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Securitizations and Variable Interest Entities
 6 Months Ended
Jun. 30, 2021
Transfers and Servicing [Abstract]  
Securitization and Variable Interest Entities Securitizations and Variable Interest Entities
VIE Assets and Liabilities

The following tables provide the classifications of assets and liabilities on the Company’s Condensed Consolidated Balance Sheets for its transactions with consolidated and unconsolidated VIEs at June 30, 2021 and December 31, 2020. Additionally, the assets and liabilities in the table below exclude intercompany balances that eliminate in consolidation:
June 30, 2021Consolidated VIEsUnconsolidated VIEsTotal
Assets
Restricted cash$16,472 $— $16,472 
Securities available for sale at fair value— 95,474 95,474 
Loans held for sale at fair value69,105 — 69,105 
Retail and certificate loans held for investment at fair value23,810 — 23,810 
Other loans held for investment at fair value34,275 — 34,275 
Other assets764 23,008 23,772 
Total assets$144,426 $118,482 $262,908 
Liabilities
Retail notes, certificates and secured borrowings at fair value$23,810 $— $23,810 
Payable on Structured Program borrowings110,871 — 110,871 
Other liabilities386 — 386 
Total liabilities135,067 — 135,067 
Total net assets$9,359 $118,482 $127,841 

December 31, 2020Consolidated VIEsUnconsolidated VIEsTotal
Assets
Restricted cash$15,983 $— $15,983 
Securities available for sale at fair value— 142,026 142,026 
Loans held for sale at fair value98,190 — 98,190 
Retail and certificate loans held for investment at fair value52,620 — 52,620 
Other loans held for investment at fair value50,102 — 50,102 
Other assets1,270 32,865 34,135 
Total assets
$218,165 $174,891 $393,056 
Liabilities
Retail notes, certificates and secured borrowings at fair value$52,620 $— $52,620 
Payable on Structured Program borrowings152,808 — 152,808 
Other liabilities729 — 729 
Total liabilities206,157 — 206,157 
Total net assets$12,008 $174,891 $186,899 
Consolidated VIEs

The Company consolidates VIEs when it is deemed to be the primary beneficiary. See “Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 1. Summary of Significant Accounting Policies” in the Annual Report for additional information.

LC Trust

The Company established the LC Trust for the purpose of acquiring and holding loans for the sole benefit of certain investors that have purchased trust certificates issued by the LC Trust. The Company is obligated to ensure that the LC Trust meets minimum capital requirements with respect to funding the administrative activities and maintaining the operations of the LC Trust.

Consolidated Trusts

The Company established trusts to facilitate the sale of loans and issuance of senior and subordinated securities. If the Company is the primary beneficiary of the trust, it is a consolidated VIE and will reflect senior and subordinated securities held by third parties within “Payable on Structured Program borrowings” in the Company’s Condensed Consolidated Balance Sheets. If subsequently the Company is not the primary beneficiary of the trust, the Company will deconsolidate the VIE. See “Note 13. Short-term Borrowings and Long-term Debt” for additional information.

Warehouse Credit Facilities

Prior to the acquisition of Radius, the Company established certain entities (deemed to be VIEs) to enter into warehouse credit facilities for the purpose of purchasing loans from LendingClub. In the fourth quarter of 2020, the Company fully repaid and terminated its credit facilities.

The following tables present a summary of financial assets and liabilities from the Company’s involvement with consolidated VIEs at June 30, 2021 and December 31, 2020:
June 30, 2021AssetsLiabilitiesNet Assets
LC Trust$26,424 $(23,991)$2,433 
Consolidated trusts118,002 (111,076)6,926 
Total consolidated VIEs$144,426 $(135,067)$9,359 

December 31, 2020AssetsLiabilitiesNet Assets
LC Trust$55,447 $(53,068)$2,379 
Consolidated trusts162,460 (153,089)9,371 
Warehouse credit facility258 — 258 
Total consolidated VIEs$218,165 $(206,157)$12,008 

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 asset-backed securitizations, Certificate Program transactions and loan sale transactions of unsecured personal loans. The Company has various forms of involvement
with VIEs, including servicing of loans and holding senior or subordinated residual interests in the VIEs. The accounting for these transactions is based on a primary beneficiary analysis to determine whether the underlying VIEs should be consolidated. If the VIEs are not consolidated and the transfer of the loans from the Company to the VIE meets sale accounting criteria, then the Company will recognize a gain or loss on sales of loans. The Company considers continued involvement in an unconsolidated VIE insignificant if it is the sponsor and servicer and does not hold other significant variable interests. 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. The Company enters into separate servicing agreements with the VIEs and holds at least 5% of the beneficial interests issued by the VIEs to comply with regulatory risk retention rules. The beneficial interests retained by the Company consist of senior securities and subordinated securities and are accounted for as securities available for sale. In connection with these transactions, we make certain customary representations, warranties and covenants. See “Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 1. Summary of Significant Accounting Policies” in the Annual Report for additional information.

Investment Fund

The Company has an equity investment in a private fund (Investment Fund) that participates in a family of funds with other unrelated third parties. This family of funds purchases assets from third parties unrelated to the Company and historically purchased whole loans and interests in loans from the Company. As of June 30, 2021, the Company had an ownership interest of approximately 22% in the Investment Fund. The Company’s investment is deemed to be a variable interest in the Investment Fund because the Company shares in the expected returns and losses of the Investment Fund. The Company has requested a full redemption of our investment in the Investment Fund. At June 30, 2021, the Company’s investment was $7.8 million, which is recognized in “Other assets” on the Company’s Condensed Consolidated Balance Sheets.

The following tables summarize unconsolidated VIEs with which the Company has significant continuing involvement, but is not the primary beneficiary at June 30, 2021 and December 31, 2020:
June 30, 2021Carrying Value
Total VIE AssetsSecurities Available for SaleOther AssetsNet Assets
Unconsolidated Trusts$920,791 $39,816 $6,590 $46,406 
Certificate Program1,213,360 55,658 8,643 64,301 
Investment Fund36,108 — 7,775 7,775 
Total unconsolidated VIEs$2,170,259 $95,474 $23,008 $118,482 

June 30, 2021Maximum Exposure to Loss
Securities Available for SaleOther AssetsNet Assets
Unconsolidated Trusts$39,816 $6,590 $46,406 
Certificate Program55,658 8,643 64,301 
Investment Fund— 7,775 7,775 
Total unconsolidated VIEs$95,474 $23,008 $118,482 
December 31, 2020Carrying Value
Total VIE AssetsSecurities Available for SaleOther AssetsNet Assets
Unconsolidated Trusts$1,267,611 $57,511 $9,654 $67,165 
Certificate Program1,931,429 84,515 15,436 99,951 
Investment Fund34,376 — 7,775 7,775 
Total unconsolidated VIEs$3,233,416 $142,026 $32,865 $174,891 

December 31, 2020Maximum Exposure to Loss
Securities Available for SaleOther AssetsTotal Exposure
Unconsolidated Trusts$57,511 $9,654 $67,165 
Certificate Program84,515 15,436 99,951 
Investment Fund— 7,775 7,775 
Total unconsolidated VIEs$142,026 $32,865 $174,891 

“Total VIE Assets” represents the remaining principal balance of loans held by unconsolidated VIEs with respect to Unconsolidated Trusts, Certificate Program transactions, and the net assets held by the Investment Fund using the most current information available. “Securities Available for Sale” and “Other Assets” are the balances in the Company’s Condensed Consolidated Balance Sheets related to its involvement with the unconsolidated VIEs. “Other Assets” includes the Company’s servicing assets and servicing receivables 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.

The following tables summarize activity related to the Unconsolidated Trusts and Certificate Program trusts, with the transfers accounted for as a sale on the Company’s financial statements for the second quarters and first halves of 2021 and 2020:
Three Months Ended June 30,20212020
Unconsolidated TrustsUnconsolidated Certificate Program
Trusts		Unconsolidated TrustsUnconsolidated Certificate Program
Trusts
Cash proceeds from servicing and other administrative fees on loans securitized or sold$2,508 $4,005 $4,821 $7,230 
Cash proceeds for interest received on senior securities and subordinated securities$1,213 $2,532 $1,769 $2,620 
Six Months Ended June 30,20212020
Unconsolidated TrustsUnconsolidated Certificate Program
Trusts		Unconsolidated TrustsUnconsolidated Certificate Program
Trusts
Principal derecognized from loans securitized or sold$— $— $255,203 $637,637 
Net gains (losses) recognized from loans securitized or sold$— $— $(20)$5,596 
Fair value of asset-backed senior and subordinated securities, and CLUB Certificate asset-backed securities retained upon settlement (1)
$— $— $12,707 $31,423 
Cash proceeds from loans securitized or sold$— $— $237,764 $598,515 
Cash proceeds from servicing and other administrative fees on loans securitized or sold$5,525 $8,923 $9,942 $14,222 
Cash proceeds for interest received on senior securities and subordinated securities$1,821 $3,790 $2,809 $4,893 
(1)    For Structured Program transactions, the Company retained asset-backed senior securities of $23.0 million, CLUB Certificate asset-backed securities of $18.3 million, and asset-backed subordinated securities of $2.9 million for the first half of 2020. The Company did not retain asset-backed securities related to Structured Program transactions during the first half of 2021.

Off-Balance Sheet Loans

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

As of June 30, 2021, the aggregate unpaid principal balance of the off-balance sheet loans related to Structured Program transactions was $2.1 billion, of which $46.5 million was attributable to off-balance sheet loans that were 31 days or more past due. As of December 31, 2020, the aggregate unpaid principal balance of the off-balance sheet loans related to Structured Program transactions was $3.2 billion, of which $94.8 million was attributable to off-balance sheet loans that were 31 days or more past due.

Retained Interests from Unconsolidated VIEs

The Company and other investors in the subordinated interests issued by trusts and Certificate Program trusts have rights to cash flows only after the investors holding the senior securities issued by the trusts have first received their contractual cash flows. The investors and the trusts have no direct recourse to the Company’s assets, and holders of the securities issued by the trusts can look only to the assets of the securitization trusts that issued their securities for payment. The beneficial interests held by the Company are subject principally to the credit and prepayment risk stemming from the underlying unsecured personal whole loans.

See “Note 8. Fair Value of Assets and Liabilities” for additional information on the fair value sensitivity of asset-backed securities related to Structured Program transactions.