Securitizations and Variable Interest Entities

In the normal course of business, the Company engages in a variety of activities with VIEs. The Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with the variable interest entity and reconsiders that conclusion continually. In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the entity. The consolidation analysis can generally be performed qualitatively, however if it is not readily apparent that the Company is not the primary beneficiary, a quantitative analysis may also be performed. If the Company is determined to be the primary beneficiary of a VIE, it must account for the VIE as a consolidated subsidiary. If the Company is determined not to be the primary beneficiary of a VIE such VIE is not consolidated. See “Note 2. Summary of Significant Accounting Policies” for additional information.

VIE Assets and Liabilities

The Company has segregated its involvement with VIEs between those VIEs which are consolidated and those VIEs which are not consolidated. The following tables provide the classifications of assets and liabilities on the Company’s Consolidated Balance Sheets for its transactions with VIEs at December 31, 2017 and 2016:



December 31, 2017	Consolidated VIEs		Unconsolidated VIEs		Total
Assets
Restricted cash	$	34,370	$	—	$	34,370
Securities available for sale	—		47,049		47,049
Loans held for investment at fair value	1,202,260		—		1,202,260
Loans held for investment by the Company at fair value	350,699		—		350,699
Loans held for sale by Company at fair value	60,812		—		60,812
Accrued interest receivable	15,602		407		16,009
Other assets	6,324		15,779		22,103
Total assets	$	1,670,067	$	63,235	$	1,733,302
Liabilities
Accrued interest payable	$	14,789	$	—	$	14,789
Accrued expenses and other liabilities	52		300		352
Notes, certificates and secured borrowings at fair value	1,210,349		—		1,210,349
Payable to securitization note and residual certificate holders	312,123		—		312,123
Warehouse notes payable	32,100		—		32,100
Total liabilities	1,569,413		300		1,569,713
Total net assets	$	100,654	$	62,935	$	163,589



December 31, 2016	Consolidated VIEs			Unconsolidated VIEs		Total
Assets
Loans held for investment at fair value	$	2,600,422		$	—	$	2,600,422
Accrued interest receivable	24,037			—		24,037
Other assets	—			10,122		10,122
Total assets	$	2,624,459		$	10,122	$	2,634,581
Liabilities
Accrued interest payable	$	26,839		$	—	$	26,839
Notes, certificates and secured borrowings at fair value	2,616,023			—		2,616,023
Total liabilities	2,642,862			—		2,642,862
Total net assets	$	(18,403	)	$	10,122	$	(8,281	)

Consolidated VIEs

Trust Certificates

The Company established the Trust for the purpose of acquiring and holding loans for the sole benefit of certain investors that have purchased trust certificates issued by the Trust based on its power to direct the activities that most significantly impact the economic outcomes of the Trust through involvement in the design and ongoing activities and significant variable interest held in the Trust. The Company consolidates the loans held and the certificates issued by the Trust as it is the primary beneficiary of the Trust. As the primary beneficiary of the Trust, the Company is obligated the ensure that the Trust meets minimum capital requirements with respect to funding the administrative activities and maintaining the operations of the Trust.

Securitizations

The Company established LOAN, Depositor, Credit Trust and Grantor Trust for the purpose of maintaining at least 5% ongoing interest to comply with regulatory credit risk retention rules in connection with securitizations of personal whole loans. The Company consolidates LOAN, Depositor, Credit Trust and Grantor Trust in its consolidated financial statements as it holds a controlling financial interest and is the primary beneficiary. The Company is the primary beneficiary of LOAN, Depositor, Credit Trust and Grantor Trust based on its power to direct the activities that most significantly impact the economic outcomes of the securitizations through its role as sponsor and servicer and significant variable interests through its interests in these VIEs.

Warehouse Credit Facility

The Company established Warehouse for the purpose of purchasing non-revolving personal whole loans from LendingClub, financing the purchase or acquisition of such assets through facility agreements and warehousing the assets for securitization or loan sales. The Company consolidates Warehouse in its consolidated financial statements as it is the primary beneficiary. The Company is the primary beneficiary of Warehouse based on its power to direct the activities that most significantly impact the economic outcomes of the VIE through role in the design and ongoing activities and significant variable interest held in the VIE.

The following table presents a summary of financial assets and liabilities from the Company’s involvement with consolidated VIEs at December 31, 2017 and 2016:



December 31, 2017	Assets		Liabilities			Net Assets
Trust Certificates	$	1,226,957	$	(1,224,473	)	$	2,484
Securitizations	375,607		(312,832		)	62,775
Warehouse Credit Facility	67,503		(32,108		)	35,395
Total consolidated VIEs	$	1,670,067	$	(1,569,413	)	$	100,654



December 31, 2016	Assets		Liabilities			Net Assets
Trust Certificates	$	2,624,459	$	(2,642,862	)	$	(18,403	)
Total consolidated VIEs	$	2,624,459	$	(2,642,862	)	$	(18,403	)

The creditors of the VIEs above have no recourse to the general credit of the Company as the primary beneficiary of the VIEs and the liabilities of the VIEs can only be settled by the respective VIE’s assets.

Unconsolidated VIEs

The Company’s transactions with unconsolidated VIEs include securitizations of personal whole loans and sales of personal whole loans to investment funds sponsored by LCAM. The Company has various forms of involvement with VIEs, including servicing of loans, holding senior or subordinated interests, and serving as the investment manager for sponsored investment funds. The Company considers continued involvement in an unconsolidated VIE insignificant when it relates to third-party sponsored VIEs for which it was not the transferor, unless it is servicer and has other significant forms of involvement, or if it was the sponsor only or sponsor and servicer but does not have any other forms of significant involvement. In these instances, the Company’s involvement with the VIE is in the role as an agent and without significant participation in the economics of the VIE.

Securitizations

The Company sponsors securitizations of unsecured personal whole loans through issuances of fixed-rate asset-backed securities, which are collateralized by loans transferred to a VIE. Securitizations typically involve the transfer of unsecured personal whole loans to these VIEs with the transfer accounted for as a sale. In addition, the Company enters into separate servicing agreements with the VIEs and holds at least 5% of the beneficial interests issued by the VIEs. In certain instances, the Company may service unsecured personal loan securitizations structured by third parties whose loans were transferred to the VIE by a party other than the Company. In the case of certain securitization transactions, the Company has also agreed to repurchase or substitute loans for which a borrower fails to make the first payment due under a loan.The Company has determined that the variable interests it holds with respect to the securitizations are not potentially significant to the VIE, and as such, the Company is not the primary beneficiary.

CLUB Certificates

The Company sponsors the sale of unsecured personal whole loans through issuance of pass-through securities called CLUB Certificates, which are collateralized by loans transferred to a VIE. In December 2017, the Company introduced the CLUB Certificate, which is an instrument that trades in the over-the-counter market with a CUSIP. For each CLUB Certificate transaction, Master Trust establishes a series of the Master Trust (Series Trust). The CLUB Certificate transaction typically involves the transfer of unsecured personal whole loans to a Series Trust with the transfer accounted for as a sale. In addition, the Company enters into a servicing agreement with each applicable Series Trust and holds at least 5% of the beneficial interests issued by the Series Trust. The Company has determined that the variable interests it holds with respect to CLUB Certificates are not potentially significant to the VIE and as such, the Company is not the primary beneficiary.

Investment Fund

The Company has an equity investment in a holding company (Investment Fund) to a family of funds that purchases loans and interest in loans from the Company. The Company’s investment is deemed to be a variable interest in the Investment Fund because the limited partnership interest shares in the expected returns and losses of the Investment Fund. However, the Company is not the primary beneficiary of the Investment Fund because the Company does not have the power to direct the activities that most significantly affect the Investment Fund’s economic performance. As a result, the Company does not consolidate the operations of the Investment Fund in its consolidated financial statements.

The following tables summarize unconsolidated VIEs with which the Company has significant continuing involvement, but is not the primary beneficiary at December 31, 2017 and 2016:



December 31, 2017			Carrying Value
	Total VIE Assets		Securities Available for Sale		Accrued Interest Receivable		Other Assets		Accrued Expenses and Other Liabilities			Net Assets
Securitizations	$	863,589	$	45,256	$	391	$	5,446	$	(300	)	$	50,793
CLUB Certificates	36,833		1,793		16		315		—			2,124
Investment Fund	40,494		—		—		10,018		—			10,018
Total unconsolidated VIEs	$	940,916	$	47,049	$	407	$	15,779	$	(300	)	$	62,935



December 31, 2017	Maximum Exposure to Loss
	Securities Available for Sale		Accrued Interest Receivable		Other Assets		Accrued Expenses and Other Liabilities		Total Exposure
Securitizations	$	45,256	$	391	$	5,446	$	300	$	51,393
CLUB Certificates	1,793		16		315		—		2,124
Investment Fund	—		—		10,018		—		10,018
Total unconsolidated VIEs	$	47,049	$	407	$	15,779	$	300	$	63,535



December 31, 2016			Carrying Value				Maximum Exposure to Loss
	Total VIE Assets		Other Assets		Net Assets		Other Assets		Total Exposure
Investment Fund	$	50,523	$	10,122	$	10,122	$	10,122	$	10,122
Total unconsolidated VIEs	$	50,523	$	10,122	$	10,122	$	10,122	$	10,122

“Total VIE Assets” represents the remaining principal balance of loans held by unconsolidated VIEs with respect to securitizations and CLUB Certificates, and the net assets held by the investment fund using the most current information available. “Securities Available for Sale,” “Accrued Interest Receivable,” “Other Assets” and “Accrued Expenses and Other Liabilities” are the balances in the Company’s Consolidated Balance Sheets related to its involvement with the unconsolidated VIEs. “Other Assets” includes the Company’s servicing assets associated with loans transferred as part of securitizations and CLUB Certificates and the Company’s equity investment with respect to the Investment Fund. “Total Exposure” refers to the Company’s maximum exposure to loss from its involvement with unconsolidated VIEs. It represents estimated loss that would be incurred under severe, hypothetical circumstances, for which the Company believes the possibility is extremely remote, such as where the value of interests and any associated collateral declines to zero. Accordingly, this required disclosure is not an indication of expected losses.

Personal Whole Loan Securitizations

The Company securitizes certain prime and near-prime unsecured personal whole loans through asset-backed securitization transactions. The loans are facilitated through the Company’s lending marketplace with the Company and third-party whole loan investors contributing loans. In connection with the securitizations, the Company established VIEs to purchase the loans from the Company and third-party whole loan investors and simultaneously transferred the loans to a securitization trust with the transfer accounted for as a sale of financial assets. The assets are transferred into a trust such that the assets are legally isolated from the creditors of the Company are not available to satisfy its obligations. These assets can only be used to settle obligations of the securitization trust or other securitization vehicle.

During the year ended December 31, 2017, securitization trusts issued senior securities and subordinated residual certificates and Master Trust issued CLUB Certificates by the respective VIEs as consideration for the transferred loans. The VIEs sold 95% of the senior securities to third-party investors and then distributed the cash and the subordinated residual certificates to the Company and third-party whole loan investors. The Company subsequently sold a portion of its allocated subordinated residual certificates in prime unsecured personal whole loans to a third-party whole loan investor.

To comply with regulatory credit risk retention rules, the Company retained at least 5% of each of the senior securities, subordinated residual certificates and CLUB Certificates. Additionally, the Company’s continued involvement includes loan servicing responsibilities for which it receives servicing fees over the life of the underlying loans.

The senior securities, subordinated residual certificates and CLUB Certificates are accounted for as securities available for sale. See “Note 2. Summary of Significant Accounting Policies” and “Note 7. Fair Value of Assets and Liabilities” for additional information.

The following table summarizes activity related to the unconsolidated personal whole loan securitizations and personal whole loan CLUB Certificates with the transfers accounted for as a sale on the Company’s consolidated financial statements for the year ended December 31, 2017:



Year Ended December 31,	2017
	Personal Whole Loan Securitizations		Personal Whole Loan CLUB Certificates
Principal derecognized from loans securitized or sold	$	999,128	$	37,779
Net gains (losses) recognized from loans securitized or sold	$	4,987	$	(177	)
Fair value of senior securities and subordinated certificates retained upon settlement ⁽¹⁾	$	53,154	$	1,802
Cash proceeds from loans securitized or sold	$	812,851	$	34,575
Cash proceeds from subordinated certificates sold	$	6,300	$	—
Cash proceeds from servicing and other administrative fees on loans securitized or sold	$	2,641	$	21
Cash proceeds for interest received on senior securities and subordinated certificates	$	300	$	5


⁽¹⁾	For personal whole loan securitizations, the Company retained senior securities of $43.4 million and subordinated certificates of $9.7 million.

There were no activities related to Company-sponsored securitizations or CLUB Certificate transactions during the years ended December 31, 2016 and 2015.

Off-Balance Sheet Loans

Off-balance sheet loans primarily relate to securitized unsecured personal whole loans for which the Company has some form of continuing involvement, including as servicer. Delinquent loans contain loans 31 days or more past due, including non-accrual loans. For loans securitized, where servicing is the only form of continuing involvement, the Company would only experience a loss if it was required to repurchase a delinquent loan due to a breach in representations and warranties associated with our loan sale or servicing contracts.

As of December 31, 2017, the aggregate unpaid principal balance of the off-balance sheet loans pursuant to Company-sponsored securitization transactions and CLUB Certificate transactions was $900.4 million, of which $26.5 million was 31 days or more past due. As of December 31, 2016, there were no off-balance sheet loans related to Company-sponsored securitization transactions.

Retained Interests from Unconsolidated VIEs

The Company and other investors in the subordinated residual certificates have rights to cash flows after the investors holding the senior securities issued by the securitization trusts have first received their contractual cash flows. The investors and the securitization trusts have no recourse to the Company’s assets, and holders of the securities issued by the securitization trusts can look only to the assets of the securitization trusts that issued their securities for payment. The beneficial interests held by the Company and MOA are subject principally to the credit and prepayment risk stemming from the underlying personal whole loans. The Company holds a portion of each issuance of CLUB Certificates. Accordingly, the Company has exposure to the loans underlying this pass through security.

The fair value sensitivity of the senior securities, subordinated residual certificates and CLUB Certificates to adverse changes in key assumptions are as follows:



	December 31, 2017
	Asset-Backed Securities Related to Company-Sponsored Securitizations and CLUB Certificate Transactions
	Senior Securities			Subordinated Residual Certificates			CLUB Certificates
Fair value of interests held	$	37,020		$	8,236		$	1,793
Expected weighted-average life (in years)	1.0			1.5			1.4
Discount rates
100 basis point increase	$	(326	)	$	(105	)	$	(41	)
200 basis point increase	$	(644	)	$	(208	)	$	(76	)
Expected credit loss rates on underlying loans
10% adverse change	$	(1	)	$	(1,060	)	$	(15	)
20% adverse change	$	(2	)	$	(2,118	)	$	(25	)
Expected prepayment rates
10% adverse change	$	(1	)	$	(265	)	$	(21	)
20% adverse change	$	(3	)	$	(513	)	$	(42	)

There were no activities related to Company-sponsored securitizations or CLUB Certificate transactions during the year ended December 31, 2016.