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Loans and Leases Held for Investment, Net of Allowance For Loan and Lease Losses
 9 Months Ended
Sep. 30, 2021
Loans and Leases Receivable Disclosure [Abstract]  
Loans and Leases Held for Investment, Net of Allowance For Loan and Lease Losses Loans and Leases Held for Investment, Net of Allowance For Loan and Lease Losses
As a result of the acquisition of Radius and becoming a bank holding company, LendingClub now records loans and leases held for investment at amortized cost, and, loans initially classified as held for sale at fair value. Prior to the acquisition, all loans were recorded at fair value. Therefore, the following disclosures apply to loans and leases held for investment at amortized cost.

Accrued interest receivable is excluded from the amortized cost basis of loans and leases held for investment and is reported within “Other assets” on the Company’s Condensed Consolidated Balance Sheets. Accrued interest within that caption related to loans and leases held for investment was $12.2 million as of September 30, 2021.

Loans and Leases Held for Investment

The Company defines its loans and leases held for investment portfolio segments as (i) consumer and (ii) commercial. The following table presents the components of each portfolio segment by class of financing receivable:
September 30, 2021
Unsecured personal$1,258,279 
Residential mortgages141,200 
Secured consumer314,539 
Other consumer1,220 
Total consumer loans held for investment1,715,238 
Equipment finance (1)
157,457 
Commercial real estate316,135 
Commercial and industrial (2)
519,162 
Total commercial loans and leases held for investment992,754 
Total loans and leases held for investment2,707,992 
Allowance for loan and lease losses (ALLL)(104,736)
Loans and leases held for investment, net (3)
$2,603,256 
(1)    Comprised of sales-type leases for equipment. See “Note 17. Leases” for additional information.
(2)    Includes $367.6 million of pledged loans under the Paycheck Protection Program (PPP). PPP loans are guaranteed by the SBA and, therefore, the Company determined no allowance for expected credit losses is required on these loans.
(3)    As of September 30, 2021, the Company had $391.5 million in loans pledged as collateral under the FRB Discount Window.

September 30, 2021
GrossALLLNet
Allowance Ratios (1)
Total consumer loans held for investment$1,715,238 $88,631 $1,626,607 5.2 %
Total commercial loans and leases held for investment (2)
992,754 16,105 976,649 1.6 %
Total loans and leases held for investment (2)
$2,707,992 $104,736 $2,603,256 3.9 %
(1)    Calculated as the ratio of ALLL to loans and leases held for investment.
(2)    Excluding the PPP loans mentioned above, the ALLL represented 2.6% of commercial loans and leases held for investment and 4.5% of total loans and leases held for investment.
The activity in the allowance for expected credit losses by portfolio segment for the third quarter and first nine months of 2021 was as follows:
Three Months Ended
September 30, 2021		Nine Months Ended
September 30, 2021
ConsumerCommercialTotalConsumerCommercialTotal
Allowance for loan and lease losses, beginning of period$54,058 $17,023 $71,081 $— $— $— 
Credit loss expense for loans and leases held for investment37,695 (562)37,133 91,194 4,468 95,662 
Initial allowance for PCD loans acquired during the period (1)
— — — 603 11,837 12,440 
Charge-offs(3,142)(1,194)(4,336)(3,232)(1,350)(4,582)
Recoveries20 838 858 66 1,150 1,216 
Allowance for loan and lease losses, end of period$88,631 $16,105 $104,736 $88,631 $16,105 $104,736 
Reserve for unfunded lending commitments, beginning of period$— $390 $390 $— $— $— 
Credit loss expense for unfunded lending commitments 50 837 887 50 1,227 1,277 
Reserve for unfunded lending commitments, end of period (2)
$50 $1,227 $1,277 $50 $1,227 $1,277 
(1)    For acquired PCD loans, an allowance of $30.4 million was required with a corresponding increase to the amortized cost basis as of the acquisition date. For PCD loans where all or a portion of the loan balance had been previously written-off, or would be subject to write-off under the Company’s charge-off policy, a CECL allowance of $18.0 million included as part of the grossed-up loan balance at acquisition was immediately written-off. The net impact to the allowance for PCD assets on the acquisition date was $12.4 million.
(2)    Relates to $115.5 million of unfunded commitments.

The Company did not recognize an allowance for loan and lease losses as of December 31, 2020 because it did not carry loans held for investment at amortized cost as of that date. During the first quarter of 2021, as a result of the Radius acquisition, the Company acquired and began originating loans held for investment at amortized cost. The allowance for loan and lease losses balance as of September 30, 2021 relates to the recognition of expected credit losses on these purchased and originated loans.
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 table presents the classes of financing receivables within the consumer portfolio segment by credit quality indicator based on delinquency status as of September 30, 2021 and origination year:
September 30, 2021 Term Loans and Leases by Origination Year
20212020201920182017PriorWithin Revolving PeriodTotal
Unsecured personal
Current $1,255,020 $— $— $— $— $— $— $1,255,020 
30-59 days past due 1,806 — — — — — — 1,806 
60-89 days past due 849 — — — — — — 849 
90 or more days past due 604 — — — — — — 604 
Total unsecured personal1,258,279 — — — — — — 1,258,279 
Residential mortgages
Current 17,210 40,108 28,246 7,848 2,700 41,889 1,266 139,267 
30-59 days past due — — — — — — — — 
60-89 days past due — — — — 93 — — 93 
90 or more days past due — — — 674 251 915 — 1,840 
Total residential mortgages 17,210 40,108 28,246 8,522 3,044 42,804 1,266 141,200 
Secured consumer
Current163,820 49,328 36,903 37,062 5,008 16,483 — 308,604 
30-59 days past due46 — — — — — — 46 
60-89 days past due— — — 2,401 — — — 2,401 
90 or more days past due— — — 3,106 382 — — 3,488 
Total secured consumer163,866 49,328 36,903 42,569 5,390 16,483 — 314,539 
Other consumer
Current 1,208 — — — — — 12 1,220 
30-59 days past due — — — — — — — — 
60-89 days past due — — — — — — — — 
90 or more days past due — — — — — — — — 
Total other consumer1,208 — — — — — 12 1,220 
Total consumer loans held for investment$1,440,563 $89,436 $65,149 $51,091 $8,434 $59,287 $1,278 $1,715,238 

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:

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

The following table presents the classes of financing receivables within the commercial portfolio segment by risk rating as of September 30, 2021 and origination year:
September 30, 2021 Term Loans and Leases by Origination Year
20212020201920182017PriorWithin Revolving PeriodTotal
Equipment finance
Pass $45,557 $38,074 $31,501 $18,807 $7,069 $12,245 $— $153,253 
Special mention1,583 — 1,877 — — — — 3,460 
Substandard — — — 744 — — — 744 
Doubtful — — — — — — — — 
Loss— — — — — — — — 
Total equipment finance47,140 38,074 33,378 19,551 7,069 12,245 — 157,457 
Commercial real estate
Pass 39,315 56,981 67,376 43,745 23,042 52,324 3,682 286,465 
Special mention— 8,372 — 1,369 1,032 10,506 — 21,279 
Substandard — — 278 2,488 651 4,397 — 7,814 
Doubtful — — — — — — — — 
Loss— — — — — 577 — 577 
Total commercial real estate39,315 65,353 67,654 47,602 24,725 67,804 3,682 316,135 
Commercial and industrial
Pass 277,968 166,667 26,858 8,283 17,604 8,431 628 506,439 
Special mention— — 2,256 650 554 40 — 3,500 
Substandard — 1,121 999 2,590 1,579 1,722 93 8,104 
Doubtful — — — — — — — — 
Loss— — — 52 4 1,063 — 1,119 
Total commercial and industrial (1)
277,968 167,788 30,113 11,575 19,741 11,256 721 519,162 
Total commercial loans and leases held for investment364,423 271,215 131,145 78,728 51,535 91,305 4,403 992,754 
(1)    Includes $367.6 million of PPP loans.

The following table presents an analysis of the past-due loans and leases held for investment within the commercial portfolio segment at September 30, 2021:
September 30, 2021Days Past Due
Current-2930-5960-8990 or moreTotal
Equipment finance$157,457 $— $— $— $157,457 
Commercial real estate315,355 163 143 474 316,135 
Commercial and industrial (1)
440,932 222 76,645 1,363 519,162 
Total commercial loans and leases held for investment$913,744 $385 $76,788 $1,837 $992,754 
(1)    Includes $367.6 million of PPP loans. The past due loans consist of PPP loans and are guaranteed by the SBA.
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.

The following table presents nonaccrual loans and leases as of September 30, 2021:
September 30, 2021
Nonaccrual(1)
Nonaccrual with no related ACL(2)
Unsecured personal$604 $— 
Residential mortgages2,106 2,106 
Secured consumer5,888 382 
Other consumer— — 
Total nonaccrual consumer loans held for investment8,598 2,488 
Equipment finance744 — 
Commercial real estate1,219 1,219 
Commercial and industrial1,415 1,067 
Total nonaccrual commercial loans and leases held for investment3,378 2,286 
Total nonaccrual loans and leases held for investment$11,976 $4,774 
(1)     There were no loans and leases that were 90 days or more past due and accruing as of September 30, 2021.
(2)     Subset of total nonaccrual loans and leases.

September 30, 2021
Nonaccrual
Nonaccrual Ratios (1)
Total nonaccrual consumer loans held for investment$8,598 0.5 %
Total nonaccrual commercial loans and leases held for investment3,378 0.3 %
Total nonaccrual loans and leases held for investment (2)(3)
$11,976 0.4 %
(1)     Calculated as the ratio of nonaccruing loans and leases to loans and leases held for investment.
(2)     The allowance for loan and lease losses represented 875% of nonaccrual loans and leases as of September 30, 2021.
(3)     Nonaccruing loans and leases represented 0.5% of total loans and leases held for investment, excluding PPP loans.

Collateral-Dependent Assets

Certain loans on non-accrual status and certain TDR loans may be considered collateral-dependent loans if the borrower is experiencing financial difficulty and repayment of the loan is expected to be substantially through sale or operation of the collateral. Expected credit losses for the Company’s collateral-dependent loans are calculated as the difference between the amortized cost basis and the fair value of the underlying collateral less costs to sell, if applicable. See “Note 1. Summary of Significant Accounting Policies” for further detail.
Purchased Financial Assets with Credit Deterioration

Acquired loans are recorded at their fair value, which may result in the recognition of a discount or premium. In addition, the purchase price of PCD loans is grossed-up upon acquisition for the initial estimate of expected credit losses. For acquired PCD loans for which all or a portion of the balance was previously written off, or was required to be written off under LendingClub’s charge-off policy upon acquisition, the expected credit loss included in the grossed-up loan balance was immediately charged off. Subsequent changes to the allowance for expected credit losses are recorded as additions to or reversals of credit losses on the Company’s Condensed Consolidated Statements of Operations.

Acquired PCD loans during the first nine months of 2021 were as follows:
Nine Months Ended September 30, 2021
Purchase price$337,118 
Allowance for expected credit losses (1)
30,378 
Discount attributable to other factors12,204 
Par value$379,700 
(1)    For acquired PCD loans, an allowance of $30.4 million was required with a corresponding increase to the amortized cost basis as of the acquisition date. For PCD loans where all or a portion of the loan balance had been previously written-off, or would be subject to write-off under the Company’s charge-off policy, a CECL allowance of $18.0 million included as part of the grossed-up loan balance at acquisition was immediately written-off. The net impact to the allowance for PCD assets on the acquisition date was $12.4 million.