Short-term Borrowings and Long-term Debt

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Short-term Borrowings and Long-term Debt

Short-term Borrowings and Long-term Debt

Short-term Borrowings:

Repurchase Agreements

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. As of September 30, 2021 and December 31, 2020, the Company had $46.1 million and $105.0 million in aggregate debt outstanding under its repurchase agreements, respectively, which is primarily amortized over time through regular principal and interest payments collected from the pledged securities. At September 30, 2021, a majority of the Company’s repurchase agreements have contractual repurchase dates ranging from September 2022 to March 2028. These contractual repurchase dates correspond to either a set repurchase schedule or to the maturity dates of the underlying securities, which have a remaining weighted-average estimated life from 0.7 to 1.3 years. At September 30, 2021 and December 31, 2020, these repurchase agreements bore interest rates ranging from 2.51% to 6.72% and 3.05% to 4.00%, respectively, which are fixed or based on a benchmark of either the three-month LIBOR rate or the weighted-average interest rate of the securities sold plus a spread. Underlying securities retained and pledged as collateral under repurchase agreements were $66.4 million and $133.5 million at September 30, 2021 and December 31, 2020, respectively.

Long-term Debt:

Advances from PPPLF

As of September 30, 2021, outstanding PPPLF borrowings were $391.9 million and are collateralized by SBA PPP loans originated by the Company. The maturity date of the PPPLF borrowings matches the maturity date of the SBA PPP loans. When loans are forgiven by the SBA, the corresponding PPPLF advance is paid by the Company. The interest rate on the PPPLF borrowings is fixed at 0.35%.

Retail Notes, Certificates, and Secured Borrowings

The Company issued member payment dependent notes (Retail Notes) and the LC Trust issued certificates as a means to allow investors to invest in the corresponding loans. Prior to the acquisition of Radius, investors were able to purchase Retail Notes, which were securities for which cash flows to investors were dependent upon principal and interest payments made by borrowers of certain unsecured personal loans. 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. 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 same interest rates and maturities. See “Note 8. Fair Value of Assets and Liabilities” for information about the outstanding principal balance and net fair value adjustments for retail notes, certificates, and secured borrowings.

The following table provides the balances of retail notes, certificates and secured borrowings at fair value at the end of the periods indicated:

	September 30, 2021		December 31, 2020
Retail notes	$	283,141	$	583,219
Certificates	15,388		52,620
Secured borrowings (1)	12		935
Total retail notes, certificates and secured borrowings	$	298,541	$	636,774

(1)    At December 31, 2020, a fair value of $0.8 million included in “Retail and certificate loans held for investment at fair value” was pledged as collateral for secured borrowings. There were no retail and certificate loans held for investment at fair value pledged as collateral for secured borrowings at September 30, 2021.

Payable on Structured Program Borrowings

The Company consolidated certain sponsored Structured Program transactions through master trusts comprised of unsecured personal whole loans. The Company is the primary beneficiary of the trusts, which are consolidated. As of September 30, 2021 and December 31, 2020, the certificate participations and securities held by third-party investors of $89.3 million and $152.8 million, respectively, are included in “Payable on Structured Program borrowings” in the Condensed Consolidated Balance Sheets and were secured by “Other loans held for investment at fair value” and “Loans held for sale” of $82.2 million and $148.3 million and restricted cash of $12.5 million and $13.5 million, respectively.

Other Long-term Debt

With the acquisition of Radius, the Company assumed subordinated notes with an outstanding amount of $15.3 million as of September 30, 2021. The subordinated notes are at a 6.5% fixed to floating rate and are due June 30, 2027. Fixed interest payments are due semiannually in arrears on June 30 and December 30 through

June 30, 2022. Subsequent to June 30, 2022, the rate resets quarterly at a rate equal to 3-month LIBOR plus 4.64%. The subordinated notes are junior in right to the repayment in full of all existing claims of creditors and depositors of the Company. The subordinated notes may be redeemed, in whole or in part, at par plus accrued unpaid interest after June 27, 2022 at the option of the Company.