Loans and Leases Held for Investment at Amortized Cost, Net of Allowance For Loan and Lease Losses |
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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 HFI at amortized cost. Other HFI and all HFS loans are recorded at fair value with the Company’s election of the fair value option. Accrued interest receivable is excluded from the amortized cost basis of loans and leases HFI and is reported within “ ” 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 December 31, 2023 and 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:
(1) Comprised of sales-type leases for equipment. See “Note 19. Leases” for additional information. (2) Includes $6.4 million and $67.0 million of pledged loans under the Paycheck Protection Program (PPP), as of December 31, 2023 and 2022, respectively. (3) Comprised of $355.8 million and $340.4 million in allowance for future estimated net charge-offs on existing portfolio balances, net of a negative allowance of $45.4 million and $12.5 million for expected recoveries of amounts previously charged-off as of December 31, 2023 and 2022, respectively. (4) As of December 31, 2023 and 2022, the Company had $3.5 billion and $283.6 million in loans pledged as collateral under the FRB Discount Window, respectively. In addition, as of December 31, 2023 and 2022, the Company had $479.0 million and $156.2 million in loans pledged to the FHLB of Des Moines, respectively.
(1) Calculated as the ratio of ALLL to loans and leases HFI at amortized cost. The activity in the ACL by portfolio segment was as follows:
(1) For the year ended December 31, 2021, includes $6.9 million of credit loss expense for acquired loans. (2) 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. (3) Relates to $78.1 million, $138.0 million and $110.8 million of unfunded commitments as of December 31, 2023, 2022 and 2021, respectively. The following table presents charge-offs by origination year for the year ended December 31, 2023:
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:
(1) Excludes cumulative basis adjustment for loans designated in fair value hedges under the portfolio layer method. As of December 31, 2023, the basis adjustment totaled $8.9 million and represents a reduction to the amortized cost of the hedged loans. See “Note 9. Derivative Instruments and Hedging Activities” for additional information.
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:
(1) Represents loan balances guaranteed by the Small Business Association (SBA).
(1) Represents loan balances guaranteed by the SBA. The following tables present an analysis of the past due loans and leases HFI at amortized cost within the commercial portfolio segment:
(1) Past due PPP loans are excluded from the tables. Loan Modifications The Company has the following programs to modify loans for borrowers experiencing financial difficulty. The table below presents the amortized cost of loans that were modified during the year ended December 31, 2023, by modification type and delinquency status:
The Company’s Combination modifications primarily provide borrowers with a short-term reduction in monthly payments, resulting in a term extension of approximately six months or greater compared to the original maturity date of the loan. In addition, the Company’s Debt Settlement modifications, which include engaging with third-party debt settlement companies, reduce the principal and interest amounts owed by borrowers. The Company typically charges-off such Debt Settlement loans within a few months following the modification, as payments under the modified agreement are less than the original contractual amounts. In the event of a borrower defaulting at 120 days past due, the modified loan is charged-off at the time of default. The total amount of charge-offs subsequent to modification related to Combination and Debt Settlement modifications was $0.5 million and $53.1 million, respectively, during the year ended December 31, 2023. 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:
(1) Excluding PPP loans, there were no loans and leases that were 90 days or more past due and accruing as of both December 31, 2023 and 2022. (2) Subset of total nonaccrual loans and leases. (3) Includes $10.4 million and $4.9 million in loan balances guaranteed by the SBA as of December 31, 2023 and 2022, respectively.
(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.
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