer loans held for investment	$	4,020,798	$	288,138	$	3,732,660	7.2	%	Total consumer loans held for investment	$	4,800,958	$	341,161	$	4,459,797	7.1	%
Total commercial loans and leases held for investment ~~(2)~~	Total commercial loans and leases held for investment ~~(2)~~	786,129		15,063		771,066		1.9	%	Total commercial loans and leases held for investment ~~(2)~~	732,391		14,002		718,389		1.9	%
Total loans and leases held for investment ~~(2)~~	Total loans and leases held for investment ~~(2)~~	$	4,806,927	$	303,201	$	4,503,726	6.3	%	Total loans and leases held for investment ~~(2)~~	$	5,533,349	$	355,163	$	5,178,186	6.4	%


December 31, 2021		Gross		ALLL		Net		Allowance Ratios (1)
December 31, 2022										December 31, 2022	Gross		ALLL		Net		Allowance Ratios (1)
Total consumer loans held for investment	Total consumer loans held for investment	$	2,021,916	$	128,812	$	1,893,104	6.4	%	Total consumer loans held for investment	$	4,260,608	$	312,489	$	3,948,119	7.3	%
Total commercial loans and leases held for investment ~~(2)~~	Total commercial loans and leases held for investment ~~(2)~~	877,210		15,577		861,633		1.8	%	Total commercial loans and leases held for investment ~~(2)~~	772,546		15,363		757,183		2.0	%
Total loans and leases held for investment ~~(2)~~	Total loans and leases held for investment ~~(2)~~	$	2,899,126	$	144,389	$	2,754,737	5.0	%	Total loans and leases held for investment ~~(2)~~	$	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.~~HFI at amortized cost.

~~(2)~~ As of September 30, 2022, excluding the $89.4 million of PPP loans, the ALLL represented 2.2% of commercial loans and leases HFI and 6.4% of total loans and leases HFI. As of December 31, 2021, excluding $268.3 million of PPP loans, the ALLL represented 2.6% of commercial loans and leases HFI and 5.5% of total loans and leases HFI. PPP loans are guaranteed by the Small Business Administration (SBA) and, therefore, the Company determined no ACL is required on these loans.

1915

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,														Three Months Ended June 30,
		2022						2021						2023				2022
		Consumer		Commercial		Total		Consumer		Commercial		Total				Consumer		Commercial		Total		Consumer		Commercial		Total
Allowance for loan and lease losses, beginning of period	Allowance for loan and lease losses, beginning of period	$	228,184	$	15,076	$	243,260	$	54,058	$	17,023	$	71,081		Allowance for loan and lease losses, beginning of period	$	333,546	$	15,311	$	348,857	$	173,857	$	14,128	$	187,985
Credit loss expense for loans and leases held for investment	Credit loss expense for loans and leases held for investment	81,935		664		82,599		37,695		(562)		37,133			Credit loss expense for loans and leases held for investment	66,874		(684)		66,190		68,314		1,739		70,053

Charge-offs (1)	Charge-offs (1)	(22,944)		(784)		(23,728)		(3,142)		(1,194)		(4,336)			Charge-offs (1)	(63,345)		(924)		(64,269)		(14,707)		(1,145)		(15,852)
Recoveries	Recoveries	963		107		1,070		20		838		858			Recoveries	4,086		299		4,385		720		354		1,074
Allowance for loan and lease losses, end of period	Allowance for loan and lease losses, end of period	$	288,138	$	15,063	$	303,201	$	88,631	$	16,105	$	104,736		Allowance for loan and lease losses, end of period	$	341,161	$	14,002	$	355,163	$	228,184	$	15,076	$	243,260

Reserve for unfunded lending commitments, beginning of period	Reserve for unfunded lending commitments, beginning of period	$	136	$	1,889	$	2,025	$	—	$	390	$	390		Reserve for unfunded lending commitments, beginning of period	$	67	$	1,545	$	1,612	$	—	$	1,512	$	1,512
Credit loss expense for unfunded lending commitments	Credit loss expense for unfunded lending commitments	(78)		218		140		50		837		887			Credit loss expense for unfunded lending commitments	(67)		472		405		136		377		513
Reserve for unfunded lending commitments, end of period (2)	Reserve for unfunded lending commitments, end of period (2)	$	58	$	2,107	$	2,165	$	50	$	1,227	$	1,277		Reserve for unfunded lending commitments, end of period (2)	$	—	$	2,017	$	2,017	$	136	$	1,889	$	2,025


		Nine Months Ended September 30,														Six Months Ended June 30,
		2022						2021						2023				2022
		Consumer		Commercial		Total		Consumer		Commercial		Total				Consumer		Commercial		Total		Consumer		Commercial		Total
Allowance for loan and lease losses, beginning of period	Allowance for loan and lease losses, beginning of period	$	128,812	$	15,577	$	144,389	$	—	$	—	$	—		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 (3)		203,967		913		204,880		91,194		4,468		95,662
Initial allowance for PCD loans acquired during the period (4)		—		—		—		603		11,837		12,440
Credit loss expense for loans and leases held for investment															Credit loss expense for loans and leases held for investment	137,558		(518)		137,040		122,032		249		122,281

Charge-offs (1)	Charge-offs (1)	(46,668)		(2,001)		(48,669)		(3,232)		(1,350)		(4,582)			Charge-offs (1)	(115,557)		(1,275)		(116,832)		(23,724)		(1,217)		(24,941)
Recoveries	Recoveries	2,027		574		2,601		66		1,150		1,216			Recoveries	6,671		432		7,103		1,064		467		1,531
Allowance for loan and lease losses, end of period	Allowance for loan and lease losses, end of period	$	288,138	$	15,063	$	303,201	$	88,631	$	16,105	$	104,736		Allowance for loan and lease losses, end of period	$	341,161	$	14,002	$	355,163	$	228,184	$	15,076	$	243,260

Reserve for unfunded lending commitments, beginning of period	Reserve for unfunded lending commitments, beginning of period	$	—	$	1,231	$	1,231	$	—	$	—	$	—		Reserve for unfunded lending commitments, beginning of period	$	18	$	1,860	$	1,878	$	—	$	1,231	$	1,231
Credit loss expense for unfunded lending commitments	Credit loss expense for unfunded lending commitments	58		876		934		50		1,227		1,277			Credit loss expense for unfunded lending commitments	(18)		157		139		136		658		794
Reserve for unfunded lending commitments, end of period (2)	Reserve for unfunded lending commitments, end of period (2)	$	58	$	2,107	$	2,165	$	50	$	1,227	$	1,277		Reserve for unfunded lending commitments, end of period (2)	$	—	$	2,017	$	2,017	$	136	$	1,889	$	2,025

(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 ~~$144.0~~$108.9 million and ~~$115.5~~$132.6 million of unfunded commitments, associated primarily with the commercial loan portfolio, as of ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

~~(3)~~ ~~Includes $6.9 million of credit loss expense for Radius loans at Acquisition for the first quarter of 2021.~~

~~(4)~~ For acquired PCD loans, an ACL of $30.4 million was required with a corresponding increase to the amortized cost basis as of the acquisition date for the first quarter of 2021. For PCD loans where all or a portion of the loan balance had been previously written-off, or would be subject to write-off under the Company’s charge-off

2016

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

~~policy, an ACL of $18.0 million included as part of the grossed-up loan balance at Acquisition was immediately written-off during the first quarter of 2021.~~ The ~~net impact to the allowance for PCD assets on the acquisition date was $12.4 million~~following table presents year-to-date gross charge-offs by origination year for the ~~first quarter of 2021.~~period presented:


	Six Months Ended June 30, 2023
	Gross Charge-Offs by Origination Year
	2023		2022		2021		2020		2019		Prior		Total
Unsecured personal	$	1,596	$	63,295	$	49,331	$	—	$	—	$	—	$	114,222
Residential mortgages	—		—		—		—		—		—		—
Secured consumer	19		1,026		290		—		—		—		1,335






Total consumer loans held for investment	1,615		64,321		49,621		—		—		—		115,557
Equipment finance	—		—		—		—		—		—		—
Commercial real estate	—		—		—		—		—		—		—
Commercial and industrial	—		—		923		—		318		34		1,275
Total commercial loans and leases held for investment	—		—		923		—		318		34		1,275

Total loans and leases held for investment	$	1,615	$	64,321	$	50,544	$	—	$	318	$	34	$	116,832

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.

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, 2022		Term Loans and Leases by Origination Year
June 30, 2023																June 30, 2023	Term Loans and Leases by Origination Year
		2022		2021		2020		2019		2018		Prior		Total			2023		2022		2021		2020		2019		Prior		Total
Unsecured personal	Unsecured personal															Unsecured personal
Current	Current	$	2,458,166	$	1,146,225	$	—	$	—	$	—	$	—	$	3,604,391	Current	$	1,374,603	$	2,240,402	$	679,211	$	—	$	—	$	—	$	4,294,216
30-59 days past due	30-59 days past due	5,758		9,041		—		—		—		—		14,799		30-59 days past due	3,279		17,474		9,013		—		—		—		29,766
60-89 days past due	60-89 days past due	4,038		8,425		—		—		—		—		12,463		60-89 days past due	1,865		14,153		7,933		—		—		—		23,951
90 or more days past due	90 or more days past due	2,520		8,081		—		—		—		—		10,601		90 or more days past due	1,213		13,852		8,332		—		—		—		23,397
Total unsecured personal	Total unsecured personal	2,470,482		1,171,772		—		—		—		—		3,642,254		Total unsecured personal	1,380,960		2,285,881		704,489		—		—		—		4,371,330
Residential mortgages	Residential mortgages															Residential mortgages
Current	Current	43,130		59,682		33,680		21,835		4,573		34,539		197,439		Current	5		49,346		56,510		30,442		21,358		34,430		192,091
30-59 days past due	30-59 days past due	—		—		—		—		—		—		—		30-59 days past due	—		—		—		—		—		—		—
60-89 days past due	60-89 days past due	—		—		—		—		—		—		—		60-89 days past due	—		—		—		—		—		—		—
90 or more days past due	90 or more days past due	—		—		—		—		4		333		337		90 or more days past due	—		—		—		—		—		165		165
Total residential mortgages	Total residential mortgages	43,130		59,682		33,680		21,835		4,577		34,872		197,776		Total residential mortgages	5		49,346		56,510		30,442		21,358		34,595		192,256
Secured consumer	Secured consumer															Secured consumer
Current	Current	133,644		42,910		—		2,563		—		—		179,117		Current	80,331		124,585		29,849		—		2,502		—		237,267
30-59 days past due	30-59 days past due	596		389		—		—		—		—		985		30-59 days past due	—		35		19		—		—		—		54
60-89 days past due	60-89 days past due	270		234		—		—		—		—		504		60-89 days past due	—		51		—		—		—		—		51
90 or more days past due	90 or more days past due	67		95		—		—		—		—		162		90 or more days past due	—		—		—		—		—		—		—
Total secured consumer	Total secured consumer	134,577		43,628		—		2,563		—		—		180,768		Total secured consumer	80,331		124,671		29,868		—		2,502		—		237,372

Total consumer loans held for investment	Total consumer loans held for investment	$	2,648,189	$	1,275,082	$	33,680	$	24,398	$	4,577	$	34,872	$	4,020,798	Total consumer loans held for investment	$	1,461,296	$	2,459,898	$	790,867	$	30,442	$	23,860	$	34,595	$	4,800,958

2118

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)


December 31, 2021		Term Loans and Leases by Origination Year
December 31, 2022																		December 31, 2022	Term Loans and Leases by Origination Year
		2021		2020		2019		2018		2017		Prior		Within Revolving Period		Total			2022		2021		2020		2019		2018		Prior		Total
Unsecured personal	Unsecured personal																	Unsecured personal
Current	Current	$	1,796,678	$	—	$	—	$	—	$	—	$	—	$	—	$	1,796,678	Current	$	2,835,460	$	977,224	$	—	$	—	$	—	$	—	$	3,812,684
30-59 days past due	30-59 days past due	3,624		—		—		—		—		—		—		3,624		30-59 days past due	11,149		9,867		—		—		—		—		21,016
60-89 days past due	60-89 days past due	2,600		—		—		—		—		—		—		2,600		60-89 days past due	7,785		8,633		—		—		—		—		16,418
90 or more days past due	90 or more days past due	1,676		—		—		—		—		—		—		1,676		90 or more days past due	6,813		9,442		—		—		—		—		16,255
Total unsecured personal	Total unsecured personal	1,804,578		—		—		—		—		—		—		1,804,578		Total unsecured personal	2,861,207		1,005,166		—		—		—		—		3,866,373
Residential mortgages	Residential mortgages																	Residential mortgages
Current	Current	36,732		37,620		26,798		7,277		2,682		37,685		1,265		150,059		Current	49,721		58,353		31,465		21,683		4,546		33,248		199,016
30-59 days past due	30-59 days past due	—		—		—		—		—		142		—		142		30-59 days past due	—		—		—		—		—		—		—
60-89 days past due	60-89 days past due	—		—		—		—		92		—		—		92		60-89 days past due	—		—		—		—		—		254		254
90 or more days past due	90 or more days past due	—		—		—		—		251		818		—		1,069		90 or more days past due	—		—		—		—		—		331		331
Total residential mortgages	Total residential mortgages	36,732		37,620		26,798		7,277		3,025		38,645		1,265		151,362		Total residential mortgages	49,721		58,353		31,465		21,683		4,546		33,833		199,601
Secured consumer	Secured consumer																	Secured consumer
Current	Current	62,731		—		—		—		—		—		10		62,741		Current	151,725		38,076		—		2,543		—		—		192,344
30-59 days past due	30-59 days past due	171		—		—		—		—		—		—		171		30-59 days past due	1,017		703		—		—		—		—		1,720
60-89 days past due	60-89 days past due	53		—		—		—		—		—		—		53		60-89 days past due	235		147		—		—		—		—		382
90 or more days past due	90 or more days past due	—		—		—		2,629		382		—		—		3,011		90 or more days past due	116		72		—		—		—		—		188
Total secured consumer	Total secured consumer	62,955		—		—		2,629		382		—		10		65,976		Total secured consumer	153,093		38,998		—		2,543		—		—		194,634

Total consumer loans held for investment	Total consumer loans held for investment	$	1,904,265	$	37,620	$	26,798	$	9,906	$	3,407	$	38,645	$	1,275	$	2,021,916	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 ~~deserves~~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.

2219

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, 2022		Term Loans and Leases by Origination Year
June 30, 2023																June 30, 2023	Term Loans and Leases by Origination Year
		2022		2021		2020		2019		2018		Prior		Total			2023		2022		2021		2020		2019		Prior		Total
Equipment finance	Equipment finance															Equipment finance
Pass	Pass	$	55,947	$	42,853	$	28,066	$	20,145	$	12,751	$	3,704	$	163,466	Pass	$	3,596	$	38,634	$	32,754	$	13,836	$	13,458	$	12,394	$	114,672
Special mention	Special mention	—		2,198		—		1,603		—		—		3,801		Special mention	—		15,369		1,881		6,295		3,173		—		26,718
Substandard	Substandard	—		—		—		—		180		—		180		Substandard	—		—		—		683		—		—		683
Doubtful	Doubtful	—		—		—		—		—		—		—		Doubtful	—		—		—		—		—		—		—
Loss	Loss	—		—		—		—		—		—		—		Loss	—		—		—		—		—		—		—
Total equipment finance	Total equipment finance	55,947		45,051		28,066		21,748		12,931		3,704		167,447		Total equipment finance	3,596		54,003		34,635		20,814		16,631		12,394		142,073
Commercial real estate	Commercial real estate															Commercial real estate
Pass	Pass	84,608		56,575		50,985		52,967		38,941		63,589		347,665		Pass	32,401		94,456		38,291		44,179		52,001		79,403		340,731
Special mention	Special mention	—		—		8,415		262		1,242		842		10,761		Special mention	—		—		—		—		259		9,389		9,648
Substandard	Substandard	—		—		—		658		2,403		10,364		13,425		Substandard	—		3,761		6,785		8,415		231		10,577		29,769
Doubtful	Doubtful	—		—		—		—		—		—		—		Doubtful	—		—		2,043		—		—		—		2,043
Loss	Loss	—		—		—		—		—		555		555		Loss	—		—		—		—		—		547		547
Total commercial real estate	Total commercial real estate	84,608		56,575		59,400		53,887		42,586		75,350		372,406		Total commercial real estate	32,401		98,217		47,119		52,594		52,491		99,916		382,738
Commercial and industrial	Commercial and industrial															Commercial and industrial
Pass	Pass	37,626		126,661		26,382		15,190		4,702		12,710		223,271		Pass	24,054		76,240		48,898		19,968		9,959		12,337		191,456
Special mention	Special mention	—		176		1,962		1,852		166		473		4,629		Special mention	—		770		29		96		214		558		1,667
Substandard	Substandard	—		4,746		4,678		3,812		1,668		1,839		16,743		Substandard	—		—		4,634		713		3,780		3,688		12,815
Doubtful	Doubtful	—		—		111		—		—		287		398		Doubtful	—		—		—		—		—		286		286
Loss	Loss	—		—		—		—		6		1,229		1,235		Loss	—		—		—		—		—		1,356		1,356
Total commercial and industrial ~~(1)~~	Total commercial and industrial ~~(1)~~	37,626		131,583		33,133		20,854		6,542		16,538		246,276		Total commercial and industrial ~~(1)~~	24,054		77,010		53,561		20,777		13,953		18,225		207,580
Total commercial loans and leases held for investment	Total commercial loans and leases held for investment	$	178,181	$	233,209	$	120,599	$	96,489	$	62,059	$	95,592	$	786,129	Total commercial loans and leases held for investment	$	60,051	$	229,230	$	135,315	$	94,185	$	83,075	$	130,535	$	732,391

~~(1)~~ ~~Includes $89.4 million of PPP loans.~~

2320

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

December 31, 2021 Term Loans and Leases by Origination Year
2021 2020 2019 2018 2017 Prior Within Revolving Period Total
Equipment finance
Pass $ 52,440 $ 35,398 $ 26,918 $ 15,457 $ 6,184 $ 8,814 $ — $ 145,211
Special mention 1,531 — 1,810 — — — — 3,341
Substandard — — — 603 — — — 603
Doubtful — — — — — — — —
Loss — — — — — — — —
Total equipment finance 53,971 35,398 28,728 16,060 6,184 8,814 — 149,155
Commercial real estate
Pass 55,613 55,202 54,460 39,981 22,366 57,235 — 284,857
Special mention — 8,397 — 1,366 1,018 7,242 — 18,023
Substandard — — 277 2,496 — 4,179 — 6,952
Doubtful — — — — — — — —
Loss — — — — — 567 — 567
Total commercial real estate 55,613 63,599 54,737 43,843 23,384 69,223 — 310,399
Commercial and industrial
Pass 241,368 108,574 24,106 7,874 14,756 8,058 599 405,335
Special mention — — 2,207 463 1,467 40 — 4,177
Substandard — 1,122 862 1,858 1,525 1,571 87 7,025
Doubtful — — — — — — — —
Loss — — — 52 4 1,063 — 1,119
Total commercial and industrial (1)
241,368 109,696 27,175 10,247 17,752 10,732 686 417,656
Total commercial loans and leases held for investment $ 350,952 $ 208,693 $ 110,640 $ 70,150 $ 47,320 $ 88,769 $ 686 $ 877,210

~~(1)~~ ~~Includes $268.3 million of PPP loans.~~


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

The following tables present an analysis of the past due loans and leases HFI within the commercial portfolio segment:


September 30, 2022		30-59 Days		60-89 Days		90 or More Days		Total
June 30, 2023										June 30, 2023	30-59 Days		60-89 Days		90 or More Days		Total
Equipment finance	Equipment finance	$	—	$	—	$	—	$	—	Equipment finance	$	485	$	—	$	683	$	1,168
Commercial real estate	Commercial real estate	—		101		452		553		Commercial real estate	2,115		—		10,561		12,676
Commercial and industrial (1)	Commercial and industrial (1)	—		—		1,650		1,650		Commercial and industrial (1)	184		358		1,608		2,150
Total commercial loans and leases held for investment	Total commercial loans and leases held for investment	$	—	$	101	$	2,102	$	2,203	Total commercial loans and leases held for investment	$	2,784	$	358	$	12,852	$	15,994


December 31, 2021		30-59 Days		60-89 Days		90 or More Days		Total
December 31, 2022										December 31, 2022	30-59 Days		60-89 Days		90 or More Days		Total
Equipment finance	Equipment finance	$	—	$	—	$	—	$	—	Equipment finance	$	3,172	$	—	$	859	$	4,031
Commercial real estate	Commercial real estate	104		—		609		713		Commercial real estate	—		102		—		102
Commercial and industrial (1)	Commercial and industrial (1)	—		—		1,410		1,410		Commercial and industrial (1)	—		—		1,643		1,643
Total commercial loans and leases held for investment	Total commercial loans and leases held for investment	$	104	$	—	$	2,019	$	2,123	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.

2421

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

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

The following table presents nonaccrual loans and leases:


		September 30, 2022				December 31, 2021				June 30, 2023		December 31, 2022
		Nonaccrual(1)		Nonaccrual with no related ACL(2)		Nonaccrual(1)		Nonaccrual with no related ACL(2)				Nonaccrual (1)		Nonaccrual with no related ACL (2)		Nonaccrual (1)		Nonaccrual with no related ACL (2)
Unsecured personal	Unsecured personal	$	10,601	$	—	$	1,676	$	—		Unsecured personal	$	23,397	$	—	$	16,255	$	—
Residential mortgages	Residential mortgages	337		337		1,373		1,373			Residential mortgages	322		322		331		331
Secured consumer	Secured consumer	162		—		3,011		3,011			Secured consumer	—		—		188		—

Total nonaccrual consumer loans held for investment	Total nonaccrual consumer loans held for investment	11,100		337		6,060		4,384			Total nonaccrual consumer loans held for investment	23,719		322		16,774		331

Equipment finance	Equipment finance	180		—		603		—			Equipment finance	683		—		898		39
Commercial real estate	Commercial real estate	1,013		1,013		989		989			Commercial real estate	19,298		9,360		1,018		1,018
Commercial and industrial	Commercial and industrial	12,214		1,338		2,333		1,061			Commercial and industrial	7,683		2,043		16,137		1,229
Total nonaccrual commercial loans and leases held for investment	Total nonaccrual commercial loans and leases held for investment	13,407		2,351		3,925		2,050			Total nonaccrual commercial loans and leases held for investment	27,664		11,403		18,053		2,286

Total nonaccrual loans and leases held for investment	Total nonaccrual loans and leases held for investment	$	24,507	$	2,688	$	9,985	$	6,434		Total nonaccrual loans and leases held for investment	$	51,383	$	11,725	$	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~~June 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

(2) Subset of total nonaccrual loans and leases.


		September 30, 2022				December 31, 2021				June 30, 2023		December 31, 2022
		Nonaccrual		Nonaccrual Ratios (1)		Nonaccrual		Nonaccrual Ratios (1)				Nonaccrual		Nonaccrual Ratios (1)		Nonaccrual		Nonaccrual Ratios (1)
Total nonaccrual consumer loans held for investment	Total nonaccrual consumer loans held for investment	$	11,100	0.28	%	$	6,060	0.30	%		Total nonaccrual consumer loans held for investment	$	23,719	0.5	%	$	16,774	0.4	%
Total nonaccrual commercial loans and leases held for investment	Total nonaccrual commercial loans and leases held for investment	13,407		1.71	%	3,925		0.45	%		Total nonaccrual commercial loans and leases held for investment	27,664		3.8	%	18,053		2.3	%
Total nonaccrual loans and leases held for investment ~~(2)~~	Total nonaccrual loans and leases held for investment ~~(2)~~	$	24,507	0.51	%	$	9,985	0.34	%		Total nonaccrual loans and leases held for investment ~~(2)~~	$	51,383	0.9	%	$	34,827	0.7	%

(1) Calculated as the ratio of nonaccruing loans and leases to loans and leases ~~HFI.~~

~~(2)~~ ~~Nonaccruing loans and leases represented 0.52% and 0.38% of total loans and leases~~ HFI ~~excluding PPP loans, as of September 30, 2022 and December 31, 2021, respectively.~~at amortized cost.

Collateral-Dependent Assets

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

~~Purchased Financial Assets with Credit Deterioration~~

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

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

~~There were no acquired PCD loans during the third quarter and first nine months of 2022 or the third quarter of 2021. Acquired PCD loans during the first nine months of 2021 were as follows:~~



~~Purchase price~~	$	~~337,118~~
~~Allowance for expected credit losses~~ ~~(1)~~	~~30,378~~
~~Discount attributable to other factors~~	~~12,204~~
~~Par value~~	$	~~379,700~~

~~(1)~~ For acquired PCD loans, an ACL of $30.4 million was required with a corresponding increase to the amortized cost basis as of the acquisition date for the first quarter of 2021. For PCD loans where all or a portion of the loan balance had been previously written-off, or would be subject to write-off under the Company’s charge-off policy, an ACL of $18.0 million included as part of the grossed-up loan balance at acquisition was immediately written-off during the first quarter of 2021. The net impact to the allowance for PCD assets on the acquisition date was $12.4 million for the first quarter of 2021.

6. Securitizations and Variable Interest Entities

VIE Assets and Liabilities

The following ~~tables provide~~table presents the classifications of assets and liabilities on the Company’s Balance Sheet for ~~the Company’s~~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 or subordinated interests in the VIEs. Additionally, the assets and liabilities in the ~~tables~~table below exclude intercompany balances that ~~eliminate~~were eliminated in ~~consolidation:~~

September 30, 2022 Consolidated VIEs Unconsolidated VIEs Total
Assets
Restricted cash $ 8,600 $ — $ 8,600
Securities available for sale at fair value — 22,445 22,445
Retail and certificate loans held for investment at fair value 2,940 — 2,940
Other loans held for investment at fair value 6,375 — 6,375
Other assets 218 11,351 11,569
Total assets $ 18,133 $ 33,796 $ 51,929
Liabilities
Retail notes, certificates and secured borrowings at fair value $ 2,940 $ — $ 2,940
Payable on Structured Program borrowings 11,185 — 11,185
Other liabilities 39 — 39
Total liabilities 14,164 — 14,164
Total net assets $ 3,969 $ 33,796 $ 37,765

~~LENDINGCLUB CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)~~

~~(Unaudited)~~

December 31, 2021 Consolidated VIEs Unconsolidated VIEs Total
Assets
Restricted cash $ 13,462 $ — $ 13,462
Securities available for sale at fair value — 58,177 58,177
Loans held for sale at fair value 41,734 — 41,734
Retail and certificate loans held for investment at fair value 10,281 — 10,281
Other loans held for investment at fair value 20,929 — 20,929
Other assets 584 17,156 17,740
Total assets $ 86,990 $ 75,333 $ 162,323
Liabilities
Retail notes, certificates and secured borrowings at fair value $ 10,281 $ — $ 10,281
Payable on Structured Program borrowings 65,451 — 65,451
Other liabilities 467 — 467
Total liabilities 76,199 — 76,199
Total net assets $ 10,791 $ 75,333 $ 86,124
consolidation.

~~Unconsolidated VIEs~~


	June 30, 2023						December 31, 2022
	Consolidated		Unconsolidated		Total		Consolidated		Unconsolidated		Total
Assets

Restricted cash	$	4,330	$	—	$	4,330	$	8,048	$	—	$	8,048
Securities available for sale at fair value	—		160,905		160,905		—		17,717		17,717

Loans held for investment at fair value	1,753		—		1,753		3,994		—		3,994
Retail and certificate loans held for investment at fair value	932		—		932		1,946		—		1,946
Other assets	23		11,695		11,718		206		10,464		10,670
Total assets	$	7,038	$	172,600	$	179,638	$	14,194	$	28,181	$	42,375
Liabilities
Borrowings	$	4,460	$	—	$	4,460	$	8,085	$	—	$	8,085
Retail notes, certificates and secured borrowings at fair value	932		—		932		1,946		—		1,946
Other liabilities	9		—		9		29		—		29
Total liabilities	5,401		—		5,401		10,060		—		10,060
Total net assets (maximum loss exposure)	$	1,637	$	172,600	$	174,237	$	4,134	$	28,181	$	32,315

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

~~The following tables present total unconsolidated VIEs with which the Company has significant continuing involvement, but is not the primary beneficiary:~~

September 30, 2022 Total VIE Assets Securities Available for Sale Other Assets Net Assets
Carrying value $ 625,017 $ 22,445 $ 11,351 $ 33,796
Total exposure N/A $ 22,445 $ 11,351 $ 33,796

December 31, 2021 Total VIE Assets Securities Available for Sale Other Assets Net Assets
Carrying value $ 1,386,279 $ 58,177 $ 17,156 $ 75,333
Total exposure N/A $ 58,177 $ 17,156 $ 75,333

~~N/A – Not applicable~~

“Total VIE Assets” represents the remaining principal balance of loans held by unconsolidated VIEs. “Net Assets” continue to decline due to the ongoing paydown of loan balances from prior Structured Program transactions.“Securities Available for Sale” and “Other Assets” are the balances on the Balance Sheet related to its involvement with the unconsolidated VIEs. “Other Assets” primarily includes the Company’s servicing assets and servicing receivables. “Total Exposure” refers to the Company’s maximumMaximum loss exposure ~~to loss from its involvement with unconsolidated VIEs. It~~ represents estimated loss that would be incurred under severe, hypothetical circumstances, for which the Company believes the possibility is extremely remote, such as where the value of interests and any associated collateral declines to zero. Accordingly, this required disclosure is not an indication of expected losses.

2723

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 ~~the Unconsolidated Trusts and Certificate Program trusts, with~~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,
2022 2021 2022 2021
Principal derecognized from loans securitized or sold
$ — $ — $ 41,023 $ —
Net gains recognized from loans securitized or sold $ — $ — $ 259 $ —
Fair value of asset-backed senior and subordinated securities, and CLUB Certificate asset-backed securities retained upon settlement $ — $ — $ 2,180 $ —
Cash proceeds from servicing and other administrative fees on loans securitized or sold $ 1,782 $ 5,152 $ 7,294 $ 19,600
Proceeds from sale of securities by consolidated VIE $ — $ — $ 5,320 $ —
Cash proceeds for interest received on senior securities and subordinated securities $ 1,294 $ 975 $ 6,373 $ 6,586


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022


Fair value of consideration received:
Cash	$	18,051	$	—	$	18,051	$	5,320
Asset-backed securities retained	153,229		—		153,229		2,180
Other assets (liabilities)	2,299		—		2,299		(3,794)
Total consideration	173,579		—		173,579		3,706
Deconsolidation of debt	—		—		—		36,072
Fair value of loans sold	(171,559)		—		(171,559)		(39,519)
Gain on sales of loans (1)	$	2,020	$	—	$	2,020	$	259

Cash proceeds from continuing involvement:
Servicing and other administrative fees	$	862	$	2,407	$	1,876	$	5,512


Interest received on asset-backed securities retained	$	2,406	$	2,384	$	3,594	$	5,079

(1) Consists 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.

~~The Company and other investors~~Beginning in the ~~subordinated interests issued by trusts~~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 ~~Certificate Program trusts have rights~~sells the residual certificates. See “Note 4. Securities Available for Sale” for the securities retained in the Company’s investment portfolio related to ~~cash flows only after the investors holding~~such transactions.

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

~~Off-Balance Sheet Loans~~

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

As of ~~September~~June 30, ~~2022,~~2023, the aggregate unpaid principal balance ~~of the off-balance sheet loans related to Structured Program transactions~~held by unconsolidated VIEs was ~~$574.7~~$400.5 million, of which ~~$16.9~~$7.9 million was attributable to off-balance sheet loans that were 31 days or more past due. As of December 31, ~~2021,~~2022, the aggregate unpaid principal balance ~~of the off-balance sheet loans related to Structured Program transactions~~held by unconsolidated VIEs was ~~$1.3 billion,~~$433.5 million, of which ~~$35.0~~$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.

~~LENDINGCLUB CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)~~

~~(Unaudited)~~

7. Fair Value of Assets and Liabilities

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

~~Financial Instruments, Assets and Liabilities Recorded at Fair Value~~

~~The following tables present the fair value hierarchy for assets and liabilities measured at fair value:~~

September 30, 2022 Level 1 Inputs Level 2 Inputs Level 3 Inputs Balance at
Fair Value
Assets:
Loans held for sale at fair value $ — $ — $ 90,058 $ 90,058
Retail and certificate loans held for investment at fair value — — 87,144 87,144
Other loans held for investment at fair value — — 15,057 15,057
Securities available for sale:
U.S. agency residential mortgage-backed securities — 216,710 — 216,710
U.S. agency securities — 75,385 — 75,385
Commercial mortgage-backed securities — 23,732 — 23,732
Asset-backed senior securities and subordinated securities — 9,154 7,444 16,598
Other asset-backed securities — 18,533 — 18,533
CLUB Certificate asset-backed securities — — 5,848 5,848
Municipal securities — 2,351 — 2,351
Total securities available for sale — 345,865 13,292 359,157
Servicing assets — — 86,518 86,518
Other assets — — 5,437 5,437
Total assets $ — $ 345,865 $ 297,506 $ 643,371
Liabilities:
Retail notes, certificates and secured borrowings $ — $ — $ 87,144 $ 87,144
Payable on Structured Program borrowings — — 11,185 11,185
Other liabilities — — 11,042 11,042
Total liabilities $ — $ — $ 109,371 $ 109,371

2924

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

December 31, 2021 Level 1 Inputs Level 2 Inputs Level 3 Inputs Balance at
Fair Value
Assets:
Loans held for sale at fair value $ — $ — $ 142,370 $ 142,370
Retail and certificate loans held for investment at fair value — — 229,719 229,719
Other loans held for investment at fair value — — 21,240 21,240
Securities available for sale:
U.S. agency residential mortgage-backed securities — 123,699 — 123,699
Asset-backed senior securities and subordinated securities — 28,129 11,762 39,891
U.S. agency securities — 26,172 — 26,172
Other asset-backed securities — 26,133 — 26,133
Commercial mortgaged-backed securities — 26,098 — 26,098
CLUB Certificate asset-backed securities — — 18,285 18,285
Municipal securities — 3,252 — 3,252
Total securities available for sale — 233,483 30,047 263,530
Servicing assets — — 67,726 67,726
Other assets — 2,812 3,312 6,124
Total assets $ — $ 236,295 $ 494,414 $ 730,709
Liabilities:
Retail notes, certificates and secured borrowings $ — $ — $ 229,719 $ 229,719
Payable on Structured Program borrowings — — 65,451 65,451
Other liabilities — — 12,911 12,911
Total liabilities $ — $ — $ 308,081 $ 308,081
Financial Instruments, Assets and Liabilities Recorded at Fair Value

The following tables present the fair value hierarchy for assets and liabilities measured at fair value:


June 30, 2023	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Balance at Fair Value
Assets:
Loans held for sale at fair value	$	—	$	—	$	250,361	$	250,361
Loans held for investment at fair value	—		—		404,119		404,119
Retail and certificate loans held for investment at fair value	—		—		26,837		26,837
Securities available for sale:
U.S. agency residential mortgage-backed securities	—		214,516		—		214,516
Senior asset-backed securities related to Structured Program transactions	—		1,139		142,785		143,924
U.S. agency securities	—		79,040		—		79,040
Mortgage-backed securities	—		38,143		—		38,143
Other asset-backed securities	—		28,466		—		28,466
Other asset-backed securities related to Structured Program transactions	—		—		16,980		16,980

Municipal securities	—		2,510		—		2,510

Total securities available for sale	—		363,814		159,765		523,579
Servicing assets	—		—		85,387		85,387
Other assets	—		4,726		—		4,726
Total assets	$	—	$	368,540	$	926,469	$	1,295,009

Liabilities:
Borrowings	$	—	$	—	$	4,460	$	4,460
Retail notes, certificates and secured borrowings	—		—		26,837		26,837
Other liabilities	—		4,726		2,570		7,296
Total liabilities	$	—	$	4,726	$	33,867	$	38,593

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)


December 31, 2022	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Balance at Fair Value
Assets:
Loans held for sale at fair value	$	—	$	—	$	110,400	$	110,400
Loans held for investment at fair value	—		—		925,938		925,938
Retail and certificate loans held for investment at fair value	—		—		55,425		55,425
Securities available for sale:
U.S. agency residential mortgage-backed securities	—		214,427		—		214,427
U.S. agency securities	—		74,394		—		74,394
Mortgaged-backed securities	—		22,518		—		22,518
Other asset-backed securities	—		14,203		—		14,203
Asset-backed securities related to Structured Program transactions	—		5,248		12,469		17,717

Municipal securities	—		2,443		—		2,443

Total securities available for sale	—		333,233		12,469		345,702
Servicing assets	—		—		84,308		84,308
Other assets	—		—		5,099		5,099
Total assets	$	—	$	333,233	$	1,193,639	$	1,526,872

Liabilities:
Borrowings	$	—	$	—	$	8,085	8,085
Retail notes, certificates and secured borrowings	—		—		55,425		55,425
Other liabilities	—		—		8,583		8,583
Total liabilities	$	—	$	—	$	72,093	$	72,093

Financial instruments are categorized in the valuation hierarchy based on the significance of observable or unobservable factors in the overall fair value measurement. For the financial instruments listed in the tables above that do not trade in an active market with readily observable prices, the Company uses significant unobservable inputs to measure the fair value of these assets and liabilities. These fair value estimates may also include observable, actively quoted components derived from external sources. As a result, changes in fair value for assets and liabilities within the Level 2 or Level 3 categories may include changes in fair value that were attributable to observable and unobservable inputs, respectively. The Company primarily uses a discounted cash flow (DCF) model to estimate the fair value of Level 3 instruments based on the present value of estimated future cash flows. This model uses inputs that are inherently judgmental and reflect the Company’s best estimates of the assumptions a market participant would use to calculate fair value. The Company did not transfer any assets or liabilities in or out of Level 3 during the ~~third~~second quarters and first ~~nine months~~halves of ~~2022~~2023 or ~~2021.~~2022.

3026

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Loans Held for Sale at Fair Value

As of both ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the majority of loans HFS were sold shortly after origination and at committed prices. Therefore, the Company is generally not exposed to fluctuations in the fair value ~~fluctuations~~of these loans as a result of adverse changes in key assumptions.

Fair Value Reconciliation

The following tables present additional information about Level 3 loans HFS on a recurring basis:

Outstanding Principal Balance Valuation Adjustment Fair Value
Balance at June 30, 2022 $ 62,761 $ 50 $ 62,811
Originations and purchases 2,298,086 — 2,298,086
Sales (2,264,859) (188) (2,265,047)
Principal payments and retirements (4,592) — (4,592)
Charge-offs, net of recoveries (17) 17 —
Change in fair value recorded in earnings — (1,200) (1,200)
Balance at September 30, 2022 $ 91,379 $ (1,321) $ 90,058
Outstanding Principal Balance Valuation Adjustment Fair Value
Balance at December 31, 2021 $ 147,193 $ (4,823) $ 142,370
Originations and purchases 7,297,510 — 7,297,510
Transfers to loans held for investment (11,888) — (11,888)
Sales (7,315,612) (18,979) (7,334,591)
Principal payments and retirements (24,990) — (24,990)
Charge-offs, net of recoveries (834) (628) (1,462)
Change in fair value recorded in earnings — 23,109 23,109
Balance at September 30, 2022 $ 91,379 $ (1,321) $ 90,058
Outstanding Principal Balance Valuation Adjustment Fair Value
Balance at June 30, 2021 $ 186,988 $ (6,927) $ 180,061
Originations and purchases 2,339,869 — 2,339,869
Sales (2,342,158) (85) (2,342,243)
Principal payments and retirements (27,211) — (27,211)
Charge-offs, net of recoveries (1,138) (209) (1,347)
Change in fair value recorded in earnings — 3,031 3,031
Balance at September 30, 2021 $ 156,350 $ (4,190) $ 152,160
Outstanding Principal Balance Valuation Adjustment Fair Value
Balance at December 31, 2020 $ 132,600 $ (10,698) $ 121,902
Originations and purchases 5,320,264 (1,629) 5,318,635
Sales (5,210,803) 10,568 (5,200,235)
Principal payments and retirements (78,946) — (78,946)
Charge-offs, net of recoveries (6,765) 3,711 (3,054)
Change in fair value recorded in earnings — (6,142) (6,142)
Balance at September 30, 2021 $ 156,350 $ (4,190) $ 152,160


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Fair value at beginning of period	$	44,647	$	156,730	$	110,400	$	142,370
Originations and purchases	1,272,118		2,728,499		2,477,147		4,999,424
Sales	(1,238,252)		(2,811,843)		(2,485,498)		(5,069,544)
Principal payments	(5,135)		(8,524)		(11,600)		(21,860)
Transfers	191,807		(11,888)		191,807		(11,888)
Fair value adjustments recorded in earnings	(14,824)		9,837		(31,895)		24,309
Fair value at end of period	$	250,361	$	62,811	$	250,361	$	62,811

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:


	June 30, 2023						December 31, 2022
	Minimum		Maximum		Weighted- Average		Minimum		Maximum		Weighted- Average
Discount rates	8.6	%	16.7	%	12.7	%	8.8	%	17.1	%	12.7	%
Net cumulative expected loss rates (1)	2.2	%	10.2	%	6.3	%	2.1	%	9.8	%	5.7	%
Cumulative expected prepayment rates (1)	22.0	%	30.7	%	27.3	%	26.2	%	35.3	%	30.8	%

(1) Expressed as a percentage of the acquired principal balance of the loan.

3127

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

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:


	June 30, 2023		December 31, 2022
Loans held for investment at fair value	$	404,119	$	925,938
Expected weighted-average life (in years)	1.0		0.9
Discount rates:
100 basis point increase	$	(3,057)	$	(7,471)
200 basis point increase	$	(6,071)	$	(14,830)
Expected credit loss rates on underlying loans:
10% increase	$	(2,454)	$	(5,574)
20% increase	$	(5,006)	$	(11,307)
Expected prepayment rates:
10% increase	$	(2,146)	$	(4,311)
20% increase	$	(4,157)	$	(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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Fair value at beginning of period	$	748,618	$	15,384	$	925,938	$	21,240
Purchases	—		—		4,037		14

Principal payments	(156,287)		(5,724)		(342,738)		(11,747)
Transfers	(191,634)		11,966		(191,634)		11,966
Interest income accretion and fair value adjustments recorded in earnings	3,422		(1,043)		8,516		(890)
Fair value at end of period	$	404,119	$	20,583	$	404,119	$	20,583

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~~June 30, ~~2022~~2023 and December 31, ~~2021,~~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 occurred in the second quarter of 2023. See “Note 6. Securitizations and Variable Interest Entities” for more information.

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Senior Asset-Backed Securities Related to Structured Program Transactions

As of June 30, 2023, the fair value of the senior asset-backed securities related to Structured Program transactions was $142.8 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 7.4% as of June 30, 2023. A hypothetical 100 and 200 basis point increase in discount rates would decrease the fair value by $2.0 million and $3.9 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 and Six Months Ended
	June 30, 2023
Fair value at beginning of period	$	—
Additions	144,680

Cash received	(1,290)
Change in unrealized loss	(605)

Fair value at end of period	$	142,785

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:


	June 30, 2023
	Minimum		Maximum		Weighted- Average
Discount rates	5.5	%	6.6	%	5.8	%
Net cumulative expected loss rates (1)	7.2	%	9.1	%	8.3	%
Cumulative expected prepayment rates (1)	33.0	%	34.0	%	33.4	%

(1) Expressed as a percentage of the outstanding collateral balance.

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Significant Recurring Fair Value Input Sensitivity

The following tables present adverse changes to the fair value sensitivity of Level 3 other asset-backed securities related to Structured Program transactions to changes in key assumptions:


	June 30, 2023

Fair value of interests held	$	16,980
Expected weighted-average life (in years)	1.6
Discount rates
100 basis point increase	$	(193)
200 basis point increase	$	(388)
Expected loss rates
10% increase	$	(390)
20% increase	$	(798)
Expected prepayment rates
10% increase	$	(216)
20% increase	$	(496)

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		Six Months Ended
	June 30, 2023
Fair value at beginning of period	$	10,397	$	12,469
Additions	8,667		8,780

Cash received	(2,084)		(4,269)


Fair value at end of period	$	16,980	$	16,980

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, 2022						December 31, 2021							June 30, 2023						December 31, 2022
		Minimum		Maximum		Weighted- Average		Minimum		Maximum		Weighted- Average			Minimum		Maximum		Weighted- Average		Minimum		Maximum		Weighted- Average
Discount rates	Discount rates	7.5	%	16.4	%	10.0	%	7.5	%	16.4	%	10.0	%	Discount rates	7.5	%	16.4	%	9.9	%	7.5	%	16.4	%	10.1	%
Net cumulative expected loss rates (1)	Net cumulative expected loss rates (1)	1.0	%	29.8	%	12.7	%	2.4	%	26.4	%	10.2	%	Net cumulative expected loss rates (1)	2.0	%	36.4	%	15.4	%	2.1	%	36.7	%	15.6	%
Cumulative expected prepayment rates (1)	Cumulative expected prepayment rates (1)	30.6	%	47.0	%	39.1	%	32.1	%	45.9	%	38.4	%	Cumulative expected prepayment rates (1)	17.0	%	47.7	%	32.9	%	15.8	%	47.2	%	35.9	%
Total market servicing rates (% per annum on outstanding principal balance) (2)	Total market servicing rates (% per annum on outstanding principal balance) (2)	0.62	%	0.62	%	0.62	%	0.62	%	0.62	%	0.62	%	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, 2022			December 31, 2021				June 30, 2023			December 31, 2022
Weighted-average market servicing rate assumptions	Weighted-average market servicing rate assumptions	0.62		%	0.62		%	Weighted-average market servicing rate assumptions	0.62		%	0.62		%
Change in fair value from:	Change in fair value from:							Change in fair value from:
Servicing rate increase by 0.10%	Servicing rate increase by 0.10%	$	(11,563)		$	(9,495)		Servicing rate increase by 0.10%	$	(9,923)		$	(10,505)
Servicing rate decrease by 0.10%	Servicing rate decrease by 0.10%	$	11,563		$	9,495		Servicing rate decrease by 0.10%	$	9,923		$	10,505

The following table presents the fair value sensitivity of servicing assets to adverse changes in key assumptions:


	June 30, 2023		December 31, 2022
Fair value of servicing assets	$	85,387	$	84,308
Discount rates
100 basis point increase	$	(726)	$	(726)
200 basis point increase	$	(1,453)	$	(1,451)
Expected loss rates
10% increase	$	(1,069)	$	(1,037)
20% increase	$	(2,137)	$	(2,074)
Expected prepayment rates
10% increase	$	(1,790)	$	(1,994)
20% increase	$	(3,581)	$	(3,989)

3231

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 fair value sensitivity of servicing assets to adverse changes in key assumptions:~~

September 30, 2022 December 31, 2021
Fair value of Servicing Assets $ 86,518 $ 67,726
Discount rates
100 basis point increase $ (745) $ (558)
200 basis point increase $ (1,489) $ (1,115)
Expected loss rates
10% adverse change $ (837) $ (693)
20% adverse change $ (1,673) $ (1,386)
Expected prepayment rates
10% adverse change $ (2,178) $ (2,401)
20% adverse change $ (4,356) $ (4,802)

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,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Fair value at beginning of period	Fair value at beginning of period	$	79,427	$	58,728	$	67,726	$	56,347	Fair value at beginning of period	$	89,241	$	72,112	$	84,308	$	67,726
Issuances (1)	Issuances (1)	22,319		21,071		73,774		46,274		Issuances (1)	13,576		29,090		27,701		51,455
Change in fair value, included in Marketplace revenue	Change in fair value, included in Marketplace revenue	(14,689)		(14,984)		(52,702)		(39,584)		Change in fair value, included in Marketplace revenue	(17,074)		(21,034)		(29,650)		(38,013)
Other net changes included in Deferred revenue		(539)		(1,242)		(2,280)		536
Other net changes										Other net changes	(356)		(741)		3,028		(1,741)
Fair value at end of period	Fair value at end of period	$	86,518	$	63,573	$	86,518	$	63,573	Fair value at end of period	$	85,387	$	79,427	$	85,387	$	79,427

(1) Represents the gains or losses on sales of the related loans.

~~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 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, 2022		Carrying Amount		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Balance at Fair Value
June 30, 2023												June 30, 2023	Carrying Amount		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Balance at Fair Value
Assets:	Assets:											Assets:
Loans and leases held for investment, net	Loans and leases held for investment, net	$	4,503,726	$	—	$	—	$	4,786,152	$	4,786,152	Loans and leases held for investment, net	$	5,178,186	$	—	$	—	$	5,408,746	$	5,408,746

Other assets	Other assets	28,638		—		27,018		1,649		28,667		Other assets	37,375		—		36,393		1,359		37,752
Total assets	Total assets	$	4,532,364	$	—	$	27,018	$	4,787,801	$	4,814,819	Total assets	$	5,215,561	$	—	$	36,393	$	5,410,105	$	5,446,498
Liabilities:	Liabilities:											Liabilities:
Deposits (1)	Deposits (1)	$	242,126	$	—	$	—	$	242,126	$	242,126	Deposits (1)	$	829,798	$	—	$	—	$	826,478	$	826,478

Short-term borrowings		4,803		—		4,803		—		4,803
Advances from PPPLF		91,671		—		—		91,671		91,671
Other long-term debt		15,300		—		—		15,300		15,300
Borrowings												Borrowings	11,215		—		561		10,654		11,215

Other liabilities	Other liabilities	63,758		—		28,310		35,448		63,758		Other liabilities	59,342		—		28,260		31,082		59,342
Total liabilities	Total liabilities	$	417,658	$	—	$	33,113	$	384,545	$	417,658	Total liabilities	$	900,355	$	—	$	28,821	$	868,214	$	897,035


December 31, 2021		Carrying Amount		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Balance at Fair Value
December 31, 2022												December 31, 2022	Carrying Amount		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Balance at Fair Value
Assets:	Assets:											Assets:
Loans held for sale		$	248,878	$	—	$	—	$	251,101	$	251,101

Loans and leases held for investment, net	Loans and leases held for investment, net	2,754,737		—		—		2,964,691		2,964,691		Loans and leases held for investment, net	$	4,705,302	$	—	$	—	$	4,941,825	$	4,941,825
Other assets	Other assets	18,274		—		15,630		2,644		18,274		Other assets	36,646		—		35,300		1,397		36,697

Total assets	Total assets	$	3,021,889	$	—	$	15,630	$	3,218,436	$	3,234,066	Total assets	$	4,741,948	$	—	$	35,300	$	4,943,222	$	4,978,522
Liabilities:	Liabilities:											Liabilities:
Deposits (1)	Deposits (1)	$	68,405	$	—	$	—	$	68,405	$	68,405	Deposits (1)	$	860,808	$	—	$	—	$	860,808	$	860,808
Short-term borrowings		27,780		—		17,595		10,185		27,780
Advances from PPPLF		271,933		—		—		271,933		271,933
Other long-term debt		15,455		—		—		15,455		15,455
Borrowings												Borrowings	66,773		—		2,619		64,154		66,773

Other liabilities	Other liabilities	51,655		—		22,187		29,468		51,655		Other liabilities	62,247		—		30,311		31,936		62,247
Total liabilities	Total liabilities	$	435,228	$	—	$	39,782	$	395,446	$	435,228	Total liabilities	$	989,828	$	—	$	32,930	$	956,898	$	989,828

(1) Excludes deposit liabilities with no defined or contractual maturities.

3432

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

8. Property, Equipment and Software, Net

Property, equipment and software, net, consist of the following:


		September 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Software (1)	Software (1)	$	168,545	$	121,102	Software (1)	$	188,817	$	174,360
Leasehold improvements	Leasehold improvements	31,213		37,347		Leasehold improvements	31,214		31,214
Computer equipment	Computer equipment	27,660		29,598		Computer equipment	24,234		27,410
Furniture and fixtures	Furniture and fixtures	6,064		8,346		Furniture and fixtures	6,088		6,088
Total property, equipment and software	Total property, equipment and software	233,482		196,393		Total property, equipment and software	250,353		239,072
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(103,525)		(98,397)		Accumulated depreciation and amortization	(98,745)		(102,599)
Total property, equipment and software, net	Total property, equipment and software, net	$	129,957	$	97,996	Total property, equipment and software, net	$	151,608	$	136,473

(1) Includes ~~$44.9~~$66.5 million and ~~$14.7~~$43.7 million of development in progress for internally-developed software and ~~$10.1~~$4.1 million and ~~$2.5~~$3.0 million of development in progress to customize purchased software as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

Depreciation and amortization expense on property, equipment and software was ~~$9.5~~$10.6 million and ~~$28.3~~$21.8 million for the ~~third~~second quarter and first ~~nine months~~half of ~~2022,~~2023, respectively. Depreciation and amortization expense on property, equipment and software was ~~$9.0~~$9.3 million and ~~$29.1~~$18.8 million for the ~~third~~second quarter and first ~~nine months~~half of ~~2021,~~2022, respectively.

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

9. Goodwill and Intangible Assets

Goodwill

The Company’s goodwill balance was $75.7 million as of both ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021.~~2022. The Company did not record any goodwill impairment expense for the ~~third~~second quarters and first ~~nine months~~halves of ~~2022~~2023 and ~~2021.~~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.

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, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Gross carrying value	Gross carrying value	$	54,500	$	54,500	Gross carrying value	$	54,500	$	54,500
Accumulated amortization	Accumulated amortization	(36,988)		(33,319)		Accumulated amortization	(40,333)		(38,166)
Net carrying value	Net carrying value	$	17,512	$	21,181	Net carrying value	$	14,167	$	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~~second quarter and first ~~nine months~~half of ~~2022~~2023 was ~~$1.2~~$1.0 million and ~~$3.7~~$2.2 million, respectively. Amortization expense associated with intangible assets for the ~~third~~second quarter and first half of 2022 was $1.2 million and $2.5 million, respectively. There was no impairment loss for the second quarters and first halves of 2023 and 2022.

3533

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

~~quarter and first nine months of 2021 was $1.3 million and $3.9 million, respectively. There was no impairment loss for the third quarters and first nine months of 2022 and 2021.~~

The expected future amortization expense for intangible assets as of ~~September~~June 30, ~~2022,~~2023, is as follows:


2022		$	1,178
2023	2023	4,198		2023	$	2,031
2024	2024	3,549		2024	3,549
2025	2025	2,901��		2025	2,901
2026	2026	2,252		2026	2,252
2027				2027	1,603
Thereafter	Thereafter	3,434		Thereafter	1,831
Total	Total	$	17,512	Total	$	14,167

10. Other Assets

Other assets consist of the following:


		September 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Deferred tax asset, net (1)	Deferred tax asset, net (1)	$	171,206	$	—	Deferred tax asset, net (1)	$	169,317	$	173,687
Servicing assets (2)	Servicing assets (2)	88,138		70,370		Servicing assets (2)	86,369		85,654
Operating lease assets	Operating lease assets	69,936		77,316		Operating lease assets	55,436		63,872
Nonmarketable equity investments	Nonmarketable equity investments	39,569		31,726		Nonmarketable equity investments	45,825		38,320
Intangible assets, net (3)	Intangible assets, net (3)	17,512		21,181		Intangible assets, net (3)	14,167		16,334
Other	Other	108,771		101,953		Other	122,269		122,439
Total other assets	Total other assets	$	495,132	$	302,546	Total other assets	$	493,383	$	500,306

(1) See “Note 15. Income Taxes” for additional detail.

(2) Loans underlying servicing assets had a total outstanding principal balance of ~~$12.0~~$10.4 billion and ~~$10.3~~$11.0 billion as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

(3) See “Note 9. Goodwill and Intangible Assets” for additional detail.

11. Deposits

Deposits consist of the following:

September 30, 2022 December 31, 2021
Interest-bearing deposits:
Savings and money market accounts $ 2,486,469 $ 856,989
Checking accounts 2,139,537 1,993,809
Certificates of deposit (1)
242,126 68,405
Total $ 4,868,132 $ 2,919,203
Noninterest-bearing deposits 255,374 216,585
Total deposits $ 5,123,506 $ 3,135,788

~~(1)~~ Includes $9.7 million and $14.0 million in denominations exceeding the Federal Deposit Insurance Corporation (FDIC) limit of $250 thousand as of September 30, 2022 and December 31, 2021, respectively.


	June 30, 2023		December 31, 2022
Interest-bearing deposits:
Savings and money market accounts	$	4,638,377	$	3,616,657
Checking accounts	1,185,574		1,681,095
Certificates of deposit	829,798		860,808
Total	$	6,653,749	$	6,158,560
Noninterest-bearing deposits	189,786		233,993
Total deposits	$	6,843,535	$	6,392,553

3634

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Total certificates of deposit at ~~September~~June 30, ~~2022~~2023 are scheduled to mature as follows:


2022		$	10,496
2023	2023	137,586		2023	$	460,024
2024	2024	75,236		2024	347,992
2025	2025	9,336		2025	10,528
2026	2026	945		2026	1,139
2027				2027	9,217
Thereafter	Thereafter	8,527		Thereafter	898
Total certificates of deposit	Total certificates of deposit	$	242,126	Total certificates of deposit	$	829,798

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 June 30, 2023:


	Three months or less		Over 3 months through 6 months		Over 6 months through 12 months		Over 12 months		Total
Certificates of deposit	$	2,351	$	4,658	$	3,536	$	3,913	$	14,458

12. ~~Short-term~~ Borrowings ~~and Long-term Debt~~

Short-term Borrowings:

~~Repurchase Agreements~~

The Company entered into repurchase agreements pursuant to which the Company sold securities (subject to an obligation to repurchase such securities at a specified future date and price) in exchange for cash. ~~As of September 30, 2022 and December 31, 2021, the Company had $4.8 million and $27.8 million, respectively, in~~The aggregate debt outstanding under ~~its repurchase agreements which is amortized over time through regular principal and interest payments collected from the pledged securities. At September 30, 2022, a majority of~~ the Company’s repurchase agreements have contractual repurchase dates ranging from October 2025 to March 2028. These contractual repurchase dates correspond to either a set repurchase schedule or to the maturity dates of the underlying securities, which have a remaining weighted-average estimated life of less than one year. At Septemberwas $0.6 million and $2.6 million at June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

In addition, the ~~repurchase agreements bore interest rates ranging from 4.04% to 6.70%~~Company has available borrowing capacity with the FRB and ~~3.12% to 6.72%, respectively, which are either fixed or based on a benchmark~~FHLB of ~~the weighted-average interest rate of the securities sold plus a spread. Underlying securities retained~~Des Moines totaling $4.1 billion and $605.5 million with pledged as collateral ~~under repurchase agreements were $5.0 million~~totaling $5.3 billion and ~~$50.5~~$754.0 million at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

Long-term Debt:

~~Advances from PPPLF~~The following table summarizes the Company’s long-term debt, as of the dates indicated:


	June 30, 2023		December 31, 2022
Advances from PPPLF (1):
Aggregate debt outstanding (fixed interest rate of 0.35%)	$	10,654	$	64,154
Pledged collateral	$	17,640	$	66,971




Retail notes, certificates and secured borrowings (2):
Aggregate debt outstanding	$	26,837	$	55,425
Payable on Structured Program borrowings (3):
Aggregate debt outstanding	$	4,460	$	8,085
Pledged collateral	$	5,972	$	9,708

(1)

~~As of September 30, 2022 and December 31, 2021, outstanding PPPLF borrowings were $91.7 million and $271.9 million, respectively, and are collateralized~~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. ~~The interest rate on the PPPLF borrowings is fixed at 0.35%.~~

(2)

~~Retail Notes, Certificates, and Secured Borrowings~~

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

3735

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

same interest rates and maturities. As of December 31, 2020, LendingClub ceased offering and selling Retail Notes. The ~~following table provides the balances~~total balance of ~~retail notes, certificates and secured borrowings at fair value~~outstanding Retail Notes will continue to decline as ~~of the periods presented:~~

September 30, 2022 December 31, 2021
Retail notes $ 84,203 $ 219,435
Certificates and secured borrowings 2,941 10,284
Total retail notes, certificates and secured borrowings $ 87,144 $ 229,719
underlying borrower payments are made.

(3)

~~Payable on Structured Program Borrowings~~

~~Certificate~~Consists of certificate participations and securities of certain consolidated VIEs held by third-party investors ~~are included in “Payable on Structured Program borrowings” on the Balance Sheet. As of September 30, 2022, these certificate participations~~ and ~~securities totaled $11.2 million and were~~ secured by ~~“Other loans~~“Loans held for investment at fair value” ~~of $6.4~~totaling $1.8 million and ~~restricted cash of $6.2 million. As of December 31, 2021, these certificate participations and securities totaled $65.5~~$4.0 million and ~~were secured by “Other loans held for investment at fair value” and “Loans held for sale”~~“Restricted cash” of ~~$62.7~~$4.2 million and ~~restricted cash of $11.2 million.~~

~~Other Long-term Debt~~

~~The Company has subordinated notes with an outstanding amount of $15.3~~$5.7 million as of ~~both September~~June 30, ~~2022~~2023 and December 31, 2021, which are due June 30, 2027. The rate resets quarterly at a rate equal to 3-month London Interbank Offered Rate (LIBOR) plus 4.64%, with interest payments due quarterly in arrears. The subordinated notes are junior in right to the repayment in full of all existing claims of creditors and depositors of the Company. The subordinated notes may be redeemed quarterly, in whole or in part, at par plus accrued unpaid interest at the option of the Company.2022, respectively.

13. Other Liabilities

Other liabilities consist of the following:


		September 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
Accounts payable and accrued expenses		$	92,796	$	100,972

Operating lease liabilities	Operating lease liabilities	83,561		91,588		Operating lease liabilities	$	68,095	$	77,291
Accounts payable and accrued expenses						Accounts payable and accrued expenses	60,815		98,173
Payable to investors(1)	Payable to investors(1)	28,310		22,187		Payable to investors(1)	28,260		30,311

Other	Other	115,388		89,204		Other	93,766		86,842
Total other liabilities	Total other liabilities	$	320,055	$	303,951	Total other liabilities	$	250,936	$	292,617

(1) Represents principal and interest on loans collected by the Company and pending disbursement to investors.

~~LENDINGCLUB CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)~~

~~(Unaudited)~~

14. Employee Incentive Plans

The Company’s equity incentive plans provide for granting awards, including ~~RSUs, PBRSUs,~~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,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
RSUs and PBRSUs	RSUs and PBRSUs	$	16,737	$	16,691	$	50,164	$	49,130	RSUs and PBRSUs	$	18,145	$	19,804	$	32,437	$	37,167
Stock options	Stock options	6		118		46		582		Stock options	—		20		—		40

Total stock-based compensation expense		$	16,743	$	16,809	$	50,210	$	49,712
Stock-based compensation expense, gross										Stock-based compensation expense, gross	18,145		19,824		32,437		37,207
Less: Capitalized stock-based compensation expense										Less: Capitalized stock-based compensation expense	2,317		2,051		4,721		3,740
Stock-based compensation expense, net										Stock-based compensation expense, net	$	15,828	$	17,773	$	27,716	$	33,467

The Company capitalized $2.2 million and $5.9 million of stock-based compensation expense associated with developing software for internal use during the third quarter and first nine months of 2022, respectively. The Company capitalized $1.2 million and $3.3 million of stock-based compensation expense associated with developing software for internal use during the third quarter and first nine months of 2021, respectively.

~~Restricted Stock Units~~

~~The following table summarizes the activities for the Company’s RSUs:~~

Number
of Units Weighted-
Average
Grant Date
Fair Value
Unvested at December 31, 2021 9,703,751 $ 12.44
Granted 5,216,789 $ 14.26
Vested (3,773,222) $ 12.59
Forfeited/expired (1,351,990) $ 14.09
Unvested at September 30, 2022 9,795,328 $ 13.09

~~During the first nine months of 2022, the Company granted 5,216,789 RSUs with an aggregate fair value of $74.4 million.~~

~~As of September 30, 2022, there was $114.5 million of unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over the next 1.9 years.~~

~~Performance-based Restricted Stock Units~~

PBRSUs are restricted stock unit awards that are earned and eligible for vesting (if applicable) based upon the achievement of certain pre-established performance metrics over a specific performance period. The Company’s outstanding PBRSU awards have a multi-year market-based performance metric with no additional time-based vesting for any earned shares. For PBRSU awards with market-based metrics, the compensation expense of the award is fixed at the time of grant (incorporating the probability of achieving the market-based metrics) and expensed over the performance period.

3936

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Restricted Stock Units

The following table summarizes the activities for the Company’s RSUs:


	Number of Units	Weighted- Average Grant Date Fair Value
Unvested at December 31, 2022	8,672,626	$	12.94
Granted	6,299,789	$	7.71
Vested	(2,761,401)	$	11.96
Forfeited/expired	(1,480,127)	$	12.72
Unvested at June 30, 2023	10,730,887	$	10.15

During the first half of 2023, the Company granted 6,299,789 RSUs with an aggregate fair value of $48.6 million.

As of June 30, 2023, there was $98.8 million of unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over the next 2.0 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.

The following table summarizes the activities for the Company’s PBRSUs:


		Number of Units	Weighted- Average Grant Date Fair Value			Number of Units	Weighted- Average Grant Date Fair Value
Unvested at December 31, 2021		1,771,869	$	9.72
Unvested at December 31, 2022					Unvested at December 31, 2022	1,754,898	$	11.19
Granted	Granted	743,074	$	8.83	Granted	807,499	$	7.15
Vested	Vested	(506,696)	$	5.48	Vested	(870,766)	$	4.22

Forfeited/expired					Forfeited/expired	(104,084)	$	11.77
Unvested at June 30, 2023					Unvested at June 30, 2023	1,587,547	$	12.63

Unvested at September 30, 2022		2,008,247	$	10.47

During the first ~~nine months~~half of ~~2022,~~2023, the Company granted ~~743,074~~807,499 PBRSUs with an aggregate fair value of ~~$6.6~~$5.8 million.

As of ~~September~~June 30, ~~2022,~~2023, there was ~~$9.6~~$9.4 million of unrecognized compensation cost related to unvested PBRSUs, which is expected to be recognized over the next ~~1.2 years.~~1.8 years, subject to any forfeitures.

15. Income Taxes

For the ~~third~~second quarter and first half of ~~2022, the Company recorded an income tax benefit of $7.2 million,primarilydue~~to~~therelease~~ofa~~$5.0 millionvaluationallowanceagainstthe~~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.

~~For the third quarter of 2021,~~2023, the Company recorded an income tax expense of ~~$2.7~~$4.7 million ~~primarily related to income~~and $8.8 million, representing an effective tax ~~expense for state jurisdictions that limit net operating loss utilization. For the first nine months~~rate of 2021, the Company recorded an income tax expense of $0.1 million, primarily related to income tax expense for state jurisdictions that limit net operating loss utilization, partially offset by changes in the deferred tax asset valuation allowance resulting from a deferred tax liability assumed with the Acquisition.

~~The Company has evaluated both positive~~31.7% and negative evidence when assessing the recoverability of its net deferred tax assets. Several factors were considered, which primarily included the Company’s business model transition and resulting increase in profitability and the expectation of continued profitability. These factors resulted in the release of the majority of the Company’s valuation allowance against its deferred tax assets during the27.1%, respectively. The second quarter ~~of 2022.~~

~~The following table summarizes the Company’s net deferred~~effective tax ~~assets:~~

September 30, 2022 December 31, 2021
Deferred tax assets (liabilities), net $ 229,269 $ 223,367
Valuation allowance (58,063) (223,367)
Deferred tax assets, net of valuation allowance $ 171,206 $ —

4037

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

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. For the second quarter and first half of 2022, the Company recorded an income tax benefit of $132.0 million and $127.0 million, respectively. The income tax benefit for the second quarter and first half of 2022 was primarily due to the release of a $135.3 million valuation allowance against the Company’s deferred tax assets, partially offset by a $3.3 million state income tax expense.

The following table summarizes the Company’s net deferred tax assets:


	June 30, 2023		December 31, 2022
Deferred tax assets, net of liabilities	$	216,929	$	221,408
Valuation allowance	(47,612)		(47,721)
Deferred tax assets, net of valuation allowance	$	169,317	$	173,687

16. Leases

Lessor Arrangements

The Company has lessor arrangements which consist of sales-type leases for equipment (Equipment Finance). Such arrangements may include options to renew or to purchase the leased equipment at the end of the lease term. For the ~~third~~second quarter and first ~~nine months~~half of ~~2022,~~2023, interest earned on Equipment Finance was ~~$2.5~~$2.3 million and ~~$7.7~~$5.2 million, respectively, and is included in “Interest and fees on loans and leases held for investment” on the Income Statement. For the ~~third~~second quarter and first ~~nine months~~half of ~~2021,~~2022, interest earned on Equipment Finance was ~~$2.9~~$2.5 million and ~~$8.1~~$5.1 million, respectively.

The components of Equipment Finance assets are as follows:

September 30, 2022 December 31, 2021
Lease receivables $ 144,433 $ 122,927
Unguaranteed residual asset values 40,375 36,837
Unearned income (18,253) (10,989)
Deferred fees 892 380
Total $ 167,447 $ 149,155

~~Future minimum lease payments based on maturity of the Company’s lessor arrangements as of September 30, 2022 were as follows:~~

2022 $ 12,639
2023 47,231
2024 39,093
2025 26,387
2026 15,988
Thereafter 12,412
Total lease payments $ 153,750
Discount effect (9,317)
Present value of future minimum lease payments $ 144,433

~~Lessee Arrangements~~

The Company has operating leases for its headquarters in San Francisco, California, as well as additional office space in the Salt Lake City, Utah, and Boston, Massachusetts areas. As of September 30, 2022, the lease agreements have remaining lease terms ranging from approximately one year to nine years. Some of the lease agreements include options to extend the lease term for up to an additional fifteen years. The Company was the sublessor of a portion of its office space in San Francisco for which lease terms have expired as of June 30, 2022. As of September 30, 2022, the Company pledged $0.4 million of cash and $3.9 million in letters of credit as security deposits in connection with its lease agreements.


	June 30, 2023		December 31, 2022
Lease receivables	$	120,046	$	137,969
Unguaranteed residual asset values	35,105		39,262
Unearned income	(13,816)		(17,786)
Deferred fees	738		874
Total	$	142,073	$	160,319

4138

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Future minimum lease payments based on maturity of the Company’s lessor arrangements as of June 30, 2023 were as follows:


2023	$	24,987
2024	40,333
2025	29,078
2026	17,503
2027	7,881
Thereafter	5,539
Total lease payments	$	125,321
Discount effect	(5,275)
Present value of future minimum lease payments	$	120,046

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 June 30, 2023, the lease agreements have remaining lease terms ranging from approximately one year to eight years. Some of the lease agreements include options to extend the lease term for up to an additional fifteen years. As of June 30, 2023, the Company pledged $0.4 million of cash and $1.1 million in letters of credit as security deposits in connection with its lease agreements.

Balance sheet information related to leases was as follows:

ROU Assets and Lease Liabilities Balance Sheet Classification September 30, 2022 December 31, 2021
Operating lease assets Other assets $ 69,936 $ 77,316
Operating lease liabilities (1)
Other liabilities $ 83,561 $ 91,588

~~(1)~~ ~~The difference between operating lease assets and operating lease liabilities is the unamortized balance of deferred rent.~~


ROU Assets and Lease Liabilities	Balance Sheet Classification	June 30, 2023		December 31, 2022
Operating lease assets	Other assets	$	55,436	$	63,872
Operating lease liabilities	Other liabilities	$	68,095	$	77,291

Components of net lease costs were as follows:

Three Months Ended
September 30, Nine Months Ended
September 30,
Net Lease Costs Income Statement Classification 2022 2021 2022 2021
Operating lease costs (1)
Occupancy $ (3,195) $ (4,561) $ (12,041) $ (14,315)
Sublease revenue Other non-interest income — 1,538 2,847 4,612
Net lease costs $ (3,195) $ (3,023) $ (9,194) $ (9,703)

~~(1)~~ Includes variable lease costs of $0.2 million and $0.4 million for the third quarters of 2022 and 2021, respectively. Includes variable lease costs of $0.9 million for both the first nine months of 2022 and 2021.


		Three Months Ended June 30,				Six Months Ended June 30,
Net Lease Costs	Income Statement Classification	2023		2022		2023		2022
Operating lease costs	Occupancy	$	(3,334)	$	(4,366)	$	(6,262)	$	(8,846)
Sublease revenue	Other non-interest income	—		1,310		—		2,847
Net lease costs		$	(3,334)	$	(3,056)	$	(6,262)	$	(5,999)

Supplemental cash flow information related to the Company’s operating leases was as follows:

Three Months Ended
September 30, Nine Months Ended
September 30,
2022 2021 2022 2021
Non-cash operating activity:
Leased assets obtained in exchange for new and amended operating lease liabilities (1)
$ — $ — $ — $ 12,914

~~(1)~~ ~~Represents non-cash activity and, accordingly, is not reflected in the Condensed Consolidated Statements of Cash Flows. Amount includes noncash remeasurements of the operating lease ROU asset.~~


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Non-cash operating activity:
Leased assets obtained or adjusted in exchange for new, amended, and modified operating lease liabilities	$	—	$	—	$	(4,664)	$	—

~~The Company’s future minimum undiscounted lease payments under operating leases as of September 30, 2022 were as follows:~~

Operating Lease
Payments
2022 $ 3,143
2023 12,798
2024 13,054
2025 13,184
2026 13,375
Thereafter 48,974
Total lease payments $ 104,528
Discount effect (20,967)
Present value of future minimum lease payments $ 83,561

4239

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

The Company’s future minimum undiscounted lease payments under operating leases as of June 30, 2023 were as follows:


	Operating Lease Payments
2023	$	6,434
2024	12,798
2025	13,129
2026	11,710
2027	10,987
Thereafter	27,238
Total lease payments	$	82,296
Discount effect	(14,201)
Present value of future minimum lease payments	$	68,095

The weighted-average remaining lease term and discount rate used in the calculation of the Company’s operating lease assets and liabilities were as follows:

Lease Term and Discount Rate

~~September~~June 30, ~~2022~~2023

Weighted-average remaining lease term (in years)

~~7.93~~6.7

Weighted-average discount rate

~~5.42~~5.39

17. Commitments and Contingencies

Operating Lease Commitments

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

Loan Repurchase Obligations

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

Unfunded Loan Commitments

As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the contractual amount of unfunded loan commitments was ~~$144.0~~$108.9 million and ~~$110.8~~$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

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

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.

~~LENDINGCLUB CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)~~

~~(Unaudited)~~

Regulatory Examinations and Actions Relating to the Company’s Business Practices, Licensing and ~~Licensing~~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 ~~its manner of~~ operating in ~~accordance~~compliance with applicable laws, including the requirements of its licenses and the regulatory framework applicable to its business.

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

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.

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

18. Regulatory Requirements

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

The minimum capital requirements under the Basel Committee on Banking Supervision standardized approach for U.S. banking organizations (U.S. Basel III) capital framework are: a CET1 risk-based capital ratio of 4.5%, a Tier 1 risk-based capital ratio of 6.0%, a total risk-based capital ratio of 8.0%, and a Tier 1 leverage ratio of 4.0%. Additionally, a Capital Conservation Buffer (CCB) of 2.5% must be maintained above the minimum risk-based capital requirements in order to avoid certain limitations on capital distributions, stock repurchases, and certain discretionary bonus payments. In addition to these guidelines, the regulators assess any particular institution’s

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

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%.

~~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 ~~LC Bank’s~~the Company’s regulatory capital amounts ~~and ratios~~ (in millions): and ratios:


LendingClub Bank		September 30, 2022				December 31, 2021				Required Minimum plus Required CCB for Non-Leverage Ratios
		Amount		Ratio		Amount		Ratio
LendingClub												LendingClub	June 30, 2023				December 31, 2022				Required Minimum plus Required CCB for Non-Leverage Ratios
													Amount		Ratio		Amount		Ratio
CET1 capital (1)	CET1 capital (1)	$	760.4	15.2	%	$	523.7	16.7	%	7.0	%	CET1 capital (1)	$	1,053.5	16.1	%	$	1,005.8	15.8	%	7.0	%
Tier 1 capital	Tier 1 capital	$	760.4	15.2	%	$	523.7	16.7	%	8.5	%	Tier 1 capital	$	1,053.5	16.1	%	$	1,005.8	15.8	%	8.5	%
Total capital	Total capital	$	825.8	16.5	%	$	563.7	18.0	%	10.5	%	Total capital	$	1,138.3	17.4	%	$	1,088.1	17.1	%	10.5	%
Tier 1 leverage	Tier 1 leverage	$	760.4	13.4	%	$	523.7	14.3	%	4.0	%	Tier 1 leverage	$	1,053.5	12.4	%	$	1,005.8	14.1	%	4.0	%
Risk-weighted assets	Risk-weighted assets	$	5,018.3	N/A		$	3,130.4	N/A		N/A		Risk-weighted assets	$	6,526.5	N/A		$	6,360.7	N/A		N/A
Quarterly adjusted average assets	Quarterly adjusted average assets	$	5,692.0	N/A		$	3,667.7	N/A		N/A		Quarterly adjusted average assets	$	8,522.6	N/A		$	7,119.0	N/A		N/A

N/A – Not applicable

(1) Consists of common stockholders’ equity as defined under U.S. GAAP and certain adjustments made in accordance with regulatory capital guidelines, including the addition of the CECL transitional benefit and deductions for goodwill and other intangible assets.

The following table ~~presents the~~summarizes LC Bank’s regulatory capital ~~and ratios of the Company~~amounts (in millions): and ratios:


LendingClub		September 30, 2022				December 31, 2021				Required Minimum plus Required CCB for Non-Leverage Ratios
		Amount		Ratio		Amount		Ratio
LendingClub Bank												LendingClub Bank	June 30, 2023				December 31, 2022				Required Minimum plus Required CCB for Non-Leverage Ratios
													Amount		Ratio		Amount		Ratio
CET1 capital (1)	CET1 capital (1)	$	953.2	18.3	%	$	710.0	21.3	%	7.0	%	CET1 capital (1)	$	939.3	14.7	%	$	852.2	13.8	%	7.0	%
Tier 1 capital	Tier 1 capital	$	953.2	18.3	%	$	710.0	21.3	%	8.5	%	Tier 1 capital	$	939.3	14.7	%	$	852.2	13.8	%	8.5	%
Total capital	Total capital	$	1,033.2	19.8	%	$	767.9	23.0	%	10.5	%	Total capital	$	1,022.6	16.0	%	$	932.4	15.1	%	10.5	%
Tier 1 leverage	Tier 1 leverage	$	953.2	15.7	%	$	710.0	16.5	%	4.0	%	Tier 1 leverage	$	939.3	11.3	%	$	852.2	12.5	%	4.0	%
Risk-weighted assets	Risk-weighted assets	$	5,210.2	N/A		$	3,333.2	N/A		N/A		Risk-weighted assets	$	6,406.5	N/A		$	6,194.0	N/A		N/A
Quarterly adjusted average assets	Quarterly adjusted average assets	$	6,061.4	N/A		$	4,301.7	N/A		N/A		Quarterly adjusted average assets	$	8,300.0	N/A		$	6,795.2	N/A		N/A

N/A – Not applicable

In response to the COVID-19 pandemic, the FRB, OCC, and FDIC adopted a final rule related to the regulatory capital treatment of the allowance for credit losses under CECL. As permitted by the rule, the Company elected to delay the estimated impact of CECL on regulatory capital resulting in a CET1 capital benefit of $35 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~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

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~~June 30, ~~2022~~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

~~LENDINGCLUB CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)~~

~~(Unaudited)~~

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,~~(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~~half of ~~2022~~2023 or during ~~2021.~~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 ~~OCC~~ 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.

19. 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,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Referral revenue	Referral revenue	$	3,144	$	4,293	$	10,860	$	9,649	Referral revenue	$	1,531	$	4,025	$	2,979	$	7,716
Realized gains (losses) on sales of securities available for sale and other investments		—		—		36		(96)
Realized gains on sales of securities available for sale										Realized gains on sales of securities available for sale	—		—		—		36
Other	Other	4,256		2,029		13,843		9,117		Other	1,504		3,423		3,412		9,587
Total other non-interest income	Total other non-interest income	$	7,400	$	6,322	$	24,739	$	18,670	Total other non-interest income	$	3,035	$	7,448	$	6,391	$	17,339

Other non-interest expense consists of the following:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Consumer credit services	Consumer credit services	$	4,610	$	4,266	$	15,804	$	11,798	Consumer credit services	$	2,480	$	5,670	$	7,447	$	11,194
Other	Other	10,496		11,341		30,727		30,575		Other	12,842		11,751		25,578		20,231
Total other non-interest expense	Total other non-interest expense	$	15,106	$	15,607	$	46,531	$	42,373	Total other non-interest expense	$	15,322	$	17,421	$	33,025	$	31,425

20. Segment Reporting

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

4643

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

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. Accordingly, during both the second quarter and first half of 2023, one marketplace bank investor accounted for 14% of total net revenue. No other individual borrower or marketplace investor accounted for 10% or more of total net revenue for any of the periods presented.

LendingClub Bank

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

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

LendingClub Corporation (Parent Only)

The LendingClub Corporation (Parent only) operating segment represents the holding company legal entity and predominately reflects the operations of the Company prior to the Acquisition. This activity includes, but is not limited to, servicing fee revenue for loans serviced prior to the Acquisition, and interest income and interest expense related to the Retail Program and Structured Program ~~transactions.~~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 June 30,				Three Months Ended June 30,				Three Months Ended June 30,				Three Months Ended June 30,
	2023		2022		2023		2022		2023		2022		2023		2022
Non-interest income:
Marketplace revenue	$	62,006	$	191,087	$	7,772	$	11,167	$	13,005	$	4,130	$	82,783	$	206,384
Other non-interest income	21,743		20,041		2,431		3,914		(21,139)		(16,507)		3,035		7,448
Total non-interest income	83,749		211,128		10,203		15,081		(8,134)		(12,377)		85,818		213,832

Interest income:
Interest income	210,514		120,152		3,972		8,316		—		—		214,486		128,468
Interest expense	(66,546)		(6,213)		(1,288)		(6,029)		—		—		(67,834)		(12,242)
Net interest income	143,968		113,939		2,684		2,287		—		—		146,652		116,226

Total net revenue	227,717		325,067		12,887		17,368		(8,134)		(12,377)		232,470		330,058

Provision for credit losses	(66,611)		(70,566)		16		—		—		—		(66,595)		(70,566)
Non-interest expense	(142,563)		(196,636)		(16,650)		(25,127)		8,134		12,377		(151,079)		(209,386)
Income (Loss) before income tax benefit (expense)	18,543		57,865		(3,747)		(7,759)		—		—		14,796		50,106
Income tax benefit (expense)	(5,429)		(17,318)		743		85,864		—		63,408		(4,686)		131,954
Net income (loss)	$	13,114	$	40,547	$	(3,004)	$	78,105	$	—	$	63,408	$	10,110	$	182,060
Capital expenditures	$	15,857	$	15,783	$	—	$	—	$	—	$	—	$	15,857	$	15,783
Depreciation and amortization	$	7,073	$	3,510	$	4,565	$	7,047	$	—	$	—	$	11,638	$	10,557

4744

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
	Six Months Ended June 30,				Six Months Ended June 30,				Six Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022		2023		2022		2023		2022
Non-interest income:
Marketplace revenue	$	134,694	$	355,922	$	20,880	$	26,298	$	22,843	$	4,130	$	178,417	$	386,350
Other non-interest income	40,904		39,539		4,984		8,137		(39,497)		(30,337)		6,391		17,339
Total non-interest income	175,598		395,461		25,864		34,435		(16,654)		(26,207)		184,808		403,689

Interest income:
Interest income	408,844		219,975		8,055		20,146		—		—		416,899		240,121
Interest expense	(120,442)		(9,857)		(3,101)		(14,358)		—		—		(123,543)		(24,215)
Net interest income	288,402		210,118		4,954		5,788		—		—		293,356		215,906

Total net revenue	464,000		605,579		30,818		40,223		(16,654)		(26,207)		478,164		619,595

Provision for credit losses	(137,195)		(123,075)		16		—		—		—		(137,179)		(123,075)
Non-interest expense	(290,946)		(375,095)		(34,095)		(51,702)		16,654		26,207		(308,387)		(400,590)
Income (Loss) before income tax benefit (expense)	35,859		107,409		(3,261)		(11,479)		—		—		32,598		95,930
Income tax benefit (expense)	(9,685)		(29,673)		863		103,591		—		53,048		(8,822)		126,966
Net income (loss)	$	26,174	$	77,736	$	(2,398)	$	92,112	$	—	$	53,048	$	23,776	$	222,896
Capital expenditures	$	32,255	$	37,358	$	—	$	—	$	—	$	—	$	32,255	$	37,358
Depreciation and amortization	$	13,967	$	7,010	$	10,025	$	14,586	$	—	$	—	$	23,992	$	21,596

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,
2022 2021 2022 2021 2022 2021 2022 2021
Non-interest income:
Marketplace revenue $ 153,504 $ 151,109 $ 9,015 $ 23,447 $ 11,318 $ — $ 173,837 $ 174,556
Other non-interest income 25,240 25,393 4,794 4,140 (22,634) (23,211) 7,400 6,322
Total non-interest income 178,744 176,502 13,809 27,587 (11,316) (23,211) 181,237 180,878
Interest income:
Interest income 137,142 64,606 6,078 18,254 — — 143,220 82,860
Interest expense (15,277) (2,270) (4,267) (15,302) — — (19,544) (17,572)
Net interest income 121,865 62,336 1,811 2,952 — — 123,676 65,288
Total net revenue 300,609 238,838 15,620 30,539 (11,316) (23,211) 304,913 246,166
(Provision for) reversal of credit losses (82,739) (38,019) — 495 — — (82,739) (37,524)
Non-interest expense (177,714) (161,101) (19,821) (40,885) 11,316 23,211 (186,219) (178,775)
Income (Loss) before income tax benefit (expense) 40,156 39,718 (4,201) (9,851) — — 35,955 29,867
Income tax benefit (expense) (9,440) (4,670) 16,683 12,607 — (10,619) 7,243 (2,682)
Net income $ 30,716 $ 35,048 $ 12,482 $ 2,756 $ — $ (10,619) $ 43,198 $ 27,185
Capital expenditures $ 17,301 $ 9,451 $ — $ — $ — $ — $ 17,301 $ 9,451
Depreciation and amortization $ 4,099 $ 1,220 $ 6,582 $ 9,329 $ — $ — $ 10,681 $ 10,549

4845

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, Eight Months Ended September 30, Nine Months Ended September 30, Nine Months Ended September 30, Eight Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021 2022 2021 2022 2021
Non-interest income:
Marketplace revenue $ 509,426 $ 315,885 $ 35,313 $ 92,133 $ 15,448 $ — $ 560,187 $ 408,018
Other non-interest income 64,779 73,433 12,931 12,519 (52,971) (67,282) 24,739 18,670
Total non-interest income 574,205 389,318 48,244 104,652 (37,523) (67,282) 584,926 426,688
Interest income:
Interest income 357,117 127,429 26,224 67,748 — — 383,341 195,177
Interest expense (25,134) (5,489) (18,625) (59,989) — — (43,759) (65,478)
Net interest income 331,983 121,940 7,599 7,759 — — 339,582 129,699
Total net revenue 906,188 511,258 55,843 112,411 (37,523) (67,282) 924,508 556,387
(Provision for) reversal of credit losses (205,814) (96,938) — 3,287 — — (205,814) (93,651)
Non-interest expense (552,809) (374,782) (71,523) (165,666) 37,523 67,282 (586,809) (473,166)
Income (Loss) before income tax benefit (expense) 147,565 39,538 (15,680) (49,968) — — 131,885 (10,430)
Income tax benefit (expense) (39,113) 7,866 120,274 23,821 53,048 (31,785) 134,209 (98)
Net income (loss) $ 108,452 $ 47,404 $ 104,594 $ (26,147) $ 53,048 $ (31,785) $ 266,094 $ (10,528)
Capital expenditures $ 54,659 $ 22,624 $ — $ 1,811 $ — $ — $ 54,659 $ 24,435
Depreciation and amortization $ 11,109 $ 2,810 $ 21,168 $ 31,013 $ — $ — $ 32,277 $ 33,823


	LendingClub Bank				LendingClub Corporation (Parent only)				Intercompany Eliminations				Consolidated Total
	June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022
Assets
Total cash and cash equivalents	$	1,176,563	$	1,020,874	$	74,632	$	56,475	$	(47,271)	$	(20,319)	$	1,203,924	$	1,057,030
Restricted cash	—		—		41,206		75,409		(6,414)		(7,955)		34,792		67,454
Securities available for sale at fair value	515,466		329,287		8,113		16,415		—		—		523,579		345,702
Loans held for sale at fair value	250,361		110,400		—		—		—		—		250,361		110,400
Loans and leases held for investment, net	5,178,186		4,705,302		—		—		—		—		5,178,186		4,705,302
Loans held for investment at fair value	390,654		906,711		13,465		19,227		—		—		404,119		925,938
Retail and certificate loans held for investment at fair value	—		—		26,837		55,425		—		—		26,837		55,425
Property, equipment and software, net	127,438		102,274		24,170		34,199		—		—		151,608		136,473
Investment in subsidiary	—		—		797,899		755,319		(797,899)		(755,319)		—		—
Goodwill	75,717		75,717		—		—		—		—		75,717		75,717
Other assets	335,118		339,341		177,798		173,851		(19,533)		(12,886)		493,383		500,306
Total assets	8,049,503		7,589,906		1,164,120		1,186,320		(871,117)		(796,479)		8,342,506		7,979,747
Liabilities and Equity
Total deposits	6,897,220		6,420,827		—		—		(53,685)		(28,274)		6,843,535		6,392,553
Borrowings	10,654		64,154		5,021		10,704		—		—		15,675		74,858
Retail notes, certificates and secured borrowings at fair value	—		—		26,837		55,425		—		—		26,837		55,425

Other liabilities	156,563		189,185		113,921		116,318		(19,548)		(12,886)		250,936		292,617
Total liabilities	7,064,437		6,674,166		145,779		182,447		(73,233)		(41,160)		7,136,983		6,815,453
Total equity	985,066		915,740		1,018,341		1,003,873		(797,884)		(755,319)		1,205,523		1,164,294
Total liabilities and equity	$	8,049,503	$	7,589,906	$	1,164,120	$	1,186,320	$	(871,117)	$	(796,479)	$	8,342,506	$	7,979,747

~~LENDINGCLUB CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)~~

~~(Unaudited)~~

LendingClub Bank LendingClub Corporation
(Parent only) Intercompany
Eliminations Consolidated Total
September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021
Assets
Total cash and cash equivalents $ 896,519 $ 659,919 $ 109,200 $ 88,268 $ (52,878) $ (61,061) $ 952,841 $ 687,126
Restricted cash — — 78,746 76,540 (12,461) (80) 66,285 76,460
Securities available for sale at fair value 338,096 205,730 21,061 57,800 — — 359,157 263,530
Loans held for sale 90,058 335,449 — 55,799 — — 90,058 391,248
Loans and leases held for investment, net 4,503,726 2,754,737 — — — — 4,503,726 2,754,737
Retail and certificate loans held for investment at fair value — — 87,144 229,719 — — 87,144 229,719
Other loans held for investment at fair value — — 15,057 21,240 — — 15,057 21,240
Property, equipment and software, net 89,576 36,424 40,381 61,572 — — 129,957 97,996
Investment in subsidiary — — 671,574 557,577 (671,574) (557,577) — —
Goodwill 75,717 75,717 — — — — 75,717 75,717
Other assets 305,456 254,075 207,556 168,042 (17,880) (119,571) 495,132 302,546
Total assets 6,299,148 4,322,051 1,230,719 1,316,557 (754,793) (738,289) 6,775,074 4,900,319
Liabilities and Equity
Total deposits 5,188,845 3,196,929 — — (65,339) (61,141) 5,123,506 3,135,788
Short-term borrowings 165 165 4,638 27,615 — — 4,803 27,780
Advances from PPPLF 91,671 271,933 — — — — 91,671 271,933
Retail notes, certificates and secured borrowings at fair value — — 87,144 229,719 — — 87,144 229,719
Payable on Structured Program borrowings — — 11,185 65,451 — — 11,185 65,451
Other long-term debt — — 15,300 15,455 — — 15,300 15,455
Other liabilities 205,814 218,775 132,121 150,727 (17,880) (65,551) 320,055 303,951
Total liabilities 5,486,495 3,687,802 250,388 488,967 (83,219) (126,692) 5,653,664 4,050,077
Total equity 812,653 634,249 980,331 827,590 (671,574) (611,597) 1,121,410 850,242
Total liabilities and equity $ 6,299,148 $ 4,322,051 $ 1,230,719 $ 1,316,557 $ (754,793) $ (738,289) $ 6,775,074 $ 4,900,319

5046

LENDINGCLUB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and related notes that appear in this Quarterly Report on Form 10-Q (Report). In addition to historical condensed consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Report, and in “Part I – Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021~~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.

5147

LENDINGCLUB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)

Overview

LendingClub is America’s leading digital marketplace bank. The Company was founded in 2006 and brought a traditional credit product – the installment loan – into the digital age by leveraging technology, data science, and a unique marketplace model. In doing so, we became one of the largest providers of unsecured personal loans in the United States. In February 2021, LendingClub completed the acquisition ~~(the Acquisition)~~ of ~~an award-winning digital bank,~~ Radius, becoming a bank holding company and forming LC Bank as its wholly-owned subsidiary. We operate the vast majority of our business through LC Bank, as a lender and originator of loans and as a regulated 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 managing the business prudently, continuing our disciplined credit underwriting, and developing new structures to meet the evolving needs of loan investors. We maintained strong liquidity and capital levels and delivered the following results, ~~as we leaned into the strategic advantages of our digital bank in the face of~~despite a ~~less favorable~~challenging economic environment. We drove growth in recurring interest income supported by strong credit performance of our retained high-quality prime loan portfolio. Marketplace volumes were impacted by higher funding costs for certain loan investors, driven by rapidly increasing interest rates. Over time, as rates stabilize and we continue to reprice personal loans, we expect this impact to gradually moderate.

•Loan originations: ~~Total loan~~Loan originations for the ~~third~~second quarter of ~~2022 were $3.5~~2023 decreased $277.1 million, or 12%, sequentially and $1.8 billion, ~~decreasing 8% sequentially,~~or 48%, year over year, primarily driven by a decrease in unsecured personal loan origination volume. We attribute the decrease in volume ~~reflecting rapidly~~to the rising ~~rates, tightening of underwriting standards and the corresponding impact on investor returns. We expect this market dynamic to continue in the near term, but moderate over time as we increase~~ interest rates on loans and continue to modify underwriting to enhance investor returns. Total loan originations increased 14% year over year, primarily driven by an increase in unsecured personal loan origination volume.rate environment.

◦Loan originations held for investment (HFI) ~~were $1.2 billion, increasing 13%~~at amortized cost for the second quarter of 2023 decreased $344.6 million, or 34%, sequentially and ~~81%~~$363.7 million, or 36%, year over year.

◦Loan originations HFI at amortized cost as a percentage of ~~total~~ loan originations was 33% and 44% for the second and first quarters of 2023, respectively, and 27% for the ~~third and~~ second ~~quarters of 2022, respectively, and 20% for the third~~ quarter of ~~2021.~~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.

•Total net revenue: Total net revenue for the ~~third~~second quarter of ~~2022 was $304.9~~2023 decreased $13.2 million, ~~decreasing 8%~~or 5%, sequentially and ~~increasing 24%~~$97.6 million, or 30%, year over year.

◦Marketplace revenue: Marketplace revenue for the ~~third~~second quarter of ~~2022 was $173.8~~2023 decreased $12.9 million, ~~decreasing 16%~~or 13%, sequentially and ~~remained flat~~$123.6 million, or 60%, year over year. The sequential decrease was primarily due to lower loan sales prices and a one-time revenue benefit related to slower prepayments recorded in the prior quarter. The year over year ~~in line with loan~~decrease was primarily due to lower origination volume. and pricing of marketplace loans.

◦Net interest income: Net interest income for the ~~third~~second quarter of ~~2022 was $123.7 million, improving 6%~~2023 remained relatively flat sequentially and ~~89%~~increased $30.4 million, or 26%, year over year. The increase was primarily driven by higher interest income due to ~~an increase in unsecured personal~~a higher average balance of loans retained as HFI in the current ~~and prior periods as HFI.~~period, partially offset by higher interest rates on deposits.

◦Net interest margin: Net interest margin for the ~~third~~second quarter of ~~2022~~2023 was ~~8.3%~~7.1%, decreasing from 7.5% in the first quarter of 2023 and from 8.5% in the second quarter of 2022, primarily due to higher interest rates on deposits offset by an increase in unsecured personal loans HFI, and increasing from 6.3% in the third quarter of 2021, primarily reflecting a greater mix of personal loans which generate a higher yield than the rest of the loans HFI.deposits.

•Provision for credit losses: Provision for credit losses for the ~~third~~second quarter of ~~2022 was $82.7~~2023 decreased $4.0 million, ~~increasing 17%~~or 6%, both sequentially and ~~120%~~ year over year. The ~~increase~~decrease was primarily due to ~~growth in~~the lower volume of loans HFI ~~allowance~~at amortized cost and the related initial provision for credit losses, partially offset by the discounting effect of the net present value ~~amortization~~(NPV) on prior loan vintages and additional qualitative allowance reflecting a modest increase in expected losses and a less favorable economic outlook.

•~~Total non-interest expense:~~ ~~Total non-interest expense for the third quarter of 2022 was $186.2 million, decreasing 11% sequentially, primarily driven by a decrease in variable marketing expenses based on lower~~

5248

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)

•Total non-interest expense: Total non-interest expense for the second quarter of 2023 decreased $6.2 million, or 4%, sequentially and $58.3 million, or 28%, year over year. The decrease was primarily driven by a decrease in headcount as a result of the cost reduction and reorganization plan we implemented in January 2023 as well as a decrease in variable marketing expenses based on lower origination volume and prudent management of expenses. ~~Total non-interest expense increased 4% year over year, primarily driven by an increase in variable marketing expenses based on higher origination volume.~~

•Net income: Net income for the ~~third~~second quarter of ~~2022 was $43.2~~2023 decreased $3.6 million, ~~decreasing by $138.9 million~~or 26%, sequentially and ~~increasing $16.0~~$172.0 million, or 94%, year over year. Net income for the ~~third and~~ second ~~quarters~~quarter of 2022 included a tax benefit of ~~$5.0 million and~~ $135.3 million ~~respectively,~~ due to the reversal of the majority of our valuation allowance against our deferred tax assets.

•~~Net income excluding income tax benefit:~~ Net income excluding income tax benefit (related to the reversal of our valuation allowance against our deferred tax assets) for the third quarter of 2022 was $38.2 million, decreasing by $8.6 million sequentially and increasing by $11.0 million year over year.

•Diluted ~~earnings per share:~~EPS: Diluted EPS for the ~~third quarter of 2022 was $0.41, compared to $1.73 for the~~ second quarter of ~~2022~~2023 was $0.09, compared to $0.13 for the first quarter of 2023 and ~~$0.26~~$1.73 for the same quarter last year. Diluted EPS for the second quarter of 2022 included a ~~$1.29~~$1.28 per share benefit from the ~~reversal of the~~ deferred tax valuation allowance. The improvement during the third quarter of 2022 from a year earlier primarily reflected revenue growth and improved operating efficiency, as well as a $0.05 per share benefit from the reversal of the deferred tax asset valuation allowance.allowance reversal.

•~~Pre-tax, pre-provision income:~~Pre-provision net revenue: ~~Pre-tax, pre-provision income~~Pre-provision net revenue for the ~~third~~second quarter of ~~2022 was $118.7~~2023 decreased $7.0 million, ~~decreasing by $2.0 million~~or 8%, sequentially and ~~increasing by $51.3~~$39.3 million, or 33%, year over year, ~~consistent with revenue growth and improved operating efficiency.~~reflecting lower non-interest income, partially offset by lower non-interest expense.

•~~Loans~~Cash and ~~leases held for investment:~~cash equivalents: Total cash and cash equivalents as of June 30, 2023 decreased $433.1 million, or 26%, sequentially and increased $161.9 million, or 16%, year over year. The sequential decrease reflects a lower cash position primarily due to the planned maturity of brokered deposits.

•Total assets: ~~Loans~~Total assets as of June 30, 2023 decreased $411.5 million, or 5%, sequentially, primarily due to the decrease in cash and ~~leases held for investment, net~~cash equivalents resulting from lower deposits. Total assets as of ~~allowance for loan and lease losses, were $4.5~~June 30, 2023 increased $2.2 billion, ~~at September 30, 2022, growing 18% sequentially and 73%~~or 35%, year over year primarily reflecting growth in ~~personal loan originations~~loans HFI and an increase in ~~loan originations retained as HFI.~~cash and cash equivalents due to the growth in deposits.

•Deposits: Total deposits~~at September~~ as of June 30, ~~2022 were $5.1 billion, growing 13%~~2023 decreased $375.3 million, or 5%, sequentially, and ~~80%~~increased $2.3 billion, or 51%, year over ~~year,~~year. The sequential decrease was primarily ~~reflecting growth in online savings~~due to the planned maturity of brokered deposits. Federal Deposit Insurance Corporation (FDIC)-insured deposits represent approximately 85% of total deposits as of June 30, 2023.

•Total equity: Total equity ~~at September~~as of June 30, ~~2022 was $1.1 billion, up $42.3~~2023 increased $14.8 million, or 1%, sequentially, and ~~$316.6~~$126.4 million, or 12%, year over year, primarily reflecting net income generated over the ~~period and the release of the deferred tax asset valuation allowance.~~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.”

5349

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 Nine Months Ended September 30,
September 30,
2022 June 30,
2022 September 30,
2021 2022 2021
Non-interest income $ 181,237 $ 213,832 $ 180,878 $ 584,926 $ 426,688
Net interest income 123,676 116,226 65,288 339,582 129,699
Total net revenue 304,913 330,058 246,166 924,508 556,387
Non-interest expense 186,219 209,386 178,775 586,809 473,166
Pre-tax, pre-provision income 118,694 120,672 67,391 337,699 83,221
Provision for credit losses 82,739 70,566 37,524 205,814 93,651
Income (Loss) before income tax benefit (expense) 35,955 50,106 29,867 131,885 (10,430)
Income tax benefit (expense) 7,243 131,954 (2,682) 134,209 (98)
Net income (loss) 43,198 182,060 27,185 266,094 (10,528)
Income tax benefit from release of tax valuation allowance 5,015 135,300 — 140,315 —
Net income (loss) excluding income tax benefit (1)(3)
$ 38,183 $ 46,760 $ 27,185 $ 125,779 $ (10,528)
Basic EPS $ 0.41 $ 1.77 $ 0.27 $ 2.59 $ (0.11)
Diluted EPS $ 0.41 $ 1.73 $ 0.26 $ 2.56 $ (0.11)
Diluted EPS impact of income tax benefit from release of tax valuation allowance $ 0.05 $ 1.28 — $ 1.35 —
Diluted EPS excluding income tax benefit (1)(3)
$ 0.36 $ 0.45 $ 0.26 $ 1.21 $ (0.11)
LendingClub Corporation Performance Metrics:
Net interest margin 8.3 % 8.5 % 6.3 % 8.3 % 4.8 %
Efficiency ratio (2)
61.1 % 63.4 % 72.6 % 63.5 % 85.0 %
Return on average equity (ROE) 14.2 % 33.8 % 13.8 % 40.6 % N/A
Return on average total assets (ROA) 2.5 % 5.5 % 2.4 % 6.8 % N/A
Marketing as a % of loan originations 1.3 % 1.6 % 1.6 % 1.5 % 1.4 %
LendingClub Corporation Capital Metrics:
Common Equity Tier 1 Capital Ratio 18.3 % 20.0 % 22.8 %
Tier 1 Leverage Ratio 15.7 % 16.2 % 16.2 %
Book Value per Common Share $ 10.67 $ 10.41 $ 8.07
Tangible Book Value per Common Share(3)
$ 9.78 $ 9.50 $ 7.08
Loan Originations (in millions):
Marketplace loans $ 2,386 $ 2,819 $ 2,471 $ 7,566 $ 5,792
Loan originations held for investment 1,153 1,021 636 3,030 1,521
Total loan originations $ 3,539 $ 3,840 $ 3,107 $ 10,596 $ 7,312
Loan originations held for investment as % of total loan originations 33 % 27 % 20 % 29 % 21 %
Servicing portfolio AUM (in millions) (4):
Total servicing portfolio $ 15,929 $ 14,783 $ 11,592
Loans serviced for others $ 11,807 $ 11,382 $ 9,744

~~N/A – Not applicable~~


	As of and for the Three Months Ended									As of and for the Six Months Ended June 30,
	June 30, 2023			March 31, 2023			June 30, 2022			2023			2022
Non-interest income	$	85,818		$	98,990		$	213,832		$	184,808		$	403,689
Net interest income	146,652			146,704			116,226			293,356			215,906
Total net revenue	232,470			245,694			330,058			478,164			619,595
Non-interest expense	151,079			157,308			209,386			308,387			400,590
Pre-provision net revenue (1)	81,391			88,386			120,672			169,777			219,005
Provision for credit losses	66,595			70,584			70,566			137,179			123,075
Income before income tax benefit (expense)	14,796			17,802			50,106			32,598			95,930
Income tax benefit (expense)	(4,686)			(4,136)			131,954			(8,822)			126,966
Net income	10,110			13,666			182,060			23,776			222,896
Income tax benefit from release of tax valuation allowance	N/A			N/A			135,300			N/A			135,300
Net income excluding income tax benefit (1)(2)	$	10,110		$	13,666		$	46,760		$	23,776		$	87,596

Basic EPS	$	0.09		$	0.13		$	1.77		$	0.22		$	2.18
Diluted EPS	$	0.09		$	0.13		$	1.73		$	0.22		$	2.13

Diluted EPS excluding income tax benefit (1)(2)	$	0.09		$	0.13		$	0.45		$	0.22		$	0.85











LendingClub Corporation Performance Metrics:
Net interest margin	7.1		%	7.5		%	8.5		%	7.3		%	8.4		%
Efficiency ratio (3)	65.0		%	64.0		%	63.4		%	64.5		%	64.7		%
Return on average equity (ROE)	3.4		%	4.6		%	33.8		%	4.0		%	24.4		%
Return on average total assets (ROA)	0.5		%	0.7		%	5.5		%	0.6		%	4.0		%
Marketing as a % of loan originations	1.2		%	1.2		%	1.6		%	1.2		%	1.7		%

LendingClub Corporation Capital Metrics:
Common equity tier 1 capital ratio	16.1		%	15.6		%	20.0		%
Tier 1 leverage ratio	12.4		%	12.8		%	16.2		%
Book value per common share	$	11.09		$	11.08		$	10.41
Tangible book value per common share(1)	$	10.26		$	10.23		$	9.50

Loan Originations (in millions) (4):
Marketplace loans	$	1,353		$	1,286		$	2,819		$	2,639		$	5,180
Loan originations held for investment	657			1,002			1,021			1,659			1,877
Total loan originations	$	2,011		$	2,288		$	3,840		$	4,298		$	7,057
Loan originations held for investment as % of total loan originations	33		%	44		%	27		%	39		%	27		%

Servicing portfolio AUM (in millions) (5):
Total servicing portfolio	$	15,669		$	16,060		$	14,783
Loans serviced for others	$	10,204		$	10,504		$	11,382

(1) Represents a non-GAAP financial measure. See “Non-GAAP Financial Measures” for additional information.

(2)The ~~third~~second quarter and ~~second quarters~~first half of 2022 ~~and first nine months of 2022 include~~excludes an income tax benefit of ~~$5.0 million,~~ $135.3 million ~~and $140.3 million, respectively,~~ due to the release of our deferred tax asset valuation allowance.

(3) Calculated as the ratio of non-interest expense to total net revenue.

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)

~~(2)~~(4) ~~Calculated as the ratio of non-interest expense to total net revenue.~~Includes unsecured personal loans and auto loans only.

~~(3)~~ ~~Represents a non-GAAP financial measure. See “Non-GAAP Financial Measures” for additional information.~~

~~(4)~~(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 the Three Months Ended									As of and for the Three Months Ended
		September 30, 2022			June 30, 2022			September 30, 2021					June 30, 2023			March 31, 2023			June 30, 2022

Balance Sheet Data:	Balance Sheet Data:											Balance Sheet Data:
Loans and leases held for investment, net, excluding PPP loans		$	4,414,347		$	3,692,667		$	2,235,698
Loans and leases held for investment at amortized cost, net, excluding PPP loans												Loans and leases held for investment at amortized cost, net, excluding PPP loans	$	5,160,546		$	5,091,969		$	3,692,667
PPP loans	PPP loans	$	89,379		$	118,794		$	367,558			PPP loans	$	17,640		$	51,112		$	118,794
Total loans and leases held for investment, net		$	4,503,726		$	3,811,461		$	2,603,256
Total loans and leases held for investment at amortized cost, net (1)												Total loans and leases held for investment at amortized cost, net (1)	$	5,178,186		$	5,143,081		$	3,811,461
Loans held for investment at fair value												Loans held for investment at fair value	$	404,119		$	748,618		$	20,583
Total loans and leases held for investment												Total loans and leases held for investment	$	5,582,305		$	5,891,699		$	3,832,044
Total assets	Total assets	$	6,775,074		$	6,186,765		$	4,750,760			Total assets	$	8,342,506		$	8,754,018		$	6,186,765
Total deposits	Total deposits	$	5,123,506		$	4,527,672		$	2,838,719			Total deposits	$	6,843,535		$	7,218,854		$	4,527,672
Total liabilities	Total liabilities	$	5,653,664		$	5,107,648		$	3,945,970			Total liabilities	$	7,136,983		$	7,563,276		$	5,107,648
Total equity	Total equity	$	1,121,410		$	1,079,117		$	804,790			Total equity	$	1,205,523		$	1,190,742		$	1,079,117

Allowance Ratios:
Allowance Ratios(1):												Allowance Ratios(1):
ALLL to total loans and leases held for investment	ALLL to total loans and leases held for investment	6.3		%	6.0		%	3.9		%		ALLL to total loans and leases held for investment	6.4		%	6.4		%	6.0		%
ALLL to total loans and leases held for investment, excluding PPP loans		6.4		%	6.2		%	4.5		%

ALLL to consumer loans and leases held for investment	ALLL to consumer loans and leases held for investment	7.2		%	6.9		%	5.2		%		ALLL to consumer loans and leases held for investment	7.1		%	7.1		%	6.9		%
ALLL to commercial loans and leases held for investment	ALLL to commercial loans and leases held for investment	1.9		%	2.0		%	1.6		%		ALLL to commercial loans and leases held for investment	1.9		%	2.0		%	2.0		%
ALLL to commercial loans and leases held for investment, excluding PPP loans		2.2		%	2.3		%	2.6		%

Net charge-offs												Net charge-offs	$	59,884		$	49,845		$	14,778
Net charge-off ratio(2)												Net charge-off ratio(2)	4.4		%	3.8		%	1.6		%

(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.

5551

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 ~~tables set~~table sets forth the Condensed Consolidated Statements of Income (Income Statement) data for each of the periods presented:


		Three Months Ended						Change (%)					Three Months Ended						Change (%)
		September 30, 2022		June 30, 2022		September 30, 2021		Q3 2022 vs Q2 2022		Q3 2022 vs Q3 2021			June 30, 2023		March 31, 2023		June 30, 2022		Q2 2023 vs Q1 2023		Q2 2023 vs Q2 2022
Non-interest income:	Non-interest income:											Non-interest income:
Marketplace revenue	Marketplace revenue	$	173,837	$	206,384	$	174,556	(16)	%	—	%	Marketplace revenue	$	82,783	$	95,634	$	206,384	(13)	%	(60)	%
Other non-interest income	Other non-interest income	7,400		7,448		6,322		(1)	%	17	%	Other non-interest income	3,035		3,356		7,448		(10)	%	(59)	%
Total non-interest income	Total non-interest income	181,237		213,832		180,878		(15)	%	—	%	Total non-interest income	85,818		98,990		213,832		(13)	%	(60)	%

Interest income:	Interest income:											Interest income:
Interest on loans held for sale	Interest on loans held for sale	5,879		7,130		8,536		(18)	%	(31)	%	Interest on loans held for sale	4,433		5,757		7,130		(23)	%	(38)	%
Interest and fees on loans and leases held for investment	Interest and fees on loans and leases held for investment	124,028		108,911		57,644		14	%	115	%	Interest and fees on loans and leases held for investment	162,085		150,467		108,911		8	%	49	%
Interest on loans held for investment at fair value												Interest on loans held for investment at fair value	21,692		26,892		631		(19)	%	N/M
Interest on retail and certificate loans held for investment at fair value	Interest on retail and certificate loans held for investment at fair value	3,685		5,091		12,172		(28)	%	(70)	%	Interest on retail and certificate loans held for investment at fair value	1,194		1,683		5,091		(29)	%	(77)	%
Interest on other loans held for investment at fair value		791		631		973		25	%	(19)	%
Interest on securities available for sale	Interest on securities available for sale	3,820		4,426		3,180		(14)	%	20	%	Interest on securities available for sale	5,948		3,900		4,426		53	%	34	%
Other	Other	5,017		2,279		355		120	%	N/M		Other	19,134		13,714		2,279		40	%	N/M
Total interest income	Total interest income	143,220		128,468		82,860		11	%	73	%	Total interest income	214,486		202,413		128,468		6	%	67	%

Interest expense:	Interest expense:											Interest expense:
Interest on deposits	Interest on deposits	15,184		6,078		1,899		150	%	700	%	Interest on deposits	66,521		53,273		6,078		25	%	N/M
Interest on short-term borrowings		87		417		849		(79)	%	(90)	%
Interest on retail notes, certificates and secured borrowings	Interest on retail notes, certificates and secured borrowings	3,685		5,091		12,172		(28)	%	(70)	%	Interest on retail notes, certificates and secured borrowings	1,194		1,683		5,091		(29)	%	(77)	%
Interest on Structured Program borrowings		225		360		2,120		(38)	%	(89)	%
Interest on other long-term debt		363		296		532		23	%	(32)	%
Other interest expense												Other interest expense	119		753		1,073		(84)	%	(89)	%
Total interest expense	Total interest expense	19,544		12,242		17,572		60	%	11	%	Total interest expense	67,834		55,709		12,242		22	%	454	%

Net interest income	Net interest income	123,676		116,226		65,288		6	%	89	%	Net interest income	146,652		146,704		116,226		—	%	26	%

Total net revenue	Total net revenue	304,913		330,058		246,166		(8)	%	24	%	Total net revenue	232,470		245,694		330,058		(5)	%	(30)	%

Provision for credit losses	Provision for credit losses	82,739		70,566		37,524		17	%	120	%	Provision for credit losses	66,595		70,584		70,566		(6)	%	(6)	%

Non-interest expense:	Non-interest expense:											Non-interest expense:
Compensation and benefits	Compensation and benefits	84,916		85,103		73,304		—	%	16	%	Compensation and benefits	71,553		73,307		85,103		(2)	%	(16)	%
Marketing	Marketing	46,031		61,497		50,782		(25)	%	(9)	%	Marketing	23,940		26,880		61,497		(11)	%	(61)	%
Equipment and software	Equipment and software	12,491		12,461		10,297		—	%	21	%	Equipment and software	13,968		13,696		12,461		2	%	12	%
Occupancy		5,051		6,209		6,486		(19)	%	(22)	%
Depreciation and amortization	Depreciation and amortization	10,681		10,557		10,549		1	%	1	%	Depreciation and amortization	11,638		12,354		10,557		(6)	%	10	%
Professional services	Professional services	11,943		16,138		11,750		(26)	%	2	%	Professional services	9,974		9,058		16,138		10	%	(38)	%
Occupancy												Occupancy	4,684		4,310		6,209		9	%	(25)	%
Other non-interest expense	Other non-interest expense	15,106		17,421		15,607		(13)	%	(3)	%	Other non-interest expense	15,322		17,703		17,421		(13)	%	(12)	%
Total non-interest expense	Total non-interest expense	186,219		209,386		178,775		(11)	%	4	%	Total non-interest expense	151,079		157,308		209,386		(4)	%	(28)	%

Income before income tax benefit (expense)	Income before income tax benefit (expense)	35,955		50,106		29,867		(28)	%	20	%	Income before income tax benefit (expense)	14,796		17,802		50,106		(17)	%	(70)	%
Income tax benefit (expense)	Income tax benefit (expense)	7,243		131,954		(2,682)		N/M		N/M		Income tax benefit (expense)	(4,686)		(4,136)		131,954		13	%	(104)	%
Net income	Net income	$	43,198	$	182,060	$	27,185	(76)	%	59	%	Net income	$	10,110	$	13,666	$	182,060	(26)	%	(94)	%

5652

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,
2022 2021 Change (%)
Non-interest income:
Marketplace revenue $ 560,187 $ 408,018 37 %
Other non-interest income 24,739 18,670 33 %
Total non-interest income 584,926 426,688 37 %
Interest income:
Interest on loans held for sale 20,459 22,387 (9) %
Interest and fees on loans and leases held for investment 324,381 112,013 190 %
Interest on retail and certificate loans held for investment at fair value 15,745 48,448 (68) %
Interest on other loans held for investment at fair value 2,015 3,674 (45) %
Interest on securities available for sale 12,757 7,954 60 %
Other 7,984 701 N/M
Total interest income 383,341 195,177 96 %
Interest expense:
Interest on deposits 24,700 4,612 436 %
Interest on short-term borrowings 939 3,116 (70) %
Interest on retail notes, certificates and secured borrowings 15,745 48,448 (68) %
Interest on Structured Program borrowings 1,349 7,996 (83) %
Interest on other long-term debt 1,026 1,306 (21) %
Total interest expense 43,759 65,478 (33) %
Net interest income 339,582 129,699 162 %
Total net revenue 924,508 556,387 66 %
Provision for credit losses 205,814 93,651 120 %
Non-interest expense:
Compensation and benefits 251,629 209,649 20 %
Marketing 162,608 105,434 54 %
Equipment and software 35,998 27,471 31 %
Occupancy 17,279 19,543 (12) %
Depreciation and amortization 32,277 33,823 (5) %
Professional services 40,487 34,873 16 %
Other non-interest expense 46,531 42,373 10 %
Total non-interest expense 586,809 473,166 24 %
Income (Loss) before income tax benefit (expense) 131,885 (10,430) N/M
Income tax benefit (expense) 134,209 (98) N/M
Net income (loss) $ 266,094 $ (10,528) N/M


	Six Months Ended June 30,
	2023		2022		Change (%)
Non-interest income:
Marketplace revenue	$	178,417	$	386,350	(54)	%
Other non-interest income	6,391		17,339		(63)	%
Total non-interest income	184,808		403,689		(54)	%

Interest income:
Interest on loans held for sale	10,190		14,580		(30)	%
Interest and fees on loans and leases held for investment	312,552		200,353		56	%
Interest on loans held for investment at fair value	48,584		1,224		N/M
Interest on retail and certificate loans held for investment at fair value	2,877		12,060		(76)	%
Interest on securities available for sale	9,848		8,937		10	%
Other	32,848		2,967		N/M
Total interest income	416,899		240,121		74	%

Interest expense:
Interest on deposits	119,794		9,516		N/M
Interest on retail notes, certificates and secured borrowings	2,877		12,060		(76)	%
Other interest expense	872		2,639		(67)	%
Total interest expense	123,543		24,215		410	%

Net interest income	293,356		215,906		36	%

Total net revenue	478,164		619,595		(23)	%

Provision for credit losses	137,179		123,075		11	%

Non-interest expense:
Compensation and benefits	144,860		166,713		(13)	%
Marketing	50,820		116,577		(56)	%
Equipment and software	27,664		23,507		18	%
Depreciation and amortization	23,992		21,596		11	%
Professional services	19,032		28,544		(33)	%
Occupancy	8,994		12,228		(26)	%
Other non-interest expense	33,025		31,425		5	%
Total non-interest expense	308,387		400,590		(23)	%

Income before income tax benefit (expense)	32,598		95,930		(66)	%
Income tax benefit (expense)	(8,822)		126,966		(107)	%
Net income	$	23,776	$	222,896	(89)	%

The analysis below is presented for the following periods: ~~Third~~Second quarter of ~~2022~~2023 compared to the first quarter of 2023 (sequential), second quarter of 2023 compared to the second quarter of 2022 ~~(sequential), third quarter of 2022 compared to the third quarter of 2021~~ (year over year) and ~~the~~ first ~~nine months~~half of ~~2022~~2023 compared to the first ~~nine months~~half of ~~2021 (nine~~2022 (six months over ~~nine~~six months). As a result of the timing of the Company’s acquisition of Radius on February 1, 2021, our results of operations discussed below for the nine- month period ended September 30, 2021 only reflect the revenue and expenses generated by LendingClub Bank for eight months of such period.

5753

LENDINGCLUB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)

Marketplace Revenue

Marketplace revenue consists of the following:


		Three Months Ended						Change (%)					Three Months Ended						Change (%)
		September 30, 2022		June 30, 2022		September 30, 2021		Q3 2022 vs Q2 2022		Q3 2022 vs Q3 2021			June 30, 2023		March 31, 2023		June 30, 2022		Q2 2023 vs Q1 2023		Q2 2023 vs Q2 2022
Origination fees	Origination fees	$	127,142	$	149,252	$	129,125	(15)	%	(2)	%	Origination fees	$	70,989	$	70,543	$	149,252	1	%	(52)	%
Servicing fees	Servicing fees	23,760		18,166		20,819		31	%	14	%	Servicing fees	22,015		26,380		18,166		(17)	%	21	%
Gain on sales of loans	Gain on sales of loans	23,554		29,319		21,907		(20)	%	8	%	Gain on sales of loans	13,221		14,125		29,319		(6)	%	(55)	%
Net fair value adjustments	Net fair value adjustments	(619)		9,647		2,705		N/M		N/M		Net fair value adjustments	(23,442)		(15,414)		9,647		52	%	N/M
Total marketplace revenue	Total marketplace revenue	$	173,837	$	206,384	$	174,556	(16)	%	—	%	Total marketplace revenue	$	82,783	$	95,634	$	206,384	(13)	%	(60)	%

Nine Months Ended September 30,
2022 2021 Change (%)
Origination fees $ 398,487 $ 298,486 34 %
Servicing fees 60,440 66,699 (9) %
Gain on sales of loans 76,983 49,547 55 %
Net fair value adjustments 24,277 (6,714) N/M
Total marketplace revenue $ 560,187 $ 408,018 37 %


	Six Months Ended June 30,
	2023		2022		Change (%)
Origination fees	$	141,532	$	271,345	(48)	%
Servicing fees	48,395		36,680		32	%
Gain on sales of loans	27,346		53,429		(49)	%
Net fair value adjustments	(38,856)		24,896		N/M
Total marketplace revenue	$	178,417	$	386,350	(54)	%

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

The following table presents loan origination volume during each of the periods set forth below:


		Three Months Ended						Nine Months Ended					Three Months Ended						Change (%)
		September 30, 2022		June 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021			June 30, 2023		March 31, 2023		June 30, 2022		Q2 2023 vs Q1 2023		Q2 2023 vs Q2 2022
Marketplace loans	Marketplace loans	$	2,386,319	$	2,819,263	$	2,471,152	$	7,565,820	$	5,791,508	Marketplace loans	$	1,353,134	$	1,285,648	$	2,819,263	5	%	(52)	%
Loan originations held for investment	Loan originations held for investment	1,152,870		1,021,110		635,514		3,030,292		1,520,751		Loan originations held for investment	657,380		1,001,989		1,021,110		(34)	%	(36)	%
Total loan originations(1)	Total loan originations(1)	$	3,539,189	$	3,840,373	$	3,106,666	$	10,596,112	$	7,312,259	Total loan originations(1)	$	2,010,514	$	2,287,637	$	3,840,373	(12)	%	(48)	%

~~Origination fees were $127.1 million~~


	Six Months Ended June 30,
	2023		2022		Change (%)
Marketplace loans	$	2,638,782	$	5,179,501	(49)	%
Loan originations held for investment	1,659,369		1,877,422		(12)	%
Total loan originations (1)	$	4,298,151	$	7,056,923	(39)	%

(1) Includes unsecured personal loans and $149.3 million for the third and second quarters of 2022, respectively, a decrease of 15%. The decrease was due to lower origination volume of marketplace loans. Loan origination volume of marketplaceauto loans ~~decreased to $2.4 billion for the third quarter of 2022 compared to $2.8 billion for the second quarter of 2022, a decrease of 15%.~~only.

5854

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)

Sequential:Origination fees were ~~$127.1~~relatively flat for the second quarter of 2023 compared to the first quarter of 2023. Loan origination volume of marketplace loans increased to $1.4 billion for the second quarter of 2023 compared to $1.3 billion for the first quarter of 2023, an increase of 5%.

Year Over Year: Origination fees were $71.0 million and ~~$129.1~~$149.3 million for the ~~third~~second quarters of ~~2022~~2023 and ~~2021,~~2022, respectively, a decrease of 2%52%. The decrease was due to lower origination volume of marketplace loans. Loan origination volume of marketplace loans decreased to ~~$2.4~~$1.4 billion for the ~~third~~second quarter of 2023 compared to $2.8 billion for the second quarter of 2022, ~~compared to $2.5 billion for the third quarter of 2021,~~ a decrease of ~~3%.~~52%, resulting from lower investor demand due to the rising interest rate environment.

Six Months Over Six Months:Origination fees were ~~$398.5~~$141.5 million and ~~$298.5~~$271.3 million for the first ~~nine months~~halves of 2023 and 2022, ~~and 2021,~~ respectively, ~~an increase~~a decrease of ~~34%~~48%. The ~~increase~~decrease was due to ~~higher~~lower origination volume of marketplace loans. Loan origination volume of marketplace loans ~~increased~~decreased to ~~$7.6~~$2.6 billion for the first ~~nine months~~half of ~~2022~~2023 compared to ~~$5.8~~$5.2 billion for the first ~~nine months~~half of ~~2021, an increase~~2022, a decrease of ~~31%.~~49%, 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 ~~end of each period~~periods presented. Loans sold and subsequently serviced on behalf of the investor represent a key driver of our servicing fee revenue.


		Three Months Ended						Change (%)												Change (%)
		September 30, 2022		June 30, 2022		September 30, 2021		Q3 2022 vs Q2 2022			Q3 2022 vs Q3 2021			June 30, 2023		March 31, 2023		June 30, 2022		Q2 2023 vs Q1 2023		Q2 2023 vs Q2 2022
AUM (in millions):	AUM (in millions):									AUM (in millions):
Loans serviced for others	Loans serviced for others	$	11,807	$	11,382	$	9,744	4	%		21	%	Loans serviced for others	$	10,204	$	10,504	$	11,382	(3)	%	(10)	%
Loans held by LendingClub Bank	Loans held by LendingClub Bank	4,019		3,258		1,438		23	%		179	%	Loans held by LendingClub Bank	5,425		5,499		3,258		(1)	%	67	%
Retail notes, certificates and secured borrowings	Retail notes, certificates and secured borrowings	92		127		314		(28)	%		(71)	%	Retail notes, certificates and secured borrowings	28		41		127		(32)	%	(78)	%
Other loans invested in by the Company	Other loans invested in by the Company	11		16		96		(31)	%		(89)	%	Other loans invested in by the Company	12		16		16		(25)	%	(25)	%
Total	Total	$	15,929	$	14,783	$	11,592	8	%		37	%	Total	$	15,669	$	16,060	$	14,783	(2)	%	6	%

In addition to the loans serviced on our marketplace platform, we ~~earned servicing fee revenue on $174.1~~serviced $146.9 million, ~~$183.6~~$159.1 million and ~~$243.6~~$183.6 million in outstanding principal balance of commercial loans sold as of ~~September~~June 30, ~~2022,~~2023, March 31, 2023 and June 30, 2022, ~~and September 30, 2021,~~ respectively.

Sequential:Servicing fees were ~~$23.8~~$22.0 million and $26.4 million for the second and first quarters of 2023, respectively, a decrease of 17%. This was primarily due to slower forecasted prepayments in the first quarter of 2023 resulting in a higher fair value of the servicing asset in the first quarter of 2023 compared to the second quarter of 2023.

Year Over Year: Servicing fees were $22.0 million and $18.2 million for the ~~third and~~ second quarters of 2023 and 2022, respectively, an increase of ~~31%~~21%. This was primarily due to ~~a higher principal balance of loans serviced and less changes~~an increase in the fair value of ~~our~~the servicing ~~asset.~~

~~Servicing fees were $23.8 million and $20.8 million for the third quarters of 2022 and 2021, respectively, an increase of 14%. The increase in~~asset based on higher expected servicing fee revenue, ~~was primarily due to a higher principal balance of loans serviced.~~

Servicing fees were $60.4 million and $66.7 million for the first nine months of 2022 and 2021, respectively, a decrease of 9%. The decrease in revenue was primarily due to more changes in the fair value of our servicing asset, partially offset by a ~~higher principal balance of loans serviced.~~

decrease in loan balances serviced for others.

5955

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)

Six Months Over Six Months: Servicing fees were $48.4 million and $36.7 million for the first halves of 2023 and 2022, respectively, an increase of 32%. This was primarily due to an increase in the fair value of the servicing asset based on higher expected servicing fee revenue, including from slower forecasted prepayments.

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 ~~$23.6~~$13.2 million and $14.1 million for the second and first quarters of 2023, respectively, a decrease of 6%. The decrease was due to lower average servicing fees on marketplace loans sold in the second quarter of 2023 compared to the first quarter of 2023.

Year Over Year: Gain on sales of loans was $13.2 million and $29.3 million for the ~~third and~~ second quarters of 2023 and 2022, respectively, a decrease of ~~20%~~55%. The decrease was primarily due to a decrease in the volume of marketplace loans sold.

Six Months Over Six Months:Gain on sales of loans was ~~$23.6~~$27.3 million and ~~$21.9~~$53.4 million for the ~~third quarters~~first halves of 2023 and 2022, ~~and 2021,~~ respectively, ~~an increase~~a decrease of 8%49%. The ~~increase~~decrease was primarily due to ~~an increase in the average contractual servicing fee, partially offset by~~ a decrease in the volume of marketplace loans sold.

Gain on sales of loans was $77.0 million and $49.5 million for the first nine months of 2022 and 2021, respectively, an increase of 55%. The increase was primarily due to an increase 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 ~~$(0.6)~~$(23.4) million and ~~$9.6~~$(15.4) million for the ~~third~~second and ~~second~~first quarters of ~~2022,~~2023, respectively, a decrease of ~~$10.3~~$8.0 million. The decrease was primarily due to lower loan sale ~~prices and a decrease in the volume of marketplace loans sold.~~prices.

Year Over Year:Net fair value adjustments were ~~$(0.6)~~$(23.4) million and ~~$2.7~~$9.6 million for the ~~third~~second quarters of ~~2022~~2023 and ~~2021,~~2022, respectively, a decrease of ~~$3.3~~$33.1 million. The decrease was primarily due to lower loan sale ~~prices and a decrease in the volume of marketplace loans sold.~~prices.

Six Months Over Six Months:Net fair value adjustments were ~~$24.3~~$(38.9) million and ~~$(6.7)~~$24.9 million for the first ~~nine months~~halves of 2023 and 2022, ~~and 2021,~~ respectively, ~~an increase~~a decrease of ~~$31.0~~$63.8 million. The ~~increase~~decrease was primarily due to ~~higher~~lower loan sale ~~prices and an increase in the volume of marketplace loans sold.~~prices.

6056

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)

Other Non-interest Income

Other non-interest income primarily consists of referral revenue that relates to fees earned from third-party companies when customers referred by us consider or purchase products or services from such third-party companies. The tables below illustrate the composition of other non-interest income for each period presented:


		Three Months Ended						Change (%)					Three Months Ended						Change (%)
		September 30, 2022		June 30, 2022		September 30, 2021		Q3 2022 vs Q2 2022		Q3 2022 vs Q3 2021			June 30, 2023		March 31, 2023		June 30, 2022		Q2 2023 vs Q1 2023		Q2 2023 vs Q2 2022
Referral revenue	Referral revenue	$	3,144	$	4,025	$	4,293	(22)	%	(27)	%	Referral revenue	$	1,531	$	1,448	$	4,025	6	%	(62)	%

Other	Other	4,256		3,423		2,029		24	%	110	%	Other	1,504		1,908		3,423		(21)	%	(56)	%
Other non-interest income	Other non-interest income	$	7,400	$	7,448	$	6,322	(1)	%	17	%	Other non-interest income	$	3,035	$	3,356	$	7,448	(10)	%	(59)	%

Nine Months Ended September 30,
2022 2021 Change (%)
Referral revenue $ 10,860 $ 9,649 13 %
Realized gains (losses) on sales of securities available for sale and other investments 36 (96) N/M
Other 13,843 9,117 52 %
Other non-interest income $ 24,739 $ 18,670 33 %


	Six Months Ended June 30,				Change (%)
	2023		2022			Q2 2023 vs Q2 2022
Referral revenue	$	2,979	$	7,716		(61)	%
Realized gains on sales of securities available for sale	—		36			(100)	%
Other	3,412		9,587			(64)	%
Other non-interest income	$	6,391	$	17,339		(63)	%

6157

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~~table below ~~present~~presents net interest income information corresponding to interest-earning assets and interest-bearing funding ~~sources on a consolidated basis for the Company.~~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, 2022						Three Months Ended June 30, 2022						Three Months Ended September 30, 2021							Three Months Ended June 30, 2023						Three Months Ended March 31, 2023						Three Months Ended June 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			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)	Interest-earning assets (1)																			Interest-earning assets (1)
Cash, cash equivalents, restricted cash and other	Cash, cash equivalents, restricted cash and other	$	893,655	$	5,017	2.25	%	$	1,023,192	$	2,279	0.89	%	$	778,667	$	355	0.18	%	Cash, cash equivalents, restricted cash and other	$	1,512,700	$	19,134	5.06	%	$	1,220,677	$	13,714	4.49	%	$	1,023,192	$	2,279	0.89	%
Securities available for sale at fair value	Securities available for sale at fair value	396,556		3,820		3.85	%	409,327		4,426		4.32	%	266,686		3,180		4.77	%	Securities available for sale at fair value	437,473		5,948		5.44	%	362,960		3,900		4.30	%	409,327		4,426		4.32	%
Loans held for sale		126,487		5,879		18.59	%	156,503		7,130		18.22	%	226,422		8,536		15.08	%
Loans and leases held for investment:
Loans held for sale at fair value																				Loans held for sale at fair value	106,865		4,433		16.59	%	110,580		5,757		20.83	%	156,503		7,130		18.22	%
Loans and leases held for investment at amortized cost:																				Loans and leases held for investment at amortized cost:
Unsecured personal loans (2)	Unsecured personal loans (2)	3,268,649		110,446		13.52	%	2,692,148		95,529		14.19	%	991,297		39,532		15.95	%	Unsecured personal loans (2)	4,360,506		145,262		13.33	%	4,066,713		133,687		13.15	%	2,692,148		95,529		14.19	%
Secured consumer loans	Secured consumer loans	337,191		3,039		3.60	%	268,091		2,351		3.51	%	464,194		4,688		4.04	%	Secured consumer loans	399,488		4,088		4.09	%	381,760		3,706		3.88	%	268,091		2,351		3.51	%
Commercial loans and leases	Commercial loans and leases	692,783		9,262		5.35	%	644,002		8,732		5.42	%	616,823		7,887		5.11	%	Commercial loans and leases	728,588		11,605		6.37	%	735,911		12,185		6.62	%	644,002		8,732		5.42	%
PPP loans	PPP loans	105,500		1,281		4.86	%	149,454		2,299		6.15	%	436,785		5,537		5.07	%	PPP loans	28,675		1,130		15.76	%	57,833		889		6.15	%	149,454		2,299		6.15	%
Loans and leases held for investment		4,404,123		124,028		11.26	%	3,753,695		108,911		11.61	%	2,509,099		57,644		9.19	%
Loans and leases held for investment at amortized cost																				Loans and leases held for investment at amortized cost	5,517,257		162,085		11.75	%	5,242,217		150,467		11.48	%	3,753,695		108,911		11.61	%
Loans held for investment at fair value																				Loans held for investment at fair value	670,969		21,692		12.93	%	836,313		26,892		12.86	%	16,991		631		14.85	%
Total loans and leases held for investment																				Total loans and leases held for investment	6,188,226		183,777		11.88	%	6,078,530		177,359		11.67	%	3,770,686		109,542		11.62	%
Retail and certificate loans held for investment at fair value	Retail and certificate loans held for investment at fair value	104,010		3,685		14.17	%	144,613		5,091		14.08	%	344,205		12,172		14.15	%	Retail and certificate loans held for investment at fair value	32,760		1,194		14.57	%	46,525		1,683		14.47	%	144,613		5,091		14.08	%
Other loans held for investment at fair value		17,763		791		17.83	%	16,991		631		14.85	%	30,981		973		12.58	%
Total interest-earning assets	Total interest-earning assets	5,942,594		143,220		9.64	%	5,504,321		128,468		9.34	%	4,156,060		82,860		7.97	%	Total interest-earning assets	8,278,024		214,486		10.36	%	7,819,272		202,413		10.35	%	5,504,321		128,468		9.34	%

Cash and due from banks and restricted cash	Cash and due from banks and restricted cash	58,411						75,517						96,733						Cash and due from banks and restricted cash	78,221						71,878						75,517
Allowance for loan and lease losses	Allowance for loan and lease losses	(254,849)						(202,904)						(86,686)						Allowance for loan and lease losses	(354,348)						(338,359)						(202,904)
Other non-interest earning assets	Other non-interest earning assets	597,169						490,412						449,964						Other non-interest earning assets	686,956						666,650						490,412
Total assets	Total assets	$	6,343,325					$	5,867,346					$	4,616,071					Total assets	$	8,688,853					$	8,219,441					$	5,867,346

Interest-bearing liabilities	Interest-bearing liabilities																			Interest-bearing liabilities
Interest-bearing deposits:	Interest-bearing deposits:																			Interest-bearing deposits:
Checking and money market accounts	Checking and money market accounts	$	2,192,904	$	4,575	0.83	%	$	2,463,710	$	2,664	0.43%		$	2,221,365	$	1,707	0.30	%	Checking and money market accounts	$	1,397,302	$	7,760	2.23	%	$	1,633,691	$	7,568	1.88	%	$	2,463,710	$	2,664	0.43	%
Savings accounts and certificates of deposit	Savings accounts and certificates of deposit	2,260,170		10,609		1.86	%	1,555,607		3,414		0.88%		307,807		192		0.25	%	Savings accounts and certificates of deposit	5,546,862		58,761		4.25	%	4,747,478		45,705		3.90	%	1,555,607		3,414		0.88	%
Interest-bearing deposits (2)	Interest-bearing deposits (2)	4,453,074		15,184		1.35	%	4,019,317		6,078		0.61%		2,529,172		1,899		0.30	%	Interest-bearing deposits (2)	6,944,164		66,521		3.84	%	6,381,169		53,273		3.39	%	4,019,317		6,078		0.61	%
Short-term borrowings		6,848		87		5.09	%	10,874		417		15.35%		57,224		849		5.93	%
Advances from PPPLF		104,897		93		0.36	%	151,278		135		0.36%		416,748		371		0.36	%
Retail notes, certificates and secured borrowings	Retail notes, certificates and secured borrowings	104,010		3,685		14.17	%	144,613		5,091		14.08	%	344,087		12,172		14.15	%	Retail notes, certificates and secured borrowings	32,760		1,194		14.57	%	46,525		1,683		14.47	%	144,613		5,091		14.08	%
Structured Program borrowings		13,859		225		6.50	%	18,439		360		7.81	%	100,178		2,120		8.46	%
Other long-term debt		15,300		270		7.04	%	15,357		161		4.20	%	15,606		161		4.13	%
Other interest-bearing liabilities																				Other interest-bearing liabilities	31,409		119		1.51	%	107,520		753		2.80	%	195,948		1,073		2.19	%
Total interest-bearing liabilities	Total interest-bearing liabilities	4,697,988		19,544		1.65	%	4,359,878		12,242		1.12	%	3,463,015		17,572		2.03	%	Total interest-bearing liabilities	7,008,333		67,834		3.88	%	6,535,214		55,709		3.46	%	4,359,878		12,242		1.12	%

6258

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, 2022						Three Months Ended June 30, 2022						Three Months Ended September 30, 2021							Three Months Ended June 30, 2023						Three Months Ended March 31, 2023						Three Months Ended June 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			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)
Non-interest bearing deposits	Non-interest bearing deposits	284,134						292,750						81,491						Non-interest bearing deposits	205,750						241,954						292,750
Other liabilities	Other liabilities	250,086						261,796						285,292						Other liabilities	272,142						263,868						261,796
Total liabilities	Total liabilities	$	5,232,208					$	4,914,424					$	3,829,798					Total liabilities	$	7,486,225					$	7,041,036					$	4,914,424

Total equity	Total equity	$	1,111,117					$	952,922					$	786,273					Total equity	$	1,202,628					$	1,178,405					$	952,922
Total liabilities and equity	Total liabilities and equity	$	6,343,325					$	5,867,346					$	4,616,071					Total liabilities and equity	$	8,688,853					$	8,219,441					$	5,867,346

Interest rate spread	Interest rate spread					7.99	%					8.21	%					5.95	%	Interest rate spread					6.48	%					6.90	%					8.21	%

Net interest income and net interest margin	Net interest income and net interest margin			$	123,676	8.32	%			$	116,226	8.45	%			$	65,288	6.28	%	Net interest income and net interest margin			$	146,652	7.09	%			$	146,704	7.50	%			$	116,226	8.45	%

(1) Nonaccrual loans and any related income are included in their respective loan categories.

(2) The average yield/rate for unsecured personal loans ~~decreased both~~increased sequentially ~~and~~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.~~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 ~~the decrease in~~pressure on net interest margin to continue during 2023.

An analysis of the sequential and year-over-year changes in the ~~fourth quarter~~categories of ~~2022.~~interest revenue and interest expense resulting from changes in volume and rate is as follows:


	Three Months Ended June 30, 2023 Compared to Three Months Ended March 31, 2023
	Increase (Decrease) Due to Change in:
	Average Volume(1)		Average Rate(1)		Total
Interest-earning assets
Cash, cash equivalents, restricted cash and other	$	3,550	$	1,870	$	5,420
Securities available for sale at fair value	893		1,155		2,048
Loans held for sale at fair value	(188)		(1,136)		(1,324)
Loans and leases held for investment at amortized cost	9,205		2,413		11,618
Loans and leases held for investment at fair value	(5,344)		144		(5,200)
Retail and certificate loans held for investment at fair value	(501)		12		(489)
Total increase in interest income on interest-earning assets	$	7,615	$	4,458	$	12,073
Interest-bearing liabilities
Checking and money market accounts	$	(1,164)	$	1,356	$	192
Savings accounts and certificates of deposit	8,566		4,490		13,056
Interest-bearing deposits	7,402		5,846		13,248
Retail notes, certificates and secured borrowings	(501)		12		(489)
Other interest-bearing liabilities	(384)		(250)		(634)
Total increase in interest expense on interest-bearing liabilities	$	6,517	$	5,608	$	12,125

Increase (Decrease) in net interest income	$	1,098	$	(1,150)	$	(52)

(1) Volume and rate changes have been allocated on a consistent basis using the respective percentage changes in average balances and average rates.

6359

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)

~~An analysis of the sequential and year-to-year changes in the categories of interest revenue and interest expense resulting from changes in volume and rate is as follows:~~


		Three Months Ended September 30, 2022 Compared to Three Months Ended June 30, 2022							Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022
		Increase (Decrease) Due to Change in:							Increase (Decrease) Due to Change in:
		Average Volume(1)		Average Rate(1)		Total			Average Volume(1)		Average Rate(1)		Total
Interest-earning assets	Interest-earning assets							Interest-earning assets
Cash, cash equivalents, restricted cash and other	Cash, cash equivalents, restricted cash and other	$	(322)	$	3,060	$	2,738	Cash, cash equivalents, restricted cash and other	$	1,564	$	15,291	$	16,855
Securities available for sale at fair value	Securities available for sale at fair value	(135)		(471)		(606)		Securities available for sale at fair value	321		1,201		1,522
Loans held for sale		(1,392)		141		(1,251)
Loans and leases held for investment		18,398		(3,281)		15,117
Loans held for sale at fair value								Loans held for sale at fair value	(2,103)		(594)		(2,697)
Loans and leases held for investment at amortized cost								Loans and leases held for investment at amortized cost	55,585		(2,411)		53,174
Loans and leases held for investment at fair value								Loans and leases held for investment at fair value	21,153		(92)		21,061
Retail and certificate loans held for investment at fair value	Retail and certificate loans held for investment at fair value	(1,438)		32		(1,406)		Retail and certificate loans held for investment at fair value	(4,069)		172		(3,897)
Other loans held for investment at fair value		30		130		160
Total increase (decrease) in interest income on interest-earning assets		$	15,141	$	(389)	$	14,752
Total increase in interest income on interest-earning assets								Total increase in interest income on interest-earning assets	$	72,451	$	13,567	$	86,018
Interest-bearing liabilities	Interest-bearing liabilities							Interest-bearing liabilities
Checking and money market accounts	Checking and money market accounts	$	(318)	$	2,229	$	1,911	Checking and money market accounts	$	(1,611)	$	6,707	$	5,096
Savings accounts and certificates of deposit	Savings accounts and certificates of deposit	2,078		5,117		7,195		Savings accounts and certificates of deposit	22,212		33,135		55,347
Interest-bearing deposits	Interest-bearing deposits	1,760		7,346		9,106		Interest-bearing deposits	20,601		39,842		60,443
Short-term borrowings		(118)		(212)		(330)
Advances from PPPLF		(42)		—		(42)
Retail notes, certificates and secured borrowings	Retail notes, certificates and secured borrowings	(1,438)		32		(1,406)		Retail notes, certificates and secured borrowings	(4,069)		172		(3,897)
Structured Program borrowings		(81)		(54)		(135)
Other long-term debt		(1)		110		109
Other interest-bearing liabilities								Other interest-bearing liabilities	(696)		(258)		(954)
Total increase in interest expense on interest-bearing liabilities	Total increase in interest expense on interest-bearing liabilities	$	80	$	7,222	$	7,302	Total increase in interest expense on interest-bearing liabilities	$	15,836	$	39,756	$	55,592

Increase (decrease) in net interest income		$	15,061	$	(7,611)	$	7,450
Increase (Decrease) in net interest income								Increase (Decrease) in net interest income	$	56,615	$	(26,189)	$	30,426

(1) Volume and rate changes have been allocated on a consistent basis using the respective percentage changes in average balances and average rates.

6460

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, 2022
Compared to
Three Months Ended September 30, 2021
Increase (Decrease) Due to Change in:
Average Volume(1)
Average Rate(1)
Total
Interest-earning assets
Cash, cash equivalents, restricted cash and other $ 60 $ 4,602 $ 4,662
Securities available for sale at fair value 1,335 (695) 640
Loans held for sale (4,342) 1,685 (2,657)
Loans and leases held for investment 51,105 15,279 66,384
Retail and certificate loans held for investment at fair value (8,510) 23 (8,487)
Other loans held for investment at fair value (503) 321 (182)
Total increase in interest income on interest-earning assets $ 39,145 $ 21,215 $ 60,360
Interest-bearing liabilities
Checking and money market accounts $ (22) $ 2,890 $ 2,868
Savings accounts and certificates of deposit 5,135 5,282 10,417
Interest-bearing deposits 5,113 8,172 13,285
Short-term borrowings (656) (106) (762)
Advances from PPPLF (278) — (278)
Retail notes, certificates and secured borrowings (8,506) 19 (8,487)
Structured Program borrowings (1,493) (402) (1,895)
Other long-term debt (3) 112 109
Total increase (decrease) in interest expense on interest-bearing liabilities $ (5,823) $ 7,795 $ 1,972
Increase in net interest income $ 44,968 $ 13,420 $ 58,388

~~(1)~~ ~~Volume and rate changes have been allocated on a consistent basis using the respective percentage changes in average balances and average rates.~~

~~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,
		2022						2021							Six Months Ended June 30, 2023						Six Months Ended June 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		Average Balance		Interest Income/ Expense		Average Yield/ Rate
Interest-earning assets (1)	Interest-earning assets (1)													Interest-earning assets (1)
Cash, cash equivalents, restricted cash and other	Cash, cash equivalents, restricted cash and other	$	936,592	$	7,984	1.14	%	$	769,759	$	701	0.12	%	Cash, cash equivalents, restricted cash and other	$	1,367,495	$	32,848	4.80	%	$	958,057	$	2,967	0.62	%
Securities available for sale at fair value	Securities available for sale at fair value	377,274		12,757		4.51	%	295,949		7,954		3.58	%	Securities available for sale at fair value	400,422		9,848		4.92	%	367,241		8,937		4.87	%
Loans held for sale		178,905		20,459		15.25	%	229,785		22,387		12.99	%
Loans and leases held for investment:
Loans held for sale at fair value														Loans held for sale at fair value	108,712		10,190		18.75	%	205,821		14,580		14.17	%
Loans and leases held for investment at amortized cost:														Loans and leases held for investment at amortized cost:
Unsecured personal loans (2)	Unsecured personal loans (2)	2,678,133		284,350		14.16	%	605,126		62,423		15.47	%	Unsecured personal loans (2)	4,214,421		278,949		13.24	%	2,376,236		173,905		14.64	%
Secured consumer loans	Secured consumer loans	279,556		7,665		3.66	%	503,798		13,076		3.89	%	Secured consumer loans	390,673		7,794		3.99	%	250,163		4,626		3.70	%
Commercial loans and leases	Commercial loans and leases	652,745		25,583		5.23	%	616,660		22,068		5.37	%	Commercial loans and leases	732,229		23,790		6.50	%	632,331		16,320		5.16	%
PPP loans	PPP loans	158,729		6,783		5.70	%	549,137		14,446		3.95	%	PPP loans	43,173		2,019		9.35	%	185,986		5,502		5.92	%
Loans and leases held for investment		3,769,163		324,381		11.47	%	2,274,721		112,013		7.39	%
Loans and leases held for investment at amortized cost														Loans and leases held for investment at amortized cost	5,380,496		312,552		11.62	%	3,444,716		200,353		11.63	%
Loans held for investment at fair value														Loans held for investment at fair value	753,184		48,584		12.90	%	17,757		1,224		13.78	%
Total loans and leases held for investment														Total loans and leases held for investment	6,133,680		361,136		11.78	%	3,462,473		201,577		11.64	%
Retail and certificate loans held for investment at fair value	Retail and certificate loans held for investment at fair value	148,798		15,745		14.11	%	454,886		48,448		14.20	%	Retail and certificate loans held for investment at fair value	39,604		2,877		14.53	%	171,713		12,060		14.05	%
Other loans held for investment at fair value		17,756		2,015		15.13	%	38,563		3,674		12.71	%
Total interest-earning assets	Total interest-earning assets	5,428,488		383,341		9.42	%	4,063,663		195,177		6.86	%	Total interest-earning assets	8,049,913		416,899		10.36	%	5,165,305		240,121		9.30	%

Cash and due from banks and restricted cash	Cash and due from banks and restricted cash	75,412						125,310						Cash and due from banks and restricted cash	75,067						84,100
Allowance for loan and lease losses	Allowance for loan and lease losses	(207,462)						(59,262)						Allowance for loan and lease losses	(346,398)						(183,268)
Other non-interest earning assets	Other non-interest earning assets	525,053						413,309						Other non-interest earning assets	676,861						488,387
Total assets	Total assets	$	5,821,491					$	4,543,020					Total assets	$	8,455,443					$	5,554,524

Interest-bearing liabilities	Interest-bearing liabilities													Interest-bearing liabilities
Interest-bearing deposits:	Interest-bearing deposits:													Interest-bearing deposits:
Checking and money market accounts	Checking and money market accounts	$	2,298,847	$	8,964	0.52	%	$	2,046,355	$	4,238	0.31	%	Checking and money market accounts	$	1,514,843	$	15,328	2.04	%	$	2,352,080	$	4,388	0.37	%
Savings accounts and certificates of deposit	Savings accounts and certificates of deposit	1,633,325		15,736		1.29	%	309,500		374		0.18	%	Savings accounts and certificates of deposit	5,149,379		104,466		4.09	%	1,313,370		5,128		0.78	%
Interest-bearing deposits (2)	Interest-bearing deposits (2)	3,932,172		24,700		0.84	%	2,355,855		4,612		0.30	%	Interest-bearing deposits (2)	6,664,222		119,794		3.62	%	3,665,450		9,516		0.52	%
Short-term borrowings		12,648		939		9.90	%	78,467		3,116		5.30	%
Advances from PPPLF		163,206		434		0.35	%	374,841		876		0.35	%
Retail notes, certificates and secured borrowings	Retail notes, certificates and secured borrowings	148,798		15,745		14.11	%	455,779		48,448		14.18	%	Retail notes, certificates and secured borrowings	39,604		2,877		14.53	%	171,713		12,060		14.05	%
Structured Program borrowings		24,671		1,349		7.29	%	121,654		7,996		8.76	%
Other long-term debt		15,359		592		5.14	%	16,665		430		3.44	%
Other interest-bearing liabilities														Other interest-bearing liabilities	69,254		872		2.52	%	254,320		2,639		2.08	%
Total interest-bearing liabilities	Total interest-bearing liabilities	4,296,854		43,759		1.36	%	3,403,261		65,478		2.59	%	Total interest-bearing liabilities	6,773,080		123,543		3.68	%	4,091,483		24,215		1.18	%

Non-interest bearing deposits	Non-interest bearing deposits	268,281						93,813						Non-interest bearing deposits	223,752						260,043
Other liabilities	Other liabilities	276,788						287,868						Other liabilities	268,028						290,518
Total liabilities	Total liabilities	$	4,841,923					$	3,784,942					Total liabilities	$	7,264,860					$	4,642,044

Total equity	Total equity	$	979,568					$	758,078					Total equity	$	1,190,583					$	912,480
Total liabilities and equity	Total liabilities and equity	$	5,821,491					$	4,543,020					Total liabilities and equity	$	8,455,443					$	5,554,524

Interest rate spread	Interest rate spread					8.06	%					4.27	%	Interest rate spread					6.68	%					8.11	%

Net interest income and net interest margin	Net interest income and net interest margin			$	339,582	8.34	%			$	129,699	4.76	%	Net interest income and net interest margin			$	293,356	7.29	%			$	215,906	8.36	%

(1) Nonaccrual loans and any related income are included in their respective loan categories.

(2) The average yield/rate for unsecured personal loans decreased ~~nine months~~year over ~~nine months~~year primarily due to a shift in the mix toward higher credit quality ~~loans.~~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 during 2023.

6661

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 ~~net present value~~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 ~~present value~~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:~~presented, as well as the loan originations held for investment in each period, which is a key driver for credit loss expense:

Three Months Ended Nine Months Ended September 30,
September 30,
2022 June 30,
2022 September 30,
2021 2022 2021
Credit loss expense for Radius loans at acquisition $ — $ — $ — $ — $ 6,929
Credit loss expense for loans and leases held for investment 82,599 70,053 37,133 204,880 88,733
Credit loss expense for unfunded lending commitments 140 513 887 934 1,277
Total credit loss expense 82,739 70,566 38,020 205,814 96,939
Reversal of credit loss expense on securities available for sale — — (496) — (3,288)
Total provision for credit losses $ 82,739 $ 70,566 $ 37,524 $ 205,814 $ 93,651


	Three Months Ended						Six Months Ended June 30,
	June 30, 2023		March 31, 2023		June 30, 2022		2023		2022

Credit loss expense for loans and leases held for investment	$	66,190	$	70,850	$	70,053	$	137,040	$	122,281
Credit loss (reversal of) expense for unfunded lending commitments	405		(266)		513		139		794


Total provision for credit losses	$	66,595	$	70,584	$	70,566	$	137,179	$	123,075

Loan originations held for investment	$	657,380	$	1,001,989	$	1,021,110	$	1,659,369	$	1,877,422

Sequential:The provision for credit losses was ~~$82.7~~$66.6 million and $70.6 million for the ~~third~~second and ~~second~~first quarters of ~~2022, respectively.~~2023, respectively, a decrease of 6%. The ~~increase~~decrease was primarily due to ~~growth in~~ the lower volume of originated loans retained as HFI at amortized cost and the related initial provision for credit losses, partially offset by the discounting effect of the NPV allowance ~~net present value amortization~~ on prior loan vintages and additional qualitative allowance reflecting a modest increase in expected losses and a less favorable economic outlook. ~~Total volume of loans HFI was $1.2 billion and $1.0 billion for the third and second quarters of 2022, respectively.~~

Year Over Year:The provision for credit losses was ~~$82.7~~$66.6 million and ~~$37.5~~$70.6 million for the ~~third~~second quarters of 2023 and 2022, ~~and 2021, respectively.~~respectively, a decrease of 6%. The ~~increase~~decrease was primarily due to ~~growth in~~ the lower volume of originated loans retained as HFI at amortized cost and the related initial provision for credit losses, partially offset by the discounting effect of the NPV allowance ~~net present value amortization~~ on prior loan vintages and additional qualitative allowance reflecting a modest increase in expected losses and a less favorable economic outlook. ~~Total volume of loans HFI was $1.2 billion and $635.5 million for the third quarters of 2022 and 2021, respectively.~~

Six Months Over Six Months:The provision for credit losses was ~~$205.8~~$137.2 million and ~~$93.7~~$123.1 million for the first ~~nine months~~halves of 2023 and 2022, ~~and 2021, respectively.~~respectively, an increase of 11%. The increase was primarily due to ~~growth in~~ the ~~volume~~discounting effect of ~~loans HFI,~~the NPV allowance ~~net present value amortization~~ on prior loan vintages and additional qualitative allowance reflecting a modest increase in expected losses and a less favorable economic ~~outlook. Total~~outlook, partially offset by a lower volume of originated loans retained as HFI ~~was $3.0 billion and $1.5 billion for the first nine months of 2022 and 2021, respectively.~~at amortized cost.

6762

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 ~~ACL~~allowance for credit losses (ACL) was as follows:


		Three Months Ended						Nine Months Ended September 30,					Three Months Ended						Six Months Ended June 30,
		September 30, 2022		June 30, 2022		September 30, 2021		2022		2021			June 30, 2023		March 31, 2023		June 30, 2022		2023		2022
Allowance for loan and lease losses, beginning of period	Allowance for loan and lease losses, beginning of period	$	243,260	$	187,985	$	71,081	$	144,389	$	—	Allowance for loan and lease losses, beginning of period	$	348,857	$	327,852	$	187,985	$	327,852	$	144,389
Credit loss expense for loans and leases held for investment	Credit loss expense for loans and leases held for investment	82,599		70,053		37,133		204,880		95,662		Credit loss expense for loans and leases held for investment	66,190		70,850		70,053		137,040		122,281
Initial allowance for purchased credit deteriorated (PCD) loans acquired during the period (1)		—		—		—		—		12,440

Charge-offs	Charge-offs	(23,728)		(15,852)		(4,336)		(48,669)		(4,582)		Charge-offs	(64,269)		(52,563)		(15,852)		(116,832)		(24,941)
Recoveries	Recoveries	1,070		1,074		858		2,601		1,216		Recoveries	4,385		2,718		1,074		7,103		1,531
Allowance for loan and lease losses, end of period	Allowance for loan and lease losses, end of period	$	303,201	$	243,260	$	104,736	$	303,201	$	104,736	Allowance for loan and lease losses, end of period	$	355,163	$	348,857	$	243,260	$	355,163	$	243,260

Reserve for unfunded lending commitments, beginning of period	Reserve for unfunded lending commitments, beginning of period	$	2,025	$	1,512	$	390	$	1,231	$	—	Reserve for unfunded lending commitments, beginning of period	$	1,612	$	1,878	$	1,512	$	1,878	$	1,231
Credit loss expense for unfunded lending commitments		140		513		887		934		1,277
Credit loss (reversal of) expense for unfunded lending commitments												Credit loss (reversal of) expense for unfunded lending commitments	405		(266)		513		139		794
Reserve for unfunded lending commitments, end of period ~~(2)~~(1)	Reserve for unfunded lending commitments, end of period ~~(2)~~(1)	$	2,165	$	2,025	$	1,277	$	2,165	$	1,277	Reserve for unfunded lending commitments, end of period ~~(2)~~(1)	$	2,017	$	1,612	$	2,025	$	2,017	$	2,025

(1) For acquired PCD loans, an ACL of $30.4 million was required with a corresponding increase to the amortized cost basis as of the acquisition date. For PCD loans where all or a portion of the loan balance had been previously written-off, or would be subject to write-off under the Company’s charge-off policy, an ACL of $18.0 million included as part of the grossed-up loan balance at acquisition was immediately written-off. The net impact to the allowance for PCD assets on the acquisition date was $12.4 million.

~~(2)~~ Relates to ~~$144.0~~$108.9 million, ~~$132.6~~$117.2 million and ~~$115.5~~$132.6 million of unfunded commitments as of ~~September~~June 30, ~~2022,~~2023, March 31, 2023 and June 30, 2022, ~~and September 30, 2021,~~ respectively.

Three Months Ended Nine Months Ended September 30,
September 30,
2022 June 30,
2022 September 30,
2021 2022 2021
Ratio of allowance for loan and lease losses to total loans and leases held for investment 6.31 % 6.00 % 3.87 % 6.31 % 3.87 %
Ratio of allowance for loan and lease losses to total loans and leases held for investment, excluding PPP loans 6.43 % 6.18 % 4.48 % 6.43 % 4.48 %
Average loans and leases held for investment $ 4,404,123 $ 3,753,695 $ 2,509,099 $ 3,769,163 $ 2,274,721
Ratio of net charge-offs to average loans and leases held for investment 0.51 % 0.39 % 0.14 % 1.22 % 0.15 %


	Three Months Ended									Six Months Ended June 30,
	June 30, 2023			March 31, 2023			June 30, 2022			2023			2022
Ratio of allowance for loan and lease losses to total loans and leases held for investment at amortized cost	6.4		%	6.4		%	6.0		%	6.4		%	6.0		%


Average loans and leases held for investment at amortized cost, excluding PPP loans	$	5,488,582		$	5,184,384		$	3,604,241		$	5,337,323		$	3,258,730
Net charge-off ratio (1)	4.4		%	3.8		%	1.6		%	4.1		%	1.4		%

(1) Calculated as annualized net charge-offs divided by average outstanding loans and leases held for investment during the period, excluding PPP loans.

~~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)~~

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 ~~as of the periods presented~~ (1):


		September 30, 2022			December 31, 2021				June 30, 2023			December 31, 2022

Total nonaccrual loans and leases held for investment	Total nonaccrual loans and leases held for investment	$	24,507		$	9,985		Total nonaccrual loans and leases held for investment	$	51,383		$	34,827
Ratio of total nonaccrual loans and leases held for investment to total loans and leases held for investment	Ratio of total nonaccrual loans and leases held for investment to total loans and leases held for investment	0.51		%	0.34		%	Ratio of total nonaccrual loans and leases held for investment to total loans and leases held for investment	0.9		%	0.7		%
Ratio of total nonaccrual loans and leases held for investment to total loans and leases held for investment, excluding PPP loans		0.52		%	0.38		%

(1) Excluding PPP loans, there were no loans that were 90 days or more past due and accruing as of both ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

For additional information on the ACL and nonaccrual loans and leases, see “Notes to Consolidated Financial Statements – Note 1. Summary of Significant Accounting Policies” ofin 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.

6963

LENDINGCLUB CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)

Non-Interest Expense

Non-interest expense primarily consists of (i) compensation and benefits, which include salaries and wages, benefits and stock-based compensation expense, (ii) marketing, which includes costs attributable to borrower 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, (v) depreciation and amortization and (vi) professional services, which primarily consist of legal and accounting fees.~~spaces.


		Three Months Ended						Change (%)					Three Months Ended						Change (%)
		September 30, 2022		June 30, 2022		September 30, 2021		Q3 2022 vs Q2 2022		Q3 2022 vs Q3 2021			June 30, 2023		March 31, 2023		June 30, 2022		Q2 2023 vs Q1 2023		Q2 2023 vs Q2 2022
Non-interest expense:	Non-interest expense:											Non-interest expense:
Compensation and benefits	Compensation and benefits	$	84,916	$	85,103	$	73,304	—	%	16	%	Compensation and benefits	$	71,553	$	73,307	$	85,103	(2)	%	(16)	%
Marketing	Marketing	46,031		61,497		50,782		(25)	%	(9)	%	Marketing	23,940		26,880		61,497		(11)	%	(61)	%
Equipment and software	Equipment and software	12,491		12,461		10,297		—	%	21	%	Equipment and software	13,968		13,696		12,461		2	%	12	%
Occupancy		5,051		6,209		6,486		(19)	%	(22)	%
Depreciation and amortization	Depreciation and amortization	10,681		10,557		10,549		1	%	1	%	Depreciation and amortization	11,638		12,354		10,557		(6)	%	10	%
Professional services	Professional services	11,943		16,138		11,750		(26)	%	2	%	Professional services	9,974		9,058		16,138		10	%	(38)	%
Occupancy												Occupancy	4,684		4,310		6,209		9	%	(25)	%
Other non-interest expense	Other non-interest expense	15,106		17,421		15,607		(13)	%	(3)	%	Other non-interest expense	15,322		17,703		17,421		(13)	%	(12)	%
Total non-interest expense	Total non-interest expense	$	186,219	$	209,386	$	178,775	(11)	%	4	%	Total non-interest expense	$	151,079	$	157,308	$	209,386	(4)	%	(28)	%

Nine Months Ended September 30,
2022 2021 Change (%)
Non-interest expense:
Compensation and benefits $ 251,629 $ 209,649 20 %
Marketing 162,608 105,434 54 %
Equipment and software 35,998 27,471 31 %
Occupancy 17,279 19,543 (12) %
Depreciation and amortization 32,277 33,823 (5) %
Professional services 40,487 34,873 16 %
Other non-interest expense 46,531 42,373 10 %
Total non-interest expense $ 586,809 $ 473,166 24 %


	Six Months Ended June 30,
	2023		2022		Change (%)
Non-interest expense:
Compensation and benefits	$	144,860	$	166,713	(13)	%
Marketing	50,820		116,577		(56)	%
Equipment and software	27,664		23,507		18	%
Depreciation and amortization	23,992		21,596		11	%
Professional services	19,032		28,544		(33)	%
Occupancy	8,994		12,228		(26)	%
Other non-interest expense	33,025		31,425		5	%
Total non-interest expense	$	308,387	$	400,590	(23)	%

Compensation and Benefits

Sequential: Compensation and benefits expense remained relatively flat for ~~the third quarter of 2022 compared to~~ the second quarter of ~~2022.~~2023 compared to the first quarter of 2023.

Year Over Year:Compensation and benefits expense ~~increased $11.6~~decreased $13.6 million, or 16%, ~~and $42.0 million, or 20%,~~ for the ~~third~~second quarter ~~and first nine months~~ of ~~2022, respectively,~~2023 compared to the same ~~periods~~period in ~~2021.~~2022. The ~~increases were~~decrease was primarily due to ~~an increase~~a decrease in ~~headcount.~~headcount as a result of the cost reduction and reorganization plan we implemented in January 2023.

Six Months Over Six Months: Compensation and benefits expense decreased $21.9 million, or 13%, for the first half 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.

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)

Marketing

Sequential:Marketing expense decreased ~~$15.5~~$2.9 million, or ~~25%~~11%, for ~~the third quarter of 2022 compared to~~ the second quarter of 2023 compared to the first 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 $37.6 million, or 61%, for the second 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, as well as the deferral of applicable marketing expenses for HFI loans.~~volume.

Six Months Over Six Months:Marketing expense decreased ~~$4.8~~$65.8 million, or 9%56%, for the ~~third quarter~~first half of ~~2022~~2023 compared to the ~~third quarter of 2021.~~same period in 2022. The decrease was primarily due to ~~the deferral of applicable marketing expenses for HFI loans, partially offset by an increase~~a decrease in variable marketing expenses based on ~~higher~~lower origination volume.

Equipment and Software

Sequential: Equipment and software expense remained relatively flat for the second quarter of 2023 compared to the first quarter of 2023.

Year Over Year: Equipment and software expense increased $1.5 million, or 12%, for the second quarter of 2023 compared to the same period in 2022. The increase was primarily due to an increase in hosting fees and subscription costs.

Six Months Over Six Months: Equipment and software expense increased $4.2 million, or 18%, for the first half of 2023 compared to the same period in 2022. The increase was primarily due to an increase in hosting fees and subscription costs.

Depreciation and Amortization

Sequential: Depreciation and amortization expense decreased $0.7 million, or 6%, for the second quarter of 2023 compared to the first quarter of 2023. The decrease was primarily due to a decrease in the amortization of internally-developed software.

Year Over Year: Depreciation and amortization expense increased $1.1 million, or 10%, for the second 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.

Six Months Over Six Months: Depreciation and amortization expense increased $2.4 million, or 11%, for the first half 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.

Professional Services

Sequential: Professional services increased $0.9 million, or 10%, for the second quarter of 2023 compared to the first quarter of 2023. The increase was primarily due to an increase in consulting fees.

Year Over Year: Professional services decreased $6.2 million, or 38%, for the second quarter of 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in consulting fees.

7065

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)

Six Months Over Six Months:

~~Marketing expense increased $57.2~~ Professional services decreased $9.5 million, or ~~54%~~33%, for the first ~~nine months~~half of ~~2022~~2023 compared to the same period in ~~2021. The increase was primarily due to an increase in variable marketing expenses based on higher origination volume, partially offset by the deferral of applicable marketing expenses for HFI loans.~~

~~Equipment and software expense remained flat for the third quarter of 2022 compared to the second quarter of 2022.~~

Equipment and software expense increased $2.2 million, or 21%, and $8.5 million, or 31%, for the third quarter and first nine months of 2022, respectively, compared to the same periods in 2021. The increases were primarily due to an increase in hosting fees and subscription costs.

~~Occupancy expense was $5.1 million, $6.2 million, and $6.5 million for the third quarter of 2022, second quarter of 2022, and third quarter of 2021, respectively.~~

~~Occupancy expense was $17.3 million and $19.5 million for the first nine months of 2022 and 2021, respectively.~~

~~Depreciation and amortization expense remained relatively flat for the third quarter of 2022 compared to the second quarter of 2022 and third quarter of 2021.~~

Depreciation and amortization expense decreased $1.5 million, or 5%, for the first nine months of 2022 compared to the same period in 2021. The decrease was primarily due to an increase in fully depreciated assets, partially offset by an increase in the amortization of intangible assets resulting from the Acquisition.

~~Professional services decreased $4.2 million, or 26%, for the third quarter of 2022 compared to the second quarter of~~ 2022. The decrease was primarily due to a decrease in consulting fees.

~~Professional services~~Occupancy

Sequential: Occupancy expense increased ~~$0.2~~$0.4 million, or ~~2%, and $5.6 million, or 16%~~9%, for the ~~third~~second quarter ~~and first nine months~~ of ~~2022, respectively,~~2023 compared to the ~~same periods in 2021.~~first quarter of 2023. The ~~increases were~~increase was primarily due to an increase in ~~consulting fees.~~variable lease costs.

Year Over Year: Occupancy expense decreased $1.5 million, or 25%, for the second quarter of 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in rent expense.

Six Months Over Six Months: Occupancy expense decreased $3.2 million, or 26%, for the first half 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~~second quarter and first half of 2023, we recorded an income tax expense of $4.7 million and $8.8 million, representing an effective tax rate of 31.7% and 27.1%, respectively. The second 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. For the second quarter and first half of 2022, we recorded an income tax benefit of ~~$7.2~~$132.0 million ~~primarilydue~~to~~therelease~~ofa~~$5.0~~and $127.0 million,~~valuationallowanceagainstour 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~~ respectively. The income tax benefit for the second quarter and first half of ~~$134.2 million,~~2022 was primarily due to the release of a ~~$140.3~~$135.3 million valuation allowance against our deferred tax ~~assets.~~

For the third quarter of 2021, we recorded an income tax expense of $2.7 million, primarily related to income tax expense for state jurisdictions that limit net operating loss utilization. For the first nine months of 2021, we recorded an income tax expense of $0.1 million, primarily related to income tax expense for state jurisdictions that limit net operating loss utilization,assets, partially offset by ~~changes in the deferred~~a $3.3 million state income tax ~~asset valuation allowance resulting from a deferred tax liability assumed with the Acquisition.~~

We have evaluated both positive and negative evidence when assessing the recoverability of our net deferred tax assets. Several factors were considered, which primarily included our business model transition and resulting increase in profitability and the expectation of continued profitability. These factors resulted in the release of the majority of our valuation allowance against our deferred tax assets during the second quarter of 2022.expense.

As of ~~September~~June 30, ~~2022,~~2023, we maintained a valuation allowance of ~~$58.1~~$47.6 million related to ~~NOLs~~net operating loss carryforwards (NOLs) and tax credit ~~carryforwards, of which certain NOLs’ tax benefit will be realized through our effective tax rate during the fourth quarter of 2022.~~carryforwards. The realization and timing of any remaining state NOLs and tax credit carryforwards, based on the

~~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)~~

allocation of taxable income to the Parent, is uncertain and may expire before being utilized. ~~We expect that our effective~~Changes to deferred tax ~~rate in 2023 will approximate our statutory~~asset valuation allowances and liabilities related to uncertain tax ~~rate of 28%.~~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. ~~Differences between separate entity and consolidated tax returns are eliminated upon consolidation.~~

Segment Information

LendingClub Bank

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 Corporation (Parent Only)

Financial information for the segments is presented in the following tables:


	LendingClub Bank				LendingClub Corporation (Parent only)				Intercompany Eliminations				Consolidated Total
	Three Months Ended June 30,				Three Months Ended June 30,				Three Months Ended June 30,				Three Months Ended June 30,
	2023		2022		2023		2022		2023		2022		2023		2022
Non-interest income:
Marketplace revenue	$	62,006	$	191,087	$	7,772	$	11,167	$	13,005	$	4,130	$	82,783	$	206,384
Other non-interest income	21,743		20,041		2,431		3,914		(21,139)		(16,507)		3,035		7,448
Total non-interest income	83,749		211,128		10,203		15,081		(8,134)		(12,377)		85,818		213,832

Interest income:
Interest income	210,514		120,152		3,972		8,316		—		—		214,486		128,468
Interest expense	(66,546)		(6,213)		(1,288)		(6,029)		—		—		(67,834)		(12,242)
Net interest income	143,968		113,939		2,684		2,287		—		—		146,652		116,226

Total net revenue	227,717		325,067		12,887		17,368		(8,134)		(12,377)		232,470		330,058

Provision for credit losses	(66,611)		(70,566)		16		—		—		—		(66,595)		(70,566)
Non-interest expense	(142,563)		(196,636)		(16,650)		(25,127)		8,134		12,377		(151,079)		(209,386)
Income (Loss) before income tax benefit (expense)	18,543		57,865		(3,747)		(7,759)		—		—		14,796		50,106
Income tax benefit (expense)	(5,429)		(17,318)		743		85,864		—		63,408		(4,686)		131,954
Net income (loss)	$	13,114	$	40,547	$	(3,004)	$	78,105	$	—	$	63,408	$	10,110	$	182,060

7267

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 information for the segments is presented in the following tables:~~

~~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					LendingClub Bank				LendingClub Corporation (Parent only)				Intercompany Eliminations				Consolidated Total
		Nine Months Ended September 30,		Eight Months Ended September 30,		Nine Months Ended September 30,				Nine Months Ended September 30,		Eight Months Ended September 30,		Nine Months Ended September 30,					Six Months Ended June 30,				Six Months Ended June 30,				Six Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021		2022		2021		2022		2021			2023		2022		2023		2022		2023		2022		2023		2022
Non-interest income:	Non-interest income:																	Non-interest income:
Marketplace revenue	Marketplace revenue	$	509,426	$	315,885	$	35,313	$	92,133	$	15,448	$	—	$	560,187	$	408,018	Marketplace revenue	$	134,694	$	355,922	$	20,880	$	26,298	$	22,843	$	4,130	$	178,417	$	386,350
Other non-interest income	Other non-interest income	64,779		73,433		12,931		12,519		(52,971)		(67,282)		24,739		18,670		Other non-interest income	40,904		39,539		4,984		8,137		(39,497)		(30,337)		6,391		17,339
Total non-interest income	Total non-interest income	574,205		389,318		48,244		104,652		(37,523)		(67,282)		584,926		426,688		Total non-interest income	175,598		395,461		25,864		34,435		(16,654)		(26,207)		184,808		403,689

Interest income:	Interest income:																	Interest income:
Interest income	Interest income	357,117		127,429		26,224		67,748		—		—		383,341		195,177		Interest income	408,844		219,975		8,055		20,146		—		—		416,899		240,121
Interest expense	Interest expense	(25,134)		(5,489)		(18,625)		(59,989)		—		—		(43,759)		(65,478)		Interest expense	(120,442)		(9,857)		(3,101)		(14,358)		—		—		(123,543)		(24,215)
Net interest income	Net interest income	331,983		121,940		7,599		7,759		—		—		339,582		129,699		Net interest income	288,402		210,118		4,954		5,788		—		—		293,356		215,906

Total net revenue	Total net revenue	906,188		511,258		55,843		112,411		(37,523)		(67,282)		924,508		556,387		Total net revenue	464,000		605,579		30,818		40,223		(16,654)		(26,207)		478,164		619,595

(Provision for) reversal of credit losses		(205,814)		(96,938)		—		3,287		—		—		(205,814)		(93,651)
Provision for credit losses																		Provision for credit losses	(137,195)		(123,075)		16		—		—		—		(137,179)		(123,075)
Non-interest expense	Non-interest expense	(552,809)		(374,782)		(71,523)		(165,666)		37,523		67,282		(586,809)		(473,166)		Non-interest expense	(290,946)		(375,095)		(34,095)		(51,702)		16,654		26,207		(308,387)		(400,590)
Income (Loss) before income tax benefit (expense)	Income (Loss) before income tax benefit (expense)	147,565		39,538		(15,680)		(49,968)		—		—		131,885		(10,430)		Income (Loss) before income tax benefit (expense)	35,859		107,409		(3,261)		(11,479)		—		—		32,598		95,930
Income tax benefit (expense)	Income tax benefit (expense)	(39,113)		7,866		120,274		23,821		53,048		(31,785)		134,209		(98)		Income tax benefit (expense)	(9,685)		(29,673)		863		103,591		—		53,048		(8,822)		126,966
Net income (loss)	Net income (loss)	$	108,452	$	47,404	$	104,594	$	(26,147)	$	53,048	$	(31,785)	$	266,094	$	(10,528)	Net income (loss)	$	26,174	$	77,736	$	(2,398)	$	92,112	$	—	$	53,048	$	23,776	$	222,896

The ~~Company integrated~~material drivers and trends of the ~~Acquisition into its reportable~~financial results of the segments inpresented above for the second quarter and first half of 2023 compared to the first quarter of ~~2021. As the Company’s reportable segments are based on legal organizational structure~~2023 and ~~LC Bank was formed upon the Acquisition, an analysis of the Company’s results of operations and material trends for the third~~second quarter and first ~~nine months~~half of 2022 ~~compared to the second quarter of 2022 and the third quarter and first nine months of 2021 is~~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 ~~(Loss)~~ 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.

~~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 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 ~~(Loss)~~ 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 ~~(Loss)~~ Excluding Income Tax Benefit adjusts for the release of a deferred tax asset valuation allowance in ~~the third and second quarters of~~ 2022. Diluted EPS Excluding Income Tax Benefit is a non-GAAP financial measure calculated by dividing Net Income ~~(Loss)~~ Excluding Income Tax Benefit by the weighted-average diluted common shares outstanding.

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 ~~such measures~~PPNR to the nearest GAAP ~~measures:~~

As of and For The Three Months Ended As of and
For The Nine Months Ended
September 30,
2022 June 30,
2022 September 30,
2021 September 30,
2022 September 30,
2021
GAAP Net income (loss) $ 43,198 $ 182,060 $ 27,185 $ 266,094 $ (10,528)
Income tax benefit from release of tax valuation allowance 5,015 135,300 — 140,315 —
Net income (loss) excluding income tax benefit $ 38,183 $ 46,760 $ 27,185 $ 125,779 $ (10,528)
GAAP Diluted EPS – common stockholders $ 0.41 $ 1.73 $ 0.26 $ 2.56 $ (0.11)
(A) Income tax benefit from release of tax valuation allowance $ 5,015 $ 135,300 N/A 140,315 N/A
(B) Weighted-average common shares – Diluted 105,853,938 105,042,626 N/A $ 104,116,240 N/A
(A/B) Diluted EPS impact of income tax benefit $ 0.05 $ 1.29 N/A $ 1.35 N/A
Diluted EPS excluding income tax benefit $ 0.36 $ 0.44 $ 0.26 $ 1.21 $ (0.11)
measure:


	Three Months Ended						Six Months Ended
	June 30, 2023		March 31, 2023		June 30, 2022		June 30, 2023		June 30, 2022
GAAP Net income	$	10,110	$	13,666	$	182,060	$	23,776	$	222,896
Less: Provision for credit losses	(66,595)		(70,584)		(70,566)		(137,179)		(123,075)
Less: Income tax benefit (expense)	(4,686)		(4,136)		131,954		(8,822)		126,966
Pre-provision net revenue	$	81,391	$	88,386	$	120,672	$	169,777	$	219,005


	Three Months Ended						Six Months Ended
	June 30, 2023		March 31, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Non-interest income	$	85,818	$	98,990	$	213,832	$	184,808	$	403,689
Net interest income	146,652		146,704		116,226		293,356		215,906
Total net revenue	232,470		245,694		330,058		478,164		619,595
Non-interest expense	(151,079)		(157,308)		(209,386)		(308,387)		(400,590)
Pre-provision net revenue	81,391		88,386		120,672		169,777		219,005
Provision for credit losses	(66,595)		(70,584)		(70,566)		(137,179)		(123,075)
Income before income tax benefit (expense)	14,796		17,802		50,106		32,598		95,930
Income tax benefit (expense)	(4,686)		(4,136)		131,954		(8,822)		126,966
GAAP Net income	$	10,110	$	13,666	$	182,060	$	23,776	$	222,896

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 Six Months Ended
		June 30, 2023		March 31, 2023		June 30, 2022		June 30, 2023		June 30, 2022
GAAP Net income		$	10,110	$	13,666	$	182,060	$	23,776	$	222,896
Income tax benefit from release of tax valuation allowance		—		—		135,300		—		135,300
Net income excluding income tax benefit		$	10,110	$	13,666	$	46,760	$	23,776	$	87,596

GAAP Diluted EPS – common stockholders		$	0.09	$	0.13	$	1.73	$	0.22	$	2.13

(A)	Income tax benefit from release of tax valuation allowance	N/A		N/A		$	135,300	N/A		$	135,300
(B)	Weighted-average common shares – Diluted	N/A		N/A		105,042,626		N/A		104,644,825
(A/B)	Diluted EPS impact of income tax benefit	N/A		N/A		$	1.28	N/A		$	1.28

Diluted EPS excluding income tax benefit		$	0.09	$	0.13	$	0.45	$	0.22	$	0.85

N/A – Not applicable

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)

September 30,
2022 June 30,
2022 December 31,
2021 September 30,
2021
GAAP common equity $ 1,121,410 $ 1,079,117 $ 850,242 $ 804,790
Less: Goodwill (75,717) (75,717) (75,717) (75,717)
Less: Intangible assets (17,512) (18,690) (21,181) (22,521)
Tangible common equity $ 1,028,181 $ 984,710 $ 753,344 $ 706,552
Book value per common share
GAAP common equity $ 1,121,410 $ 1,079,117 $ 850,242 $ 804,790
Common shares issued and outstanding 105,088,761 103,630,776 101,043,924 99,782,192
Book value per common share $ 10.67 $ 10.41 $ 8.41 $ 8.07
Tangible book value per common share
Tangible common equity $ 1,028,181 $ 984,710 $ 753,344 $ 706,552
Common shares issued and outstanding 105,088,761 103,630,776 101,043,924 99,782,192
Tangible book value per common share $ 9.78 $ 9.50 $ 7.46 $ 7.08

The following table provides a reconciliation of TBV Per Common Share to the nearest GAAP measure:


As of	June 30, 2023		March 31, 2023		June 30, 2022
GAAP common equity	$	1,205,523	$	1,190,742	$	1,079,117
Less: Goodwill	(75,717)		(75,717)		(75,717)
Less: Intangible assets	(14,167)		(15,201)		(18,690)
Tangible common equity	$	1,115,639	$	1,099,824	$	984,710

Book value per common share
GAAP common equity	$	1,205,523	$	1,190,742	$	1,079,117
Common shares issued and outstanding	108,694,120		107,460,734		103,630,776
Book value per common share	$	11.09	$	11.08	$	10.41

Tangible book value per common share
Tangible common equity	$	1,115,639	$	1,099,824	$	984,710
Common shares issued and outstanding	108,694,120		107,460,734		103,630,776
Tangible book value per common share	$	10.26	$	10.23	$	9.50

Supervision and Regulatory Environment

We ~~are regularly subject to claims, individual and class action lawsuits, and lawsuits alleging regulatory violations. Further, we~~ are subject to periodic exams, investigations, inquiries or requests, enforcement actions and other proceedings from federal and state regulatory agencies, including the federal banking regulators that directly regulate the Company and/or LC Bank. Further, we are subject to claims, individual and class action lawsuits, and lawsuits alleging regulatory violations. The number and/or significance of these ~~claims, lawsuits,~~ exams, investigations, inquiries, requests, proceedings, claims and ~~proceedings~~lawsuits have been increasing since the Acquisition in part because our products and services ~~have been increasing~~increased in scope ~~and complexity~~ and in part because we ~~have become~~became a bank holding company operating a national bank. Although historically the Company has generally resolved these matters in a manner that was not materially adverse to its financial results or business operations, no assurance can be given as to the timing, outcome or consequences of any of these matters in the future.

Regulatory Actions Taken in Relation to COVID-19

Regulators and government officials at the federal government level and in states across the country have issued orders, passed laws or otherwise issued guidance in connection with COVID-19. Some of these orders and laws have placed restrictions on debt collection activity, all or certain types of communications with delinquent borrowers or others, required that borrowers be allowed to defer payments on outstanding debt, governed credit reporting and the use of credit reporting, and placed certain restrictions and requirements on operations in the workplace. We have taken steps to monitor regulatory developments relating to COVID-19 and to comply with orders and laws applicable to our business. ~~Given the ongoing nature~~Although many of the ~~pandemic,~~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

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)

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.

~~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)~~

Consequences

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

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

Capital Management

The prudent management of capital is fundamental to the successful achievement of our business initiatives. We actively ~~manage~~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.

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

7771

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 summarizes ~~LC Bank’s~~the Company’s regulatory capital amounts ~~and ratios~~ (in millions): and ratios:


LendingClub Bank		September 30, 2022				December 31, 2021				Required Minimum plus Required CCB for Non-Leverage Ratios
		Amount		Ratio		Amount		Ratio
													June 30, 2023				December 31, 2022				Required Minimum plus Required CCB for Non-Leverage Ratios
LendingClub												LendingClub	Amount		Ratio		Amount		Ratio
CET1 capital (1)	CET1 capital (1)	$	760.4	15.2	%	$	523.7	16.7	%	7.0	%	CET1 capital (1)	$	1,053.5	16.1	%	$	1,005.8	15.8	%	7.0	%
Tier 1 capital	Tier 1 capital	$	760.4	15.2	%	$	523.7	16.7	%	8.5	%	Tier 1 capital	$	1,053.5	16.1	%	$	1,005.8	15.8	%	8.5	%
Total capital	Total capital	$	825.8	16.5	%	$	563.7	18.0	%	10.5	%	Total capital	$	1,138.3	17.4	%	$	1,088.1	17.1	%	10.5	%
Tier 1 leverage	Tier 1 leverage	$	760.4	13.4	%	$	523.7	14.3	%	4.0	%	Tier 1 leverage	$	1,053.5	12.4	%	$	1,005.8	14.1	%	4.0	%
Risk-weighted assets	Risk-weighted assets	$	5,018.3	N/A		$	3,130.4	N/A		N/A		Risk-weighted assets	$	6,526.5	N/A		$	6,360.7	N/A		N/A
Quarterly adjusted average assets	Quarterly adjusted average assets	$	5,692.0	N/A		$	3,667.7	N/A		N/A		Quarterly adjusted average assets	$	8,522.6	N/A		$	7,119.0	N/A		N/A

N/A – Not applicable

The following table ~~presents the~~summarizes LC Bank’s regulatory capital ~~and ratios of the Company~~amounts (in millions): and ratios:


		September 30, 2022				December 31, 2021				Required Minimum plus Required CCB for Non-Leverage Ratios
LendingClub		Amount		Ratio		Amount		Ratio
LendingClub Bank												LendingClub Bank	June 30, 2023				December 31, 2022				Required Minimum plus Required CCB for Non-Leverage Ratios
													Amount		Ratio		Amount		Ratio
CET1 capital (1)	CET1 capital (1)	$	953.2	18.3	%	$	710.0	21.3	%	7.0	%	CET1 capital (1)	$	939.3	14.7	%	$	852.2	13.8	%	7.0	%
Tier 1 capital	Tier 1 capital	$	953.2	18.3	%	$	710.0	21.3	%	8.5	%	Tier 1 capital	$	939.3	14.7	%	$	852.2	13.8	%	8.5	%
Total capital	Total capital	$	1,033.2	19.8	%	$	767.9	23.0	%	10.5	%	Total capital	$	1,022.6	16.0	%	$	932.4	15.1	%	10.5	%
Tier 1 leverage	Tier 1 leverage	$	953.2	15.7	%	$	710.0	16.5	%	4.0	%	Tier 1 leverage	$	939.3	11.3	%	$	852.2	12.5	%	4.0	%
Risk-weighted assets	Risk-weighted assets	$	5,210.2	N/A		$	3,333.2	N/A		N/A		Risk-weighted assets	$	6,406.5	N/A		$	6,194.0	N/A		N/A
Quarterly adjusted average assets	Quarterly adjusted average assets	$	6,061.4	N/A		$	4,301.7	N/A		N/A		Quarterly adjusted average assets	$	8,300.0	N/A		$	6,795.2	N/A		N/A

N/A – Not applicable

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.

In response to the COVID-19 pandemic, the FRB, OCC, and FDIC adopted a final rule related to the regulatory capital treatment of the allowance for credit losses under CECL. As permitted by the rule, the Company elected to delay the estimated impact of CECL on regulatory capital resulting in a ~~CET1~~ capital benefit of $35 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

7872

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)

management also involves maintaining sufficient liquidity to repay ~~wholesale~~ borrowings, pay operating expenses and support extraordinary funding requirements when necessary.

LendingClub Bank Liquidity

The following table summarizes LC Bank’s primary sources of ~~LC Bank~~ short-term liquidity ~~include cash, unencumbered AFS debt~~as of the periods presented:


	June 30, 2023		December 31, 2022
Cash and cash equivalents	$	1,176,563	$	1,020,874
Securities available for sale (1)	$	362,675	$	329,287
Deposits	$	6,897,220	$	6,420,827


Available borrowing capacity:
FHLB of Des Moines borrowing capacity (2)	$	427,877	$	414,528
FRB Discount Window borrowing capacity (3)	$	3,674,308	$	191,021
Total available borrowing capacity	$	4,102,185	$	605,549

(1) Excludes illiquid securities available for sale.

(2) Includes both loans and ~~unused~~securities available for sale pledged as collateral.

(3) During the second quarter of 2023, LC Bank’s available borrowing capacity ~~with~~under the ~~Federal Home Loan Bank (FHLB). Additionally, customer deposits provide LC Bank with a significant source of relatively low-cost funds.~~ FRB Discount Window increased upon including its unsecured personal loan portfolio among the loans pledged as collateral.

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 ~~$54.7~~$32.3 million, or ~~6.0%~~7.0% of total net revenue, and ~~$22.6~~$37.4 million, or ~~4.4%~~6.2% of total net revenue, for the first ~~nine months~~halves of ~~2022~~2023 and ~~2021,~~2022, respectively. Capital expenditures in ~~2022~~2023 are expected to be approximately ~~$70~~$65 million, primarily related to costs associated with the continued development and support of our online lending marketplace platform, including regulatory compliance costs.

As of September 30, 2022 and December 31, 2021, cash and cash equivalents at LC Bank were $896.5 million and $659.9 million, respectively, reflecting the continued growth in LC Bank deposits during the first nine months of 2022. Outstanding PPPLF borrowings were $91.7 million and $271.9 million at September 30, 2022 and December 31, 2021, respectively, and are collateralized by PPP loans originated by the Company. In addition, LC Bank has available Federal Home Loan Bank of Des Moines secured borrowing capacity totaling $297.8 million and $173.4 million at September 30, 2022 and December 31, 2021, respectively. As of September 30, 2022 and December 31, 2021, LC Bank also has secured borrowing capacity available under the FRB Discount Window totaling $187.6 million and $75.2 million, respectively.

LendingClub Holding Company Liquidity

The primary source of liquidity at the holding company is ~~$109.2~~$74.6 million and ~~$88.3~~$56.5 million in cash and cash equivalents as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~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.

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, based on our projections, that our cash on hand, liquid AFS securities, available ~~funds,~~borrowing capacity, and cash flow from operations 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.

~~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)~~

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 relationship between~~ rates, the impact of interest rate fluctuations on asset prepayments, and the level and composition of deposits and ~~liabilities.~~

~~Interest Rate Sensitivity~~

~~LendingClub Bank~~liabilities, among other factors.

Loans HFI at LC Bank are funded primarily through our deposit ~~base, and the~~base. The majority of loans ~~on LC Bank’s balance sheet, at any point in time,~~HFI are ~~retained in~~fixed-rate instruments over the ~~HFI portfolio and accounted for at amortized cost.~~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 ~~measure this~~use a sensitivity ~~by assessing~~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.

The following table presents the change in projected net interest income for the next twelve months due to a hypothetical instantaneous parallel change in interest rates relative to current ~~rates as of September 30, 2022:~~rates:




~~200 basis point increase~~	~~(3.9)~~	%
~~100 basis point decrease~~	~~0.5~~	%


	June 30, 2023		December 31, 2022
Instantaneous Change in Interest Rates:
+ 200 basis points	(9.1)	%	(6.9)	%
+ 100 basis points	(4.4)	%	(3.3)	%
– 100 basis points	2.7	%	1.9	%
– 200 basis points	5.1	%	3.5	%

~~The impact of these projected instantaneous interest rate changes would not have a significant impact to LC Bank’s net interest income. In~~As illustrated in the ~~200 basis point increase simulation,~~table above, net interest income ~~would slightly decline~~is projected to decrease over the next twelve months during hypothetical rising interest rate environments primarily as ~~deposit costs reset~~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. Conversely, net interest income is projected to ~~market prices~~increase over the next twelve months during hypothetical declining interest rate environments. The increase in sensitivity as of June 30, 2023 relative to December 31, 2022 is primarily due to the composition of our loans and deposits. Furthermore, during fluctuating interest rate environments, the increased sensitivity of repricing interest-bearing deposits is more ~~quickly~~impactful than ~~interest-earning assets. However,~~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 ~~100 basis point decrease simulation, the benefit from lower deposit rates would more than offset the downward repricing~~estimated outcomes of ~~interest-earning assets.~~our simulations.

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 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 ~~our~~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 ~~at fair value~~ continue to reduce the outstanding balance of this portfolio, and, as a result, the fair value impact from changes in interest rates continues to diminish.

Contingencies

For a comprehensive discussion of contingencies as of ~~September~~June 30, ~~2022,~~2023, see “Item 1. Financial Statements – Notes to Condensed Consolidated Financial Statements – Note 17. Commitments and Contingencies.”

~~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)~~

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~~half of ~~2022.~~2023.

8175

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~~June 30, ~~2022.~~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~~June 30, ~~2022,~~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~~second quarter of ~~2022,~~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 17. Commitments and Contingencies – Legal,” which is incorporated herein by reference.

Item 1A. Risk Factors

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

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

LENDINGCLUB CORPORATION

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 July 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 ~~operations~~is sensitive to, and may be adversely impacted by, ~~political events, terrorism, military conflict~~ 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 ~~acts~~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 ~~war, cyber-attacks, public health issues, natural disasters, severe weather, climate change, infrastructure failure or outages, labor disputes~~recent increases in inflation and ~~other business interruptions.~~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.

~~Our business operations~~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 a recent agreement to raise the borrowing capacity of the Federal government, the Student Loan Forbearance Program is expected to lapse and payments and interest accruals are ~~subject~~expected to ~~interruption~~resume by ~~among~~September 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 ~~things, political events, terrorism, military conflict or acts~~debt payments, including personal loans, over the repayment of ~~war (including~~student loans. Further, in anticipation of the war in Ukraine), cyber-attacks, public health issues, natural disasters, severe weather, climate change, infrastructure failure or outages, labor disputes and other events which could: (i) decrease demand for our products and services, (ii) adversely affectpotential impact of the ~~macroeconomy and/or our customers, or (iii) make it difficult or impossible for us to deliver a satisfactory experience~~Student Loan Payment Resumption, we began undertaking certain changes to our ~~customers. Any such events could also affect~~underwriting standards in 2022 that were intended to proactively incorporate the ~~Company~~potential impact of the Federal Student Loan Resumption on the credit profile of loan applicants. However, the Student Loan Payment Resumption is unprecedented and therefore its impact is inherently uncertain and there can be no assurance that the factors listed above will materialize or mute the impact of the Student Loan Payment Resumption on our loan performance. We estimate that approximately 20% of the current outstanding unpaid principal balance on LendingClub loans is held by ~~impacting~~borrowers that have federal student loan payments that will resume pursuant to the ~~stability of our deposit base, impairing~~Student Loan Payment Resumption. It is possible that the Federal Student Loan Resumption may reduce the ability of ~~our~~these borrowers to ~~repay~~make other payments and thereby potentially increase their ~~outstanding loans, causing significant property damage~~risk of default on their LendingClub loan(s). It is also possible that the Federal government may extend the Student Loan Forbearance Program or ~~otherwise impair~~implement or leverage another program to mitigate the ~~value~~impact of ~~collateral securing~~the Student Loan Payment Resumption.

LENDINGCLUB CORPORATION

Finally, an economic downturn or recession could increase the risk of borrower default, reduce investor participation on our ~~loans, and/or resulting in loss of revenue and/or~~marketplace bank platform, cause us to ~~incur additional expenses. Furthermore, in the event of any disruption to~~change, postpone or cancel our ~~operations~~strategic initiatives, or those of the companies with whom we do business with, we could incur significant losses, require substantial recovery time and experience significant expenditures in order to resume or maintain operations, any of which could have a material adverse impact onotherwise negatively affect our business, financial condition and results of operations.

For example, the Ukrainian-Russian conflict, the responses thereto (such as sanctions imposed by the United States and other countries) and any expansion thereof is likely to have unpredictable and/or adverse effects on the domestic and global economy and financial markets. Although we have not yet experienced any material direct impact from the Ukrainian-Russian conflict, in part because our business is conducted exclusively in the United States, our business, financial condition or results of operations may be impacted if the conflict prolongs and/or its impact exacerbates. Further, the Ukrainian-Russian conflictThe current economic environment, and its impact, may also have the effect of heightening many of the other risks described in “~~Item~~“Item 1A. Risk ~~Factors~~”Factors” and elsewhere in our Annual Report, such as ~~escalating inflation, elevating~~our exposure to the ~~possibility~~credit and default risk of ~~a decline in economic conditions~~borrowers, maintaining and increasing ~~cybersecurity risk.~~loan originations, maintaining our deposit base and retaining our platform investors.

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

~~Issuer Purchases of Equity Securities~~

~~The following table summarizes purchases made by or on behalf of LendingClub of its common stock for each calendar month in the third quarter of 2022:~~

Month Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
July 1 - July 31 (1)
3,326 $ 14.70 — $ —
August 1 - August 31 — $ — — $ —
September 1 - September 30 (1)
4,425 $ 11.05 — $ —
Total 7,751 $ 12.62 — $ —

~~(1)~~ ~~Represents shares that were transferred to the Company to satisfy payment of all or a portion of the exercise price in connection with the exercise of stock options.~~None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

~~LENDINGCLUB CORPORATION~~

Item 5. Other Information

~~Not applicable.~~Rule 10b5-1 Trading Plans

During the second 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.”

8478

LENDINGCLUB CORPORATION

Item 6. Exhibits

Exhibit Index

The exhibits noted in the accompanying Exhibit Index are filed or incorporated by reference as a part of this Report and such Exhibit Index is incorporated herein by reference.

Incorporated by Reference
Exhibit
Number Exhibit Description Form File No. Exhibit Filing
Date Filed Herewith
3.1
Restated Certificate of Incorporation of LendingClub Corporation
8-K
000-54752
3.1
December 16, 2014
3.2
Certificate of Amendment of Restated Certificate of Incorporation of LendingClub Corporation, effective July 5, 2019
10-Q
001-36771
3.1
August 7, 2019
3.3
Second Certificate of Amendment of Restated Certificate of Incorporation of LendingClub Corporation, effective June 7, 2022
8-K
001-36771
3.1
June 7, 2022
3.4
Amended and Restated Bylaws of the Company, effective March 22, 2018
8-K/A
001-36771
3.1
June 22, 2018
31.1
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X
31.2
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X
32.1
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
X
101.INS XBRL Instance Document‡ X
101.SCH XBRL Taxonomy Extension Schema Document X
101.CAL XBRL Taxonomy Extension Calculation Linkbase X
101.DEF XBRL Taxonomy Extension Definition Linkbase X
101.LAB XBRL Taxonomy Extension Label Linkbase X
101.PRE XBRL Taxonomy Extension Presentation Linkbase X
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Incorporated by Reference

Exhibit
Number

Exhibit Description

Form

File No.

Exhibit

Filing
Date

Filed Herewith

3.1

Restated Certificate of Incorporation of LendingClub Corporation

Certificate of Amendment of Restated Certificate of Incorporation of LendingClub Corporation, effective July 5, 2019

Second Certificate of Amendment of Restated Certificate of Incorporation of LendingClub Corporation, effective June 7, 2022

Amended and Restated Bylaws of the Company, effective March 22, 2018

2014 Equity Incentive Plan, as amended and restated on June 8, 2023, and forms of award agreements thereunder

31.1

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

XBRL Instance Document‡

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase

101.DEF

XBRL Taxonomy Extension Definition Linkbase

101.LAB

XBRL Taxonomy Extension Label Linkbase

101.PRE

XBRL Taxonomy Extension Presentation Linkbase

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

‡ The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

8579

LENDINGCLUB CORPORATION

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

LENDINGCLUB CORPORATION

(Registrant)

Date:

~~November 1, 2022~~July 31, 2023

/s/ SCOTT SANBORN

Scott Sanborn

Chief Executive Officer

Date:

~~November 1, 2022~~July 31, 2023

/s/ ANDREW LABENNE

Andrew LaBenne

Chief Financial Officer

8680


	September 30, 2022		December 31, 2021
Assets of consolidated VIEs, included in total assets above
Restricted cash	$	8,600	$	13,462
Loans held for sale at fair value	—		41,734
Retail and certificate loans held for investment at fair value	2,940		10,281
Other loans held for investment at fair value	6,375		20,929
Other assets	218		584
Total assets of consolidated VIEs	$	18,133	$	86,990
Liabilities of consolidated VIEs, included in total liabilities above
Retail notes, certificates and secured borrowings at fair value	$	2,940	$	10,281
Payable on Structured Program borrowings	11,185		65,451
Other liabilities	39		467
Total liabilities of consolidated VIEs	$	14,164	$	76,199



	Preferred Stock			Common Stock			Additional Paid-in Capital		Treasury Stock			Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Equity
	Shares	Amount		Shares	Amount				Shares	Amount
Balance at June 30, 2022	—	$	—	103,630,776	$	1,036	$	1,594,458	—	$	—	$	(21,843)	$	(494,534)	$	1,079,117
Stock-based compensation	—	—		—	—		18,757		—	—		—		—		18,757
Net issuances under equity incentive plans, net of tax (1)	—	—		1,457,985	15		(1,588)		7,751	(98)		—		—		(1,671)



Net unrealized loss on securities available for sale, net of tax	—	—		—	—		—		—	—		(17,991)		—		(17,991)

Net income	—	—		—	—		—		—	—		—		43,198		43,198
Balance at September 30, 2022	—	$	—	105,088,761	$	1,051	$	1,611,627	7,751	$	(98)	$	(39,834)	$	(451,336)	1,121,410


	Preferred Stock			Common Stock			Additional Paid-in Capital		Treasury Stock			Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Equity
	Shares	Amount		Shares	Amount				Shares	Amount
Balance at December 31, 2021	—	$	—	101,043,924	$	1,010	$	1,559,616	—	$	—	$	7,046	$	(717,430)	$	850,242
Stock-based compensation	—	—		—	—		55,608		—	—		—		—		55,608
Net issuances under equity incentive plans, net of tax (1)	—	—		4,044,837	41		(3,597)		7,751	(98)		—		—		(3,654)



Net unrealized loss on securities available for sale, net of tax	—	—		—	—		—		—	—		(46,880)		—		(46,880)

Net income	—	—		—	—		—		—	—		—		266,094		266,094
Balance at September 30, 2022	—	$	—	105,088,761	$	1,051	$	1,611,627	7,751	$	(98)	$	(39,834)	$	(451,336)	$	1,121,410

	Preferred Stock			Common Stock			Additional Paid-in Capital		Treasury Stock			Accumulated Other Comprehensive Income		Accumulated Deficit		Total Equity
	Shares	Amount		Shares	Amount				Shares	Amount
Balance at June 30, 2021	—	$	—	98,601,148	$	986	$	1,530,314	4,251	$	(92)	$	4,874	$	(773,723)	$	762,359
Stock-based compensation	—	—		—	—		17,971		—	—		—		—		17,971
Net issuances under equity incentive plans, net of tax	—	—		1,181,044	12		(3,843)		—	—		—		—		(3,831)



Net unrealized gain on securities available for sale, net of tax	—	—		—	—		—		—	—		1,106		—		1,106
Net income	—	—		—	—		—		—	—		—		27,185		27,185
Balance at September 30, 2021	—	$	—	99,782,192	$	998	$	1,544,442	4,251	$	(92)	$	5,980	$	(746,538)	$	804,790

	Preferred Stock			Common Stock			Additional Paid-in Capital		Treasury Stock			Accumulated Other Comprehensive Income		Accumulated Deficit		Total Equity
	Shares	Amount		Shares	Amount				Shares	Amount
Balance at December 31, 2020	43,000	$	—	88,149,510	$	881	$	1,457,816	—	$	—	$	1,484	$	(736,010)	$	724,171
Stock-based compensation	—	—		—	—		52,637		—	—		—		—		52,637
Net issuances under equity incentive plans, net of tax (1)	—	—		3,571,568	36		(7,392)		4,251	(92)		—		—		(7,448)
Net issuances of stock related to acquisition (2)	—	—		3,761,114	38		41,424		—	—		—		—		41,462
Exchange of preferred stock for common stock	(43,000)	—		4,300,000	43		(43)		—	—		—		—		—

Net unrealized gain on securities available for sale, net of tax	—	—		—	—		—		—	—		4,496		—		4,496
Net loss	—	—		—	—		—		—	—		—		(10,528)		(10,528)
Balance at September 30, 2021	—	$	—	99,782,192	$	998	$	1,544,442	4,251	$	(92)	$	5,980	$	(746,538)	$	804,790


Nine Months Ended September 30, 2020	Additional Paid-in Capital		Accumulated Deficit
Issuance of preferred stock in exchange for common stock, as originally reported	$	149	$	(50,204)
Adoption of ASU 2020-06	(50,204)		50,204
Issuance of preferred stock in exchange for common stock, as adjusted	$	(50,055)	$	—








Credit Valuation Allowance	CLUB Certificate asset-backed securities		Asset-backed subordinated securities		Total
Balance at June 30, 2021	$	(40)	$	(552)	$	(592)

Reversal of credit loss expense	40		456		496
Balance at September 30, 2021	$	—	$	(96)	$	(96)


September 30, 2022	Consolidated VIEs		Unconsolidated VIEs		Total
Assets

Restricted cash	$	8,600	$	—	$	8,600
Securities available for sale at fair value	—		22,445		22,445

Retail and certificate loans held for investment at fair value	2,940		—		2,940
Other loans held for investment at fair value	6,375		—		6,375
Other assets	218		11,351		11,569
Total assets	$	18,133	$	33,796	$	51,929
Liabilities
Retail notes, certificates and secured borrowings at fair value	$	2,940	$	—	$	2,940
Payable on Structured Program borrowings	11,185		—		11,185
Other liabilities	39		—		39
Total liabilities	14,164		—		14,164
Total net assets	$	3,969	$	33,796	$	37,765


September 30, 2022	Total VIE Assets		Securities Available for Sale		Other Assets		Net Assets



Carrying value	$	625,017	$	22,445	$	11,351	$	33,796
Total exposure	N/A		$	22,445	$	11,351	$	33,796


	Outstanding Principal Balance		Valuation Adjustment		Fair Value
Balance at June 30, 2022	$	62,761	$	50	$	62,811
Originations and purchases	2,298,086		—		2,298,086

Sales	(2,264,859)		(188)		(2,265,047)
Principal payments and retirements	(4,592)		—		(4,592)
Charge-offs, net of recoveries	(17)		17		—
Change in fair value recorded in earnings	—		(1,200)		(1,200)
Balance at September 30, 2022	$	91,379	$	(1,321)	$	90,058

	Outstanding Principal Balance		Valuation Adjustment		Fair Value
Balance at December 31, 2021	$	147,193	$	(4,823)	$	142,370
Originations and purchases	7,297,510		—		7,297,510
Transfers to loans held for investment	(11,888)		—		(11,888)
Sales	(7,315,612)		(18,979)		(7,334,591)
Principal payments and retirements	(24,990)		—		(24,990)
Charge-offs, net of recoveries	(834)		(628)		(1,462)
Change in fair value recorded in earnings	—		23,109		23,109
Balance at September 30, 2022	$	91,379	$	(1,321)	$	90,058

	Outstanding Principal Balance		Valuation Adjustment		Fair Value
Balance at June 30, 2021	$	186,988	$	(6,927)	$	180,061
Originations and purchases	2,339,869		—		2,339,869

Sales	(2,342,158)		(85)		(2,342,243)
Principal payments and retirements	(27,211)		—		(27,211)
Charge-offs, net of recoveries	(1,138)		(209)		(1,347)
Change in fair value recorded in earnings	—		3,031		3,031
Balance at September 30, 2021	$	156,350	$	(4,190)	$	152,160

	Outstanding Principal Balance		Valuation Adjustment		Fair Value
Balance at December 31, 2020	$	132,600	$	(10,698)	$	121,902
Originations and purchases	5,320,264		(1,629)		5,318,635

Sales	(5,210,803)		10,568		(5,200,235)
Principal payments and retirements	(78,946)		—		(78,946)
Charge-offs, net of recoveries	(6,765)		3,711		(3,054)
Change in fair value recorded in earnings	—		(6,142)		(6,142)
Balance at September 30, 2021	$	156,350	$	(4,190)	$	152,160


	September 30, 2022		December 31, 2021
Retail notes	$	84,203	$	219,435
Certificates and secured borrowings	2,941		10,284

Total retail notes, certificates and secured borrowings	$	87,144	$	229,719


	September 30, 2022		December 31, 2021
Deferred tax assets (liabilities), net	$	229,269	$	223,367
Valuation allowance	(58,063)		(223,367)
Deferred tax assets, net of valuation allowance	$	171,206	$	—


2022	$	12,639
2023	47,231
2024	39,093
2025	26,387
2026	15,988
Thereafter	12,412
Total lease payments	$	153,750
Discount effect	(9,317)
Present value of future minimum lease payments	$	144,433


	Operating Lease Payments
2022	$	3,143
2023	12,798
2024	13,054
2025	13,184
2026	13,375
Thereafter	48,974
Total lease payments	$	104,528
Discount effect	(20,967)
Present value of future minimum lease payments	$	83,561


	As Of and For The Three Months Ended									Nine Months Ended September 30,
	September 30, 2022			June 30, 2022			September 30, 2021			2022			2021
Non-interest income	$	181,237		$	213,832		$	180,878		$	584,926		$	426,688
Net interest income	123,676			116,226			65,288			339,582			129,699
Total net revenue	304,913			330,058			246,166			924,508			556,387
Non-interest expense	186,219			209,386			178,775			586,809			473,166
Pre-tax, pre-provision income	118,694			120,672			67,391			337,699			83,221
Provision for credit losses	82,739			70,566			37,524			205,814			93,651
Income (Loss) before income tax benefit (expense)	35,955			50,106			29,867			131,885			(10,430)
Income tax benefit (expense)	7,243			131,954			(2,682)			134,209			(98)
Net income (loss)	43,198			182,060			27,185			266,094			(10,528)
Income tax benefit from release of tax valuation allowance	5,015			135,300			—			140,315			—
Net income (loss) excluding income tax benefit (1)(3)	$	38,183		$	46,760		$	27,185		$	125,779		$	(10,528)

Basic EPS	$	0.41		$	1.77		$	0.27		$	2.59		$	(0.11)
Diluted EPS	$	0.41		$	1.73		$	0.26		$	2.56		$	(0.11)
Diluted EPS impact of income tax benefit from release of tax valuation allowance	$	0.05		$	1.28		—			$	1.35		—
Diluted EPS excluding income tax benefit (1)(3)	$	0.36		$	0.45		$	0.26		$	1.21		$	(0.11)











LendingClub Corporation Performance Metrics:
Net interest margin	8.3		%	8.5		%	6.3		%	8.3		%	4.8		%
Efficiency ratio (2)	61.1		%	63.4		%	72.6		%	63.5		%	85.0		%
Return on average equity (ROE)	14.2		%	33.8		%	13.8		%	40.6		%	N/A
Return on average total assets (ROA)	2.5		%	5.5		%	2.4		%	6.8		%	N/A
Marketing as a % of loan originations	1.3		%	1.6		%	1.6		%	1.5		%	1.4		%

LendingClub Corporation Capital Metrics:
Common Equity Tier 1 Capital Ratio	18.3		%	20.0		%	22.8		%
Tier 1 Leverage Ratio	15.7		%	16.2		%	16.2		%
Book Value per Common Share	$	10.67		$	10.41		$	8.07
Tangible Book Value per Common Share(3)	$	9.78		$	9.50		$	7.08

Loan Originations (in millions):
Marketplace loans	$	2,386		$	2,819		$	2,471		$	7,566		$	5,792
Loan originations held for investment	1,153			1,021			636			3,030			1,521
Total loan originations	$	3,539		$	3,840		$	3,107		$	10,596		$	7,312
Loan originations held for investment as % of total loan originations	33		%	27		%	20		%	29		%	21		%

Servicing portfolio AUM (in millions) (4):
Total servicing portfolio	$	15,929		$	14,783		$	11,592
Loans serviced for others	$	11,807		$	11,382		$	9,744


		As of and For The Three Months Ended						As of and For The Nine Months Ended
		September 30, 2022		June 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
GAAP Net income (loss)		$	43,198	$	182,060	$	27,185	$	266,094	$	(10,528)
Income tax benefit from release of tax valuation allowance		5,015		135,300		—		140,315		—
Net income (loss) excluding income tax benefit		$	38,183	$	46,760	$	27,185	$	125,779	$	(10,528)

GAAP Diluted EPS – common stockholders		$	0.41	$	1.73	$	0.26	$	2.56	$	(0.11)

(A)	Income tax benefit from release of tax valuation allowance	$	5,015	$	135,300	N/A		140,315		N/A
(B)	Weighted-average common shares – Diluted	105,853,938		105,042,626		N/A		$	104,116,240	N/A
(A/B)	Diluted EPS impact of income tax benefit	$	0.05	$	1.29	N/A		$	1.35	N/A

Diluted EPS excluding income tax benefit		$	0.36	$	0.44	$	0.26	$	1.21	$	(0.11)


	September 30, 2022		June 30, 2022		December 31, 2021		September 30, 2021
GAAP common equity	$	1,121,410	$	1,079,117	$	850,242	$	804,790
Less: Goodwill	(75,717)		(75,717)		(75,717)		(75,717)
Less: Intangible assets	(17,512)		(18,690)		(21,181)		(22,521)
Tangible common equity	$	1,028,181	$	984,710	$	753,344	$	706,552

Book value per common share
GAAP common equity	$	1,121,410	$	1,079,117	$	850,242	$	804,790
Common shares issued and outstanding	105,088,761		103,630,776		101,043,924		99,782,192
Book value per common share	$	10.67	$	10.41	$	8.41	$	8.07

Tangible book value per common share
Tangible common equity	$	1,028,181	$	984,710	$	753,344	$	706,552
Common shares issued and outstanding	105,088,761		103,630,776		101,043,924		99,782,192
Tangible book value per common share	$	9.78	$	9.50	$	7.46	$	7.08


Month	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
July 1 - July 31 (1)	3,326	$	14.70	—	$	—
August 1 - August 31	—	$	—	—	$	—
September 1 - September 30 (1)	4,425	$	11.05	—	$	—
Total	7,751	$	12.62	—	$	—