UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM			10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~September 30, 2023

Commission File Number: 001-36771


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


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

595 Market Street, Suite 200,

San Francisco,

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 ~~April 21,~~October 20, 2023, there were ~~107,468,463~~109,648,769 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	4
	Condensed Consolidated Statements of Comprehensive Income (Loss)	5
	Condensed Consolidated Statements of Changes in Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4449
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6878
Item 4.	Controls and Procedures	6878

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	6878
Item 1A.	Risk Factors	6878
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6880
Item 3.	Defaults Upon Senior Securities	6980
Item 4.	Mine Safety Disclosures	6980
Item 5.	Other Information	6980
Item 6.	Exhibits	7081
Signatures		7182

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, 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

~~Earnings Per Share or~~ 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 successfully navigate, the current interest rate and economic ~~climate;~~climate, a potential recession and the resumption of Federal student loan payments;

•our ability to sustain the business under adverse circumstances;

•our ability to attract and retain members, to expand our product offerings and services, to improve revenue and generate recurring earnings, to capture expense benefits, to increase resiliency, and to enhance regulatory clarity;

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

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

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

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

•our ability to develop and maintain a strong core deposit base or other low cost funding sources necessary to fund our activities;

•the impact of changes in consumer spending, borrowing and saving habits;

•the impact of the continuation of or changes in the short-term and long-term interest rate environment;

•our expectations on the interplay among origination volume, underwriting standards and interest rates;

•the ability of borrowers to repay ~~loans and the plans of borrowers;~~loans;

•our belief that certain loans and leases in our commercial loan portfolio will be fully repaid in accordance with the contractual loan terms;

•our ability to maintain investor confidence in the operation of our platform;

•our ability to retain existing sources and secure new or additional sources of investor commitments for our platform;

•our expectation that ~~the reduction in~~platform investor demand for ~~marketplace~~our loans will ~~continue~~remain depressed until interest rates and the macro environment ~~volatility~~ stabilize;

•our expectation of pressure on net interest margin to continue during 2023;

•the performance of our loan products and expected rates of return for investors;

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

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

•our intention not to sell our AFS investment portfolio;

LENDINGCLUB CORPORATION

•our financial condition and performance, including the impact that management’s estimates have on our financial performance and the relationship between interim period and full year results;

•the fair value estimates used in the valuation of our financial instruments;

•our estimate of our interest rate sensitivity;

•our calculation of expected credit losses for our collateral-dependent loans;

•our estimated maximum exposure to losses;

•our expectation of loan servicing fee revenue based on ~~forecast~~forecasted prepayments and estimated market rate of servicing at the time of loan sale;

•capital expenditures;

•our compliance with contractual obligations or restrictions;

•the potential impact of macro-economic developments, including recessions, inflation or other adverse circumstances;

•the impact of COVID-19;

•our ability to develop and maintain effective internal controls;

•our ability to continue to realize the financial and strategic benefits of our digital marketplace bank business model;

•the impact of expense initiatives and our ability to control our cost structure;

•our ability to manage and repay our indebtedness; and

•other risk factors listed from time to time in reports we file with the SEC.

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

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

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

LENDINGCLUB CORPORATION

Condensed Consolidated Balance Sheets

(In Thousands, Except Share and Per Share Amounts)

(Unaudited)


		March 31, 2023		December 31, 2022			September 30, 2023		December 31, 2022
Assets	Assets					Assets
Cash and due from banks	Cash and due from banks	$	22,732	$	23,125	Cash and due from banks	$	19,220	$	23,125
Interest-bearing deposits in banks	Interest-bearing deposits in banks	1,614,265		1,033,905		Interest-bearing deposits in banks	1,288,550		1,033,905
Total cash and cash equivalents	Total cash and cash equivalents	1,636,997		1,057,030		Total cash and cash equivalents	1,307,770		1,057,030
Restricted cash (1)	Restricted cash (1)	47,342		67,454		Restricted cash (1)	42,487		67,454
Securities available for sale at fair value ($428,395 and $399,668 at amortized cost, respectively)		380,028		345,702
Securities available for sale at fair value ($872,341 and $399,668 at amortized cost, respectively)						Securities available for sale at fair value ($872,341 and $399,668 at amortized cost, respectively)	795,669		345,702
Loans held for sale at fair value	Loans held for sale at fair value	44,647		110,400		Loans held for sale at fair value	362,789		110,400
Loans and leases held for investment	Loans and leases held for investment	5,491,938		5,033,154		Loans and leases held for investment	5,237,277		5,033,154
Allowance for loan and lease losses	Allowance for loan and lease losses	(348,857)		(327,852)		Allowance for loan and lease losses	(350,495)		(327,852)
Loans and leases held for investment, net	Loans and leases held for investment, net	5,143,081		4,705,302		Loans and leases held for investment, net	4,886,782		4,705,302
Loans held for investment at fair value (1)	Loans held for investment at fair value (1)	748,618		925,938		Loans held for investment at fair value (1)	326,299		925,938
Retail and certificate loans held for investment at fair value (1)	Retail and certificate loans held for investment at fair value (1)	38,855		55,425		Retail and certificate loans held for investment at fair value (1)	18,118		55,425
Property, equipment and software, net	Property, equipment and software, net	144,041		136,473		Property, equipment and software, net	159,768		136,473
Goodwill	Goodwill	75,717		75,717		Goodwill	75,717		75,717
Other assets (1)	Other assets (1)	494,692		500,306		Other assets (1)	496,952		500,306
Total assets	Total assets	$	8,754,018	$	7,979,747	Total assets	$	8,472,351	$	7,979,747
Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Deposits:	Deposits:					Deposits:
Interest-bearing	Interest-bearing	$	7,018,014	$	6,158,560	Interest-bearing	$	6,687,069	$	6,158,560
Noninterest-bearing	Noninterest-bearing	200,840		233,993		Noninterest-bearing	313,194		233,993
Total deposits	Total deposits	7,218,854		6,392,553		Total deposits	7,000,263		6,392,553
Borrowings (1)	Borrowings (1)	52,980		74,858		Borrowings (1)	10,717		74,858
Retail notes, certificates and secured borrowings at fair value (1)	Retail notes, certificates and secured borrowings at fair value (1)	38,855		55,425		Retail notes, certificates and secured borrowings at fair value (1)	18,118		55,425

Other liabilities (1)	Other liabilities (1)	252,587		292,617		Other liabilities (1)	235,034		292,617
Total liabilities	Total liabilities	7,563,276		6,815,453		Total liabilities	7,264,132		6,815,453
Equity	Equity					Equity

Common stock, $0.01 par value; 180,000,000 shares authorized; 107,460,734 and 106,546,995 shares issued and outstanding, respectively		1,075		1,065
Common stock, $0.01 par value; 180,000,000 shares authorized; 109,648,769 and 106,546,995 shares issued and outstanding, respectively						Common stock, $0.01 par value; 180,000,000 shares authorized; 109,648,769 and 106,546,995 shares issued and outstanding, respectively	1,096		1,065
Additional paid-in capital	Additional paid-in capital	1,637,283		1,628,590		Additional paid-in capital	1,660,236		1,628,590
Accumulated deficit	Accumulated deficit	(414,079)		(427,745)		Accumulated deficit	(398,961)		(427,745)

Accumulated other comprehensive loss	Accumulated other comprehensive loss	(33,537)		(37,616)		Accumulated other comprehensive loss	(54,152)		(37,616)

Total equity	Total equity	1,190,742		1,164,294		Total equity	1,208,219		1,164,294
Total liabilities and equity	Total liabilities and equity	$	8,754,018	$	7,979,747	Total liabilities and equity	$	8,472,351	$	7,979,747

(1) Includes amounts in consolidated variable interest entities (VIEs). See “Notes to Condensed Consolidated Financial Statements – Note 6. Securitizations and Variable Interest Entities.”

See Notes to Condensed Consolidated Financial Statements.

LENDINGCLUB CORPORATION

Condensed Consolidated Statements of Income

(In Thousands, Except Share and Per Share Amounts)

(Unaudited)


		Three Months Ended March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
			2023			2022			2023		2022		2023		2022
Non-interest income:	Non-interest income:							Non-interest income:
Marketplace revenue	Marketplace revenue		$	95,634		$	179,966	Marketplace revenue	$	60,886	$	173,837	$	239,303	$	560,187
Other non-interest income	Other non-interest income		3,356			9,891		Other non-interest income	2,958		7,400		9,349		24,739
Total non-interest income	Total non-interest income		98,990			189,857		Total non-interest income	63,844		181,237		248,652		584,926

Interest income:	Interest income:							Interest income:
Interest on loans held for sale	Interest on loans held for sale		5,757			7,450		Interest on loans held for sale	9,582		5,879		19,772		20,459
Interest and fees on loans and leases held for investment	Interest and fees on loans and leases held for investment		150,467			91,442		Interest and fees on loans and leases held for investment	158,960		124,028		471,512		324,381
Interest on loans held for investment at fair value	Interest on loans held for investment at fair value		26,892			593		Interest on loans held for investment at fair value	11,788		791		60,372		2,015
Interest on retail and certificate loans held for investment at fair value	Interest on retail and certificate loans held for investment at fair value		1,683			6,969		Interest on retail and certificate loans held for investment at fair value	817		3,685		3,694		15,745
Interest on securities available for sale	Interest on securities available for sale		3,900			4,511		Interest on securities available for sale	9,467		3,820		19,315		12,757
Other interest income	Other interest income		13,714			688		Other interest income	16,798		5,017		49,646		7,984
Total interest income	Total interest income		202,413			111,653		Total interest income	207,412		143,220		624,311		383,341

Interest expense:	Interest expense:							Interest expense:
Interest on deposits	Interest on deposits		53,273			3,438		Interest on deposits	69,509		15,184		189,303		24,700
Interest on retail notes, certificates and secured borrowings	Interest on retail notes, certificates and secured borrowings		1,683			6,969		Interest on retail notes, certificates and secured borrowings	817		3,685		3,694		15,745
Other interest expense	Other interest expense		753			1,566		Other interest expense	81		675		953		3,314
Total interest expense	Total interest expense		55,709			11,973		Total interest expense	70,407		19,544		193,950		43,759

Net interest income	Net interest income		146,704			99,680		Net interest income	137,005		123,676		430,361		339,582

Total net revenue	Total net revenue		245,694			289,537		Total net revenue	200,849		304,913		679,013		924,508

Provision for credit losses	Provision for credit losses		70,584			52,509		Provision for credit losses	64,479		82,739		201,658		205,814

Non-interest expense:	Non-interest expense:							Non-interest expense:
Compensation and benefits	Compensation and benefits		73,307			81,610		Compensation and benefits	58,497		84,916		203,357		251,629
Marketing	Marketing		26,880			55,080		Marketing	19,555		46,031		70,375		162,608
Equipment and software	Equipment and software		13,696			11,046		Equipment and software	12,631		12,491		40,295		35,998
Depreciation and amortization	Depreciation and amortization		12,354			11,039		Depreciation and amortization	11,250		10,681		35,242		32,277
Professional services	Professional services		9,058			12,406		Professional services	8,414		11,943		27,446		40,487
Occupancy	Occupancy		4,310			6,019		Occupancy	4,612		5,051		13,606		17,279
Other non-interest expense	Other non-interest expense		17,703			14,004		Other non-interest expense	13,076		15,106		46,101		46,531
Total non-interest expense	Total non-interest expense		157,308			191,204		Total non-interest expense	128,035		186,219		436,422		586,809

Income before income tax expense			17,802			45,824
Income tax expense			(4,136)			(4,988)
Income before income tax benefit (expense)								Income before income tax benefit (expense)	8,335		35,955		40,933		131,885
Income tax benefit (expense)								Income tax benefit (expense)	(3,327)		7,243		(12,149)		134,209
Net income	Net income		$	13,666		$	40,836	Net income	$	5,008	$	43,198	$	28,784	$	266,094

Earnings per share: (1)	Earnings per share: (1)							Earnings per share: (1)
Basic EPS – common stockholders			$	0.13		$	0.40
Diluted EPS – common stockholders			$	0.13		$	0.39
Basic EPS								Basic EPS	$	0.05	$	0.41	$	0.27	$	2.59
Diluted EPS								Diluted EPS	$	0.05	$	0.41	$	0.27	$	2.56
Weighted-average common shares – Basic	Weighted-average common shares – Basic		106,912,139			101,493,561		Weighted-average common shares – Basic	109,071,180		104,215,594		107,966,544		102,838,645
Weighted-average common shares – Diluted	Weighted-average common shares – Diluted		106,917,770			105,052,904		Weighted-average common shares – Diluted	109,073,194		105,853,938		107,969,920		104,116,240

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

See Notes to Condensed Consolidated Financial Statements.

LENDINGCLUB CORPORATION

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In Thousands)

(Unaudited)

Three Months Ended
March 31,
2023 2022
Net income $ 13,666 $ 40,836
Other comprehensive income (loss):
Net unrealized gain (loss) on securities available for sale 5,599 (19,987)
Other comprehensive income (loss), before tax 5,599 (19,987)
Income tax effect (1,520) (200)
Other comprehensive income (loss), net of tax 4,079 (20,187)
Total comprehensive income $ 17,745 $ 20,649


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net income	$	5,008	$	43,198	$	28,784	$	266,094
Other comprehensive loss:
Net unrealized loss on securities available for sale	(20,547)		(24,112)		(22,706)		(63,929)
Other comprehensive loss, before tax	(20,547)		(24,112)		(22,706)		(63,929)
Income tax effect (1)	5,583		6,121		6,170		17,049
Other comprehensive loss, net of tax	(14,964)		(17,991)		(16,536)		(46,880)
Total comprehensive income (loss)	$	(9,956)	$	25,207	$	12,248	$	219,214

(1)Income tax effect for the three and nine months ended September 30, 2022 reflects the release of the deferred tax asset valuation allowance on the securities available for sale portfolio.

See Notes to Condensed Consolidated Financial Statements.

LENDINGCLUB CORPORATION

Condensed Consolidated Statements of Changes in Equity

(In Thousands, Except Share Data)

(Unaudited)


															Common Stock												Additional Paid-in Capital			Treasury Stock				Accumulated Other Comprehensive Loss			Accumulated Deficit				Total Equity
																					Shares									Amount		Shares				Amount
Balance at June 30, 2023																									Balance at June 30, 2023							108,694,120		$	1,087		$	1,647,593			—			$	—			$	(39,188)			$	(403,969)			$	1,205,523
Stock-based compensation																									Stock-based compensation							—		—			16,783				—			—				—				—				16,783
Net issuances under equity incentive plans																									Net issuances under equity incentive plans							954,649		9			(4,140)				—			—				—				—				(4,131)

Net unrealized loss on securities available for sale, net of tax																									Net unrealized loss on securities available for sale, net of tax							—		—			—				—			—				(14,964)				—				(14,964)

Net income																									Net income							—		—			—				—			—				—				5,008				5,008
Balance at September 30, 2023																									Balance at September 30, 2023							109,648,769		$	1,096		$	1,660,236			—			$	—			$	(54,152)			$	(398,961)			$	1,208,219

		Common Stock		Additional Paid-in Capital				Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit		Total Equity										Common Stock									Additional Paid-in Capital		Treasury Stock					Accumulated Other Comprehensive Loss				Accumulated Deficit			Total Equity
			Shares			Amount																		Shares					Additional Paid-in Capital					Amount		Accumulated Deficit										Total Equity
Balance at December 31, 2022	Balance at December 31, 2022		106,546,995	$	1,065	$	1,628,590						$	(37,616)					$	(427,745)					$	1,164,294		Balance at December 31, 2022						106,546,995							$	1,628,590		—						$	—					$	1,164,294
Stock-based compensation	Stock-based compensation		—	—		14,070					—					—						14,070			Stock-based compensation								—			—			48,874				—			—				—				—				48,874
Net issuances under equity incentive plans	Net issuances under equity incentive plans		913,739	10		(5,377)					—					—						(5,367)			Net issuances under equity incentive plans							3,101,774		31			(17,228)				—			—				—				—				(17,197)

Net unrealized gain on securities available for sale, net of tax			—	—		—					4,079					—						4,079
Net unrealized loss on securities available for sale, net of tax																									Net unrealized loss on securities available for sale, net of tax							—		—			—				—			—				(16,536)				—				(16,536)

Net income	Net income		—	—		—					—					13,666						13,666			Net income							—		—			—				—			—				—				28,784				28,784
Balance at March 31, 2023			107,460,734	$	1,075	$	1,637,283				$	(33,537)				$	(414,079)					$	1,190,742
Balance at September 30, 2023																									Balance at September 30, 2023							109,648,769		$	1,096		$	1,660,236			—			$	—			$	(54,152)			$	(398,961)			$	1,208,219

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

Net unrealized loss on securities available for sale, net of tax																									Net unrealized loss on securities available for sale, net of tax							—		—			—				—			—				(17,991)				—				(17,991)
Net income																									Net income							—		—			—				—			—				—				43,198				43,198
Balance at September 30, 2022																									Balance at September 30, 2022							105,088,761		$	1,051		$	1,611,627			7,751			$	(98)			$	(39,834)			$	(451,336)			$	1,121,410

		Common Stock		Additional Paid-in Capital				Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit			Total Equity											Common Stock							Additional Paid-in Capital		Treasury Stock						Accumulated Other Comprehensive Income (Loss)				Accumulated Deficit			Total Equity
			Shares			Amount																					Shares			Additional Paid-in Capital						Amount	Accumulated Deficit											Total Equity
Balance at December 31, 2021	Balance at December 31, 2021		101,043,924	$	1,010	$	1,559,616						$	7,046					$	(717,430)					$	850,242		Balance at December 31, 2021						101,043,924					$	1,559,616				—						$	—					$	850,242
Stock-based compensation	Stock-based compensation		—	—		17,187					—					—						17,187			Stock-based compensation							—		—			55,608				—			—				—				—				55,608
Net issuances under equity incentive plans	Net issuances under equity incentive plans		1,150,113	12		(656)					—					—						(644)			Net issuances under equity incentive plans							4,044,837		41			(3,597)				7,751			(98)				—				—				(3,654)

Net unrealized loss on securities available for sale, net of tax	Net unrealized loss on securities available for sale, net of tax		—	—		—					(20,187)					—						(20,187)			Net unrealized loss on securities available for sale, net of tax							—		—			—				—			—				(46,880)				—				(46,880)
Net income	Net income		—	—		—					—					40,836						40,836			Net income							—		—			—				—			—				—				266,094				266,094
Balance at March 31, 2022			102,194,037	$	1,022	$	1,576,147				$	(13,141)				$	(676,594)					$	887,434
Balance at September 30, 2022																									Balance at September 30, 2022							105,088,761		$	1,051		$	1,611,627			7,751			$	(98)			$	(39,834)			$	(451,336)			$	1,121,410

See Notes to Condensed Consolidated Financial Statements.

LENDINGCLUB CORPORATION

Condensed Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)


		Three Months Ended March 31,					Nine Months Ended September 30,
		2023		2022			2023		2022
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net income	Net income	$	13,666	$	40,836	Net income	$	28,784	$	266,094
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash (used for) provided by operating activities:						Adjustments to reconcile net income to net cash (used for) provided by operating activities:
Net fair value adjustments	Net fair value adjustments	15,414		(15,249)		Net fair value adjustments	80,222		(24,277)
Change in fair value of loan servicing assets						Change in fair value of loan servicing assets	41,750		53,928
Gain on sales of loans						Gain on sales of loans	(35,918)		(76,983)
Provision for credit losses	Provision for credit losses	70,584		52,509		Provision for credit losses	201,658		205,814
Change in fair value of loan servicing assets		12,576		16,979
Accretion of loan deferred fees and costs	Accretion of loan deferred fees and costs	(24,110)		(19,252)		Accretion of loan deferred fees and costs	(74,486)		(63,486)
Stock-based compensation, net	Stock-based compensation, net	11,888		15,694		Stock-based compensation, net	42,122		50,210

Depreciation and amortization	Depreciation and amortization	12,354		11,039		Depreciation and amortization	35,242		32,277
Gain on sales of loans		(14,125)		(24,110)

Income tax benefit from release of tax valuation allowance						Income tax benefit from release of tax valuation allowance	—		(140,315)
Other, net	Other, net	(3,670)		1,559		Other, net	(8,474)		515

Net change to loans held for sale	Net change to loans held for sale	50,738		(29,601)		Net change to loans held for sale	(590,400)		42,991

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	14,591		443		Other assets	23,622		(11,152)

Other liabilities	Other liabilities	(45,414)		(10,174)		Other liabilities	(65,917)		6,602

Net cash provided by operating activities		114,492		40,673
Net cash (used for) provided by operating activities						Net cash (used for) provided by operating activities	(321,795)		342,218
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:

Net change in loans and leases	Net change in loans and leases	(302,580)		(258,829)		Net change in loans and leases	101,884		(1,630,858)
Net decrease in retail and certificate loans	Net decrease in retail and certificate loans	17,480		64,280		Net decrease in retail and certificate loans	39,337		148,963

Purchases of securities available for sale	Purchases of securities available for sale	(37,245)		(166,123)		Purchases of securities available for sale	(59,336)		(222,534)

Proceeds from maturities and paydowns of securities available for sale	Proceeds from maturities and paydowns of securities available for sale	9,000		24,990		Proceeds from maturities and paydowns of securities available for sale	42,856		69,776
Purchases of property, equipment and software, net	Purchases of property, equipment and software, net	(16,398)		(21,575)		Purchases of property, equipment and software, net	(48,239)		(54,659)

Other investing activities	Other investing activities	(6,671)		(2,967)		Other investing activities	(8,606)		(5,704)

Net cash used for investing activities		(336,414)		(360,224)
Net cash provided by (used for) investing activities						Net cash provided by (used for) investing activities	67,896		(1,695,016)
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:
Net change in deposits	Net change in deposits	826,117		841,689		Net change in deposits	599,054		1,987,718

Principal payments on borrowings	Principal payments on borrowings	(21,493)		(102,650)		Principal payments on borrowings	(62,850)		(222,271)

Principal payments on retail notes and certificates	Principal payments on retail notes and certificates	(17,480)		(64,358)		Principal payments on retail notes and certificates	(39,337)		(149,115)

Other financing activities	Other financing activities	(5,367)		(4,984)		Other financing activities	(17,195)		(7,994)
Net cash provided by financing activities	Net cash provided by financing activities	781,777		669,697		Net cash provided by financing activities	479,672		1,608,338
Net Increase in Cash, Cash Equivalents and Restricted Cash	Net Increase in Cash, Cash Equivalents and Restricted Cash	$	559,855	$	350,146	Net Increase in Cash, Cash Equivalents and Restricted Cash	$	225,773	$	255,540
Cash, Cash Equivalents and Restricted Cash, Beginning of Period	Cash, Cash Equivalents and Restricted Cash, Beginning of Period	$	1,124,484	$	763,586	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	$	1,684,339	$	1,113,732	Cash, Cash Equivalents and Restricted Cash, End of Period	$	1,350,257	$	1,019,126

Supplemental Cash Flow Information:
Cash paid for interest		$	51,608	$	10,223
Cash paid for operating leases included in the measurement of lease liabilities		$	3,156	$	4,895
Cash paid for taxes		$	4,526	$	670

Non-cash financing activity:
Derecognition of payable to securitization note and residual certificate holders held in consolidated VIE		$	—	$	36,072

LENDINGCLUB CORPORATION

Condensed Consolidated Statements of Cash Flows (Continued)

(In Thousands)

(Unaudited)


	Nine Months Ended September 30,
	2023		2022

Supplemental Cash Flow Information:
Cash paid for interest	$	180,167	$	43,623
Cash paid for taxes	$	7,757	$	14,003
Cash paid for operating leases included in the measurement of lease liabilities	$	9,581	$	12,394

Non-cash investing activity:

Net asset-backed securities retained from Structured Program transactions	$	454,831	$	—





Non-cash financing activity:
Derecognition of payable to securitization note and residual certificate holders held in consolidated VIE	$	—	$	36,072

The following presents cash, cash equivalents and restricted cash by category within the Balance Sheet:


		March 31, 2023		December 31, 2022			September 30, 2023		December 31, 2022
Cash and cash equivalents	Cash and cash equivalents	$	1,636,997	$	1,057,030	Cash and cash equivalents	$	1,307,770	$	1,057,030
Restricted cash	Restricted cash	47,342		67,454		Restricted cash	42,487		67,454
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	1,684,339	$	1,124,484	Total cash, cash equivalents and restricted cash	$	1,350,257	$	1,124,484

See Notes to Condensed Consolidated Financial Statements.

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

1. Summary of Significant Accounting Policies

Basis of Presentation

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

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

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

Significant Accounting Policies

Derivative Instruments and Hedging Activities

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

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

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

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

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

no other changes to these significant accounting policies for the ~~three-month~~nine-month period ended ~~March 31,~~September 30, 2023, except for the impact of the new adopted accounting ~~standard~~standards noted below.

Adoption of New Accounting Standards

The Company adopted the following new accounting ~~standard~~standards during the ~~three-month~~nine-month period ended ~~March 31,~~September 30, 2023:

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

~~New Accounting Standards Not Yet Adopted~~

The FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date

~~LENDINGCLUB CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

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

~~(Unaudited)~~

of Topic 848, which, if certain criteria are met, provide optional expedients and exceptions for applying GAAP to transactions affected by reference rate reform. The provisions of this topic are elective and may be applied prospectively as of the beginning of the reporting period when the election is made through December 31, 2024. The Company ~~has plans to adopt~~adopted this standard ~~and concluded it does~~as of April1, 2023. The adoption of this standard did not have a material impact toon the Company’s financial ~~statements.~~position, results of operations, cash flows, and disclosures.

2. Marketplace Revenue

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

Origination Fees: ~~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.

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

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

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

Three Months Ended
March 31,
2023 2022
Origination fees $ 70,543 $ 122,093
Servicing fees 26,380 18,514
Gain on sales of loans 14,125 24,110
Net fair value adjustments (15,414) 15,249
Total marketplace revenue $ 95,634 $ 179,966

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

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


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

3. Earnings Per Share

The following table details the computation of the Company’s Basic and Diluted EPS:

Three Months Ended
March 31,
2023 2022
Basic EPS:
Net income attributable to stockholders $ 13,666 $ 40,836
Weighted-average common shares – Basic 106,912,139 101,493,561
Basic EPS $ 0.13 $ 0.40
Diluted EPS:
Net income attributable to stockholders $ 13,666 $ 40,836
Weighted-average common shares – Diluted 106,917,770 105,052,904
Diluted EPS $ 0.13 $ 0.39

~~There were no weighted-average common shares that were excluded from the Company’s Diluted EPS computation during the first quarters of 2023 and 2022.~~


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Basic EPS:
Net income attributable to stockholders	$	5,008	$	43,198	$	28,784	$	266,094
Weighted-average common shares – Basic	109,071,180		104,215,594		107,966,544		102,838,645
Basic EPS	$	0.05	$	0.41	$	0.27	$	2.59

Diluted EPS:
Net income attributable to stockholders	$	5,008	$	43,198	$	28,784	$	266,094
Weighted-average common shares – Diluted	109,073,194		105,853,938		107,969,920		104,116,240
Diluted EPS	$	0.05	$	0.41	$	0.27	$	2.56

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

4. Securities Available for Sale

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


March 31, 2023		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 30, 2023										September 30, 2023	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Senior asset-backed securities related to Structured Program transactions										Senior asset-backed securities related to Structured Program transactions	$	413,850	$	—	$	(1,453)	$	412,397
U.S. agency residential mortgage-backed securities	U.S. agency residential mortgage-backed securities	$	259,748	$	—	$	(37,404)	$	222,344	U.S. agency residential mortgage-backed securities	263,568		—		(52,331)		211,237
U.S. agency securities	U.S. agency securities	93,448		6		(13,245)		80,209		U.S. agency securities	93,451		—		(18,372)		75,079
Commercial mortgage-backed securities		41,514		—		(4,623)		36,891
Mortgage-backed securities										Mortgage-backed securities	43,162		—		(7,013)		36,149
Other asset-backed securities related to Structured Program transactions (1)										Other asset-backed securities related to Structured Program transactions (1)	26,831		4,540		(309)		31,062
Other asset-backed securities	Other asset-backed securities	25,629		50		(739)		24,940		Other asset-backed securities	28,217		34		(787)		27,464
Asset-backed securities related to Structured Program transactions		4,784		8,309		—		13,093
Municipal securities	Municipal securities	3,272		—		(721)		2,551		Municipal securities	3,262		—		(981)		2,281

Total securities available for sale (1)		$	428,395	$	8,365	$	(56,732)	$	380,028
Total securities available for sale (2)										Total securities available for sale (2)	$	872,341	$	4,574	$	(81,246)	$	795,669


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

Municipal securities	Municipal securities	3,277		—		(834)		2,443		Municipal securities	3,277		—		(834)		2,443
Total securities available for sale ~~(1)~~(2)	Total securities available for sale ~~(1)~~(2)	$	399,668	$	9,424	$	(63,390)	$	345,702	Total securities available for sale ~~(1)~~(2)	$	399,668	$	9,424	$	(63,390)	$	345,702

(1) As of ~~March 31,~~September 30, 2023, $24.8 million of the other asset-backed securities related to Structured Program transactions at fair value are subject to restrictions on transfer pursuant to the Company’s obligations as a “sponsor” under the U.S. Risk Retention Rules.

(2) As of September 30, 2023 and December 31, 2022, includes ~~$356.9~~$341.6 million and $319.0 million, respectively, of fair value securities pledged as collateral.

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
March 31, 2023		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
September 30, 2023														September 30, 2023	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Senior asset-backed securities related to Structured Program transactions														Senior asset-backed securities related to Structured Program transactions	$	372,388	$	(1,453)	$	—	$	—	$	372,388	$	(1,453)
U.S. agency residential mortgage-backed securities	U.S. agency residential mortgage-backed securities	$	26,101	$	(1,125)	$	196,243	$	(36,279)	$	222,344	$	(37,404)	U.S. agency residential mortgage-backed securities	21,064		(892)		190,173		(51,439)		211,237		(52,331)
U.S. agency securities	U.S. agency securities	8,759		(241)		68,443		(13,004)		77,202		(13,245)		U.S. agency securities	2,960		(40)		72,119		(18,332)		75,079		(18,372)
Commercial mortgage-backed securities		14,602		(314)		22,289		(4,309)		36,891		(4,623)
Mortgage-backed securities														Mortgage-backed securities	16,278		(1,387)		19,871		(5,626)		36,149		(7,013)
Other asset-backed securities	Other asset-backed securities	4,021		(14)		9,433		(725)		13,454		(739)		Other asset-backed securities	14,112		(47)		8,233		(740)		22,345		(787)

Other asset-backed securities related to Structured Program transactions														Other asset-backed securities related to Structured Program transactions	21,486		(309)		—		—		21,486		(309)
Municipal securities	Municipal securities	—		—		2,551		(721)		2,551		(721)		Municipal securities	—		—		2,281		(981)		2,281		(981)
Total securities with unrealized losses	Total securities with unrealized losses	$	53,483	$	(1,694)	$	298,959	$	(55,038)	$	352,442	$	(56,732)	Total securities with unrealized losses	$	448,288	$	(4,128)	$	292,677	$	(77,118)	$	740,965	$	(81,246)

		Less than 12 months				12 months or longer				Total					Less than 12 months				12 months or longer				Total
December 31, 2022	December 31, 2022	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		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	$	111,843	$	(15,831)	$	102,584	$	(25,417)	$	214,427	$	(41,248)	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	50,352		(7,213)		24,042		(8,840)		74,394		(16,053)		U.S. agency securities	50,352		(7,213)		24,042		(8,840)		74,394		(16,053)
Commercial mortgage-backed securities		2,441		(229)		20,077		(4,241)		22,518		(4,470)
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	4,086		(73)		6,945		(712)		11,031		(785)		Other asset-backed securities	4,086		(73)		6,945		(712)		11,031		(785)
Municipal securities	Municipal securities	—		—		2,443		(834)		2,443		(834)		Municipal securities	—		—		2,443		(834)		2,443		(834)
Total securities with unrealized losses	Total securities with unrealized losses	$	168,722	$	(23,346)	$	156,091	$	(40,044)	$	324,813	$	(63,390)	Total securities with unrealized losses	$	168,722	$	(23,346)	$	156,091	$	(40,044)	$	324,813	$	(63,390)

There was no activity in the allowance for AFS securities during the third quarters and first ~~quarters~~nine months of 2023 and 2022. At ~~March 31,~~September 30, 2023, the majority of the Company’s AFS investment portfolio was comprised of senior asset-backed securities related to Structured Program transactions and U.S. agency-backed securities. Management considers ~~these~~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. ~~The~~Most of the remaining securities in an unrealized loss position in the Company’s AFS investment portfolio at ~~March 31,~~September 30, 2023, were rated investment grade. Substantially all of these unrealized losses in the AFS investment portfolio were caused by interest rate increases. The Company does not intend to sell the investment portfolio, and it is not more likely than not that it will be required to sell any investment before recovery of its amortized cost basis. For a description of management’s quarterly evaluation of AFS securities in an unrealized loss position, see “Part II – Item 8. Financial Statements and Supplementary Data – Note 1. Summary of Significant Accounting Policies” in our Annual Report.

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

The contractual maturities of AFS securities were as follows:


March 31, 2023		Amortized Cost		Fair Value		Weighted- average Yield(1)
September 30, 2023								September 30, 2023	Amortized Cost		Fair Value		Weighted- average Yield (1)

Due within 1 year:								Due within 1 year:

Senior asset-backed securities related to Structured Program transactions								Senior asset-backed securities related to Structured Program transactions	$	230	$	230
Total due within 1 year								Total due within 1 year	230		230		46.15	%
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	413,620		412,167
Other asset-backed securities related to Structured Program transactions								Other asset-backed securities related to Structured Program transactions	26,831		31,062
U.S. agency securities	U.S. agency securities	$	9,000	$	8,675			U.S. agency securities	9,000		8,567
Commercial mortgage-backed securities		1,026		939
Mortgage-backed securities								Mortgage-backed securities	1,774		1,556
Other asset-backed securities								Other asset-backed securities	441		443
U.S. agency residential mortgage-backed securities	U.S. agency residential mortgage-backed securities	4		4				U.S. agency residential mortgage-backed securities	4		3
Total due after 1 year through 5 years	Total due after 1 year through 5 years	10,030		9,618		3.33	%	Total due after 1 year through 5 years	451,670		453,798		3.17	%
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	15,848		14,642				U.S. agency securities	18,848		16,768
Other asset-backed securities	Other asset-backed securities	11,900		11,919				Other asset-backed securities	15,567		15,545

U.S. agency residential mortgage-backed securities	U.S. agency residential mortgage-backed securities	5,872		5,528				U.S. agency residential mortgage-backed securities	5,177		4,696
Commercial mortgage-backed securities		2,835		2,411
Mortgage-backed securities								Mortgage-backed securities	2,036		1,634
Municipal securities	Municipal securities	623		550				Municipal securities	621		516
Total due after 5 years through 10 years	Total due after 5 years through 10 years	37,078		35,050		3.81	%	Total due after 5 years through 10 years	42,249		39,159		4.27	%
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	253,872		216,812				U.S. agency residential mortgage-backed securities	258,387		206,538
U.S. agency securities	U.S. agency securities	68,600		56,892				U.S. agency securities	65,603		49,744
Commercial mortgage-backed securities		37,653		33,541
Mortgage-backed securities								Mortgage-backed securities	39,352		32,959
Other asset-backed securities	Other asset-backed securities	13,729		13,021				Other asset-backed securities	12,209		11,476
Municipal securities	Municipal securities	2,649		2,001				Municipal securities	2,641		1,765
Total due after 10 years	Total due after 10 years	376,503		322,267		2.67	%	Total due after 10 years	378,192		302,482		2.80	%
Asset-backed securities related to Structured Program transactions		4,784		13,093		99.40	%
Total securities available for sale	Total securities available for sale	$	428,395	$	380,028	3.87	%	Total securities available for sale	$	872,341	$	795,669	3.07	%

(1) The weighted-average yield is computed using the amortized cost at ~~March 31,~~September 30, 2023.

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

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

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

LendingClub records certain loans and leases held for investment (HFI) at amortized ~~cost, whereas certain~~cost. Other HFI and all held for sale (HFS) loans are recorded at fair value with the Company’s election of the fair value option. Net accrued interest receivable is excluded from the amortized cost basis of loans and leases HFI and is reported within “Other assets” on the Balance Sheet. Net accrued interest receivable related to loans and leases HFI at amortized cost was ~~$31.2~~$34.3 million and $27.9 million as of ~~March 31,~~September 30, 2023 and December 31, 2022, respectively.

Loans and Leases Held for Investment at Amortized Cost

The Company defines its loans and leases HFI portfolio segments as (i) consumer and (ii) commercial. The following table presents the components of each portfolio segment by class of financing receivable:


		March 31, 2023		December 31, 2022			September 30, 2023		December 31, 2022
Unsecured personal	Unsecured personal	$	4,319,148	$	3,866,373	Unsecured personal	$	4,094,748	$	3,866,373
Residential mortgages	Residential mortgages	197,728		199,601		Residential mortgages	186,510		199,601
Secured consumer	Secured consumer	212,748		194,634		Secured consumer	254,105		194,634

Total consumer loans held for investment	Total consumer loans held for investment	4,729,624		4,260,608		Total consumer loans held for investment	4,535,363		4,260,608
Equipment finance (1)	Equipment finance (1)	153,905		160,319		Equipment finance (1)	125,289		160,319
Commercial real estate	Commercial real estate	372,770		373,501		Commercial real estate	373,246		373,501
Commercial and industrial (2)	Commercial and industrial (2)	235,639		238,726		Commercial and industrial (2)	203,379		238,726
Total commercial loans and leases held for investment	Total commercial loans and leases held for investment	762,314		772,546		Total commercial loans and leases held for investment	701,914		772,546
Total loans and leases held for investment	Total loans and leases held for investment	5,491,938		5,033,154		Total loans and leases held for investment	5,237,277		5,033,154
Allowance for loan and lease losses	Allowance for loan and lease losses	(348,857)		(327,852)		Allowance for loan and lease losses	(350,495)		(327,852)
Loans and leases held for investment, net (3)	Loans and leases held for investment, net (3)	$	5,143,081	$	4,705,302	Loans and leases held for investment, net (3)	$	4,886,782	$	4,705,302

(1) Comprised of sales-type leases for equipment. See “Note ~~16.~~17. Leases” for additional information.

(2) Includes ~~$51.1~~$7.6 million and $67.0 million of pledged loans under the Paycheck Protection Program (PPP) as of ~~March 31,~~September 30, 2023 and December 31, 2022, respectively.

(3) As of ~~March 31,~~September 30, 2023 and December 31, 2022, the Company had ~~$278.6 million~~$4.0 billion and $283.6 million in loans pledged as collateral under the Federal Reserve Bank (FRB) Discount Window, respectively. In addition, as of ~~both March 31,~~September 30, 2023 and December 31, 2022, the Company had$511.2 million and $156.2 million in loans pledged to the Federal Home Loan Bank (FHLB) of Des ~~Moines.~~Moines, respectively.


March 31, 2023		Gross		ALLL		Net		Allowance Ratios (1)
September 30, 2023										September 30, 2023	Gross		ALLL		Net		Allowance Ratios (1)
Total consumer loans held for investment	Total consumer loans held for investment	$	4,729,624	$	333,546	$	4,396,078	7.1	%	Total consumer loans held for investment	$	4,535,363	$	336,288	$	4,199,075	7.4	%
Total commercial loans and leases held for investment	Total commercial loans and leases held for investment	762,314		15,311		747,003		2.0	%	Total commercial loans and leases held for investment	701,914		14,207		687,707		2.0	%
Total loans and leases held for investment	Total loans and leases held for investment	$	5,491,938	$	348,857	$	5,143,081	6.4	%	Total loans and leases held for investment	$	5,237,277	$	350,495	$	4,886,782	6.7	%


December 31, 2022	Gross		ALLL		Net		Allowance Ratios (1)
Total consumer loans held for investment	$	4,260,608	$	312,489	$	3,948,119	7.3	%
Total commercial loans and leases held for investment	772,546		15,363		757,183		2.0	%
Total loans and leases held for investment	$	5,033,154	$	327,852	$	4,705,302	6.5	%

(1) Calculated as the ratio of allowance for loan and lease losses (ALLL) to loans and leases HFI at amortized cost.

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

The activity in the ACL by portfolio segment was as follows:


		Three Months Ended March 31,														Three Months Ended September 30,
		2023						2022						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	$	312,489	$	15,363	$	327,852	$	128,812	$	15,577	$	144,389		Allowance for loan and lease losses, beginning of period	$	341,161	$	14,002	$	355,163	$	228,184	$	15,076	$	243,260
Credit loss expense for loans and leases held for investment	Credit loss expense for loans and leases held for investment	70,684		166		70,850		53,718		(1,490)		52,228			Credit loss expense for loans and leases held for investment	63,733		394		64,127		81,935		664		82,599

Charge-offs (1)	Charge-offs (1)	(52,212)		(351)		(52,563)		(9,017)		(72)		(9,089)			Charge-offs (1)	(73,644)		(534)		(74,178)		(22,944)		(784)		(23,728)
Recoveries	Recoveries	2,585		133		2,718		344		113		457			Recoveries	5,038		345		5,383		963		107		1,070
Allowance for loan and lease losses, end of period	Allowance for loan and lease losses, end of period	$	333,546	$	15,311	$	348,857	$	173,857	$	14,128	$	187,985		Allowance for loan and lease losses, end of period	$	336,288	$	14,207	$	350,495	$	288,138	$	15,063	$	303,201

Reserve for unfunded lending commitments, beginning of period	Reserve for unfunded lending commitments, beginning of period	$	18	$	1,860	$	1,878	$	—	$	1,231	$	1,231		Reserve for unfunded lending commitments, beginning of period	$	—	$	2,017	$	2,017	$	136	$	1,889	$	2,025
Credit loss expense for unfunded lending commitments	Credit loss expense for unfunded lending commitments	49		(315)		(266)		—		281		281			Credit loss expense for unfunded lending commitments	—		352		352		(78)		218		140
Reserve for unfunded lending commitments, end of period (2)	Reserve for unfunded lending commitments, end of period (2)	$	67	$	1,545	$	1,612	$	—	$	1,512	$	1,512		Reserve for unfunded lending commitments, end of period (2)	$	—	$	2,369	$	2,369	$	58	$	2,107	$	2,165



	Nine Months Ended September 30,
	2023						2022
	Consumer		Commercial		Total		Consumer		Commercial		Total
Allowance for loan and lease losses, beginning of period	$	312,489	$	15,363	$	327,852	$	128,812	$	15,577	$	144,389
Credit loss expense for loans and leases held for investment	201,291		(124)		201,167		203,967		913		204,880

Charge-offs (1)	(189,201)		(1,809)		(191,010)		(46,668)		(2,001)		(48,669)
Recoveries	11,709		777		12,486		2,027		574		2,601
Allowance for loan and lease losses, end of period	$	336,288	$	14,207	$	350,495	$	288,138	$	15,063	$	303,201

Reserve for unfunded lending commitments, beginning of period	$	18	$	1,860	$	1,878	$	—	$	1,231	$	1,231
Credit loss expense for unfunded lending commitments	(18)		509		491		58		876		934
Reserve for unfunded lending commitments, end of period (2)	$	—	$	2,369	$	2,369	$	58	$	2,107	$	2,165

(1) Unsecured personal loans are charged-off when a borrower is (i) contractually 120 days past due or (ii) two payments past due and has filed for bankruptcy or is deceased.

(2) Relates to ~~$117.2~~$89.5 million and ~~$109.5~~$144.0 million of unfunded commitments, associated primarily with the commercial loan portfolio, as of ~~March 31,~~September 30, 2023 and ~~March 31,~~ 2022, respectively.

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

The following table presents year-to-date gross charge-offs by origination year for the period presented:


		Three Months Ended March 31, 2023														Nine Months Ended September 30, 2023
		Gross Charge-Offs by Origination Year																Gross Charge-Offs by Origination Year
		2023		2022		2021		2020		2019		Prior		Total				2023		2022		2021		2020		2019		Prior		Total
Unsecured personal	Unsecured personal	$	—	$	25,413	$	26,123	$	—	$	—	$	—	$	51,536		Unsecured personal	$	7,730	$	106,835	$	72,330	$	—	$	—	$	—	$	186,895
Residential mortgages	Residential mortgages	—		—		—		—		—		—		—			Residential mortgages	—		—		—		—		—		—		—
Secured consumer	Secured consumer	—		468		208		—		—		—		676			Secured consumer	93		1,668		545		—		—		—		2,306

Total consumer loans held for investment	Total consumer loans held for investment	—		25,881		26,331		—		—		—		52,212			Total consumer loans held for investment	7,823		108,503		72,875		—		—		—		189,201
Equipment finance	Equipment finance	—		—		—		—		—		—		—			Equipment finance	—		—		—		—		—		—		—
Commercial real estate	Commercial real estate	—		—		—		—		—		—		—			Commercial real estate	—		—		—		—		—		—		—
Commercial and industrial	Commercial and industrial	—		—		—		—		318		33		351			Commercial and industrial	—		—		1,369		—		318		122		1,809
Total commercial loans and leases held for investment	Total commercial loans and leases held for investment	—		—		—		—		318		33		351			Total commercial loans and leases held for investment	—		—		1,369		—		318		122		1,809

Total loans and leases held for investment	Total loans and leases held for investment	$	—	$	25,881	$	26,331	$	—	$	318	$	33	$	52,563		Total loans and leases held for investment	$	7,823	$	108,503	$	74,244	$	—	$	318	$	122	$	191,010

The Company ~~modifies~~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.

1617

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

Consumer Lending Credit Quality Indicators

The Company evaluates the credit quality of its consumer loan portfolio based on the aging status of the loan and by payment activity. Loan delinquency reporting is based upon borrower payment activity relative to the contractual terms of the loan. The following tables present the classes of financing receivables within the consumer portfolio segment by credit quality indicator based on delinquency status and origination year:


March 31, 2023		Term Loans and Leases by Origination Year
September 30, 2023																September 30, 2023	Term Loans and Leases by Origination Year
		2023		2022		2021		2020		2019		Prior		Total			2023		2022		2021		2020		2019		Prior		Total
Unsecured personal	Unsecured personal															Unsecured personal
Current	Current	$	893,506	$	2,538,186	$	821,772	$	—	$	—	$	—	$	4,253,464	Current	$	1,500,780	$	1,954,955	$	552,491	$	—	$	—	$	—	$	4,008,226
30-59 days past due	30-59 days past due	1,142		16,076		9,723		—		—		—		26,941		30-59 days past due	6,728		18,780		7,968		—		—		—		33,476
60-89 days past due	60-89 days past due	—		12,520		7,239		—		—		—		19,759		60-89 days past due	4,159		15,830		6,679		—		—		—		26,668
90 or more days past due	90 or more days past due	—		10,782		8,202		—		—		—		18,984		90 or more days past due	4,409		16,987		8,002		—		—		—		29,398
Total unsecured personal(1)	Total unsecured personal(1)	894,648		2,577,564		846,936		—		—		—		4,319,148		Total unsecured personal(1)	1,516,076		2,006,552		575,140		—		—		—		4,097,768
Residential mortgages	Residential mortgages															Residential mortgages
Current	Current	45		50,069		57,970		30,654		21,517		37,076		197,331		Current	—		48,934		56,128		30,204		20,403		30,678		186,347
30-59 days past due	30-59 days past due	—		—		—		—		—		230		230		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	—		—		—		—		—		167		167		90 or more days past due	—		—		—		—		—		163		163
Total residential mortgages	Total residential mortgages	45		50,069		57,970		30,654		21,517		37,473		197,728		Total residential mortgages	—		48,934		56,128		30,204		20,403		30,841		186,510
Secured consumer	Secured consumer															Secured consumer
Current	Current	36,276		137,912		33,669		—		2,522		—		210,379		Current	114,186		109,327		25,434		—		2,481		—		251,428
30-59 days past due	30-59 days past due	18		1,271		633		—		—		—		1,922		30-59 days past due	199		1,188		291		—		—		—		1,678
60-89 days past due	60-89 days past due	—		170		90		—		—		—		260		60-89 days past due	45		484		261		—		—		—		790
90 or more days past due	90 or more days past due	—		139		48		—		—		—		187		90 or more days past due	—		149		60		—		—		—		209
Total secured consumer	Total secured consumer	36,294		139,492		34,440		—		2,522		—		212,748		Total secured consumer	114,430		111,148		26,046		—		2,481		—		254,105

Total consumer loans held for investment	Total consumer loans held for investment	$	930,987	$	2,767,125	$	939,346	$	30,654	$	24,039	$	37,473	$	4,729,624	Total consumer loans held for investment	$	1,630,506	$	2,166,634	$	657,314	$	30,204	$	22,884	$	30,841	$	4,538,383

(1) Excludes cumulative basis adjustment for loans designated in fair value hedges under the portfolio layer method. As of September 30, 2023, the basis adjustment totaled $3.0 million and represents a reduction to the amortized cost of the hedged loans. See “Note 8. Derivative Instruments and Hedging Activities” for additional information.

1718

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)


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






Total consumer loans held for investment	$	3,064,021	$	1,102,517	$	31,465	$	24,226	$	4,546	$	33,833	$	4,260,608

Commercial Lending Credit Quality Indicators

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

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

Special Mention – Loans and leases with a potential weakness that ~~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.

~~LENDINGCLUB CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

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

~~(Unaudited)~~

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.

~~The following tables present the classes of financing receivables within the commercial portfolio segment by risk rating and origination year:~~

March 31, 2023 Term Loans and Leases by Origination Year
2023 2022 2021 2020 2019 Prior Total
Equipment finance
Pass $ 3,920 $ 56,720 $ 35,474 $ 22,901 $ 14,527 $ 14,135 $ 147,677
Special mention — — 1,989 — 3,468 — 5,457
Substandard — — — 771 — — 771
Doubtful — — — — — — —
Loss — — — — — — —
Total equipment finance 3,920 56,720 37,463 23,672 17,995 14,135 153,905
Commercial real estate
Pass 9,937 95,093 44,483 44,411 52,521 85,428 331,873
Special mention — — — — 260 10,021 10,281
Substandard — 3,904 6,848 8,415 241 10,582 29,990
Doubtful — — — — — — —
Loss — — — — 68 558 626
Total commercial real estate 9,937 98,997 51,331 52,826 53,090 106,589 372,770
Commercial and industrial
Pass 16,071 71,533 83,592 22,658 10,950 14,107 218,911
Special mention — 787 30 112 439 647 2,015
Substandard — — 4,589 732 3,861 3,887 13,069
Doubtful — — — — — 286 286
Loss — — — — — 1,358 1,358
Total commercial and industrial (1)
16,071 72,320 88,211 23,502 15,250 20,285 235,639
Total commercial loans and leases held for investment $ 29,928 $ 228,037 $ 177,005 $ 100,000 $ 86,335 $ 141,009 $ 762,314

~~(1)~~ ~~Includes $51.1 million of PPP loans.~~

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

The following tables present the classes of financing receivables within the commercial portfolio segment by risk rating and origination year:


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

(1) Represents loan balances guaranteed by the Small Business Association (SBA).

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

(1)~~Includes $67.0 million of PPP loans.~~ Represents loan balances guaranteed by the SBA.

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


March 31, 2023		30-59 Days		60-89 Days		90 or More Days		Total
September 30, 2023										September 30, 2023	30-59 Days		60-89 Days		90 or More Days		Total
Equipment finance	Equipment finance	$	3,020	$	—	$	771	$	3,791	Equipment finance	$	—	$	3,150	$	—	$	3,150
Commercial real estate	Commercial real estate	8,251		2,112		103		10,466		Commercial real estate	4,493		434		1,618		6,545
Commercial and industrial (1)	Commercial and industrial (1)	941		—		1,608		2,549		Commercial and industrial (1)	1,514		29		1,515		3,058
Total commercial loans and leases held for investment	Total commercial loans and leases held for investment	$	12,212	$	2,112	$	2,482	$	16,806	Total commercial loans and leases held for investment	$	6,007	$	3,613	$	3,133	$	12,753


December 31, 2022	30-59 Days		60-89 Days		90 or More Days		Total
Equipment finance	$	3,172	$	—	$	859	$	4,031
Commercial real estate	—		102		—		102
Commercial and industrial (1)	—		—		1,643		1,643
Total commercial loans and leases held for investment	$	3,172	$	102	$	2,502	$	5,776

(1) Past due PPP loans are excluded from the tables.

Nonaccrual Assets

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

2021

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

The following table presents nonaccrual loans and leases:


		March 31, 2023				December 31, 2022				September 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	$	18,986	$	—	$	16,255	$	—		Unsecured personal	$	29,398	$	—	$	16,255	$	—
Residential mortgages	Residential mortgages	326		326		331		331			Residential mortgages	316		316		331		331
Secured consumer	Secured consumer	187		—		188		—			Secured consumer	209		—		188		—

Total nonaccrual consumer loans held for investment	Total nonaccrual consumer loans held for investment	19,499		326		16,774		331			Total nonaccrual consumer loans held for investment	29,923		316		16,774		331

Equipment finance	Equipment finance	771		—		898		39			Equipment finance	2,733		—		898		39
Commercial real estate	Commercial real estate	9,290		1,039		1,018		1,018			Commercial real estate	10,113		2,431		1,018		1,018
Commercial and industrial	Commercial and industrial	8,832		2,002		16,137		1,229			Commercial and industrial	7,230		1,892		16,137		1,229
Total nonaccrual commercial loans and leases held for investment(3)	Total nonaccrual commercial loans and leases held for investment(3)	18,893		3,041		18,053		2,286			Total nonaccrual commercial loans and leases held for investment(3)	20,076		4,323		18,053		2,286

Total nonaccrual loans and leases held for investment	Total nonaccrual loans and leases held for investment	$	38,392	$	3,367	$	34,827	$	2,617		Total nonaccrual loans and leases held for investment	$	49,999	$	4,639	$	34,827	$	2,617

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

(2) Subset of total nonaccrual loans and leases.

(3) Includes $12.7 million and $4.9 million in loan balances guaranteed by the SBA as of September 30, 2023 and December 31, 2022, respectively.


		March 31, 2023				December 31, 2022				September 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	$	19,499	0.4	%	$	16,774	0.4	%		Total nonaccrual consumer loans held for investment	$	29,923	0.7	%	$	16,774	0.4	%
Total nonaccrual commercial loans and leases held for investment	Total nonaccrual commercial loans and leases held for investment	18,893		2.5	%	18,053		2.3	%		Total nonaccrual commercial loans and leases held for investment	20,076		2.9	%	18,053		2.3	%
Total nonaccrual loans and leases held for investment	Total nonaccrual loans and leases held for investment	$	38,392	0.7	%	$	34,827	0.7	%		Total nonaccrual loans and leases held for investment	$	49,999	1.0	%	$	34,827	0.7	%

(1) Calculated as the ratio of nonaccruing loans and leases to loans and leases HFI at amortized cost.

Collateral-Dependent Assets

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

2122

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

6. Securitizations and Variable Interest Entities

VIE Assets and Liabilities

The following ~~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 of loans and holding senior asset-backed securities or subordinated ~~residual~~ interests in the VIEs. Additionally, the assets and liabilities in the ~~tables~~table below exclude intercompany balances that ~~eliminate~~were eliminated in ~~consolidation:~~consolidation.

March 31, 2023 Consolidated VIEs Unconsolidated VIEs Total
Assets
Restricted cash $ 7,195 $ — $ 7,195
Securities available for sale at fair value — 13,093 13,093
Loans held for investment at fair value 2,663 — 2,663
Retail and certificate loans held for investment at fair value 1,316 — 1,316
Other assets 190 9,412 9,602
Total assets $ 11,364 $ 22,505 $ 33,869
Liabilities
Borrowings $ 5,978 $ — $ 5,978
Retail notes, certificates and secured borrowings at fair value 1,316 — 1,316
Other liabilities 19 — 19
Total liabilities 7,313 — 7,313
Total net assets $ 4,051 $ 22,505 $ 26,556


December 31, 2022		Consolidated VIEs		Unconsolidated VIEs		Total
									September 30, 2023						December 31, 2022
									Consolidated		Unconsolidated		Total		Consolidated		Unconsolidated		Total
Assets	Assets							Assets

Restricted cash	Restricted cash	$	8,048	$	—	$	8,048	Restricted cash	$	3,813	$	—	$	3,813	$	8,048	$	—	$	8,048
Securities available for sale at fair value	Securities available for sale at fair value	—		17,717		17,717		Securities available for sale at fair value	—		443,460		443,460		—		17,717		17,717

Loans held for investment at fair value	Loans held for investment at fair value	3,994		—		3,994		Loans held for investment at fair value	1,095		—		1,095		3,994		—		3,994
Retail and certificate loans held for investment at fair value	Retail and certificate loans held for investment at fair value	1,946		—		1,946		Retail and certificate loans held for investment at fair value	637		—		637		1,946		—		1,946
Other assets	Other assets	206		10,464		10,670		Other assets	19		17,161		17,180		206		10,464		10,670
Total assets	Total assets	$	14,194	$	28,181	$	42,375	Total assets	$	5,564	$	460,621	$	466,185	$	14,194	$	28,181	$	42,375
Liabilities	Liabilities							Liabilities

Borrowings	Borrowings	$	8,085	$	—	$	8,085	Borrowings	$	3,329	$	—	$	3,329	$	8,085	$	—	$	8,085
Retail notes, certificates and secured borrowings at fair value	Retail notes, certificates and secured borrowings at fair value	1,946		—		1,946		Retail notes, certificates and secured borrowings at fair value	637		—		637		1,946		—		1,946
Other liabilities	Other liabilities	29		—		29		Other liabilities	5		980		985		29		—		29
Total liabilities	Total liabilities	10,060		—		10,060		Total liabilities	3,971		980		4,951		10,060		—		10,060
Total net assets		$	4,134	$	28,181	$	32,315
Total net assets (maximum loss exposure)								Total net assets (maximum loss exposure)	$	1,593	$	459,641	$	461,234	$	4,134	$	28,181	$	32,315

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

2223

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 remaining principal balance of loans held by unconsolidated VIEs was $356.6 million and $457.8 million as of March 31, 2023 and December 31, 2022, respectively. For unconsolidated VIEs, “Total net assets” indicates the Company’s maximum exposure to loss, however, the balance continues to decline due to the ongoing paydown of loan balances from prior Structured Program transactions.Maximum exposure represents estimated loss that would be incurred under severe, hypothetical circumstances, for which the Company believes the possibility is extremely remote, such as where the value of interests and any associated collateral declines to zero. Accordingly, this required disclosure is not an indication of expected losses.

The following table summarizes activity related to ~~the~~ unconsolidated VIEs ~~with~~where the transfers were accounted for as a sale on the Company’s financial statements:

Three Months Ended
March 31,


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022


Fair value of consideration received:
Cash	$	40,994	$	—	$	59,045	$	5,320
Asset-backed securities retained	301,602		—		454,831		2,180
Other assets (liabilities)	3,790		—		6,089		(3,794)
Total consideration	346,386		—		519,965		3,706
Deconsolidation of debt	—		—		—		36,072
Fair value of loans sold	(343,142)		—		(514,701)		(39,519)
Gain on sales of loans (1)	$	3,244	$	—	$	5,264	$	259

Cash proceeds from continuing involvement:
Servicing and other administrative fees	$	1,234	$	1,782	$	3,110	$	7,294


Interest received on asset-backed securities retained	$	5,142	$	1,294	$	8,736	$	6,373

(1) Consists primarily of servicing assets recognized at the time of sale, less any transaction costs, and excludes origination fees and fair value adjustments recognized prior to the sale. Prior period amounts have been reclassified to conform to the current period presentation.

~~2022~~

~~Principal derecognized from loans securitized or sold~~

~~41,023~~

~~Net gains recognized from loans securitized or sold~~

~~259~~

~~Fair value of asset-backed securities related to Structured Program transactions retained upon settlement~~

~~2,180~~

~~Cash proceeds~~

~~5,800~~

~~Proceeds from sale of securities by consolidated VIE~~

~~5,320~~

~~There was no activity~~Beginning in the second quarter of 2023, the Company resumed its sponsoring of Structured Program transactions in which it retains the senior securities at a contractual interest rate, in addition to the amount required pursuant to the U.S. Risk Retention Rules, and sells the residual certificates. See “Note 4. Securities Available for Sale” for the securities retained in the Company’s investment portfolio related to ~~unconsolidated VIEs during the first quarter of 2023.~~such transactions.

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

As of ~~March 31,~~September 30, 2023, the aggregate unpaid principal balance ~~of the off-balance sheet loans related to~~held by unconsolidated VIEs was ~~$303.1~~$678.5 million, of which ~~$10.6~~$7.7 million was attributable to off-balance sheet loans that were 31 days or more past due. As of December 31, 2022, the aggregate unpaid principal balance ~~of the off-balance sheet loans related to~~held by unconsolidated VIEs was $433.5 million, of which $14.8 million was attributable to off-balance sheet loans that were 31 days or more past due. For such loans, the Company would only experience a loss if it was required to repurchase a loan due to a breach in representations and warranties associated with its loan sale or servicing contracts.

~~LENDINGCLUB CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

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

~~(Unaudited)~~

7. Fair Value of Assets and Liabilities

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

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

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

March 31, 2023 Level 1 Inputs Level 2 Inputs Level 3 Inputs Balance at
Fair Value
Assets:
Loans held for sale at fair value $ — $ — $ 44,647 $ 44,647
Loans held for investment at fair value — — 748,618 748,618
Retail and certificate loans held for investment at fair value — — 38,855 38,855
Securities available for sale:
U.S. agency residential mortgage-backed securities — 222,344 — 222,344
U.S. agency securities — 80,209 — 80,209
Commercial mortgage-backed securities — 36,891 — 36,891
Other asset-backed securities — 24,940 — 24,940
Asset-backed securities related to Structured Program transactions — 2,696 10,397 13,093
Municipal securities — 2,551 — 2,551
Total securities available for sale — 369,631 10,397 380,028
Servicing assets — — 89,241 89,241
Other assets — 3,885 — 3,885
Total assets $ — $ 373,516 $ 931,758 $ 1,305,274
Liabilities:
Borrowings $ — $ — $ 5,978 $ 5,978
Retail notes, certificates and secured borrowings — — 38,855 38,855
Other liabilities — 3,885 2,235 6,120
Total liabilities $ — $ 3,885 $ 47,068 $ 50,953

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

Financial Instruments, Assets and Liabilities Recorded at Fair Value

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


September 30, 2023	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Balance at Fair Value
Assets:
Loans held for sale at fair value	$	—	$	—	$	362,789	$	362,789
Loans held for investment at fair value	—		—		326,299		326,299
Retail and certificate loans held for investment at fair value	—		—		18,118		18,118
Securities available for sale:
Senior asset-backed securities related to Structured Program transactions	—		—		412,397		412,397
U.S. agency residential mortgage-backed securities	—		211,237		—		211,237
U.S. agency securities	—		75,079		—		75,079
Mortgage-backed securities	—		36,149		—		36,149
Other asset-backed securities related to Structured Program transactions	—		—		31,062		31,062
Other asset-backed securities	—		27,464		—		27,464

Municipal securities	—		2,281		—		2,281

Total securities available for sale	—		352,210		443,459		795,669
Servicing assets	—		—		81,760		81,760
Other assets	—		8,965		—		8,965
Total assets	$	—	$	361,175	$	1,232,425	$	1,593,600

Liabilities:
Borrowings	$	—	$	—	$	3,329	$	3,329
Retail notes, certificates and secured borrowings	—		—		18,118		18,118
Other liabilities	—		5,482		4,614		10,096
Total liabilities	$	—	$	5,482	$	26,061	$	31,543

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

Municipal securities	Municipal securities	—		2,443		—		2,443		Municipal securities	—		2,443		—		2,443

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

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

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

~~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

AsIn the third quarter of ~~both March 31,~~ 2023, ~~and December 31, 2022,~~as part of its new extended seasoning program, the Company began accumulating loans into the HFS portfolio to meet investor demand for seasoned loans. Prior year comparative disclosures for the tables below are not presented as the comparability between periods would not be meaningful given that the current period relates primarily to the new extended seasoning program whereas in previous periods the majority of HFS loans ~~HFS~~ were sold shortly after origination and at committed prices. ~~Therefore,~~As such, the Company iswas generally not exposed to fluctuations in the fair value ~~fluctuations~~of HFS loans in the prior period.

LENDINGCLUB CORPORATION

Notes to ~~the committed prices~~Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as ~~a result of adverse changes in key assumptions.~~Noted)

(Unaudited)

~~Fair Value Reconciliation~~

Significant Unobservable Inputs

The following ~~tables present additional~~table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 loans HFS onat fair value:


	September 30, 2023
	Minimum		Maximum		Weighted- Average
Discount rates	8.8	%	11.2	%	9.6	%
Net cumulative expected loss rates (1)	3.5	%	23.4	%	10.9	%
Cumulative expected prepayment rates (1)	27.7	%	37.3	%	32.5	%

(1) Expressed as a ~~recurring basis:~~percentage of the acquired principal balance of the loan.

Significant Recurring Level 3 Fair Value Input Sensitivity

The sensitivity of loans HFS at fair value to adverse changes in key assumptions are as follows:

September 30, 2023

~~Balance~~Loans held for sale at ~~December 31, 2022~~

fair value

~~110,400~~362,789

~~Originations and purchases~~Expected weighted-average life (in years)

1.5

~~1,205,029~~ Discount rates:

~~Sales~~100 basis point increase

~~(1,247,246)~~(4,628)

~~Principal payments~~200 basis point increase

~~(6,465)~~(9,160)

~~Fair value adjustments recorded in earnings~~Expected credit loss rates on underlying loans:

~~(17,071)~~

~~Balance at March 31, 2023~~

~~44,647~~

~~Balance at December 31, 2021~~

~~142,370~~

~~Originations and purchases~~10% increase

~~2,270,925~~ (4,292)

~~Sales~~20% increase

~~(2,257,701)~~(8,530)

~~Principal payments~~

~~(13,336)~~

~~Fair value adjustments recorded in earnings~~Expected prepayment rates:

~~14,472~~

~~Balance at March 31, 2022~~

10% increase

~~156,730~~ (660)

20% increase

(1,244)

Fair Value Reconciliation

The following table presents additional information about Level 3 loans HFS on a recurring basis:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023			2023
Fair value at beginning of period	$	250,361		$	110,400
Originations and purchases	1,107,771			3,584,918
Sales	(950,451)			(3,435,949)
Principal payments	(22,372)			(33,972)
Transfers	3,299			195,106
Fair value adjustments recorded in earnings	(25,819)			(57,714)
Fair value at end of period	$	362,789		$	362,789

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

Loans Held for Investment at Fair Value

Significant Unobservable Inputs

The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 loans HFI at fair value:


		March 31, 2023						December 31, 2022							September 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	8.7	%	16.9	%	12.7	%	8.8	%	17.1	%	12.7	%	Discount rates	8.5	%	16.5	%	12.8	%	8.8	%	17.1	%	12.7	%
Net cumulative expected loss rates (1)	Net cumulative expected loss rates (1)	2.1	%	9.9	%	5.9	%	2.1	%	9.8	%	5.7	%	Net cumulative expected loss rates (1)	2.5	%	11.0	%	7.1	%	2.1	%	9.8	%	5.7	%
Cumulative expected prepayment rates (1)	Cumulative expected prepayment rates (1)	21.1	%	29.7	%	26.2	%	26.2	%	35.3	%	30.8	%	Cumulative expected prepayment rates (1)	20.6	%	28.5	%	25.2	%	26.2	%	35.3	%	30.8	%

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

Significant Recurring Level 3 Fair Value Input Sensitivity

The sensitivity of loans HFI at fair value to adverse changes in key assumptions are as follows:


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

Fair Value Reconciliation

The following table presents additional information about Level 3 loans HFI at fair value on a recurring basis:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Fair value at beginning of period	$	404,119	$	20,583	$	925,938	$	21,240
Purchases	112		136		4,149		150

Principal payments	(76,495)		(5,913)		(419,233)		(17,660)
Transfers	(3,472)		—		(195,106)		11,966
Interest income accretion and fair value adjustments recorded in earnings	2,035		251		10,551		(639)
Fair value at end of period	$	326,299	$	15,057	$	326,299	$	15,057

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:~~
March 31, 2023 December 31, 2022
Loans held for investment at fair value $ 748,618 $ 925,938
Expected weighted-average life (in years) 0.9 0.9
Discount rates:
100 basis point increase $ (5,987) $ (7,471)
200 basis point increase $ (11,885) $ (14,830)
Expected credit loss rates on underlying loans:
10% increase $ (4,350) $ (5,574)
20% increase $ (8,869) $ (11,307)
Expected prepayment rates:
10% increase $ (3,336) $ (4,311)
20% increase $ (6,259) $ (7,480)

~~Fair Value Reconciliation~~

~~The following table presents additional information about Level 3 loans HFI at fair value on a recurring basis:~~

~~Balance at December 31, 2022~~

~~925,938~~

~~Purchases~~

~~4,037~~

~~Principal payments~~

~~(186,451)~~

~~Interest income accretion and fair value adjustments recorded in earnings~~

~~5,094~~

~~Balance at March 31, 2023~~

~~748,618~~

~~Balance at December 31, 2021~~

~~21,240~~

~~Purchases~~

~~Principal payments~~

~~(6,023)~~

~~Interest income accretion and fair value adjustments recorded in earnings~~

~~153~~

~~Balance at March 31, 2022~~

~~15,384~~

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

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

Asset-Backed Securities Related to Structured Program Transactions

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

Senior Asset-Backed Securities Related to Structured Program Transactions

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

The following table presents additional information about Level 3 senior asset-backed securities related to Structured Program transactions measured at fair value on a recurring basis:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023		2023
Fair value at beginning of period	$	142,785	$	—
Additions	284,704		429,384

Cash received	(14,244)		(15,534)
Change in unrealized loss	(848)		(1,453)

Fair value at end of period	$	412,397	$	412,397

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

Other Asset-Backed Securities Related to Structured Program Transactions

Significant Unobservable Inputs

The following table presents quantitative information about the significant unobservable inputs used for the

Company’s Level 3 fair value measurements for other asset-backed securities related to Structured Program transactions:


	September 30, 2023
	Minimum		Maximum		Weighted- Average
Discount rates	8.8	%	11.2	%	9.5	%
Net cumulative expected loss rates (1)	3.6	%	23.0	%	9.3	%
Cumulative expected prepayment rates (1)	27.7	%	37.3	%	32.7	%

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

Significant Recurring Fair Value Input Sensitivity

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


	September 30, 2023

Fair value of interests held	$	31,062
Expected weighted-average life (in years)	1.5
Discount rates
100 basis point increase	$	(369)
200 basis point increase	$	(735)
Expected loss rates
10% increase	$	(523)
20% increase	$	(1,058)
Expected prepayment rates
10% increase	$	(190)
20% increase	$	(425)

Fair Value Reconciliation

The following table presents additional information about Level 3 other asset-backed securities related to Structured Program transactions measured at fair value on a recurring basis:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023		2023
Fair value at beginning of period	$	16,980	$	12,469
Additions	17,190		25,970

Cash received	(2,812)		(7,081)
Change in unrealized loss	(296)		(296)

Fair value at end of period	$	31,062	$	31,062

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

Servicing Assets

Significant Unobservable Inputs

The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for servicing assets relating to loans sold to investors:


		March 31, 2023						December 31, 2022							September 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	%	10.1	%	Discount rates	8.7	%	17.3	%	11.6	%	7.5	%	16.4	%	10.1	%
Net cumulative expected loss rates (1)	Net cumulative expected loss rates (1)	2.0	%	37.3	%	16.0	%	2.1	%	36.7	%	15.6	%	Net cumulative expected loss rates (1)	3.5	%	37.7	%	15.6	%	2.1	%	36.7	%	15.6	%
Cumulative expected prepayment rates (1)	Cumulative expected prepayment rates (1)	17.8	%	47.5	%	32.3	%	15.8	%	47.2	%	35.9	%	Cumulative expected prepayment rates (1)	18.5	%	44.6	%	32.7	%	15.8	%	47.2	%	35.9	%
Total market servicing rates (% per annum on outstanding principal balance) (2)	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:


		March 31, 2023			December 31, 2022				September 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%	$	(10,401)		$	(10,505)		Servicing rate increase by 0.10%	$	(8,759)		$	(10,505)
Servicing rate decrease by 0.10%	Servicing rate decrease by 0.10%	$	10,401		$	10,505		Servicing rate decrease by 0.10%	$	8,759		$	10,505

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


		March 31, 2023		December 31, 2022			September 30, 2023		December 31, 2022
Fair value of servicing assets	Fair value of servicing assets	$	89,241	$	84,308	Fair value of servicing assets	$	81,760	$	84,308
Discount rates	Discount rates					Discount rates
100 basis point increase	100 basis point increase	$	(768)	$	(726)	100 basis point increase	$	(695)	$	(726)
200 basis point increase	200 basis point increase	$	(1,536)	$	(1,451)	200 basis point increase	$	(1,391)	$	(1,451)
Expected loss rates	Expected loss rates					Expected loss rates
10% increase	10% increase	$	(1,175)	$	(1,037)	10% increase	$	(1,026)	$	(1,037)
20% increase	20% increase	$	(2,351)	$	(2,074)	20% increase	$	(2,051)	$	(2,074)
Expected prepayment rates	Expected prepayment rates					Expected prepayment rates
10% increase	10% increase	$	(1,772)	$	(1,994)	10% increase	$	(1,720)	$	(1,994)
20% increase	20% increase	$	(3,544)	$	(3,989)	20% increase	$	(3,440)	$	(3,989)

2831

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

Fair Value Reconciliation

The following table presents additional information about Level 3 servicing assets measured at fair value on a recurring basis:


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022				2023		2022		2023		2022
Fair value at beginning of period	Fair value at beginning of period	$	84,308	$	67,726		Fair value at beginning of period	$	85,387	$	79,427	$	84,308	$	67,726
Issuances (1)	Issuances (1)	14,125		22,365			Issuances (1)	11,568		22,319		39,269		73,774
Change in fair value, included in Marketplace revenue	Change in fair value, included in Marketplace revenue	(12,576)		(16,979)			Change in fair value, included in Marketplace revenue	(12,100)		(14,689)		(41,750)		(52,702)
Other net changes	Other net changes	3,384		(1,000)			Other net changes	(3,095)		(539)		(67)		(2,280)
Fair value at end of period	Fair value at end of period	$	89,241	$	72,112		Fair value at end of period	$	81,760	$	86,518	$	81,760	$	86,518

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

Financial Instruments, Assets and Liabilities Not Recorded at Fair Value

The following tables present the fair value hierarchy for financial instruments, assets, and liabilities not recorded at fair value:


March 31, 2023		Carrying Amount		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Balance at Fair Value
September 30, 2023												September 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	$	5,143,081	$	—	$	—	$	5,374,911	$	5,374,911	Loans and leases held for investment, net	$	4,886,782	$	—	$	—	$	5,060,962	$	5,060,962

Other assets	Other assets	38,595		—		37,407		1,530		38,937		Other assets	39,727		—		38,885		1,118		40,003
Total assets	Total assets	$	5,181,676	$	—	$	37,407	$	5,376,441	$	5,413,848	Total assets	$	4,926,509	$	—	$	38,885	$	5,062,080	$	5,100,965
Liabilities:	Liabilities:											Liabilities:
Deposits (1)	Deposits (1)	$	1,110,114	$	—	$	—	$	1,110,114	$	1,110,114	Deposits (1)	$	1,169,593	$	—	$	—	$	1,164,915	$	1,164,915

Borrowings	Borrowings	47,002		—		1,392		45,610		47,002		Borrowings	7,388		—		27		7,361		7,388

Other liabilities	Other liabilities	69,808		—		37,753		32,055		69,808		Other liabilities	62,572		—		37,270		25,302		62,572
Total liabilities	Total liabilities	$	1,226,924	$	—	$	39,145	$	1,187,779	$	1,226,924	Total liabilities	$	1,239,553	$	—	$	37,297	$	1,197,578	$	1,234,875


December 31, 2022	Carrying Amount		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Balance at Fair Value
Assets:

Loans and leases held for investment, net	$	4,705,302	$	—	$	—	$	4,941,825	$	4,941,825
Other assets	36,646		—		35,300		1,397		36,697

Total assets	$	4,741,948	$	—	$	35,300	$	4,943,222	$	4,978,522
Liabilities:
Deposits (1)	$	860,808	$	—	$	—	$	860,808	$	860,808
Borrowings	66,773		—		2,619		64,154		66,773

Other liabilities	62,247		—		30,311		31,936		62,247
Total liabilities	$	989,828	$	—	$	32,930	$	956,898	$	989,828

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

2932

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

8. Derivative Instruments and Hedging Activities

Credit Derivatives

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

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

Hedging

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

The table below presents the notional and gross fair value amounts of the Company’s derivatives used for hedging as of September 30, 2023:



	Notional		Gross Derivative Asset Fair Value (1)
Derivatives used for hedging:
Interest rate swaps	$	1,500,000	$	3,483

(1) Recorded in “Other assets” on the Balance Sheet.

The following table summarizes the gains (losses) recognized on the Company’s fair value hedges for both the three and nine months ended September 30, 2023:




Gains (losses) recognized on:
Hedged item	$	(3,020)
Derivatives used for hedging	3,483
Interest settlement on derivative (1)	883
Total gains on fair value hedges (2)	$	1,346

(1) Includes accrued interest receivable and accrued interest payable.

(2) Recorded in “Interest and fees on loans held for investment at amortized cost” on the Income Statement.

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

8.The following table presents the cumulative basis adjustments for fair value hedges as of September 30, 2023:


Balance Sheet Line Item	Carrying Amount of Closed Portfolio (1)		Cumulative Fair Value Adjustment to Hedged Item
Loans and leases held for investment at amortized cost	$	3,586,394	$	(3,020)

(1) Represents the amortized cost of the total closed portfolio of loans designated in a portfolio method hedge relationship in which the hedged item is a stated layer that is expected to be remaining at the end of the hedging relationship. At September 30, 2023, the amortized cost of loans designated as the hedged item in the portfolio layer hedging relationship was $1.5 billion.

9. Property, Equipment and Software, Net

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


		March 31, 2023		December 31, 2022			September 30, 2023		December 31, 2022
Software (1)	Software (1)	$	193,061	$	174,360	Software (1)	$	206,311	$	174,360
Leasehold improvements	Leasehold improvements	31,214		31,214		Leasehold improvements	31,249		31,214
Computer equipment	Computer equipment	24,256		27,410		Computer equipment	23,753		27,410
Furniture and fixtures	Furniture and fixtures	6,088		6,088		Furniture and fixtures	6,088		6,088
Total property, equipment and software	Total property, equipment and software	254,619		239,072		Total property, equipment and software	267,401		239,072
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(110,578)		(102,599)		Accumulated depreciation and amortization	(107,633)		(102,599)
Total property, equipment and software, net	Total property, equipment and software, net	$	144,041	$	136,473	Total property, equipment and software, net	$	159,768	$	136,473

(1) Includes ~~$59.9~~$71.7 million and $43.7 million of development in progress for internally-developed software and ~~$3.6~~$4.7 million and $3.0 million of development in progress to customize purchased software as of ~~March 31,~~September 30, 2023 and December 31, 2022, respectively.

Depreciation and amortization expense on property, equipment and software was ~~$11.2~~$10.3 million and ~~$9.5~~$32.1 million for the third quarter and first ~~quarters~~nine months of 2023, respectively. Depreciation and amortization expense on property, equipment and software was $9.5 million and $28.3 million for the third quarter and first nine months of 2022, respectively.

9.10. Goodwill and Intangible Assets

Goodwill

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

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

Intangible Assets

Intangible assets consist of customer relationships. Intangible assets, net of accumulated amortization, are included in “Other assets” on the Balance Sheet. The gross and net carrying values and accumulated amortization were as follows:


		March 31, 2023		December 31, 2022			September 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	(39,299)		(38,166)		Accumulated amortization	(41,349)		(38,166)
Net carrying value	Net carrying value	$	15,201	$	16,334	Net carrying value	$	13,151	$	16,334

The customer relationship intangible assets are amortized on an accelerated basis from ten to fourteen years. Amortization expense associated with intangible assets for the third quarter and first ~~quarters~~nine months of 2023 was $1.0 million and $3.2 million, respectively. Amortization expense associated with intangible assets for the third quarter and first nine months of 2022 was ~~$1.1~~$1.2 million and ~~$1.3~~$3.7 million, respectively. There was no impairment loss for the third quarters and first ~~quarters~~nine months of 2023 and 2022.

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


2023	$	1,015
2024	3,549
2025	2,901
2026	2,252
2027	1,603
Thereafter	1,831
Total	$	13,151

11. Other Assets

Other assets consist of the following:


	September 30, 2023		December 31, 2022
Deferred tax asset, net (1)	$	171,766	$	173,687
Servicing assets (2)	82,602		85,654
Operating lease assets	53,510		63,872
Nonmarketable equity investments	46,812		38,320
Intangible assets, net (3)	13,151		16,334
Other	129,111		122,439
Total other assets	$	496,952	$	500,306

(1) See “Note 16. Income Taxes” for additional detail.

(2) Loans underlying servicing assets had a total outstanding principal balance of $9.7 billion and $11.0 billion as of September 30, 2023 and December 31, 2022, respectively.

(3) See “Note 10. Goodwill and Intangible Assets” for additional detail.

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

~~The expected future amortization expense for intangible assets as of March 31, 2023, is as follows:~~

2023 $ 3,065
2024 3,549
2025 2,901
2026 2,252
2027 1,603
Thereafter 1,831
Total $ 15,201

~~10. Other Assets~~

~~Other assets consist of the following:~~

March 31, 2023 December 31, 2022
Deferred tax asset, net (1)
$ 170,976 $ 173,687
Servicing assets (2)
90,429 85,654
Operating lease assets 57,335 63,872
Nonmarketable equity investments 44,991 38,320
Intangible assets, net (3)
15,201 16,334
Other 115,760 122,439
Total other assets $ 494,692 $ 500,306

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

~~(2)~~ ~~Loans underlying servicing assets had a total outstanding principal balance of $10.7 billion and $11.0 billion as of March 31, 2023 and December 31, 2022, respectively.~~

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

~~11.~~12. Deposits

Deposits consist of the following:


		March 31, 2023		December 31, 2022			September 30, 2023		December 31, 2022
Interest-bearing deposits:	Interest-bearing deposits:					Interest-bearing deposits:
Savings and money market accounts	Savings and money market accounts	$	4,550,577	$	3,616,657	Savings and money market accounts	4,537,503		3,616,657
Certificates of deposit						Certificates of deposit	1,169,593		860,808
Checking accounts	Checking accounts	1,357,323		1,681,095		Checking accounts	979,973		1,681,095
Certificates of deposit		1,110,114		860,808
Total	Total	$	7,018,014	$	6,158,560	Total	6,687,069		6,158,560
Noninterest-bearing deposits	Noninterest-bearing deposits	200,840		233,993		Noninterest-bearing deposits	313,194		233,993
Total deposits	Total deposits	$	7,218,854	$	6,392,553	Total deposits	$	7,000,263	$	6,392,553

~~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 ~~March 31,~~September 30, 2023 are scheduled to mature as follows:


2023	2023	$	749,302	2023	$	310,816
2024	2024	339,416		2024	833,003
2025	2025	10,598		2025	14,075
2026	2026	1,107		2026	1,252
2027	2027	9,213		2027	9,228
Thereafter	Thereafter	478		Thereafter	1,219
Total certificates of deposit	Total certificates of deposit	$	1,110,114	Total certificates of deposit	$	1,169,593

The following table presents the amount of certificates of deposit with denominations exceeding the Federal Deposit Insurance Corporation (FDIC) limit of $250 thousand, segregated by time remaining until maturity, as of ~~March 31,~~September 30, 2023:

Three months or less Over 3 months through
6 months Over 6 months through
12 months Over
12 months Total
Certificates of deposit $ 303 $ 2,336 $ 7,573 $ 3,632 $ 13,844


	Three months or less		Over 3 months through 6 months		Over 6 months through 12 months		Over 12 months		Total
Certificates of deposit	$	4,949	$	5,117	$	43,598	$	3,674	$	57,338

~~12.~~13. Borrowings

Short-term ~~Borrowings:~~Borrowings

The Company entered into repurchase agreements pursuant to which the Company sold securities (subject to an obligation to repurchase such securities at a specified future date and price) in exchange for cash. The aggregate debt outstanding under the Company’s repurchase agreements was ~~$1.4 million~~$27 thousand and $2.6 million at ~~March 31,~~September 30, 2023 and December 31, 2022, respectively.

In addition, the Company has available borrowing capacity with the FRB and FHLB of Des Moines totaling ~~$631.1 million~~$3.8 billion and $605.5 million with pledged collateral totaling ~~$786.9 million~~$4.9 billion and $754.0 million at ~~March 31,~~September 30, 2023 and December 31, 2022, respectively.

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

Long-term ~~Debt:~~Debt

The following table summarizes the Company’s long-term debt, as of the dates indicated:
March 31, 2023 December 31, 2022
Advances from PPPLF (1):
Aggregate debt outstanding (fixed interest rate of 0.35%) $ 45,610 $ 64,154
Pledged collateral $ 51,112 $ 66,971
Retail notes, certificates and secured borrowings (2):
Aggregate debt outstanding $ 38,855 $ 55,425
Payable on Structured Program borrowings (3):
Aggregate debt outstanding $ 5,978 $ 8,085
Pledged collateral $ 7,568 $ 9,708


	September 30, 2023		December 31, 2022
Advances from PPPLF (1):
Aggregate debt outstanding (fixed interest rate of 0.35%)	$	7,361	$	64,154
Pledged collateral	$	7,560	$	66,971




Retail notes, certificates and secured borrowings (2):
Aggregate debt outstanding	$	18,118	$	55,425
Payable on Structured Program borrowings (3):
Aggregate debt outstanding	$	3,329	$	8,085
Pledged collateral	$	4,828	$	9,708

(1) Collateralized by SBA PPP loans originated by the Company. The maturity date of the PPPLF borrowings matches the maturity date of the pledged SBA PPP loans. When loans are forgiven by the SBA, the corresponding PPPLF advance is paid by the Company.

(2) The Company does not assume principal or interest rate risk on loans that were funded by Retail Notes because loan balances, interest rates and maturities were matched and offset by an equal balance of notes with the exact

~~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 total balance of outstanding Retail Notes will continue to decline as underlying borrower payments are made.

(3) Consists of certificate participations and securities of certain consolidated VIEs held by third-party investors and secured by “Loans held for investment at fair value” totaling ~~$2.7~~$1.1 million and $4.0 million and “Restricted cash” of ~~$4.9~~$3.7 million and $5.7 million as of ~~March 31,~~September 30, 2023 and December 31, 2022, respectively.

~~13.~~14. Other Liabilities

Other liabilities consist of the following:


		March 31, 2023		December 31, 2022			September 30, 2023		December 31, 2022

Operating lease liabilities	Operating lease liabilities	$	70,406	$	77,291	Operating lease liabilities	$	65,747	$	77,291
Accounts payable and accrued expenses	Accounts payable and accrued expenses	51,128		98,173		Accounts payable and accrued expenses	54,179		98,173
Payable to investors (1)	Payable to investors (1)	37,753		30,311		Payable to investors (1)	37,270		30,311

Other	Other	93,300		86,842		Other	77,838		86,842
Total other liabilities	Total other liabilities	$	252,587	$	292,617	Total other liabilities	$	235,034	$	292,617

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

~~14.~~

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

15. Employee Incentive Plans

The Company’s equity incentive plans provide for granting awards, including ~~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 March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
			2023			2022			2023		2022		2023		2022
RSUs and PBRSUs	RSUs and PBRSUs		$	14,292		$	17,363	RSUs and PBRSUs	$	16,855	$	18,931	$	49,292	$	56,098
Stock options	Stock options		—			20		Stock options	—		6		—		46
Stock-based compensation expense, gross	Stock-based compensation expense, gross		14,292			17,383		Stock-based compensation expense, gross	16,855		18,937		49,292		56,144
Less: Capitalized stock-based compensation expense	Less: Capitalized stock-based compensation expense		2,404			1,689		Less: Capitalized stock-based compensation expense	2,449		2,194		7,170		5,934
Stock-based compensation expense, net	Stock-based compensation expense, net		$	11,888		$	15,694	Stock-based compensation expense, net	$	14,406	$	16,743	$	42,122	$	50,210

Restricted Stock Units

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


	Number of Units	Weighted- Average Grant Date Fair Value
Unvested at December 31, 2022	8,672,626	$	12.94
Granted	6,533,732	$	7.68
Vested	(4,329,854)	$	11.63
Forfeited/expired	(1,772,768)	$	12.42
Unvested at September 30, 2023	9,103,736	$	9.89

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

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

Performance-based Restricted Stock Units

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

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 5,794,645 $ 7.63
Vested (1,234,655) $ 12.78
Forfeited/expired (1,211,117) $ 13.30
Unvested at March 31, 2023 12,021,499 $ 10.36

~~During the first quarter of 2023, the Company granted 5,794,645 RSUs with an aggregate fair value of $44.2 million.~~

~~As of March 31, 2023, there was $113.6 million of unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over the next 2.2 years.~~

~~Performance-based Restricted Stock Units~~

PBRSUs are restricted stock unit awards that are earned and vest 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. 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, 2022	Unvested at December 31, 2022	1,754,898	$	11.19	Unvested at December 31, 2022	1,754,898	$	11.19
Granted	Granted	687,992	$	7.62	Granted	807,499	$	7.15
Vested	Vested	(253,351)	$	5.48	Vested	(870,766)	$	4.22

Forfeited/expired	Forfeited/expired	(104,084)	$	11.77	Forfeited/expired	(104,084)	$	11.77
Unvested at March 31, 2023		2,085,455	$	10.67
Unvested at September 30, 2023					Unvested at September 30, 2023	1,587,547	$	12.63

During the first ~~quarter~~nine months of 2023, the Company granted ~~687,992~~807,499 PBRSUs with an aggregate fair value of ~~$5.2~~$5.8 million.

As of ~~March 31,~~September 30, 2023, there was ~~$11.2~~$7.9 million of unrecognized compensation cost related to unvested PBRSUs, which is expected to be recognized over ~~the next 1.8 years.~~

a weighted-average period of approximately 1.6 years, subject to any forfeitures.

~~15.~~

16. Income Taxes

For the third quarter and first ~~quarter~~nine months of 2023, the Company recorded an income tax expense of ~~$4.1~~$3.3 million and $12.1 million, representing an effective tax rate of ~~23.2%.~~39.9% and 29.7%, respectively. The third quarter effective tax rate differs from the statutory rate as it iswas favorably affected by

~~LENDINGCLUB CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

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

~~(Unaudited)~~

recurring items such as tax credits and iswas unfavorably affected by nondeductible portions of executive compensation. Additionally, the effective tax rate was unfavorably impacted by the discrete tax impact recognized during the period related to stock-based compensation, which had a larger impact in the third quarter.

For the ~~first~~third quarter of 2022, the Company recorded an income tax ~~expense~~benefit of $7.2 million, primarily due to the release of a $5.0 million ~~representing an effective~~valuation allowance against the Company’s deferred tax ~~rate of 10.9%, primarily related to~~assets and a $4.6 million tax credit, partially offset by a $2.4 million state income tax ~~expense for state jurisdictions that limit net operating loss utilization. The increase in~~expense. For the ~~quarterly effective~~first nine months of 2022, the Company recorded an income tax ~~rate is~~benefit of $134.2 million, primarily ~~related~~due to the ~~prior year tax benefits from the~~release of a $140.3 million valuation allowance ~~reversal.~~against the Company’s deferred tax assets.

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


		March 31, 2023		December 31, 2022			September 30, 2023		December 31, 2022
Deferred tax assets, net of liabilities	Deferred tax assets, net of liabilities	$	218,636	$	221,408	Deferred tax assets, net of liabilities	$	219,329	$	221,408
Valuation allowance	Valuation allowance	(47,660)		(47,721)		Valuation allowance	(47,563)		(47,721)
Deferred tax assets, net of valuation allowance	Deferred tax assets, net of valuation allowance	$	170,976	$	173,687	Deferred tax assets, net of valuation allowance	$	171,766	$	173,687

~~16.~~17. Leases

Lessor Arrangements

The Company has lessor arrangements which consist of sales-type leases for equipment (Equipment Finance). Such arrangements may include options to renew or to purchase the leased equipment at the end of the lease term. For the third quarter and first ~~quarters~~nine months of 2023, ~~and 2022,~~ interest earned on Equipment Finance was ~~$2.9~~$2.0 million and ~~$2.6 million, respectively, and is included in “Interest and fees on loans and leases held for investment” on the Income Statement.~~

~~The components of Equipment Finance assets are as follows:~~

March 31, 2023 December 31, 2022
Lease receivables $ 131,840 $ 137,969
Unguaranteed residual asset values 36,584 39,262
Unearned income (15,329) (17,786)
Deferred fees 810 874
Total $ 153,905 $ 160,319

~~Future minimum lease payments based on maturity of the Company’s lessor arrangements as of March 31, 2023 were as follows:~~

2023 $ 37,428
2024 40,395
2025 29,311
2026 17,135
2027 8,087
Thereafter 5,620
Total lease payments $ 137,976
Discount effect (6,136)
Present value of future minimum lease payments $ 131,840

3539

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

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

The components of Equipment Finance assets are as follows:


	September 30, 2023		December 31, 2022
Lease receivables	$	103,750	$	137,969
Unguaranteed residual asset values	33,264		39,262
Unearned income	(12,397)		(17,786)
Deferred fees	672		874
Total	$	125,289	$	160,319

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


2023	$	15,167
2024	35,355
2025	27,288
2026	16,796
2027	7,447
Thereafter	5,538
Total lease payments	$	107,591
Discount effect	(3,841)
Present value of future minimum lease payments	$	103,750

Lessee Arrangements

The Company has various operating leases, ~~for~~including with respect to its headquarters in San Francisco, California, ~~as well as additional~~and office ~~space~~spaces in the Salt Lake City, Utah, and Boston, Massachusetts areas. As of ~~March 31,~~September 30, 2023, the lease agreements have remaining lease terms ranging from approximately ~~one year~~three months to eight years. Some of the lease agreements include options to extend the lease term for up to an additional fifteen years. As of ~~March 31,~~September 30, 2023, the Company pledged $0.4 million of cash and ~~$3.9~~$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 March 31, 2023 December 31, 2022
Operating lease assets Other assets $ 57,335 $ 63,872
Operating lease liabilities (1)
Other liabilities $ 70,406 $ 77,291

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

~~Components of net lease costs were as follows:~~

Three Months Ended
March 31,
Net Lease Costs Income Statement Classification 2023 2022
Operating lease costs Occupancy $ (2,928) $ (4,480)
Sublease revenue Other non-interest income — 1,537
Net lease costs $ (2,928) $ (2,943)

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

Three Months Ended
March 31,
2023 2022
Non-cash operating activity:
Leased assets obtained or adjusted in exchange for new, amended, and modified operating lease liabilities (1)
$ (4,664) $ —

~~(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.~~


ROU Assets and Lease Liabilities	Balance Sheet Classification	September 30, 2023		December 31, 2022
Operating lease assets	Other assets	$	53,510	$	63,872
Operating lease liabilities	Other liabilities	$	65,747	$	77,291

3640

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

Components of net lease costs were as follows:


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

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


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

The Company’s future minimum undiscounted lease payments under operating leases as of ~~March 31,~~September 30, 2023 were as follows:


		Operating Lease Payments			Operating Lease Payments
2023	2023	$	9,629	2023	$	3,220
2024	2024	12,798		2024	12,798
2025	2025	13,129		2025	13,129
2026	2026	11,710		2026	11,710
2027	2027	10,987		2027	10,987
Thereafter	Thereafter	27,238		Thereafter	27,238
Total lease payments	Total lease payments	$	85,491	Total lease payments	$	79,082
Discount effect	Discount effect	(15,085)		Discount effect	(13,335)
Present value of future minimum lease payments	Present value of future minimum lease payments	$	70,406	Present value of future minimum lease payments	$	65,747

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

Lease Term and Discount Rate

~~March 31,~~September 30, 2023

Weighted-average remaining lease term (in years)

~~6.92~~6.49

Weighted-average discount rate

~~5.38~~5.40

~~17.~~18. Commitments and Contingencies

Operating Lease Commitments

For discussion regarding the Company’s operating lease commitments, see “Note ~~16.~~17. Leases.”

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

Loan Repurchase Obligations

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

Unfunded Loan Commitments

As of ~~March 31,~~September 30, 2023 and December 31, 2022, the contractual amount of unfunded loan commitments was ~~$117.2~~$89.5 million and $138.0 million, respectively. See “Note 5. Loans and Leases Held for Investment at Amortized Cost, Net of Allowance For Loan and Lease Losses” for additional detail related to the reserve for unfunded lending commitments.

Legal

The Company is subject to various claims brought in a litigation or regulatory context. These matters include lawsuits, including but not limited to, putative class action lawsuits and routine litigation matters arising in the ordinary course of business. In addition, the Company, and its business practices and compliance with licensing and

~~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.

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

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

The Company periodically has discussions with various regulatory agencies regarding its business model and has engaged in similar discussions with the 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.

~~18.~~

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

19. Regulatory Requirements

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

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

~~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%.

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

LendingClub March 31, 2023 December 31, 2022
Required Minimum plus Required CCB for
Non-Leverage Ratios
Amount Ratio Amount Ratio
CET1 capital (1)
$ 1,023.7 15.6 % $ 1,005.8 15.8 % 7.0 %
Tier 1 capital $ 1,023.7 15.6 % $ 1,005.8 15.8 % 8.5 %
Total capital $ 1,108.5 16.9 % $ 1,088.1 17.1 % 10.5 %
Tier 1 leverage $ 1,023.7 12.8 % $ 1,005.8 14.1 % 4.0 %
Risk-weighted assets $ 6,541.2 N/A $ 6,360.7 N/A N/A
Quarterly adjusted average assets $ 8,016.1 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 summarizes~~ LC Bank’s regulatory capital amounts (in millions) and ratios:


LendingClub Bank		March 31, 2023				December 31, 2022				Required Minimum plus Required CCB for Non-Leverage Ratios
		Amount		Ratio		Amount		Ratio
													September 30, 2023				December 31, 2022				Required Minimum plus Required CCB for Non-Leverage Ratios
													Amount		Ratio		Amount		Ratio
LendingClub Corporation:												LendingClub Corporation:
CET1 capital (1)	CET1 capital (1)	$	914.6	14.3	%	$	852.2	13.8	%	7.0	%	CET1 capital (1)	$	1,078.7	16.9	%	$	1,005.8	15.8	%	7.0	%
Tier 1 capital	Tier 1 capital	$	914.6	14.3	%	$	852.2	13.8	%	8.5	%	Tier 1 capital	$	1,078.7	16.9	%	$	1,005.8	15.8	%	8.5	%
Total capital	Total capital	$	997.7	15.6	%	$	932.4	15.1	%	10.5	%	Total capital	$	1,161.7	18.2	%	$	1,088.1	17.1	%	10.5	%
Tier 1 leverage	Tier 1 leverage	$	914.6	11.7	%	$	852.2	12.5	%	4.0	%	Tier 1 leverage	$	1,078.7	13.2	%	$	1,005.8	14.1	%	4.0	%
Risk-weighted assets	Risk-weighted assets	$	6,399.2	N/A		$	6,194.0	N/A		N/A		Risk-weighted assets	$	6,388.6	N/A		$	6,360.7	N/A		N/A
Quarterly adjusted average assets	Quarterly adjusted average assets	$	7,787.5	N/A		$	6,795.2	N/A		N/A		Quarterly adjusted average assets	$	8,200.3	N/A		$	7,119.0	N/A		N/A

LendingClub Bank:												LendingClub Bank:
CET1 capital (1)												CET1 capital (1)	$	949.7	15.1	%	$	852.2	13.8	%	7.0	%
Tier 1 capital												Tier 1 capital	$	949.7	15.1	%	$	852.2	13.8	%	8.5	%
Total capital												Total capital	$	1,031.2	16.5	%	$	932.4	15.1	%	10.5	%
Tier 1 leverage												Tier 1 leverage	$	949.7	11.8	%	$	852.2	12.5	%	4.0	%
Risk-weighted assets												Risk-weighted assets	$	6,268.6	N/A		$	6,194.0	N/A		N/A
Quarterly adjusted average assets												Quarterly adjusted average assets	$	8,016.0	N/A		$	6,795.2	N/A		N/A

N/A – Not applicable

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

In response to the COVID-19 pandemic, the FRB, OCC, and FDIC adopted a final rule related to the regulatory

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

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

The Federal Deposit Insurance Act provides for a system of “prompt corrective action” (PCA). The PCA regime provides for capitalization categories ranging from “well-capitalized” to “critically undercapitalized.” An institution’s PCA category is determined primarily by its regulatory capital ratios. The PCA requires remedial actions and imposes limitations that become increasingly stringent as its PCA capitalization category declines, including the ability to accept and/or rollover brokered deposits. At ~~March 31,~~September 30, 2023 and December 31, 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 ~~March 31,~~September 30, 2023 that management believes would change the Company’s categorization.

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

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

~~19.~~20. Other Non-interest Income and Non-interest Expense

Other non-interest income consists of the following:


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022				2023		2022		2023		2022
Referral revenue	Referral revenue	$	1,448	$	3,691		Referral revenue	$	1,029	$	3,144	$	4,008	$	10,860
Realized gains on sales of securities available for sale	Realized gains on sales of securities available for sale	—		36			Realized gains on sales of securities available for sale	—		—		—		36
Other	Other	1,908		6,164			Other	1,929		4,256		5,341		13,843
Total other non-interest income	Total other non-interest income	$	3,356	$	9,891		Total other non-interest income	$	2,958	$	7,400	$	9,349	$	24,739

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

Other non-interest expense consists of the following:


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022				2023		2022		2023		2022
Consumer credit services	Consumer credit services	$	4,967	$	5,524		Consumer credit services	$	2,930	$	4,610	$	10,377	$	15,804
Other	Other	12,736		8,480			Other	10,146		10,496		35,724		30,727
Total other non-interest expense	Total other non-interest expense	$	17,703	$	14,004		Total other non-interest expense	$	13,076	$	15,106	$	46,101	$	46,531

~~20.~~21. Segment Reporting

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

~~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~~During the third quarter of 2023, no individual borrower or marketplace investor accounted for 10% or more of total net revenue. During the first ~~quarter~~nine months of 2023, one marketplace bank investor accounted for ~~15%~~12% of total net revenue. No other individual borrower or marketplace investor accounted for 10% or more of total net revenue for ~~any~~the first nine months of ~~the periods presented.~~2023.

LendingClub Bank

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

LendingClub Corporation (Parent Only)

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

4145

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)

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

LendingClub
Bank LendingClub
Corporation
(Parent only) Intercompany
Eliminations Consolidated Total
Three Months Ended March 31, Three Months Ended March 31, Three Months Ended March 31, Three Months Ended March 31,
2023 2022 2023 2022 2023 2022 2023 2022
Non-interest income:
Marketplace revenue $ 72,688 $ 164,835 $ 13,108 $ 15,131 $ 9,838 $ — $ 95,634 $ 179,966
Other non-interest income 19,161 19,498 2,553 4,223 (18,358) (13,830) 3,356 9,891
Total non-interest income 91,849 184,333 15,661 19,354 (8,520) (13,830) 98,990 189,857
Interest income:
Interest income 198,330 99,823 4,083 11,830 — — 202,413 111,653
Interest expense (53,896) (3,644) (1,813) (8,329) — — (55,709) (11,973)
Net interest income 144,434 96,179 2,270 3,501 — — 146,704 99,680
Total net revenue 236,283 280,512 17,931 22,855 (8,520) (13,830) 245,694 289,537
Provision for credit losses (70,584) (52,509) — — — — (70,584) (52,509)
Non-interest expense (148,383) (178,459) (17,445) (26,575) 8,520 13,830 (157,308) (191,204)
Income (Loss) before income tax benefit (expense) 17,316 49,544 486 (3,720) — — 17,802 45,824
Income tax benefit (expense) (4,256) (12,355) 120 17,727 — (10,360) (4,136) (4,988)
Net income (loss) $ 13,060 $ 37,189 $ 606 $ 14,007 $ — $ (10,360) $ 13,666 $ 40,836
Capital expenditures $ 16,398 $ 21,575 $ — $ — $ — $ — $ 16,398 $ 21,575
Depreciation and amortization $ 6,894 $ 3,500 $ 5,460 $ 7,539 $ — $ — $ 12,354 $ 11,039


	LendingClub Bank				LendingClub Corporation (Parent only)				Intercompany Eliminations				Consolidated Total
	Three Months Ended September 30,				Three Months Ended September 30,				Three Months Ended September 30,				Three Months Ended September 30,
	2023		2022		2023		2022		2023		2022		2023		2022
Non-interest income:
Marketplace revenue	$	37,439	$	153,504	$	12,320	$	9,015	$	11,127	$	11,318	$	60,886	$	173,837
Other non-interest income	18,783		25,240		2,478		4,794		(18,303)		(22,634)		2,958		7,400
Total non-interest income	56,222		178,744		14,798		13,809		(7,176)		(11,316)		63,844		181,237

Interest income:
Interest income	203,961		137,142		3,451		6,078		—		—		207,412		143,220
Interest expense	(69,517)		(15,277)		(890)		(4,267)		—		—		(70,407)		(19,544)
Net interest income	134,444		121,865		2,561		1,811		—		—		137,005		123,676

Total net revenue	190,666		300,609		17,359		15,620		(7,176)		(11,316)		200,849		304,913

Provision for credit losses	(64,463)		(82,739)		(16)		—		—		—		(64,479)		(82,739)
Non-interest expense	(122,142)		(177,714)		(13,069)		(19,821)		7,176		11,316		(128,035)		(186,219)
Income (Loss) before income tax benefit (expense)	4,061		40,156		4,274		(4,201)		—		—		8,335		35,955
Income tax benefit (expense)	(2,380)		(9,440)		(947)		16,683		—		—		(3,327)		7,243
Net income	$	1,681	$	30,716	$	3,327	$	12,482	$	—	$	—	$	5,008	$	43,198
Capital expenditures	$	15,984	$	17,301	$	—	$	—	$	—	$	—	$	15,984	$	17,301
Depreciation and amortization	$	7,579	$	4,099	$	3,671	$	6,582	$	—	$	—	$	11,250	$	10,681

4246

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

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

(Unaudited)


	LendingClub Bank				LendingClub Corporation (Parent only)				Intercompany Eliminations				Consolidated Total
	Nine Months Ended September 30,				Nine Months Ended September 30,				Nine Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022		2023		2022		2023		2022
Non-interest income:
Marketplace revenue	$	172,133	$	509,426	$	33,200	$	35,313	$	33,970	$	15,448	$	239,303	$	560,187
Other non-interest income	59,687		64,779		7,462		12,931		(57,800)		(52,971)		9,349		24,739
Total non-interest income	231,820		574,205		40,662		48,244		(23,830)		(37,523)		248,652		584,926

Interest income:
Interest income	612,805		357,117		11,506		26,224		—		—		624,311		383,341
Interest expense	(189,959)		(25,134)		(3,991)		(18,625)		—		—		(193,950)		(43,759)
Net interest income	422,846		331,983		7,515		7,599		—		—		430,361		339,582

Total net revenue	654,666		906,188		48,177		55,843		(23,830)		(37,523)		679,013		924,508

Provision for credit losses	(201,658)		(205,814)		—		—		—		—		(201,658)		(205,814)
Non-interest expense	(413,088)		(552,809)		(47,164)		(71,523)		23,830		37,523		(436,422)		(586,809)
Income (Loss) before income tax benefit (expense)	39,920		147,565		1,013		(15,680)		—		—		40,933		131,885
Income tax benefit (expense)	(12,065)		(39,113)		(84)		120,274		—		53,048		(12,149)		134,209
Net income	$	27,855	$	108,452	$	929	$	104,594	$	—	$	53,048	$	28,784	$	266,094
Capital expenditures	$	48,239	$	54,659	$	—	$	—	$	—	$	—	$	48,239	$	54,659
Depreciation and amortization	$	21,546	$	11,109	$	13,696	$	21,168	$	—	$	—	$	35,242	$	32,277

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					LendingClub Bank				LendingClub Corporation (Parent only)				Intercompany Eliminations				Consolidated Total
		March 31, 2023		December 31, 2022		March 31, 2023		December 31, 2022		March 31, 2023		December 31, 2022		March 31, 2023		December 31, 2022			September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
Assets	Assets																	Assets
Total cash and cash equivalents	Total cash and cash equivalents	$	1,609,360	$	1,020,874	$	42,769	$	56,475	$	(15,132)	$	(20,319)	$	1,636,997	$	1,057,030	Total cash and cash equivalents	$	1,283,549	$	1,020,874	$	93,060	$	56,475	$	(68,839)	$	(20,319)	$	1,307,770	$	1,057,030
Restricted cash	Restricted cash	—		—		54,819		75,409		(7,477)		(7,955)		47,342		67,454		Restricted cash	—		—		48,102		75,409		(5,615)		(7,955)		42,487		67,454
Securities available for sale at fair value	Securities available for sale at fair value	368,365		329,287		11,663		16,415		—		—		380,028		345,702		Securities available for sale at fair value	790,542		329,287		5,127		16,415		—		—		795,669		345,702
Loans held for sale at fair value	Loans held for sale at fair value	44,647		110,400		—		—		—		—		44,647		110,400		Loans held for sale at fair value	362,789		110,400		—		—		—		—		362,789		110,400
Loans and leases held for investment, net	Loans and leases held for investment, net	5,143,081		4,705,302		—		—		—		—		5,143,081		4,705,302		Loans and leases held for investment, net	4,886,782		4,705,302		—		—		—		—		4,886,782		4,705,302
Loans held for investment at fair value	Loans held for investment at fair value	729,954		906,711		18,664		19,227		—		—		748,618		925,938		Loans held for investment at fair value	316,622		906,711		9,677		19,227		—		—		326,299		925,938
Retail and certificate loans held for investment at fair value	Retail and certificate loans held for investment at fair value	—		—		38,855		55,425		—		—		38,855		55,425		Retail and certificate loans held for investment at fair value	—		—		18,118		55,425		—		—		18,118		55,425
Property, equipment and software, net	Property, equipment and software, net	115,306		102,274		28,735		34,199		—		—		144,041		136,473		Property, equipment and software, net	139,269		102,274		20,499		34,199		—		—		159,768		136,473
Investment in subsidiary	Investment in subsidiary	—		—		776,034		755,319		(776,034)		(755,319)		—		—		Investment in subsidiary	—		—		813,436		755,319		(813,436)		(755,319)		—		—
Goodwill	Goodwill	75,717		75,717		—		—		—		—		75,717		75,717		Goodwill	75,717		75,717		—		—		—		—		75,717		75,717
Other assets	Other assets	308,476		339,341		207,228		173,851		(21,012)		(12,886)		494,692		500,306		Other assets	352,072		339,341		162,490		173,851		(17,610)		(12,886)		496,952		500,306
Total assets	Total assets	8,394,906		7,589,906		1,178,767		1,186,320		(819,655)		(796,479)		8,754,018		7,979,747		Total assets	8,207,342		7,589,906		1,170,509		1,186,320		(905,500)		(796,479)		8,472,351		7,979,747
Liabilities and Equity	Liabilities and Equity																	Liabilities and Equity
Total deposits	Total deposits	7,241,463		6,420,827		—		—		(22,609)		(28,274)		7,218,854		6,392,553		Total deposits	7,074,717		6,420,827		—		—		(74,454)		(28,274)		7,000,263		6,392,553
Borrowings	Borrowings	45,610		64,154		7,370		10,704		—		—		52,980		74,858		Borrowings	7,361		64,154		3,356		10,704		—		—		10,717		74,858
Retail notes, certificates and secured borrowings at fair value	Retail notes, certificates and secured borrowings at fair value	—		—		38,855		55,425		—		—		38,855		55,425		Retail notes, certificates and secured borrowings at fair value	—		—		18,118		55,425		—		—		18,118		55,425

Other liabilities	Other liabilities	153,450		189,185		120,149		116,318		(21,012)		(12,886)		252,587		292,617		Other liabilities	136,543		189,185		116,101		116,318		(17,610)		(12,886)		235,034		292,617
Total liabilities	Total liabilities	7,440,523		6,674,166		166,374		182,447		(43,621)		(41,160)		7,563,276		6,815,453		Total liabilities	7,218,621		6,674,166		137,575		182,447		(92,064)		(41,160)		7,264,132		6,815,453
Total equity	Total equity	954,383		915,740		1,012,393		1,003,873		(776,034)		(755,319)		1,190,742		1,164,294		Total equity	988,721		915,740		1,032,934		1,003,873		(813,436)		(755,319)		1,208,219		1,164,294
Total liabilities and equity	Total liabilities and equity	$	8,394,906	$	7,589,906	$	1,178,767	$	1,186,320	$	(819,655)	$	(796,479)	$	8,754,018	$	7,979,747	Total liabilities and equity	$	8,207,342	$	7,589,906	$	1,170,509	$	1,186,320	$	(905,500)	$	(796,479)	$	8,472,351	$	7,979,747

4348

LENDINGCLUB CORPORATION

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

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

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

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

4449

LENDINGCLUB CORPORATION

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

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

Overview

LendingClub is America’s leading digital marketplace bank. The Company was founded in 2006 and brought a traditional credit product – the installment loan – into the digital age by leveraging technology, data science, and a unique marketplace model. In doing so, we became one of the largest providers of unsecured personal loans in the United States. In February 2021, LendingClub completed the acquisition of ~~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 leveraging Structured Program transactions to drive marketplace originations and managing the business prudently by aligning our expense base to current market conditions. We maintained strong liquidity and capital levels and delivered the following results, ~~demonstrating the strategic advantages of our digital marketplace bank model in the face of~~despite a ~~less favorable~~challenging economic environment. ~~While~~In addition, in October 2023, we ~~expect continued industry and macro headwinds, these advantages, along with~~implemented a cost reduction plan, reducing our ~~growing online consumer deposit franchise and high-yielding short duration assets, provide us with a range of options~~workforce by 172 employees, or 14%, to ensure our ability to navigate through the ~~current macro environment. For~~challenging macroenvironment. We anticipate that this workforce reduction will result in annualized run-rate compensation and benefits savings of approximately $30 to $35 million compared to the ~~first~~second quarter of 2023, our recurring net interest income growth partially offset the recent reduction in investor demand for marketplace loans, which has been impacted adversely given the rapidly rising interest rate environment. We expect the reduction in investor demand to continue until interest rates and the macro environment volatility stabilize.2023.

•Loan originations: Loan originations for the ~~first~~third quarter of 2023 decreased ~~$236.8~~$502.4 million, or 9%25%, sequentially and ~~$928.9 million,~~$2.0 billion, or ~~29%~~57%, year over year, primarily driven by a decrease in unsecured personal loan origination volume. We attribute the decrease in volume and investor demand to the rising interest rate environment.

◦Loan originations held for investment (HFI) at amortized cost of $326.3 million for the ~~first~~third quarter of 2023 ~~increased $301.2~~decreased $331.1 million, or ~~43%~~50%, sequentially and ~~$145.7~~$826.6 million, or ~~17%~~72%, year over year.

◦Loan originations HFI at amortized cost as a percentage of loan originations was ~~44%~~22% and ~~28%~~33% for the ~~first quarter~~third and second quarters of 2023, ~~and fourth quarter of 2022,~~ respectively, and ~~27%~~33% for the ~~first~~third quarter of 2022. The percentage of loan originations HFI in any period is dependent on many factors, including quarterly loan origination volume, risk-adjusted returns, liquidity and general regulatory capital considerations.

◦We accumulated $250 million into held for sale (HFS) loans for our extended seasoning program to meet future investor demand for seasoned loans. Additionally, marketplace loan originations were sold as whole loan sales or through Structured Program transactions.

•Total net revenue: Total net revenue for the ~~first~~third quarter of 2023 decreased ~~$17.0~~$31.6 million, or 6%14%, sequentially and ~~$43.8~~$104.1 million, or ~~15%~~34%, year over year.

◦Marketplace revenue: Marketplace revenue for the ~~first~~third quarter of 2023 decreased ~~$27.8~~$21.9 million, or ~~23%~~26%, sequentially and ~~$84.3~~$113.0 million, or ~~47%~~65%, year over year. The decrease was ~~in line with the~~primarily due to a decrease in loan origination volume and ~~the recent reduction~~lower loan sales prices resulting from a shift in investor demand ~~for marketplace loans, which was impacted adversely given the rapidly rising interest rate environment, as well as tighter underwriting standards implemented by the Company.~~from banks to asset managers. This decrease was partially offset by a ~~$9.0 million~~ one-time ~~revenue~~ benefit ~~primarily due~~related to ~~lower prepayments.~~recouping volume-based purchase incentives from certain bank investors.

◦Net interest income: Net interest income for the ~~first~~third quarter of 2023 ~~increased $11.5~~decreased $9.6 million, or 8%7%, sequentially and ~~$47.0~~increased $13.3 million, or ~~47%~~11%, year over year. The sequential decrease was primarily driven by a lower balance of HFI loans and higher deposit funding costs. The year over year increase was primarily driven by ~~an increase in unsecured personal~~higher interest income due to a higher average balance of loans retained ~~in current and prior periods~~ as HFI in the current period and higher interest rates earned on cash and cash equivalents, partially offset by ~~an increase in~~ higher interest ~~expense due to higher~~rates paid on deposits ~~and interest rates.~~.

◦Net interest margin: Net interest margin for the ~~first~~third quarter of 2023 was ~~7.5%~~6.9%, decreasing from ~~7.8%~~7.1% in the ~~fourth~~second quarter of ~~2022~~2023 and from 8.3% in the ~~first~~third quarter of ~~2022, primarily due to higher interest rates on deposits.~~

•~~Provision for credit losses:~~ Provision for credit losses for the first quarter of 2023 increased $9.1 million, or 15%, sequentially and $18.1 million, or 34%, year over year. The increase was primarily due to growth in loans HFI at amortized cost, the discounting effect of the net present value (NPV) on prior loan vintages and additional qualitative allowance reflecting a less favorable economic outlook. Credit losses are performing in-2022.

4550

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)

~~line with our expectations~~

•Provision for credit losses: Provision for credit losses for the third quarter of 2023 decreased $2.1 million, or 3%, sequentially and $18.3 million, or 22%, year over year. The decrease was due to the lower volume of originated loans retained as HFI at amortized cost and the ~~portfolio seasons, we are seeing the expected~~related initial provision for credit losses, partially offset by an increase in ~~charge-offs. Our lifetime loss expectations remain unchanged from the prior quarter.~~quantitative and qualitative allowance due to an increase in expected losses and a less favorable economic outlook.

•Total non-interest expense: Total non-interest expense for the ~~first~~third quarter of 2023 decreased ~~$22.7~~$23.0 million, or ~~13%~~15%, sequentially and ~~$33.9~~$58.2 million, or ~~18%~~31%, year over year. The sequential decrease was primarily driven by a decrease in the accrual of variable compensation expense. The year over year decrease was primarily driven by a decrease in headcount as a result of the cost reduction and reorganization plan we implemented in January 2023, ~~as well as~~a decrease in the accrual of variable compensation expense and a decrease in variable marketing expenses based on lower origination volume and prudent management of expenses.

•Net income: Net income for the ~~first~~third quarter of 2023 decreased ~~$9.9~~$5.1 million, or ~~42%~~50%, sequentially and ~~$27.2~~$38.2 million, or ~~67%~~88%, year over year. Net income for the ~~fourth~~third quarter of 2022 included a tax benefit of ~~$3.2~~$5.0 million due to the reversal of the majority of our valuation allowance against our deferred tax assets.

•Diluted EPS: Diluted EPS for the ~~first~~third quarter of 2023 was ~~$0.13,~~$0.05, compared to ~~$0.22~~$0.09 for the ~~fourth~~second quarter of ~~2022~~2023 and ~~$0.39~~$0.41 for the same quarter last year. Diluted EPS for the ~~fourth~~third quarter of 2022 included a ~~$0.03~~$0.05 per share benefit from the deferred tax valuation allowance reversal.

•Pre-provision net revenue: Pre-provision net revenue for the ~~first quarter of 2023 increased $5.7 million, or 7%, sequentially primarily reflecting improved operating efficiency and cost reduction actions. Pre-provision net revenue for the first~~third quarter of 2023 decreased ~~$9.9~~$8.6 million, or ~~10%~~11%, sequentially and $45.9 million, or 39%, year over year.

•Cash and cash equivalents: Total cash and cash equivalents as of September 30, 2023 increased $103.8 million, or 9%, sequentially and $354.9 million, or 37%, year over year. The increase is primarily due to ~~a decrease~~an increase in revenue due to lower loan origination volume, partially offset by improved operating efficiency and cost reduction actions, as well as a $9.0 million one-time revenue benefit primarily due to lower prepayments.deposits.

•Total assets: Total assets as of ~~March 31,~~September 30, 2023 increased ~~$774.3~~$129.8 million, or ~~10%~~2%, sequentially and ~~$3.2~~$1.7 billion, or ~~57%~~25%, year over year. The year over year increase primarily ~~reflecting~~reflects growth in loans ~~held for investment~~HFI, growth in securities related to the Structured Program transactions and an increase in cash and cash equivalents due to the growth in deposits.

•~~Cash and cash equivalents:~~ ~~Total cash and cash equivalents as of March 31, 2023 increased $580.0 million, or 55%, sequentially and $583.8 million, or 55%, year over year.~~

•~~Liquidity:~~ ~~Available aggregate borrowing capacity increased during the second quarter of 2023, with total available borrowing capacity of $4.1 billion as of April 26, 2023.~~

•Deposits: Total deposits as of ~~March 31,~~September 30, 2023 increased ~~$826.3~~$156.7 million, or ~~13%~~2%, sequentially, and ~~$3.2~~$1.9 billion, or ~~81%~~37%, year over ~~year,~~year. The sequential increase was primarily ~~reflecting growth~~due to an increase in ~~online savings deposits.~~customer certificates of deposit. Federal Deposit Insurance Corporation (FDIC)-insured deposits represent approximately 86% of total deposits as of ~~March 31,~~September 30, 2023.

•Total equity: Total equity as of ~~March 31,~~September 30, 2023 increased ~~$26.4~~$2.7 million, or 2%0%, sequentially, and ~~$303.3~~$86.8 million, or ~~34%~~8%, year over year, primarily reflecting net income generated over the period. ~~In addition, the year over year increase includes the deferred tax asset valuation reversal in each of the last three quarters of 2022 totaling $143.5 million.~~

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.”

4651

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
March 31,
2023 December 31,
2022 March 31,
2022
Non-interest income $ 98,990 $ 127,465 $ 189,857
Net interest income 146,704 135,243 99,680
Total net revenue 245,694 262,708 289,537
Non-interest expense 157,308 180,044 191,204
Pre-provision net revenue (1)
88,386 82,664 98,333
Provision for credit losses 70,584 61,512 52,509
Income before income tax benefit (expense) 17,802 21,152 45,824
Income tax benefit (expense) (4,136) 2,439 (4,988)
Net income 13,666 23,591 40,836
Income tax benefit from release of tax valuation allowance — 3,180 —
Net income excluding income tax benefit (1)(2)
$ 13,666 $ 20,411 $ 40,836
Basic EPS – common stockholders $ 0.13 $ 0.22 $ 0.40
Diluted EPS – common stockholders $ 0.13 $ 0.22 $ 0.39
Diluted EPS excluding income tax benefit (1)(2)
$ 0.13 $ 0.19 $ 0.39
LendingClub Corporation Performance Metrics:
Net interest margin 7.5 % 7.8 % 8.3 %
Efficiency ratio (3)
64.0 % 68.5 % 66.0 %
Return on average equity (ROE) 4.6 % 7.2 % 18.7 %
Return on average total assets (ROA) 0.7 % 1.1 % 3.1 %
Marketing as a % of loan originations 1.2 % 1.4 % 1.7 %
LendingClub Corporation Capital Metrics:
Common equity tier 1 capital ratio 15.6 % 15.8 % 20.6 %
Tier 1 leverage ratio 12.8 % 14.1 % 15.6 %
Book value per common share $ 11.08 $ 10.93 $ 8.68
Tangible book value per common share(1)
$ 10.23 $ 10.06 $ 7.75
Loan Originations (in millions) (4):
Marketplace loans $ 1,286 $ 1,824 $ 2,360
Loan originations held for investment 1,002 701 856
Total loan originations $ 2,288 $ 2,524 $ 3,217
Loan originations held for investment as % of total loan originations 44 % 28 % 27 %
Servicing portfolio AUM (in millions) (5):
Total servicing portfolio $ 16,060 $ 16,157 $ 13,341
Loans serviced for others $ 10,504 $ 10,819 $ 10,475


	As of and for the Three Months Ended									As of and for the Nine Months Ended September 30,
	September 30, 2023			June 30, 2023			September 30, 2022			2023			2022
Non-interest income	$	63,844		$	85,818		$	181,237		$	248,652		$	584,926
Net interest income	137,005			146,652			123,676			430,361			339,582
Total net revenue	200,849			232,470			304,913			679,013			924,508
Non-interest expense	128,035			151,079			186,219			436,422			586,809
Pre-provision net revenue (1)	72,814			81,391			118,694			242,591			337,699
Provision for credit losses	64,479			66,595			82,739			201,658			205,814
Income before income tax benefit (expense)	8,335			14,796			35,955			40,933			131,885
Income tax benefit (expense)	(3,327)			(4,686)			7,243			(12,149)			134,209
Net income	5,008			10,110			43,198			28,784			266,094
Income tax benefit from release of tax valuation allowance	N/A			N/A			5,015			N/A			140,315
Net income excluding income tax benefit (1)(2)	$	5,008		$	10,110		$	38,183		$	28,784		$	125,779

Basic EPS	$	0.05		$	0.09		$	0.41		$	0.27		$	2.59
Diluted EPS	$	0.05		$	0.09		$	0.41		$	0.27		$	2.56

Diluted EPS excluding income tax benefit (1)(2)	$	0.05		$	0.09		$	0.36		$	0.27		$	1.21











LendingClub Corporation Performance Metrics:
Net interest margin	6.9		%	7.1		%	8.3		%	7.2		%	8.3		%
Efficiency ratio (3)	63.7		%	65.0		%	61.1		%	64.3		%	63.5		%
Return on average equity (ROE)	1.7		%	3.4		%	14.2		%	3.2		%	40.6		%
Return on average total assets (ROA)	0.2		%	0.5		%	2.5		%	0.5		%	6.8		%
Marketing as a % of loan originations	1.3		%	1.2		%	1.3		%	1.2		%	1.5		%

LendingClub Corporation Capital Metrics:
Common equity tier 1 capital ratio	16.9		%	16.1		%	18.3		%
Tier 1 leverage ratio	13.2		%	12.4		%	15.7		%
Book value per common share	$	11.02		$	11.09		$	10.67
Tangible book value per common share (1)	$	10.21		$	10.26		$	9.78

Loan Originations (in millions) (4):
Marketplace loans	$	1,182		$	1,353		$	2,386		$	3,821		$	7,566
Loan originations held for investment	326			657			1,153			1,986			3,030
Total loan originations	$	1,508		$	2,011		$	3,539		$	5,806		$	10,596
Loan originations held for investment as % of total loan originations	22		%	33		%	33		%	34		%	29		%

Servicing portfolio AUM (in millions) (5):
Total servicing portfolio	$	14,818		$	15,669		$	15,929
Loans serviced for others	$	9,601		$	10,204		$	11,807

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

(2) The ~~fourth~~third quarter and first nine months of 2022 excludes an income tax benefit of ~~$3.2~~$5.0 million and

LENDINGCLUB CORPORATION

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

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

$140.3 million due to the release of our deferred tax asset valuation allowance.

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

(4) Includes unsecured personal loans and auto loans only.

(5) Assets under management (AUM) reflects loans serviced on our platform, which includes outstanding balances of unsecured personal loans, auto refinance loans and education and patient finance loans serviced for others and retained for investment by the Company.

~~LENDINGCLUB CORPORATION~~

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

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


		As of and for the Three Months Ended									As of and for the Three Months Ended
		March 31, 2023			December 31, 2022			March 31, 2022					September 30, 2023			June 30, 2023			September 30, 2022

Balance Sheet Data:	Balance Sheet Data:											Balance Sheet Data:
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	$	5,091,969		$	4,638,331		$	3,049,325			Loans and leases held for investment at amortized cost, net, excluding PPP loans	$	4,879,222		$	5,160,546		$	4,414,347
PPP loans	PPP loans	$	51,112		$	66,971		$	184,986			PPP loans	$	7,560		$	17,640		$	89,379
Total loans and leases held for investment at amortized cost, net (1)	Total loans and leases held for investment at amortized cost, net (1)	$	5,143,081		$	4,705,302		$	3,234,311			Total loans and leases held for investment at amortized cost, net (1)	$	4,886,782		$	5,178,186		$	4,503,726
Loans held for investment at fair value	Loans held for investment at fair value	$	748,618		$	925,938		$	15,384			Loans held for investment at fair value	$	326,299		$	404,119		$	15,057
Total loans and leases held for investment	Total loans and leases held for investment	$	5,891,699		$	5,631,240		$	3,249,695			Total loans and leases held for investment	$	5,213,081		$	5,582,305		$	4,518,783
Total assets	Total assets	$	8,754,018		$	7,979,747		$	5,574,425			Total assets	$	8,472,351		$	8,342,506		$	6,775,074
Total deposits	Total deposits	$	7,218,854		$	6,392,553		$	3,977,477			Total deposits	$	7,000,263		$	6,843,535		$	5,123,506
Total liabilities	Total liabilities	$	7,563,276		$	6,815,453		$	4,686,991			Total liabilities	$	7,264,132		$	7,136,983		$	5,653,664
Total equity	Total equity	$	1,190,742		$	1,164,294		$	887,434			Total equity	$	1,208,219		$	1,205,523		$	1,121,410

Allowance Ratios(1):	Allowance Ratios(1):											Allowance Ratios(1):
ALLL to total loans and leases held for investment	ALLL to total loans and leases held for investment	6.4		%	6.5		%	5.5		%		ALLL to total loans and leases held for investment	6.7		%	6.4		%	6.3		%

ALLL to consumer loans and leases held for investment	ALLL to consumer loans and leases held for investment	7.1		%	7.3		%	6.6		%		ALLL to consumer loans and leases held for investment	7.4		%	7.1		%	7.2		%
ALLL to commercial loans and leases held for investment	ALLL to commercial loans and leases held for investment	2.0		%	2.0		%	1.8		%		ALLL to commercial loans and leases held for investment	2.0		%	1.9		%	1.9		%

Net charge-offs	Net charge-offs	$	49,845		$	37,148		$	8,632			Net charge-offs	$	68,795		$	59,884		$	22,658
Net charge-off ratio(2)	Net charge-off ratio(2)	3.8		%	3.0		%	1.2		%		Net charge-off ratio(2)	5.1		%	4.4		%	2.1		%

(1) Excludes loans held for investment at fair value, which primarily consists of a loan portfolio that was acquired at the end of 2022.

(2) Calculated as annualized net charge-offs divided by average outstanding loans and leases HFI at amortized cost during the period, excluding PPP loans.

4853

LENDINGCLUB CORPORATION

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

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

Results of Operations

The following table sets forth the Condensed Consolidated Statements of Income (Income Statement) data for each of the periods presented:


		Three Months Ended						Change (%)					Three Months Ended						Change (%)
		March 31, 2023		December 31, 2022		March 31, 2022		Q1 2023 vs Q4 2022		Q1 2023 vs Q1 2022			September 30, 2023		June 30, 2023		September 30, 2022		Q3 2023 vs Q2 2023		Q3 2023 vs Q3 2022
Non-interest income:	Non-interest income:											Non-interest income:
Marketplace revenue	Marketplace revenue	$	95,634	$	123,439	$	179,966	(23)	%	(47)	%	Marketplace revenue	$	60,886	$	82,783	$	173,837	(26)	%	(65)	%
Other non-interest income	Other non-interest income	3,356		4,026		9,891		(17)	%	(66)	%	Other non-interest income	2,958		3,035		7,400		(3)	%	(60)	%
Total non-interest income	Total non-interest income	98,990		127,465		189,857		(22)	%	(48)	%	Total non-interest income	63,844		85,818		181,237		(26)	%	(65)	%

Interest income:	Interest income:											Interest income:
Interest on loans held for sale	Interest on loans held for sale	5,757		5,724		7,450		1	%	(23)	%	Interest on loans held for sale	9,582		4,433		5,879		116	%	63	%
Interest and fees on loans and leases held for investment	Interest and fees on loans and leases held for investment	150,467		141,069		91,442		7	%	65	%	Interest and fees on loans and leases held for investment	158,960		162,085		124,028		(2)	%	28	%
Interest on loans held for investment at fair value	Interest on loans held for investment at fair value	26,892		10,862		593		148	%	N/M		Interest on loans held for investment at fair value	11,788		21,692		791		(46)	%	N/M
Interest on retail and certificate loans held for investment at fair value	Interest on retail and certificate loans held for investment at fair value	1,683		2,390		6,969		(30)	%	(76)	%	Interest on retail and certificate loans held for investment at fair value	817		1,194		3,685		(32)	%	(78)	%
Interest on securities available for sale	Interest on securities available for sale	3,900		3,359		4,511		16	%	(14)	%	Interest on securities available for sale	9,467		5,948		3,820		59	%	148	%
Other	Other	13,714		10,595		688		29	%	N/M		Other	16,798		19,134		5,017		(12)	%	235	%
Total interest income	Total interest income	202,413		173,999		111,653		16	%	81	%	Total interest income	207,412		214,486		143,220		(3)	%	45	%

Interest expense:	Interest expense:											Interest expense:
Interest on deposits	Interest on deposits	53,273		35,751		3,438		49	%	N/M		Interest on deposits	69,509		66,521		15,184		4	%	358	%
Interest on retail notes, certificates and secured borrowings	Interest on retail notes, certificates and secured borrowings	1,683		2,390		6,969		(30)	%	(76)	%	Interest on retail notes, certificates and secured borrowings	817		1,194		3,685		(32)	%	(78)	%
Other interest expense	Other interest expense	753		615		1,566		22	%	(52)	%	Other interest expense	81		119		675		(32)	%	(88)	%
Total interest expense	Total interest expense	55,709		38,756		11,973		44	%	365	%	Total interest expense	70,407		67,834		19,544		4	%	260	%

Net interest income	Net interest income	146,704		135,243		99,680		8	%	47	%	Net interest income	137,005		146,652		123,676		(7)	%	11	%

Total net revenue	Total net revenue	245,694		262,708		289,537		(6)	%	(15)	%	Total net revenue	200,849		232,470		304,913		(14)	%	(34)	%

Provision for credit losses	Provision for credit losses	70,584		61,512		52,509		15	%	34	%	Provision for credit losses	64,479		66,595		82,739		(3)	%	(22)	%

Non-interest expense:	Non-interest expense:											Non-interest expense:
Compensation and benefits	Compensation and benefits	73,307		87,768		81,610		(16)	%	(10)	%	Compensation and benefits	58,497		71,553		84,916		(18)	%	(31)	%
Marketing	Marketing	26,880		35,139		55,080		(24)	%	(51)	%	Marketing	19,555		23,940		46,031		(18)	%	(58)	%
Equipment and software	Equipment and software	13,696		13,200		11,046		4	%	24	%	Equipment and software	12,631		13,968		12,491		(10)	%	1	%
Depreciation and amortization	Depreciation and amortization	12,354		11,554		11,039		7	%	12	%	Depreciation and amortization	11,250		11,638		10,681		(3)	%	5	%
Professional services	Professional services	9,058		10,029		12,406		(10)	%	(27)	%	Professional services	8,414		9,974		11,943		(16)	%	(30)	%
Occupancy	Occupancy	4,310		4,698		6,019		(8)	%	(28)	%	Occupancy	4,612		4,684		5,051		(2)	%	(9)	%
Other non-interest expense	Other non-interest expense	17,703		17,656		14,004		—	%	26	%	Other non-interest expense	13,076		15,322		15,106		(15)	%	(13)	%
Total non-interest expense	Total non-interest expense	157,308		180,044		191,204		(13)	%	(18)	%	Total non-interest expense	128,035		151,079		186,219		(15)	%	(31)	%

Income before income tax benefit (expense)	Income before income tax benefit (expense)	17,802		21,152		45,824		(16)	%	(61)	%	Income before income tax benefit (expense)	8,335		14,796		35,955		(44)	%	(77)	%
Income tax benefit (expense)	Income tax benefit (expense)	(4,136)		2,439		(4,988)		N/M		(17)	%	Income tax benefit (expense)	(3,327)		(4,686)		7,243		(29)	%	(146)	%
Net income	Net income	$	13,666	$	23,591	$	40,836	(42)	%	(67)	%	Net income	$	5,008	$	10,110	$	43,198	(50)	%	(88)	%

LENDINGCLUB CORPORATION

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

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


	Nine Months Ended September 30,
	2023		2022		Change (%)
Non-interest income:
Marketplace revenue	$	239,303	$	560,187	(57)	%
Other non-interest income	9,349		24,739		(62)	%
Total non-interest income	248,652		584,926		(57)	%

Interest income:
Interest on loans held for sale	19,772		20,459		(3)	%
Interest and fees on loans and leases held for investment	471,512		324,381		45	%
Interest on loans held for investment at fair value	60,372		2,015		N/M
Interest on retail and certificate loans held for investment at fair value	3,694		15,745		(77)	%
Interest on securities available for sale	19,315		12,757		51	%
Other	49,646		7,984		522	%
Total interest income	624,311		383,341		63	%

Interest expense:
Interest on deposits	189,303		24,700		666	%
Interest on retail notes, certificates and secured borrowings	3,694		15,745		(77)	%
Other interest expense	953		3,314		(71)	%
Total interest expense	193,950		43,759		343	%

Net interest income	430,361		339,582		27	%

Total net revenue	679,013		924,508		(27)	%

Provision for credit losses	201,658		205,814		(2)	%

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

Income before income tax benefit (expense)	40,933		131,885		(69)	%
Income tax benefit (expense)	(12,149)		134,209		(109)	%
Net income	$	28,784	$	266,094	(89)	%

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

4955

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 (%)
		March 31, 2023		December 31, 2022		March 31, 2022		Q1 2023 vs Q4 2022		Q1 2023 vs Q1 2022			September 30, 2023		June 30, 2023		September 30, 2022		Q3 2023 vs Q2 2023		Q3 2023 vs Q3 2022
Origination fees	Origination fees	$	70,543	$	100,692	$	122,093	(30)	%	(42)	%	Origination fees	$	60,912	$	70,989	$	127,142	(14)	%	(52)	%
Servicing fees	Servicing fees	26,380		20,169		18,514		31	%	42	%	Servicing fees	32,768		22,015		23,760		49	%	38	%
Gain on sales of loans	Gain on sales of loans	14,125		18,352		24,110		(23)	%	(41)	%	Gain on sales of loans	8,572		13,221		23,554		(35)	%	(64)	%
Net fair value adjustments	Net fair value adjustments	(15,414)		(15,774)		15,249		(2)	%	(201)	%	Net fair value adjustments	(41,366)		(23,442)		(619)		76	%	N/M
Total marketplace revenue	Total marketplace revenue	$	95,634	$	123,439	$	179,966	(23)	%	(47)	%	Total marketplace revenue	$	60,886	$	82,783	$	173,837	(26)	%	(65)	%


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

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

Origination Fees

Origination fees recorded as a component of marketplace revenue are primarily fees earned related to originating and issuing unsecured personal loans that are held for sale. The following table presents loan origination volume during each of the periods set forth below:


		Three Months Ended						Change (%)				Three Months Ended						Change (%)
		March 31, 2023		December 31, 2022		March 31, 2022		Q1 2023 vs Q4 2022		Q1 2023 vs Q1 2022				September 30, 2023		June 30, 2023		September 30, 2022		Q3 2023 vs Q2 2023		Q3 2023 vs Q3 2022
Marketplace loans	Marketplace loans	$	1,285,648	$	1,823,625	$	2,360,238	(30)	%	(46)	%		Marketplace loans	$	1,181,858	$	1,353,134	$	2,386,319	(13)	%	(50)	%
Loan originations held for investment	Loan originations held for investment	1,001,989		700,765		856,312		43	%	17	%		Loan originations held for investment	326,290		657,380		1,152,870		(50)	%	(72)	%
Total loan originations (1)	Total loan originations (1)	$	2,287,637	$	2,524,390	$	3,216,550	(9)	%	(29)	%		Total loan originations (1)	$	1,508,148	$	2,010,514	$	3,539,189	(25)	%	(57)	%

(1) Includes unsecured personal loans and auto loans only.

LENDINGCLUB CORPORATION

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

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


	Nine Months Ended September 30,
	2023		2022		Change (%)
Marketplace loans	$	3,820,640	$	7,565,820	(50)	%
Loan originations held for investment	1,985,659		3,030,292		(34)	%
Total loan originations (1)	$	5,806,299	$	10,596,112	(45)	%

(1) Includes unsecured personal loans and auto loans only.

Sequential: Origination fees were ~~$70.5~~$60.9 million and ~~$100.7~~$71.0 million for the ~~first quarter~~third and second quarters of 2023, ~~and fourth quarter of 2022,~~ respectively, a decrease of ~~30%~~14%. The decrease was due to lower origination volume of marketplace loans. Loan origination volume of marketplace loans decreased to ~~$1.3~~$1.2 billion for the ~~first~~third quarter of 2023 compared to ~~$1.8~~$1.4 billion for the ~~fourth~~second quarter of ~~2022,~~2023, a decrease of ~~30%.~~13%, resulting from lower investor demand due to the rising interest rate environment.

Year Over Year: Origination fees were ~~$70.5~~$60.9 million and ~~$122.1~~$127.1 million for the ~~first~~third quarters of 2023 and 2022, respectively, a decrease of ~~42%~~52%. The decrease was due to lower origination volume of marketplace loans. Loan origination volume of marketplace loans decreased to ~~$1.3~~$1.2 billion for the ~~first~~third quarter of 2023 compared to $2.4 billion for the ~~first~~third quarter of 2022, a decrease of ~~46%.~~50%, resulting from lower investor demand due to the rising interest rate environment.

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

Servicing Fees

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

~~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 table below illustrates AUM serviced on our platform by the method in which the loans were financed as of the periods presented. Loans sold and subsequently serviced on behalf of the investor represent a key driver of our servicing fee revenue.


								Change (%)												Change (%)
		March 31, 2023		December 31, 2022		March 31, 2022		Q1 2023 vs Q4 2022			Q1 2023 vs Q1 2022			September 30, 2023		June 30, 2023		September 30, 2022		Q3 2023 vs Q2 2023		Q3 2023 vs Q3 2022
AUM (in millions):	AUM (in millions):									AUM (in millions):
Loans serviced for others	Loans serviced for others	$	10,504	$	10,819	$	10,475	(3)	%		—	%	Loans serviced for others	$	9,601	$	10,204	$	11,807	(6)	%	(19)	%
Loans held by LendingClub Bank	Loans held by LendingClub Bank	5,499		5,263		2,669		4	%		106	%	Loans held by LendingClub Bank	5,189		5,425		4,019		(4)	%	29	%
Retail notes, certificates and secured borrowings	Retail notes, certificates and secured borrowings	41		59		175		(31)	%		(77)	%	Retail notes, certificates and secured borrowings	19		28		92		(32)	%	(79)	%
Other loans invested in by the Company	Other loans invested in by the Company	16		16		22		—	%		(27)	%	Other loans invested in by the Company	9		12		11		(25)	%	(18)	%
Total	Total	$	16,060	$	16,157	$	13,341	(1)	%		20	%	Total	$	14,818	$	15,669	$	15,929	(5)	%	(7)	%

LENDINGCLUB CORPORATION

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

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

In addition to the loans serviced on our marketplace platform, we serviced ~~$159.1~~$138.8 million, ~~$167.0~~$146.9 million and ~~$197.4~~$174.1 million in outstanding principal balance of commercial loans sold as of ~~March 31,~~September 30, 2023, ~~December 31, 2022~~June 30, 2023 and ~~March 31,~~September 30, 2022, respectively.

Sequential: Servicing fees were ~~$26.4~~$32.8 million and ~~$20.2~~$22.0 million for the ~~first quarter~~third and second quarters of 2023, ~~and fourth quarter of 2022,~~ respectively, an increase of ~~31%~~49%. This was primarily due to a one-time benefit related to recouping volume-based purchase incentives and an increase in the fair value of the servicing asset based on higher expected servicing fee revenue, ~~including from lower forecast prepayments, as well as~~partially offset by a ~~servicing asset write-off related to the acquisition of a $1.05 billion outstanding principal~~decrease in loan ~~portfolio in the fourth quarter of 2022.~~balances serviced for others.

Year Over Year: Servicing fees were ~~$26.4~~$32.8 million and ~~$18.5~~$23.8 million for the ~~first~~third quarters of 2023 and 2022, respectively, an increase of ~~42%~~38%. This was primarily due to a one-time benefit related to recouping volume-based purchase incentives and an increase in the fair value of the servicing asset based on higher expected servicing fee revenue, ~~including from lower forecast prepayments.~~partially offset by a decrease in loan balances serviced for others.

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

Gain on Sales of Loans

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

Sequential: Gain on sales of loans was ~~$14.1~~$8.6 million and ~~$18.4~~$13.2 million for the ~~first quarter~~third and second quarters of 2023, ~~and fourth quarter of 2022,~~ respectively, a decrease of ~~23%~~35%. The decrease was primarily due to a decrease in the volume of marketplace loans sold.

Year Over Year: Gain on sales of loans was ~~$14.1~~$8.6 million and ~~$24.1~~$23.6 million for the ~~first~~third quarters of 2023 and 2022, respectively, a decrease of ~~41%~~64%. The decrease was primarily due to a decrease in the volume of marketplace loans sold.

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

Net Fair Value Adjustments

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

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

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

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:~~ ~~Net fair value adjustments remained relatively flat at $(15.4) million and $(15.8) million for the first quarter of 2023 and fourth quarter of 2022, respectively.~~

~~Year~~Nine Months Over ~~Year:~~Nine Months: Net fair value adjustments were ~~$(15.4)~~$(80.2) million and ~~$15.2~~$24.3 million for the first ~~quarters~~nine months of 2023 and 2022, respectively, ~~a decrease~~an increased loss of ~~$30.7~~$104.5 million. The ~~decrease~~change to a loss from a gain was primarily due to lower loan sale prices.

Other Non-interest Income

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


		Three Months Ended						Change (%)					Three Months Ended						Change (%)
		March 31, 2023		December 31, 2022		March 31, 2022		Q1 2023 vs Q4 2022		Q1 2023 vs Q1 2022			September 30, 2023		June 30, 2023		September 30, 2022		Q3 2023 vs Q2 2023		Q3 2023 vs Q3 2022
Referral revenue	Referral revenue	$	1,448	$	2,082	$	3,691	(30)	%	(61)	%	Referral revenue	$	1,029	$	1,531	$	3,144	(33)	%	(67)	%
Realized gains (losses) on sales of securities available for sale		—		(36)		36		(100)	%	(100)	%

Other	Other	1,908		1,980		6,164		(4)	%	(69)	%	Other	1,929		1,504		4,256		28	%	(55)	%
Other non-interest income	Other non-interest income	$	3,356	$	4,026	$	9,891	(17)	%	(66)	%	Other non-interest income	$	2,958	$	3,035	$	7,400	(3)	%	(60)	%


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

5259

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 ~~table~~tables below ~~presents~~present net interest income information corresponding to interest-earning assets and interest-bearing funding sources. The average yield/rate is calculated by dividing the annualized period-end interest income/expense by the average balance.


		Three Months Ended March 31, 2023						Three Months Ended December 31, 2022						Three Months Ended March 31, 2022							Three Months Ended September 30, 2023						Three Months Ended June 30, 2023						Three Months Ended September 30, 2022
		Average Balance		Interest Income/ Expense		Average Yield/ Rate		Average Balance		Interest Income/ Expense		Average Yield/ Rate		Average Balance		Interest Income/ Expense		Average Yield/ Rate			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	$	1,220,677	$	13,714	4.49	%	$	1,139,887	$	10,595	3.72	%	$	892,921	$	688	0.31	%	Cash, cash equivalents, restricted cash and other	$	1,249,087	$	16,798	5.38	%	$	1,512,700	$	19,134	5.06	%	$	893,655	$	5,017	2.25	%
Securities available for sale at fair value	Securities available for sale at fair value	362,960		3,900		4.30	%	349,512		3,359		3.84	%	325,155		4,511		5.55	%	Securities available for sale at fair value	601,512		9,467		6.30	%	437,473		5,948		5.44	%	396,556		3,820		3.85	%
Loans held for sale at fair value	Loans held for sale at fair value	110,580		5,757		20.83	%	114,851		5,724		19.93	%	255,139		7,450		11.68	%	Loans held for sale at fair value	286,111		9,582		13.40	%	106,865		4,433		16.59	%	126,487		5,879		18.59	%
Loans and leases held for investment at amortized cost:	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)	4,066,713		133,687		13.15	%	3,825,808		125,872		13.16	%	2,060,323		78,376		15.22	%	Unsecured personal loans (2)	4,257,360		142,118		13.35	%	4,360,506		145,262		13.33	%	3,268,649		110,446		13.52	%
Secured consumer loans	Secured consumer loans	381,760		3,706		3.88	%	364,723		3,428		3.76	%	232,235		2,275		3.92	%	Secured consumer loans	414,436		4,501		4.34	%	399,488		4,088		4.09	%	337,191		3,039		3.60	%
Commercial loans and leases	Commercial loans and leases	735,911		12,185		6.62	%	720,832		10,584		5.87	%	620,660		7,588		4.89	%	Commercial loans and leases	720,895		12,240		6.79	%	728,588		11,605		6.37	%	692,783		9,262		5.35	%
PPP loans	PPP loans	57,833		889		6.15	%	78,771		1,185		6.02	%	222,517		3,203		5.76	%	PPP loans	11,799		101		3.44	%	28,675		1,130		15.76	%	105,500		1,281		4.86	%
Loans and leases held for investment at amortized cost	Loans and leases held for investment at amortized cost	5,242,217		150,467		11.48	%	4,990,134		141,069		11.31	%	3,135,735		91,442		11.66	%	Loans and leases held for investment at amortized cost	5,404,490		158,960		11.76	%	5,517,257		162,085		11.75	%	4,404,123		124,028		11.26	%
Loans held for investment at fair value	Loans held for investment at fair value	836,313		26,892		12.86	%	308,570		10,862		14.08	%	18,523		593		12.80	%	Loans held for investment at fair value	362,837		11,788		13.00	%	670,969		21,692		12.93	%	17,763		791		17.83	%
Total loans and leases held for investment	Total loans and leases held for investment	6,078,530		177,359		11.67	%	5,298,704		151,931		11.47	%	3,154,258		92,035		11.67	%	Total loans and leases held for investment	5,767,327		170,748		11.84	%	6,188,226		183,777		11.88	%	4,421,886		124,819		11.29	%
Retail and certificate loans held for investment at fair value	Retail and certificate loans held for investment at fair value	46,525		1,683		14.47	%	66,469		2,390		14.38	%	198,813		6,969		14.02	%	Retail and certificate loans held for investment at fair value	22,311		817		14.65	%	32,760		1,194		14.57	%	104,010		3,685		14.17	%
Total interest-earning assets	Total interest-earning assets	7,819,272		202,413		10.35	%	6,969,423		173,999		9.99	%	4,826,286		111,653		9.25	%	Total interest-earning assets	7,926,348		207,412		10.47	%	8,278,024		214,486		10.36	%	5,942,594		143,220		9.64	%

Cash and due from banks and restricted cash	Cash and due from banks and restricted cash	71,878						64,907						92,683						Cash and due from banks and restricted cash	69,442						78,221						58,411
Allowance for loan and lease losses	Allowance for loan and lease losses	(338,359)						(314,861)						(163,631)						Allowance for loan and lease losses	(354,263)						(354,348)						(254,849)
Other non-interest earning assets	Other non-interest earning assets	666,650						613,664						486,363						Other non-interest earning assets	691,641						686,956						597,169
Total assets	Total assets	$	8,219,441					$	7,333,133					$	5,241,701					Total assets	$	8,333,168					$	8,688,853					$	6,343,325

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	$	1,633,691	$	7,568	1.88	%	$	1,929,260	$	7,500	1.54%		$	2,240,450	$	1,724	0.31	%	Checking and money market accounts	$	1,271,720	$	9,541	2.98	%	$	1,397,302	$	7,760	2.23	%	$	2,192,904	$	4,575	0.83	%
Savings accounts and certificates of deposit	Savings accounts and certificates of deposit	4,747,478		45,705		3.90	%	3,576,205		28,251		3.13%		1,071,133		1,714		0.64	%	Savings accounts and certificates of deposit	5,357,717		59,968		4.44	%	5,546,862		58,761		4.25	%	2,260,170		10,609		1.86	%
Interest-bearing deposits (2)	Interest-bearing deposits (2)	6,381,169		53,273		3.39	%	5,505,465		35,751		2.58%		3,311,583		3,438		0.42	%	Interest-bearing deposits (2)	6,629,437		69,509		4.16	%	6,944,164		66,521		3.84	%	4,453,074		15,184		1.35	%
Retail notes, certificates and secured borrowings	Retail notes, certificates and secured borrowings	46,525		1,683		14.47	%	66,469		2,390		14.38	%	198,813		6,969		14.02	%	Retail notes, certificates and secured borrowings	22,311		817		14.65	%	32,760		1,194		14.57	%	104,010		3,685		14.17	%
Other interest-bearing liabilities	Other interest-bearing liabilities	107,520		753		2.80	%	105,834		615		2.33	%	312,690		1,566		2.00	%	Other interest-bearing liabilities	13,567		81		2.42	%	31,409		119		1.51	%	140,904		675		1.92	%
Total interest-bearing liabilities	Total interest-bearing liabilities	6,535,214		55,709		3.46	%	5,677,768		38,756		2.71	%	3,823,086		11,973		1.25	%	Total interest-bearing liabilities	6,665,315		70,407		4.19	%	7,008,333		67,834		3.88	%	4,697,988		19,544		1.65	%

5360

LENDINGCLUB CORPORATION

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

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


		Three Months Ended March 31, 2023						Three Months Ended December 31, 2022						Three Months Ended March 31, 2022							Three Months Ended September 30, 2023						Three Months Ended June 30, 2023						Three Months Ended September 30, 2022
		Average Balance		Interest Income/ Expense		Average Yield/ Rate		Average Balance		Interest Income/ Expense		Average Yield/ Rate		Average Balance		Interest Income/ Expense		Average Yield/ Rate			Average Balance		Interest Income/ Expense		Average Yield/ Rate		Average Balance		Interest Income/ Expense		Average Yield/ Rate		Average Balance		Interest Income/ Expense		Average Yield/ Rate
Non-interest bearing deposits	Non-interest bearing deposits	241,954						251,686						227,337						Non-interest bearing deposits	183,728						205,750						284,134
Other liabilities	Other liabilities	263,868						266,558						319,241						Other liabilities	271,118						272,142						250,086
Total liabilities	Total liabilities	$	7,041,036					$	6,196,012					$	4,369,664					Total liabilities	$	7,120,161					$	7,486,225					$	5,232,208

Total equity	Total equity	$	1,178,405					$	1,137,121					$	872,037					Total equity	$	1,213,007					$	1,202,628					$	1,111,117
Total liabilities and equity	Total liabilities and equity	$	8,219,441					$	7,333,133					$	5,241,701					Total liabilities and equity	$	8,333,168					$	8,688,853					$	6,343,325

Interest rate spread	Interest rate spread					6.90	%					7.28	%					8.00	%	Interest rate spread					6.28	%					6.48	%					7.99	%

Net interest income and net interest margin	Net interest income and net interest margin			$	146,704	7.50	%			$	135,243	7.76	%			$	99,680	8.26	%	Net interest income and net interest margin			$	137,005	6.91	%			$	146,652	7.09	%			$	123,676	8.32	%

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

(2) The average yield/rate for unsecured personal loans ~~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 ~~continued~~ pressure on net interest margin to continue ~~during~~for the remainder of 2023.

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


		Three Months Ended March 31, 2023 Compared to Three Months Ended December 31, 2022							Three Months Ended September 30, 2023 Compared to Three Months Ended June 30, 2023
		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	$	791	$	2,328	$	3,119	Cash, cash equivalents, restricted cash and other	$	(3,488)	$	1,152	$	(2,336)
Securities available for sale at fair value	Securities available for sale at fair value	133		408		541		Securities available for sale at fair value	2,477		1,042		3,519
Loans held for sale at fair value	Loans held for sale at fair value	(217)		250		33		Loans held for sale at fair value	6,151		(1,002)		5,149
Loans and leases held for investment at amortized cost	Loans and leases held for investment at amortized cost	7,987		1,411		9,398		Loans and leases held for investment at amortized cost	(3,852)		727		(3,125)
Loans and leases held for investment at fair value	Loans and leases held for investment at fair value	17,046		(1,016)		16,030		Loans and leases held for investment at fair value	(10,010)		106		(9,904)
Retail and certificate loans held for investment at fair value	Retail and certificate loans held for investment at fair value	(722)		15		(707)		Retail and certificate loans held for investment at fair value	(383)		6		(377)
Total increase in interest income on interest-earning assets		$	25,018	$	3,396	$	28,414
Total increase (decrease) in interest income on interest-earning assets								Total increase (decrease) in interest income on interest-earning assets	$	(9,105)	$	2,031	$	(7,074)
Interest-bearing liabilities	Interest-bearing liabilities							Interest-bearing liabilities
Checking and money market accounts	Checking and money market accounts	$	(1,311)	$	1,379	$	68	Checking and money market accounts	$	(750)	$	2,531	$	1,781
Savings accounts and certificates of deposit	Savings accounts and certificates of deposit	9,971		7,483		17,454		Savings accounts and certificates of deposit	(2,053)		3,260		1,207
Interest-bearing deposits	Interest-bearing deposits	8,660		8,862		17,522		Interest-bearing deposits	(2,803)		5,791		2,988
Retail notes, certificates and secured borrowings	Retail notes, certificates and secured borrowings	(722)		15		(707)		Retail notes, certificates and secured borrowings	(383)		6		(377)
Other interest-bearing liabilities	Other interest-bearing liabilities	10		128		138		Other interest-bearing liabilities	(87)		49		(38)
Total increase in interest expense on interest-bearing liabilities		$	7,948	$	9,005	$	16,953
Total increase (decrease) in interest expense on interest-bearing liabilities								Total increase (decrease) in interest expense on interest-bearing liabilities	$	(3,273)	$	5,846	$	2,573

Increase (Decrease) in net interest income		$	17,070	$	(5,609)	$	11,461
Decrease in net interest income								Decrease in net interest income	$	(5,832)	$	(3,815)	$	(9,647)

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

5461

LENDINGCLUB CORPORATION

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

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


		Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022							Three Months Ended September 30, 2023 Compared to Three Months Ended September 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	$	343	$	12,683	$	13,026	Cash, cash equivalents, restricted cash and other	$	2,613	$	9,168	$	11,781
Securities available for sale at fair value	Securities available for sale at fair value	484		(1,095)		(611)		Securities available for sale at fair value	2,536		3,111		5,647
Loans held for sale at fair value	Loans held for sale at fair value	(5,609)		3,916		(1,693)		Loans held for sale at fair value	5,722		(2,019)		3,703
Loans and leases held for investment at amortized cost	Loans and leases held for investment at amortized cost	67,740		(8,715)		59,025		Loans and leases held for investment at amortized cost	33,293		1,639		34,932
Loans and leases held for investment at fair value	Loans and leases held for investment at fair value	26,296		3		26,299		Loans and leases held for investment at fair value	11,269		(272)		10,997
Retail and certificate loans held for investment at fair value	Retail and certificate loans held for investment at fair value	(5,502)		216		(5,286)		Retail and certificate loans held for investment at fair value	(2,989)		121		(2,868)
Total increase in interest income on interest-earning assets	Total increase in interest income on interest-earning assets	$	83,752	$	7,008	$	90,760	Total increase in interest income on interest-earning assets	$	52,444	$	11,748	$	64,192
Interest-bearing liabilities	Interest-bearing liabilities							Interest-bearing liabilities
Checking and money market accounts	Checking and money market accounts	$	(594)	$	6,438	$	5,844	Checking and money market accounts	$	(2,606)	$	7,572	$	4,966
Savings accounts and certificates of deposit	Savings accounts and certificates of deposit	17,731		26,260		43,991		Savings accounts and certificates of deposit	24,321		25,038		49,359
Interest-bearing deposits	Interest-bearing deposits	17,137		32,698		49,835		Interest-bearing deposits	21,715		32,610		54,325
Retail notes, certificates and secured borrowings	Retail notes, certificates and secured borrowings	(5,502)		216		(5,286)		Retail notes, certificates and secured borrowings	(2,989)		121		(2,868)
Other interest-bearing liabilities	Other interest-bearing liabilities	(1,283)		470		(813)		Other interest-bearing liabilities	(733)		139		(594)
Total increase in interest expense on interest-bearing liabilities	Total increase in interest expense on interest-bearing liabilities	$	10,352	$	33,384	$	43,736	Total increase in interest expense on interest-bearing liabilities	$	17,993	$	32,870	$	50,863

Increase (Decrease) in net interest income	Increase (Decrease) in net interest income	$	73,400	$	(26,376)	$	47,024	Increase (Decrease) in net interest income	$	34,451	$	(21,122)	$	13,329

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

LENDINGCLUB CORPORATION

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

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


	Nine Months Ended September 30, 2023						Nine Months Ended September 30, 2022
	Average Balance		Interest Income/ Expense		Average Yield/ Rate		Average Balance		Interest Income/ Expense		Average Yield/ Rate
Interest-earning assets (1)
Cash, cash equivalents, restricted cash and other	$	1,327,592	$	49,646	4.99	%	$	936,592	$	7,984	1.14	%
Securities available for sale at fair value	468,189		19,315		5.50	%	377,274		12,757		4.51	%
Loans held for sale at fair value	168,495		19,772		15.65	%	178,905		20,459		15.25	%
Loans and leases held for investment at amortized cost:
Unsecured personal loans (2)	4,228,891		421,066		13.28	%	2,678,133		284,350		14.16	%
Secured consumer loans	398,681		12,295		4.11	%	279,556		7,665		3.66	%
Commercial loans and leases	728,410		36,030		6.60	%	652,745		25,583		5.23	%
PPP loans	32,600		2,121		8.67	%	158,729		6,783		5.70	%
Loans and leases held for investment at amortized cost	5,388,582		471,512		11.67	%	3,769,163		324,381		11.47	%
Loans held for investment at fair value	621,639		60,372		12.95	%	17,756		2,015		15.13	%
Total loans and leases held for investment	6,010,221		531,884		11.80	%	3,786,919		326,396		11.49	%
Retail and certificate loans held for investment at fair value	33,776		3,694		14.58	%	148,798		15,745		14.11	%
Total interest-earning assets	8,008,273		624,311		10.39	%	5,428,488		383,341		9.42	%

Cash and due from banks and restricted cash	73,171						75,412
Allowance for loan and lease losses	(349,049)						(207,462)
Other non-interest earning assets	681,841						525,053
Total assets	$	8,414,236					$	5,821,491

Interest-bearing liabilities
Interest-bearing deposits:
Checking and money market accounts	$	1,432,912	$	24,869	2.32	%	$	2,298,847	$	8,964	0.52	%
Savings accounts and certificates of deposit	5,219,587		164,434		4.21	%	1,633,325		15,736		1.29	%
Interest-bearing deposits (2)	6,652,499		189,303		3.80	%	3,932,172		24,700		0.84	%
Retail notes, certificates and secured borrowings	33,776		3,694		14.58	%	148,798		15,745		14.11	%
Other interest-bearing liabilities	50,489		953		2.52	%	215,884		3,314		2.05	%
Total interest-bearing liabilities	6,736,764		193,950		3.85	%	4,296,854		43,759		1.36	%

Non-interest bearing deposits	210,264						268,281
Other liabilities	269,068						276,788
Total liabilities	$	7,216,096					$	4,841,923

Total equity	$	1,198,140					$	979,568
Total liabilities and equity	$	8,414,236					$	5,821,491

Interest rate spread					6.55	%					8.06	%

Net interest income and net interest margin			$	430,361	7.17	%			$	339,582	8.34	%

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

(2) The average yield/rate for unsecured personal loans decreased year over year primarily due to a shift in the mix toward higher credit quality loans, which generally have lower interest rates. The average yield/rate for interest-bearing deposits increased due to a higher federal funds rate and an increasing concentration of online deposits. We expect pressure on net interest margin to continue for the remainder of 2023.

5563

LENDINGCLUB CORPORATION

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

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

Provision for Credit Losses

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

The provision for credit losses includes the credit loss expense for HFI loans and leases at amortized cost, available for sale (AFS) securities and unfunded lending commitments. The table below illustrates the composition of the provision for credit losses for each period ~~presented:~~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						Three Months Ended						Nine Months Ended September 30,
		March 31, 2023		December 31, 2022		March 31, 2022				September 30, 2023		June 30, 2023		September 30, 2022		2023		2022

Credit loss expense for loans and leases held for investment	Credit loss expense for loans and leases held for investment	$	70,850	$	61,799	$	52,228		Credit loss expense for loans and leases held for investment	$	64,127	$	66,190	$	82,599	$	201,167	$	204,880
Credit loss (reversal of) expense for unfunded lending commitments		(266)		(287)		281
Credit loss expense for unfunded lending commitments									Credit loss expense for unfunded lending commitments	352		405		140		491		934

Total provision for credit losses	Total provision for credit losses	$	70,584	$	61,512	$	52,509		Total provision for credit losses	$	64,479	$	66,595	$	82,739	$	201,658	$	205,814

Loan originations held for investment									Loan originations held for investment	$	326,290	$	657,380	$	1,152,870	$	1,985,659	$	3,030,292

Sequential: The provision for credit losses was ~~$70.6~~$64.5 million and ~~$61.5~~$66.6 million for the ~~first quarter~~third and second quarters of 2023, ~~and fourth quarter~~respectively, a decrease of ~~2022, an increase of 15%, respectively.~~3%. 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, ~~the discounting effect of the NPV allowance on prior loan vintages~~partially offset by an increase in quantitative and ~~additional~~ qualitative allowance ~~reflecting~~due to an increase in expected losses and a less favorable economic outlook.

Year Over Year: The provision for credit losses was ~~$70.6~~$64.5 million and ~~$52.5~~$82.7 million for the ~~first~~third quarters of 2023 and 2022, ~~an increase~~respectively, a decrease of ~~34%, respectively.~~22%. 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, ~~the discounting effect of the NPV allowance on prior loan vintages~~partially offset by an increase in quantitative and ~~additional~~ qualitative allowance ~~reflecting~~due to an increase in expected losses and a less favorable economic outlook.

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

5664

LENDINGCLUB CORPORATION

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

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

The activity in the allowance for credit losses (ACL) was as follows:


		Three Months Ended						Three Months Ended						Nine Months Ended September 30,
		March 31, 2023		December 31, 2022		March 31, 2022				September 30, 2023		June 30, 2023		September 30, 2022		2023		2022
Allowance for loan and lease losses, beginning of period	Allowance for loan and lease losses, beginning of period	$	327,852	$	303,201	$	144,389		Allowance for loan and lease losses, beginning of period	$	355,163	$	348,857	$	243,260	$	327,852	$	144,389
Credit loss expense for loans and leases held for investment	Credit loss expense for loans and leases held for investment	70,850		61,799		52,228			Credit loss expense for loans and leases held for investment	64,127		66,190		82,599		201,167		204,880

Charge-offs	Charge-offs	(52,563)		(38,804)		(9,089)			Charge-offs	(74,178)		(64,269)		(23,728)		(191,010)		(48,669)
Recoveries	Recoveries	2,718		1,656		457			Recoveries	5,383		4,385		1,070		12,486		2,601
Allowance for loan and lease losses, end of period	Allowance for loan and lease losses, end of period	$	348,857	$	327,852	$	187,985		Allowance for loan and lease losses, end of period	$	350,495	$	355,163	$	303,201	$	350,495	$	303,201

Reserve for unfunded lending commitments, beginning of period	Reserve for unfunded lending commitments, beginning of period	$	1,878	$	2,165	$	1,231		Reserve for unfunded lending commitments, beginning of period	$	2,017	$	1,612	$	2,025	$	1,878	$	1,231
Credit loss (reversal of) expense for unfunded lending commitments		(266)		(287)		281
Credit loss expense for unfunded lending commitments									Credit loss expense for unfunded lending commitments	352		405		140		491		934
Reserve for unfunded lending commitments, end of period (1)	Reserve for unfunded lending commitments, end of period (1)	$	1,612	$	1,878	$	1,512		Reserve for unfunded lending commitments, end of period (1)	$	2,369	$	2,017	$	2,165	$	2,369	$	2,165

(1) Relates to ~~$117.2~~$89.5 million, ~~$138.0~~$108.9 million and ~~$109.5~~$144.0 million of unfunded commitments as of ~~March 31,~~September 30, 2023, ~~December 31, 2022~~June 30, 2023 and ~~March 31,~~September 30, 2022, respectively.


		Three Months Ended									Three Months Ended								Nine Months Ended September 30,
		March 31, 2023			December 31, 2022			March 31, 2022					September 30, 2023			June 30, 2023			September 30, 2022			2023			2022
Ratio of allowance for loan and lease losses to total loans and leases held for investment at amortized cost	Ratio of allowance for loan and lease losses to total loans and leases held for investment at amortized cost	6.4		%	6.5		%	5.5		%		Ratio of allowance for loan and lease losses to total loans and leases held for investment at amortized cost	6.7		%	6.4		%	6.3		%	6.7		%	6.3		%

Average loans and leases held for investment at amortized cost		$	5,242,217		$	4,990,134		$	3,135,735
Average loans and leases held for investment at amortized cost, excluding PPP loans												Average loans and leases held for investment at amortized cost, excluding PPP loans	$	5,392,691		$	5,488,582		$	4,298,623		$	5,355,982		$	3,610,434
Net charge-off ratio (1)	Net charge-off ratio (1)	3.8		%	3.0		%	1.2		%		Net charge-off ratio (1)	5.1		%	4.4		%	2.1		%	4.4		%	1.7		%

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

Loans and leases are generally placed on nonaccrual status when contractually past due 90 days or more, or earlier if management believes that the probability of collection does not warrant further accrual. Unsecured personal loans are charged-off no later than 120 days past due. The following table presents nonaccrual loans and leases(1):


		March 31, 2023			December 31, 2022				September 30, 2023			December 31, 2022

Total nonaccrual loans and leases held for investment	Total nonaccrual loans and leases held for investment	$	38,392		$	34,827		Total nonaccrual loans and leases held for investment	$	49,999		$	34,827
Ratio of total nonaccrual loans and leases held for investment to total loans and leases held for investment	Ratio of total nonaccrual loans and leases held for investment to total loans and leases held for investment	0.7		%	0.7		%	Ratio of total nonaccrual loans and leases held for investment to total loans and leases held for investment	1.0		%	0.7		%

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

LENDINGCLUB CORPORATION

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

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

For additional information on the ACL and nonaccrual loans and leases, see “Notes to Consolidated Financial Statements – Note 1. Summary of Significant Accounting Policies” in our Annual Report and “Note 5. Loans and Leases Held for Investment at Amortized Cost, Net of Allowance For Loan and Lease Losses” in this Report.

~~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.


		Three Months Ended						Change (%)					Three Months Ended						Change (%)
		March 31, 2023		December 31, 2022		March 31, 2022		Q1 2023 vs Q4 2022		Q1 2023 vs Q1 2022			September 30, 2023		June 30, 2023		September 30, 2022		Q3 2023 vs Q2 2023		Q3 2023 vs Q3 2022
Non-interest expense:	Non-interest expense:											Non-interest expense:
Compensation and benefits	Compensation and benefits	$	73,307	$	87,768	$	81,610	(16)	%	(10)	%	Compensation and benefits	$	58,497	$	71,553	$	84,916	(18)	%	(31)	%
Marketing	Marketing	26,880		35,139		55,080		(24)	%	(51)	%	Marketing	19,555		23,940		46,031		(18)	%	(58)	%
Equipment and software	Equipment and software	13,696		13,200		11,046		4	%	24	%	Equipment and software	12,631		13,968		12,491		(10)	%	1	%
Depreciation and amortization	Depreciation and amortization	12,354		11,554		11,039		7	%	12	%	Depreciation and amortization	11,250		11,638		10,681		(3)	%	5	%
Professional services	Professional services	9,058		10,029		12,406		(10)	%	(27)	%	Professional services	8,414		9,974		11,943		(16)	%	(30)	%
Occupancy	Occupancy	4,310		4,698		6,019		(8)	%	(28)	%	Occupancy	4,612		4,684		5,051		(2)	%	(9)	%
Other non-interest expense	Other non-interest expense	17,703		17,656		14,004		—	%	26	%	Other non-interest expense	13,076		15,322		15,106		(15)	%	(13)	%
Total non-interest expense	Total non-interest expense	$	157,308	$	180,044	$	191,204	(13)	%	(18)	%	Total non-interest expense	$	128,035	$	151,079	$	186,219	(15)	%	(31)	%


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

Compensation and Benefits

Sequential: Compensation and benefits expense decreased ~~$14.5~~$13.1 million, or ~~16%~~18%, for the ~~first~~third quarter of 2023 compared to the ~~fourth~~second quarter of ~~2022.~~2023. The decrease was primarily due to a decrease in ~~headcount as a result~~the accrual of ~~the cost reduction and reorganization plan we implemented in January 2023.~~variable compensation expense.

Year Over Year: Compensation and benefits expense decreased ~~$8.3~~$26.4 million, or ~~10%~~31%, for the ~~first~~third quarter of 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in headcount as a result of the cost reduction and reorganization plan we implemented in January ~~2023.~~2023 and a decrease in the accrual of variable compensation expense.

LENDINGCLUB CORPORATION

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

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

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

Marketing

Sequential: Marketing expense decreased ~~$8.3~~$4.4 million, or ~~24%~~18%, for the ~~first~~third quarter of 2023 compared to the ~~fourth~~second quarter of ~~2022.~~2023. 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.

Year Over Year: Marketing expense decreased ~~$28.2~~$26.5 million, or ~~51%~~58%, for the ~~first~~third quarter of 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in variable marketing expenses based on lower origination volume.

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

Equipment and Software

Sequential: Equipment and software expense ~~remained relatively flat~~decreased $1.3 million, or 10%, for the ~~first~~third quarter of 2023 compared to the ~~fourth~~second quarter of ~~2022.~~2023. The decrease was primarily due to a decrease in subscription costs.

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

Nine Months Over Nine Months: Equipment and software expense increased ~~$2.7~~$4.3 million, or ~~24%~~12%, for the first nine months of 2023 compared to the same period in 2022. The increase was primarily due to an increase in subscription costs and hosting fees, partially offset by a decrease in support and maintenance expense.

Depreciation and Amortization

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

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

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

Professional Services

Sequential: ~~Depreciation and amortization expense remained relatively flat~~Professional services decreased $1.6 million, or 16%, for the ~~first~~third quarter of 2023 compared to the ~~fourth~~second quarter of ~~2022.~~2023. The decrease was primarily due to a decrease in consulting fees.

5867

LENDINGCLUB CORPORATION

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

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

Year Over Year: ~~Depreciation and amortization expense increased $1.3~~Professional services decreased $3.5 million, or ~~12%~~30%, for the ~~first quarter of 2023 compared to the same period in 2022. The increase was primarily due to an increase in the amortization of internally-developed software.~~

~~Sequential:~~ ~~Professional services decreased $1.0 million, or 10%, for the first quarter of 2023 compared to the fourth quarter of 2022. The decrease was primarily due to a decrease in consulting fees.~~

~~Year Over Year:~~ ~~Professional services decreased $3.3 million, or 27%, for the first~~third quarter of 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in consulting fees.

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

Occupancy

Sequential: Occupancy expense remained relatively flat for the ~~first~~third quarter of 2023 compared to the ~~fourth~~second quarter of ~~2022.~~2023.

Year Over Year: Occupancy expense decreased ~~$1.7~~$0.4 million, or ~~28%~~9%, for the ~~first~~third quarter of 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in rent expense.

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

Income Taxes

For the third quarter and first ~~quarter~~nine months of 2023, we recorded an income tax expense of ~~$4.1~~$3.3 million and $12.1 million, representing an effective tax rate of ~~23.2%.~~39.9% and 29.7%, respectively. The third quarter effective tax rate differs from the statutory rate as it iswas favorably affected by recurring items such as tax credits and iswas unfavorably affected by nondeductible portions of executive compensation. Additionally, the effective tax rate was unfavorably impacted by the discrete tax impact recognized during the period related to stock-based compensation, which had a larger impact in the third quarter.

For the ~~first~~third quarter of 2022, we recorded an income tax ~~expense~~benefit of $7.2 million, primarily due to the release of a $5.0 million ~~representing an effective~~valuation allowance against our deferred tax ~~rate of 10.9%, primarily related to~~assets and a $4.6 million tax credit, partially offset by a $2.4 million state income tax ~~expense for state jurisdictions that limit net operating loss utilization. The increase in~~expense. For the ~~quarterly effective~~first nine months of 2022, we recorded an income tax ~~rate is~~benefit of $134.2 million, primarily ~~related~~due to the ~~prior year tax benefits from our~~release of a $140.3 million valuation allowance ~~reversal.~~against our deferred tax assets.

As of ~~March 31,~~September 30, 2023, we maintained a valuation allowance of ~~$47.7~~$47.6 million related to net operating loss carryforwards (NOLs) and tax credit carryforwards. The realization and timing of any remaining state NOLs and tax credit carryforwards, based on the allocation of taxable income to the Parent, is uncertain and may expire before being utilized. Changes to deferred tax asset valuation allowances and liabilities related to uncertain tax positions are recorded as current period income tax expense or benefit.

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

The Inflation Reduction Act of 2022 (IRA) was signed into law in August 2022. The IRA contains a number of tax-related provisions effective for tax years beginning after December 31, 2022, including a 15% minimum corporate income tax on certain large corporations. As of March 31, 2023, we have evaluated the provisions of the IRA and there is currently no impact to income taxes.

Segment Information

5968

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)

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


		LendingClub Bank				LendingClub Corporation (Parent only)				Intercompany Eliminations				Consolidated Total					LendingClub Bank				LendingClub Corporation (Parent only)				Intercompany Eliminations				Consolidated Total
		Three Months Ended March 31,				Three Months Ended March 31,				Three Months Ended March 31,				Three Months Ended March 31,					Three Months Ended September 30,				Three Months Ended September 30,				Three Months Ended September 30,				Three Months Ended September 30,
		2023		2022		2023		2022		2023		2022		2023		2022			2023		2022		2023		2022		2023		2022		2023		2022
Non-interest income:	Non-interest income:																	Non-interest income:
Marketplace revenue	Marketplace revenue	$	72,688	$	164,835	$	13,108	$	15,131	$	9,838	$	—	$	95,634	$	179,966	Marketplace revenue	$	37,439	$	153,504	$	12,320	$	9,015	$	11,127	$	11,318	$	60,886	$	173,837
Other non-interest income	Other non-interest income	19,161		19,498		2,553		4,223		(18,358)		(13,830)		3,356		9,891		Other non-interest income	18,783		25,240		2,478		4,794		(18,303)		(22,634)		2,958		7,400
Total non-interest income	Total non-interest income	91,849		184,333		15,661		19,354		(8,520)		(13,830)		98,990		189,857		Total non-interest income	56,222		178,744		14,798		13,809		(7,176)		(11,316)		63,844		181,237

Interest income:	Interest income:																	Interest income:
Interest income	Interest income	198,330		99,823		4,083		11,830		—		—		202,413		111,653		Interest income	203,961		137,142		3,451		6,078		—		—		207,412		143,220
Interest expense	Interest expense	(53,896)		(3,644)		(1,813)		(8,329)		—		—		(55,709)		(11,973)		Interest expense	(69,517)		(15,277)		(890)		(4,267)		—		—		(70,407)		(19,544)
Net interest income	Net interest income	144,434		96,179		2,270		3,501		—		—		146,704		99,680		Net interest income	134,444		121,865		2,561		1,811		—		—		137,005		123,676

Total net revenue	Total net revenue	236,283		280,512		17,931		22,855		(8,520)		(13,830)		245,694		289,537		Total net revenue	190,666		300,609		17,359		15,620		(7,176)		(11,316)		200,849		304,913

Provision for credit losses	Provision for credit losses	(70,584)		(52,509)		—		—		—		—		(70,584)		(52,509)		Provision for credit losses	(64,463)		(82,739)		(16)		—		—		—		(64,479)		(82,739)
Non-interest expense	Non-interest expense	(148,383)		(178,459)		(17,445)		(26,575)		8,520		13,830		(157,308)		(191,204)		Non-interest expense	(122,142)		(177,714)		(13,069)		(19,821)		7,176		11,316		(128,035)		(186,219)
Income (Loss) before income tax benefit (expense)	Income (Loss) before income tax benefit (expense)	17,316		49,544		486		(3,720)		—		—		17,802		45,824		Income (Loss) before income tax benefit (expense)	4,061		40,156		4,274		(4,201)		—		—		8,335		35,955
Income tax benefit (expense)	Income tax benefit (expense)	(4,256)		(12,355)		120		17,727		—		(10,360)		(4,136)		(4,988)		Income tax benefit (expense)	(2,380)		(9,440)		(947)		16,683		—		—		(3,327)		7,243
Net income (loss)		$	13,060	$	37,189	$	606	$	14,007	$	—	$	(10,360)	$	13,666	$	40,836
Net income																		Net income	$	1,681	$	30,716	$	3,327	$	12,482	$	—	$	—	$	5,008	$	43,198

LENDINGCLUB CORPORATION

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

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


	LendingClub Bank				LendingClub Corporation (Parent only)				Intercompany Eliminations				Consolidated Total
	Nine Months Ended September 30,				Nine Months Ended September 30,				Nine Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022		2023		2022		2023		2022
Non-interest income:
Marketplace revenue	$	172,133	$	509,426	$	33,200	$	35,313	$	33,970	$	15,448	$	239,303	$	560,187
Other non-interest income	59,687		64,779		7,462		12,931		(57,800)		(52,971)		9,349		24,739
Total non-interest income	231,820		574,205		40,662		48,244		(23,830)		(37,523)		248,652		584,926

Interest income:
Interest income	612,805		357,117		11,506		26,224		—		—		624,311		383,341
Interest expense	(189,959)		(25,134)		(3,991)		(18,625)		—		—		(193,950)		(43,759)
Net interest income	422,846		331,983		7,515		7,599		—		—		430,361		339,582

Total net revenue	654,666		906,188		48,177		55,843		(23,830)		(37,523)		679,013		924,508

Provision for credit losses	(201,658)		(205,814)		—		—		—		—		(201,658)		(205,814)
Non-interest expense	(413,088)		(552,809)		(47,164)		(71,523)		23,830		37,523		(436,422)		(586,809)
Income (Loss) before income tax benefit (expense)	39,920		147,565		1,013		(15,680)		—		—		40,933		131,885
Income tax benefit (expense)	(12,065)		(39,113)		(84)		120,274		—		53,048		(12,149)		134,209
Net income	$	27,855	$	108,452	$	929	$	104,594	$	—	$	53,048	$	28,784	$	266,094

~~An analysis~~The material drivers and trends of the ~~Company’s~~financial results of ~~operations and material trends~~the segments presented above for the third quarter and first ~~quarter~~nine months of 2023 compared to the ~~fourth~~second quarter of 2023 and third quarter and first ~~quarters~~nine months of 2022 isare consistent with those provided on a consolidated basis in “"Results of Operations.”"

Non-GAAP Financial Measures

To supplement our financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: Pre-Provision Net Revenue (PPNR), Net Income Excluding Income Tax

~~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)~~

Benefit, Diluted EPS Excluding Income Tax Benefit, and Tangible Book Value (TBV) Per Common Share. Our non-GAAP financial measures do have limitations as analytical tools and you should not consider them in isolation or as a substitute for an analysis of our results under GAAP.

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

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

LENDINGCLUB CORPORATION

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

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

We believe TBV Per Common Share is an important measure used to evaluate the Company’s use of equity. TBV Per Common Share is a non-GAAP financial measure representing the book value of common equity reduced by goodwill and intangible assets, divided by ending number of common shares issued and outstanding.

The following tables provide a reconciliation of PPNR to the nearest GAAP measure:


		Three Months Ended						Three Months Ended						Nine Months Ended
		March 31, 2023		December 31, 2022		March 31, 2022				September 30, 2023		June 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
GAAP Net income	GAAP Net income	$	13,666	$	23,591	$	40,836		GAAP Net income	$	5,008	$	10,110	$	43,198	$	28,784	$	266,094
Less: Provision for credit losses	Less: Provision for credit losses	(70,584)		(61,512)		(52,509)			Less: Provision for credit losses	(64,479)		(66,595)		(82,739)		(201,658)		(205,814)
Less: Income tax benefit (expense)	Less: Income tax benefit (expense)	(4,136)		2,439		(4,988)			Less: Income tax benefit (expense)	(3,327)		(4,686)		7,243		(12,149)		134,209
Pre-provision net revenue	Pre-provision net revenue	$	88,386	$	82,664	$	98,333		Pre-provision net revenue	$	72,814	$	81,391	$	118,694	$	242,591	$	337,699


		Three Months Ended						Three Months Ended						Nine Months Ended
		March 31, 2023		December 31, 2022		March 31, 2022				September 30, 2023		June 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Non-interest income	Non-interest income	$	98,990	$	127,465	$	189,857		Non-interest income	$	63,844	$	85,818	$	181,237	$	248,652	$	584,926
Net interest income	Net interest income	146,704		135,243		99,680			Net interest income	137,005		146,652		123,676		430,361		339,582
Total net revenue	Total net revenue	245,694		262,708		289,537			Total net revenue	200,849		232,470		304,913		679,013		924,508
Non-interest expense	Non-interest expense	(157,308)		(180,044)		(191,204)			Non-interest expense	(128,035)		(151,079)		(186,219)		(436,422)		(586,809)
Pre-provision net revenue	Pre-provision net revenue	88,386		82,664		98,333			Pre-provision net revenue	72,814		81,391		118,694		242,591		337,699
Provision for credit losses	Provision for credit losses	(70,584)		(61,512)		(52,509)			Provision for credit losses	(64,479)		(66,595)		(82,739)		(201,658)		(205,814)
Income before income tax benefit (expense)	Income before income tax benefit (expense)	17,802		21,152		45,824			Income before income tax benefit (expense)	8,335		14,796		35,955		40,933		131,885
Income tax benefit (expense)	Income tax benefit (expense)	(4,136)		2,439		(4,988)			Income tax benefit (expense)	(3,327)		(4,686)		7,243		(12,149)		134,209
GAAP Net income	GAAP Net income	$	13,666	$	23,591	$	40,836		GAAP Net income	$	5,008	$	10,110	$	43,198	$	28,784	$	266,094

6171

LENDINGCLUB CORPORATION

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

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

The following table provides a reconciliation of Net Income Excluding Income Tax Benefit and Diluted EPS Excluding Income Tax Benefit to the nearest GAAP measures:


			As of and For The Three Months Ended						As of and For The Three Months Ended							As of and For The Nine Months Ended
			March 31, 2023		December 31, 2022		March 31, 2022					September 30, 2023		June 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
GAAP Net income	GAAP Net income		$	13,666	$	23,591	$	40,836		GAAP Net income		$	5,008	$	10,110	$	43,198	$	28,784	$	266,094
Income tax benefit from release of tax valuation allowance	Income tax benefit from release of tax valuation allowance		—		3,180		—			Income tax benefit from release of tax valuation allowance		—		—		5,015		—		140,315
Net income excluding income tax benefit	Net income excluding income tax benefit		$	13,666	$	20,411	$	40,836		Net income excluding income tax benefit		$	5,008	$	10,110	$	38,183	$	28,784	$	125,779

GAAP Diluted EPS – common stockholders	GAAP Diluted EPS – common stockholders		$	0.13	$	0.22	$	0.39		GAAP Diluted EPS – common stockholders		$	0.05	$	0.09	$	0.41	$	0.27	$	2.56

(A)	(A)	Income tax benefit from release of tax valuation allowance	N/A		$	3,180	N/A			(A)	Income tax benefit from release of tax valuation allowance	N/A		N/A		$	5,015	N/A		$	140,315
(B)	(B)	Weighted-average common shares – Diluted	N/A		105,984,612		N/A			(B)	Weighted-average common shares – Diluted	N/A		N/A		105,853,938		N/A		104,116,240
(A/B)	(A/B)	Diluted EPS impact of income tax benefit	N/A		$	0.03	N/A			(A/B)	Diluted EPS impact of income tax benefit	N/A		N/A		$	0.05	N/A		$	1.35

Diluted EPS excluding income tax benefit	Diluted EPS excluding income tax benefit		$	0.13	$	0.19	$	0.39		Diluted EPS excluding income tax benefit		$	0.05	$	0.09	$	0.36	$	0.27	$	1.21

N/A – Not applicable

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


As of	As of	March 31, 2023		December 31, 2022		March 31, 2022		As of	September 30, 2023		June 30, 2023		September 30, 2022
GAAP common equity	GAAP common equity	$	1,190,742	$	1,164,294	$	887,434	GAAP common equity	$	1,208,219	$	1,205,523	$	1,121,410
Less: Goodwill	Less: Goodwill	(75,717)		(75,717)		(75,717)		Less: Goodwill	(75,717)		(75,717)		(75,717)
Less: Intangible assets	Less: Intangible assets	(15,201)		(16,334)		(19,886)		Less: Intangible assets	(13,151)		(14,167)		(17,512)
Tangible common equity	Tangible common equity	$	1,099,824	$	1,072,243	$	791,831	Tangible common equity	$	1,119,351	$	1,115,639	$	1,028,181

Book value per common share	Book value per common share							Book value per common share
GAAP common equity	GAAP common equity	$	1,190,742	$	1,164,294	$	887,434	GAAP common equity	$	1,208,219	$	1,205,523	$	1,121,410
Common shares issued and outstanding	Common shares issued and outstanding	107,460,734		106,546,995		102,194,037		Common shares issued and outstanding	109,648,769		108,694,120		105,088,761
Book value per common share	Book value per common share	$	11.08	$	10.93	$	8.68	Book value per common share	$	11.02	$	11.09	$	10.67

Tangible book value per common share	Tangible book value per common share							Tangible book value per common share
Tangible common equity	Tangible common equity	$	1,099,824	$	1,072,243	$	791,831	Tangible common equity	$	1,119,351	$	1,115,639	$	1,028,181
Common shares issued and outstanding	Common shares issued and outstanding	107,460,734		106,546,995		102,194,037		Common shares issued and outstanding	109,648,769		108,694,120		105,088,761
Tangible book value per common share	Tangible book value per common share	$	10.23	$	10.06	$	7.75	Tangible book value per common share	$	10.21	$	10.26	$	9.78

Supervision and Regulatory Environment

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

LENDINGCLUB CORPORATION

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

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

Although historically the Company has generally resolved these matters in a manner that was not materially adverse to its financial results or business operations, no assurance can be given as to the timing, outcome or consequences of any of these matters in the future.

~~LENDINGCLUB CORPORATION~~

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

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

Regulatory Actions Taken in Relation to COVID-19

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

Federal Banking Regulator Supervision

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

Consequences

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

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

Capital Management

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

LENDINGCLUB CORPORATION

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

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

The formation of LC Bank as a nationally chartered association and the organization of the Company as a bank holding company subjects us to various capital adequacy guidelines issued by the OCC and the FRB, including the requirement to maintain regulatory capital ratios in accordance with the Basel Committee on Banking Supervision standardized approach for U.S. banking organizations (U.S. Basel III). As a U.S. Basel III standardized approach institution, we selected the one-time election to opt-out of the requirements to include all the components of

~~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)~~

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.~~19. Regulatory Requirements” in this Report for additional information.

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

March 31, 2023 December 31, 2022
Required Minimum plus Required CCB for
Non-Leverage Ratios
LendingClub Amount Ratio Amount Ratio
CET1 capital (1)
$ 1,023.7 15.6 % $ 1,005.8 15.8 % 7.0 %
Tier 1 capital $ 1,023.7 15.6 % $ 1,005.8 15.8 % 8.5 %
Total capital $ 1,108.5 16.9 % $ 1,088.1 17.1 % 10.5 %
Tier 1 leverage $ 1,023.7 12.8 % $ 1,005.8 14.1 % 4.0 %
Risk-weighted assets $ 6,541.2 N/A $ 6,360.7 N/A N/A
Quarterly adjusted average assets $ 8,016.1 N/A $ 7,119.0 N/A N/A

~~N/A – Not applicable~~

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


LendingClub Bank		March 31, 2023				December 31, 2022				Required Minimum plus Required CCB for Non-Leverage Ratios
		Amount		Ratio		Amount		Ratio
													September 30, 2023				December 31, 2022				Required Minimum plus Required CCB for Non-Leverage Ratios
													Amount		Ratio		Amount		Ratio
LendingClub Corporation:												LendingClub Corporation:
CET1 capital (1)	CET1 capital (1)	$	914.6	14.3	%	$	852.2	13.8	%	7.0	%	CET1 capital (1)	$	1,078.7	16.9	%	$	1,005.8	15.8	%	7.0	%
Tier 1 capital	Tier 1 capital	$	914.6	14.3	%	$	852.2	13.8	%	8.5	%	Tier 1 capital	$	1,078.7	16.9	%	$	1,005.8	15.8	%	8.5	%
Total capital	Total capital	$	997.7	15.6	%	$	932.4	15.1	%	10.5	%	Total capital	$	1,161.7	18.2	%	$	1,088.1	17.1	%	10.5	%
Tier 1 leverage	Tier 1 leverage	$	914.6	11.7	%	$	852.2	12.5	%	4.0	%	Tier 1 leverage	$	1,078.7	13.2	%	$	1,005.8	14.1	%	4.0	%
Risk-weighted assets	Risk-weighted assets	$	6,399.2	N/A		$	6,194.0	N/A		N/A		Risk-weighted assets	$	6,388.6	N/A		$	6,360.7	N/A		N/A
Quarterly adjusted average assets	Quarterly adjusted average assets	$	7,787.5	N/A		$	6,795.2	N/A		N/A		Quarterly adjusted average assets	$	8,200.3	N/A		$	7,119.0	N/A		N/A

LendingClub Bank:												LendingClub Bank:
CET1 capital (1)												CET1 capital (1)	$	949.7	15.1	%	$	852.2	13.8	%	7.0	%
Tier 1 capital												Tier 1 capital	$	949.7	15.1	%	$	852.2	13.8	%	8.5	%
Total capital												Total capital	$	1,031.2	16.5	%	$	932.4	15.1	%	10.5	%
Tier 1 leverage												Tier 1 leverage	$	949.7	11.8	%	$	852.2	12.5	%	4.0	%
Risk-weighted assets												Risk-weighted assets	$	6,268.6	N/A		$	6,194.0	N/A		N/A
Quarterly adjusted average assets												Quarterly adjusted average assets	$	8,016.0	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.

6474

LENDINGCLUB CORPORATION

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

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

In response to the COVID-19 pandemic, the FRB, OCC, and FDIC adopted a final rule related to the regulatory capital treatment of the allowance for credit losses under CECL. As permitted by the rule, the Company elected to delay the estimated impact of CECL on regulatory capital resulting in a capital benefit of $35 million at December 31, 2021. This benefit is phased out over a three-year transition period that commenced on January 1, 2022 at a rate of 25% each year through January 1, 2025.

Liquidity

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

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

LendingClub Bank Liquidity

~~During~~The following table summarizes LC Bank’s primary sources of short-term liquidity as of the ~~second quarter of 2023,~~ periods presented:


	September 30, 2023		December 31, 2022
Cash and cash equivalents	$	1,283,549	$	1,020,874
Securities available for sale (1)	$	352,210	$	329,287
Deposits	$	7,074,717	$	6,420,827


Available borrowing capacity:
FHLB of Des Moines borrowing capacity (2)	$	656,190	$	414,528
FRB Discount Window borrowing capacity (3)	$	3,108,772	$	191,021
Total available borrowing capacity	$	3,764,962	$	605,549

(1) Excludes illiquid securities available for sale.

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

(3) LC Bank’s available borrowing capacity under the FRB Discount Window increased upon including its unsecured personal loan portfolio among the loans pledged as ~~collateral. Consequently, LC Bank’s available borrowing capacity under~~collateral beginning in the ~~FRB Discount Window was $3.7 billion, with total available borrowing capacity~~second quarter of ~~$4.1 billion, as of April 26,~~ 2023.

The following table summarizes LC Bank’s primary sources of short-term liquidity, including customer deposits that provide a significant source of relatively low-cost funding, as of the periods presented:

March 31, 2023 December 31, 2022
Cash and cash equivalents $ 1,609,360 $ 1,020,874
Unencumbered securities available for sale $ 368,365 $ 329,287
Deposits $ 7,241,463 $ 6,420,827
Advances from PPPLF (1)
$ 45,610 $ 64,154
Available borrowing capacity:
FHLB of Des Moines borrowing capacity $ 438,206 $ 414,528
FRB Discount Window borrowing capacity $ 192,897 $ 191,021
Total available borrowing capacity $ 631,103 $ 605,549

~~(1)~~ ~~Collateralized by PPP loans originated by the Company.~~

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 ~~$16.4~~$48.2 million, or ~~6.9%~~7.4% of total net revenue, and ~~$21.6~~$54.7 million, or ~~7.7%~~6.0% of total net revenue, for the first ~~quarters~~nine months of 2023 and 2022, respectively. Capital expenditures in 2023 are expected to be approximately ~~$65~~$60 million, primarily related to costs associated with the continued development and support of our online lending marketplace platform, including regulatory compliance costs.

6575

LENDINGCLUB CORPORATION

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

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

LendingClub Holding Company Liquidity

The primary source of liquidity at the holding company is ~~$42.8~~$93.1 million and $56.5 million in cash and cash equivalents as of ~~March 31,~~September 30, 2023 and December 31, 2022, respectively. Additionally, the holding company has the ability to access the capital markets through additional registrations and public equity offerings.

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

Factors Impacting Liquidity

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

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

Market Risk

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

Interest Rate Sensitivity

LendingClub Bank

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

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

6676

LENDINGCLUB CORPORATION

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

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

The following table presents the change in projected net interest income for the next twelve months due to a hypothetical instantaneous parallel change in interest rates relative to current rates:


		March 31, 2023		December 31, 2022		September 30, 2023		December 31, 2022
Instantaneous Change in Interest Rates:	Instantaneous Change in Interest Rates:						Instantaneous Change in Interest Rates:
+ 200 basis points	+ 200 basis points	(8.8)	%	(6.9)	%		+ 200 basis points	(4.7)	%	(6.9)	%
+ 100 basis points	+ 100 basis points	(4.3)	%	(3.3)	%		+ 100 basis points	(2.3)	%	(3.3)	%
– 100 basis points	– 100 basis points	2.6	%	1.9	%		– 100 basis points	0.4	%	1.9	%
– 200 basis points	– 200 basis points	5.0	%	3.5	%		– 200 basis points	0.6	%	3.5	%

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

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

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

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

LendingClub Holding Company

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

Contingencies

For a comprehensive discussion of contingencies as of ~~March 31,~~September 30, 2023, see “Item 1. Financial Statements – Notes to Condensed Consolidated Financial Statements – Note ~~17.~~18. Commitments and Contingencies.”

Critical Accounting Estimates

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

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management evaluated, with the participation of the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of ~~March 31,~~September 30, 2023. In designing and evaluating its disclosure controls and procedures, the Company’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance, not absolute assurance, of achieving the desired control objectives, and is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures as of ~~March 31,~~September 30, 2023, were designed and functioned effectively to provide reasonable assurance that the information required to be disclosed by the Company in reports filed under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to management, including the principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

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

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For a comprehensive discussion of legal proceedings, see “Part I. Financial Information – Item 1. Financial Statements – Notes to Condensed Consolidated Financial Statements – Note ~~17.~~18. Commitments and Contingencies – Legal,” which is incorporated herein by reference.

Item 1A. Risk Factors

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

LENDINGCLUB CORPORATION

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

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

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

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

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

LENDINGCLUB CORPORATION

outstanding unpaid principal balance on LendingClub loans is held by borrowers that have federal student loan payments that resumed pursuant to the Student Loan Payment Resumption. It is possible that the Federal Student Loan Resumption may reduce the ability of these borrowers to make other payments and thereby potentially increase their risk of default on their LendingClub loan(s). It is also possible that the Federal government may extend the Student Loan Forbearance Program or implement or leverage another program to mitigate the impact of the Student Loan Payment Resumption.

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

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

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

None.

~~LENDINGCLUB CORPORATION~~

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

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

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

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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

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

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.

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LENDINGCLUB CORPORATION

SIGNATURES

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

LENDINGCLUB CORPORATION

(Registrant)

Date:

~~May 2,~~October 30, 2023

/s/ SCOTT SANBORN

Scott Sanborn

Chief Executive Officer

Date:

~~May 2,~~October 30, 2023

/s/ ANDREW LABENNE

Andrew LaBenne

Chief Financial Officer

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2023	$	3,065
2024	3,549
2025	2,901
2026	2,252
2027	1,603
Thereafter	1,831
Total	$	15,201


2023	$	37,428
2024	40,395
2025	29,311
2026	17,135
2027	8,087
Thereafter	5,620
Total lease payments	$	137,976
Discount effect	(6,136)
Present value of future minimum lease payments	$	131,840


LendingClub	March 31, 2023				December 31, 2022				Required Minimum plus Required CCB for Non-Leverage Ratios
	Amount		Ratio		Amount		Ratio
CET1 capital (1)	$	1,023.7	15.6	%	$	1,005.8	15.8	%	7.0	%
Tier 1 capital	$	1,023.7	15.6	%	$	1,005.8	15.8	%	8.5	%
Total capital	$	1,108.5	16.9	%	$	1,088.1	17.1	%	10.5	%
Tier 1 leverage	$	1,023.7	12.8	%	$	1,005.8	14.1	%	4.0	%
Risk-weighted assets	$	6,541.2	N/A		$	6,360.7	N/A		N/A
Quarterly adjusted average assets	$	8,016.1	N/A		$	7,119.0	N/A		N/A