What changed in LendingClub Corp's 10-K — 2023 vs 2024
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Paragraph-level year-over-year comparison of LendingClub Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.
+430 added−536 removedSource: 10-K (2025-02-13) vs 10-K (2024-02-16)
Top changes in LendingClub Corp's 2024 10-K
430 paragraphs added · 536 removed · 165 edited across 8 sections
- Item 1A. Risk Factors+221 / −115 · 3 edited
- Item 1. Business+75 / −294 · 65 edited
- Item 7. Management's Discussion & Analysis+119 / −114 · 85 edited
- Item 1C. Cybersecurity+5 / −5 · 5 edited
- Item 5. Market for Registrant's Common Equity+4 / −4 · 3 edited
Item 1. Business
Business — how the company describes what it does
65 edited+10 added−229 removed101 unchanged
Item 1. Business
Business — how the company describes what it does
65 edited+10 added−229 removed101 unchanged
2023 filing
2024 filing
Biggest changeFurther, increases in delinquency rates may require that we take additional allowances for losses, which may adversely affect our financial performance and our ability to allocate sufficient financial resources for other purposes, such as advancing our products and services, which could impact our results of operations. 22 LENDINGCLUB CORPORATION In addition to the discussion in this section, see the risk factor “ The current economic environment, including a potential recession and the resumption of Federal student loan payments, could negatively affect our business and operating results. ” If investors on our marketplace bank platform pause or cease their participation or exert influence over us, our business, financial condition and results of operations may be harmed.
Biggest changeIn addition to the discussion in this section, see the risk factor “ The current economic environment, including related uncertainties, could negatively affect our business and operating results. ” If investors on our marketplace bank platform pause or cease their participation or exert influence over us, our business, financial condition and results of operations may be harmed.
Among other things, as inflation and interest rates are elevated: (i) existing borrowers may allocate more of their income to necessities such as housing and food, thereby potentially increasing their risk of default by reducing their ability to make loan payments, (ii) the rate we offer on our deposit products will increase to remain competitive, thereby increasing our cost of funding and reducing our net interest margin, (iii) the return our loan products generate may be less attractive relative to other investment options, thereby reducing marketplace investor demand in our loan products, and (iv) we may need to increase interest rates and/or tighten credit standards for new originations, thereby potentially making it more challenging to source enough interested and qualified borrowers to enable sufficient origination volume.
Among other things, as inflation and interest rates are elevated: (i) existing borrowers may allocate more of their income to necessities such as housing and food, thereby potentially increasing their risk of default by reducing their ability to make loan payments, (ii) the rate we offer on our deposit products may be elevated to remain competitive, thereby increasing our cost of funding and reducing our net interest margin, (iii) the return our loan products generate may be less attractive relative to other investment options, thereby reducing marketplace investor demand in our loan products, and (iv) we may need to increase interest rates and/or tighten credit standards for new originations, thereby potentially making it more challenging to source enough interested and qualified borrowers to enable sufficient origination volume.
Any new arrangements or programs may: (i) increase the complexity of our business, (ii) require allocation of personnel and other resources to create and operate, and/or (iii) have new and/or different structures and terms, including alternative fee arrangements, purchase price rebates or other incentives.
Any new arrangements or programs may: (i) increase the complexity of our business, (ii) require allocation of personnel and other resources to create and operate such arrangements or programs, and/or (iii) have new and/or different structures and terms, including alternative fee arrangements, purchase price rebates or other incentives.
However, any acquisition, disposition or other strategic transactions involves risks, including: • difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, products and services of the acquired business, which may require ongoing investment in development and enhancement of additional operational and reporting processes and controls; 28 LENDINGCLUB CORPORATION • inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits; • difficulties in retaining, training, motivating and integrating key personnel; • diversion of management’s time and resources from our normal daily operations; • difficulties in successfully incorporating licensed or acquired technology and rights into our platform; • difficulties in maintaining uniform standards, controls, procedures and policies within the combined organization; • difficulties in retaining relationships with customers, employees and suppliers of the acquired business; • risks of entering markets in which we have no or limited direct prior experience; • regulatory risks, including remaining in good standing with existing regulatory bodies or receiving any necessary pre-closing or post-closing approvals, as well as being subject to new regulators with oversight over an acquired business; • assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights or increase our risk for liability; • failure to successfully further develop any acquired technology; • liability for activities of the acquired or disposed of business before the acquisition or disposition, including patent and trademark infringement claims, violations of laws, regulatory actions, commercial disputes, tax liabilities and other known and unknown liabilities; • difficulty in separating assets and replacing shared services; • assumption of exposure to performance of any acquired loan portfolios; • potential disruptions to our ongoing businesses; and • unexpected costs and unknown risks and liabilities associated with the acquisition.
However, any acquisition, disposition or other strategic transaction involves risks, including: • difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, products and services of the acquired business, which may require ongoing investment in development and enhancement of additional operational and reporting processes and controls; • inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits; • difficulties in retaining, training, motivating and integrating key personnel; • diversion of management’s time and resources from our normal daily operations; • difficulties in successfully incorporating licensed or acquired technology and rights into our platform; • difficulties in maintaining uniform standards, controls, procedures and policies within the combined organization; • difficulties in retaining relationships with customers, employees and suppliers of the acquired business; • risks of entering markets in which we have no or limited direct prior experience; • regulatory risks, including remaining in good standing with existing regulatory bodies or receiving any necessary pre-closing or post-closing approvals, as well as being subject to new regulators with oversight over an acquired business; • assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights or increase our risk for liability; • failure to successfully further develop any acquired technology; • liability for activities of the acquired or disposed of business before the acquisition or disposition, including patent and trademark infringement claims, violations of laws, regulatory actions, commercial disputes, tax liabilities and other known and unknown liabilities; • difficulty in separating assets and replacing shared services; • assumption of exposure to performance of any acquired loan portfolios; • potential disruptions to our ongoing businesses; and • unexpected costs and unknown risks and liabilities associated with the acquisition.
Changes to the legal and regulatory regime may require material modifications to our products, services and operations, require significant investments of management attention and resources, or expose us to potential liability for past practices.
Changes to the legal, regulatory or political regime may require material modifications to our products, services and operations, require significant investments of management attention and resources, or expose us to potential liability for past practices.
Additionally, there may be risks that exist, or that develop in the future, that we have not appropriately anticipated, identified or mitigated. 21 LENDINGCLUB CORPORATION Finally, our risk management framework may be deemed insufficient or inadequate by our regulators, which has in the past required, and may in the future require, that we invest additional resources into remediating any deficiencies and adversely impacted our ability to operate our business until the revised framework is deemed sufficient and adequate by our regulators.
Additionally, there may be risks that exist, or that develop in the future, that we have not appropriately anticipated, identified or mitigated. 20 LENDINGCLUB CORPORATION Finally, our risk management framework may be deemed insufficient or inadequate by our regulators, which has in the past required, and may in the future require, that we invest additional resources into remediating any deficiencies and adversely impacted our ability to operate our business until the revised framework is deemed sufficient and adequate by our regulators.
Under this model, the allowance is established to reserve for management’s best estimate of expected lifetime losses inherent in our finance receivables and loan portfolio. 20 LENDINGCLUB CORPORATION The process for determining the amount of the allowance requires subjective and complex judgments about the future, including forecasts of economic or market conditions that might impair the ability of borrowers to repay their loans.
Under this model, the allowance is established to reserve for management’s best estimate of expected lifetime losses inherent in our finance receivables and loan portfolio. 19 LENDINGCLUB CORPORATION The process for determining the amount of the allowance requires subjective and complex judgments about the future, including forecasts of economic or market conditions that might impair the ability of borrowers to repay their loans.
Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 20. Commitments and Contingencies, ” below. The scope, timing, outcome, consequences and impact of claims, lawsuits, proceedings, investigations, inquiries and requests that we are subject to cannot be predicted with certainty. Determining reserves for our pending litigation is a complex, fact-intensive process that requires significant judgment.
Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 19. Commitments and Contingencies, ” below. The scope, timing, outcome, consequences and impact of claims, lawsuits, proceedings, investigations, inquiries and requests that we are subject to cannot be predicted with certainty. Determining reserves for our pending litigation is a complex, fact-intensive process that requires significant judgment.
Our success depends in significant part on third party investors purchasing loans through our marketplace bank platform. Investors may have financial conditions or limitations that adversely impact their ability to continue to participate on our platform. Further, investors may choose to deploy their capital elsewhere for any reason, including if financial returns on loans we offer prove to be unsatisfactory.
Our success depends in significant part on marketplace investors purchasing loans through our marketplace bank platform. Investors may have financial conditions or limitations that adversely impact their ability to continue to participate on our platform. Further, investors may choose to deploy their capital elsewhere for any reason, including if financial returns on loans we offer prove to be unsatisfactory.
Additionally, investors may exert significant influence over us, our management and operations. For example, if investors pause or discontinue their investment activity, we may need to provide incentives or discounts and/or enter into alternative structures or terms to attract investor capital to the platform, such as our recently launched Structured Certificates.
Additionally, investors may exert significant influence over us, our management and our operations. For example, if investors pause or discontinue their investment activity, we may need to provide incentives or discounts and/or enter into alternative structures or terms to attract investor capital to the platform, such as our Structured Certificates.
There is also no assurance that we will be able to enter into any of these arrangements or programs with interest parties, or if we do, what the final terms will be. Failure to attract investor capital on reasonable terms may result in a reduction in origination volume.
There is also no assurance that we will be able to enter into any of these arrangements or programs with interested parties, or if we do, what the final terms will be. Failure to attract investor capital on reasonable terms may result in a reduction in origination volume.
The vast majority of our revenue currently comes from origination fees, servicing fees on loans sold to marketplace investors and net interest income earned from retaining loans on our balance sheet for investment. Growing these revenue streams may require that we increase loan originations over time.
The vast majority of our revenue currently comes from origination fees, servicing fees on loans sold to marketplace investors and net interest income earned from retaining loans on our balance sheet. Growing these revenue streams may require that we increase loan originations over time.
For example, certain of our marketplace investors and equity investors have inquired about our progress and disclosures on this topic. Further, this area of disclosure is subject to state legislation and proposed rules from the SEC, which the Company continues to monitor and will comply with as applicable.
For example, certain of our marketplace investors and equity investors have inquired about our progress and disclosures on this topic. Further, this area of disclosure is subject to state legislation and pending rules from the SEC, which the Company continues to monitor and will comply with as applicable.
Although we believe that we currently have an adequate amount of liquidity to support our business, there are a number of factors that could reduce and/or deplete our existing liquidity position, including results of operations that are reduced relative to our projections, costs related to existing or future litigation or regulatory matters, the pursuit of strategic business opportunities (whether through acquisition or organic) and unanticipated liabilities.
Although we believe that we currently have an adequate amount of liquidity to support our business, there are a number of factors that could reduce and/or deplete our existing liquidity position, 24 LENDINGCLUB CORPORATION including results of operations that are reduced relative to our projections, costs related to existing or future litigation or regulatory matters, the pursuit of strategic business opportunities (whether through acquisition or organic) and unanticipated liabilities.
Furthermore, even following the resolution of any claims, lawsuits, proceedings, exams, investigations, inquiries and requests against us, a regulatory enforcement agency could take action against one or more individuals or entities, which may require us to continue to incur significant expense for indemnification for any such individual or entity until such matters may be resolved.
Furthermore, even following the resolution of any claims, lawsuits, proceedings, exams, investigations, inquiries and requests against us, a regulatory enforcement agency could take action against one or more individuals or entities, which may require us to continue to incur significant 25 LENDINGCLUB CORPORATION expense for indemnification for any such individual or entity until such matters may be resolved.
Item 1. Business – Regulation and Supervision ” for information on the regulation and supervision framework which governs our Company and its activities. 19 LENDINGCLUB CORPORATION We are regularly examined and inspected by our regulators, including the FRB and OCC.
Item 1. Business – Regulation and Supervision ” for information on the regulation and supervision framework which governs our Company and its activities. 18 LENDINGCLUB CORPORATION We are regularly examined and inspected by our regulators, including the FRB and OCC.
See the risk factor “ Holding loans on our balance sheet exposes us to credit, default and liquidity risks, which may adversely affect our financial performance. ” Alternatively, in the event that investor demand at a given return exceeds borrower demand for that product for a given period, there may be insufficient inventory to satisfy investor demand.
See the risk factor “ Holding loans on our balance sheet exposes us to credit, default and liquidity risks, which may adversely affect our financial performance. ” 27 LENDINGCLUB CORPORATION Alternatively, in the event that investor demand at a given return exceeds borrower demand for that product for a given period, there may be insufficient inventory to satisfy investor demand.
Changes in the legal and regulatory regime could adversely affect our business, financial condition, and results of operations. Laws, regulations and supervisory expectations, and the manner in which they are interpreted and enforced, are constantly changing.
Changes in the legal, regulatory or political regime could adversely affect our business, financial condition, and results of operations. Laws, regulations and supervisory expectations, and the manner in which they are interpreted and enforced, are constantly changing.
The number and/or significance of these claims, lawsuits, exams, investigations, inquiries and requests have increased as our business has expanded in scope and geographic reach, and our products and services have increased in complexity. For example, since our acquisition of Radius, we are subject to supervision, regulation, examination and enforcement by multiple federal banking regulatory bodies.
The number and/or significance of these claims, lawsuits, exams, investigations, inquiries and requests have increased as our business has expanded in scope and geographic reach, and our products and services have increased in complexity. For example, we are subject to supervision, regulation, examination and enforcement by multiple federal banking regulatory bodies.
Additionally, in the event of 26 LENDINGCLUB CORPORATION damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur. Our disaster recovery plan has not been tested under actual disaster conditions, and we may not have sufficient capacity to recover all data and services in the event of an outage.
Additionally, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur. Our disaster recovery plan has not been tested under actual disaster conditions, and we may not have sufficient capacity to recover all data and services in the event of an outage.
Federal Deposit Insurance Corporation , No. 4:20-cv-05860-JSW (N.D. Cal.)).While we believe that our use of the issuing bank model is appropriate and factually distinguishable from the decision of the U.S. Court of Appeals for the Second Circuit in Madden v. Midland Funding, LLC , the case could create potential liability under state statutes such as usury statutes.
Federal Deposit Insurance Corporation , 29 LENDINGCLUB CORPORATION No. 4:20-cv-05860-JSW (N.D. Cal.)).While we believe that our use of the issuing bank model was appropriate and factually distinguishable from the decision of the U.S. Court of Appeals for the Second Circuit in Madden v. Midland Funding, LLC , the case could create potential liability under state statutes such as usury statutes.
Changes in the way these platforms operate could make the maintenance, protection and promotion of our products and services and our brand more expensive or more difficult. Many of our stakeholders are becoming increasingly interested in our environmental, social, governance and other sustainability responsibilities, strategy and related disclosures.
Changes in the way these platforms operate could make the maintenance, protection and promotion of our products and services and our brand more expensive or more difficult. 26 LENDINGCLUB CORPORATION Many of our stakeholders are becoming increasingly interested in our environmental, social, governance and other sustainability responsibilities, strategy and related disclosures.
We continue to devote substantial time and resources to compliance and meeting our regulators’ supervisory expectations, which will adversely affect our profitably and may adversely affect our ability to pursue advantageous business opportunities.
We continue to devote substantial time and resources to compliance and meeting our regulators’ supervisory expectations, which will adversely affect our profitability and may adversely affect our ability to pursue advantageous business opportunities.
Accordingly, we may be unable to raise additional capital if needed or on acceptable terms, which may adversely affect our liquidity, business, financial condition and results of operations. 25 LENDINGCLUB CORPORATION We are regularly subject to litigation, and government and regulatory investigations, inquiries and requests.
Accordingly, we may be unable to raise additional capital if needed or on acceptable terms, which may adversely affect our liquidity, business, financial condition and results of operations. We are regularly subject to litigation, and government and regulatory investigations, inquiries and requests.
However, because our consumer loans are fixed interest rate products, we are unable to re-price existing loans, and with respect to new originations, we need to re-price methodically to remain competitive and mitigate the adverse impacts of doing so.
However, because our consumer loans are fixed interest rate products, we were unable to re-price existing loans, and with respect to new originations, we needed to re-price methodically to remain competitive and mitigate the adverse impacts of doing so.
The occurrence of one or more of these events with a significant number of investors could, alone or in combination, have a material and adverse effect on our business, financial condition and results of operation.
The occurrence of one or more of these events with a significant number of investors has in the past and could in the future, alone or in combination, have a material and adverse effect on our business, financial condition and results of operation.
The current economic environment, and its impact, may also have the effect of heightening many of the other risks described in “ Item 1A.
The current economic environment, and its impact, may also have the effect of heightening many of the other risks described in “
Such concentration exposes us disproportionately to any of those investors choosing to cease participation on our platform or choosing to deploy their capital elsewhere, to the economic performance of those investors or to any events, circumstances or risks affecting such investors.
Such concentration exposes us disproportionately to 22 LENDINGCLUB CORPORATION any of those investors choosing to cease participation on our platform or choosing to deploy their capital elsewhere, to the economic performance of those investors or to any events, circumstances or risks affecting such investors.
Changes to the legal and regulatory regime, such as through amendments to laws and regulations, imposition of supervisory action, or shifts in governmental or regulatory policies, practices or priorities may have a material adverse impact on our operations, including the cost to conduct business, our results of operations and what products and services we can offer.
Changes to the legal and regulatory regime, such as through amendments to laws and regulations, legal challenges to new and existing agency regulations and interpretations, imposition of supervisory action, or shifts in governmental or regulatory policies, practices or priorities may have a material adverse impact on our operations, including the cost to conduct business, our results of operations and what products and services we can offer.
For example, elevated inflation and interest rates may cause borrowers to allocate their income to necessities, such as housing and food, thereby potentially increasing their risk of default by reducing their ability to make loan payments. This may increase default rates, which could adversely affect marketplace investor returns.
For example, inflation and/or natural disasters may cause borrowers to allocate their income to necessities, such as housing and food, thereby potentially increasing their risk of default by reducing their ability to make loan payments. This may increase default rates, which could adversely affect marketplace investor returns.
In one particular scheme, third parties represented to individuals that they might obtain a loan if they paid an “advance fee.” Individuals who believe that the campaigns are genuine may make payments to these unaffiliated third parties.
In one particular scheme, third parties represented to individuals that they might obtain a loan if they paid an “advance fee.” Individuals who believe that the campaigns are genuine have in the past made, and may continue to make, payments to these unaffiliated third parties.
Any challenge to or adverse consequence from our use of the issuing bank partnership model (or litigation or legislation aimed at thwarting certain transactions based on this model) may harm our business. Prior to acquiring Radius, we utilized an issuing bank model.
Any challenge to or adverse consequence from our use of the issuing bank partnership model (or litigation or legislation aimed at thwarting certain transactions based on this model) may harm our business. Prior to becoming a bank holding company, we utilized an issuing bank partnership model.
We believe that our historical use and current limited use of the issuing bank partnership model was and remains appropriate for all the jurisdictions in which we operate and we have worked with federal, state and local regulatory agencies to help them understand the model.
We believe that our historical use of the issuing bank partnership model was appropriate for all the jurisdictions in which we operated it, and we have worked with federal, state and local regulatory agencies to help them understand the model.
Doing so requires that we attract a large number of new borrowers who meet our platform’s lending standards and those of new and existing marketplace investors, including investors in any securitizations of our loans.
Doing so requires that we attract a large number of new borrowers who meet our platform’s lending standards and those of new and existing marketplace investors, including investors in any of our Structured Program transactions.
In addition to the discussion in this section, see the risk factor “ The current economic environment, including a potential recession and the resumption of Federal student loan payments, could negatively affect our business and operating results . ” 23 LENDINGCLUB CORPORATION If we do not maintain or continue to increase loan originations, or expand our marketplace bank to new markets, we may not succeed in maintaining and/or growing our business, and as a result our business and results of operations could be adversely affected.
In addition to the discussion in this section, see the risk factor “ The current economic environment, including related uncertainties, could negatively affect our business and operating results . ” If we do not maintain or continue to increase loan originations, or expand our marketplace bank to new markets, we may not succeed in maintaining and/or growing our business, and as a result our business and results of operations could be adversely affected.
The U.S. economy is undergoing a period of rapid change and significant uncertainty. A number of factors are causing this change and uncertainty, including elevated inflation, increasing interest rates, evolving government policies and changing U.S. consumer spending patterns.
The U.S. economy has been undergoing a period of rapid change and significant uncertainty. A number of factors have been causing this change and uncertainty, including changing inflation and interest rates, evolving government policies and changing U.S. consumer spending patterns.
Further, the pace of recent increases in inflation and interest rates creates unique challenges in our ability to operate our business. For example, the rapid increase in interest rates has quickly increased the cost of capital for our non-bank marketplace investors and thereby increased their return expectations.
Further, the pace of changes in inflation and interest rates can create unique challenges in our ability to operate our business. For example, the rapid increase in interest rates in 2022 and 2023 quickly increased the cost of capital for our non-bank marketplace investors and thereby increased their return expectations.
Finally, we may also choose to divest certain businesses or product lines that no longer fit with our strategic objectives. If we decide to sell assets or a business, we may have difficulty obtaining terms acceptable to us in a timely manner, or at all.
Finally, we may also choose to divest certain businesses or product lines that no longer fit with our strategic objectives. If we decide to sell assets or a business, we may have difficulty obtaining terms acceptable to us in a timely manner, or at all. Additionally, the terms of such potential transactions may expose us to ongoing obligations and liabilities.
In addition to the discussion in this section, see the risk factor “ The current economic environment, including a potential recession and the resumption of Federal student loan payments, could negatively affect our business and operating results. ” If we are unable to develop and commercialize new products and services and enhancements to existing products and services, our business may suffer.
In addition to the discussion in this section, see the risk factor “ The current economic environment, including related uncertainties, could negatively affect our business and operating results. ” If we are unable to develop and commercialize new products and services and enhancements to existing products and services, our business may suffer.
We also may not be able to refinance our indebtedness or take such other actions, if necessary, on commercially reasonable terms, or at all. RISKS RELATED TO MACROECONOMIC CONDITIONS OR OTHER EXTERNAL FACTORS The current economic environment, including a potential recession and the resumption of Federal student loan payments, could negatively affect our business and operating results.
We also may not be able to refinance our indebtedness or take such other actions, if necessary, on commercially reasonable terms, or at all. 30 LENDINGCLUB CORPORATION RISKS RELATED TO MACROECONOMIC CONDITIONS OR OTHER EXTERNAL FACTORS The current economic environment, including related uncertainties, could negatively affect our business and operating results.
Specifically, as a bank holding company, the Company is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the FRB. Further, as a national bank, LC Bank is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the OCC.
Specifically, as a bank holding company, the Company is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the FRB. Further, as a national bank, LC Bank is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the OCC. Moreover, we currently anticipate becoming subject to supervision and enforcement by the CFPB in 2025.
We make customary representations, warranties and covenants to marketplace investors about the loans we sell and service. We have sponsored, and expect to sponsor in the future, the sale of unsecured personal whole loans through 30 LENDINGCLUB CORPORATION asset-backed securitizations.
We make customary representations, warranties and covenants to marketplace investors about the loans we sell and service. We have sponsored, and expect to sponsor in the future, the sale of unsecured personal whole loans through asset-backed securitizations. In connection with these securitizations, as well as other Structured Program transactions, we make customary representations, warranties and covenants.
If any of these factors is volatile or adverse, then we may be unable to hold or sell as many loans as we could potentially originate and therefore would need to reduce our origination volume. If loan originations through our platform stagnate or decrease, for any reason, our business and financial results may be adversely affected.
If any of these factors is volatile or adverse, then we may be unable to hold or sell as many loans as we could potentially originate and therefore would need to reduce our origination volume.
The elevated inflation and interest rates, and uncertainty with respect to when the rates will decrease, are changing lending and spending patterns, and thereby prompting fears that the U.S. is currently experiencing or will soon experience an economic downturn or prolonged period of slow economic growth. 31 LENDINGCLUB CORPORATION Our business is sensitive to, and may be adversely impacted by, the current inflation and interest rate environment.
Elevated inflation and interest rates, and uncertainty with respect to future interest rate decreases, are changing lending and spending patterns, and thereby prompting some concern that the U.S. could experience an economic downturn or prolonged period of slow economic growth. Our business is sensitive to, and may be adversely impacted by, changes in the inflation and interest rate environment.
Our regulators can adjust the requirements to be “well-capitalized” at any time and have authority to place limitations on our deposit businesses, including the interest rate we pay on deposits and the amount of brokered deposits we can accept.
Our regulators can adjust the requirements to be “well-capitalized” at any time, as well as require us to maintain capital levels higher than a “well-capitalized” bank under the current statutory definitions, and have authority to place limitations on our deposit businesses, including the interest rate we pay on deposits and the amount of brokered deposits we can accept.
Any transactions, combinations, acquisitions, dispositions or alliances may also require us to issue additional equity securities, spend our cash, or incur debt (and increased interest expense), liabilities and amortization expenses related to intangible assets or write-offs of goodwill, which could adversely affect our results of operations and dilute the economic and voting rights of our stockholders and the interests of holders of our indebtedness.
Additionally, it may take us longer than expected to fully realize the anticipated benefits and synergies of these transactions, and those benefits and synergies may ultimately be smaller than anticipated or may not be realized at all, which could adversely affect our business and operating results. 28 LENDINGCLUB CORPORATION Any transactions, combinations, acquisitions, dispositions or alliances may also require us to issue additional equity securities, spend our cash, or incur debt (and increased interest expense), liabilities and amortization expenses related to intangible assets or write-offs of goodwill, which could adversely affect our results of operations and dilute the economic and voting rights of our stockholders and the interests of holders of our indebtedness.
Any such guarantee may require approval of the banking regulators and there can be no assurance that we would be able to obtain such a guarantee. To the extent that we are not able to obtain a guarantee from LC Bank, it may be more difficult or expensive for us to borrow money.
To the extent that we are not able to obtain a guarantee from LC Bank, or any guarantee is limited, it may be more difficult or expensive for us to borrow money.
Changes we make to the rates offered on our deposit products may affect our finances and liquidity. We have brokered deposits, which may be more price sensitive than other types of deposits and may become less available if alternative investments offer higher returns.
We have brokered deposits, which may be more price sensitive than other types of deposits and may become less available if alternative investments offer higher returns.
Since acquiring Radius, we have transitioned from an issuing bank partnership model to one in which we directly originate the vast majority of our loans.
Since becoming a banking organization, we have transitioned from an issuing bank partnership model to one in which we directly originate our loans.
In addition to the discussion in this section, see the risk factor “ The current economic environment, including a potential recession and the resumption of Federal student loan payments, could negatively affect our business and operating results. ” We may not be able to maintain our deposit base.
In addition to the discussion in this section, see the risk factor “ The current economic environment, including related uncertainties, could negatively affect our business and operating results. ” We may not be able to maintain our deposit base. We rely on deposits as a principal source of funding for our lending activities.
Additionally, the terms of such potential transactions may expose us to ongoing obligations and liabilities. 29 LENDINGCLUB CORPORATION If we are unable to offer marketplace investors a satisfactory breadth and volume of investment opportunities, our business and results of operations may be materially harmed.
If we are unable to offer marketplace investors a satisfactory breadth and volume of investment opportunities, our business and results of operations may be materially harmed.
Further, state legislatures may enact new laws or amend existing laws aimed at undermining the ability of non-bank purchasers of loans to realize the outcome of a bank’s ability to export interest rates.
Further, state legislatures may enact new laws or amend existing laws aimed at undermining the ability of non-bank purchasers of loans to realize the outcome of a bank’s ability to export interest rates. Any challenge to or adverse consequence of our use of the issuing bank partnership model could adversely affect our business, financial condition and results of operations.
We are subject to the risk of fraudulent activity associated with our marketplace bank, borrowers, depositors, investors and third parties handling borrower and investor information.
Fraudulent activity associated with our marketplace bank could negatively impact our operating results, brand and reputation and cause the use of our products and services to decrease and our fraud losses to increase. We are subject to the risk of fraudulent activity associated with our marketplace bank, borrowers, depositors, investors and third parties handling borrower, depositor and investor information.
In response to elevated inflation, the FRB increased interest rates eleven times since early 2022, from a federal funds rate range of 0.00% to 0.25% in early 2022 to 5.25% to 5.50% as of December 2023, and has indicated a willingness to keep rates elevated as it deems necessary to combat inflation.
Inflation reached a 40-year high of 9.1% in June 2022, and in response the FRB increased interest rates eleven times since early 2022, from a federal funds rate range of 0.00% to 0.25% in early 2022 to 5.25% to 5.50% in July 2023.
Therefore, until the interest rate environment stabilizes, we may be challenged to fully meet the return expectations for certain of our marketplace investors which may adversely impact our marketplace volume and related revenue. In addition, changes in, and uncertainty with respect to, government policies in response to the current economic climate may adversely impact our business.
Therefore, until the interest rate environment stabilized, we were temporarily challenged to fully meet the return expectations for certain of our marketplace investors which adversely impacted our marketplace volume and related revenue.
For example, governments could pass legislation or adopt policies based on changes in leadership, shifting priorities, the stability of the banking system or in response to current financial conditions. We cannot predict what changes, if any, will be made to the legal and regulatory regime or the effect that such changes may have on our future business and earnings prospects.
We cannot predict what other changes, if any, will be made to the legal and regulatory regime, whether the changes will be retained or the effect that such changes may have on our future business and earnings prospects.
For example, in 2023, Silicon Valley Bank, Signature Bank, and First Republic Bank each failed shortly after substantial reductions in their deposit bases over the course of a few days/weeks. 24 LENDINGCLUB CORPORATION Our ability to obtain deposit funding and offer competitive interest rates on deposits is also dependent on capital levels of LC Bank and being considered “well-capitalized” by the banking regulators.
Our ability to obtain deposit funding and offer competitive interest rates on deposits is also dependent on capital levels of LC Bank and being considered “well-capitalized” by the banking regulators.
For example, in 2023, Silicon Valley Bank, Signature Bank, and First Republic Bank each failed shortly after substantial reductions in their deposit bases over the course of a few days/weeks. Any such events of perceptions may make our members reluctant to use our products and services or could adversely affect our business, financial condition and results of operations.
In particular, sudden and substantial withdrawals could cause the banking regulators to close our institution and seize our assets. For example, in 2023, Silicon Valley Bank, Signature Bank, and First Republic Bank each failed shortly after substantial reductions in their deposit bases over the course of a few days/weeks.
If we do not successfully maintain, protect and promote our brand we may be unable to maintain and/or expand our base of customers and investors, which may materially harm our business. 27 LENDINGCLUB CORPORATION Fraudulent activity associated with our marketplace bank could negatively impact our operating results, brand and reputation and cause the use of our products and services to decrease and our fraud losses to increase.
If we do not successfully maintain, protect and promote our brand we may be unable to maintain and/or expand our base of customers and investors, which may materially harm our business.
We rely on deposits as a principal source of funding for our lending activities. As of December 31, 2023, we had approximately $7.3 billion in deposits. Our future growth and strategy will largely depend on our ability to maintain deposits to provide a less costly and stable source of funding.
As of December 31, 2024, we had approximately $9.1 billion in deposits. Our future growth and strategy depend on our ability to maintain deposits to provide a less costly and stable source of funding. The deposit markets are competitive, and therefore it may prove difficult and/or costly to grow our deposit base.
For example, increasing inflation and interest rates may cause borrowers to allocate more of their income to necessities such as housing and food, thereby potentially increasing their risk of default by reducing their ability to make loan payments.
For example, inflation and/or natural disasters may cause borrowers to allocate more of their income to necessities such as housing and food, thereby potentially increasing their risk of default by reducing their ability to make loan payments. 21 LENDINGCLUB CORPORATION From time to time, we also sponsor the sale of loans through Structured Program transactions, and we may be required to and/or otherwise decide to retain a portion of the interests in these securitization transactions (Securitization Interests).
If we are unable to develop and commercialize timely and attractive products and services, our growth may be limited and our business may be materially and adversely affected. An inability to maintain adequate liquidity could jeopardize our business and financial condition. Liquidity is essential to our business.
An inability to maintain adequate liquidity could jeopardize our business and financial condition. Liquidity is essential to our business.
Finally, an economic downturn or recession could increase the risk of borrower default, reduce investor participation on our marketplace bank platform, cause us to change, postpone or cancel our strategic initiatives, or otherwise negatively affect our business, financial condition and results of operations.
Additionally, uncertainty regarding the economic environment could adversely impact borrower or marketplace investor interest in our products, adversely impact our third-party vendors, cause us to change, postpone or cancel our strategic initiatives, or otherwise negatively affect our business, financial condition and results of operations. Notably, the recent changes in U.S. presidential administration and the composition of the U.S.
The deposit markets are competitive, and therefore it may prove difficult and/or costly to grow our deposit base. For example, as the FRB has increased interest rates, we have made corresponding increases to the rates we offer depositors, which increases our cost of capital and may reduce the net interest margin on loans held for investment.
For example, as the FRB increased interest rates in 2022 and 2023, we made corresponding increases to the rates we offer depositors, which increased our funding cost and reduced the net interest margin on loans held on our balance sheet. 23 LENDINGCLUB CORPORATION Changes we make to the rates offered on our deposit products may affect our finances and liquidity.
For example, in response to elevated inflation, the FRB increased interest rates eight times since early 2022, from a federal funds rate range of 0.00% to 0.25% in early 2022 to 5.25% to 5.50% as of December 2023, and has indicated a willingness to conduct rate increases as it deems necessary to combat inflation.
While the FRB has since reduced rates to a range of 4.25% to 4.5% as of December 2024, it has indicated a willingness to adjust rates, including slowing the pace of rate decreases or increasing rates, as it deems necessary to combat inflation.
Removed
From time to time, we also sponsor the sale of loans through Structured Program transactions, and we may be required to and/or otherwise decide to retain a portion of the interests in these securitization transactions (Securitization Interests).
Added
Further, we currently anticipate that we will also be regulated by, and thereby subject to supervision and enforcement by, the CFPB in 2025.
Removed
In particular, sudden and substantial withdrawals could cause the banking regulators to close our institution and seize our assets.
Added
Governments could pass legislation or adopt policies based on changes in leadership, shifting priorities, the stability of the banking system or in response to current financial conditions. Further, the recent change in U.S. presidential administration and the composition of the U.S.
Removed
Additionally, it may take us longer than expected to fully realize the anticipated benefits and synergies of these transactions, and those benefits and synergies may ultimately be smaller than anticipated or may not be realized at all, which could adversely affect our business and operating results.
Added
Congress is expected to lead to potentially significant changes in governing ideology and style, legislative, regulatory or policy priorities and/or the existence, priorities, scope, practices and/or staffing levels of regulatory agencies. For example, in February 2025, the Trump administration directed the CFPB to, among other things, suspend rule implementations and cease supervision activities.
Removed
Any challenge to or adverse consequence of our use of the issuing bank partnership model could adversely affect that business (including requiring that we alter our business model for impacted products), financial condition and results of operations.
Added
Further, as a result of changes in priorities and/or leadership at federal, state and/or local levels, we may become subject to different and potentially conflicting requirements and expectations in the jurisdictions in which we operate or that may attempt to exercise jurisdiction over us, which may have an adverse effect on our business and results of operations.
Removed
In connection with these securitizations, as well as other structured products or Structured Certificate transactions, we make customary representations, warranties and covenants.
Added
Further, increases in delinquency rates may require that we take additional allowances for losses, which may adversely affect our financial performance and our ability to allocate sufficient financial resources for other purposes, such as advancing our products and services, which could impact our results of operations.
Removed
Inflation reached a 40-year high of 9.1% in June 2022, and the annual inflation rate for the U.S. was 6.5% for the twelve months ended December 31, 2022.
Added
Additionally, other than a modest number of marketplace investors that are located internationally, our business exists solely in the U.S. and therefore fluctuations in and risks to U.S. consumer credit, U.S. macroeconomic conditions, and the U.S. legal and regulatory landscape may have a greater adverse impact on our business and financial results than a competitor company with a global footprint.
Removed
For example, in response to the COVID-19 pandemic, in March 2020 the U.S. Department of Education implemented a student loan relief program which included a suspension of: (i) federal loan payments, (ii) interest rate accrual and (iii) collections on defaulted loans (collectively, the Student Loan Forbearance Program).
Added
If loan originations through our platform stagnate or decrease, for any reason, our business and financial results may be adversely affected.
Removed
However, in connection with an agreement to raise the borrowing capacity of the Federal government, the Student Loan Forbearance Program lapsed and interest accruals resumed in September 2023 and payments resumed in October 2023 (collectively, the Student Loan Payment Resumption).
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Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
3 edited+218 added−112 removed0 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
3 edited+218 added−112 removed0 unchanged
2023 filing
2024 filing
Biggest changeRisk Factors – Risks Related to Regulation, Supervision and Compliance. ” Intellectual Property To establish and protect our technology and intellectual property rights, we rely on a combination of copyright, trade secret and other rights, as well as confidentiality procedures, non-disclosure agreements with third parties, employee disclosure and invention assignment agreements, and other contractual rights.
Biggest changeWe rely on a combination of copyright, trade secret, trademark, patent and other rights, as well as confidentiality procedures and contractual provisions to protect our proprietary technology, underwriting and credit decisioning data, processes and other intellectual property. However, the steps we take to protect our intellectual property rights may be inadequate.
For example, the California Privacy Rights Act of 2020 became fully operative on January 1, 2023.
For example, in California, the California Consumer Privacy Act (CCPA) became effective on January 1, 2020 and was modified by the California Privacy Rights Act (CPRA) on January 1, 2023.
Risk Factors Summary Our business is subject to a number of risks that may adversely affect our business, financial condition and results of operations.
Any such losses could adversely affect our business, financial condition and results of operations.
Removed
Item 1A. Risk Factors – Substantial and increasing competition in our industry may harm our business ” for further discussion of the potential impact of competition on our business. Regulation and Supervision General The U.S. financial services and banking industry is highly regulated.
Added
Item 1A. Risk Factors ” and elsewhere in our Annual Report, such as our exposure to the credit and default risk of borrowers, maintaining and increasing loan originations, maintaining our deposit base and retaining our marketplace investors. Fluctuations in interest rates could negatively affect transaction volume and our net interest income.
Removed
The bank regulatory regime is intended primarily for the protection of customers, the public, the financial system and the Deposit Insurance Fund (DIF) of the Federal Deposit Insurance Corporation (FDIC), rather than our stockholders or creditors. The legal and regulatory regime affects virtually all aspects of our operations.
Added
We offer loan products with both fixed and variable interest rates, depending on the type of loan. If interest rates rise, potential borrowers could seek to defer taking new loans as they wait for interest rates to decrease and/or settle, and borrowers of variable rate loans may be subject to increased interest rates, which could increase default risk.
Removed
Statutes, regulations and regulatory and supervisory policies govern, among other things, the scope of activities that we may conduct and the manner in which we may conduct them; our business plan and growth; our board, management, and risk management infrastructure; the type, terms, and pricing of our products and services; our loan and investment portfolio; our capital and liquidity levels; our reserves against deposits; our ability to pay dividends, buy-back stock or distribute capital; and our ability to engage in mergers, acquisitions, strategic initiatives and transactions between LC Bank and its affiliates.
Added
If interest rates decrease after a loan is made, existing borrowers may prepay their loans to take advantage of the lower 31 LENDINGCLUB CORPORATION rates. Furthermore, investors would lose the opportunity to collect the higher interest rate payable on the corresponding loan and may delay or reduce future loan investments.
Removed
The legal and regulatory regime is continually under review by legislatures, regulators and other governmental bodies, and changes regularly occur through the enactment or amendment of laws and regulations or through shifts in policy, implementation or enforcement. Changes are difficult to predict and could have significant effects on our business.
Added
Our net interest income is the interest we earn on loans and investments less the interest we pay on our deposits and borrowings. Our net interest margin is the difference between the yield we earn on our assets and the interest rate we pay for deposits and our other sources of funding.
Removed
The material regulatory requirements that are applicable to us and our subsidiaries are summarized below.
Added
Changes in interest rates will cause our net interest income and margin to increase or decrease. To the extent that we hold loans for sale on our balance sheet, we will be at risk to rising interest rates between origination and sale.
Removed
The description below, as well as other descriptions of laws and regulations in this Annual Report, are not intended to summarize all laws and regulations applicable to us and our subsidiaries, and are based upon the statutes, regulations, policies, interpretive letters and other written guidance that are in effect as of the date of this Annual Report.
Added
In order to sell such loans, we may need to reduce the sale price in order to satisfy the yield expectations of our marketplace investors.
Removed
Regulatory Framework We are subject to regulation and supervision by multiple regulatory bodies. As a bank holding company, the Company is subject to the Bank Holding Company Act of 1956 (BHCA) and is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the Board of Governors of the Federal Reserve System (FRB).
Added
Further, we are exposed to interest rate risk because our interest-earning assets and interest-bearing sources of funding do not react uniformly or concurrently to changes in interest rates, as the two have different time periods for adjustment and can be tied to different measures of rates.
Removed
The FRB acts as the supervisor of the consolidated operations of bank holding companies. 9 LENDINGCLUB CORPORATION As a national bank, LC Bank is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the Office of the Comptroller of the Currency (OCC). The OCC charges fees to national banks, including LC Bank, in connection with its supervisory activities.
Added
Fluctuations in the interest rate environment may impact our net interest income, net interest margin and/or discourage investors and borrowers from participating on our marketplace bank platform and may reduce our loan originations, any of which may adversely affect our business.
Removed
LC Bank’s deposits are insured by the DIF of the FDIC up to applicable legal limits. As an FDIC-insured depository institution, LC Bank is subject under certain circumstances to supervision, regulation and examination by the FDIC. The FDIC charges deposit insurance assessments to FDIC-insured institutions, including LC Bank, to fund and support the DIF.
Added
Notwithstanding the above, we monitor interest rates and have certain avenues to manage our interest rate risk exposure, including changing the interest rate offered on deposits and the interest rate on our loan products.
Removed
The rate of these deposit insurance assessments is based on, among other things, the risk characteristics of LC Bank. The FDIC has the power to terminate LC Bank’s deposit insurance if it determines LC Bank is engaging in unsafe or unsound practices.
Added
If our interest rate risk management strategies are not appropriately monitored or executed, these activities may not effectively mitigate our interest rate sensitivity or have the desired impact on our results of operations or financial condition.
Removed
Federal banking laws provide for the appointment of the FDIC as receiver in the event LC Bank were to fail, such as in connection with undercapitalization, insolvency, unsafe or unsound condition or other financial distress.
Added
Additionally, we use, and may in the future use, financial instruments for hedging and risk management purposes in order to protect against possible fluctuations in interest rates, or for other reasons that we may deem appropriate.
Removed
In a receivership, the claims of the receiver for administrative expenses and the claims of LC Bank’s depositors (and those of the FDIC as subrogee of LC Bank) would have priority over other general unsecured claims against LC Bank.
Added
However, any current or future hedges will not completely eliminate the risk associated with fluctuating interest rates and our hedging activities may prove to be ineffective.
Removed
We are subject to the disclosure and regulatory requirements of the Securities Act and the Exchange Act, both as administered by the SEC. Our common stock is listed on the New York Stock Exchange (NYSE) under the trading symbol “LC” and therefore we are also subject to the rules of the NYSE for listed companies.
Added
Any failure to manage our hedging positions properly or inability to enter into hedging instruments under acceptable terms, or any other unintended or unanticipated economic consequences of our hedging activities, could negatively affect our financial condition and results of operations.
Removed
Broad Powers to Ensure Safety and Soundness A principal objective of the U.S. bank regulatory system is to ensure the safety and soundness of banking organizations.
Added
A decline in social and economic conditions may adversely affect our customers, which may negatively impact our business and results of operations.
Removed
Safety and soundness is a broad concept that includes financial, operational, compliance and reputational considerations, including matters such as capital, asset quality, quality of board and management oversight, earnings, liquidity, and sensitivity to market and interest rate risk.
Added
As a marketplace bank, we believe our customers are highly susceptible to uncertainties and negative trends in the markets driven by, among other factors, general social and economic conditions in the United States, abroad and the regional areas where our customers reside.
Removed
As part of its commitment to maintain safety and soundness, at the time the Company acquired LC Bank, LC Bank entered into an Operating Agreement with the OCC (the Operating Agreement).
Added
Economic factors include interest rates, unemployment levels, tax and tariff rates, the impact of a federal government shutdown, natural disasters, public health emergencies, pandemics, gasoline prices, adjustments in monthly payments, adjustable-rate mortgages and other debt payments, the rate of inflation, relative returns available from competing investment products and consumer perceptions of economic conditions.
Removed
The Operating Agreement set forth key parameters which LC Bank was required to operate within, such as with respect to its business plan, minimum capital, directors and senior executive officers, risk management and compliance. Per its original terms, the Operating Agreement expired on February 2, 2024. The banking regulators have broad examination and enforcement authority.
Added
Social factors include changes in consumer confidence levels and changes in attitudes with respect to incurring debt and the stigma of personal bankruptcy. These social and economic factors may affect the ability or willingness of borrowers to make payments on their loans.
Removed
The regulators require banking organizations to file detailed periodic reports and regularly examine the operations of banking organizations. Banking organizations that do not meet the regulators’ supervisory expectations can be subjected to increased scrutiny and supervisory criticism.
Added
Because we pass through collected borrower payments to investors or we make payments to investors ratably only to the extent we receive the borrower’s payments on the corresponding loan, if we do not receive payment(s) on the corresponding loan, the investor will not be entitled to the corresponding amount(s) or payment(s) under the terms of the investment or whole loan purchase agreement.
Removed
The regulators have various remedies available, which may be public or of a confidential supervisory nature, if they determine that an institution’s condition, management, operations or risk profile is unsatisfactory. The regulators may also take action if they determine that the banking organization or its management is violating or has violated any law or regulation.
Added
For example, elevated inflation and/or interest rates may cause borrowers to allocate more of their income to necessities, such as housing and food, thereby potentially increasing their risk of default by reducing their ability to make loan payments. In some circumstances, economic and/or social factors could lead a borrower to pre-pay their loan obligations.
Removed
The regulators have the power to, among other things: • require affirmative actions to correct any violation or practice; • issue administrative orders that can be judicially enforced; • direct increases in capital; • direct the sale of subsidiaries or other assets; • limit dividends and distributions; • restrict growth and activities; • set forth parameters, obligations and/or limitations with respect to the operation of our business; • assess civil monetary penalties; • remove officers and directors; and 10 LENDINGCLUB CORPORATION • terminate deposit insurance.
Added
In the event of a prepayment, while the investor would receive the return of principal, interest would no longer accrue on the loan. Accordingly, the return for the investor would decline as compared to a loan that was timely paid in accordance with its amortization schedule.
Removed
Engaging in unsafe or unsound practices or failing to comply with applicable laws, regulations and supervisory agreements could subject us and our subsidiaries or their officers, directors and institution-affiliated parties to a broad variety of sanctions or remedies, including those described above.
Added
There is no penalty to borrowers if they choose to pay their loan early. 32 LENDINGCLUB CORPORATION Similarly, any adverse impact on the ability of borrowers to make loan payments and/or material increase in pre-payment rates may also have a material impact on the net interest income we earn for loans held on our balance sheet.
Removed
Limits on Activities and Approval Requirements The BHCA generally restricts the Company’s ability, directly or indirectly, to engage in, or acquire more than 5% of any class of voting securities of a company engaged in, activities other than those determined by the FRB to be so closely related to banking as to be a proper incident thereto.
Added
We strive to maintain a marketplace bank platform in which annual percentage rates are attractive to borrowers and returns, including the impact of credit losses and prepayments, are attractive to marketplace investors and the Company.
Removed
The Gramm-Leach-Bliley Act expanded the scope of permissible activities to include those that are financial in nature or incidental or complementary to a financial activity for a bank holding company that elects to be a financial holding company, which requires the satisfaction of certain conditions. We have not elected financial holding company status.
Added
These external economic and social conditions and resulting trends or uncertainties could adversely impact the ability or desire of our borrowers or marketplace investors to participate on our platform, which could negatively affect our business and results of operations. In addition to the discussion in this section, see “ Part II – Item 7.
Removed
The bank regulatory regime requires that we obtain prior approval of one or more regulators for various initiatives or corporate actions, including acquisitions or minority investments, the establishment, relocation or closure of branches, certain dividends or capital distributions.
Added
Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview. ” Our business and operating results could be adversely affected by the political environment and governmental fiscal and monetary policies.
Removed
Regulators take into account a range of factors in determining whether to grant a requested approval, including the supervisory status of the applicant and its affiliates. Thus, there is no guarantee that a particular proposal by us would receive the required regulatory approvals.
Added
An unpredictable or volatile political environment in the United States, including any related social unrest, could negatively impact business and market conditions, economic growth, financial stability, and business, consumer, investor, and regulatory sentiments, any one or more of which in turn could cause our business and financial results to suffer.
Removed
The Community Reinvestment Act (CRA) requires federal banking regulators, in their review of certain applications by banking organizations, to take into account the applicant’s record in helping meet the credit needs of its community, including low- and moderate-income neighborhoods.
Added
Our business and financial results are also significantly affected by the fiscal and monetary policies of the U.S. government and its agencies. We are particularly affected by the policies of the FRB, which regulates the supply of money and credit in the United States in pursuit of maximum employment, stable prices, and moderate long-term interest rates.
Removed
LC Bank is subject to periodic examination under the CRA by the OCC, which will assign ratings based on the methodologies set forth in its regulations and guidance. Less favorable CRA ratings, or concerns raised under the CRA, may result in negative regulatory consequences for LC Bank.
Added
The FRB and its policies influence the availability and demand for loans and deposits, the rates and other terms for loans and deposits, the conditions in equity, fixed-income, currency, and other markets, and the value of securities and other financial instruments.
Removed
The federal banking regulators have recently finalized reforms to the regulations implementing the CRA that, subject to the outcome of related litigation, may impact how certain activities may be considered, and how regulators may assess performance, under the CRA.
Added
For example, in response to elevated inflation, the FRB increased interest rates eleven times since early 2022, from a federal funds rate range of 0.00% to 0.25% in early 2022 to 5.25% to 5.50% in July 2023.
Removed
Company as Source of Strength for LC Bank Federal law and FRB policy require that a bank holding company serve as a source of financial and managerial strength for any FDIC-insured depository institution that it controls.
Added
While the FRB has since reduced rates to a range of 4.25% to 4.5% as of December 2024, it has indicated a willingness to adjust rates, including slowing the pace of rate decreases or increasing rates, as it deems necessary to combat inflation.
Removed
Thus, if LC Bank were to be in financial distress or to otherwise be viewed by the regulators as in an unsatisfactory condition, then the Federal Reserve has the authority to require the Company to act as a source of strength for LC Bank, which could include providing additional capital or liquidity support, or take other action, in support of LC Bank, even if doing so is not otherwise in the best interest of the Company.
Added
Additionally, tax and other fiscal policies impact not only general economic and market conditions but also give rise to incentives or disincentives that affect how we and our customers prioritize objectives, deploy resources, and run households or operate businesses.
Removed
Capital and Liquidity Requirements and Prompt Corrective Action The Company and LC Bank are expected to have established policies and practices for identifying, measuring, monitoring and controlling their funding and liquidity risks. The banking regulators view capital levels as important indicators of an institution’s financial soundness.
Added
Both the timing and the nature of any changes in monetary or fiscal policies, as well as their consequences for the economy and the markets in which we operate, are beyond our control and difficult to predict but could adversely affect our business and operating results. Negative publicity and unfavorable media coverage could negatively affect our business.
Removed
As a general matter, FDIC-insured depository institutions and their holding companies are required to maintain a specified level of capital relative to the amount and types of assets they hold.
Added
Negative publicity about our industry or our company, including with respect to the quality and reliability of our marketplace bank, effectiveness of the credit decisioning or scoring models used in our marketplace bank platform, the effectiveness of our collection efforts, statements regarding investment returns, changes to our marketplace bank, our ability to grow our borrower and investor base at a rate expected by the market, our ability to effectively manage and resolve borrower and investor complaints, our ability to manage borrower and investor accounts in compliance with regulatory requirements which may not be clear, privacy and security practices, use of loan proceeds by certain borrowers of ours or other companies in our industry for illegal purposes, litigation, regulatory activity, and the experience of borrowers and investors with our marketplace bank, products or services, even if inaccurate, could adversely affect our reputation and the confidence in, and the use of, our bank, products and services, which could harm our business and operating results.
Removed
While capital can serve as an important cushion against losses, higher capital requirements can also adversely affect an institution’s ability to grow and/or increase leverage through deposit-gathering or other sources of funding. The Company and LC Bank are each subject to generally similar capital requirements adopted by the FRB and the OCC, respectively.
Added
Harm to our reputation can arise from many sources, including employee misconduct or error, misconduct or errors by our partners or partners of partners, other online marketplace banks, outsourced service providers or other counterparties, failure by us or our partners to meet minimum standards of service and quality, inadequate protection of borrower and investor information and compliance failures and claims. 33 LENDINGCLUB CORPORATION Our business operations may be adversely impacted by political events, terrorism, military conflict or acts of war, cyber-attacks, public health issues, natural disasters, severe weather, climate change, infrastructure failure or outages, labor disputes and other business interruptions.
Removed
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 11 LENDINGCLUB CORPORATION assets and certain other items for purposes of the risk-based capital ratios; require an additional capital conservation buffer over the minimum required capital ratios in order to avoid certain limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses; and define what qualifies as capital for purposes of meeting the capital requirements.
Added
Our business operations are subject to interruption by, among other things, political events, terrorism, military conflict or acts of war (including the conflicts in Ukraine and the Gaza Strip), cyber-attacks, public health issues, natural disasters, severe weather, climate change (including longer-term shifts in climate patterns, such as extreme heat, sea level rise and more frequent and prolonged drought), infrastructure failure or outages (including power outages), labor disputes and other events which could: (i) decrease demand for our products and services, (ii) adversely affect the macroeconomy and/or our customers, or (iii) make it difficult or impossible for us to deliver a satisfactory experience to our customers.
Removed
The U.S. capital requirements generally are modeled off the Capital Accords of the Basel Committee on Banking Supervision (BCBS).
Added
Any such events could also affect the Company by impacting the stability of our deposit base, impairing the ability of our borrowers to repay their outstanding loans, causing significant property damage or otherwise impair the value of collateral securing our loans, and/or resulting in loss of revenue and/or cause us to incur additional expenses.
Removed
Specifically, the capital thresholds in order to be regarded as a well-capitalized institution under the BCBS standardized approach for U.S. banking organizations are as follows: a CET1 risk-based capital ratio of 6.5%, a Tier 1 risk-based capital ratio of 8.0%, a total risk-based capital ratio of 10.0% and a Tier 1 leverage ratio of 5.0%.
Added
While we may undertake measures indicated to mitigate the adverse impacts of such events, there are no assurances that any of the measures we take will be sufficient or successful.
Removed
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. The Federal Deposit Insurance Act provides for a system of “prompt corrective action” (PCA).
Added
Furthermore, in the event of any disruption to our operations or those of the companies with whom we do business with, we could experience delays in product development, marketing, operations and customer service efforts, incur significant losses, require substantial recovery time and experience significant expenditures in order to resume or maintain operations, any of which could have a material adverse impact on our business, financial condition and results of operations.
Removed
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.
Added
For example, the Ukrainian-Russian conflict, the responses thereto (such as sanctions imposed by the United States and other countries) and any expansion thereof have had, and may continue to have, unpredictable and/or adverse effects on the domestic and global economy and financial markets.
Removed
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. In addition to capital requirements, depository institutions are required to maintain non-interest bearing reserves at specified levels against their transaction accounts and certain non-personal time deposits.
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Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
5 edited+0 added−0 removed11 unchanged
Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
5 edited+0 added−0 removed11 unchanged
2023 filing
2024 filing
Biggest changeIn managing cybersecurity risks, we strive to: (i) identify, prevent and mitigate cybersecurity threats; (ii) preserve the confidentiality, security and availability of proprietary or 47 LENDINGCLUB CORPORATION confidential information; (iii) protect the Company’s intellectual property; (iv) maintain the confidence of our members, marketplace investors and business partners; and (v) provide appropriate and required disclosure of cybersecurity risks and incidents.
Biggest changeIn managing cybersecurity risks, we strive to: (i) identify, prevent and mitigate cybersecurity threats; (ii) preserve the confidentiality, security and availability of proprietary or confidential information; (iii) protect the Company’s intellectual property; (iv) maintain the confidence of our members, marketplace investors and business partners; and (v) provide appropriate and required disclosure of cybersecurity risks and incidents.
In 2023, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. However, we cannot eliminate all risks from cybersecurity threats or provide assurances that we have not experienced undetected cybersecurity incidents of a material nature.
In 2024, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. However, we cannot eliminate all risks from cybersecurity threats or provide assurances that we have not experienced undetected cybersecurity incidents of a material nature.
Our CISO, through his team and use of accompanying technology, monitor the prevention, detection, mitigation and remediation of cybersecurity incidents, and report such incidents to the Management Operational Risk Committee and/or the Board Operational Risk Committee, as and when appropriate.
Our CISO, through his team and use of accompanying technology, monitors the prevention, detection, mitigation and remediation of cybersecurity incidents, and report such incidents to the Management Operational Risk Committee and/or the Board Operational Risk Committee, as and when appropriate.
Our CISO 48 LENDINGCLUB CORPORATION holds an undergraduate degree in computer information systems and has attained the professional certification of Certified Information Systems Security Professional. The other members of the Management Operational Risk Committee each have relevant qualifications and over 10 years of experience managing risk in the technology and/or financial services industry.
Our CISO holds an undergraduate degree in computer information systems and has attained the professional certification of Certified Information Systems Security Professional. The other members of the Management Operational Risk Committee each have relevant qualifications and over 10 years of experience managing risk in the technology and/or financial services industry.
A key part of our strategy for managing risks from cybersecurity threats is the assessment and testing of our processes and practices through auditing, assessments, tabletop exercises, threat modeling, vulnerability scanning and other exercises focused on evaluating the effectiveness of our cybersecurity measures.
A key part of our strategy for managing risks from cybersecurity threats is the assessment and testing of our processes and practices through auditing, assessments, tabletop exercises, threat modeling, vulnerability scanning 47 LENDINGCLUB CORPORATION and other exercises focused on evaluating the effectiveness of our cybersecurity measures.
Item 2. Properties
Properties — owned and leased real estate
2 edited+2 added−0 removed0 unchanged
Item 2. Properties
Properties — owned and leased real estate
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2023 filing
2024 filing
Biggest changeFor more information regarding our leases, see “ Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 19. Leases ” of this Annual Report.
Biggest changeWith the exception of New York, we have renewal options to extend the terms of all of our leases. We believe our current leased properties are adequate for our immediate business needs. For more information regarding our leases, see “ Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 18.
Item 2. Properties We lease space for our headquarters in San Francisco, California. Further, we lease additional office space in other parts of the United States, including in the Salt Lake City, Utah and Boston, Massachusetts areas. We believe our current leased properties are adequate for our immediate business needs.
In addition to our headquarters, we lease office space in other parts of the United States, including in the Salt Lake City, Utah area, expiring in 2029, as well as in Boston, Massachusetts and New York, New York, both expiring in 2028. These leases total approximately 140,000 square feet.
Added
Item 2. Properties Our corporate headquarters are located in San Francisco, California and consist of approximately 115,000 square feet of office space under a lease that expires in 2026.
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Leases ” of this Annual Report. 48 LENDINGCLUB CORPORATION
Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
1 edited+0 added−0 removed0 unchanged
Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
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2023 filing
2024 filing
Biggest changeItem 3. Legal Proceedings The information set forth under “ Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 20. Commitments and Contingencies ” of this Annual Report is incorporated herein by reference. Item 4. Mine Safety Disclosures Not applicable. 49 LENDINGCLUB CORPORATION PART II
Biggest changeItem 3. Legal Proceedings The information set forth under “ Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 19. Commitments and Contingencies ” of this Annual Report is incorporated herein by reference. Item 4. Mine Safety Disclosures Not applicable. 49 LENDINGCLUB CORPORATION PART II
Item 4. Mine Safety Disclosures
Mine Safety Disclosures — required of mining issuers
1 edited+0 added−0 removed0 unchanged
Item 4. Mine Safety Disclosures
Mine Safety Disclosures — required of mining issuers
1 edited+0 added−0 removed0 unchanged
2023 filing
2024 filing
Biggest changeItem 4. Mine Safety Disclosures 49 PART II 50 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 50 Item 6. [Reserved] 51 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 52
Biggest changeItem 4. Mine Safety Disclosures 49 PART II 50 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 50 Item 6. [Reserved] 52 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 53
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
3 edited+1 added−1 removed4 unchanged
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
3 edited+1 added−1 removed4 unchanged
2023 filing
2024 filing
Biggest changeAn investment of $100 (with reinvestment of all dividends, when applicable) is assumed to have been made in LendingClub’s common stock and in each index at market close on December 31, 2018 and its relative performance is tracked through December 29, 2023. The returns shown are based on historical results and are not intended to suggest future performance.
Biggest changeAn investment of $100 (with reinvestment of all dividends, when applicable) is assumed to have been made in LendingClub’s common stock and in each index at market close on December 31, 2019 and its relative performance is tracked through December 31, 2024. The returns shown are based on historical results and are not intended to suggest future performance.
Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 21. Regulatory Requirements ” for a summary of certain rules and regulations that limit the ability of the Company or LC Bank to pay dividends. Sales of Unregistered Securities None.
Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 20. Regulatory Requirements ” for a summary of certain rules and regulations that limit the ability of the Company or LC Bank to pay dividends. Sales of Unregistered Securities None.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock LendingClub’s common stock is listed on the New York Stock Exchange (NYSE) under the ticker symbol “LC.” Holders of Record As of January 31, 2024, there were 34 holders of record of LendingClub’s common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock LendingClub’s common stock is listed on the New York Stock Exchange (NYSE) under the ticker symbol “LC.” Holders of Record As of January 31, 2025, there were 33 holders of record of LendingClub’s common stock.
Removed
December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 30, 2022 December 29, 2023 LendingClub Corporation $ 100 $ 95.97 $ 80.30 $ 183.88 $ 66.92 $ 66.46 KBW Nasdaq Bank Index $ 100 $ 132.14 $ 114.13 $ 154.12 $ 117.55 $ 111.92 Standard & Poor’s 500 Index $ 100 $ 128.88 $ 149.83 $ 190.13 $ 153.16 $ 190.27
Added
December 31, 2019 December 31, 2020 December 31, 2021 December 30, 2022 December 29, 2023 December 31, 2024 LendingClub Corporation $ 100 $ 83.68 $ 191.60 $ 69.73 $ 69.26 $ 128.29 KBW Nasdaq Bank Index $ 100 $ 86.37 $ 116.64 $ 88.96 $ 84.70 $ 112.45 Standard & Poor’s 500 Index $ 100 $ 116.26 $ 147.52 $ 118.84 $ 147.64 $ 182.05 51 LENDINGCLUB CORPORATION
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
85 edited+34 added−29 removed32 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
85 edited+34 added−29 removed32 unchanged
2023 filing
2024 filing
Biggest changeThe following tables provide a reconciliation of Pre-Provision Net Revenue to the nearest GAAP measure: For the year ended December 31, 2023 2022 2021 GAAP Net income $ 38,939 $ 289,685 $ 18,580 Less: Provision for credit losses (243,565) (267,326) (138,800) Less: Income tax benefit (expense) (15,678) 136,648 136 Pre-provision net revenue $ 298,182 $ 420,363 $ 157,244 For the year ended December 31, 2023 2022 2021 Non-interest income $ 302,781 $ 712,391 $ 605,799 Net interest income 561,838 474,825 212,831 Total net revenue 864,619 1,187,216 818,630 Non-interest expense (566,437) (766,853) (661,386) Pre-provision net revenue 298,182 420,363 157,244 Provision for credit losses (243,565) (267,326) (138,800) Income before income tax benefit (expense) 54,617 153,037 18,444 Income tax benefit (expense) (15,678) 136,648 136 GAAP Net income $ 38,939 $ 289,685 $ 18,580 68 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) The following table provides a reconciliation of Net Income Excluding Income Tax Benefit and Diluted EPS Excluding Income Tax Benefit to the nearest GAAP measures: As of and For The Year Ended December 31, 2023 2022 2021 GAAP Net income $ 38,939 $ 289,685 $ 18,580 Income tax benefit from release of tax valuation allowance — 143,495 — Net income excluding income tax benefit $ 38,939 $ 146,190 $ 18,580 GAAP Diluted EPS – common stockholders $ 0.36 $ 2.79 $ 0.18 (A) Income tax benefit from release of tax valuation allowance N/A $ 143,495 N/A (B) Weighted-average common shares – Diluted N/A 104,001,288 N/A (A/B) Diluted EPS impact of income tax benefit N/A $ 1.38 N/A Diluted EPS excluding income tax benefit $ 0.36 $ 1.41 $ 0.18 N/A – Not applicable The following table provides a reconciliation of TBV Per Common Share to the nearest GAAP measure: As of December 31, 2023 2022 2021 GAAP common equity $ 1,251,822 $ 1,164,294 $ 850,242 Less: Goodwill (75,717) (75,717) (75,717) Less: Intangible assets (12,135) (16,334) (21,181) Tangible common equity $ 1,163,970 $ 1,072,243 $ 753,344 Book value per common share GAAP common equity $ 1,251,822 $ 1,164,294 $ 850,242 Common shares issued and outstanding 110,410,602 106,546,995 101,043,924 Book value per common share $ 11.34 $ 10.93 $ 8.41 Tangible book value per common share Tangible common equity $ 1,163,970 $ 1,072,243 $ 753,344 Common shares issued and outstanding 110,410,602 106,546,995 101,043,924 Tangible book value per common share $ 10.54 $ 10.06 $ 7.46 Supervision and Regulatory Environment We are subject to periodic exams, investigations, inquiries or requests, enforcement actions and other proceedings from federal and state regulatory and/or law enforcement agencies, including the federal banking regulators that directly regulate the Company and/or LC Bank.
Biggest changeThe following tables provide a reconciliation of PPNR to the nearest GAAP measure: For the year ended December 31, 2024 2023 2022 GAAP Net income $ 51,330 $ 38,939 $ 289,685 Less: Provision for credit losses (178,267) (243,565) (267,326) Less: Income tax (expense) benefit (13,736) (15,678) 136,648 Pre-provision net revenue $ 243,333 $ 298,182 $ 420,363 69 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) For the year ended December 31, 2024 2023 2022 Non-interest income $ 252,970 $ 302,781 $ 712,391 Net interest income 534,041 561,838 474,825 Total net revenue 787,011 864,619 1,187,216 Non-interest expense (543,678) (566,437) (766,853) Pre-provision net revenue 243,333 298,182 420,363 Provision for credit losses (178,267) (243,565) (267,326) Income before income tax (expense) benefit 65,066 54,617 153,037 Income tax (expense) benefit (13,736) (15,678) 136,648 GAAP Net income $ 51,330 $ 38,939 $ 289,685 The following table provides a reconciliation of TBV Per Common Share to the nearest GAAP measure: As of December 31, 2024 2023 2022 GAAP common equity $ 1,341,731 $ 1,251,822 $ 1,164,294 Less: Goodwill (75,717) (75,717) (75,717) Less: Customer relationship intangible assets (8,586) (12,135) (16,334) Tangible common equity $ 1,257,428 $ 1,163,970 $ 1,072,243 Book value per common share GAAP common equity $ 1,341,731 $ 1,251,822 $ 1,164,294 Common shares issued and outstanding 113,383,917 110,410,602 106,546,995 Book value per common share $ 11.83 $ 11.34 $ 10.93 Tangible book value per common share Tangible common equity $ 1,257,428 $ 1,163,970 $ 1,072,243 Common shares issued and outstanding 113,383,917 110,410,602 106,546,995 Tangible book value per common share $ 11.09 $ 10.54 $ 10.06 The following table provides a reconciliation of ROTCE to the nearest GAAP measure: As of and For The Year Ended December 31, 2024 2023 2022 Average GAAP common equity $ 1,291,938 $ 1,204,050 $ 1,019,280 Less: Average goodwill (75,717) (75,717) (75,717) Less: Average customer relationship intangible assets (10,324) (14,198) (18,721) Average tangible common equity $ 1,205,897 $ 1,114,135 $ 924,842 Return on average equity GAAP net income $ 51,330 $ 38,939 $ 289,685 Average GAAP common equity 1,291,938 1,204,050 1,019,280 Return on average equity 4.0 % 3.2 % 28.4 % Return on tangible common equity GAAP net income $ 51,330 $ 38,939 $ 289,685 Average tangible common equity 1,205,897 1,114,135 924,842 Return on tangible common equity 4.3 % 3.5 % 31.3 % 70 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) The following table provides a reconciliation of Net Income Excluding Income Tax Benefit and Diluted EPS Excluding Income Tax Benefit to the nearest GAAP measures: As of and For The Year Ended December 31, 2024 2023 2022 GAAP Net income $ 51,330 $ 38,939 $ 289,685 Income tax benefit from release of tax valuation allowance — — 143,495 Net income excluding income tax benefit $ 51,330 $ 38,939 $ 146,190 GAAP Diluted EPS – common stockholders $ 0.45 $ 0.36 $ 2.79 (A) Income tax benefit from release of tax valuation allowance N/A N/A $ 143,495 (B) Weighted-average common shares – Diluted N/A N/A 104,001,288 (A/B) Diluted EPS impact of income tax benefit N/A N/A $ 1.38 Diluted EPS excluding income tax benefit $ 0.45 $ 0.36 $ 1.41 N/A – Not applicable Supervision and Regulatory Environment We are subject to periodic exams, investigations, inquiries or requests, enforcement actions and other proceedings from federal and state regulatory and/or law enforcement agencies, including the federal banking regulators that directly regulate the Company and/or LC Bank.
Loans and Leases Held for Investment at Amortized Cost, Net of Allowance For Loan and Lease Losses .” 64 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) Non-interest Expense Non-interest expense primarily consists of (i) compensation and benefits , which include salaries and wages, benefits and stock-based compensation expense, (ii) marketing, which includes costs attributable to borrower and deposit customer acquisition efforts and building general brand awareness, (iii) equipment and software, (iv) depreciation and amortization, (v) professional services, which primarily consist of consulting fees and (vi) occupancy, which includes rent expense and all other costs related to occupying our office spaces.
Loans and Leases Held for Investment at Amortized Cost, Net of Allowance for Loan and Lease Losses .” 65 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) Non-interest Expense Non-interest expense primarily consists of (i) compensation and benefits , which include salaries and wages, benefits and stock-based compensation expense, (ii) marketing, which includes costs attributable to borrower and deposit customer acquisition efforts and building general brand awareness, (iii) equipment and software, (iv) depreciation and amortization, (v) professional services, which primarily consist of consulting fees and (vi) occupancy, which includes rent expense and all other costs related to occupying our office spaces.
In response to the COVID-19 pandemic, the FRB, OCC, and FDIC adopted a final rule related to the regulatory capital treatment of the allowance for credit losses under CECL. As permitted by the rule, the Company elected to delay the estimated impact of CECL on regulatory capital resulting in a capital benefit of $35 million at December 31, 2021.
In response to the COVID-19 pandemic, the FRB, OCC, and FDIC adopted a final rule related to the regulatory capital treatment of the allowance for credit losses under CECL. As permitted by the rule, the Company elected to delay the estimated impact of CECL on regulatory capital resulting in a CET1 capital benefit of $35 million at December 31, 2021.
We believe PPNR, Net Income Excluding Income Tax Benefit and Diluted EPS Excluding Income Tax Benefit are important measures because they reflect the underlying financial performance of our business operations. PPNR is a non-GAAP financial measure calculated by subtracting the provision for credit losses and income tax benefit/expense from net income.
We believe PPNR, Net Income Excluding Income Tax Benefit and Diluted EPS Excluding Income Tax Benefit are important measures because they reflect the financial performance of our business operations. PPNR is a non-GAAP financial measure calculated by subtracting the provision for credit losses and income tax benefit/expense from net income.
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.
Additionally, a capital conservation buffer 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.
Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 5. Securities Available for Sale. ” LendingClub Holding Company At the holding company level, we continue to measure interest rate sensitivity by evaluating the change in fair value of certain assets and liabilities due to a hypothetical change in interest rates.
Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 4. Securities Available for Sale. ” LendingClub Holding Company At the holding company level, we continue to measure interest rate sensitivity by evaluating the change in fair value of certain assets and liabilities due to a hypothetical change in interest rates.
This benefit is phased out over a three-year transition period that commenced on January 1, 2022 at a rate of 25% each year through January 1, 2025. Liquidity We manage liquidity to meet our cash flow and collateral obligations in a timely manner at a reasonable cost.
This benefit was phased out over a three-year transition period that commenced on January 1, 2022 at a rate of 25% each year through January 1, 2025. Liquidity We manage liquidity to meet our cash flow and collateral obligations in a timely manner at a reasonable cost.
Principal payments on our loans HFI continue to reduce the outstanding balance of this portfolio, and, as a result, the fair value impact from changes in interest rates continues to diminish. Contingencies For a comprehensive discussion of contingencies as of December 31, 2023, see “ Item 8.
Principal payments on our loans HFI continue to reduce the outstanding balance of this portfolio, and, as a result, the fair value impact from changes in interest rates continues to diminish. Contingencies For a comprehensive discussion of contingencies as of December 31, 2024, see “ Item 8.
Management may make adjustments as the assumptions in the underlying analyses change to reflect an estimate of expected lifetime loan losses and prepayments at the reporting date, based on the best information available at that time. 75 LENDINGCLUB CORPORATION Item 7A.
Management may make adjustments as the assumptions in the underlying analyses change to reflect an estimate of expected lifetime loan losses and prepayments at the reporting date, based on the best information available at that time. 77 LENDINGCLUB CORPORATION Item 7A.
Under the DCF approach, the provision for credit losses in subsequent periods includes a credit loss expense relating to the discounting effect due to the passage of time after the initial recognition of ALLL on originated HFI loans at amortized cost.
Under the DCF approach, the provision for credit losses in subsequent periods includes a credit loss expense related to the discounting effect due to the passage of time after the initial recognition of ALLL on originated HFI loans at amortized cost.
Since the Acquisition, we are subject to supervision, regulation, examination and enforcement by multiple federal banking regulatory bodies. Specifically, as a bank holding company, the Company is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the Board of Governors of the Federal Reserve System (FRB).
We are subject to supervision, regulation, examination and enforcement by multiple federal banking regulatory bodies. Specifically, as a bank holding company, the Company is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the Board of Governors of the Federal Reserve System (FRB).
Loans accounted for under the fair value option do not have an ALLL. Changes in the credit risk profile of our loans and leases result in changes in “Provision for credit losses,” on the Income Statement with a resulting change, net of charge-offs and recoveries, in the ACL balance. The majority of our ALLL relates to unsecured personal loans.
Loans accounted for under the fair value option do not have an ALLL. Changes in the credit risk profile of our loans and leases result in changes in “Provision for credit losses” on the Income Statement with a resulting change, net of charge-offs and recoveries, in the ACL balance. The majority of our ALLL relates to unsecured personal loans.
Servicing fee revenue related to loans sold also includes the change in fair value of servicing assets associated with the loans. 58 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) The table below illustrates AUM serviced on our platform by the method in which the loans were financed as of the periods presented.
Servicing fee revenue related to loans sold also includes the change in fair value of servicing assets associated with the loans. 58 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) The tables below illustrate AUM serviced on our platform by the method in which the loans were financed as of the periods presented.
Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 20. Commitments and Contingencies. ” Critical Accounting Estimates Our significant accounting policies are described in “ Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 1.
Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 19. Commitments and Contingencies. ” Critical Accounting Estimates Our significant accounting policies are described in “ Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 1.
The following table presents the change in projected net interest income for the next twelve months due to a hypothetical instantaneous parallel change in interest rates relative to current rates: December 31, 2023 December 31, 2022 Instantaneous Change in Interest Rates: + 200 basis points (4.8) % (6.9) % + 100 basis points (2.2) % (3.3) % - 100 basis points 0.0 % 1.9 % - 200 basis points (0.4) % 3.5 % As illustrated in the table above, net interest income is projected to decrease over the next twelve months during hypothetical rising interest rate environments primarily as a result of higher rates paid on interest-bearing deposits, partially offset by higher rates earned on new loans, investment purchases, and cash and cash equivalents as well as by the impact of our hedging activity.
The following table presents the change in projected net interest income for the next twelve months due to a hypothetical instantaneous parallel change in interest rates relative to current rates: December 31, 2024 December 31, 2023 Instantaneous Change in Interest Rates: + 200 basis points (7.1) % (4.8) % + 100 basis points (3.5) % (2.2) % - 100 basis points 1.1 % — % - 200 basis points 1.6 % (0.4) % As illustrated in the table above, net interest income is projected to decrease over the next twelve months during hypothetical rising interest rate environments primarily as a result of higher rates paid on interest-bearing deposits, partially offset by higher rates earned on new loans, security purchases, and cash and cash equivalents as well as by the impact of our hedging activity.
See “ Item 8. Financial Statements and Supplementary Data – Consolidated Statements of Cash Flows ” for additional detail regarding our cash flows. Market Risk Market risk represents the risk of potential losses arising from changes in interest rates, foreign exchange rates, equity prices, commodity prices, and/or other relevant market rates or prices.
Financial Statements and Supplementary Data – Consolidated Statements of Cash Flows ” for additional detail regarding our cash flows. Market Risk Market risk represents the risk of potential losses arising from changes in interest rates, foreign exchange rates, equity prices, commodity prices, and/or other relevant market rates or prices.
The effective interest rate is calculated based on the periodic interest income received from the loan’s contractual cash flows, which includes deferred origination fees and costs, to provide a constant rate of return over the contractual loan term.
The effective interest rate is calculated based on the periodic interest income received from the loan’s contractual cash flows and the net investment in the loan, which includes deferred origination fees and costs, to provide a constant rate of return over the contractual loan term.
With the election of the fair value option, origination fees, net fair value adjustments prior to sale of the loans, and servicing asset gains on the sales of the loans, are reported as separate components of “Marketplace revenue.” Origination Fees Origination fees recorded as a component of marketplace revenue are primarily fees earned related to originating and issuing unsecured personal loans that are held for sale.
With the election of the fair value option, origination fees, net fair value adjustments prior to sale of the loans, and servicing asset gains on the sales of the loans, are reported as separate components within “Marketplace revenue.” Origination Fees Origination fees recorded as a component of marketplace revenue are primarily fees earned related to originating and issuing unsecured personal loans that are HFS.
These factors resulted in the release of the majority of our valuation allowance against our deferred tax assets in 2022. As of December 31, 2023, we maintained a valuation allowance of $46.1 million related to certain state net operating loss carryforwards (NOLs) and state tax credit carryforwards.
These factors resulted in the release of the majority of our valuation allowance against our deferred tax assets in 2022. As of December 31, 2024, we maintained a valuation allowance of $46.3 million related to certain state net operating loss carryforwards (NOLs) and state tax credit carryforwards.
GAAP and certain adjustments made in accordance with regulatory capital guidelines, including the addition of the CECL transitional benefit and deductions for goodwill and other intangible assets. The higher risk-based capital ratios for the Company reflect generally lower risk-weights for assets held by LendingClub Corporation as compared with LC Bank.
GAAP and certain adjustments made in accordance with regulatory capital guidelines, including the addition of the CECL transitional benefit and deductions for goodwill and other intangible assets. The higher risk-based capital ratios for the Company reflect higher capital at LendingClub Corporation as compared with LC Bank.
LendingClub Holding Company Liquidity The primary source of liquidity at the holding company is $110.3 million and $56.5 million in cash and cash equivalents as of December 31, 2023 and 2022, respectively. Additionally, the holding company has the ability to access the capital markets through additional registrations and public equity offerings.
LendingClub Holding Company Liquidity The primary source of liquidity at the holding company is $66.0 million and $110.3 million in cash and cash equivalents as of December 31, 2024 and 2023, respectively. Additionally, the holding company has the ability to access the capital markets through additional registrations and public equity offerings.
Differences between separate entity and consolidated tax returns are eliminated upon consolidation. Segment Information The Company defines operating segments to be components of the Company for which discrete financial information is evaluated regularly by the Company’s Chief Executive Officer and Chief Financial Officer to allocate resources and evaluate financial performance.
Differences between separate entity and consolidated tax returns are eliminated upon consolidation. Segment Information Reportable Segments The Company defines operating segments to be components of the Company for which discrete financial information is evaluated regularly by the Chief Operating Decision Maker (CODM) to allocate resources and evaluate financial performance.
The decrease was primarily due to a decrease in consulting fees. 65 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) Occupancy expense decreased $4.4 million, or 20%, for the year ended December 31, 2023 compared to the same period in 2022.
The decrease was primarily due to a decrease in consulting fees. 66 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) Occupancy expense decreased $1.7 million, or 10%, for the year ended December 31, 2024 compared to the same period in 2023.
We believe TBV Per Common Share is an important measure used to evaluate the Company’s use of equity. TBV Per Common Share is a non-GAAP financial measure representing the book value of common equity reduced by goodwill and intangible assets, divided by ending number of common shares issued and outstanding.
We believe TBV Per Common Share is an important measure used to evaluate the Company’s use of equity. TBV Per Common Share is a non-GAAP financial measure representing tangible common equity for the period (common equity reduced by goodwill and customer relationship intangible assets), divided by the ending number of common shares issued and outstanding.
Further, as a national bank, LC Bank is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the OCC.
Further, as a national bank, LC Bank is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the Office of the Comptroller of the Currency (OCC).
These judgments, estimates and assumptions are inherently subjective and actual results may materially differ from these estimates and assumptions. 74 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) Allowance for Loan and Lease Losses Under the CECL model, we reserve for expected credit losses on our loan and lease portfolio when loans are initially recorded as HFI at amortized cost through the ALLL by using a DCF approach to calculate the NPV of expected cash flows.
Allowance for Loan and Lease Losses Under the CECL model, we reserve for expected credit losses on our loan and lease portfolio when loans are initially recorded as HFI at amortized cost through the ALLL by using a DCF approach to calculate the NPV of 76 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) expected cash flows.
Summary of Significant Accounting Policies. ” We consider certain of these policies to be critical accounting policies as they require significant management judgments, assumptions and estimates which we believe are critical in understanding and evaluating our reported financial results.
Summary of Significant Accounting Policies. ” We consider certain of these policies to be critical accounting policies as they require significant management judgments, assumptions and estimates which we believe are critical in understanding and evaluating our reported financial results. These judgments, estimates and assumptions are inherently subjective and actual results may materially differ from these estimates and assumptions.
Capital Management The prudent management of capital is fundamental to the successful achievement of our business initiatives. We actively review capital through a process that continuously assesses and monitors the Company’s overall capital adequacy. Our objective is to maintain capital at an amount commensurate with our risk profile and risk tolerance objectives, and to meet both regulatory and market expectations.
We actively review capital through a process that continuously assesses and monitors the Company’s overall capital adequacy. Our objective is to maintain capital at an amount commensurate with our risk profile and risk tolerance objectives, and to meet both regulatory and market expectations.
In addition to these guidelines, the banking regulators may require a banking organization to maintain capital at levels higher than the minimum ratios prescribed under the Basel III capital framework.
In addition to these guidelines, the banking regulators may require a banking organization to maintain capital at levels higher than the minimum ratios prescribed under the Basel III capital framework. See “ Part I – Item 1.
Net Fair Value Adjustments We record fair value adjustments on loans that are recorded at fair value, including gains or losses from sale prices in excess of or less than the loan principal amount sold.
Net Fair Value Adjustments We record fair value adjustments on loans that are recorded at fair value, which include gains or losses from sale prices in excess of or less than the loan principal amount sold and realized net charge-offs.
The following presents our select financial metrics for the periods presented: 54 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) As Of and For The Year Ended December 31, 2023 2022 2021 Non-interest income $ 302,781 $ 712,391 $ 605,799 Net interest income 561,838 474,825 212,831 Total net revenue 864,619 1,187,216 818,630 Non-interest expense 566,437 766,853 661,386 Pre-provision net revenue (1) 298,182 420,363 157,244 Provision for credit losses 243,565 267,326 138,800 Income before income tax benefit (expense) 54,617 153,037 18,444 Income tax benefit (expense) (15,678) 136,648 136 Net income $ 38,939 $ 289,685 $ 18,580 Income tax benefit from release of tax valuation allowance — 143,495 — Net income excluding income tax benefit (1)(2) $ 38,939 $ 146,190 $ 18,580 Basic EPS – common stockholders $ 0.36 $ 2.80 $ 0.19 Diluted EPS – common stockholders $ 0.36 $ 2.79 $ 0.18 Diluted EPS excluding income tax benefit (1)(2) $ 0.36 $ 1.41 $ 0.18 LendingClub Corporation Performance Metrics: Net interest margin 7.0 % 8.2 % 5.6 % Efficiency ratio (3) 65.5 % 64.6 % 80.8 % Return on average equity (ROE) 3.2 % 28.4 % 2.4 % Return on average total assets (ROA) 0.5 % 4.7 % 0.4 % Marketing as a % of loan originations 1.3 % 1.5 % 1.5 % LendingClub Corporation Capital Metrics: Common equity tier 1 capital ratio 17.9 % 15.8 % 21.3 % Tier 1 leverage ratio 12.9 % 14.1 % 16.5 % Book value per common share $ 11.34 $ 10.93 $ 8.41 Tangible book value per common share (1) $ 10.54 $ 10.06 $ 7.46 Loan Originations (in millions) (4) : Marketplace loans $ 5,253 $ 9,389 $ 8,099 Loan originations held for investment 2,184 3,731 2,282 Total loan originations $ 7,437 $ 13,121 $ 10,381 Loan originations held for investment as a % of total loan originations 29 % 28 % 22 % Servicing Portfolio AUM (in millions) (5) : Total servicing portfolio $ 14,122 $ 16,157 $ 12,463 Loans serviced for others $ 9,336 $ 10,819 $ 10,124 (1) Represents a non-GAAP financial measure.
The following presents our select financial metrics for the periods presented: 54 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) As Of and For The Year Ended December 31, 2024 2023 2022 Non-interest income $ 252,970 $ 302,781 $ 712,391 Net interest income 534,041 561,838 474,825 Total net revenue 787,011 864,619 1,187,216 Non-interest expense 543,678 566,437 766,853 Pre-provision net revenue (1) 243,333 298,182 420,363 Provision for credit losses 178,267 243,565 267,326 Income before income tax (expense) benefit 65,066 54,617 153,037 Income tax (expense) benefit (13,736) (15,678) 136,648 Net income $ 51,330 $ 38,939 $ 289,685 Income tax benefit from release of tax valuation allowance — — 143,495 Net income excluding income tax benefit (1)(2) $ 51,330 $ 38,939 $ 146,190 Basic EPS – common stockholders $ 0.46 $ 0.36 $ 2.80 Diluted EPS – common stockholders $ 0.45 $ 0.36 $ 2.79 Diluted EPS excluding income tax benefit (1)(2) $ 0.45 $ 0.36 $ 1.41 LendingClub Corporation Performance Metrics: Net interest margin 5.6 % 7.0 % 8.2 % Efficiency ratio (3) 69.1 % 65.5 % 64.6 % Return on average equity (ROE) 4.0 % 3.2 % 28.4 % Return on tangible common equity (ROTCE) (1) 4.3 % 3.5 % 31.3 % Return on average total assets (ROA) 0.5 % 0.5 % 4.7 % Marketing as a % of loan originations 1.4 % 1.3 % 1.5 % LendingClub Corporation Capital Metrics: Common equity tier 1 capital ratio 17.3 % 17.9 % 15.8 % Tier 1 leverage ratio 11.0 % 12.9 % 14.1 % Book value per common share $ 11.83 $ 11.34 $ 10.93 Tangible book value per common share (1) $ 11.09 $ 10.54 $ 10.06 Loan Originations (in millions) (4) : Marketplace loans $ 5,482 $ 5,253 $ 9,389 Loan originations held for investment 1,735 2,184 3,731 Total loan originations $ 7,218 $ 7,437 $ 13,121 Loan originations held for investment as a % of total loan originations 24 % 29 % 28 % Servicing Portfolio AUM (in millions) (5) : Total servicing portfolio $ 12,371 $ 14,122 $ 16,157 Loans serviced for others $ 7,207 $ 9,336 $ 10,819 (1) Represents a non-GAAP financial measure.
Although historically the Company has generally resolved these matters in a manner that was not materially adverse to its financial results or business operations, no assurance can be given as to the timing, outcome or consequences of any of these matters in the future.
Further, we are subject to claims, individual and class action lawsuits, and lawsuits alleging regulatory violations. Although historically the Company has generally resolved these matters in a manner that was not materially adverse to its financial results or business operations, no assurance can be given as to the timing, outcome or consequences of any of these matters in the future.
The following table presents loan origination volume during each of the periods set forth below: Year Ended December 31, 2023 2022 2021 2023 vs. 2022 Change (%) 2022 vs. 2021 Change (%) Marketplace loans $ 5,252,668 $ 9,389,445 $ 8,099,109 (44) % 16 % Loan originations held for investment 2,184,095 3,731,057 2,282,206 (41) % 63 % Total loan originations (1) $ 7,436,763 $ 13,120,502 $ 10,381,315 (43) % 26 % (1) Includes unsecured personal loans and auto loans only.
The following table presents loan origination volume during each of the periods set forth below: Year Ended December 31, 2024 2023 2022 2024 vs. 2023 Change (%) 2023 vs. 2022 Change (%) Marketplace loans $ 5,482,339 $ 5,252,668 $ 9,389,445 4 % (44) % Loan originations held for investment 1,735,409 2,184,095 3,731,057 (21) % (41) % Total loan originations (1) $ 7,217,748 $ 7,436,763 $ 13,120,502 (3) % (43) % (1) Includes unsecured personal loans and auto loans only.
The decrease was primarily due to a decrease in headcount as a result of the workforce reduction plans we implemented in January and October of 2023. Marketing expense decreased $103.9 million, or 53%, for the year ended December 31, 2023 compared to the same period in 2022.
The decrease was primarily due to a decrease in headcount as a result of the workforce reduction plans we implemented in 2023. Marketing expense increased $6.6 million, or 7%, for the year ended December 31, 2024 compared to the same period in 2023.
This activity includes, but is not limited to, servicing fee revenue for loans serviced prior to the Acquisition, and interest income and interest expense related to the Retail Program and Structured Program transactions entered into prior to the Acquisition.
This activity includes, but is not limited to, servicing fee revenue on purchased servicing assets, and interest income and interest expense related to the Retail Program and Structured Program transactions entered into prior to LC Bank’s formation.
The decrease was primarily due to a decrease in variable marketing expenses based on lower origination volume. Equipment and software expense increased $4.3 million, or 9%, for the year ended December 31, 2023 compared to the same period in 2022.
The increase was primarily due to an increase in variable marketing expenses based on higher origination volume of marketplace loans. Equipment and software expense decreased $2.3 million, or 4%, for the year ended December 31, 2024 compared to the same period in 2023. The decrease was primarily due to a decrease in software license expense.
The table below illustrates the composition of the provision for credit losses for each period presented, as well as the loan originations held for investment in each period, which is a key driver for credit loss expense: Year Ended December 31, 2023 2022 2021 Credit loss expense for Radius loans at acquisition $ — $ — $ 6,929 Credit loss expense for loans and leases held for investment 243,570 266,679 134,022 Credit loss expense for unfunded lending commitments (5) 647 1,231 Total credit loss expense 243,565 267,326 142,182 Reversal of impairment on securities available for sale — — (3,382) Total provision for credit losses $ 243,565 $ 267,326 $ 138,800 Loan originations held for investment $ 2,184,095 $ 3,731,057 $ 2,282,206 The provision for credit losses was $243.6 million and $267.3 million for the year ended December 31, 2023 and 2022, respectively, a decrease of 9%.
The table below illustrates the composition of the provision for credit losses for each period presented, as well as the loan originations held for investment in each period, which is a key driver for credit loss expense: Year Ended December 31, 2024 2023 2022 Credit loss expense for loans and leases held for investment $ 175,430 $ 243,570 $ 266,679 Credit loss expense for securities available for sale 3,527 — — Credit loss expense (benefit) for unfunded lending commitments (690) (5) 647 Total provision for credit losses $ 178,267 $ 243,565 $ 267,326 Loan originations held for investment $ 1,735,409 $ 2,184,095 $ 3,731,057 The provision for credit losses was $178.3 million and $243.6 million for the years ended December 31, 2024 and 2023, respectively, a decrease of 27%.
Our assumptions are periodically calibrated to observed data and/or expected outcomes. We actively monitor the level of exposure to movements in interest rates and have entered into interest rate swaps, which qualify for hedge accounting treatment, to manage such risk. See “ Item 8. Financial Statements and Supplementary Data – Note 9.
We actively monitor the level of exposure to movements in interest rates and have entered into interest rate hedging instruments, some of which qualify for hedge accounting treatment, to manage such risk. See “ Item 8. Financial Statements and Supplementary Data – Note 8. Derivative Instruments and Hedging Activities ” for additional information.
The above summary should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations in its entirety. For additional discussion related to our operating segments, see “ Segment Information .” Financial Highlights We regularly review several metrics to evaluate our business, measure our performance, identify trends, formulate financial projections and make strategic decisions.
For additional discussion related to our operating segments, see “ Segment Information .” Financial Highlights We regularly review several metrics to evaluate our business, measure our performance, identify trends, formulate financial projections and make strategic decisions.
This information is reviewed according to the legal organizational structure of the Company’s operations with products and services presented separately for the parent bank holding company and its wholly-owned subsidiary, LC Bank. LendingClub Bank The LC Bank operating segment represents the national bank legal entity and reflects post-Acquisition operating activities.
This information is reviewed according to the legal organizational structure of the Company’s operations with products and services presented separately for the parent bank holding company and its wholly-owned subsidiary, LC Bank, which are both considered reportable segments.
The decrease was primarily due to a decrease in rent expense. Other non-interest expense decreased $6.9 million, or 11%, for the year ended December 31, 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in consumer credit services.
The decrease was primarily due to a decrease in rent expense. Other non-interest expense decreased $4.0 million, or 7%, for the year ended December 31, 2024 compared to the same period in 2023. The decrease was primarily due to a decrease in miscellaneous operating expenses.
Management’s Discussion and Analysis of Financial Condition and Results of Operations ” in the Annual Report on Form 10-K for the year ended December 31, 2022. 56 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) The following table sets forth the Income Statement data for each of the periods presented: Year Ended December 31, 2023 2022 2021 Non-interest income: Marketplace revenue $ 291,484 $ 683,626 $ 578,580 Other non-interest income 11,297 28,765 27,219 Total non-interest income 302,781 712,391 605,799 Interest income: Interest on loans held for sale 35,655 26,183 29,540 Interest and fees on loans and leases held for investment 616,735 465,450 188,977 Interest on loans held for investment at fair value 69,866 12,877 4,436 Interest on retail and certificate loans held for investment at fair value 4,222 18,135 57,684 Interest on securities available for sale 40,235 16,116 11,025 Other interest income 65,917 18,579 1,170 Total interest income 832,630 557,340 292,832 Interest expense: Interest on deposits 265,556 60,451 7,228 Interest on retail notes and certificates 4,222 18,135 57,684 Other interest expense 1,014 3,929 15,089 Total interest expense 270,792 82,515 80,001 Net interest income 561,838 474,825 212,831 Total net revenue 864,619 1,187,216 818,630 Provision for credit losses 243,565 267,326 138,800 Non-interest expense: Compensation and benefits 261,948 339,397 288,390 Marketing 93,840 197,747 156,142 Equipment and software 53,485 49,198 39,490 Depreciation and amortization 47,195 43,831 44,285 Professional services 35,173 50,516 47,572 Occupancy 17,532 21,977 24,249 Other non-interest expense 57,264 64,187 61,258 Total non-interest expense 566,437 766,853 661,386 Income before income tax benefit (expense) 54,617 153,037 18,444 Income tax benefit (expense) (15,678) 136,648 136 Net income $ 38,939 $ 289,685 $ 18,580 57 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) Marketplace Revenue Marketplace revenue consists of the following: Year Ended December 31, 2023 2022 Change ($) Change (%) Origination fees $ 279,146 $ 499,179 $ (220,033) (44) % Servicing fees 98,613 80,609 18,004 22 % Gain on sales of loans 47,839 95,335 (47,496) (50) % Net fair value adjustments (134,114) 8,503 (142,617) N/M Total marketplace revenue $ 291,484 $ 683,626 $ (392,142) (57) % Year Ended December 31, 2022 2021 Change ($) Change (%) Origination fees $ 499,179 $ 416,839 $ 82,340 20 % Servicing fees 80,609 87,639 (7,030) (8) % Gain on sales of loans 95,335 70,116 25,219 36 % Net fair value adjustments 8,503 3,986 4,517 113 % Total marketplace revenue $ 683,626 $ 578,580 $ 105,046 18 % We elected to account for HFS loans under the fair value option.
Management’s Discussion and Analysis of Financial Condition and Results of Operations ” in the Annual Report on Form 10-K for the year ended December 31, 2023. 56 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) The following table sets forth the Income Statement data for each of the periods presented: Year Ended December 31, 2024 2023 2022 2024 vs. 2023 Change (%) 2023 vs. 2022 Change (%) Non-interest income: Marketplace revenue $ 242,791 $ 291,484 $ 683,626 (17) % (57) % Other non-interest income 10,179 11,297 28,765 (10) % (61) % Total non-interest income 252,970 302,781 712,391 (16) % (57) % Interest income: Interest on loans held for sale 92,442 35,655 26,183 159 % 36 % Interest and fees on loans and leases held for investment 494,214 616,735 465,450 (20) % 33 % Interest on loans held for investment at fair value (1) 77,034 74,088 31,012 4 % 139 % Interest on securities available for sale 187,961 40,235 16,116 367 % 150 % Other interest income 56,307 65,917 18,579 (15) % 255 % Total interest income 907,958 832,630 557,340 9 % 49 % Interest expense: Interest on deposits 369,219 265,556 60,451 39 % 339 % Other interest expense (1) 4,698 5,236 22,064 (10) % (76) % Total interest expense 373,917 270,792 82,515 38 % 228 % Net interest income 534,041 561,838 474,825 (5) % 18 % Total net revenue 787,011 864,619 1,187,216 (9) % (27) % Provision for credit losses 178,267 243,565 267,326 (27) % (9) % Non-interest expense: Compensation and benefits 232,158 261,948 339,397 (11) % (23) % Marketing 100,402 93,840 197,747 7 % (53) % Equipment and software 51,194 53,485 49,198 (4) % 9 % Depreciation and amortization 58,834 47,195 43,831 25 % 8 % Professional services 32,045 35,173 50,516 (9) % (30) % Occupancy 15,798 17,532 21,977 (10) % (20) % Other non-interest expense 53,247 57,264 64,187 (7) % (11) % Total non-interest expense 543,678 566,437 766,853 (4) % (26) % Income before income tax (expense) benefit 65,066 54,617 153,037 19 % (64) % Income tax (expense) benefit (13,736) (15,678) 136,648 (12) % (111) % Net income $ 51,330 $ 38,939 $ 289,685 32 % (87) % (1) Prior period amounts have been reclassified to conform to the current period presentation. 57 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) Marketplace Revenue Marketplace revenue consists of the following: Year Ended December 31, 2024 2023 Change ($) Change (%) Origination fees $ 283,420 $ 279,146 $ 4,274 2 % Servicing fees 64,933 98,613 (33,680) (34) % Gain on sales of loans 49,097 47,839 1,258 3 % Net fair value adjustments (154,659) (134,114) (20,545) (15) % Total marketplace revenue $ 242,791 $ 291,484 $ (48,693) (17) % Year Ended December 31, 2023 2022 Change ($) Change (%) Origination fees $ 279,146 $ 499,179 $ (220,033) (44) % Servicing fees 98,613 80,609 18,004 22 % Gain on sales of loans 47,839 95,335 (47,496) (50) % Net fair value adjustments (134,114) 8,503 (142,617) N/M Total marketplace revenue $ 291,484 $ 683,626 $ (392,142) (57) % We elected to account for HFS loans under the fair value option.
Origination fees were $279.1 million and $499.2 million for the years ended December 31, 2023 and 2022, respectively, a decrease of 44%. The decrease was due to lower origination volume of marketplace loans.
Origination fees were $283.4 million and $279.1 million for the years ended December 31, 2024 and 2023, respectively, an increase of 2%. The increase was primarily due to the increase in the origination volume of marketplace loans.
Therefore, we use a sensitivity analysis to assess the impact of hypothetical changes in interest rates on our net interest income results. The outcome of the analysis is influenced by a variety of assumptions, including the maturity profile and prepayment level of our unsecured consumer loans and expected consumer responses to changes in rates paid on non-maturity deposit products.
The outcome of the analysis is influenced by a variety of assumptions, including the maturity profile and prepayment level of our unsecured consumer loans and expected consumer responses to changes in rates paid on non-maturity deposit products. Our assumptions are periodically calibrated to observed data and/or expected outcomes.
Although we believe that these measurements provide an estimate of our interest rate sensitivity, they do not account for potential changes in credit quality, balance sheet mix, size of our balance sheet, or other business 73 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) developments that could affect net income.
Although we believe that these measurements provide an estimate of our interest rate sensitivity, they do not account for potential changes in credit quality, balance sheet mix, size of our balance sheet, or other business developments that could affect net income.
Gain on sales of loans was $47.8 million and $95.3 million for the years ended December 31, 2023 and 2022, respectively, a decrease of 50%. The decrease was primarily due to a decrease in the volume of marketplace loans sold.
Gain on sales of loans was $49.1 million and $47.8 million for the years ended December 31, 2024 and 2023, respectively, an increase of 3%. The increase was primarily due to a decrease in the volume of loans sold with credit support agreements compared to the prior year.
Year Ended December 31, 2023 2022 Change ($) Change (%) Non-interest expense: Compensation and benefits $ 261,948 $ 339,397 $ (77,449) (23) % Marketing 93,840 197,747 (103,907) (53) % Equipment and software 53,485 49,198 4,287 9 % Depreciation and amortization 47,195 43,831 3,364 8 % Professional services 35,173 50,516 (15,343) (30) % Occupancy 17,532 21,977 (4,445) (20) % Other non-interest expense 57,264 64,187 (6,923) (11) % Total non-interest expense $ 566,437 $ 766,853 $ (200,416) (26) % Year Ended December 31, 2022 2021 Change ($) Change (%) Non-interest expense: Compensation and benefits $ 339,397 $ 288,390 $ 51,007 18 % Marketing 197,747 156,142 41,605 27 % Equipment and software 49,198 39,490 9,708 25 % Depreciation and amortization 43,831 44,285 (454) (1) % Professional services 50,516 47,572 2,944 6 % Occupancy 21,977 24,249 (2,272) (9) % Other non-interest expense 64,187 61,258 2,929 5 % Total non-interest expense $ 766,853 $ 661,386 $ 105,467 16 % Compensation and benefits expense decreased $77.4 million, or 23%, for the year ended December 31, 2023 compared to the same period in 2022.
Year Ended December 31, 2024 2023 Change ($) Change (%) Non-interest expense: Compensation and benefits $ 232,158 $ 261,948 $ (29,790) (11) % Marketing 100,402 93,840 6,562 7 % Equipment and software 51,194 53,485 (2,291) (4) % Depreciation and amortization 58,834 47,195 11,639 25 % Professional services 32,045 35,173 (3,128) (9) % Occupancy 15,798 17,532 (1,734) (10) % Other non-interest expense 53,247 57,264 (4,017) (7) % Total non-interest expense $ 543,678 $ 566,437 $ (22,759) (4) % Year Ended December 31, 2023 2022 Change ($) Change (%) Non-interest expense: Compensation and benefits $ 261,948 $ 339,397 $ (77,449) (23) % Marketing 93,840 197,747 (103,907) (53) % Equipment and software 53,485 49,198 4,287 9 % Depreciation and amortization 47,195 43,831 3,364 8 % Professional services 35,173 50,516 (15,343) (30) % Occupancy 17,532 21,977 (4,445) (20) % Other non-interest expense 57,264 64,187 (6,923) (11) % Total non-interest expense $ 566,437 $ 766,853 $ (200,416) (26) % Compensation and benefits expense decreased $29.8 million, or 11%, for the year ended December 31, 2024 compared to the same period in 2023.
Accordingly, we have been and continue to invest in 69 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) regulatory compliance and be subject to certain parameters, obligations and/or limitations set forth by the banking regulations and regulators with respect to the operation of our business.
Accordingly, we have been and continue to invest in regulatory compliance and be subject to certain parameters, obligations and/or limitations set forth by the banking regulations and regulators with respect to the operation of our business.
The effective tax rate differs from the statutory rate due to the impact of state taxes, the favorable impact of recurring items such as tax credits, the unfavorable impact of the non-deductible portions of executive compensation and stock-based compensation, and the change in unrecognized tax benefits.
The effective tax rate for the year ended December 31, 2024 differs from the statutory rate due to the favorable impact of recurring tax credits and the unfavorable impact of the non-deductible portions of executive compensation and stock-based compensation.
During hypothetical declining interest rate environments net interest income is projected to remain relatively flat. The decrease in sensitivity as of December 31, 2023 relative to the prior year is primarily due to the composition of our loans and deposits, and recent hedging activity.
Conversely, net interest income is projected to increase over the next twelve months during hypothetical declining interest rate environments. The increase in sensitivity as of December 31, 2024 relative to the prior year is primarily due to the growth of our Balance Sheet as well as the composition of our loans, deposits, and hedging instruments.
Business – Regulation and Supervision – Capital and Liquidity Requirements and Prompt Corrective Action ” of this Annual Report for additional information regarding regulatory capital requirements. 70 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) The following table summarizes the Company’s and LC Bank’s regulatory capital amounts (in millions) and ratios: December 31, 2023 December 31, 2022 Required Minimum plus Required CCB for Non-Leverage Ratios Amount Ratio Amount Ratio LendingClub Corporation: CET1 capital (1) $ 1,090.2 17.9 % $ 1,005.8 15.8 % 7.0 % Tier 1 capital $ 1,090.2 17.9 % $ 1,005.8 15.8 % 8.5 % Total capital $ 1,169.2 19.2 % $ 1,088.1 17.1 % 10.5 % Tier 1 leverage $ 1,090.2 12.9 % $ 1,005.8 14.1 % 4.0 % Risk-weighted assets $ 6,104.5 N/A $ 6,360.7 N/A N/A Quarterly adjusted average assets $ 8,476.1 N/A $ 7,119.0 N/A N/A LendingClub Bank: CET1 capital (1) $ 949.4 15.8 % $ 852.2 13.8 % 7.0 % Tier 1 capital $ 949.4 15.8 % $ 852.2 13.8 % 8.5 % Total capital $ 1,027.4 17.1 % $ 932.4 15.1 % 10.5 % Tier 1 leverage $ 949.4 11.4 % $ 852.2 12.5 % 4.0 % Risk-weighted assets $ 6,022.2 N/A $ 6,194.0 N/A N/A Quarterly adjusted average assets $ 8,337.4 N/A $ 6,795.2 N/A N/A N/A – Not applicable (1) Consists of common stockholders’ equity as defined under U.S.
The following table presents the actual capital amounts and ratios of the Company and LC Bank as well as the regulatory minimum and “well-capitalized” requirements (dollars in millions): December 31, 2024 December 31, 2023 Required Minimum (1) Well-Capitalized Minimum Amount Ratio Amount Ratio LendingClub Corporation: CET1 capital (2) $ 1,188.6 17.3 % $ 1,090.2 17.9 % 7.0 % N/A Tier 1 capital $ 1,188.6 17.3 % $ 1,090.2 17.9 % 8.5 % 6.0 % Total capital $ 1,276.5 18.5 % $ 1,169.2 19.2 % 10.5 % 10.0 % Tier 1 leverage $ 1,188.6 11.0 % $ 1,090.2 12.9 % 4.0 % N/A Risk-weighted assets $ 6,887.1 N/A $ 6,104.5 N/A N/A N/A Quarterly adjusted average assets $ 10,814.0 N/A $ 8,476.1 N/A N/A N/A LendingClub Bank: CET1 capital (2) $ 1,101.4 16.1 % $ 949.4 15.8 % 7.0 % 6.5 % Tier 1 capital $ 1,101.4 16.1 % $ 949.4 15.8 % 8.5 % 8.0 % Total capital $ 1,188.5 17.4 % $ 1,027.4 17.1 % 10.5 % 10.0 % Tier 1 leverage $ 1,101.4 10.3 % $ 949.4 11.4 % 4.0 % 5.0 % Risk-weighted assets $ 6,823.1 N/A $ 6,022.2 N/A N/A N/A Quarterly adjusted average assets $ 10,696.7 N/A $ 8,337.4 N/A N/A N/A N/A – Not applicable (1) Required minimums presented for risk-based capital ratios include the required capital conservation buffer of 2.5%. 72 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) (2) CET1 capital consists of common stockholders’ equity as defined under U.S.
Servicing fees were $98.6 million and $80.6 million for the years ended December 31, 2023 and 2022, respectively, an increase of 22%.
Servicing fees were $64.9 million and $98.6 million for the years ended December 31, 2024 and 2023, respectively, a decrease of 34%.
Income Taxes For the year ended December 31, 2023, we recorded an income tax expense of $15.7 million.
Income Taxes For the years ended December 31, 2024 and 2023, we recorded an income tax expense of $13.7 million and $15.7 million, representing an effective tax rate of 21.1% and 28.7%, respectively.
See “ Part I – Item 1. Business – Regulation and Supervision, ” “ Part I – Item 1A. Risk Factors – Risks Related to Regulation, Supervision and Compliance, ” and “ Part I – Item 1A. Risk Factors – Risks Related to Operating Our Business ” of this Annual Report for further discussion regarding our supervision and regulatory environment.
See “ Part I – Item 1. Business – Regulation and Supervision, ” “ Part I – Item 1A. Risk Factors – Risks Related to Regulation, Supervision and Compliance, ” and “ Part I – Item 1A.
This was primarily due to a one-time benefit related to recouping volume-based purchase incentives and an increase in the fair value of the servicing asset based on higher expected servicing fee revenue, partially offset by a decrease in loan balances serviced for others.
In addition, the decrease was also driven by a one-time benefit related to recouping volume-based purchase incentives during the third quarter of 2023 as well as an increase in the fair value of the servicing asset based on higher expected servicing fee revenue in 2023.
We attribute the decrease in volume and investor demand to the rising interest rate environment. ◦ Loan originations held for investment (HFI) at amortized cost decreased $1.5 billion, or 41%, for the year ended December 31, 2023 compared to the prior year. ◦ Loan originations HFI at amortized cost as a percentage of loan originations was 29% and 28% for the years ended December 31, 2023 and 2022, respectively.
The decrease was primarily driven by a decrease in unsecured personal loan origination volume. ◦ Loan originations held for investment (HFI) at amortized cost decreased $0.4 billion, or 21%, for the year ended December 31, 2024 compared to the prior year. ◦ Loan originations HFI at amortized cost as a percentage of loan originations was 24% and 29% for the years ended December 31, 2024 and 2023, respectively.
We believe, based on our projections, that our cash on hand, liquid AFS securities, available borrowing capacity, and net cash flows from operating, investing and financing activities are sufficient to meet our liquidity needs for 72 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) the next twelve months, as well as beyond the next twelve months.
We believe, based on our projections, that our cash on hand, liquid AFS securities, deposits, available borrowing capacity, and net cash flows from operating, investing and financing activities are sufficient to meet our liquidity needs for the next twelve months, as well as beyond the next twelve months. See “ Item 8.
As of December 31, 2023 2022 Change ($) Change (%) AUM (in millions): Loans sold $ 9,336 $ 10,819 $ (1,483) (14) % Loans held by LendingClub Bank 4,767 5,263 (496) (9) % Retail notes and certificates 11 59 (48) (81) % Other loans invested in by the Company 8 16 (8) (50) % Total $ 14,122 $ 16,157 $ (2,035) (13) % As of December 31, 2022 2021 Change ($) Change (%) AUM (in millions): Loans sold $ 10,819 $ 10,124 $ 695 7 % Loans held by LendingClub Bank 5,263 2,026 3,237 160 % Retail notes and certificates 59 238 (179) (75) % Other loans invested in by the Company 16 75 (59) (79) % Total $ 16,157 $ 12,463 $ 3,694 30 % In addition to the loans serviced on our marketplace platform, we serviced $133.2 million, $167.0 million and $214.0 million in outstanding principal balance of commercial loans sold as of December 31, 2023, 2022 and 2021, respectively.
As of December 31, 2024 2023 Change ($) Change (%) AUM (in millions): Loans sold $ 7,207 $ 9,336 $ (2,129) (23) % Loans held by LendingClub Bank 5,164 4,786 378 8 % Total $ 12,371 $ 14,122 $ (1,751) (12) % As of December 31, 2023 2022 Change ($) Change (%) AUM (in millions): Loans sold $ 9,336 $ 10,819 $ (1,483) (14) % Loans held by LendingClub Bank 4,786 5,338 (552) (10) % Total $ 14,122 $ 16,157 $ (2,035) (13) % In addition to the loans serviced on our marketplace platform, we serviced $102.0 million, $133.2 million and $167.0 million in outstanding principal balance of commercial loans sold as of December 31, 2024, 2023 and 2022, respectively.
For discussion related to 2021 items and year-over-year comparisons between 2022 and 2021, see “ Part II – Item 7.
Results of Operations This section of this Form 10-K generally discusses 2024 and 2023 items and year-over-year comparisons between 2024 and 2023. For discussion related to 2022 items and year-over-year comparisons between 2023 and 2022, see “ Part II – Item 7.
The increase was primarily due to an increase in the amortization of internally-developed software and purchased software. Professional services expense decreased $15.3 million, or 30%, for the year ended December 31, 2023 compared to the same period in 2022.
Depreciation and amortization expense increased $11.6 million, or 25%, for the year ended December 31, 2024 compared to the same period in 2023. The increase was primarily due to an increase in the amortization of internally-developed software as well as a $5.5 million impairment expense for internally-developed software recorded in 2024.
Interest Rate Sensitivity LendingClub Bank Our net interest income is affected by changes in the level of interest rates, the impact of interest rate fluctuations on asset prepayments, and the level and composition of deposits and liabilities, among other factors. Loans HFI at LC Bank are funded primarily through our deposit base.
Interest rate risk arises from financial instruments including loans, securities and borrowings, all entered into for purposes other than trading. Interest Rate Sensitivity LendingClub Bank Our net interest income is affected by changes in the level of interest rates, the impact of interest rate fluctuations on asset prepayments, and the level and composition of deposits and liabilities, among other factors.
Year Ended December 31, 2023 2022 2021 Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate Interest-earning assets (1) Cash, cash equivalents, restricted cash and other $ 1,293,047 $ 65,917 5.10 % $ 987,833 $ 18,579 1.88 % $ 754,920 $ 1,170 0.16 % Securities available for sale at fair value 652,047 40,235 6.17 % 370,277 16,116 4.35 % 288,545 11,025 3.82 % Loans held for sale at fair value 252,519 35,655 14.12 % 162,760 26,183 16.09 % 218,349 29,540 13.53 % Loans and leases held for investment at amortized cost: Unsecured personal loans (2) 4,143,482 549,256 13.26 % 2,967,410 410,222 13.82 % 863,266 122,807 15.52 % Secured consumer loans 402,668 16,963 4.21 % 301,023 11,093 3.69 % 485,195 17,105 3.85 % Commercial loans and leases 722,419 48,307 6.69 % 669,907 36,167 5.40 % 617,483 30,731 5.43 % PPP loans 26,114 2,209 8.46 % 138,575 7,968 5.75 % 487,435 18,334 4.10 % Loans and leases held for investment at amortized cost 5,294,683 616,735 11.65 % 4,076,915 465,450 11.42 % 2,453,379 188,977 8.40 % Loans held for investment at fair value 538,577 69,866 12.97 % 91,057 12,877 14.14 % 34,938 4,436 12.70 % Total loans and leases held for investment 5,833,260 686,601 11.77 % 4,167,972 478,327 11.48 % 2,488,317 193,413 7.77 % Retail and certificate loans held for investment at fair value 28,927 4,222 14.60 % 128,047 18,135 14.16 % 406,406 57,684 14.19 % Total interest-earning assets 8,059,800 832,630 10.33 % 5,816,889 557,340 9.58 % 4,156,537 292,832 7.46 % Cash and due from banks and restricted cash 70,653 72,764 112,012 Allowance for loan and lease losses (345,434) (234,532) (77,223) Other non-interest earning assets 676,335 547,388 426,323 Total assets $ 8,461,354 $ 6,202,509 $ 4,617,649 Interest-bearing liabilities Interest-bearing deposits: Checking and money market accounts 1,344,431 34,462 2.56 % $ 2,205,691 $ 16,464 0.75 % $ 2,071,640 $ 5,954 0.31 % Savings accounts and certificates of deposit 5,345,734 231,094 4.32 % 2,123,037 43,987 2.07 % 383,447 1,274 0.36 % Interest-bearing deposits (2) 6,690,165 265,556 3.97 % 4,328,728 60,451 1.40 % 2,455,087 7,228 0.32 % Retail notes and certificates 28,927 4,222 14.60 % 128,047 18,135 14.16 % 407,471 57,684 14.16 % Other interest-bearing liabilities 40,193 1,014 2.52 % 188,146 3,929 2.09 % 560,942 15,089 2.69 % Total interest-bearing liabilities 6,759,285 270,792 4.01 % 4,644,921 82,515 1.78 % 3,423,500 80,001 2.36 % 61 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) Year Ended December 31, 2023 2022 2021 Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate Non-interest bearing deposits 236,618 264,099 126,982 Other liabilities 261,401 274,209 289,163 Total liabilities $ 7,257,304 $ 5,183,229 $ 3,839,645 Total equity $ 1,204,050 $ 1,019,280 $ 778,004 Total liabilities and equity $ 8,461,354 $ 6,202,509 $ 4,617,649 Interest rate spread 6.32 % 7.80 % 5.10 % Net interest income and net interest margin $ 561,838 6.97 % $ 474,825 8.16 % $ 212,831 5.56 % (1) Nonaccrual loans and any related income are included in their respective loan categories.
Year Ended December 31, 2024 2023 2022 Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate Interest-earning assets (1) Cash, cash equivalents, restricted cash and other $ 1,081,644 $ 56,307 5.21 % $ 1,293,047 $ 65,917 5.10 % $ 987,833 $ 18,579 1.88 % Securities available for sale at fair value 2,707,049 187,961 6.94 % 652,047 40,235 6.17 % 370,277 16,116 4.35 % Loans held for sale at fair value 719,898 92,442 12.84 % 252,519 35,655 14.12 % 162,760 26,183 16.09 % Loans and leases held for investment at amortized cost: Unsecured personal loans 3,220,969 431,782 13.41 % 4,143,482 549,256 13.26 % 2,967,410 410,222 13.82 % Commercial and other consumer loans (2) 1,073,445 62,432 5.82 % 1,151,201 67,479 5.86 % 1,109,505 55,228 4.98 % Loans and leases held for investment at amortized cost 4,294,414 494,214 11.51 % 5,294,683 616,735 11.65 % 4,076,915 465,450 11.42 % Loans held for investment at fair value (2) 693,557 77,034 11.11 % 567,504 74,088 13.06 % 219,104 31,012 14.15 % Total loans and leases held for investment (2) 4,987,971 571,248 11.45 % 5,862,187 690,823 11.78 % 4,296,019 496,462 11.56 % Total interest-earning assets 9,496,562 907,958 9.56 % 8,059,800 832,630 10.33 % 5,816,889 557,340 9.58 % Cash and due from banks and restricted cash 51,732 70,653 72,764 Allowance for loan and lease losses (247,458) (345,434) (234,532) Other noninterest-earning assets 621,324 676,335 547,388 Total assets $ 9,922,160 $ 8,461,354 $ 6,202,509 Interest-bearing liabilities Interest-bearing deposits: Checking and money market accounts $ 1,012,164 $ 35,143 3.47 % $ 1,344,431 $ 34,462 2.56 % $ 2,205,691 $ 16,464 0.75 % Savings accounts and certificates of deposit 6,923,221 334,076 4.83 % 5,345,734 231,094 4.32 % 2,123,037 43,987 2.07 % Interest-bearing deposits 7,935,385 369,219 4.65 % 6,690,165 265,556 3.97 % 4,328,728 60,451 1.40 % Other interest-bearing liabilities (2) 143,189 4,698 3.28 % 69,120 5,236 7.58 % 316,193 22,064 6.98 % Total interest-bearing liabilities 8,078,574 373,917 4.63 % 6,759,285 270,792 4.01 % 4,644,921 82,515 1.78 % Noninterest-bearing deposits 323,378 236,618 264,099 Other liabilities 228,270 261,401 274,209 Total liabilities $ 8,630,222 $ 7,257,304 $ 5,183,229 Total equity $ 1,291,938 $ 1,204,050 $ 1,019,280 Total liabilities and equity $ 9,922,160 $ 8,461,354 $ 6,202,509 61 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) Year Ended December 31, 2024 2023 2022 Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate Average Balance Interest Income/ Expense Average Yield/ Rate Interest rate spread 4.93 % 6.32 % 7.80 % Net interest income and net interest margin $ 534,041 5.62 % $ 561,838 6.97 % $ 474,825 8.16 % (1) Nonaccrual loans and any related income are included in their respective loan categories.
The decrease was primarily due to lower volume of originated loans retained as HFI at amortized cost and the related initial provision for credit losses, partially offset by an increase in quantitative and qualitative allowance due to an increase in expected losses and a less favorable economic outlook. • Total non-interest expense: Total non-interest expense decreased $200.4 million, or 26%, for the year ended December 31, 2023 compared to the same period in 2022.
The decrease was primarily driven by a decrease in the initial provision for credit losses from a lower volume of originated loans retained as HFI at amortized cost. In addition, the provision for credit losses in 2023 included a higher quantitative and qualitative allowance as a result of an increase in expected losses and a less favorable economic outlook.
(5) Assets under management (AUM) reflects loans serviced on our platform, which includes outstanding balances of unsecured personal loans, auto refinance loans and education and patient finance loans serviced for others and retained for investment by the Company. 55 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) As of December 31, 2023 2022 Balance Sheet Data: Securities available for sale $ 1,620,262 $ 345,702 Loans held for sale at fair value $ 407,773 $ 110,400 Loans and leases held for investment at amortized cost, net, excluding PPP loans $ 4,533,523 $ 4,638,331 PPP loans $ 6,392 $ 66,971 Total loans and leases held for investment at amortized cost, net (1) $ 4,539,915 $ 4,705,302 Loans held for investment at fair value $ 262,190 $ 925,938 Total loans and leases held for investment $ 4,802,105 $ 5,631,240 Total assets $ 8,827,463 $ 7,979,747 Total deposits $ 7,333,486 $ 6,392,553 Total liabilities $ 7,575,641 $ 6,815,453 Total equity $ 1,251,822 $ 1,164,294 Allowance Ratios (1) : ALLL to total loans and leases held for investment 6.4 % 6.5 % ALLL to consumer loans and leases held for investment 7.2 % 7.3 % ALLL to commercial loans and leases held for investment 1.8 % 2.0 % Net charge-offs $ 261,035 $ 83,216 Net charge-off ratio (2) 5.0 % 2.1 % (1) Excludes loans held for investment at fair value, which primarily consists of a loan portfolio that was acquired at the end of 2022.
(5) Assets under management (AUM) reflects loans serviced on our platform, which includes outstanding balances of unsecured personal loans, auto refinance loans and education and patient finance loans serviced for others and retained by the Company. 55 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) As of December 31, 2024 2023 Balance Sheet Data: Securities available for sale $ 3,452,648 $ 1,620,262 Loans held for sale at fair value $ 636,352 $ 407,773 Loans and leases held for investment at amortized cost $ 4,125,818 $ 4,850,302 Gross allowance for loan and lease losses (1) $ (285,686) $ (355,773) Recovery asset value (2) $ 48,952 $ 45,386 Allowance for loan and lease losses $ (236,734) $ (310,387) Loans and leases held for investment at amortized cost, net $ 3,889,084 $ 4,539,915 Loans held for investment at fair value (3)(4) $ 1,027,798 $ 272,678 Total loans and leases held for investment (3)(4) $ 4,916,882 $ 4,812,593 Total assets $ 10,630,509 $ 8,827,463 Total deposits $ 9,068,237 $ 7,333,486 Total liabilities $ 9,288,778 $ 7,575,641 Total equity $ 1,341,731 $ 1,251,822 Allowance Ratios (5) : ALLL to total loans and leases held for investment at amortized cost 5.7 % 6.4 % ALLL to commercial loans and leases held for investment at amortized cost 3.9 % 1.8 % ALLL to consumer loans and leases held for investment at amortized cost 6.1 % 7.2 % Gross ALLL to consumer loans and leases held for investment at amortized cost 7.5 % 8.3 % Net charge-offs $ 249,083 $ 261,035 Net charge-off ratio (6) 5.8 % 4.9 % (1) Represents the allowance for future estimated net charge-offs on existing portfolio balances.
The majority of loans HFI are fixed-rate instruments over the term of the loans. As a result, the primary component of interest rate risk on our financial instruments at LC Bank arises from the impact of fluctuations in loan and deposit rates on our net interest income.
As a result, the primary component of interest rate risk on our financial instruments arises from the impact of fluctuations in loan, security, and deposit rates on our net interest income. Therefore, we use a sensitivity analysis to assess the impact of hypothetical changes in interest rates on our net interest income results.
For additional information on the ACL and nonaccrual loans and leases, see “ Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 1. Summary of Significant Accounting Policies ” and “ Note 6.
Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 1. Summary of Significant Accounting Policies ” and “ Note 5.
The primary uses of LC Bank liquidity include the funding/acquisition of loans and securities purchases; withdrawals, maturities and the payment of interest on deposits; compensation and benefits expense; taxes; capital expenditures, including internally developed software, leasehold improvements and computer equipment; and costs associated with the continued development and support of our online lending marketplace platform.
The primary uses of LC Bank liquidity include (i) the funding/acquisition of loans and securities purchases, (ii) withdrawals, maturities and the payment of interest on deposits, (iii) compensation and benefits expense, (iv) taxes, (v) capital expenditures, including internally developed software, leasehold improvements and computer equipment, and (vi) costs associated with the continued development and support of our digital marketplace bank. 73 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) Deposits Deposits represent an important source of funding for LC Bank.
The percentage of loan originations HFI in any period is dependent on many factors, including quarterly loan origination volume, risk-adjusted returns, liquidity and general regulatory capital considerations.
The percentage of loan originations HFI in any period is dependent on many factors, including quarterly loan origination volume, risk-adjusted returns, liquidity and general regulatory capital considerations. • Total net revenue: Total net revenue decreased $77.6 million, or 9.0%, for the year ended December 31, 2024 compared to the same period in 2023. ◦ Marketplace revenue: Marketplace revenue decreased $48.7 million, or 17%, for the year ended December 31, 2024 compared to the same period in 2023.
This increase was partially offset by a decrease in loans retained as HFI. • Total deposits: Total deposits as of December 31, 2023 increased $940.9 million, or 15%, compared to the same period in 2022, primarily due to an increase in customer certificates of deposit.
This portfolio consisted of loans that we previously originated and sold. This increase was partially offset by a decrease in loans retained as HFI. • Deposits: Total deposits as of December 31, 2024 increased $1.7 billion, or 24%, compared to the same period in 2023, primarily reflecting growth in our high-yield savings and certificates of deposit.
The increase was primarily driven by higher interest income due to a higher average balance of loans retained as HFI in the current period, a higher average balance of securities retained associated with our Structured Certificates and higher interest rates earned on cash and cash equivalents, partially offset by higher interest rates paid on a higher average balance of deposits. ◦ Net interest margin: Net interest margin for the year ended December 31, 2023 was 7.0%, decreasing from 8.2% in the prior year. • Provision for credit losses: Provision for credit losses decreased $23.8 million, or 9%, for the year ended December 31, 2023 compared to the same period in 2022.
This was partially offset by higher interest income due to a higher average balance of securities retained associated with our Structured Certificates and a higher average balance of loans held for sale (HFS) . 53 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) ◦ Net interest margin: Net interest margin for the year ended December 31, 2024 was 5.6%, decreasing from 7.0% in the prior year. • Provision for credit losses: Provision for credit losses decreased $65.3 million, or 27%, for the year ended December 31, 2024 compared to the same period in 2023.
The decrease was primarily due to the lower volume of originated loans retained as HFI at amortized cost and the related initial provision for credit losses, partially offset by an increase in quantitative and qualitative allowance due to an increase in expected losses and a less favorable economic outlook. 63 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) The activity in the allowance for credit losses (ACL) was as follows: Year Ended December 31, 2023 2022 2021 Allowance for loan and lease losses, beginning of period $ 327,852 $ 144,389 $ — Credit loss expense for loans and leases held for investment 243,570 266,679 140,951 Initial allowance for purchased credit deteriorated (PCD) loans acquired during the period — — 12,440 Charge-offs (281,107) (87,473) (10,452) Recoveries 20,072 4,257 1,450 Allowance for loan and lease losses, end of period (1) $ 310,387 $ 327,852 $ 144,389 Reserve for unfunded lending commitments, beginning of period $ 1,878 $ 1,231 $ — Credit loss expense for unfunded lending commitments (5) 647 1,231 Reserve for unfunded lending commitments, end of period (2) $ 1,873 $ 1,878 $ 1,231 (1) Comprised of $355.8 million, $340.4 million and $145.2 million in allowance for future estimated net charge-offs on existing portfolio balances, net of a negative allowance of $45.4 million, $12.5 million and $0.8 million for expected recoveries of amounts previously charged-off as of December 31, 2023, 2022 and 2021, respectively .
Excluding this one loan, the CRE office loan portfolio balance was under $35 million as of December 31, 2024. 63 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) Allowance for Credit Losses The activity in the allowance for credit losses (ACL) was as follows: Year Ended December 31, 2024 2023 2022 Allowance for loan and lease losses: Beginning of period $ 310,387 $ 327,852 $ 144,389 Credit loss expense for loans and leases held for investment 175,430 243,570 266,679 Charge-offs (303,593) (281,107) (87,473) Recoveries 54,510 20,072 4,257 End of period $ 236,734 $ 310,387 $ 327,852 Allowance for securities available for sale: Beginning of period $ — $ — $ — Credit loss expense for securities available for sale 3,527 — — End of period $ 3,527 $ — $ — Reserve for unfunded lending commitments: Beginning of period $ 1,873 $ 1,878 $ 1,231 Credit loss expense (benefit) for unfunded lending commitments (690) (5) 647 End of period (1) $ 1,183 $ 1,873 $ 1,878 (1) Relates to $105.0 million, $78.1 million and $138.0 million of unfunded commitments as of December 31, 2024, 2023 and 2022, respectively .
This segment provides a full complement of financial products and solutions, including loans, leases and deposits.
This segment provides a full complement of financial products and solutions, including loans and deposits. It originates loans to individuals and businesses, retains loans for investment, sells loans to investors and manages relationships with deposit holders.
Liquidity management also involves maintaining sufficient liquidity to repay borrowings, pay operating expenses and support extraordinary funding requirements when necessary. 71 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) LendingClub Bank Liquidity The following table summarizes LC Bank’s primary sources of short-term liquidity as of the periods presented: December 31, 2023 December 31, 2022 Cash and cash equivalents $ 1,230,206 $ 1,020,874 Securities available for sale (1) $ 370,466 $ 329,287 Deposits $ 7,426,445 $ 6,420,827 Available borrowing capacity: FHLB of Des Moines borrowing capacity (2) $ 661,337 $ 414,528 FRB Discount Window borrowing capacity (3) $ 2,816,501 $ 191,021 Total available borrowing capacity $ 3,477,838 $ 605,549 (1) Excludes illiquid securities available for sale.
LendingClub Bank Liquidity The following table summarizes LC Bank’s primary sources of short-term liquidity as of the periods presented: December 31, 2024 December 31, 2023 Cash and cash equivalents $ 932,463 $ 1,230,206 Securities available for sale (1) $ 382,876 $ 370,466 Deposits $ 9,116,821 $ 7,426,445 Available borrowing capacity: FRB Discount Window (2) $ 2,635,034 $ 2,816,501 FHLB of Des Moines (3) 626,117 661,337 Total available borrowing capacity $ 3,261,151 $ 3,477,838 (1) Excludes illiquid securities available for sale.
Capital expenditures in 2024 are expected to be approximately $50 million, primarily related to costs associated with the continued development and support of our online lending marketplace platform, including regulatory compliance costs.
Capital Expenditures Net capital expenditures were $54.3 million, or 7% of total net revenue, and $59.5 million, or 7% of total net revenue, for the years ended December 31, 2024 and 2023, respectively. Capital expenditures in 2025 are expected to be approximately $65 million, primarily related to costs associated with the continued development and support of our digital marketplace bank.
The following table presents nonaccrual loans and leases (1) : December 31, 2023 December 31, 2022 Total nonaccrual loans and leases held for investment at amortized cost $ 44,382 $ 34,827 Ratio of total nonaccrual loans and leases held for investment to total loans and leases held for investment 0.9 % 0.7 % (1) Excluding PPP loans, there were no loans that were 90 days or more past due and accruing as of both December 31, 2023 and 2022 .
The following table presents nonaccrual loans and leases: As of December 31, 2024 2023 Nonaccrual loans and leases held for investment at amortized cost $ 72,304 $ 44,382 % of total loans and leases held for investment 1.8 % 0.9 % For additional information on the ACL and nonaccrual loans and leases, see “ Item 8.
We do this by leveraging data and technology to increase access to credit, lower borrowing costs, and improve the return on savings – all through a smart, simple, and rewarding digital experience.
Overview LendingClub operates a leading, nationally chartered, digital marketplace bank that aims to advantage our members with the information, tools, and guidance needed to achieve their own version of financial success. We do this through a smart, simple, and rewarding digital experience that leverages data and technology to increase access to credit, lower borrowing costs, and improve returns on savings.
An analysis of the year-over-year changes in the categories of interest income and interest expense resulting from changes in volume and rate is as follows: 2023 Compared to 2022 2022 Compared to 2021 Increase (Decrease) Due to Change in: Increase (Decrease) Due to Change in: Average Volume (1) Average Rate (1) Total Average Volume (1) Average Rate (1) Total Interest-earning assets Cash, cash equivalents, restricted cash and other $ 7,243 $ 40,095 $ 47,338 $ 470 $ 16,939 $ 17,409 Securities available for sale at fair value 15,571 8,548 24,119 3,414 1,677 5,091 Loans held for sale at fair value 12,994 (3,522) 9,472 (8,336) 4,979 (3,357) Loans and leases held for investment at amortized cost 155,258 (3,973) 151,285 286,205 (9,732) 276,473 Loans held for investment at fair value 58,140 (1,151) 56,989 7,883 558 8,441 Retail and certificate loans held for investment at fair value (14,452) 539 (13,913) (39,422) (127) (39,549) Total increase in interest income on interest-earning assets $ 234,754 $ 40,536 $ 275,290 $ 250,214 $ 14,294 $ 264,508 Interest-bearing liabilities Checking and money market accounts $ (8,592) $ 26,590 $ 17,998 $ 472 $ 10,038 $ 10,510 Savings accounts and certificates of deposit 109,053 78,054 187,107 20,965 21,748 42,713 Interest-bearing deposits 100,461 104,644 205,105 21,437 31,786 53,223 Retail notes and certificates (14,452) 539 (13,913) (39,573) 24 (39,549) Other interest-bearing liabilities (3,598) 683 (2,915) (11,798) 638 (11,160) Total increase (decrease) in interest expense on interest-bearing liabilities $ 82,411 $ 105,866 $ 188,277 $ (29,934) $ 32,448 $ 2,514 Increase (decrease) in net interest income $ 152,343 $ (65,330) $ 87,013 $ 280,148 $ (18,154) $ 261,994 (1) Volume and rate changes have been allocated on a consistent basis using the respective percentage changes in average balances and average rates. 62 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) Provision for Credit Losses The allowance for loan and lease losses (ALLL) for lifetime expected losses under CECL on HFI loans and leases at amortized cost is initially recognized as “Provision for credit losses” at the time of origination.
An analysis of the year-over-year changes in the categories of interest revenue and interest expense resulting from changes in volume and rate is as follows: 2024 Compared to 2023 2023 Compared to 2022 Increase (Decrease) Due to Change in: Increase (Decrease) Due to Change in: Average Volume (1) Average Yield/Rate (1) Total Average Volume (1) Average Yield/Rate (1) Total Interest-earning assets Cash, cash equivalents, restricted cash and other $ (10,980) $ 1,370 $ (9,610) $ 7,243 $ 40,095 $ 47,338 Securities available for sale at fair value 142,079 5,647 147,726 15,571 8,548 24,119 Loans held for sale at fair value 60,295 (3,508) 56,787 12,994 (3,522) 9,472 Loans and leases held for investment at amortized cost (115,197) (7,324) (122,521) 155,258 (3,973) 151,285 Loans held for investment at fair value (2) 14,988 (12,042) 2,946 45,661 (2,585) 43,076 Total increase (decrease) in interest income on interest-earning assets $ 91,185 $ (15,857) $ 75,328 $ 236,727 $ 38,563 $ 275,290 Interest-bearing liabilities Checking and money market accounts $ (9,757) $ 10,438 $ 681 $ (8,592) $ 26,590 $ 17,998 Savings accounts and certificates of deposit 73,880 29,102 102,982 109,053 78,054 187,107 Interest-bearing deposits 64,123 39,540 103,663 100,461 104,644 205,105 Other interest-bearing liabilities (2) 3,532 (4,070) (538) (18,572) 1,744 (16,828) Total increase in interest expense on interest-bearing liabilities $ 67,655 $ 35,470 $ 103,125 $ 81,889 $ 106,388 $ 188,277 Increase (decrease) in net interest income $ 23,530 $ (51,327) $ (27,797) $ 154,838 $ (67,825) $ 87,013 (1) Volume and rate changes have been allocated on a consistent basis using the respective percentage changes in average balances and average rates.
The decrease was primarily due to a decrease in loan origination volume and lower loan sales prices resulting from a shift in investor demand from banks to asset managers. ◦ Net interest income: Net interest income increased $87.0 million, or 18%, for the year ended December 31, 2023 compared to the same period in 2022.
In addition, the decrease was also driven by an increased loss in net fair value adjustments due to the increase in the origination volume of marketplace loans, partially offset by higher loan sales prices. ◦ Net interest income: Net interest income decreased $27.8 million, or 5%, for the year ended December 31, 2024 compared to the same period in 2023.
It originates loans to individuals and businesses, retains loans for investment, sells loans to investors and manages relationships with deposit holders. 66 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) LendingClub Corporation (Parent Only) The LendingClub Corporation (Parent only) operating segment represents the holding company legal entity and predominately reflects the operations of the Company prior to the Acquisition.
Income taxes are recorded on a separate entity basis whereby each operating segment determines income tax expense or benefit as if it filed a separate tax return. 67 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) LendingClub Bank The LC Bank operating segment represents the national bank legal entity and reflects operating activities after its formation.
Financial information for the segments is presented in the following table: LendingClub Bank LendingClub Corporation (Parent only) Intercompany Eliminations Consolidated Total Year Ended December 31, Eleven Months Ended December 31, Year Ended December 31, Year Ended December 31, Eleven Months Ended December 31, Year Ended December 31, 2023 2022 2021 (1) 2023 2022 2021 2023 2022 2021 (1) 2023 2022 2021 Non-interest income: Marketplace revenue $ 206,381 $ 610,536 $ 462,821 $ 41,817 $ 48,231 $ 115,759 $ 43,286 $ 24,859 $ — $ 291,484 $ 683,626 $ 578,580 Other non-interest income 74,684 85,208 94,953 9,503 15,628 16,718 (72,890) (72,071) (84,452) 11,297 28,765 27,219 Total non-interest income 281,065 695,744 557,774 51,320 63,859 132,477 (29,604) (47,212) (84,452) 302,781 712,391 605,799 Interest income: Interest income 818,206 526,471 210,739 14,424 30,869 82,093 — — — 832,630 557,340 292,832 Interest expense (266,218) (60,954) (8,412) (4,574) (21,561) (71,589) — — — (270,792) (82,515) (80,001) Net interest income 551,988 465,517 202,327 9,850 9,308 10,504 — — — 561,838 474,825 212,831 Total net revenue 833,053 1,161,261 760,101 61,170 73,167 142,981 (29,604) (47,212) (84,452) 864,619 1,187,216 818,630 (Provision for) reversal of credit losses (243,565) (267,326) (142,182) — — 3,382 — — — (243,565) (267,326) (138,800) Non-interest expense (537,026) (724,304) (547,799) (59,015) (89,761) (198,039) 29,604 47,212 84,452 (566,437) (766,853) (661,386) Income (Loss) before income tax benefit (expense) 52,462 169,631 70,120 2,155 (16,594) (51,676) — — — 54,617 153,037 18,444 Income tax benefit (expense) (17,881) (42,354) 9,171 2,203 125,954 44,013 — 53,048 (53,048) (15,678) 136,648 136 Net income (loss) $ 34,581 $ 127,277 $ 79,291 $ 4,358 $ 109,360 $ (7,663) $ — $ 53,048 $ (53,048) $ 38,939 $ 289,685 $ 18,580 Capital expenditures $ 59,509 $ 69,481 $ 32,602 $ — $ — $ 1,811 $ — $ — $ — $ 59,509 $ 69,481 $ 34,413 Depreciation and amortization $ 30,216 $ 16,489 $ 4,569 $ 16,979 $ 27,342 $ 39,716 $ — $ — $ — $ 47,195 $ 43,831 $ 44,285 (1) Because the LendingClub Bank reportable segment was formed upon the Acquisition on February 1, 2021, the associated results are presented for the eleven month period ended December 31, 2021.
Financial information for the segments is presented in the following table: LendingClub Bank LendingClub Corporation (Parent only) Total Reportable Segments Year ended 2024 2023 2022 2024 2023 2022 2024 2023 2022 Non-interest income: Marketplace revenue $ 176,921 $ 206,381 $ 610,536 $ 36,595 $ 41,817 $ 48,231 $ 213,516 $ 248,198 $ 658,767 Other non-interest income 53,643 74,684 85,208 9,038 9,503 15,628 62,681 84,187 100,836 Total non-interest income 230,564 281,065 695,744 45,633 51,320 63,859 276,197 332,385 759,603 Interest income: Interest income 902,741 818,206 526,471 5,217 14,424 30,869 907,958 832,630 557,340 Interest expense (373,219) (266,218) (60,954) (698) (4,574) (21,561) (373,917) (270,792) (82,515) Net interest income 529,522 551,988 465,517 4,519 9,850 9,308 534,041 561,838 474,825 Total net revenue 760,086 833,053 1,161,261 50,152 61,170 73,167 810,238 894,223 1,234,428 Provision for credit losses (178,267) (243,565) (267,326) — — — (178,267) (243,565) (267,326) Non-interest expense: Compensation and benefits (225,620) (255,428) (331,627) (6,538) (6,520) (7,770) (232,158) (261,948) (339,397) Marketing (100,400) (93,840) (197,559) (2) — (188) (100,402) (93,840) (197,747) Equipment and Software (51,068) (53,239) (49,004) (126) (246) (194) (51,194) (53,485) (49,198) Depreciation and Amortization (50,309) (30,216) (16,489) (8,525) (16,979) (27,342) (58,834) (47,195) (43,831) Professional Services (31,376) (33,963) (49,993) (669) (1,210) (523) (32,045) (35,173) (50,516) Occupancy (7,582) (7,980) (8,631) (8,216) (9,552) (13,346) (15,798) (17,532) (21,977) Other non-interest expense (54,963) (62,360) (71,001) (21,511) (24,508) (40,398) (76,474) (86,868) (111,399) Total non-interest expense (521,318) (537,026) (724,304) (45,587) (59,015) (89,761) (566,905) (596,041) (814,065) Income tax (expense) benefit (12,824) (17,881) (42,354) (912) 2,203 125,954 (13,736) (15,678) 83,600 Net income (1) $ 47,677 $ 34,581 $ 127,277 $ 3,653 $ 4,358 $ 109,360 $ 51,330 $ 38,939 $ 236,637 Capital expenditures $ 54,302 $ 59,509 $ 69,481 $ — $ — $ — $ 54,302 $ 59,509 $ 69,481 (1) Total net income from reportable segments reflects net income on a consolidated basis. 68 LENDINGCLUB CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations (Tabular Amounts in Thousands, Except Share and Per Share Data and Ratios, or as Noted) Year Ended December 31, 2024 2023 2022 Total net revenue – reportable segments $ 810,238 $ 894,223 $ 1,234,428 Intercompany eliminations (23,227) (29,604) (47,212) Total net revenue – consolidated $ 787,011 $ 864,619 $ 1,187,216 An analysis of the Company’s results of operations and material drivers and trends of the financial results of the segments presented above are consistent with those provided on a consolidated basis in “ Results of Operations .” Non-GAAP Financial Measures To supplement our financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: Pre-Provision Net Revenue (PPNR), Tangible Book Value (TBV) Per Common Share, Return on Tangible Common Equity (ROTCE), Net Income Excluding Income Tax Benefit and Diluted EPS Excluding Income Tax Benefit.
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