LC 10-Q Quarterly Report June 30, 2023 | Alphaminr
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LC 10-Q Quarter ended June 30, 2023

Balance Sheet
Cash Flow
Income Statement
Debt
LENDINGCLUB CORP
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lc-20230630
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023
Commission File Number: 001-36771
LendingClub Corporation
(Exact name of registrant as specified in its charter)
Delaware 51-0605731
(State or other jurisdiction of
incorporation or organization) 		(I.R.S. Employer
Identification No.)
595 Market Street, Suite 200,
San Francisco, CA 94105
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: ( 415 ) 632-5600
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Common stock, par value $0.01 per share LC New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes ☐ No ☒
As of July 21, 2023, there were 108,694,120 shares of the registrant’s common stock outstanding.


LENDINGCLUB CORPORATION
TABLE OF CONTENTS



Glossary

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


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


LENDINGCLUB CORPORATION

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

Forward-looking Statements

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

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

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

LENDINGCLUB CORPORATION

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

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

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

2

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
LENDINGCLUB CORPORATION
Condensed Consolidated Balance Sheets
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)
June 30,
2023 		December 31, 2022
Assets
Cash and due from banks $ 20,950 $ 23,125
Interest-bearing deposits in banks 1,182,974 1,033,905
Total cash and cash equivalents 1,203,924 1,057,030
Restricted cash (1)
34,792 67,454
Securities available for sale at fair value ($ 579,704 and $ 399,668 at amortized cost, respectively)
523,579 345,702
Loans held for sale at fair value 250,361 110,400
Loans and leases held for investment 5,533,349 5,033,154
Allowance for loan and lease losses ( 355,163 ) ( 327,852 )
Loans and leases held for investment, net 5,178,186 4,705,302
Loans held for investment at fair value (1)
404,119 925,938
Retail and certificate loans held for investment at fair value (1)
26,837 55,425
Property, equipment and software, net 151,608 136,473
Goodwill 75,717 75,717
Other assets (1)
493,383 500,306
Total assets $ 8,342,506 $ 7,979,747
Liabilities and Equity
Deposits:
Interest-bearing $ 6,653,749 $ 6,158,560
Noninterest-bearing 189,786 233,993
Total deposits 6,843,535 6,392,553
Borrowings (1)
15,675 74,858
Retail notes, certificates and secured borrowings at fair value (1)
26,837 55,425
Other liabilities (1)
250,936 292,617
Total liabilities 7,136,983 6,815,453
Equity
Common stock, $ 0.01 par value; 180,000,000 shares authorized; 108,694,120 and 106,546,995 shares issued and outstanding, respectively
1,087 1,065
Additional paid-in capital
1,647,593 1,628,590
Accumulated deficit ( 403,969 ) ( 427,745 )
Accumulated other comprehensive loss ( 39,188 ) ( 37,616 )
Total equity 1,205,523 1,164,294
Total liabilities and equity $ 8,342,506 $ 7,979,747
(1) Includes amounts in consolidated variable interest entities (VIEs). See “ Notes to Condensed Consolidated Financial Statements – Note 6. Securitizations and Variable Interest Entities .”

See Notes to Condensed Consolidated Financial Statements.
3

LENDINGCLUB CORPORATION
Condensed Consolidated Statements of Income
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)
Three Months Ended
June 30, 		Six Months Ended
June 30,
2023 2022 2023 2022
Non-interest income:
Marketplace revenue $ 82,783 $ 206,384 $ 178,417 $ 386,350
Other non-interest income 3,035 7,448 6,391 17,339
Total non-interest income 85,818 213,832 184,808 403,689
Interest income:
Interest on loans held for sale 4,433 7,130 10,190 14,580
Interest and fees on loans and leases held for investment 162,085 108,911 312,552 200,353
Interest on loans held for investment at fair value 21,692 631 48,584 1,224
Interest on retail and certificate loans held for investment at fair value 1,194 5,091 2,877 12,060
Interest on securities available for sale 5,948 4,426 9,848 8,937
Other interest income 19,134 2,279 32,848 2,967
Total interest income 214,486 128,468 416,899 240,121
Interest expense:
Interest on deposits 66,521 6,078 119,794 9,516
Interest on retail notes, certificates and secured borrowings 1,194 5,091 2,877 12,060
Other interest expense 119 1,073 872 2,639
Total interest expense 67,834 12,242 123,543 24,215
Net interest income 146,652 116,226 293,356 215,906
Total net revenue 232,470 330,058 478,164 619,595
Provision for credit losses 66,595 70,566 137,179 123,075
Non-interest expense:
Compensation and benefits 71,553 85,103 144,860 166,713
Marketing 23,940 61,497 50,820 116,577
Equipment and software 13,968 12,461 27,664 23,507
Depreciation and amortization 11,638 10,557 23,992 21,596
Professional services 9,974 16,138 19,032 28,544
Occupancy 4,684 6,209 8,994 12,228
Other non-interest expense 15,322 17,421 33,025 31,425
Total non-interest expense 151,079 209,386 308,387 400,590
Income before income tax benefit (expense) 14,796 50,106 32,598 95,930
Income tax benefit (expense) ( 4,686 ) 131,954 ( 8,822 ) 126,966
Net income $ 10,110 $ 182,060 $ 23,776 $ 222,896
Earnings per share: (1)
Basic EPS $ 0.09 $ 1.77 $ 0.22 $ 2.18
Diluted EPS $ 0.09 $ 1.73 $ 0.22 $ 2.13
Weighted-average common shares – Basic 107,892,590 102,776,867 107,405,072 102,138,760
Weighted-average common shares – Diluted 107,895,072 105,042,626 107,409,129 104,644,825
(1) See “ Notes to Condensed Consolidated Financial Statements – Note 3. Earnings Per Share ” for additional information.
See Notes to Condensed Consolidated Financial Statements.
4

LENDINGCLUB CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(In Thousands)
(Unaudited)
Three Months Ended
June 30, 		Six Months Ended
June 30,
2023 2022 2023 2022
Net income $ 10,110 $ 182,060 $ 23,776 $ 222,896
Other comprehensive loss:
Net unrealized loss on securities available for sale ( 7,758 ) ( 19,830 ) ( 2,159 ) ( 39,817 )
Other comprehensive loss, before tax ( 7,758 ) ( 19,830 ) ( 2,159 ) ( 39,817 )
Income tax effect (1)
2,107 11,128 587 10,928
Other comprehensive loss, net of tax ( 5,651 ) ( 8,702 ) ( 1,572 ) ( 28,889 )
Total comprehensive income $ 4,459 $ 173,358 $ 22,204 $ 194,007
(1) Income tax effect for the second quarter and first half of 2022 reflects the release of the deferred tax asset valuation allowance on the securities available for sale portfolio.

See Notes to Condensed Consolidated Financial Statements.
5

LENDINGCLUB CORPORATION
Condensed Consolidated Statements of Changes in Equity
(In Thousands, Except Share Data)
(Unaudited)
Common Stock Additional
Paid-in
Capital 		Accumulated Other Comprehensive Loss Accumulated
Deficit 		Total
Equity
Shares Amount
Balance at March 31, 2023
107,460,734 $ 1,075 $ 1,637,283 $ ( 33,537 ) $ ( 414,079 ) $ 1,190,742
Stock-based compensation — — 18,021 — — 18,021
Net issuances under equity incentive plans 1,233,386 12 ( 7,711 ) — — ( 7,699 )
Net unrealized loss on securities available for sale, net of tax — — — ( 5,651 ) — ( 5,651 )
Net income — — — — 10,110 10,110
Balance at June 30, 2023
108,694,120 $ 1,087 $ 1,647,593 $ ( 39,188 ) $ ( 403,969 ) $ 1,205,523
Common Stock Additional
Paid-in
Capital 		Accumulated Other Comprehensive Loss Accumulated
Deficit 		Total
Equity
Shares Amount
Balance at December 31, 2022
106,546,995 $ 1,065 $ 1,628,590 $ ( 37,616 ) $ ( 427,745 ) $ 1,164,294
Stock-based compensation — — 32,091 — — 32,091
Net issuances under equity incentive plans 2,147,125 22 ( 13,088 ) — — ( 13,066 )
Net unrealized loss on securities available for sale, net of tax — — — ( 1,572 ) — ( 1,572 )
Net income — — — — 23,776 23,776
Balance at June 30, 2023
108,694,120 $ 1,087 $ 1,647,593 $ ( 39,188 ) $ ( 403,969 ) $ 1,205,523
Common Stock Additional
Paid-in
Capital 		Accumulated Other Comprehensive Loss Accumulated
Deficit 		Total
Equity
Shares Amount
Balance at March 31, 2022
102,194,037 $ 1,022 $ 1,576,147 $ ( 13,141 ) $ ( 676,594 ) $ 887,434
Stock-based compensation — — 19,664 — — 19,664
Net issuances under equity incentive plans 1,436,739 14 ( 1,353 ) — — ( 1,339 )
Net unrealized loss on securities available for sale, net of tax — — — ( 8,702 ) — ( 8,702 )
Net income — — — — 182,060 182,060
Balance at June 30, 2022
103,630,776 $ 1,036 $ 1,594,458 $ ( 21,843 ) $ ( 494,534 ) $ 1,079,117
Common Stock Additional
Paid-in
Capital 		Accumulated Other Comprehensive Income (Loss) Accumulated
Deficit 		Total
Equity
Shares Amount
Balance at December 31, 2021
101,043,924 $ 1,010 $ 1,559,616 $ 7,046 $ ( 717,430 ) $ 850,242
Stock-based compensation — — 36,851 — — 36,851
Net issuances under equity incentive plans 2,586,852 26 ( 2,009 ) — — ( 1,983 )
Net unrealized loss on securities available for sale, net of tax — — — ( 28,889 ) — ( 28,889 )
Net income — — — — 222,896 222,896
Balance at June 30, 2022
103,630,776 $ 1,036 $ 1,594,458 $ ( 21,843 ) $ ( 494,534 ) $ 1,079,117

See Notes to Condensed Consolidated Financial Statements.
6

LENDINGCLUB CORPORATION
Condensed Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
Six Months Ended
June 30,
2023 2022
Cash Flows from Operating Activities:
Net income $ 23,776 $ 222,896
Adjustments to reconcile net income to net cash provided by operating activities:
Net fair value adjustments 38,856 ( 24,896 )
Change in fair value of loan servicing assets 29,650 38,013
Gain on sales of loans ( 27,346 ) ( 53,429 )
Provision for credit losses 137,179 123,075
Accretion of loan deferred fees and costs ( 50,292 ) ( 41,392 )
Stock-based compensation, net 27,716 33,467
Depreciation and amortization 23,992 21,596
Income tax benefit from release of tax valuation allowance — ( 135,300 )
Other, net ( 6,363 ) 2,520
Net change to loans held for sale ( 138,347 ) 66,787
Net change in operating assets and liabilities:
Other assets 14,065 ( 6,648 )
Other liabilities ( 49,751 ) ( 14,734 )
Net cash provided by operating activities 23,135 231,955
Cash Flows from Investing Activities:
Net change in loans and leases ( 222,167 ) ( 881,279 )
Net decrease in retail and certificate loans 30,222 113,422
Purchases of securities available for sale ( 45,120 ) ( 222,534 )
Proceeds from maturities and paydowns of securities available for sale 19,022 49,645
Purchases of property, equipment and software, net
( 32,255 ) ( 37,358 )
Other investing activities ( 7,600 ) ( 4,023 )
Net cash used for investing activities ( 257,898 ) ( 982,127 )
Cash Flows from Financing Activities:
Net change in deposits 450,559 1,391,884
Principal payments on borrowings ( 58,276 ) ( 183,244 )
Principal payments on retail notes and certificates ( 30,222 ) ( 113,498 )
Other financing activities
( 13,066 ) ( 6,324 )
Net cash provided by financing activities 348,995 1,088,818
Net Increase in Cash, Cash Equivalents and Restricted Cash $ 114,232 $ 338,646
Cash, Cash Equivalents and Restricted Cash, Beginning of Period $ 1,124,484 $ 763,586
Cash, Cash Equivalents and Restricted Cash, End of Period $ 1,238,716 $ 1,102,232
7

LENDINGCLUB CORPORATION
Condensed Consolidated Statements of Cash Flows (Continued)
(In Thousands)
(Unaudited)
Six Months Ended
June 30,
2023 2022
Supplemental Cash Flow Information:
Cash paid for interest $ 115,112 $ 19,463
Cash paid for taxes $ 7,245 $ 10,840
Cash paid for operating leases included in the measurement of lease liabilities
$ 6,364 $ 9,253
Non-cash investing activity:
Net securities retained from Structured Program transactions $ 153,229 $ —
Non-cash financing activity:
Derecognition of payable to securitization note and residual certificate holders held in consolidated VIE $ — $ 36,072

The following presents cash, cash equivalents and restricted cash by category within the Balance Sheet:
June 30,
2023 		December 31, 2022
Cash and cash equivalents $ 1,203,924 $ 1,057,030
Restricted cash 34,792 67,454
Total cash, cash equivalents and restricted cash
$ 1,238,716 $ 1,124,484

See Notes to Condensed Consolidated Financial Statements.
8

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


1. Summary of Significant Accounting Policies

Basis of Presentation

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

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

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

Significant Accounting Policies

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

Adoption of New Accounting Standards

The Company adopted the following new accounting standard during the six-month period ended June 30, 2023:

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

The FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which, if certain criteria are met, provide optional expedients and exceptions for applying GAAP to transactions affected by reference rate reform. The provisions of this topic are elective and may be applied prospectively as of the beginning of the reporting period when the election is made through December 31, 2024.
9

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

The Company adopted this standard as of April 1, 2023. The adoption of this standard did not have a material impact on the Company’s financial position, results of operations, cash flows, and disclosures.

2. Marketplace Revenue

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

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

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

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

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

The following table presents components of marketplace revenue for the periods presented:
Three Months Ended
June 30, 		Six Months Ended
June 30,
2023 2022 2023 2022
Origination fees $ 70,989 $ 149,252 $ 141,532 $ 271,345
Servicing fees 22,015 18,166 48,395 36,680
Gain on sales of loans 13,221 29,319 27,346 53,429
Net fair value adjustments ( 23,442 ) 9,647 ( 38,856 ) 24,896
Total marketplace revenue $ 82,783 $ 206,384 $ 178,417 $ 386,350

10

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

3. Earnings Per Share

The following table details the computation of the Company’s Basic and Diluted EPS:
Three Months Ended
June 30, 		Six Months Ended
June 30,
2023 2022 2023 2022
Basic EPS:
Net income attributable to stockholders $ 10,110 $ 182,060 $ 23,776 $ 222,896
Weighted-average common shares – Basic 107,892,590 102,776,867 107,405,072 102,138,760
Basic EPS $ 0.09 $ 1.77 $ 0.22 $ 2.18
Diluted EPS:
Net income attributable to stockholders $ 10,110 $ 182,060 $ 23,776 $ 222,896
Weighted-average common shares – Diluted 107,895,072 105,042,626 107,409,129 104,644,825
Diluted EPS $ 0.09 $ 1.73 $ 0.22 $ 2.13

11

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

4. Securities Available for Sale

The amortized cost, gross unrealized gains and losses, credit valuation allowance and fair value of available for sale (AFS) securities were as follows:
June 30, 2023 Amortized
Cost 		Gross
Unrealized
Gains 		Gross
Unrealized
Losses 		Fair
Value
U.S. agency residential mortgage-backed securities $ 254,999 $ — $ ( 40,483 ) $ 214,516
Senior asset-backed securities related to Structured Program transactions 144,529 — ( 605 ) 143,924
U.S. agency securities 93,449 — ( 14,409 ) 79,040
Mortgage-backed securities 43,723 — ( 5,580 ) 38,143
Other asset-backed securities 29,187 44 ( 765 ) 28,466
Other asset-backed securities related to Structured Program transactions (1)
10,550 6,452 ( 22 ) 16,980
Municipal securities 3,267 — ( 757 ) 2,510
Total securities available for sale (2)
$ 579,704 $ 6,496 $ ( 62,621 ) $ 523,579
December 31, 2022 Amortized
Cost 		Gross
Unrealized
Gains 		Gross
Unrealized
Losses 		Fair
Value
U.S. agency residential mortgage-backed securities $ 255,675 $ — $ ( 41,248 ) $ 214,427
U.S. agency securities 90,447 — ( 16,053 ) 74,394
Mortgage-backed securities 26,988 — ( 4,470 ) 22,518
Asset-backed securities related to Structured Program transactions 8,322 9,395 — 17,717
Other asset-backed securities 14,959 29 ( 785 ) 14,203
Municipal securities 3,277 — ( 834 ) 2,443
Total securities available for sale (2)
$ 399,668 $ 9,424 $ ( 63,390 ) $ 345,702
(1) As of June 30, 2023, $ 8.5 million of the other asset-backed securities related to Structured Program transactions at fair value are subject to restrictions on transfer pursuant to the Company’s obligations as a “sponsor” under the U.S. Risk Retention Rules.
(2) As of June 30, 2023 and December 31, 2022, includes $ 352.1 million and $ 319.0 million, respectively, of fair value securities pledged as collateral.

12

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

A summary of AFS securities with unrealized losses for which a credit valuation allowance has not been recorded, aggregated by period of continuous unrealized loss, is as follows:
Less than
12 months 		12 months
or longer 		Total
June 30, 2023 Fair
Value 		Unrealized
Losses 		Fair
Value 		Unrealized
Losses 		Fair
Value 		Unrealized
Losses
U.S. agency residential mortgage-backed securities $ 22,653 $ ( 1,331 ) $ 191,863 $ ( 39,152 ) $ 214,516 $ ( 40,483 )
Senior asset-backed securities related to Structured Program transactions 94,552 ( 605 ) — — 94,552 ( 605 )
U.S. agency securities 5,878 ( 122 ) 73,162 ( 14,287 ) 79,040 ( 14,409 )
Mortgage-backed securities 16,946 ( 787 ) 21,197 ( 4,793 ) 38,143 ( 5,580 )
Other asset-backed securities 14,035 ( 48 ) 8,479 ( 717 ) 22,514 ( 765 )
Other asset-backed securities related to Structured Program transactions 5,703 ( 22 ) — — 5,703 ( 22 )
Municipal securities — — 2,510 ( 757 ) 2,510 ( 757 )
Total securities with unrealized losses $ 159,767 $ ( 2,915 ) $ 297,211 $ ( 59,706 ) $ 456,978 $ ( 62,621 )
Less than
12 months 		12 months
or longer 		Total
December 31, 2022 Fair
Value 		Unrealized
Losses 		Fair
Value 		Unrealized
Losses 		Fair
Value 		Unrealized
Losses
U.S. agency residential mortgage-backed securities $ 111,843 $ ( 15,831 ) $ 102,584 $ ( 25,417 ) $ 214,427 $ ( 41,248 )
U.S. agency securities 50,352 ( 7,213 ) 24,042 ( 8,840 ) 74,394 ( 16,053 )
Mortgage-backed securities 2,441 ( 229 ) 20,077 ( 4,241 ) 22,518 ( 4,470 )
Other asset-backed securities 4,086 ( 73 ) 6,945 ( 712 ) 11,031 ( 785 )
Municipal securities — — 2,443 ( 834 ) 2,443 ( 834 )
Total securities with unrealized losses $ 168,722 $ ( 23,346 ) $ 156,091 $ ( 40,044 ) $ 324,813 $ ( 63,390 )

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


13

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


The contractual maturities of AFS securities were as follows:
June 30, 2023 Amortized Cost Fair Value
Weighted-
average
Yield (1)
Due after 1 year through 5 years:
Senior asset-backed securities related to Structured Program transactions $ 144,529 $ 143,924
Other asset-backed securities related to Structured Program transactions 10,550 16,980
U.S. agency securities 9,000 8,595
Mortgage-backed securities 1,788 1,583
U.S. agency residential mortgage-backed securities 4 4
Total due after 1 year through 5 years 165,871 171,086 5.19 %
Due after 5 years through 10 years:
U.S. agency securities 18,847 17,257
Other asset-backed securities 16,491 16,471
U.S. agency residential mortgage-backed securities 5,512 5,127
Mortgage-backed securities 2,047 1,693
Municipal securities 622 541
Total due after 5 years through 10 years 43,519 41,089 4.19 %
Due after 10 years:
U.S. agency residential mortgage-backed securities 249,483 209,385
U.S. agency securities 65,602 53,188
Mortgage-backed securities 39,888 34,867
Other asset-backed securities 12,696 11,995
Municipal securities 2,645 1,969
Total due after 10 years 370,314 311,404 2.69 %
Total securities available for sale $ 579,704 $ 523,579 3.52 %
(1) The weighted-average yield is computed using the amortized cost at June 30, 2023.

There were no sales of AFS securities during the second quarters and first halves of 2023 and 2022 .

14

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

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

LendingClub records certain loans and leases held for investment (HFI) at amortized cost. Other HFI and all held for sale (HFS) loans are recorded at fair value with the Company’s election of the fair value option. Net a ccrued interest receivable is excluded from the amortized cost basis of loans and leases HFI and is reported within “Other assets” on the Balance Sheet . Net accrued interest receivable related to loans and leases HFI at amortized cost was $ 32.2 million and $ 27.9 million as of June 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:
June 30, 2023 December 31, 2022
Unsecured personal $ 4,371,330 $ 3,866,373
Residential mortgages 192,256 199,601
Secured consumer 237,372 194,634
Total consumer loans held for investment 4,800,958 4,260,608
Equipment finance (1)
142,073 160,319
Commercial real estate 382,738 373,501
Commercial and industrial (2)
207,580 238,726
Total commercial loans and leases held for investment 732,391 772,546
Total loans and leases held for investment 5,533,349 5,033,154
Allowance for loan and lease losses ( 355,163 ) ( 327,852 )
Loans and leases held for investment, net (3)
$ 5,178,186 $ 4,705,302
(1) Comprised of sales-type leases for equipment. See “ Note 16. Leases ” for additional information.
(2) Includes $ 17.6 million and $ 67.0 million of pledged loans under the Paycheck Protection Program (PPP) as of June 30, 2023 and December 31, 2022, respectively.
(3) As of June 30, 2023 and December 31, 2022, the Company had $ 4.8 billion and $ 283.6 million in loans pledged as collateral under the Federal Reserve Bank (FRB) Discount Window, respectively. In addition, as of June 30, 2023 and December 31, 2022 , the Company had $ 151.2 million and $ 156.2 million in loans pledged to the Federal Home Loan Bank ( FHLB) of Des Moines, respectively.

June 30, 2023 Gross ALLL Net
Allowance Ratios (1)
Total consumer loans held for investment $ 4,800,958 $ 341,161 $ 4,459,797 7.1 %
Total commercial loans and leases held for investment 732,391 14,002 718,389 1.9 %
Total loans and leases held for investment $ 5,533,349 $ 355,163 $ 5,178,186 6.4 %
December 31, 2022 Gross ALLL Net
Allowance Ratios (1)
Total consumer loans held for investment $ 4,260,608 $ 312,489 $ 3,948,119 7.3 %
Total commercial loans and leases held for investment 772,546 15,363 757,183 2.0 %
Total loans and leases held for investment $ 5,033,154 $ 327,852 $ 4,705,302 6.5 %
(1) Calculated as the ratio of allowance for loan and lease losses (ALLL) to loans and leases HFI at amortized cost.

15

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

The activity in the ACL by portfolio segment was as follows:
Three Months Ended June 30,
2023 2022
Consumer Commercial Total Consumer Commercial Total
Allowance for loan and lease losses, beginning of period $ 333,546 $ 15,311 $ 348,857 $ 173,857 $ 14,128 $ 187,985
Credit loss expense for loans and leases held for investment
66,874 ( 684 ) 66,190 68,314 1,739 70,053
Charge-offs (1)
( 63,345 ) ( 924 ) ( 64,269 ) ( 14,707 ) ( 1,145 ) ( 15,852 )
Recoveries 4,086 299 4,385 720 354 1,074
Allowance for loan and lease losses, end of period $ 341,161 $ 14,002 $ 355,163 $ 228,184 $ 15,076 $ 243,260
Reserve for unfunded lending commitments, beginning of period $ 67 $ 1,545 $ 1,612 $ — $ 1,512 $ 1,512
Credit loss expense for unfunded lending commitments ( 67 ) 472 405 136 377 513
Reserve for unfunded lending commitments, end of period (2)
$ — $ 2,017 $ 2,017 $ 136 $ 1,889 $ 2,025
Six Months Ended June 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
137,558 ( 518 ) 137,040 122,032 249 122,281
Charge-offs (1)
( 115,557 ) ( 1,275 ) ( 116,832 ) ( 23,724 ) ( 1,217 ) ( 24,941 )
Recoveries 6,671 432 7,103 1,064 467 1,531
Allowance for loan and lease losses, end of period $ 341,161 $ 14,002 $ 355,163 $ 228,184 $ 15,076 $ 243,260
Reserve for unfunded lending commitments, beginning of period $ 18 $ 1,860 $ 1,878 $ — $ 1,231 $ 1,231
Credit loss expense for unfunded lending commitments ( 18 ) 157 139 136 658 794
Reserve for unfunded lending commitments, end of period (2)
$ — $ 2,017 $ 2,017 $ 136 $ 1,889 $ 2,025
(1) Unsecured personal loans are charged-off when a borrower is (i) contractually 120 days past due or (ii) two payments past due and has filed for bankruptcy or is deceased.
(2) Relates to $ 108.9 million and $ 132.6 million of unfunded commitments, associated primarily with the commercial loan portfolio, as of June 30, 2023 and 2022, respectively.

16

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

The following table presents year-to-date gross charge-offs by origination year for the period presented:
Six Months Ended June 30, 2023
Gross Charge-Offs by Origination Year
2023 2022 2021 2020 2019 Prior Total
Unsecured personal $ 1,596 $ 63,295 $ 49,331 $ — $ — $ — $ 114,222
Residential mortgages — — — — — — —
Secured consumer 19 1,026 290 — — — 1,335
Total consumer loans held for investment 1,615 64,321 49,621 — — — 115,557
Equipment finance — — — — — — —
Commercial real estate — — — — — — —
Commercial and industrial — — 923 — 318 34 1,275
Total commercial loans and leases held for investment — — 923 — 318 34 1,275
Total loans and leases held for investment $ 1,615 $ 64,321 $ 50,544 $ — $ 318 $ 34 $ 116,832

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

17

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

Consumer Lending Credit Quality Indicators

The Company evaluates the credit quality of its consumer loan portfolio based on the aging status of the loan and by payment activity. Loan delinquency reporting is based upon borrower payment activity relative to the contractual terms of the loan. The following tables present the classes of financing receivables within the consumer portfolio segment by credit quality indicator based on delinquency status and origination year:
June 30, 2023 Term Loans and Leases by Origination Year
2023 2022 2021 2020 2019 Prior Total
Unsecured personal
Current $ 1,374,603 $ 2,240,402 $ 679,211 $ — $ — $ — $ 4,294,216
30-59 days past due 3,279 17,474 9,013 — — — 29,766
60-89 days past due 1,865 14,153 7,933 — — — 23,951
90 or more days past due 1,213 13,852 8,332 — — — 23,397
Total unsecured personal 1,380,960 2,285,881 704,489 — — — 4,371,330
Residential mortgages
Current 5 49,346 56,510 30,442 21,358 34,430 192,091
30-59 days past due — — — — — — —
60-89 days past due — — — — — — —
90 or more days past due — — — — — 165 165
Total residential mortgages 5 49,346 56,510 30,442 21,358 34,595 192,256
Secured consumer
Current 80,331 124,585 29,849 — 2,502 — 237,267
30-59 days past due — 35 19 — — — 54
60-89 days past due — 51 — — — — 51
90 or more days past due — — — — — — —
Total secured consumer 80,331 124,671 29,868 — 2,502 — 237,372
Total consumer loans held for investment $ 1,461,296 $ 2,459,898 $ 790,867 $ 30,442 $ 23,860 $ 34,595 $ 4,800,958

18

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

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

Commercial Lending Credit Quality Indicators

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

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

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

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

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

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

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


The following tables present the classes of financing receivables within the commercial portfolio segment by risk rating and origination year:
June 30, 2023 Term Loans and Leases by Origination Year
2023 2022 2021 2020 2019 Prior Total
Equipment finance
Pass $ 3,596 $ 38,634 $ 32,754 $ 13,836 $ 13,458 $ 12,394 $ 114,672
Special mention — 15,369 1,881 6,295 3,173 — 26,718
Substandard — — — 683 — — 683
Doubtful — — — — — — —
Loss — — — — — — —
Total equipment finance 3,596 54,003 34,635 20,814 16,631 12,394 142,073
Commercial real estate
Pass 32,401 94,456 38,291 44,179 52,001 79,403 340,731
Special mention — — — — 259 9,389 9,648
Substandard — 3,761 6,785 8,415 231 10,577 29,769
Doubtful — — 2,043 — — — 2,043
Loss — — — — — 547 547
Total commercial real estate 32,401 98,217 47,119 52,594 52,491 99,916 382,738
Commercial and industrial
Pass 24,054 76,240 48,898 19,968 9,959 12,337 191,456
Special mention — 770 29 96 214 558 1,667
Substandard — — 4,634 713 3,780 3,688 12,815
Doubtful — — — — — 286 286
Loss — — — — — 1,356 1,356
Total commercial and industrial 24,054 77,010 53,561 20,777 13,953 18,225 207,580
Total commercial loans and leases held for investment $ 60,051 $ 229,230 $ 135,315 $ 94,185 $ 83,075 $ 130,535 $ 732,391


20

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

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

The following tables present an analysis of the past due loans and leases HFI within the commercial portfolio segment:
June 30, 2023 30-59
Days 		60-89
Days 		90 or More Days Total
Equipment finance $ 485 $ — $ 683 $ 1,168
Commercial real estate 2,115 — 10,561 12,676
Commercial and industrial (1)
184 358 1,608 2,150
Total commercial loans and leases held for investment $ 2,784 $ 358 $ 12,852 $ 15,994
December 31, 2022 30-59
Days 		60-89
Days 		90 or More
Days 		Total
Equipment finance $ 3,172 $ — $ 859 $ 4,031
Commercial real estate — 102 — 102
Commercial and industrial (1)
— — 1,643 1,643
Total commercial loans and leases held for investment $ 3,172 $ 102 $ 2,502 $ 5,776
(1) Past due PPP loans are excluded from the tables.

Nonaccrual Assets

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

21

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

The following table presents nonaccrual loans and leases:
June 30, 2023 December 31, 2022
Nonaccrual (1)
Nonaccrual with no related ACL (2)
Nonaccrual (1)
Nonaccrual with no related ACL (2)
Unsecured personal $ 23,397 $ — $ 16,255 $ —
Residential mortgages 322 322 331 331
Secured consumer — — 188 —
Total nonaccrual consumer loans held for investment 23,719 322 16,774 331
Equipment finance 683 — 898 39
Commercial real estate 19,298 9,360 1,018 1,018
Commercial and industrial 7,683 2,043 16,137 1,229
Total nonaccrual commercial loans and leases held for investment 27,664 11,403 18,053 2,286
Total nonaccrual loans and leases held for investment $ 51,383 $ 11,725 $ 34,827 $ 2,617
(1) Excluding PPP loans, there were no loans and leases that were 90 days or more past due and accruing as of both June 30, 2023 and December 31, 2022.
(2) Subset of total nonaccrual loans and leases.

June 30, 2023 December 31, 2022
Nonaccrual
Nonaccrual Ratios (1)
Nonaccrual
Nonaccrual Ratios (1)
Total nonaccrual consumer loans held for investment $ 23,719 0.5 % $ 16,774 0.4 %
Total nonaccrual commercial loans and leases held for investment 27,664 3.8 % 18,053 2.3 %
Total nonaccrual loans and leases held for investment $ 51,383 0.9 % $ 34,827 0.7 %
(1) Calculated as the ratio of nonaccruing loans and leases to loans and leases HFI at amortized cost.

Collateral-Dependent Assets

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

22

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

6. Securitizations and Variable Interest Entities

VIE Assets and Liabilities

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

June 30, 2023 December 31, 2022
Consolidated Unconsolidated Total Consolidated Unconsolidated Total
Assets
Restricted cash $ 4,330 $ — $ 4,330 $ 8,048 $ — $ 8,048
Securities available for sale at fair value — 160,905 160,905 — 17,717 17,717
Loans held for investment at fair value 1,753 — 1,753 3,994 — 3,994
Retail and certificate loans held for investment at fair value 932 — 932 1,946 — 1,946
Other assets 23 11,695 11,718 206 10,464 10,670
Total assets $ 7,038 $ 172,600 $ 179,638 $ 14,194 $ 28,181 $ 42,375
Liabilities
Borrowings $ 4,460 $ — $ 4,460 $ 8,085 $ — $ 8,085
Retail notes, certificates and secured borrowings at fair value 932 — 932 1,946 — 1,946
Other liabilities 9 — 9 29 — 29
Total liabilities 5,401 — 5,401 10,060 — 10,060
Total net assets (maximum loss exposure) $ 1,637 $ 172,600 $ 174,237 $ 4,134 $ 28,181 $ 32,315

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

23

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

Unconsolidated VIEs

The following table summarizes activity related to unconsolidated VIEs where the transfers were accounted for as a sale on the Company’s financial statements:
Three Months Ended
June 30, 		Six Months Ended
June 30,
2023 2022 2023 2022
Fair value of consideration received:
Cash $ 18,051 $ — $ 18,051 $ 5,320
Asset-backed securities retained 153,229 — 153,229 2,180
Other assets (liabilities) 2,299 — 2,299 ( 3,794 )
Total consideration 173,579 — 173,579 3,706
Deconsolidation of debt — — — 36,072
Fair value of loans sold ( 171,559 ) — ( 171,559 ) ( 39,519 )
Gain on sales of loans (1)
$ 2,020 $ — $ 2,020 $ 259
Cash proceeds from continuing involvement:
Servicing and other administrative fees $ 862 $ 2,407 $ 1,876 $ 5,512
Interest received on asset-backed securities retained $ 2,406 $ 2,384 $ 3,594 $ 5,079
(1) Consists of servicing assets recognized at the time of sale, less any transaction costs, and excludes origination fees and fair value adjustments recognized prior to the sale. Prior period amounts have been reclassified to conform to the current period presentation.

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

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

As of June 30, 2023, the aggregate unpaid principal balance held by unconsolidated VIEs was $ 400.5 million, of which $ 7.9 million was attributable to off-balance sheet loans that were 31 days or more past due. As of December 31, 2022, the aggregate unpaid principal balance held by unconsolidated VIEs was $ 433.5 million, of which $ 14.8 million was attributable to off-balance sheet loans that were 31 days or more past due. For such loans, the Company would only experience a loss if it was required to repurchase a loan due to a breach in representations and warranties associated with its loan sale or servicing contracts.

7. Fair Value of Assets and Liabilities

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

24

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

Financial Instruments, Assets and Liabilities Recorded at Fair Value

The following tables present the fair value hierarchy for assets and liabilities measured at fair value:
June 30, 2023 Level 1 Inputs Level 2 Inputs Level 3 Inputs Balance at
Fair Value
Assets:
Loans held for sale at fair value $ — $ — $ 250,361 $ 250,361
Loans held for investment at fair value — — 404,119 404,119
Retail and certificate loans held for investment at fair value — — 26,837 26,837
Securities available for sale:
U.S. agency residential mortgage-backed securities — 214,516 — 214,516
Senior asset-backed securities related to Structured Program transactions — 1,139 142,785 143,924
U.S. agency securities — 79,040 — 79,040
Mortgage-backed securities — 38,143 — 38,143
Other asset-backed securities — 28,466 — 28,466
Other asset-backed securities related to Structured Program transactions — — 16,980 16,980
Municipal securities — 2,510 — 2,510
Total securities available for sale — 363,814 159,765 523,579
Servicing assets — — 85,387 85,387
Other assets — 4,726 — 4,726
Total assets $ — $ 368,540 $ 926,469 $ 1,295,009
Liabilities:
Borrowings $ — $ — $ 4,460 $ 4,460
Retail notes, certificates and secured borrowings — — 26,837 26,837
Other liabilities — 4,726 2,570 7,296
Total liabilities $ — $ 4,726 $ 33,867 $ 38,593

25

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

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

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

26

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

Loans Held for Sale at Fair Value

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

Fair Value Reconciliation

The following tables present additional information about Level 3 loans HFS on a recurring basis:
Three Months Ended
June 30, 		Six Months Ended
June 30,
2023 2022 2023 2022
Fair value at beginning of period $ 44,647 $ 156,730 $ 110,400 $ 142,370
Originations and purchases 1,272,118 2,728,499 2,477,147 4,999,424
Sales ( 1,238,252 ) ( 2,811,843 ) ( 2,485,498 ) ( 5,069,544 )
Principal payments ( 5,135 ) ( 8,524 ) ( 11,600 ) ( 21,860 )
Transfers 191,807 ( 11,888 ) 191,807 ( 11,888 )
Fair value adjustments recorded in earnings ( 14,824 ) 9,837 ( 31,895 ) 24,309
Fair value at end of period $ 250,361 $ 62,811 $ 250,361 $ 62,811

Loans Held for Investment at Fair Value

Significant Unobservable Inputs

The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 loans HFI at fair value:
June 30, 2023
December 31, 2022
Minimum
Maximum
Weighted-
Average
Minimum
Maximum
Weighted-
Average
Discount rates
8.6 % 16.7 % 12.7 % 8.8 % 17.1 % 12.7 %
Net cumulative expected loss rates (1)
2.2 % 10.2 % 6.3 % 2.1 % 9.8 % 5.7 %
Cumulative expected prepayment rates (1)
22.0 % 30.7 % 27.3 % 26.2 % 35.3 % 30.8 %
(1) Expressed as a percentage of the acquired principal balance of the loan.

27

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

Significant Recurring Level 3 Fair Value Input Sensitivity

The sensitivity of loans HFI at fair value to adverse changes in key assumptions are as follows:
June 30, 2023 December 31, 2022
Loans held for investment at fair value $ 404,119 $ 925,938
Expected weighted-average life (in years) 1.0 0.9
Discount rates:
100 basis point increase $ ( 3,057 ) $ ( 7,471 )
200 basis point increase $ ( 6,071 ) $ ( 14,830 )
Expected credit loss rates on underlying loans:
10% increase $ ( 2,454 ) $ ( 5,574 )
20% increase $ ( 5,006 ) $ ( 11,307 )
Expected prepayment rates:
10% increase $ ( 2,146 ) $ ( 4,311 )
20% increase $ ( 4,157 ) $ ( 7,480 )

Fair Value Reconciliation

The following table presents additional information about Level 3 loans HFI at fair value on a recurring basis:
Three Months Ended
June 30, 		Six Months Ended
June 30,
2023 2022 2023 2022
Fair value at beginning of period $ 748,618 $ 15,384 $ 925,938 $ 21,240
Purchases — — 4,037 14
Principal payments ( 156,287 ) ( 5,724 ) ( 342,738 ) ( 11,747 )
Transfers ( 191,634 ) 11,966 ( 191,634 ) 11,966
Interest income accretion and fair value adjustments recorded in earnings 3,422 ( 1,043 ) 8,516 ( 890 )
Fair value at end of period $ 404,119 $ 20,583 $ 404,119 $ 20,583

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

The Company does not assume principal or interest rate risk on loans that were funded by its member payment- dependent self-directed retail program (Retail Program) because loan balances, interest rates and maturities are matched and offset by an equal balance of notes with the exact same interest rates and maturities. At June 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 occurred in the second quarter of 2023. See “ Note 6. Securitizations and Variable Interest Entities ” for more information.

28

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

Senior Asset-Backed Securities Related to Structured Program Transactions

As of June 30, 2023, the fair value of the senior asset-backed securities related to Structured Program transactions was $ 142.8 million with an expected weighted-average life of 1.5 years. Discount rates were the significant unobservable input used to measure the fair value of this Level 3 asset. The minimum, maximum and weighted-average discount rates assumptions were 7.4 % as of June 30, 2023. A hypothetical 100 and 200 basis point increase in discount rates would decrease the fair value by $ 2.0 million and $ 3.9 million, respectively.

The following table presents additional information about Level 3 senior asset-backed securities related to Structured Program transactions measured at fair value on a recurring basis:
Three and Six Months Ended
June 30, 2023
Fair value at beginning of period $ —
Additions 144,680
Cash received ( 1,290 )
Change in unrealized loss ( 605 )
Fair value at end of period $ 142,785

Other Asset-Backed Securities Related to Structured Program Transactions

Significant Unobservable Inputs

The following table presents quantitative information about the significant unobservable inputs used for the
Company’s Level 3 fair value measurements for other asset-backed securities related to Structured Program transactions:
June 30, 2023
Minimum Maximum Weighted-
Average
Discount rates 5.5 % 6.6 % 5.8 %
Net cumulative expected loss rates (1)
7.2 % 9.1 % 8.3 %
Cumulative expected prepayment rates (1)
33.0 % 34.0 % 33.4 %
(1) Expressed as a percentage of the outstanding collateral balance.

29

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

Significant Recurring Fair Value Input Sensitivity

The following tables present adverse changes to the fair value sensitivity of Level 3 other asset-backed securities related to Structured Program transactions to changes in key assumptions:
June 30, 2023
Fair value of interests held $ 16,980
Expected weighted-average life (in years) 1.6
Discount rates
100 basis point increase $ ( 193 )
200 basis point increase $ ( 388 )
Expected loss rates
10% increase $ ( 390 )
20% increase $ ( 798 )
Expected prepayment rates
10% increase $ ( 216 )
20% increase $ ( 496 )

Fair Value Reconciliation

The following table presents additional information about Level 3 other asset-backed securities related to Structured Program transactions measured at fair value on a recurring basis:
Three Months Ended Six Months Ended
June 30, 2023
Fair value at beginning of period $ 10,397 $ 12,469
Additions 8,667 8,780
Cash received ( 2,084 ) ( 4,269 )
Fair value at end of period $ 16,980 $ 16,980


30

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

S ervicing 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:
June 30, 2023 December 31, 2022
Minimum Maximum Weighted-
Average 		Minimum Maximum Weighted-
Average
Discount rates 7.5 % 16.4 % 9.9 % 7.5 % 16.4 % 10.1 %
Net cumulative expected loss rates (1)
2.0 % 36.4 % 15.4 % 2.1 % 36.7 % 15.6 %
Cumulative expected prepayment rates (1)
17.0 % 47.7 % 32.9 % 15.8 % 47.2 % 35.9 %
Total market servicing rates (% per annum on outstanding principal balance) (2)
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:
June 30,
2023 		December 31, 2022
Weighted-average market servicing rate assumptions
0.62 % 0.62 %
Change in fair value from:
Servicing rate increase by 0.10 %
$ ( 9,923 ) $ ( 10,505 )
Servicing rate decrease by 0.10 %
$ 9,923 $ 10,505

The following table presents the fair value sensitivity of servicing assets to adverse changes in key assumptions:
June 30,
2023 		December 31, 2022
Fair value of servicing assets $ 85,387 $ 84,308
Discount rates
100 basis point increase $ ( 726 ) $ ( 726 )
200 basis point increase $ ( 1,453 ) $ ( 1,451 )
Expected loss rates
10% increase $ ( 1,069 ) $ ( 1,037 )
20% increase $ ( 2,137 ) $ ( 2,074 )
Expected prepayment rates
10% increase $ ( 1,790 ) $ ( 1,994 )
20% increase $ ( 3,581 ) $ ( 3,989 )

31

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

Fair Value Reconciliation

The following table presents additional information about Level 3 servicing assets measured at fair value on a recurring basis:
Three Months Ended
June 30, 		Six Months Ended
June 30,
2023 2022 2023 2022
Fair value at beginning of period $ 89,241 $ 72,112 $ 84,308 $ 67,726
Issuances (1)
13,576 29,090 27,701 51,455
Change in fair value, included in Marketplace revenue ( 17,074 ) ( 21,034 ) ( 29,650 ) ( 38,013 )
Other net changes ( 356 ) ( 741 ) 3,028 ( 1,741 )
Fair value at end of period $ 85,387 $ 79,427 $ 85,387 $ 79,427
(1) Represents the gains or losses on sales of the related loans.

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:
June 30, 2023 Carrying Amount Level 1 Inputs Level 2 Inputs Level 3 Inputs Balance at
Fair Value
Assets:
Loans and leases held for investment, net $ 5,178,186 $ — $ — $ 5,408,746 $ 5,408,746
Other assets 37,375 — 36,393 1,359 37,752
Total assets $ 5,215,561 $ — $ 36,393 $ 5,410,105 $ 5,446,498
Liabilities:
Deposits (1)
$ 829,798 $ — $ — $ 826,478 $ 826,478
Borrowings 11,215 — 561 10,654 11,215
Other liabilities 59,342 — 28,260 31,082 59,342
Total liabilities $ 900,355 $ — $ 28,821 $ 868,214 $ 897,035
December 31, 2022 Carrying Amount Level 1 Inputs Level 2 Inputs Level 3 Inputs Balance at
Fair Value
Assets:
Loans and leases held for investment, net $ 4,705,302 $ — $ — $ 4,941,825 $ 4,941,825
Other assets 36,646 — 35,300 1,397 36,697
Total assets $ 4,741,948 $ — $ 35,300 $ 4,943,222 $ 4,978,522
Liabilities:
Deposits (1)
$ 860,808 $ — $ — $ 860,808 $ 860,808
Borrowings 66,773 — 2,619 64,154 66,773
Other liabilities 62,247 — 30,311 31,936 62,247
Total liabilities $ 989,828 $ — $ 32,930 $ 956,898 $ 989,828
(1) Excludes deposit liabilities with no defined or contractual maturities.

32

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

8. Property, Equipment and Software, Net

Property, equipment and software, net, consist of the following:
June 30, 2023 December 31, 2022
Software (1)
$ 188,817 $ 174,360
Leasehold improvements 31,214 31,214
Computer equipment 24,234 27,410
Furniture and fixtures 6,088 6,088
Total property, equipment and software 250,353 239,072
Accumulated depreciation and amortization ( 98,745 ) ( 102,599 )
Total property, equipment and software, net $ 151,608 $ 136,473
(1) Includes $ 66.5 million and $ 43.7 million of development in progress for internally-developed software and $ 4.1 million and $ 3.0 million of development in progress to customize purchased software as of June 30, 2023 and December 31, 2022, respectively.

Depreciation and amortization expense on property, equipment and software was $ 10.6 million and $ 21.8 million for the second quarter and first half of 2023, respectively. Depreciation and amortization expense on property, equipment and software was $ 9.3 million and $ 18.8 million for the second quarter and first half of 2022, respectively.

9. Goodwill and Intangible Assets

Goodwill

The Company’s goodwill balance was $ 75.7 million as of both June 30, 2023 and December 31, 2022. The Company did no t record any goodwill impairment expense for the second quarters and first halves 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.

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:
June 30, 2023 December 31, 2022
Gross carrying value $ 54,500 $ 54,500
Accumulated amortization ( 40,333 ) ( 38,166 )
Net carrying value $ 14,167 $ 16,334

The customer relationship intangible assets are amortized on an accelerated basis from ten to fourteen years . Amortization expense associated with intangible assets for the second quarter and first half of 2023 was $ 1.0 million and $ 2.2 million, respectively. Amortization expense associated with intangible assets for the second quarter and first half of 2022 was $ 1.2 million and $ 2.5 million, respectively. There was no impairment loss for the second quarters and first halves of 2023 and 2022.

33

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

The expected future amortization expense for intangible assets as of June 30, 2023, is as follows:
2023 $ 2,031
2024 3,549
2025 2,901
2026 2,252
2027 1,603
Thereafter 1,831
Total $ 14,167

10. Other Assets

Other assets consist of the following:
June 30,
2023 		December 31, 2022
Deferred tax asset, net (1)
$ 169,317 $ 173,687
Servicing assets (2)
86,369 85,654
Operating lease assets 55,436 63,872
Nonmarketable equity investments 45,825 38,320
Intangible assets, net (3)
14,167 16,334
Other 122,269 122,439
Total other assets $ 493,383 $ 500,306
(1) See “ Note 15. Income Taxes ” for additional detail.
(2) Loans underlying servicing assets had a total outstanding principal balance of $ 10.4 billion and $ 11.0 billion as of June 30, 2023 and December 31, 2022, respectively.
(3) See “ Note 9. Goodwill and Intangible Assets ” for additional detail.

11. Deposits

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

34

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 June 30, 2023 are scheduled to mature as follows:
2023 $ 460,024
2024 347,992
2025 10,528
2026 1,139
2027 9,217
Thereafter 898
Total certificates of deposit $ 829,798

The following table presents the amount of certificates of deposit with denominations exceeding the Federal Deposit Insurance Corporation (FDIC) limit of $250 thousand, segregated by time remaining until maturity, as of June 30, 2023:
Three months or less Over 3 months through
6 months 		Over 6 months through
12 months 		Over
12 months 		Total
Certificates of deposit $ 2,351 $ 4,658 $ 3,536 $ 3,913 $ 14,458

12. Borrowings

Short-term Borrowings:

The Company entered into repurchase agreements pursuant to which the Company sold securities (subject to an obligation to repurchase such securities at a specified future date and price) in exchange for cash. The aggregate debt outstanding under the Company’s repurchase agreements was $ 0.6 million and $ 2.6 million at June 30, 2023 and December 31, 2022, respectively.

In addition, the Company has available borrowing capacity with the FRB and FHLB of Des Moines totaling $ 4.1 billion and $ 605.5 million with pledged collateral totaling $ 5.3 billion and $ 754.0 million at June 30, 2023 and December 31, 2022, respectively.

Long-term Debt:

The following table summarizes the Company’s long-term debt, as of the dates indicated:
June 30, 2023 December 31, 2022
Advances from PPPLF (1) :
Aggregate debt outstanding (fixed interest rate of 0.35 %)
$ 10,654 $ 64,154
Pledged collateral
$ 17,640 $ 66,971
Retail notes, certificates and secured borrowings (2) :
Aggregate debt outstanding
$ 26,837 $ 55,425
Payable on Structured Program borrowings (3) :
Aggregate debt outstanding
$ 4,460 $ 8,085
Pledged collateral
$ 5,972 $ 9,708
(1) 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
35

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 $ 1.8 million and $ 4.0 million and “Restricted cash” of $ 4.2 million and $ 5.7 million as of June 30, 2023 and December 31, 2022, respectively.

13. Other Liabilities

Other liabilities consist of the following:
June 30,
2023 		December 31, 2022
Operating lease liabilities $ 68,095 $ 77,291
Accounts payable and accrued expenses 60,815 98,173
Payable to investors (1)
28,260 30,311
Other 93,766 86,842
Total other liabilities $ 250,936 $ 292,617
(1) Represents principal and interest on loans collected by the Company and pending disbursement to investors.

14. Employee Incentive Plans

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

Stock-based Compensation

Stock-based compensation expense, included in “Compensation and benefits” expense on the Income Statement, was as follows for the periods presented:
Three Months Ended
June 30, 		Six Months Ended
June 30,
2023 2022 2023 2022
RSUs and PBRSUs $ 18,145 $ 19,804 $ 32,437 $ 37,167
Stock options — 20 — 40
Stock-based compensation expense, gross 18,145 19,824 32,437 37,207
Less: Capitalized stock-based compensation expense 2,317 2,051 4,721 3,740
Stock-based compensation expense, net $ 15,828 $ 17,773 $ 27,716 $ 33,467

36

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

Restricted Stock Units

The following table summarizes the activities for the Company’s RSUs:
Number
of Units 		Weighted-
Average
Grant Date
Fair Value
Unvested at December 31, 2022
8,672,626 $ 12.94
Granted 6,299,789 $ 7.71
Vested ( 2,761,401 ) $ 11.96
Forfeited/expired ( 1,480,127 ) $ 12.72
Unvested at June 30, 2023
10,730,887 $ 10.15

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

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

Performance-based Restricted Stock Units

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

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

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

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

15. Income Taxes

For the second quarter and first half of 2023, the Company recorded an income tax expense of $ 4.7 million and $ 8.8 million, representing an effective tax rate of 31.7 % and 27.1 %, respectively. The second quarter effective tax
37

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

rate differs from the statutory rate as it was favorably affected by recurring items such as tax credits and was unfavorably affected by nondeductible portions of executive compensation. Additionally, the effective tax rate was unfavorably impacted by the discrete tax impact recognized during the period related to stock-based compensation. For the second quarter and first half of 2022, the Company recorded an income tax benefit of $ 132.0 million and $ 127.0 million, respectively. The income tax benefit for the second quarter and first half of 2022 was primarily due to the release of a $ 135.3 million valuation allowance against the Company’s deferred tax assets, partially offset by a $ 3.3 million state income tax expense.

The following table summarizes the Company’s net deferred tax assets:
June 30,
2023 		December 31, 2022
Deferred tax assets, net of liabilities $ 216,929 $ 221,408
Valuation allowance ( 47,612 ) ( 47,721 )
Deferred tax assets, net of valuation allowance $ 169,317 $ 173,687

16. Leases

Lessor Arrangements

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

The components of Equipment Finance assets are as follows:
June 30,
2023 		December 31, 2022
Lease receivables $ 120,046 $ 137,969
Unguaranteed residual asset values 35,105 39,262
Unearned income ( 13,816 ) ( 17,786 )
Deferred fees 738 874
Total $ 142,073 $ 160,319

38

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

Future minimum lease payments based on maturity of the Company’s lessor arrangements as of June 30, 2023 were as follows:
2023 $ 24,987
2024 40,333
2025 29,078
2026 17,503
2027 7,881
Thereafter 5,539
Total lease payments $ 125,321
Discount effect ( 5,275 )
Present value of future minimum lease payments $ 120,046

Lessee Arrangements

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

Balance sheet information related to leases was as follows:
ROU Assets and Lease Liabilities Balance Sheet Classification June 30, 2023 December 31, 2022
Operating lease assets Other assets $ 55,436 $ 63,872
Operating lease liabilities Other liabilities $ 68,095 $ 77,291

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

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


39

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

The Company’s future minimum undiscounted lease payments under operating leases as of June 30, 2023 were as follows:
Operating Lease
Payments
2023 $ 6,434
2024 12,798
2025 13,129
2026 11,710
2027 10,987
Thereafter 27,238
Total lease payments $ 82,296
Discount effect ( 14,201 )
Present value of future minimum lease payments $ 68,095

The weighted-average remaining lease term and discount rate used in the calculation of the Company’s operating lease assets and liabilities were as follows:
Lease Term and Discount Rate June 30, 2023
Weighted-average remaining lease term (in years) 6.7
Weighted-average discount rate 5.39 %

17. Commitments and Contingencies

Operating Lease Commitments

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

Loan Repurchase Obligations

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

Unfunded Loan Commitments

As of June 30, 2023 and December 31, 2022, the contractual amount of unfunded loan commitments was $ 108.9 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
40

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. 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
41

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 June 30, 2023 December 31, 2022
Required Minimum plus Required CCB for
Non-Leverage Ratios
Amount Ratio Amount Ratio
CET1 capital (1)
$ 1,053.5 16.1 % $ 1,005.8 15.8 % 7.0 %
Tier 1 capital $ 1,053.5 16.1 % $ 1,005.8 15.8 % 8.5 %
Total capital $ 1,138.3 17.4 % $ 1,088.1 17.1 % 10.5 %
Tier 1 leverage $ 1,053.5 12.4 % $ 1,005.8 14.1 % 4.0 %
Risk-weighted assets $ 6,526.5 N/A $ 6,360.7 N/A N/A
Quarterly adjusted average assets $ 8,522.6 N/A $ 7,119.0 N/A N/A
N/A – Not applicable
(1) Consists of common stockholders’ equity as defined under U.S. GAAP and certain adjustments made in accordance with regulatory capital guidelines, including the addition of the CECL transitional benefit and deductions for goodwill and other intangible assets.

The following table summarizes LC Bank’s regulatory capital amounts (in millions) and ratios:
LendingClub Bank June 30, 2023 December 31, 2022
Required Minimum plus Required CCB for
Non-Leverage Ratios
Amount Ratio Amount Ratio
CET1 capital (1)
$ 939.3 14.7 % $ 852.2 13.8 % 7.0 %
Tier 1 capital $ 939.3 14.7 % $ 852.2 13.8 % 8.5 %
Total capital $ 1,022.6 16.0 % $ 932.4 15.1 % 10.5 %
Tier 1 leverage $ 939.3 11.3 % $ 852.2 12.5 % 4.0 %
Risk-weighted assets $ 6,406.5 N/A $ 6,194.0 N/A N/A
Quarterly adjusted average assets $ 8,300.0 N/A $ 6,795.2 N/A N/A
N/A – Not applicable
(1) Consists of common stockholders’ equity as defined under U.S. GAAP and certain adjustments made in accordance with regulatory capital guidelines, including the addition of the CECL transitional benefit and deductions for goodwill and other intangible assets.

In response to the COVID-19 pandemic, the FRB, OCC, and FDIC adopted a final rule related to the regulatory capital treatment of the allowance for credit losses under CECL. 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 June 30, 2023 and December 31, 2022, the
42

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 June 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 half 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. Other Non-interest Income and Non-interest Expense

Other non-interest income consists of the following:
Three Months Ended
June 30, 		Six Months Ended
June 30,
2023 2022 2023 2022
Referral revenue $ 1,531 $ 4,025 $ 2,979 $ 7,716
Realized gains on sales of securities available for sale — — — 36
Other 1,504 3,423 3,412 9,587
Total other non-interest income $ 3,035 $ 7,448 $ 6,391 $ 17,339

Other non-interest expense consists of the following:
Three Months Ended
June 30, 		Six Months Ended
June 30,
2023 2022 2023 2022
Consumer credit services $ 2,480 $ 5,670 $ 7,447 $ 11,194
Other 12,842 11,751 25,578 20,231
Total other non-interest expense $ 15,322 $ 17,421 $ 33,025 $ 31,425

20. Segment Reporting

The Company defines operating segments to be components of the Company for which discrete financial information is evaluated regularly by the Company’s Chief Executive Officer and Chief Financial Officer to allocate resources and evaluate financial performance. This information is reviewed according to the legal organizational structure of the Company’s operations with products and services presented separately for the parent bank holding company and its wholly-owned subsidiary, LC Bank. Income taxes are recorded on a separate entity basis whereby each operating segment determines income tax expense or benefit as if it filed a separate tax return.
43

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


All of the Company’s revenue is generated in the United States. The Company has experienced reductions in marketplace investor demand in connection with increases in interest rates and volatility in the macro economy. Accordingly, during both the second quarter and first half of 2023, one marketplace bank investor accounted for 14 % of total net revenue. No other individual borrower or marketplace investor accounted for 10% or more of total net revenue for any of the periods presented.

LendingClub Bank

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

LendingClub Corporation (Parent Only)

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

Financial information for the segments is presented in the following tables:
LendingClub
Bank 		LendingClub
Corporation
(Parent only) 		Intercompany
Eliminations 		Consolidated Total
Three Months Ended June 30, Three Months Ended June 30, Three Months Ended June 30, Three Months Ended June 30,
2023 2022 2023 2022 2023 2022 2023 2022
Non-interest income:
Marketplace revenue $ 62,006 $ 191,087 $ 7,772 $ 11,167 $ 13,005 $ 4,130 $ 82,783 $ 206,384
Other non-interest income 21,743 20,041 2,431 3,914 ( 21,139 ) ( 16,507 ) 3,035 7,448
Total non-interest income 83,749 211,128 10,203 15,081 ( 8,134 ) ( 12,377 ) 85,818 213,832
Interest income:
Interest income 210,514 120,152 3,972 8,316 — — 214,486 128,468
Interest expense ( 66,546 ) ( 6,213 ) ( 1,288 ) ( 6,029 ) — — ( 67,834 ) ( 12,242 )
Net interest income 143,968 113,939 2,684 2,287 — — 146,652 116,226
Total net revenue 227,717 325,067 12,887 17,368 ( 8,134 ) ( 12,377 ) 232,470 330,058
Provision for credit losses ( 66,611 ) ( 70,566 ) 16 — — — ( 66,595 ) ( 70,566 )
Non-interest expense ( 142,563 ) ( 196,636 ) ( 16,650 ) ( 25,127 ) 8,134 12,377 ( 151,079 ) ( 209,386 )
Income (Loss) before income tax benefit (expense) 18,543 57,865 ( 3,747 ) ( 7,759 ) — — 14,796 50,106
Income tax benefit (expense) ( 5,429 ) ( 17,318 ) 743 85,864 — 63,408 ( 4,686 ) 131,954
Net income (loss) $ 13,114 $ 40,547 $ ( 3,004 ) $ 78,105 $ — $ 63,408 $ 10,110 $ 182,060
Capital expenditures $ 15,857 $ 15,783 $ — $ — $ — $ — $ 15,857 $ 15,783
Depreciation and amortization $ 7,073 $ 3,510 $ 4,565 $ 7,047 $ — $ — $ 11,638 $ 10,557

44

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
Six Months Ended June 30, Six Months Ended June 30, Six Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022 2023 2022 2023 2022
Non-interest income:
Marketplace revenue $ 134,694 $ 355,922 $ 20,880 $ 26,298 $ 22,843 $ 4,130 $ 178,417 $ 386,350
Other non-interest income 40,904 39,539 4,984 8,137 ( 39,497 ) ( 30,337 ) 6,391 17,339
Total non-interest income 175,598 395,461 25,864 34,435 ( 16,654 ) ( 26,207 ) 184,808 403,689
Interest income:
Interest income 408,844 219,975 8,055 20,146 — — 416,899 240,121
Interest expense ( 120,442 ) ( 9,857 ) ( 3,101 ) ( 14,358 ) — — ( 123,543 ) ( 24,215 )
Net interest income 288,402 210,118 4,954 5,788 — — 293,356 215,906
Total net revenue 464,000 605,579 30,818 40,223 ( 16,654 ) ( 26,207 ) 478,164 619,595
Provision for credit losses ( 137,195 ) ( 123,075 ) 16 — — — ( 137,179 ) ( 123,075 )
Non-interest expense ( 290,946 ) ( 375,095 ) ( 34,095 ) ( 51,702 ) 16,654 26,207 ( 308,387 ) ( 400,590 )
Income (Loss) before income tax benefit (expense) 35,859 107,409 ( 3,261 ) ( 11,479 ) — — 32,598 95,930
Income tax benefit (expense) ( 9,685 ) ( 29,673 ) 863 103,591 — 53,048 ( 8,822 ) 126,966
Net income (loss) $ 26,174 $ 77,736 $ ( 2,398 ) $ 92,112 $ — $ 53,048 $ 23,776 $ 222,896
Capital expenditures $ 32,255 $ 37,358 $ — $ — $ — $ — $ 32,255 $ 37,358
Depreciation and amortization $ 13,967 $ 7,010 $ 10,025 $ 14,586 $ — $ — $ 23,992 $ 21,596
45

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

LendingClub Bank LendingClub Corporation
(Parent only) 		Intercompany
Eliminations 		Consolidated Total
June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022
Assets
Total cash and cash equivalents $ 1,176,563 $ 1,020,874 $ 74,632 $ 56,475 $ ( 47,271 ) $ ( 20,319 ) $ 1,203,924 $ 1,057,030
Restricted cash — — 41,206 75,409 ( 6,414 ) ( 7,955 ) 34,792 67,454
Securities available for sale at fair value 515,466 329,287 8,113 16,415 — — 523,579 345,702
Loans held for sale at fair value 250,361 110,400 — — — — 250,361 110,400
Loans and leases held for investment, net 5,178,186 4,705,302 — — — — 5,178,186 4,705,302
Loans held for investment at fair value 390,654 906,711 13,465 19,227 — — 404,119 925,938
Retail and certificate loans held for investment at fair value — — 26,837 55,425 — — 26,837 55,425
Property, equipment and software, net 127,438 102,274 24,170 34,199 — — 151,608 136,473
Investment in subsidiary — — 797,899 755,319 ( 797,899 ) ( 755,319 ) — —
Goodwill 75,717 75,717 — — — — 75,717 75,717
Other assets 335,118 339,341 177,798 173,851 ( 19,533 ) ( 12,886 ) 493,383 500,306
Total assets 8,049,503 7,589,906 1,164,120 1,186,320 ( 871,117 ) ( 796,479 ) 8,342,506 7,979,747
Liabilities and Equity
Total deposits 6,897,220 6,420,827 — — ( 53,685 ) ( 28,274 ) 6,843,535 6,392,553
Borrowings 10,654 64,154 5,021 10,704 — — 15,675 74,858
Retail notes, certificates and secured borrowings at fair value — — 26,837 55,425 — — 26,837 55,425
Other liabilities 156,563 189,185 113,921 116,318 ( 19,548 ) ( 12,886 ) 250,936 292,617
Total liabilities 7,064,437 6,674,166 145,779 182,447 ( 73,233 ) ( 41,160 ) 7,136,983 6,815,453
Total equity 985,066 915,740 1,018,341 1,003,873 ( 797,884 ) ( 755,319 ) 1,205,523 1,164,294
Total liabilities and equity $ 8,049,503 $ 7,589,906 $ 1,164,120 $ 1,186,320 $ ( 871,117 ) $ ( 796,479 ) $ 8,342,506 $ 7,979,747

46

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

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

47

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

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

Executive Summary

The interest rate environment and broader economic volatility is adversely impacting our business, predominantly through investor demand and pricing for marketplace loans. While we expect these headwinds to persist, we’re managing the business prudently, continuing our disciplined credit underwriting, and developing new structures to meet the evolving needs of loan investors. We maintained strong liquidity and capital levels and delivered the following results, despite a challenging economic environment.

• Loan originations: Loan originations for the second quarter of 2023 decreased $277.1 million, or 12%, sequentially and $1.8 billion, or 48%, year over year, primarily driven by a decrease in unsecured personal loan origination volume. We attribute the decrease in volume to the rising interest rate environment.
◦ Loan originations held for investment (HFI) at amortized cost for the second quarter of 2023 decreased $344.6 million, or 34%, sequentially and $363.7 million, or 36%, year over year.
◦ Loan originations HFI at amortized cost as a percentage of loan originations was 33% and 44% for the second and first quarters of 2023, respectively, and 27% for the second 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.

• Total net revenue: Total net revenue for the second quarter of 2023 decreased $13.2 million, or 5%, sequentially and $97.6 million, or 30%, year over year.
◦ Marketplace revenue: Marketplace revenue for the second quarter of 2023 decreased $12.9 million, or 13%, sequentially and $123.6 million, or 60%, year over year. The sequential decrease was primarily due to lower loan sales prices and a one-time revenue benefit related to slower prepayments recorded in the prior quarter. The year over year decrease was primarily due to lower origination volume and pricing of marketplace loans.
◦ Net interest income: Net interest income for the second quarter of 2023 remained relatively flat sequentially and increased $30.4 million, or 26%, year over year. The increase was primarily driven by higher interest income due to a higher average balance of loans retained as HFI in the current period, partially offset by higher interest rates on deposits .
◦ Net interest margin: Net interest margin for the second quarter of 2023 was 7.1%, decreasing from 7.5% in the first quarter of 2023 and from 8.5% in the second quarter of 2022, primarily due to higher interest rates on deposits.

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

48

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
• Total non-interest expense: Total non-interest expense for the second quarter of 2023 decreased $6.2 million, or 4%, sequentially and $58.3 million, or 28%, year over year. The decrease was primarily driven by a decrease in headcount as a result of the cost reduction and reorganization plan we implemented in January 2023 as well as a decrease in variable marketing expenses based on lower origination volume and prudent management of expenses.

• Net income: Net income for the second quarter of 2023 decreased $3.6 million, or 26%, sequentially and $172.0 million, or 94%, year over year. Net income for the second quarter of 2022 included a tax benefit of $135.3 million due to the reversal of the majority of our valuation allowance against our deferred tax assets.

• Diluted EPS: Diluted EPS for the second quarter of 2023 was $0.09, compared to $0.13 for the first quarter of 2023 and $1.73 for the same quarter last year. Diluted EPS for the second quarter of 2022 included a $1.28 per share benefit from the deferred tax valuation allowance reversal.

• Pre-provision net revenue: Pre-provision net revenue for the second quarter of 2023 decreased $7.0 million, or 8%, sequentially and $39.3 million, or 33%, year over year, reflecting lower non-interest income, partially offset by lower non-interest expense.

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

• Total assets: Total assets as of June 30, 2023 decreased $411.5 million, or 5%, sequentially, primarily due to the decrease in cash and cash equivalents resulting from lower deposits. Total assets as of June 30, 2023 increased $2.2 billion, or 35%, year over year primarily reflecting growth in loans HFI and an increase in cash and cash equivalents due to the growth in deposits.

• Deposits: Total deposits as of June 30, 2023 decreased $375.3 million, or 5%, sequentially, and increased $2.3 billion, or 51%, year over year. The sequential decrease was primarily due to the planned maturity of brokered deposits. Federal Deposit Insurance Corporation (FDIC)-insured deposits represent approximately 85% of total deposits as of June 30, 2023.

• Total equity: Total equity as of June 30, 2023 increased $14.8 million, or 1%, sequentially, and $126.4 million, or 12%, year over year, primarily reflecting net income generated over the period.

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

49

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Financial Highlights
We regularly review several metrics to evaluate our business, measure our performance, identify trends, formulate financial projections and make strategic decisions. The following presents our select financial metrics for the periods presented:
As of and for the Three Months Ended
As of and for the Six Months Ended June 30,
June 30,
2023 		March 31,
2023 		June 30,
2022 		2023 2022
Non-interest income $ 85,818 $ 98,990 $ 213,832 $ 184,808 $ 403,689
Net interest income 146,652 146,704 116,226 293,356 215,906
Total net revenue 232,470 245,694 330,058 478,164 619,595
Non-interest expense 151,079 157,308 209,386 308,387 400,590
Pre-provision net revenue (1)
81,391 88,386 120,672 169,777 219,005
Provision for credit losses 66,595 70,584 70,566 137,179 123,075
Income before income tax benefit (expense) 14,796 17,802 50,106 32,598 95,930
Income tax benefit (expense) (4,686) (4,136) 131,954 (8,822) 126,966
Net income 10,110 13,666 182,060 23,776 222,896
Income tax benefit from release of tax valuation allowance N/A N/A 135,300 N/A 135,300
Net income excluding income tax benefit (1)(2)
$ 10,110 $ 13,666 $ 46,760 $ 23,776 $ 87,596
Basic EPS $ 0.09 $ 0.13 $ 1.77 $ 0.22 $ 2.18
Diluted EPS $ 0.09 $ 0.13 $ 1.73 $ 0.22 $ 2.13
Diluted EPS excluding income tax benefit (1)(2)
$ 0.09 $ 0.13 $ 0.45 $ 0.22 $ 0.85
LendingClub Corporation Performance Metrics:
Net interest margin 7.1 % 7.5 % 8.5 % 7.3 % 8.4 %
Efficiency ratio (3)
65.0 % 64.0 % 63.4 % 64.5 % 64.7 %
Return on average equity (ROE) 3.4 % 4.6 % 33.8 % 4.0 % 24.4 %
Return on average total assets (ROA) 0.5 % 0.7 % 5.5 % 0.6 % 4.0 %
Marketing as a % of loan originations 1.2 % 1.2 % 1.6 % 1.2 % 1.7 %
LendingClub Corporation Capital Metrics:
Common equity tier 1 capital ratio 16.1 % 15.6 % 20.0 %
Tier 1 leverage ratio 12.4 % 12.8 % 16.2 %
Book value per common share $ 11.09 $ 11.08 $ 10.41
Tangible book value per common share (1)
$ 10.26 $ 10.23 $ 9.50
Loan Originations (in millions) (4) :
Marketplace loans $ 1,353 $ 1,286 $ 2,819 $ 2,639 $ 5,180
Loan originations held for investment 657 1,002 1,021 1,659 1,877
Total loan originations $ 2,011 $ 2,288 $ 3,840 $ 4,298 $ 7,057
Loan originations held for investment as % of total loan originations 33 % 44 % 27 % 39 % 27 %
Servicing portfolio AUM (in millions) (5) :
Total servicing portfolio $ 15,669 $ 16,060 $ 14,783
Loans serviced for others $ 10,204 $ 10,504 $ 11,382
(1) Represents a non-GAAP financial measure. See “ Non-GAAP Financial Measures ” for additional information.
(2) The second quarter and first half of 2022 excludes an income tax benefit of $135.3 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.
50

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

As of and for the Three Months Ended
June 30,
2023 		March 31,
2023 		June 30,
2022
Balance Sheet Data:
Loans and leases held for investment at amortized cost, net, excluding PPP loans $ 5,160,546 $ 5,091,969 $ 3,692,667
PPP loans $ 17,640 $ 51,112 $ 118,794
Total loans and leases held for investment at amortized cost, net (1)
$ 5,178,186 $ 5,143,081 $ 3,811,461
Loans held for investment at fair value $ 404,119 $ 748,618 $ 20,583
Total loans and leases held for investment $ 5,582,305 $ 5,891,699 $ 3,832,044
Total assets $ 8,342,506 $ 8,754,018 $ 6,186,765
Total deposits $ 6,843,535 $ 7,218,854 $ 4,527,672
Total liabilities $ 7,136,983 $ 7,563,276 $ 5,107,648
Total equity $ 1,205,523 $ 1,190,742 $ 1,079,117
Allowance Ratios (1) :
ALLL to total loans and leases held for investment 6.4 % 6.4 % 6.0 %
ALLL to consumer loans and leases held for investment 7.1 % 7.1 % 6.9 %
ALLL to commercial loans and leases held for investment 1.9 % 2.0 % 2.0 %
Net charge-offs $ 59,884 $ 49,845 $ 14,778
Net charge-off ratio (2)
4.4 % 3.8 % 1.6 %
(1) Excludes loans held for investment at fair value, which primarily consists of a loan portfolio that was acquired at the end of 2022.
(2) Calculated as annualized net charge-offs divided by average outstanding loans and leases HFI at amortized cost during the period, excluding PPP loans.
51

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
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 (%)
June 30,
2023 		March 31,
2023 		June 30,
2022 		Q2 2023
vs
Q1 2023 		Q2 2023
vs
Q2 2022
Non-interest income:
Marketplace revenue $ 82,783 $ 95,634 $ 206,384 (13) % (60) %
Other non-interest income 3,035 3,356 7,448 (10) % (59) %
Total non-interest income 85,818 98,990 213,832 (13) % (60) %
Interest income:
Interest on loans held for sale 4,433 5,757 7,130 (23) % (38) %
Interest and fees on loans and leases held for investment 162,085 150,467 108,911 8 % 49 %
Interest on loans held for investment at fair value 21,692 26,892 631 (19) % N/M
Interest on retail and certificate loans held for investment at fair value 1,194 1,683 5,091 (29) % (77) %
Interest on securities available for sale 5,948 3,900 4,426 53 % 34 %
Other 19,134 13,714 2,279 40 % N/M
Total interest income 214,486 202,413 128,468 6 % 67 %
Interest expense:
Interest on deposits 66,521 53,273 6,078 25 % N/M
Interest on retail notes, certificates and secured borrowings 1,194 1,683 5,091 (29) % (77) %
Other interest expense 119 753 1,073 (84) % (89) %
Total interest expense 67,834 55,709 12,242 22 % 454 %
Net interest income 146,652 146,704 116,226 — % 26 %
Total net revenue 232,470 245,694 330,058 (5) % (30) %
Provision for credit losses 66,595 70,584 70,566 (6) % (6) %
Non-interest expense:
Compensation and benefits 71,553 73,307 85,103 (2) % (16) %
Marketing 23,940 26,880 61,497 (11) % (61) %
Equipment and software 13,968 13,696 12,461 2 % 12 %
Depreciation and amortization 11,638 12,354 10,557 (6) % 10 %
Professional services 9,974 9,058 16,138 10 % (38) %
Occupancy 4,684 4,310 6,209 9 % (25) %
Other non-interest expense 15,322 17,703 17,421 (13) % (12) %
Total non-interest expense 151,079 157,308 209,386 (4) % (28) %
Income before income tax benefit (expense) 14,796 17,802 50,106 (17) % (70) %
Income tax benefit (expense) (4,686) (4,136) 131,954 13 % (104) %
Net income $ 10,110 $ 13,666 $ 182,060 (26) % (94) %

52

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Six Months Ended June 30,
2023 2022 Change (%)
Non-interest income:
Marketplace revenue $ 178,417 $ 386,350 (54) %
Other non-interest income 6,391 17,339 (63) %
Total non-interest income 184,808 403,689 (54) %
Interest income:
Interest on loans held for sale 10,190 14,580 (30) %
Interest and fees on loans and leases held for investment 312,552 200,353 56 %
Interest on loans held for investment at fair value 48,584 1,224 N/M
Interest on retail and certificate loans held for investment at fair value 2,877 12,060 (76) %
Interest on securities available for sale 9,848 8,937 10 %
Other 32,848 2,967 N/M
Total interest income 416,899 240,121 74 %
Interest expense:
Interest on deposits 119,794 9,516 N/M
Interest on retail notes, certificates and secured borrowings 2,877 12,060 (76) %
Other interest expense 872 2,639 (67) %
Total interest expense 123,543 24,215 410 %
Net interest income 293,356 215,906 36 %
Total net revenue 478,164 619,595 (23) %
Provision for credit losses 137,179 123,075 11 %
Non-interest expense:
Compensation and benefits 144,860 166,713 (13) %
Marketing 50,820 116,577 (56) %
Equipment and software 27,664 23,507 18 %
Depreciation and amortization 23,992 21,596 11 %
Professional services 19,032 28,544 (33) %
Occupancy 8,994 12,228 (26) %
Other non-interest expense 33,025 31,425 5 %
Total non-interest expense 308,387 400,590 (23) %
Income before income tax benefit (expense) 32,598 95,930 (66) %
Income tax benefit (expense) (8,822) 126,966 (107) %
Net income $ 23,776 $ 222,896 (89) %
The analysis below is presented for the following periods: Second quarter of 2023 compared to the first quarter of 2023 (sequential), second quarter of 2023 compared to the second quarter of 2022 (year over year) and first half of 2023 compared to the first half of 2022 (six months over six months).

53

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

Marketplace revenue consists of the following:
Three Months Ended Change (%)
June 30,
2023 		March 31,
2023 		June 30,
2022 		Q2 2023
vs
Q1 2023 		Q2 2023
vs
Q2 2022
Origination fees $ 70,989 $ 70,543 $ 149,252 1 % (52) %
Servicing fees 22,015 26,380 18,166 (17) % 21 %
Gain on sales of loans 13,221 14,125 29,319 (6) % (55) %
Net fair value adjustments (23,442) (15,414) 9,647 52 % N/M
Total marketplace revenue $ 82,783 $ 95,634 $ 206,384 (13) % (60) %

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

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

Origination Fees

Origination fees recorded as a component of marketplace revenue are primarily fees earned related to originating and issuing unsecured personal loans that are held for sale. The following table presents loan origination volume during each of the periods set forth below:
Three Months Ended Change (%)
June 30,
2023 		March 31,
2023 		June 30,
2022 		Q2 2023
vs
Q1 2023 		Q2 2023
vs
Q2 2022
Marketplace loans $ 1,353,134 $ 1,285,648 $ 2,819,263 5 % (52) %
Loan originations held for investment 657,380 1,001,989 1,021,110 (34) % (36) %
Total loan originations (1)
$ 2,010,514 $ 2,287,637 $ 3,840,373 (12) % (48) %

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

54

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Sequential: Origination fees were relatively flat for the second quarter of 2023 compared to the first quarter of 2023. Loan origination volume of marketplace loans increased to $1.4 billion for the second quarter of 2023 compared to $1.3 billion for the first quarter of 2023, an increase of 5%.

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

Six Months Over Six Months: Origination fees were $141.5 million and $271.3 million for the first halves of 2023 and 2022, respectively, a decrease of 48%. The decrease was due to lower origination volume of marketplace loans. Loan origination volume of marketplace loans decreased to $2.6 billion for the first half of 2023 compared to $5.2 billion for the first half of 2022, a decrease of 49%, resulting from lower investor demand due to the rising interest rate environment.

Servicing Fees

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

The table below illustrates AUM serviced on our platform by the method in which the loans were financed as of the periods presented. Loans sold and subsequently serviced on behalf of the investor represent a key driver of our servicing fee revenue.
Change (%)
June 30,
2023 		March 31,
2023 		June 30,
2022 		Q2 2023
vs
Q1 2023 		Q2 2023
vs
Q2 2022
AUM (in millions):
Loans serviced for others $ 10,204 $ 10,504 $ 11,382 (3) % (10) %
Loans held by LendingClub Bank 5,425 5,499 3,258 (1) % 67 %
Retail notes, certificates and secured borrowings 28 41 127 (32) % (78) %
Other loans invested in by the Company 12 16 16 (25) % (25) %
Total $ 15,669 $ 16,060 $ 14,783 (2) % 6 %

In addition to the loans serviced on our marketplace platform, we serviced $146.9 million, $159.1 million and $183.6 million in outstanding principal balance of commercial loans sold as of June 30, 2023, March 31, 2023 and June 30, 2022, respectively.

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

Year Over Year: Servicing fees were $22.0 million and $18.2 million for the second quarters of 2023 and 2022, respectively, an increase of 21%. This was primarily due to 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.
55

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

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

Gain on Sales of Loans

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

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

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

Six Months Over Six Months: Gain on sales of loans was $27.3 million and $53.4 million for the first halves of 2023 and 2022, respectively, a decrease of 49%. 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 $(23.4) million and $(15.4) million for the second and first quarters of 2023, respectively, a decrease of $8.0 million. The decrease was primarily due to lower loan sale prices.

Year Over Year: Net fair value adjustments were $(23.4) million and $9.6 million for the second quarters of 2023 and 2022, respectively, a decrease of $33.1 million. The decrease was primarily due to lower loan sale prices.

Six Months Over Six Months: Net fair value adjustments were $(38.9) million and $24.9 million for the first halves of 2023 and 2022, respectively, a decrease of $63.8 million. The decrease was primarily due to lower loan sale prices.

56

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

Other non-interest income primarily consists of referral revenue that relates to fees earned from third-party companies when customers referred by us consider or purchase products or services from such third-party companies. The tables below illustrate the composition of other non-interest income for each period presented:
Three Months Ended Change (%)
June 30,
2023 		March 31,
2023 		June 30,
2022 		Q2 2023
vs
Q1 2023 		Q2 2023
vs
Q2 2022
Referral revenue $ 1,531 $ 1,448 $ 4,025 6 % (62) %
Other 1,504 1,908 3,423 (21) % (56) %
Other non-interest income $ 3,035 $ 3,356 $ 7,448 (10) % (59) %

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

57

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

The table below presents 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
June 30, 2023 		Three Months Ended
March 31, 2023
Three Months Ended
June 30, 2022
Average
Balance 		Interest Income/
Expense 		Average Yield/
Rate 		Average
Balance 		Interest Income/
Expense 		Average Yield/
Rate 		Average
Balance 		Interest Income/
Expense 		Average Yield/
Rate
Interest-earning assets (1)
Cash, cash equivalents, restricted cash and other $ 1,512,700 $ 19,134 5.06 % $ 1,220,677 $ 13,714 4.49 % $ 1,023,192 $ 2,279 0.89 %
Securities available for sale at fair value 437,473 5,948 5.44 % 362,960 3,900 4.30 % 409,327 4,426 4.32 %
Loans held for sale at fair value 106,865 4,433 16.59 % 110,580 5,757 20.83 % 156,503 7,130 18.22 %
Loans and leases held for investment at amortized cost:
Unsecured personal loans (2)
4,360,506 145,262 13.33 % 4,066,713 133,687 13.15 % 2,692,148 95,529 14.19 %
Secured consumer loans 399,488 4,088 4.09 % 381,760 3,706 3.88 % 268,091 2,351 3.51 %
Commercial loans and leases 728,588 11,605 6.37 % 735,911 12,185 6.62 % 644,002 8,732 5.42 %
PPP loans 28,675 1,130 15.76 % 57,833 889 6.15 % 149,454 2,299 6.15 %
Loans and leases held for investment at amortized cost 5,517,257 162,085 11.75 % 5,242,217 150,467 11.48 % 3,753,695 108,911 11.61 %
Loans held for investment at fair value 670,969 21,692 12.93 % 836,313 26,892 12.86 % 16,991 631 14.85 %
Total loans and leases held for investment 6,188,226 183,777 11.88 % 6,078,530 177,359 11.67 % 3,770,686 109,542 11.62 %
Retail and certificate loans held for investment at fair value 32,760 1,194 14.57 % 46,525 1,683 14.47 % 144,613 5,091 14.08 %
Total interest-earning assets 8,278,024 214,486 10.36 % 7,819,272 202,413 10.35 % 5,504,321 128,468 9.34 %
Cash and due from banks and restricted cash 78,221 71,878 75,517
Allowance for loan and lease losses (354,348) (338,359) (202,904)
Other non-interest earning assets 686,956 666,650 490,412
Total assets $ 8,688,853 $ 8,219,441 $ 5,867,346
Interest-bearing liabilities
Interest-bearing deposits:
Checking and money market accounts $ 1,397,302 $ 7,760 2.23 % $ 1,633,691 $ 7,568 1.88 % $ 2,463,710 $ 2,664 0.43 %
Savings accounts and certificates of deposit 5,546,862 58,761 4.25 % 4,747,478 45,705 3.90 % 1,555,607 3,414 0.88 %
Interest-bearing deposits (2)
6,944,164 66,521 3.84 % 6,381,169 53,273 3.39 % 4,019,317 6,078 0.61 %
Retail notes, certificates and secured borrowings 32,760 1,194 14.57 % 46,525 1,683 14.47 % 144,613 5,091 14.08 %
Other interest-bearing liabilities 31,409 119 1.51 % 107,520 753 2.80 % 195,948 1,073 2.19 %
Total interest-bearing liabilities 7,008,333 67,834 3.88 % 6,535,214 55,709 3.46 % 4,359,878 12,242 1.12 %
58

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Three Months Ended
June 30, 2023 		Three Months Ended
March 31, 2023
Three Months Ended
June 30, 2022
Average
Balance 		Interest Income/
Expense 		Average Yield/
Rate 		Average
Balance 		Interest Income/
Expense 		Average Yield/
Rate 		Average
Balance 		Interest Income/
Expense 		Average Yield/
Rate
Non-interest bearing deposits 205,750 241,954 292,750
Other liabilities 272,142 263,868 261,796
Total liabilities $ 7,486,225 $ 7,041,036 $ 4,914,424
Total equity $ 1,202,628 $ 1,178,405 $ 952,922
Total liabilities and equity $ 8,688,853 $ 8,219,441 $ 5,867,346
Interest rate spread 6.48 % 6.90 % 8.21 %
Net interest income and net interest margin $ 146,652 7.09 % $ 146,704 7.50 % $ 116,226 8.45 %
(1) Nonaccrual loans and any related income are included in their respective loan categories.
(2) The average yield/rate for unsecured personal loans increased sequentially primarily due to higher coupon loans in the portfolio. The average yield/rate for unsecured personal loans decreased year over year primarily due to a shift in the mix toward higher credit quality loans, which generally have lower interest rates. The average yield/rate for interest-bearing deposits increased due to a higher federal funds rate and an increasing concentration of online deposits. We expect pressure on net interest margin to continue during 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 June 30, 2023
Compared to
Three Months Ended March 31, 2023
Increase (Decrease) Due to Change in:
Average Volume (1)
Average Rate (1)
Total
Interest-earning assets
Cash, cash equivalents, restricted cash and other $ 3,550 $ 1,870 $ 5,420
Securities available for sale at fair value 893 1,155 2,048
Loans held for sale at fair value (188) (1,136) (1,324)
Loans and leases held for investment at amortized cost 9,205 2,413 11,618
Loans and leases held for investment at fair value (5,344) 144 (5,200)
Retail and certificate loans held for investment at fair value (501) 12 (489)
Total increase in interest income on interest-earning assets $ 7,615 $ 4,458 $ 12,073
Interest-bearing liabilities
Checking and money market accounts $ (1,164) $ 1,356 $ 192
Savings accounts and certificates of deposit 8,566 4,490 13,056
Interest-bearing deposits 7,402 5,846 13,248
Retail notes, certificates and secured borrowings (501) 12 (489)
Other interest-bearing liabilities (384) (250) (634)
Total increase in interest expense on interest-bearing liabilities $ 6,517 $ 5,608 $ 12,125
Increase (Decrease) in net interest income $ 1,098 $ (1,150) $ (52)
(1) Volume and rate changes have been allocated on a consistent basis using the respective percentage changes in average balances and average rates.
59

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Three Months Ended June 30, 2023
Compared to
Three Months Ended June 30, 2022
Increase (Decrease) Due to Change in:
Average Volume (1)
Average Rate (1)
Total
Interest-earning assets
Cash, cash equivalents, restricted cash and other $ 1,564 $ 15,291 $ 16,855
Securities available for sale at fair value 321 1,201 1,522
Loans held for sale at fair value (2,103) (594) (2,697)
Loans and leases held for investment at amortized cost 55,585 (2,411) 53,174
Loans and leases held for investment at fair value 21,153 (92) 21,061
Retail and certificate loans held for investment at fair value (4,069) 172 (3,897)
Total increase in interest income on interest-earning assets $ 72,451 $ 13,567 $ 86,018
Interest-bearing liabilities
Checking and money market accounts $ (1,611) $ 6,707 $ 5,096
Savings accounts and certificates of deposit 22,212 33,135 55,347
Interest-bearing deposits 20,601 39,842 60,443
Retail notes, certificates and secured borrowings (4,069) 172 (3,897)
Other interest-bearing liabilities (696) (258) (954)
Total increase in interest expense on interest-bearing liabilities $ 15,836 $ 39,756 $ 55,592
Increase (Decrease) in net interest income $ 56,615 $ (26,189) $ 30,426
(1) Volume and rate changes have been allocated on a consistent basis using the respective percentage changes in average balances and average rates.
60

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

Six Months Ended
June 30, 2023
Six Months Ended
June 30, 2022
Average
Balance 		Interest Income/
Expense 		Average Yield/
Rate 		Average
Balance 		Interest Income/
Expense 		Average Yield/
Rate
Interest-earning assets (1)
Cash, cash equivalents, restricted cash and other $ 1,367,495 $ 32,848 4.80 % $ 958,057 $ 2,967 0.62 %
Securities available for sale at fair value 400,422 9,848 4.92 % 367,241 8,937 4.87 %
Loans held for sale at fair value 108,712 10,190 18.75 % 205,821 14,580 14.17 %
Loans and leases held for investment at amortized cost:
Unsecured personal loans (2)
4,214,421 278,949 13.24 % 2,376,236 173,905 14.64 %
Secured consumer loans 390,673 7,794 3.99 % 250,163 4,626 3.70 %
Commercial loans and leases 732,229 23,790 6.50 % 632,331 16,320 5.16 %
PPP loans 43,173 2,019 9.35 % 185,986 5,502 5.92 %
Loans and leases held for investment at amortized cost 5,380,496 312,552 11.62 % 3,444,716 200,353 11.63 %
Loans held for investment at fair value 753,184 48,584 12.90 % 17,757 1,224 13.78 %
Total loans and leases held for investment 6,133,680 361,136 11.78 % 3,462,473 201,577 11.64 %
Retail and certificate loans held for investment at fair value 39,604 2,877 14.53 % 171,713 12,060 14.05 %
Total interest-earning assets 8,049,913 416,899 10.36 % 5,165,305 240,121 9.30 %
Cash and due from banks and restricted cash 75,067 84,100
Allowance for loan and lease losses (346,398) (183,268)
Other non-interest earning assets 676,861 488,387
Total assets $ 8,455,443 $ 5,554,524
Interest-bearing liabilities
Interest-bearing deposits:
Checking and money market accounts $ 1,514,843 $ 15,328 2.04 % $ 2,352,080 $ 4,388 0.37 %
Savings accounts and certificates of deposit 5,149,379 104,466 4.09 % 1,313,370 5,128 0.78 %
Interest-bearing deposits (2)
6,664,222 119,794 3.62 % 3,665,450 9,516 0.52 %
Retail notes, certificates and secured borrowings 39,604 2,877 14.53 % 171,713 12,060 14.05 %
Other interest-bearing liabilities 69,254 872 2.52 % 254,320 2,639 2.08 %
Total interest-bearing liabilities 6,773,080 123,543 3.68 % 4,091,483 24,215 1.18 %
Non-interest bearing deposits 223,752 260,043
Other liabilities 268,028 290,518
Total liabilities $ 7,264,860 $ 4,642,044
Total equity $ 1,190,583 $ 912,480
Total liabilities and equity $ 8,455,443 $ 5,554,524
Interest rate spread 6.68 % 8.11 %
Net interest income and net interest margin $ 293,356 7.29 % $ 215,906 8.36 %
(1) Nonaccrual loans and any related income are included in their respective loan categories.
(2) The average yield/rate for unsecured personal loans decreased 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 during 2023.

61

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

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

The provision for credit losses includes the credit loss expense for HFI loans and leases at amortized cost, available for sale (AFS) securities and unfunded lending commitments. The table below illustrates the composition of the provision for credit losses for each period presented, as well as the loan originations held for investment in each period, which is a key driver for credit loss expense:
Three Months Ended Six Months Ended June 30,
June 30,
2023 		March 31,
2023 		June 30,
2022 		2023 2022
Credit loss expense for loans and leases held for investment $ 66,190 $ 70,850 $ 70,053 $ 137,040 $ 122,281
Credit loss (reversal of) expense for unfunded lending commitments 405 (266) 513 139 794
Total provision for credit losses $ 66,595 $ 70,584 $ 70,566 $ 137,179 $ 123,075
Loan originations held for investment $ 657,380 $ 1,001,989 $ 1,021,110 $ 1,659,369 $ 1,877,422

Sequential: The provision for credit losses was $66.6 million and $70.6 million for the second and first quarters of 2023, respectively, a decrease of 6%. 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 the discounting effect of the NPV allowance on prior loan vintages and additional qualitative allowance reflecting a modest increase in expected losses and a less favorable economic outlook.

Year Over Year: The provision for credit losses was $66.6 million and $70.6 million for the second quarters of 2023 and 2022, respectively, a decrease of 6%. 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 the discounting effect of the NPV allowance on prior loan vintages and additional qualitative allowance reflecting a modest increase in expected losses and a less favorable economic outlook.

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

62

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
The activity in the allowance for credit losses (ACL) was as follows:
Three Months Ended Six Months Ended June 30,
June 30,
2023 		March 31,
2023 		June 30,
2022 		2023 2022
Allowance for loan and lease losses, beginning of period $ 348,857 $ 327,852 $ 187,985 $ 327,852 $ 144,389
Credit loss expense for loans and leases held for investment 66,190 70,850 70,053 137,040 122,281
Charge-offs (64,269) (52,563) (15,852) (116,832) (24,941)
Recoveries 4,385 2,718 1,074 7,103 1,531
Allowance for loan and lease losses, end of period $ 355,163 $ 348,857 $ 243,260 $ 355,163 $ 243,260
Reserve for unfunded lending commitments, beginning of period $ 1,612 $ 1,878 $ 1,512 $ 1,878 $ 1,231
Credit loss (reversal of) expense for unfunded lending commitments 405 (266) 513 139 794
Reserve for unfunded lending commitments, end of period (1)
$ 2,017 $ 1,612 $ 2,025 $ 2,017 $ 2,025
(1) Relates to $108.9 million, $117.2 million and $132.6 million of unfunded commitments as of June 30, 2023, March 31, 2023 and June 30, 2022, respectively.

Three Months Ended Six Months Ended June 30,
June 30,
2023 		March 31,
2023 		June 30,
2022 		2023 2022
Ratio of allowance for loan and lease losses to total loans and leases held for investment at amortized cost 6.4 % 6.4 % 6.0 % 6.4 % 6.0 %
Average loans and leases held for investment at amortized cost, excluding PPP loans $ 5,488,582 $ 5,184,384 $ 3,604,241 $ 5,337,323 $ 3,258,730
Net charge-off ratio (1)
4.4 % 3.8 % 1.6 % 4.1 % 1.4 %
(1) Calculated as annualized net charge-offs divided by average outstanding loans and leases held for investment during the period, excluding PPP loans.

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) :
June 30, 2023 December 31, 2022
Total nonaccrual loans and leases held for investment $ 51,383 $ 34,827
Ratio of total nonaccrual loans and leases held for investment to total loans and leases held for investment 0.9 % 0.7 %
(1) Excluding PPP loans, there were no loans that were 90 days or more past due and accruing as of both June 30, 2023 and December 31, 2022.

For additional information on the ACL and nonaccrual loans and leases, see “ Notes to Consolidated Financial Statements – Note 1. Summary of Significant Accounting Policies ” 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.
63

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

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 (%)
June 30,
2023 		March 31,
2023 		June 30,
2022 		Q2 2023
vs
Q1 2023 		Q2 2023
vs
Q2 2022
Non-interest expense:
Compensation and benefits $ 71,553 $ 73,307 $ 85,103 (2) % (16) %
Marketing 23,940 26,880 61,497 (11) % (61) %
Equipment and software 13,968 13,696 12,461 2 % 12 %
Depreciation and amortization 11,638 12,354 10,557 (6) % 10 %
Professional services 9,974 9,058 16,138 10 % (38) %
Occupancy 4,684 4,310 6,209 9 % (25) %
Other non-interest expense 15,322 17,703 17,421 (13) % (12) %
Total non-interest expense $ 151,079 $ 157,308 $ 209,386 (4) % (28) %

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

Compensation and Benefits

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

Year Over Year: Compensation and benefits expense decreased $13.6 million, or 16%, for the second 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.

Six Months Over Six Months: Compensation and benefits expense decreased $21.9 million, or 13%, for the first half of 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in headcount as a result of the cost reduction and reorganization plan we implemented in January 2023.

64

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

Sequential: Marketing expense decreased $2.9 million, or 11%, for the second quarter of 2023 compared to the first quarter of 2023. The decrease was primarily due to a decrease in variable marketing expenses based on lower origination volume.

Year Over Year: Marketing expense decreased $37.6 million, or 61%, for the second quarter of 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in variable marketing expenses based on lower origination volume.

Six Months Over Six Months: Marketing expense decreased $65.8 million, or 56%, for the first half 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 for the second quarter of 2023 compared to the first quarter of 2023.

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

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

Depreciation and Amortization

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

Year Over Year: Depreciation and amortization expense increased $1.1 million, or 10%, for the second quarter of 2023 compared to the same period in 2022. The increase was primarily due to an increase in purchased software and the amortization of internally-developed software.

Six Months Over Six Months: Depreciation and amortization expense increased $2.4 million, or 11%, for the first half of 2023 compared to the same period in 2022. The increase was primarily due to an increase in purchased software and the amortization of internally-developed software.

Professional Services

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

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

65

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
Six Months Over Six Months: Professional services decreased $9.5 million, or 33%, for the first half of 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in consulting fees.

Occupancy

Sequential: Occupancy expense increased $0.4 million, or 9%, for the second quarter of 2023 compared to the first quarter of 2023. The increase was primarily due to an increase in variable lease costs.

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

Six Months Over Six Months: Occupancy expense decreased $3.2 million, or 26%, for the first half of 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in rent expense.

Income Taxes

For the second quarter and first half of 2023, we recorded an income tax expense of $4.7 million and $8.8 million, representing an effective tax rate of 31.7% and 27.1%, respectively. The second quarter effective tax rate differs from the statutory rate as it was favorably affected by recurring items such as tax credits and was unfavorably affected by nondeductible portions of executive compensation. Additionally, the effective tax rate was unfavorably impacted by the discrete tax impact recognized during the period related to stock-based compensation. For the second quarter and first half of 2022, we recorded an income tax benefit of $132.0 million and $127.0 million, respectively. The income tax benefit for the second quarter and first half of 2022 was primarily due to the release of a $135.3 million valuation allowance against our deferred tax assets, partially offset by a $3.3 million state income tax expense.

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

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

Segment Information

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

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.

66

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

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

Financial information for the segments is presented in the following tables:
LendingClub
Bank 		LendingClub
Corporation
(Parent only) 		Intercompany
Eliminations 		Consolidated Total
Three Months Ended June 30, Three Months Ended June 30, Three Months Ended June 30, Three Months Ended June 30,
2023 2022 2023 2022 2023 2022 2023 2022
Non-interest income:
Marketplace revenue $ 62,006 $ 191,087 $ 7,772 $ 11,167 $ 13,005 $ 4,130 $ 82,783 $ 206,384
Other non-interest income 21,743 20,041 2,431 3,914 (21,139) (16,507) 3,035 7,448
Total non-interest income 83,749 211,128 10,203 15,081 (8,134) (12,377) 85,818 213,832
Interest income:
Interest income 210,514 120,152 3,972 8,316 — — 214,486 128,468
Interest expense (66,546) (6,213) (1,288) (6,029) — — (67,834) (12,242)
Net interest income 143,968 113,939 2,684 2,287 — — 146,652 116,226
Total net revenue 227,717 325,067 12,887 17,368 (8,134) (12,377) 232,470 330,058
Provision for credit losses (66,611) (70,566) 16 — — — (66,595) (70,566)
Non-interest expense (142,563) (196,636) (16,650) (25,127) 8,134 12,377 (151,079) (209,386)
Income (Loss) before income tax benefit (expense) 18,543 57,865 (3,747) (7,759) — — 14,796 50,106
Income tax benefit (expense) (5,429) (17,318) 743 85,864 — 63,408 (4,686) 131,954
Net income (loss) $ 13,114 $ 40,547 $ (3,004) $ 78,105 $ — $ 63,408 $ 10,110 $ 182,060

67

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
LendingClub
Bank 		LendingClub
Corporation
(Parent only) 		Intercompany
Eliminations 		Consolidated Total
Six Months Ended June 30, Six Months Ended June 30, Six Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022 2023 2022 2023 2022
Non-interest income:
Marketplace revenue $ 134,694 $ 355,922 $ 20,880 $ 26,298 $ 22,843 $ 4,130 $ 178,417 $ 386,350
Other non-interest income 40,904 39,539 4,984 8,137 (39,497) (30,337) 6,391 17,339
Total non-interest income 175,598 395,461 25,864 34,435 (16,654) (26,207) 184,808 403,689
Interest income:
Interest income 408,844 219,975 8,055 20,146 — — 416,899 240,121
Interest expense (120,442) (9,857) (3,101) (14,358) — — (123,543) (24,215)
Net interest income 288,402 210,118 4,954 5,788 — — 293,356 215,906
Total net revenue 464,000 605,579 30,818 40,223 (16,654) (26,207) 478,164 619,595
Provision for credit losses (137,195) (123,075) 16 — — — (137,179) (123,075)
Non-interest expense (290,946) (375,095) (34,095) (51,702) 16,654 26,207 (308,387) (400,590)
Income (Loss) before income tax benefit (expense) 35,859 107,409 (3,261) (11,479) — — 32,598 95,930
Income tax benefit (expense) (9,685) (29,673) 863 103,591 — 53,048 (8,822) 126,966
Net income (loss) $ 26,174 $ 77,736 $ (2,398) $ 92,112 $ — $ 53,048 $ 23,776 $ 222,896

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

Non-GAAP Financial Measures

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

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

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

68

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
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 Six Months Ended
June 30, 2023 March 31,
2023 		June 30, 2022 June 30, 2023 June 30, 2022
GAAP Net income $ 10,110 $ 13,666 $ 182,060 $ 23,776 $ 222,896
Less: Provision for credit losses (66,595) (70,584) (70,566) (137,179) (123,075)
Less: Income tax benefit (expense) (4,686) (4,136) 131,954 (8,822) 126,966
Pre-provision net revenue $ 81,391 $ 88,386 $ 120,672 $ 169,777 $ 219,005

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

The following table provides a reconciliation of Net Income Excluding Income Tax Benefit and Diluted EPS Excluding Income Tax Benefit to the nearest GAAP measures:
As of and For The Three Months Ended
As of and For The Six Months Ended
June 30, 2023 March 31,
2023 		June 30, 2022 June 30, 2023 June 30, 2022
GAAP Net income $ 10,110 $ 13,666 $ 182,060 $ 23,776 $ 222,896
Income tax benefit from release of tax valuation allowance — — 135,300 — 135,300
Net income excluding income tax benefit $ 10,110 $ 13,666 $ 46,760 $ 23,776 $ 87,596
GAAP Diluted EPS – common stockholders $ 0.09 $ 0.13 $ 1.73 $ 0.22 $ 2.13
(A) Income tax benefit from release of tax valuation allowance N/A N/A $ 135,300 N/A $ 135,300
(B) Weighted-average common shares – Diluted N/A N/A 105,042,626 N/A 104,644,825
(A/B) Diluted EPS impact of income tax benefit N/A N/A $ 1.28 N/A $ 1.28
Diluted EPS excluding income tax benefit $ 0.09 $ 0.13 $ 0.45 $ 0.22 $ 0.85
N/A – Not applicable
69

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

The following table provides a reconciliation of TBV Per Common Share to the nearest GAAP measure:
As of June 30,
2023 		March 31,
2023 		June 30,
2022
GAAP common equity $ 1,205,523 $ 1,190,742 $ 1,079,117
Less: Goodwill (75,717) (75,717) (75,717)
Less: Intangible assets (14,167) (15,201) (18,690)
Tangible common equity $ 1,115,639 $ 1,099,824 $ 984,710
Book value per common share
GAAP common equity $ 1,205,523 $ 1,190,742 $ 1,079,117
Common shares issued and outstanding 108,694,120 107,460,734 103,630,776
Book value per common share $ 11.09 $ 11.08 $ 10.41
Tangible book value per common share
Tangible common equity $ 1,115,639 $ 1,099,824 $ 984,710
Common shares issued and outstanding 108,694,120 107,460,734 103,630,776
Tangible book value per common share $ 10.26 $ 10.23 $ 9.50

Supervision and Regulatory Environment

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

Regulatory Actions Taken in Relation to COVID-19

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

Federal Banking Regulator Supervision

Since the Acquisition, we are subject to supervision, regulation, examination and enforcement by multiple federal banking regulatory bodies. Specifically, as a bank holding company, the Company is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the Board of Governors of the Federal
70

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

The formation of LC Bank as a nationally chartered association and the organization of the Company as a bank holding company subjects us to various capital adequacy guidelines issued by the OCC and the FRB, including the requirement to maintain regulatory capital ratios in accordance with the Basel Committee on Banking Supervision standardized approach for U.S. banking organizations (U.S. Basel III). As a U.S. Basel III standardized approach institution, we selected the one-time election to opt-out of the requirements to include all the components of accumulated other comprehensive income included in common stockholder’s equity. The minimum capital requirements under the U.S. Basel III capital framework are: a CET1 risk-based capital ratio of 4.5%, a Tier 1 risk-based capital ratio of 6.0%, a total risk-based capital ratio of 8.0%, and a Tier 1 leverage ratio of 4.0%. Additionally, a Capital Conservation Buffer (CCB) of 2.5% must be maintained above the minimum risk-based capital requirements in order to avoid certain limitations on capital distributions, stock repurchases, and certain discretionary bonus payments. In addition to these guidelines, the banking regulators may require a banking organization to maintain capital at levels higher than the minimum ratios prescribed under the U.S. Basel III capital framework. In this regard, and unless otherwise directed by the FRB and the OCC, we have made commitments for the Company and LC Bank (until February 2024) to maintain a CET1 risk-based capital ratio of 11.0%, a Tier 1 risk-based capital ratio above 11.0%, a total risk-based capital ratio above 13.0%, and a Tier 1 leverage ratio of 11.0%. See “ Part I – Item 1. Business – Regulation and Supervision – Regulatory Capital Requirements and Prompt Corrective Action ” in our Annual Report and “ Notes to Condensed Consolidated Financial Statements – Note 18. Regulatory Requirements” in this Report for additional information.

71

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
The following table summarizes the Company’s regulatory capital amounts (in millions) and ratios:
June 30, 2023 December 31, 2022
Required Minimum plus Required CCB for
Non-Leverage Ratios
LendingClub Amount Ratio Amount Ratio
CET1 capital (1)
$ 1,053.5 16.1 % $ 1,005.8 15.8 % 7.0 %
Tier 1 capital $ 1,053.5 16.1 % $ 1,005.8 15.8 % 8.5 %
Total capital $ 1,138.3 17.4 % $ 1,088.1 17.1 % 10.5 %
Tier 1 leverage $ 1,053.5 12.4 % $ 1,005.8 14.1 % 4.0 %
Risk-weighted assets $ 6,526.5 N/A $ 6,360.7 N/A N/A
Quarterly adjusted average assets $ 8,522.6 N/A $ 7,119.0 N/A N/A
N/A – Not applicable
(1) Consists of common stockholders’ equity as defined under U.S. GAAP and certain adjustments made in accordance with regulatory capital guidelines, including the addition of the CECL transitional benefit and deductions for goodwill and other intangible assets.

The following table summarizes LC Bank’s regulatory capital amounts (in millions) and ratios:
LendingClub Bank June 30, 2023 December 31, 2022
Required Minimum plus Required CCB for
Non-Leverage Ratios
Amount Ratio Amount Ratio
CET1 capital (1)
$ 939.3 14.7 % $ 852.2 13.8 % 7.0 %
Tier 1 capital $ 939.3 14.7 % $ 852.2 13.8 % 8.5 %
Total capital $ 1,022.6 16.0 % $ 932.4 15.1 % 10.5 %
Tier 1 leverage $ 939.3 11.3 % $ 852.2 12.5 % 4.0 %
Risk-weighted assets $ 6,406.5 N/A $ 6,194.0 N/A N/A
Quarterly adjusted average assets $ 8,300.0 N/A $ 6,795.2 N/A N/A
N/A – Not applicable
(1) Consists of common stockholders’ equity as defined under U.S. GAAP and certain adjustments made in accordance with regulatory capital guidelines, including the addition of the CECL transitional benefit and deductions for goodwill and other intangible assets.

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

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
72

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
management also involves maintaining sufficient liquidity to repay borrowings, pay operating expenses and support extraordinary funding requirements when necessary.

LendingClub Bank Liquidity

The following table summarizes LC Bank’s primary sources of short-term liquidity as of the periods presented:
June 30, 2023 December 31, 2022
Cash and cash equivalents $ 1,176,563 $ 1,020,874
Securities available for sale (1)
$ 362,675 $ 329,287
Deposits $ 6,897,220 $ 6,420,827
Available borrowing capacity:
FHLB of Des Moines borrowing capacity (2)
$ 427,877 $ 414,528
FRB Discount Window borrowing capacity (3)
$ 3,674,308 $ 191,021
Total available borrowing capacity $ 4,102,185 $ 605,549
(1) Excludes illiquid securities available for sale.
(2) Includes both loans and securities available for sale pledged as collateral.
(3) During the second quarter of 2023, 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.

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

LendingClub Holding Company Liquidity

The primary source of liquidity at the holding company is $74.6 million and $56.5 million in cash and cash equivalents as of June 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.

73

LENDINGCLUB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted)
We believe, based on our projections, that our cash on hand, liquid AFS securities, available borrowing capacity, and cash flow from operations are sufficient to meet our liquidity needs for the next twelve months, as well as beyond the next twelve months. See “ Item 1. Financial Statements – Condensed Consolidated Statements of Cash Flows ” for additional detail regarding our cash flows.

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.

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

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. Conversely, net interest income is projected to increase over the next twelve months during hypothetical declining interest rate environments. The increase in sensitivity as of June 30, 2023 relative to December 31, 2022 is primarily due to the composition of our loans and deposits. Furthermore, during fluctuating interest rate environments, the increased sensitivity of repricing interest-bearing deposits is more impactful than that of repricing fixed rate loans.

Although we believe that these measurements provide an estimate of our interest rate sensitivity, they do not account for potential changes in credit quality, balance sheet mix, size of our balance sheet, or other business developments that could affect net income. Actual results could differ materially from the estimated outcomes of our simulations.
74

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

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 June 30, 2023, see “ Item 1. Financial Statements – Notes to Condensed Consolidated Financial Statements – Note 17. Commitments and Contingencies. ”

Critical Accounting Estimates

Certain of the Company’s accounting policies that involve a higher degree of judgment and complexity are discussed in “ Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates ” in our Annual Report. There have been no significant changes to these critical accounting estimates during the first half 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 June 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 June 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 second 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. Commitments and Contingencies – Legal, ” which is incorporated herein by reference.

Item 1A. Risk Factors

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

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

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

Our business 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 a recent agreement to raise the borrowing capacity of the Federal government, the Student Loan Forbearance Program is expected to lapse and payments and interest accruals are expected to resume by September 2023 (collectively, the Student Loan Payment Resumption).

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

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

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

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Rule 10b5-1 Trading Plans

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

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Item 6. Exhibits

Exhibit Index

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

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
LENDINGCLUB CORPORATION
(Registrant)
Date: July 31, 2023 /s/ SCOTT SANBORN
Scott Sanborn
Chief Executive Officer
Date: July 31, 2023 /s/ ANDREW LABENNE
Andrew LaBenne
Chief Financial Officer

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