Regulatory Requirements

9 Months Ended

Sep. 30, 2021

LendingClub, a bank holding company, and LendingClub Bank, a nationally chartered association, are subject to comprehensive supervision, examination and enforcement, and regulation by the FRB and the Office of the Comptroller of the Currency (OCC). The Company and the Bank are each subject to 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’s financial statements.

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 regulators assess any particular institution’s 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 the Bank (for a minimum of three years following its formation) 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 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 an institution’s condition deteriorates and its PCA capitalization category declines. Among other things, institutions that are less than well-capitalized become

subject to increasingly stringent restrictions on their ability to accept and/or rollover brokered deposits. At September 30, 2021, the Company’s and the 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 September 30, 2021 that management believes would change the Company’s categorization.

The following table summarizes the Bank’s regulatory capital amounts and ratios at September 30, 2021 (in millions):


	LendingClub Bank				Required Minimum plus Required CCB for Non-Leverage Ratios
September 30, 2021	Amount		Ratio
CET1 capital	$	453.5	18.0	%	7.0	%
Tier 1 capital	$	453.5	18.0	%	8.5	%
Total capital	$	485.4	19.3	%	10.5	%
Tier 1 leverage	$	453.5	14.1	%	4.0	%
Risk-weighted assets	$	2,514.0	N/A		N/A
Quarterly adjusted average assets	$	3,223.9	N/A		N/A

N/A – Not applicable

The following table presents the regulatory capital and ratios of the Company at September 30, 2021 (in millions):


	LendingClub				Required Minimum plus Required CCB for Non-Leverage Ratios
September 30, 2021	Amount		Ratio
CET1 capital	$	656.2	22.8	%	7.0	%
Tier 1 capital	$	656.2	22.8	%	8.5	%
Total capital	$	708.2	24.6	%	10.5	%
Tier 1 leverage	$	656.2	16.2	%	4.0	%
Risk-weighted assets	$	2,881.1	N/A		N/A
Quarterly adjusted average assets	$	4,049.8	N/A		N/A

N/A – Not applicable

At September 30, 2021, $24.2 million of this capital benefit was applied to the computation of the Company’s common equity Tier 1 capital.

- Definition

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

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