Loans and Leases Held for Investment at Amortized Cost, Net of Allowance for Loan and Lease Losses

6 Months Ended

Jun. 30, 2023

Loans and Leases Receivable Disclosure [Abstract]

Loans and Leases Held for Investment at Amortized Cost, Net of Allowance for Loan and Lease Losses

Loans and Leases Held for Investment at Amortized Cost, Net of Allowance for Loan and Lease Losses

LendingClub records certain loans and leases held for investment (HFI) at amortized cost. Other HFI and all held for sale (HFS) loans are recorded at fair value with the Company’s election of the fair value option. Net accrued interest receivable is excluded from the amortized cost basis of loans and leases HFI and is reported within “Other assets” on the Balance Sheet. Net accrued interest receivable related to loans and leases HFI at amortized cost was $32.2 million and $27.9 million as of June 30, 2023 and December 31, 2022, respectively.

Loans and Leases Held for Investment at Amortized Cost

The Company defines its loans and leases HFI portfolio segments as (i) consumer and (ii) commercial. The following table presents the components of each portfolio segment by class of financing receivable:

	June 30, 2023		December 31, 2022
Unsecured personal	$	4,371,330	$	3,866,373
Residential mortgages	192,256		199,601
Secured consumer	237,372		194,634
Total consumer loans held for investment	4,800,958		4,260,608
Equipment finance (1)	142,073		160,319
Commercial real estate	382,738		373,501
Commercial and industrial (2)	207,580		238,726
Total commercial loans and leases held for investment	732,391		772,546
Total loans and leases held for investment	5,533,349		5,033,154
Allowance for loan and lease losses	(355,163)		(327,852)
Loans and leases held for investment, net (3)	$	5,178,186	$	4,705,302

(1)    Comprised of sales-type leases for equipment. See “Note 16. Leases” for additional information.

(2)    Includes $17.6 million and $67.0 million of pledged loans under the Paycheck Protection Program (PPP) as of June 30, 2023 and December 31, 2022, respectively.

(3)    As of June 30, 2023 and December 31, 2022, the Company had $4.8 billion and $283.6 million in loans pledged as collateral under the Federal Reserve Bank (FRB) Discount Window, respectively. In addition, as of June 30, 2023 and December 31, 2022, the Company had $151.2 million and $156.2 million in loans pledged to the Federal Home Loan Bank (FHLB) of Des Moines, respectively.

June 30, 2023	Gross		ALLL		Net		Allowance Ratios (1)
Total consumer loans held for investment	$	4,800,958	$	341,161	$	4,459,797	7.1	%
Total commercial loans and leases held for investment	732,391		14,002		718,389		1.9	%
Total loans and leases held for investment	$	5,533,349	$	355,163	$	5,178,186	6.4	%

December 31, 2022	Gross		ALLL		Net		Allowance Ratios (1)
Total consumer loans held for investment	$	4,260,608	$	312,489	$	3,948,119	7.3	%
Total commercial loans and leases held for investment	772,546		15,363		757,183		2.0	%
Total loans and leases held for investment	$	5,033,154	$	327,852	$	4,705,302	6.5	%

(1)    Calculated as the ratio of allowance for loan and lease losses (ALLL) to loans and leases HFI at amortized cost.

The activity in the ACL by portfolio segment was as follows:

	Three Months Ended June 30,
	2023						2022
	Consumer		Commercial		Total		Consumer		Commercial		Total
Allowance for loan and lease losses, beginning of period	$	333,546	$	15,311	$	348,857	$	173,857	$	14,128	$	187,985
Credit loss expense for loans and leases held for investment	66,874		(684)		66,190		68,314		1,739		70,053
Charge-offs (1)	(63,345)		(924)		(64,269)		(14,707)		(1,145)		(15,852)
Recoveries	4,086		299		4,385		720		354		1,074
Allowance for loan and lease losses, end of period	$	341,161	$	14,002	$	355,163	$	228,184	$	15,076	$	243,260
Reserve for unfunded lending commitments, beginning of period	$	67	$	1,545	$	1,612	$	—	$	1,512	$	1,512
Credit loss expense for unfunded lending commitments	(67)		472		405		136		377		513
Reserve for unfunded lending commitments, end of period (2)	$	—	$	2,017	$	2,017	$	136	$	1,889	$	2,025

	Six Months Ended June 30,
	2023						2022
	Consumer		Commercial		Total		Consumer		Commercial		Total
Allowance for loan and lease losses, beginning of period	$	312,489	$	15,363	$	327,852	$	128,812	$	15,577	$	144,389
Credit loss expense for loans and leases held for investment	137,558		(518)		137,040		122,032		249		122,281
Charge-offs (1)	(115,557)		(1,275)		(116,832)		(23,724)		(1,217)		(24,941)
Recoveries	6,671		432		7,103		1,064		467		1,531
Allowance for loan and lease losses, end of period	$	341,161	$	14,002	$	355,163	$	228,184	$	15,076	$	243,260
Reserve for unfunded lending commitments, beginning of period	$	18	$	1,860	$	1,878	$	—	$	1,231	$	1,231
Credit loss expense for unfunded lending commitments	(18)		157		139		136		658		794
Reserve for unfunded lending commitments, end of period (2)	$	—	$	2,017	$	2,017	$	136	$	1,889	$	2,025

(1)    Unsecured personal loans are charged-off when a borrower is (i) contractually 120 days past due or (ii) two payments past due and has filed for bankruptcy or is deceased.

(2)    Relates to $108.9 million and $132.6 million of unfunded commitments, associated primarily with the commercial loan portfolio, as of June 30, 2023 and 2022, respectively.

The following table presents year-to-date gross charge-offs by origination year for the period presented:

	Six Months Ended June 30, 2023
	Gross Charge-Offs by Origination Year
	2023		2022		2021		2020		2019		Prior		Total
Unsecured personal	$	1,596	$	63,295	$	49,331	$	—	$	—	$	—	$	114,222
Residential mortgages	—		—		—		—		—		—		—
Secured consumer	19		1,026		290		—		—		—		1,335
Total consumer loans held for investment	1,615		64,321		49,621		—		—		—		115,557
Equipment finance	—		—		—		—		—		—		—
Commercial real estate	—		—		—		—		—		—		—
Commercial and industrial	—		—		923		—		318		34		1,275
Total commercial loans and leases held for investment	—		—		923		—		318		34		1,275
Total loans and leases held for investment	$	1,615	$	64,321	$	50,544	$	—	$	318	$	34	$	116,832

The Company has programs to modify loans for borrowers experiencing financial difficulty. Such modifications primarily include principal forgiveness, term extensions and/or interest rate reductions. Given that unsecured personal loans typically charge-off within a few months following modification, the total amortized cost balances are not significant for the period presented.

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 tables present the classes of financing receivables within the consumer portfolio segment by credit quality indicator based on delinquency status and origination year:

June 30, 2023	Term Loans and Leases by Origination Year
	2023		2022		2021		2020		2019		Prior		Total
Unsecured personal
Current	$	1,374,603	$	2,240,402	$	679,211	$	—	$	—	$	—	$	4,294,216
30-59 days past due	3,279		17,474		9,013		—		—		—		29,766
60-89 days past due	1,865		14,153		7,933		—		—		—		23,951
90 or more days past due	1,213		13,852		8,332		—		—		—		23,397
Total unsecured personal	1,380,960		2,285,881		704,489		—		—		—		4,371,330
Residential mortgages
Current	5		49,346		56,510		30,442		21,358		34,430		192,091
30-59 days past due	—		—		—		—		—		—		—
60-89 days past due	—		—		—		—		—		—		—
90 or more days past due	—		—		—		—		—		165		165
Total residential mortgages	5		49,346		56,510		30,442		21,358		34,595		192,256
Secured consumer
Current	80,331		124,585		29,849		—		2,502		—		237,267
30-59 days past due	—		35		19		—		—		—		54
60-89 days past due	—		51		—		—		—		—		51
90 or more days past due	—		—		—		—		—		—		—
Total secured consumer	80,331		124,671		29,868		—		2,502		—		237,372
Total consumer loans held for investment	$	1,461,296	$	2,459,898	$	790,867	$	30,442	$	23,860	$	34,595	$	4,800,958

December 31, 2022	Term Loans and Leases by Origination Year
	2022		2021		2020		2019		2018		Prior		Total
Unsecured personal
Current	$	2,835,460	$	977,224	$	—	$	—	$	—	$	—	$	3,812,684
30-59 days past due	11,149		9,867		—		—		—		—		21,016
60-89 days past due	7,785		8,633		—		—		—		—		16,418
90 or more days past due	6,813		9,442		—		—		—		—		16,255
Total unsecured personal	2,861,207		1,005,166		—		—		—		—		3,866,373
Residential mortgages
Current	49,721		58,353		31,465		21,683		4,546		33,248		199,016
30-59 days past due	—		—		—		—		—		—		—
60-89 days past due	—		—		—		—		—		254		254
90 or more days past due	—		—		—		—		—		331		331
Total residential mortgages	49,721		58,353		31,465		21,683		4,546		33,833		199,601
Secured consumer
Current	151,725		38,076		—		2,543		—		—		192,344
30-59 days past due	1,017		703		—		—		—		—		1,720
60-89 days past due	235		147		—		—		—		—		382
90 or more days past due	116		72		—		—		—		—		188
Total secured consumer	153,093		38,998		—		2,543		—		—		194,634
Total consumer loans held for investment	$	3,064,021	$	1,102,517	$	31,465	$	24,226	$	4,546	$	33,833	$	4,260,608

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:

Pass – Loans and leases that the Company believes will fully repay in accordance with the contractual loan terms.

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

Loss – Loans and leases that are considered uncollectible and of little value.

The following tables present the classes of financing receivables within the commercial portfolio segment by risk rating and origination year:

June 30, 2023	Term Loans and Leases by Origination Year
	2023		2022		2021		2020		2019		Prior		Total
Equipment finance
Pass	$	3,596	$	38,634	$	32,754	$	13,836	$	13,458	$	12,394	$	114,672
Special mention	—		15,369		1,881		6,295		3,173		—		26,718
Substandard	—		—		—		683		—		—		683
Doubtful	—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—
Total equipment finance	3,596		54,003		34,635		20,814		16,631		12,394		142,073
Commercial real estate
Pass	32,401		94,456		38,291		44,179		52,001		79,403		340,731
Special mention	—		—		—		—		259		9,389		9,648
Substandard	—		3,761		6,785		8,415		231		10,577		29,769
Doubtful	—		—		2,043		—		—		—		2,043
Loss	—		—		—		—		—		547		547
Total commercial real estate	32,401		98,217		47,119		52,594		52,491		99,916		382,738
Commercial and industrial
Pass	24,054		76,240		48,898		19,968		9,959		12,337		191,456
Special mention	—		770		29		96		214		558		1,667
Substandard	—		—		4,634		713		3,780		3,688		12,815
Doubtful	—		—		—		—		—		286		286
Loss	—		—		—		—		—		1,356		1,356
Total commercial and industrial	24,054		77,010		53,561		20,777		13,953		18,225		207,580
Total commercial loans and leases held for investment	$	60,051	$	229,230	$	135,315	$	94,185	$	83,075	$	130,535	$	732,391

December 31, 2022	Term Loans and Leases by Origination Year
	2022		2021		2020		2019		2018		Prior		Total
Equipment finance
Pass	$	59,227	$	38,218	$	25,014	$	15,785	$	11,880	$	3,444	$	153,568
Special mention	—		2,094		—		3,759		—		—		5,853
Substandard	—		—		859		—		39		—		898
Doubtful	—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—
Total equipment finance	59,227		40,312		25,873		19,544		11,919		3,444		160,319
Commercial real estate
Pass	100,602		53,445		47,497		52,834		35,992		60,976		351,346
Special mention	—		—		8,415		260		1,237		405		10,317
Substandard	—		—		—		643		2,404		8,215		11,262
Doubtful	—		—		—		—		—		—		—
Loss	—		—		—		—		—		576		576
Total commercial real estate	100,602		53,445		55,912		53,737		39,633		70,172		373,501
Commercial and industrial
Pass	61,076		99,264		24,726		13,866		5,174		10,831		214,937
Special mention	—		—		—		483		163		455		1,101
Substandard	—		9,361		4,529		3,623		797		2,820		21,130
Doubtful	—		—		—		—		—		286		286
Loss	—		—		—		—		1		1,271		1,272
Total commercial and industrial	61,076		108,625		29,255		17,972		6,135		15,663		238,726
Total commercial loans and leases held for investment	$	220,905	$	202,382	$	111,040	$	91,253	$	57,687	$	89,279	$	772,546

The following tables present an analysis of the past due loans and leases HFI within the commercial portfolio segment:

June 30, 2023	30-59 Days		60-89 Days		90 or More Days		Total
Equipment finance	$	485	$	—	$	683	$	1,168
Commercial real estate	2,115		—		10,561		12,676
Commercial and industrial (1)	184		358		1,608		2,150
Total commercial loans and leases held for investment	$	2,784	$	358	$	12,852	$	15,994

December 31, 2022	30-59 Days		60-89 Days		90 or More Days		Total
Equipment finance	$	3,172	$	—	$	859	$	4,031
Commercial real estate	—		102		—		102
Commercial and industrial (1)	—		—		1,643		1,643
Total commercial loans and leases held for investment	$	3,172	$	102	$	2,502	$	5,776

(1)    Past due PPP loans are excluded from the tables.

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, and are charged-off no later than 120 days past due.

The following table presents nonaccrual loans and leases:

	June 30, 2023				December 31, 2022
	Nonaccrual (1)		Nonaccrual with no related ACL (2)		Nonaccrual (1)		Nonaccrual with no related ACL (2)
Unsecured personal	$	23,397	$	—	$	16,255	$	—
Residential mortgages	322		322		331		331
Secured consumer	—		—		188		—
Total nonaccrual consumer loans held for investment	23,719		322		16,774		331
Equipment finance	683		—		898		39
Commercial real estate	19,298		9,360		1,018		1,018
Commercial and industrial	7,683		2,043		16,137		1,229
Total nonaccrual commercial loans and leases held for investment	27,664		11,403		18,053		2,286
Total nonaccrual loans and leases held for investment	$	51,383	$	11,725	$	34,827	$	2,617

(1)     Excluding PPP loans, there were no loans and leases that were 90 days or more past due and accruing as of both June 30, 2023 and December 31, 2022.

(2)     Subset of total nonaccrual loans and leases.

	June 30, 2023				December 31, 2022
	Nonaccrual		Nonaccrual Ratios (1)		Nonaccrual		Nonaccrual Ratios (1)
Total nonaccrual consumer loans held for investment	$	23,719	0.5	%	$	16,774	0.4	%
Total nonaccrual commercial loans and leases held for investment	27,664		3.8	%	18,053		2.3	%
Total nonaccrual loans and leases held for investment	$	51,383	0.9	%	$	34,827	0.7	%

(1)     Calculated as the ratio of nonaccruing loans and leases to loans and leases HFI at amortized cost.

Collateral-Dependent Assets

Certain loans on non-accrual status 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.