Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2022

Summary of Significant Accounting Policies

Basis of Presentation

On February 1, 2021, LendingClub Corporation (LendingClub) completed the acquisition (the Acquisition) of Radius Bancorp, Inc. (Radius), whereby LendingClub became a bank holding company and formed LendingClub Bank, National Association (LC Bank) as its wholly-owned subsidiary. The Company operates the vast majority of its business through LC Bank, as a lender and originator of loans and as a regulated bank in the United States.

All intercompany balances and transactions have been eliminated in consolidation. These condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and, in the opinion of management, contain all adjustments, including normal recurring adjustments, necessary for the fair statement of the results and financial position for the periods presented. These accounting principles require management to make certain estimates and assumptions that affect the amounts in the accompanying financial statements. These estimates and assumptions are inherently subjective in nature and actual results may differ from these estimates and assumptions, and the differences could be material. Results reported in interim periods are not necessarily indicative of results for the full year or any other interim period. Certain prior period amounts in the condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period presentation.

The accompanying interim condensed consolidated financial statements and these related notes should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (Annual Report) filed on February 11, 2022.

Significant Accounting Policies

The Company’s significant accounting policies are discussed in “Part II – Item 8. Financial Statements and Supplementary Data – Note 1. Summary of Significant Accounting Policies” in the Annual Report. There have been no changes to these significant accounting policies for the nine-month period ended September 30, 2022.

Adoption of New Accounting Standards

The Company did not adopt any new accounting standards during the nine-month period ended September 30, 2022, except as noted below.

In August 2020, the Financial Accounting Standards Board (FASB) issued ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity including convertible instruments and contracts on an entity’s own equity. The guidance allows for either full or modified retrospective adoption for fiscal periods beginning after December 15, 2021. The Company adopted this ASU on January 1, 2022 under the full retrospective approach. As a result of the adoption, the deemed dividend recorded in the first quarter of 2020 related to the beneficial conversion feature of the convertible Series A Preferred Stock, was reclassified from Accumulated Deficit to Additional Paid-in Capital within Equity, as shown in the following table:


Nine Months Ended September 30, 2020	Additional Paid-in Capital		Accumulated Deficit
Issuance of preferred stock in exchange for common stock, as originally reported	$	149	$	(50,204)
Adoption of ASU 2020-06	(50,204)		50,204
Issuance of preferred stock in exchange for common stock, as adjusted	$	(50,055)	$	—

In addition, since the beneficial conversion feature is no longer recorded as a deemed dividend, the allocation of net income (loss) attributable to stockholders and the related Basic and Diluted net income (loss) per share (EPS) has been adjusted, as shown in the following table:


Nine Months Ended September 30, 2020	Common Stock		Preferred Stock
Net income (loss) attributable to stockholders, as originally reported	$	(180,172)	$	19,289
Adoption of ASU 2020-06	42,851		(42,851)
Net loss attributable to stockholders, as adjusted	$	(137,321)	$	(23,562)

Basic and Diluted EPS, as originally reported	$	(2.35)	$	1.46
Adoption of ASU 2020-06	0.56		(3.25)
Basic and Diluted EPS, as adjusted	$	(1.79)	$	(1.79)

The adoption of this ASU did not impact the Company’s financial position and cash flows in the first nine months of 2020, nor did it change net loss reported in the period.

New Accounting Standards Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which, if certain criteria are met, provides optional expedients and exceptions for applying GAAP to transactions affected by reference rate reform. These transactions include contract modifications, hedging relationships, and sale or transfer of debt securities classified as held-to-maturity. The provisions of the new standard are elective and may be applied prospectively upon adoption to reporting periods through December 31, 2022. The FASB has issued an exposure draft that would extend the sunset of the adoption period through December 31, 2024. The Company has not made an election to adopt this ASU and does not expect its impact would be material to the financial statements if adopted in future reporting periods.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which eliminates the accounting guidance on troubled debt restructurings (TDRs) for creditors that have adopted the CECL model and amends the guidance on “vintage disclosures” to require disclosure of current period gross write-offs by year of origination. The ASU also updates the requirements related to accounting for credit losses under Accounting Standards Codification 326 and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty. The provisions of this standard are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the impact of this ASU.