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

9 Months Ended

Sep. 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 $34.3 million and $27.9 million as of September 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:

	September 30, 2023		December 31, 2022
Unsecured personal	$	4,094,748	$	3,866,373
Residential mortgages	186,510		199,601
Secured consumer	254,105		194,634
Total consumer loans held for investment	4,535,363		4,260,608
Equipment finance (1)	125,289		160,319
Commercial real estate	373,246		373,501
Commercial and industrial (2)	203,379		238,726
Total commercial loans and leases held for investment	701,914		772,546
Total loans and leases held for investment	5,237,277		5,033,154
Allowance for loan and lease losses	(350,495)		(327,852)
Loans and leases held for investment, net (3)	$	4,886,782	$	4,705,302

(1)    Comprised of sales-type leases for equipment. See “Note 17. Leases” for additional information.

(2)    Includes $7.6 million and $67.0 million of pledged loans under the Paycheck Protection Program (PPP) as of September 30, 2023 and December 31, 2022, respectively.

(3)    As of September 30, 2023 and December 31, 2022, the Company had $4.0 billion and $283.6 million in loans pledged as collateral under the Federal Reserve Bank (FRB) Discount Window, respectively. In addition, as of September 30, 2023 and December 31, 2022, the Company had $511.2 million and $156.2 million in loans pledged to the Federal Home Loan Bank (FHLB) of Des Moines, respectively.

September 30, 2023	Gross		ALLL		Net		Allowance Ratios (1)
Total consumer loans held for investment	$	4,535,363	$	336,288	$	4,199,075	7.4	%
Total commercial loans and leases held for investment	701,914		14,207		687,707		2.0	%
Total loans and leases held for investment	$	5,237,277	$	350,495	$	4,886,782	6.7	%

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 September 30,
	2023						2022
	Consumer		Commercial		Total		Consumer		Commercial		Total
Allowance for loan and lease losses, beginning of period	$	341,161	$	14,002	$	355,163	$	228,184	$	15,076	$	243,260
Credit loss expense for loans and leases held for investment	63,733		394		64,127		81,935		664		82,599
Charge-offs (1)	(73,644)		(534)		(74,178)		(22,944)		(784)		(23,728)
Recoveries	5,038		345		5,383		963		107		1,070
Allowance for loan and lease losses, end of period	$	336,288	$	14,207	$	350,495	$	288,138	$	15,063	$	303,201
Reserve for unfunded lending commitments, beginning of period	$	—	$	2,017	$	2,017	$	136	$	1,889	$	2,025
Credit loss expense for unfunded lending commitments	—		352		352		(78)		218		140
Reserve for unfunded lending commitments, end of period (2)	$	—	$	2,369	$	2,369	$	58	$	2,107	$	2,165

	Nine Months Ended September 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	201,291		(124)		201,167		203,967		913		204,880
Charge-offs (1)	(189,201)		(1,809)		(191,010)		(46,668)		(2,001)		(48,669)
Recoveries	11,709		777		12,486		2,027		574		2,601
Allowance for loan and lease losses, end of period	$	336,288	$	14,207	$	350,495	$	288,138	$	15,063	$	303,201
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)		509		491		58		876		934
Reserve for unfunded lending commitments, end of period (2)	$	—	$	2,369	$	2,369	$	58	$	2,107	$	2,165

(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 $89.5 million and $144.0 million of unfunded commitments, associated primarily with the commercial loan portfolio, as of September 30, 2023 and 2022, respectively.

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

	Nine Months Ended September 30, 2023
	Gross Charge-Offs by Origination Year
	2023		2022		2021		2020		2019		Prior		Total
Unsecured personal	$	7,730	$	106,835	$	72,330	$	—	$	—	$	—	$	186,895
Residential mortgages	—		—		—		—		—		—		—
Secured consumer	93		1,668		545		—		—		—		2,306
Total consumer loans held for investment	7,823		108,503		72,875		—		—		—		189,201
Equipment finance	—		—		—		—		—		—		—
Commercial real estate	—		—		—		—		—		—		—
Commercial and industrial	—		—		1,369		—		318		122		1,809
Total commercial loans and leases held for investment	—		—		1,369		—		318		122		1,809
Total loans and leases held for investment	$	7,823	$	108,503	$	74,244	$	—	$	318	$	122	$	191,010

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:

September 30, 2023	Term Loans and Leases by Origination Year
	2023		2022		2021		2020		2019		Prior		Total
Unsecured personal
Current	$	1,500,780	$	1,954,955	$	552,491	$	—	$	—	$	—	$	4,008,226
30-59 days past due	6,728		18,780		7,968		—		—		—		33,476
60-89 days past due	4,159		15,830		6,679		—		—		—		26,668
90 or more days past due	4,409		16,987		8,002		—		—		—		29,398
Total unsecured personal (1)	1,516,076		2,006,552		575,140		—		—		—		4,097,768
Residential mortgages
Current	—		48,934		56,128		30,204		20,403		30,678		186,347
30-59 days past due	—		—		—		—		—		—		—
60-89 days past due	—		—		—		—		—		—		—
90 or more days past due	—		—		—		—		—		163		163
Total residential mortgages	—		48,934		56,128		30,204		20,403		30,841		186,510
Secured consumer
Current	114,186		109,327		25,434		—		2,481		—		251,428
30-59 days past due	199		1,188		291		—		—		—		1,678
60-89 days past due	45		484		261		—		—		—		790
90 or more days past due	—		149		60		—		—		—		209
Total secured consumer	114,430		111,148		26,046		—		2,481		—		254,105
Total consumer loans held for investment	$	1,630,506	$	2,166,634	$	657,314	$	30,204	$	22,884	$	30,841	$	4,538,383

(1)    Excludes cumulative basis adjustment for loans designated in fair value hedges under the portfolio layer method. As of September 30, 2023, the basis adjustment totaled $3.0 million and represents a reduction to the amortized cost of the hedged loans. See “Note 8. Derivative Instruments and Hedging Activities” for additional information.

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:

September 30, 2023	Term Loans and Leases by Origination Year
	2023		2022		2021		2020		2019		Prior		Total		Guaranteed Amount (1)
Equipment finance
Pass	$	3,266	$	36,438	$	29,017	$	9,088	$	8,963	$	8,797	$	95,569	$	—
Special mention	—		15,059		2,435		6,085		2,872		—		26,451		—
Substandard	—		—		—		536		—		2,733		3,269		—
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total equipment finance	3,266		51,497		31,452		15,709		11,835		11,530		125,289		—
Commercial real estate
Pass	39,237		94,645		35,078		43,382		52,066		76,254		340,662		33,681
Special mention	—		—		—		—		—		9,362		9,362		—
Substandard	—		3,641		6,738		—		221		10,571		21,171		8,515
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		1,515		—		—		536		2,051		1,471
Total commercial real estate	39,237		98,286		43,331		43,382		52,287		96,723		373,246		43,667
Commercial and industrial
Pass	35,793		64,912		42,901		10,287		9,136		11,054		174,083		107,266
Special mention	—		10,734		1,252		1,297		115		385		13,783		9,469
Substandard	—		1,102		5,133		787		3,691		3,253		13,966		7,986
Doubtful	—		—		—		—		—		286		286		216
Loss	—		—		—		—		—		1,261		1,261		1,229
Total commercial and industrial	35,793		76,748		49,286		12,371		12,942		16,239		203,379		126,166
Total commercial loans and leases held for investment	$	78,296	$	226,531	$	124,069	$	71,462	$	77,064	$	124,492	$	701,914	$	169,833

(1)    Represents loan balances guaranteed by the Small Business Association (SBA).

December 31, 2022	Term Loans and Leases by Origination Year
	2022		2021		2020		2019		2018		Prior		Total		Guaranteed Amount (1)
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		40,693
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		40,693
Commercial and industrial
Pass	61,076		99,264		24,726		13,866		5,174		10,831		214,937		141,858
Special mention	—		—		—		483		163		455		1,101		44
Substandard	—		9,361		4,529		3,623		797		2,820		21,130		5,716
Doubtful	—		—		—		—		—		286		286		216
Loss	—		—		—		—		1		1,271		1,272		1,229
Total commercial and industrial	61,076		108,625		29,255		17,972		6,135		15,663		238,726		149,063
Total commercial loans and leases held for investment	$	220,905	$	202,382	$	111,040	$	91,253	$	57,687	$	89,279	$	772,546	$	189,756

(1)    Represents loan balances guaranteed by the SBA.

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

September 30, 2023	30-59 Days		60-89 Days		90 or More Days		Total
Equipment finance	$	—	$	3,150	$	—	$	3,150
Commercial real estate	4,493		434		1,618		6,545
Commercial and industrial (1)	1,514		29		1,515		3,058
Total commercial loans and leases held for investment	$	6,007	$	3,613	$	3,133	$	12,753

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:

	September 30, 2023				December 31, 2022
	Nonaccrual (1)		Nonaccrual with no related ACL (2)		Nonaccrual (1)		Nonaccrual with no related ACL (2)
Unsecured personal	$	29,398	$	—	$	16,255	$	—
Residential mortgages	316		316		331		331
Secured consumer	209		—		188		—
Total nonaccrual consumer loans held for investment	29,923		316		16,774		331
Equipment finance	2,733		—		898		39
Commercial real estate	10,113		2,431		1,018		1,018
Commercial and industrial	7,230		1,892		16,137		1,229
Total nonaccrual commercial loans and leases held for investment (3)	20,076		4,323		18,053		2,286
Total nonaccrual loans and leases held for investment	$	49,999	$	4,639	$	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 September 30, 2023 and December 31, 2022.

(2)     Subset of total nonaccrual loans and leases.

(3)     Includes $12.7 million and $4.9 million in loan balances guaranteed by the SBA as of September 30, 2023 and December 31, 2022, respectively.

	September 30, 2023				December 31, 2022
	Nonaccrual		Nonaccrual Ratios (1)		Nonaccrual		Nonaccrual Ratios (1)
Total nonaccrual consumer loans held for investment	$	29,923	0.7	%	$	16,774	0.4	%
Total nonaccrual commercial loans and leases held for investment	20,076		2.9	%	18,053		2.3	%
Total nonaccrual loans and leases held for investment	$	49,999	1.0	%	$	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.