LendingClub Corp (Form: 10-Q, Received: 05/08/2019 16:20:59)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

Commission File Number: 001-36771

LendingClub Corporation

(Exact name of registrant as specified in its charter)



Delaware	51-0605731
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

595 Market Street, Suite 200, San Francisco, CA 94105
(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (415) 632-5600

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:



Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨
Emerging growth company	¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, par value $0.01 per share	LC	New York Stock Exchange

As of April 30, 2019 , there were 431,922,251 shares of the registrant’s common stock outstanding.

LENDINGCLUB CORPORATION

TABLE OF CONTENTS




PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Comprehensive Income (Loss)	6
	Condensed Consolidated Statements of Changes in Equity	7
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	52
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	84
Item 4.	Controls and Procedures	87

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	87
Item 1A.	Risk Factors	87
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	88
Item 3.	Defaults Upon Senior Securities	88
Item 4.	Mine Safety Disclosures	88
Item 5.	Other Information	88
Item 6.	Exhibits	89
Signatures		90

LENDINGCLUB CORPORATION

Except as the context requires otherwise, as used herein, “LendingClub,” “Company,” “we,” “us,” and “our,” refer to LendingClub Corporation, a Delaware corporation, and, where appropriate, its consolidated subsidiaries and consolidated variable interest entities (VIEs), including:


•	Various wholly-owned Delaware limited liability companies established to enter into warehouse credit agreements with certain lenders for secured credit facilities.


•	Various entities established to facilitate LendingClub-sponsored asset-backed securities transactions, including transactions where certain accredited investors and qualified institutional buyers have the opportunity to invest in a pool of unsecured personal whole loans in a certificated form (CLUB Certificates).


•	LC Trust I (the LC Trust), an independent Delaware business trust that acquires loans from LendingClub and holds them for the sole benefit of certain investors that have purchased trust certificates issued by the LC Trust and that are related to specific underlying loans for the benefit of the investor.


•	Springstone Financial, LLC (Springstone), a wholly-owned Delaware limited liability company that facilitates the origination of education and patient finance loans by third-party issuing banks.

Forward-Looking Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements in this Quarterly Report on Form 10-Q (Report) include, without limitation, statements regarding borrowers, credit scoring, our strategy, future operations, expected losses, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth. You can identify these forward-looking statements by words such as “anticipate,” “appear,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “intend,” “may,” “opportunity,” “plan,” “predict,” “project,” “should,” “strategy,” “target,” “will,” “would,” or similar expressions.

These forward-looking statements include, among other things, statements about:


•	the ability of borrowers to repay loans and the plans of borrowers;


•	our ability to maintain investor confidence in the operation of our platform;


•	the likelihood of investors to continue to, directly or indirectly, invest through our platform;


•	our ability to secure new or additional sources of investor commitments for our platform;


•	expected rates of return for investors;


•	the effectiveness of our platform’s credit scoring models;


•	the use of our own capital to purchase loans;

•

maintaining liquidity and capital availability to support purchase of loans, contractual commitments and obligations (including repurchase obligations or other commitments to purchase loans), regulatory obligations to fund loans, and general strategic directives (such as with respect to product testing or supporting our Company-sponsored securitizations and CLUB Certificate transactions), and to support marketplace equilibrium across our platform;


•	the impact of holding loans on and our ability to sell loans off our balance sheet;


•	transaction fees or other revenue we expect to recognize after loans are issued by the issuing banks who originate loans facilitated through our platform;


•	interest income on our loans invested in by the Company and the negative fair value adjustments on associated loans;


•	our financial condition and performance, including the impact that management’s estimates have on our financial performance and the relationship between the interim period and full year results;


•	capital expenditures;


•	interest rate risk and credit performance associated with the outstanding principal balance of loans and other securities and their impact to investor returns and demand for our products;


•	the impact of new accounting standards;


•	the impact of pending litigation and regulatory investigations and inquiries;

LENDINGCLUB CORPORATION


•	our compliance with applicable local, state and Federal laws, regulations and regulatory developments or court decisions affecting our business;


•	investor, borrower, platform and loan performance-related factors that may affect our revenue;


•	the potential adoption rates and returns related to new products and services;


•	the potential impact of macro-economic developments that could impact the credit performance of our loans, notes, certificates and secured borrowings, and influence borrower and investor behavior;


•	our ability to develop and maintain effective internal controls;


•	our ability to recruit and retain quality employees to support current operations and future growth;


•	the impact of expense initiatives and review of our cost structure;


•	our ability to manage and repay our indebtedness; and


•	other risk factors listed from time to time in reports we file with the SEC.

We caution you that the foregoing list may not contain all of the forward-looking statements in this Report. We may not actually achieve the plans, intentions or expectations disclosed in forward-looking statements, and you should not place undue reliance on forward-looking statements. We have included important factors in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2018 , as well as in our condensed consolidated financial statements, related notes, and other information appearing elsewhere in this Report and our other filings with the Securities and Exchange Commission, that could, among other things, cause actual results or events to differ materially from forward-looking statements contained in this Report. Forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

You should read this Report carefully and completely and with the understanding that actual future results may be materially different from what we expect. We do not assume any obligation to update or revise any forward-looking statements, whether as a result of new information, actual results, future events or otherwise, other than as required by law.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

LENDINGCLUB CORPORATION

Condensed Consolidated Balance Sheets

(In Thousands, Except Share and Per Share Amounts)

(Unaudited)



	March 31, 2019			December 31, 2018
Assets
Cash and cash equivalents	$	402,311		$	372,974
Restricted cash ⁽¹⁾	167,954			271,084
Securities available for sale (includes $45,203 and $53,611 pledged as collateral at fair value, respectively)	197,509			170,469
Loans held for investment at fair value ⁽¹⁾	1,698,198			1,883,251
Loans held for investment by the Company at fair value ⁽¹⁾	8,757			2,583
Loans held for sale by the Company at fair value ⁽¹⁾	552,166			840,021
Accrued interest receivable ⁽¹⁾	19,657			22,255
Property, equipment and software, net	118,157			113,875
Intangible assets, net	17,108			18,048
Other assets ⁽¹⁾	235,264			124,967
Total assets	$	3,417,081		$	3,819,527
Liabilities and Equity
Accounts payable	$	24,804		$	7,104
Accrued interest payable ⁽¹⁾	14,929			19,241
Accrued expenses and other liabilities ⁽¹⁾	238,941			152,118
Payable to investors	72,175			149,052
Notes, certificates and secured borrowings at fair value ⁽¹⁾	1,703,226			1,905,875
Payable to securitization note holders ⁽¹⁾	233,269			256,354
Credit facilities and securities sold under repurchase agreements ⁽¹⁾	263,863			458,802
Total liabilities	2,551,207			2,948,546
Equity
Common stock, $0.01 par value; 900,000,000 shares authorized; 434,202,951 and 431,923,335 shares issued, respectively; 431,920,251 and 429,640,635 shares outstanding, respectively	4,342			4,319
Additional paid-in capital	1,417,364			1,401,937
Accumulated deficit	(537,662		)	(517,727		)
Treasury stock, at cost; 2,282,700 shares	(19,485		)	(19,485		)
Accumulated other comprehensive income	225			157
Total LendingClub stockholders’ equity	864,784			869,201
Noncontrolling interests	1,090			1,780
Total equity	865,874			870,981
Total liabilities and equity	$	3,417,081		$	3,819,527


⁽¹⁾	Includes amounts in consolidated variable interest entities (VIEs) presented separately in the table below.

The following table presents the assets and liabilities of consolidated VIEs, which are included in the Condensed Consolidated Balance Sheets above. The assets in the table below may only be used to settle obligations of consolidated VIEs and are in excess of those obligations. Additionally, the assets and liabilities in the table below include third-party assets and liabilities of consolidated VIEs only and exclude intercompany balances that eliminate in consolidation.



	March 31, 2019		December 31, 2018
Assets of consolidated VIEs, included in total assets above
Restricted cash	$	25,593	$	43,918
Loans held for investment at fair value	539,694		642,094
Loans held for sale by the Company at fair value	437,432		739,216
Accrued interest receivable	8,322		10,438
Other assets	2,513		2,498
Total assets of consolidated variable interest entities	$	1,013,554	$	1,438,164
Liabilities of consolidated VIEs, included in total liabilities above
Accrued interest payable	$	5,910	$	7,594
Accrued expenses and other liabilities	354		1,627
Notes, certificates and secured borrowings at fair value	539,694		648,908
Payable to securitization note holders	233,269		256,354
Credit facilities and securities sold under repurchase agreements	122,396		306,790
Total liabilities of consolidated variable interest entities	$	901,623	$	1,221,273

See Notes to Condensed Consolidated Financial Statements.

LENDINGCLUB CORPORATION

Condensed Consolidated Statements of Operations

(In Thousands, Except Share and Per Share Amounts)

(Unaudited)



	Three Months Ended March 31,
	2019			2018
Net revenue:

Transaction fees	$	135,397		$	111,182

Interest income	100,172			138,018
Interest expense	(75,360		)	(110,843		)
Net fair value adjustments	(34,729		)	(28,713		)
Net interest income and fair value adjustments	(9,917		)	(1,538		)
Investor fees	31,731			27,895
Gain on sales of loans	15,152			12,671
Net investor revenue ⁽¹⁾	36,966			39,028

Other revenue	2,055			1,457

Total net revenue	174,418			151,667
Operating expenses:
Sales and marketing	66,623			57,517
Origination and servicing	28,273			22,645
Engineering and product development	42,546			36,837
Other general and administrative	56,876			52,309
Class action and regulatory litigation expense	—			13,500
Total operating expenses	194,318			182,808
Loss before income tax expense	(19,900		)	(31,141		)
Income tax expense	—			39
Consolidated net loss	(19,900		)	(31,180		)
Less: Income attributable to noncontrolling interests	35			1
LendingClub net loss	$	(19,935	)	$	(31,181	)
Net loss per share attributable to LendingClub:
Basic	$	(0.05	)	$	(0.07	)
Diluted	$	(0.05	)	$	(0.07	)
Weighted-average common shares – Basic	430,544,355			418,299,301
Weighted-average common shares – Diluted	430,544,355			418,299,301


⁽¹⁾	See “ Notes to Condensed Consolidated Financial Statements – Note 1. Basis of Presentation ” for additional information.

See Notes to Condensed Consolidated Financial Statements.

LENDINGCLUB CORPORATION

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In Thousands)

(Unaudited)



	Three Months Ended March 31,
	2019			2018
LendingClub net loss	$	(19,935	)	$	(31,181	)
Other comprehensive income (loss), before tax:
Net unrealized gain (loss) on securities available for sale	68			22
Other comprehensive income (loss), before tax	68			22
Income tax effect	—			(19		)
Other comprehensive income (loss), net of tax	68			41
Less: Other comprehensive income (loss) attributable to noncontrolling interests	—			(9		)
LendingClub other comprehensive income (loss), net of tax	68			50
LendingClub comprehensive income (loss)	(19,867		)	(31,131		)
Comprehensive income (loss) attributable to noncontrolling interests	—			(9		)
Total comprehensive income (loss)	$	(19,867	)	$	(31,140	)

See Notes to Condensed Consolidated Financial Statements.

LENDINGCLUB CORPORATION

Condensed Consolidated Statements of Changes in Equity

(In Thousands, Except Share Data)

(Unaudited)



	LendingClub Corporation Stockholders
	Common Stock			Additional Paid-in Capital			Treasury Stock				Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit			Total LendingClub Stockholders’ Equity			Noncontrolling Interests			Total Equity
	Shares	Amount		Additional Paid-in Capital			Shares	Amount			Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit			Total LendingClub Stockholders’ Equity			Noncontrolling Interests			Total Equity
Balance at December 31, 2018	429,640,635	$	4,319	$	1,401,937		2,282,700	$	(19,485	)	$	157	$	(517,727	)	$	869,201		$	1,780		$	870,981
Stock-based compensation and related tax effects		—		20,113			—	—			—		—			20,113			—			20,113
Issuances under equity incentive plans, net of tax	2,279,616	23		(4,686		)	—	—			—		—			(4,663		)	—			(4,663		)
Net unrealized gain on securities available for sale, net of tax	—	—		—			—	—			68		—			68			—			68
Dividends paid and return of capital to noncontrolling interests	—	—		—			—	—			—		—			—			(725		)	(725		)
Net loss	—	—		—			—	—			—		(19,935		)	(19,935		)	35			(19,900		)
Balance at March 31, 2019	431,920,251	$	4,342	$	1,417,364		2,282,700	$	(19,485	)	$	225	$	(537,662	)	$	864,784		$	1,090		$	865,874



	LendingClub Corporation Stockholders
	Common Stock			Additional Paid-in Capital			Treasury Stock				Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total LendingClub Stockholders’ Equity			Noncontrolling Interests			Total Equity
	Shares	Amount		Additional Paid-in Capital			Shares	Amount			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total LendingClub Stockholders’ Equity			Noncontrolling Interests			Total Equity
Balance at December 31, 2017	417,473,846	$	4,198	$	1,327,206		2,282,700	$	(19,485	)	$	(5	)	$	(389,419	)	$	922,495		$	5,262		$	927,757
Stock-based compensation and related tax effects	—	—		20,024			—	—			—			—			20,024			—			20,024
Issuances under equity incentive plans, net of tax	2,133,783	21		(460		)	—	—			—			—			(439		)	—			(439		)
Net unrealized gain (loss) on securities available for sale, net of tax	—	—		—			—	—			50			—			50			(8		)	42
Dividends paid and return of capital to noncontrolling interests	—	—		—			—	—			—			—			—			(1,084		)	(1,084		)
Net loss	—	—		—			—	—			—			(31,181		)	(31,181		)	1			(31,180		)
Balance at March 31, 2018	419,607,629	$	4,219	$	1,346,770		2,282,700	$	(19,485	)	$	45		$	(420,600	)	$	910,949		$	4,171		$	915,120

See Notes to Condensed Consolidated Financial Statements.

LENDINGCLUB CORPORATION

Condensed Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)



	Three Months Ended March 31,
	2019			2018
Cash Flows from Operating Activities:
Consolidated net loss	$	(19,900	)	$	(31,180	)
Adjustments to reconcile consolidated net loss to net cash provided by operating activities:
Net fair value adjustments	34,729			28,713
Change in fair value of loan servicing assets and liabilities	11,001			5,248
Stock-based compensation, net	18,252			17,801
Depreciation and amortization	15,855			11,701
(Gain) Loss on sales of loans	(15,152		)	(13,116		)
Other, net	7,413			1,582
Purchase of loans held for sale	(1,406,584		)	(1,597,816		)
Principal payments received on loans held for sale	66,125			58,943
Proceeds from sales of whole loans	771,723			1,348,092
Purchase of loans held for sale by consolidated VIE	—			(270,770		)
Proceeds from sale of securities by consolidated VIE, net of underwriting fees and costs	777,516			437,969
Net change in operating assets and liabilities:
Accrued interest receivable, net	(1,201		)	5,961
Other assets	3,313			57,365
Accounts payable	16,810			(6,058		)
Accrued interest payable	(4,312		)	(7,482		)
Accrued expenses and other liabilities	(31,598		)	(33,254		)
Net cash provided by operating activities	243,990			13,699
Cash Flows from Investing Activities:
Purchases of loans	(193,075		)	(293,460		)
Principal payments received on loans	342,672			504,618
Proceeds from recoveries and sales of charged-off loans	14,136			17,658
Purchases of securities available for sale	(39,639		)	(32,346		)
Proceeds from sales, maturities, redemptions and paydowns of securities available for sale	35,464			40,476
Proceeds from paydowns of asset-backed securities related to securitization notes and CLUB Certificates	17,482			6,339
Other investing activities	(4		)	—
Purchases of property, equipment and software, net	(15,938		)	(13,607		)
Net cash provided by investing activities	161,098			229,678

LENDINGCLUB CORPORATION

Condensed Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)



	Three Months Ended March 31,
	2019			2018
Cash Flows from Financing Activities:
Change in payable to investors	(77,727		)	(35,222		)
Proceeds from issuance of notes and certificates	193,093			292,461
Repayments of secured borrowings	(20,313		)	(47,545		)
Principal payments on and retirements of notes and certificates	(340,160		)	(456,157		)
Payments on notes and certificates from recoveries/sales of related charged-off loans	(13,909		)	(17,459		)
Principal payments on securitization notes	(23,594		)	(31,729		)
Proceeds from credit facilities and securities sold under repurchase agreements	396,500			274,900
Principal payments on credit facilities and securities sold under repurchase agreements	(591,525		)	(233,000		)
Payment for debt issuance costs	(625		)	(1,119		)
Proceeds from issuances under equity incentive plans, net of tax	104			185
Return of capital to noncontrolling interests in consolidated VIE	(688		)	(1,055		)
Dividends paid to noncontrolling interests in consolidated VIE	(37		)	(30		)
Net cash used for financing activities	(478,881		)	(255,770		)
Net Decrease in Cash, Cash Equivalents and Restricted Cash	(73,793		)	(12,393		)
Cash, Cash Equivalents and Restricted Cash, Beginning of Period	644,058			644,289
Cash, Cash Equivalents and Restricted Cash, End of Period	$	570,265		$	631,896
Supplemental Cash Flow Information:
Cash paid for interest	$	80,456		$	116,273
Cash paid for operating leases included in the measurement of lease liabilities	$	4,285		$	—
Non-cash investing activity:
Accruals for property, equipment and software	$	3,863		$	956
Beneficial interests retained from securitization and CLUB Certificate transactions	$	41,578		$	26,639

The following presents cash, cash equivalents and restricted cash by category within the Condensed Consolidated Balance Sheets :



	March 31, 2019		December 31, 2018
Cash and cash equivalents	$	402,311	$	372,974
Restricted cash	167,954		271,084
Total cash, cash equivalents and restricted cash	$	570,265	$	644,058

See Notes to Condensed Consolidated Financial Statements.

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

1. Basis of Presentation

LendingClub Corporation (LendingClub) operates an online lending marketplace platform that connects borrowers and investors. Various wholly-owned subsidiaries of LendingClub have been established to enter into warehouse credit agreements with certain lenders for secured credit facilities. Additionally, LendingClub has established various entities in connection with its role as the sponsor of asset-backed securitization transactions, which include transactions that provide accredited investors and qualified institutional buyers the opportunity to invest in a pool of unsecured personal whole loans in a certificated form (CLUB Certificates). Company-sponsored securitizations and CLUB Certificate transactions are collectively referred to as “structured program transactions.” LC Trust I (the LC Trust) is an independent Delaware business trust that acquires loans from LendingClub and holds them for the sole benefit of certain investors that have purchased trust certificates issued by the LC Trust that are related to specific underlying loans for the benefit of the investor. Springstone Financial, LLC (Springstone), is a wholly-owned subsidiary of LendingClub that facilitates the origination of education and patient finance loans by third-party issuing banks.

The accompanying unaudited condensed consolidated financial statements include LendingClub, its subsidiaries (collectively referred to as the Company, we, or us) and consolidated variable interest entities (VIEs). Noncontrolling interests are reported as a separate component of consolidated equity from the equity attributable to LendingClub’s stockholders for all periods presented. All intercompany balances and transactions have been eliminated. These condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and, in the opinion of management, contain all adjustments, consisting of only normal recurring adjustments, necessary for the fair statement of the results and financial position for the periods presented. These accounting principles require management to make certain estimates and assumptions that affect the amounts in the accompanying financial statements. These estimates and assumptions are inherently subjective in nature and actual results may differ from these estimates and assumptions, and the differences could be material. Results reported in the interim periods are not necessarily indicative of the results for the full year or any other interim period. Certain prior-period amounts have been reclassified to conform to the current period presentation.

In the first quarter of 2019, the Company presented a new sub-total caption called “Net investor revenue” on its Condensed Consolidated Statements of Operations and also reordered the presentation of certain of its existing captions. The Company believes this new presentation allows shareholders a view of net investor revenue and our capital markets activity, which includes net interest income and fair value adjustments of loans and securities available for sale, gain on sales of loans invested in by the Company and investor fees from servicing of loans. This change in presentation had no impact on prior period amounts presented.

The Company presents loans under a number of different captions to align the assets to their associated liabilities, if any. “Loans held for investment at fair value” are loans which are related to the Company’s retail notes, certificates and secured borrowings program. The Company is not exposed to market risk, interest rate risk or credit risk on these loans and all loan cash flows flow directly to the retail note, certificate and secured borrowing owners. The associated liability for this loan category is included in the caption “Notes, certificates and secured borrowings at fair value.” Loans included in “Loans held for investment by the Company at fair value” and “Loans held for sale by the Company at fair value” are loans which the Company has purchased and from which the Company earns interest income and records net fair value adjustments in earnings for changes in the valuation of loans.

The accompanying interim condensed consolidated financial statements and these related notes should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (Annual Report) filed on February 20, 2019.

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

2. Summary of Significant Accounting Policies

The Company’s significant accounting policies are discussed in “ Part II – Item 8 – Financial Statements and Supplementary Data – Note 2. Summary of Significant Accounting Policies ” in the Annual Report. There have been no changes to these significant accounting policies for the first quarter of 2019 , except as noted below.

Adoption of New Accounting Standards

The Company adopted the following accounting standards during the first quarter of 2019 :

ASU 2016-02, Leases (Topic 842), requires lessees to record on their balance sheets a lease liability for the obligation to make lease payments and a right-of-use (ROU) asset for the right to use the underlying asset for the lease term. The Company adopted Topic 842 as of January 1, 2019 and has elected not to restate comparative periods presented in the condensed consolidated financial statements. The Company has chosen not to elect the practical expedients permitted under the transition guidance within the new standard, which among other things, permits entities to carry forward their historical lease identification. The Company has made an accounting policy election to not recognize lease liabilities and ROU assets for short-term leases, which are leases with initial terms of 12 months or less and for which there is not a purchase option that is reasonably certain to be exercised. All leases within the Company’s portfolio are classified as operating leases.

Adoption of Topic 842 had an impact on the Company’s Condensed Consolidated Balance Sheets but did not have an impact on the Company’s Condensed Consolidated Statements of Operations or Condensed Consolidated Statements of Cash Flows . The most significant impact was the recognition of ROU assets and lease liabilities of $ 95.2 million and $110.1 million , respectively, with no cumulative effect in retained earnings. The difference between the ROU assets and lease liabilities is the unamortized balance of deferred rent, which prior to January 1, 2019, was included as a separate liability within Accrued expenses and other liabilities. The operating lease expenses are included in Other general and administrative expense and sublease income is recorded in Other revenue in the Company’s Condensed Consolidated Statements of Operations . The Company included the disclosures required by ASU 2016-02 in “ Note 17. Leases .”

New Accounting Standards Not Yet Adopted

Updates to new accounting standards issued and not yet adopted are as follows:

In June 2016, the FASB amended guidance related to impairment of financial instruments as part of ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which will be effective on January 1, 2020. The guidance replaces the incurred loss impairment methodology with an expected credit loss model for which a company recognizes an allowance based on the estimate of expected credit loss. The Company accounts for its loans at fair value through net income, which is outside the scope of Topic 326. For available for sale debt securities, the guidance will require recognition of expected credit losses by recognizing an allowance for credit losses when the fair value of the security is below amortized cost and the recognition of this allowance is limited to the difference between the security’s amortized cost basis and fair value. The Company has created a working group consisting of key stakeholders from finance to implement the targeted amendments to the available for sale debt securities impairment model. The Company is evaluating the impact this ASU will have on its financial position, results of operations, and cash flows.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement , which modifies the disclosure requirements on fair value measurements by removing, modifying, or adding certain disclosures. The ASU eliminates such disclosures as the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

valuation processes for Level 3 fair value measurements. The ASU adds new disclosure requirements for Level 3 measurements. The new guidance is effective on January 1, 2020 and permits early adoption of either the entire standard or only the provisions that eliminate or modify the requirements. The Company is evaluating the impact this ASU will have on its disclosures.

In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software – (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract , which requires a customer in a hosting arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. The standard is effective on January 1, 2020, with early adoption permitted. The amendments in this ASU can be applied either retrospectively or prospectively to all implementation costs after the date of adoption. The Company is evaluating the impact this ASU will have on its financial position, results of operations, and cash flows.

3. Revenue from Contracts with Customers

The Company’s revenue from contracts with customers includes transaction fees and referral fees. Referral fees are presented as a component of “Other revenue” in the Condensed Consolidated Statements of Operations .

The following tables present the Company’s revenue from contracts with customers, disaggregated by revenue source for services transferred over time, for the first quarters of 2019 and 2018 :



	Three Months Ended March 31,
	2019		2018
Transaction fees	$	135,397	$	111,182
Referral fees	695		836
Total revenue from contracts with customers	$	136,092	$	112,018

Revenues are recognized when control of the promised services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. For the first quarters of 2019 and 2018 , the Company did not have any revenue from contracts with customers for services transferred at a point of time. For additional detail on the Company’s accounting policy regarding revenue recognition, see “ Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 2. Summary of Significant Accounting Policies ” in the Annual Report.

The Company recognizes transaction fees at the time it receives such fees. Referral fees are received after the Company satisfies its performance obligation. As of March 31, 2019 and December 31, 2018 , accounts receivable from these fees were $0.2 million and $0.5 million , respectively. The Company had no bad debt expense for the first quarters of 2019 and 2018 . The Company had no contract assets, contract liabilities, or deferred contract costs recorded as of both March 31, 2019 and December 31, 2018 . Additionally, the Company did not recognize any revenue from performance obligations related to prior periods (for example, due to changes in transaction price) for the first quarters of 2019 and 2018 .

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

4. Net Loss Per Share

The following table details the computation of the Company’s basic and diluted net loss per share:



	Three Months Ended March 31,
	2019			2018
LendingClub net loss	$	(19,935	)	$	(31,181	)
Weighted-average common shares – Basic	430,544,355			418,299,301
Weighted-average common shares – Diluted	430,544,355			418,299,301
Net loss per share attributable to LendingClub:
Basic	$	(0.05	)	$	(0.07	)
Diluted	$	(0.05	)	$	(0.07	)

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

5. Securities Available for Sale

The amortized cost, gross unrealized gains and losses, and fair value of securities available for sale as of March 31, 2019 and December 31, 2018 , were as follows:



March 31, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
CLUB Certificate asset-backed securities ⁽¹⁾	$	67,869	$	70	$	(178	)	$	67,761
Securitized asset-backed senior securities ⁽¹⁾⁽²⁾	59,749		330		—			60,079
Certificates of deposit	17,729		—		—			17,729
Corporate debt securities	14,778		12		—			14,790
Asset-backed securities	13,631		1		(1		)	13,631
Securitized asset-backed subordinated residual certificates ⁽¹⁾	11,550		194		(80		)	11,664
Commercial paper	11,355		—		—			11,355
Other securities	500		—		—			500
Total securities available for sale	$	197,161	$	607	$	(259	)	$	197,509


December 31, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securitized asset-backed senior securities ⁽¹⁾⁽²⁾	$	56,363	$	188	$	(62	)	$	56,489
CLUB Certificate asset-backed securities ⁽¹⁾	48,505		150		(225		)	48,430
Corporate debt securities	17,339		1		(12		)	17,328
Certificates of deposit	14,929		—		—			14,929
Securitized asset-backed subordinated residual certificates ⁽¹⁾	11,602		249		(2		)	11,849
Asset-backed securities	11,232		—		(7		)	11,225
Commercial paper	9,720		—		—			9,720
Other securities	499		—		—			499
Total securities available for sale	$	170,189	$	588	$	(308	)	$	170,469

⁽¹⁾

As of March 31, 2019 , and December 31, 2018 , $138.1 million and $115.1 million , respectively, of the asset-backed securities related to structured program transactions at fair value are subject to restrictions on transfer pursuant to the Company's obligations as a “sponsor” under the U.S. Risk Retention Rules (as more fully described in “ Part I – Item 1A. Risk Factors – Risk retention rules may increase our compliance costs, impair our liquidity and otherwise adversely affect our operating results ” in the Annual Report.).


⁽²⁾	Includes $45.2 million and $53.6 million of securities available for sale pledged as collateral at fair value as of March 31, 2019 , and December 31, 2018 , respectively.

The senior securities and the subordinated residual certificates related to Company-sponsored securitization transactions and the retained portion of any CLUB Certificates are accounted for as securities available for sale, as described in “ Note 7. Securitizations and Variable Interest Entities .”

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

A summary of securities available for sale with unrealized losses as of March 31, 2019 and December 31, 2018 , aggregated by period of continuous unrealized loss, is as follows:



	Less than 12 months					12 months or longer					Total
March 31, 2019	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Asset-backed securities related to structured program transactions	$	10,892	$	(258	)	$	—	$	—		$	10,892	$	(258	)
Asset-backed securities	3,906		(1		)	—		—			3,906		(1		)
Total securities with unrealized losses ⁽¹⁾	$	14,798	$	(259	)	$	—	$	—		$	14,798	$	(259	)


	Less than 12 months					12 months or longer					Total
December 31, 2018	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Asset-backed securities related to structured program transactions	$	49,047	$	(285	)	$	1,745	$	(4	)	$	50,792	$	(289	)
Corporate debt securities	14,538		(12		)	—		—			14,538		(12		)
Asset-backed securities	11,208		(7		)	—		—			11,208		(7		)
Total securities with unrealized losses ⁽¹⁾	$	74,793	$	(304	)	$	1,745	$	(4	)	$	76,538	$	(308	)


⁽¹⁾	The number of investment positions with unrealized losses at March 31, 2019 and December 31, 2018 totaled 25 and 56 , respectively.

During the first quarters of 2019 and 2018 , the Company recognized $1.2 million and $1.3 million , respectively, in other-than-temporary impairment charges on its securitized asset-backed subordinated residual certificates and CLUB Certificate asset-backed securities. There were no credit losses recognized into earnings for other-than-temporarily impaired securities held by the Company during the first quarters of 2019 and 2018 for which a portion of the impairment was previously recognized in other comprehensive income.

The contractual maturities of securities available for sale at March 31, 2019 , were as follows:



	Amortized Cost		Fair Value
Within 1 year:
Certificates of deposit	$	17,729	$	17,729
Corporate debt securities	14,778		14,790
Commercial paper	11,355		11,355
Asset-backed securities	10,376		10,376
Other securities	500		500
Total	54,738		54,750
After 1 year through 5 years:
Asset-backed securities	3,255		3,255
Total	3,255		3,255
Asset-backed securities related to structured program transactions	139,168		139,504
Total securities available for sale	$	197,161	$	197,509

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

During the first quarter s of 2019 and 2018 , the Company and Consumer Loan Underlying Bond Depositor LLC (Depositor), a subsidiary of the Company, sold a combined $785.5 million and $440.6 million , respectively, in asset-backed securities related to structured program transactions. There were no realized gains or losses related to such sales. For further information, see “ Note 7. Securitizations and Variable Interest Entities .” Proceeds from other sales of securities available for sale during the first quarter of 2019 were $3.1 million . There were no other sales of securities available for sale during the first quarter of 2018 .

6. Loans Held for Investment, Loans Held for Sale, Notes, Certificates and Secured Borrowings

Loans Held for Investment, Notes, Certificates and Secured Borrowings

The Company issues member payment dependent notes and the LC Trust issues certificates as a means to allow investors to invest in the corresponding loans. At March 31, 2019 and December 31, 2018 , loans held for investment, notes, certificates and secured borrowings measured at fair value on a recurring basis were as follows:



	Loans Held for Investment						Notes, Certificates and Secured Borrowings
	March 31, 2019			December 31, 2018			March 31, 2019			December 31, 2018
Aggregate principal balance outstanding	$	1,805,078		$	2,013,438		$	1,805,078		$	2,033,258
Net fair value adjustments	(106,880		)	(130,187		)	(101,852		)	(127,383		)
Fair value	$	1,698,198		$	1,883,251		$	1,703,226		$	1,905,875

At March 31, 2019 , $59.4 million of the aggregate principal balance outstanding and a fair value of $56.5 million included in “Loans Held for Investment” were pledged as collateral for secured borrowings. At December 31, 2018 , $81.1 million of the aggregate principal balance outstanding and a fair value of $76.5 million included in “Loans Held for Investment” were pledged as collateral for secured borrowings. See “ Note 14. Secured Borrowings ” for additional information.

The following table provides the balances of notes, certificates and secured borrowings at fair value at the end of the periods indicated:



	March 31, 2019		December 31, 2018
Notes	$	1,101,961	$	1,176,333
Certificates	539,694		648,908
Secured borrowings	61,571		80,634
Total notes, certificates and secured borrowings	$	1,703,226	$	1,905,875

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Loans Invested in by the Company

At March 31, 2019 and December 31, 2018 , loans invested in by the Company for which there were no associated notes, certificates or secured borrowings (with the exception of $254.8 million and $286.3 million in loans at fair value in a consolidated securitization trust, respectively) were as follows:



	Loans Invested in by the Company
	Loans Held for Investment						Loans Held for Sale						Total
	March 31, 2019			December 31, 2018			March 31, 2019			December 31, 2018			March 31, 2019			December 31, 2018
Aggregate principal balance outstanding	$	11,233		$	3,518		$	584,872		$	869,715		$	596,105		$	873,233
Net fair value adjustments	(2,476		)	(935		)	(32,706		)	(29,694		)	(35,182		)	(30,629		)
Fair value	$	8,757		$	2,583		$	552,166		$	840,021		$	560,923		$	842,604

The net fair value adjustments of $(35.2) million and $(30.6) million represent net unrealized losses recorded in earnings on loans invested in by the Company at March 31, 2019 and December 31, 2018 , respectively. Total fair value adjustments recorded in earnings on loans invested in by the Company of $(32.5) million during the first quarter of 2019 include net realized losses and changes in net unrealized losses. Net interest income earned on loans invested in by the Company during the first quarter of 2019 was $20.5 million .

The Company used its own capital to purchase $843.9 million in loans during the first quarter of 2019 and sold $1.0 billion in loans during the first quarter of 2019 , of which $834.5 million was securitized or sold to series trusts in connection with the issuance of CLUB Certificates and $211.3 million was sold to whole loan investors. The aggregate principal balance outstanding of loans invested in by the Company was $596.1 million at March 31, 2019 , of which $314.0 million was held for sale primarily for future anticipated securitization and CLUB Certificate transactions and sales to loan investors and $270.9 million was related to the consolidation of a securitization trust. See “ Note 7. Securitizations and Variable Interest Entities ” for further discussion on the Company’s consolidated securitization trust and “ Note 8. Fair Value of Assets and Liabilities ” for a fair value rollforward of loans invested in by the Company for the first quarters of 2019 and 2018 .

At March 31, 2019 and December 31, 2018 , $270.9 million and $294.8 million of the aggregate principal balance outstanding included in “Loans held for sale by the Company at fair value,” related to a consolidated securitization trust, was pledged as collateral for payables to securitization note holders, respectively. Additionally, at March 31, 2019 and December 31, 2018 , $193.0 million and $467.4 million of the aggregate principal balance outstanding included in “Loans held for sale by the Company at fair value” was pledged as collateral for the Company’s warehouse credit facilities, respectively. See “ Note 13. Debt ” for additional information related to these debt obligations.

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Loans that were 90 days or more past due (including non-accrual loans) were as follows:



	March 31, 2019			December 31, 2018
Loans held for investment and loans held for sale:
Outstanding principal balance	$	16,400		$	19,707
Net fair value adjustments	(13,295		)	(16,166		)
Fair value	$	3,105		$	3,541
Number of loans (not in thousands)	2,041			2,309

Loans invested in by the Company:
Outstanding principal balance	$	2,491		$	2,060
Net fair value adjustments	(2,057		)	(1,710		)
Fair value	$	434		$	350
Number of loans (not in thousands)	414			356

7. Securitizations and Variable Interest Entities

VIE Assets and Liabilities

The Company has segregated its involvement with VIEs between consolidated VIEs and unconsolidated VIEs. The following tables provide the classifications of assets and liabilities on the Company’s Condensed Consolidated Balance Sheets for its transactions with VIEs at March 31, 2019 and December 31, 2018 . Additionally, the assets and liabilities in the table below include third-party assets and liabilities of consolidated and unconsolidated VIEs only and exclude intercompany balances that eliminate in consolidation:



March 31, 2019	Consolidated VIEs		Unconsolidated VIEs		Total
Assets
Restricted cash	$	25,593	$	—	$	25,593
Securities available for sale at fair value	—		139,504		139,504
Loans held for investment at fair value	539,694		—		539,694
Loans held for sale by the Company at fair value	437,432		—		437,432
Accrued interest receivable	8,322		911		9,233
Other assets	2,513		33,679		36,192
Total assets	$	1,013,554	$	174,094	$	1,187,648
Liabilities
Accrued interest payable	$	5,910	$	—	$	5,910
Accrued expenses and other liabilities	354		—		354
Notes, certificates and secured borrowings at fair value	539,694		—		539,694
Payable to securitization note holders	233,269		—		233,269
Credit facilities and securities sold under repurchase agreements	122,396		—		122,396
Total liabilities	901,623		—		901,623
Total net assets	$	111,931	$	174,094	$	286,025

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)



December 31, 2018	Consolidated VIEs		Unconsolidated VIEs		Total
Assets
Restricted cash	$	43,918	$	—	$	43,918
Securities available for sale at fair value	—		116,768		116,768
Loans held for investment at fair value	642,094		—		642,094
Loans held for sale by the Company at fair value	739,216		—		739,216
Accrued interest receivable	10,438		1,214		11,652
Other assets	2,498		29,206		31,704
Total assets	$	1,438,164	$	147,188	$	1,585,352
Liabilities
Accrued interest payable	$	7,594	$	—	$	7,594
Accrued expenses and other liabilities	1,627		—		1,627
Notes, certificates and secured borrowings at fair value	648,908		—		648,908
Payable to securitization note holders	256,354		—		256,354
Credit facilities and securities sold under repurchase agreements	306,790		57,012		363,802
Total liabilities	1,221,273		57,012		1,278,285
Total net assets	$	216,891	$	90,176	$	307,067

Consolidated VIEs

The Company consolidates VIEs when it is deemed to be the primary beneficiary. The primary beneficiary is the party that has both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the entity. A consolidation analysis can generally be performed qualitatively; however, if it is not readily apparent that the Company is not the primary beneficiary, a quantitative analysis may also be performed. See “ Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 2. Summary of Significant Accounting Policies ” in the Annual Report for additional information.

LC Trust I Certificates

The Company established the LC Trust for the purpose of acquiring and holding loans for the sole benefit of certain investors that have purchased trust certificates issued by the LC Trust. The Company is obligated to ensure that the LC Trust meets minimum capital requirements with respect to funding the administrative activities and maintaining the operations of the LC Trust.

Consolidated Securitizations

On December 13, 2018, the Company consolidated a securitization trust because the Company was the primary beneficiary. As a result, the senior securities held by third-party investors were classified as “Payable to securitization note holders” in the Company’s Condensed Consolidated Balance Sheets as of December 31, 2018 . Additionally, the Company’s continued involvement includes loan servicing responsibilities for which it receives servicing fees over the life of the underlying loans.

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Warehouse Credit Facilities

The Company established certain entities (deemed to be VIEs) to enter into warehouse credit facilities for the purpose of purchasing loans from LendingClub. See “ Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 14. Debt ” in the Annual Report for additional information.

The following tables present a summary of financial assets and liabilities from the Company’s involvement with consolidated VIEs at March 31, 2019 and December 31, 2018 :



March 31, 2019	Assets		Liabilities			Net Assets
LC Trust certificates	$	546,313	$	(544,732	)	$	1,581
Securitizations	271,755		(233,702		)	38,053
Warehouse credit facilities	195,486		(123,189		)	72,297
Total consolidated VIEs	$	1,013,554	$	(901,623	)	$	111,931



December 31, 2018	Assets		Liabilities			Net Assets
LC Trust certificates	$	657,339	$	(656,088	)	$	1,251
Securitizations	297,821		(256,901		)	40,920
Warehouse credit facility	483,004		(308,284		)	174,720
Total consolidated VIEs	$	1,438,164	$	(1,221,273	)	$	216,891

The creditors of the VIEs above have no recourse to the general credit of the Company as the primary beneficiary of the VIEs and the liabilities of the VIEs can only be settled by the respective VIE’s assets.

Unconsolidated VIEs

The Company’s transactions with unconsolidated VIEs include securitizations of unsecured personal whole loans, CLUB Certificate transactions, and sales of whole loans to VIEs. The Company has various forms of involvement with VIEs, including servicing of loans and holding senior or subordinated residual interests in the VIEs. The Company considers continued involvement in an unconsolidated VIE insignificant if it is the sponsor and servicer and does not hold other significant variable interests. In these instances, the Company’s involvement with the VIE is in the role as an agent and without significant participation in the economics of the VIE. In connection with these securitizations, as well as our whole loan sales and CLUB Certificate transactions, we made certain customary representations, warranties and covenants. See “ Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 2. Summary of Significant Accounting Policies ” in the Annual Report for additional information.

Unconsolidated Securitizations

The Company sponsors securitizations of unsecured personal whole loans through issuances of asset-backed securities, which are collateralized by unsecured personal whole loans that are contributed by the Company and third parties. In connection with these securitizations, the Company is the sponsor and establishes securitization trusts to purchase the loans from the Company and such third parties. The accounting for Company-sponsored securitizations is based on a primary beneficiary analysis to determine whether the underlying trusts should be consolidated. If the VIEs are not consolidated and the transfer of the loans from the Company to the securitization trust meets sale accounting criteria, then the Company will recognize a gain or loss on sales of loans. The net

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

proceeds of the sale represent the fair value of any assets obtained or liabilities incurred as part of the transaction, including, but not limited to, servicing assets, retained securities, and recourse obligations. The assets are transferred into a trust such that the assets are legally isolated from the creditors of the Company and are not available to satisfy obligations of the Company. These assets can only be used to settle obligations of the underlying securitization trusts.

The Company enters into separate servicing agreements with the VIEs and holds at least 5% of the beneficial interests issued by the VIEs to comply with regulatory risk retention rules. The beneficial interests retained by the Company consist of senior securities and subordinated residual certificates and are accounted for as securities available for sale. In the case of certain securitization transactions, the Company has also agreed to repurchase or substitute loans for which a borrower fails to make the first payment due under a loan.

Unconsolidated CLUB Certificates

The Company sponsors the sale of unsecured personal whole loans funded through the issuance of pass-through securities called CLUB Certificates, which are collateralized by loans transferred to the issuing VIE. The CLUB Certificate is an instrument that trades in the over-the-counter market with a CUSIP. The CLUB Certificate transaction typically involves the transfer of unsecured personal whole loans to a series of a master trust. The accounting for CLUB Certificates is based on a primary beneficiary analysis to determine whether the series trust should be consolidated. If the series trust is not consolidated and the transfer of the loans from the Company to the series trust meets sale accounting criteria, then the Company will recognize gain or loss on sales of loans. The net proceeds of the sale represent the fair value of any assets obtained or liabilities incurred as part of the transaction, including, but not limited to, servicing assets, retained securities, and recourse obligations. In addition, the Company enters into a servicing agreement with each applicable series trust and holds at least 5% of the beneficial interests issued by the series trust to comply with regulatory risk retention rules. The portion of the CLUB Certificates retained by the Company are accounted for as securities available for sale. Additionally, the Company’s continued involvement includes loan servicing responsibilities for which it receives servicing fees over the life of the underlying loans.

Investment Fund

The Company has an equity investment in a private fund (Investment Fund) that participates in a family of funds with other unrelated third parties. This family of funds purchases whole loans and interests in loans from the Company, as well as other assets from third parties unrelated to the Company. As of March 31, 2019 , the Company had an ownership interest of approximately 23% in the Investment Fund. The Company’s investment is deemed to be a variable interest in the Investment Fund because the Company shares in the expected returns and losses of the Investment Fund. At March 31, 2019 , the Company’s investment was $8.1 million , which is recognized in “Other assets” on the Company’s Condensed Consolidated Balance Sheets .

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

The following tables summarize unconsolidated VIEs with which the Company has significant continuing involvement, but is not the primary beneficiary at March 31, 2019 and December 31, 2018 :



March 31, 2019			Carrying Value
	Total VIE Assets		Securities Available for Sale		Accrued Interest Receivable		Other Assets		Accrued Expenses and Other Liabilities		Securities Sold Under Repurchase Agreements		Net Assets
Securitizations	$	1,413,708	$	71,743	$	555	$	12,761	$	—	$	—	$	85,059
CLUB Certificates	1,375,940		67,761		356		12,861		—		—		80,978
Investment Fund	35,059		—		—		8,057		—		—		8,057
Total unconsolidated VIEs	$	2,824,707	$	139,504	$	911	$	33,679	$	—	$	—	$	174,094



March 31, 2019	Maximum Exposure to Loss
	Securities Available for Sale		Accrued Interest Receivable		Other Assets		Accrued Expenses and Other Liabilities		Securities Sold Under Repurchase Agreements		Total Exposure
Securitizations	$	71,743	$	555	$	12,761	$	—	$	—	$	85,059
CLUB Certificates	67,761		356		12,861		—		—		80,978
Investment Fund	—		—		8,057		—		—		8,057
Total unconsolidated VIEs	$	139,504	$	911	$	33,679	$	—	$	—	$	174,094



December 31, 2018			Carrying Value
	Total VIE Assets		Securities Available for Sale		Accrued Interest Receivable		Other Assets		Accrued Expenses and Other Liabilities		Securities Sold Under Repurchase Agreements			Net Assets
Securitizations	$	1,359,367	$	68,338	$	958	$	11,838	$	—	$	(57,012	)	$	24,122
CLUB Certificates	973,815		48,430		256		9,115		—		—			57,801
Investment Fund	35,157		—		—		8,253		—		—			8,253
Total unconsolidated VIEs	$	2,368,339	$	116,768	$	1,214	$	29,206	$	—	$	(57,012	)	$	90,176



December 31, 2018	Maximum Exposure to Loss
	Securities Available for Sale		Accrued Interest Receivable		Other Assets		Accrued Expenses and Other Liabilities		Securities Sold Under Repurchase Agreements		Total Exposure
Securitizations	$	68,339	$	958	$	11,838	$	—	$	—	$	81,135
CLUB Certificates	48,431		256		9,115		—		—		57,802
Investment Fund	—		—		8,253		—		—		8,253
Total unconsolidated VIEs	$	116,770	$	1,214	$	29,206	$	—	$	—	$	147,190

“Total VIE Assets” represents the remaining principal balance of loans held by unconsolidated VIEs with respect to securitizations and CLUB Certificates, and the net assets held by the Investment Fund using the most current information available. “Securities Available for Sale,” “Accrued Interest Receivable,” “Other Assets” and “Accrued Expenses and Other Liabilities” are the balances in the Company’s Condensed Consolidated Balance Sheets related to its involvement with the unconsolidated VIEs. “Other Assets” includes the Company’s servicing assets and

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

servicing receivables associated with loans transferred as part of securitizations and CLUB Certificates and the Company’s equity investment with respect to the Investment Fund. “Total Exposure” refers to the Company’s maximum exposure to loss from its involvement with unconsolidated VIEs. It represents estimated loss that would be incurred under severe, hypothetical circumstances, for which the Company believes the possibility is extremely remote, such as where the value of interests and any associated collateral declines to zero. Accordingly, this required disclosure is not an indication of expected losses.

The following table summarizes activity related to the unconsolidated personal whole loan securitizations and personal whole loan CLUB Certificates with the transfers accounted for as a sale on the Company’s condensed consolidated financial statements for the first quarters of 2019 and 2018 :



Three Months Ended March 31,	2019				2018
	Personal Whole Loan Securitizations		Personal Whole Loan CLUB Certificates		Personal Whole Loan Securitizations		Personal Whole Loan CLUB Certificates
Principal derecognized from loans securitized or sold	$	293,419	$	541,128	$	355,248	$	161,875
Net gains (losses) recognized from loans securitized or sold	$	2,932	$	5,824	$	3,097	$	1,457
Fair value of senior securities and subordinated residual certificates retained upon settlement ⁽¹⁾	$	14,555	$	26,787	$	18,493	$	8,102
Cash proceeds from loans securitized or sold	$	266,235	$	513,885	$	283,272	$	154,839
Cash proceeds from servicing and other administrative fees on loans securitized or sold	$	3,570	$	2,943	$	2,350	$	135
Cash proceeds for interest received on senior securities and subordinated residual certificates	$	1,439	$	1,435	$	296	$	82


⁽¹⁾	For personal whole loan securitizations, the Company retained senior securities of $13.4 million and $15.1 million for the first quarters of 2019 and 2018 , respectively, and subordinated residual certificates of $1.1 million and $3.4 million for the first quarters of 2019 and 2018 , respectively.

Off-Balance Sheet Loans

Off-balance sheet loans primarily relate to structured program transactions for which the Company has some form of continuing involvement, including as servicer. Delinquent loans are comprised of loans 31 days or more past due, including non-accrual loans. For loans related to structured program transactions where servicing is the only form of continuing involvement, the Company would only experience a loss if it was required to repurchase a loan due to a breach in representations and warranties associated with its loan sale or servicing contracts.

As of March 31, 2019 , the aggregate unpaid principal balance of the off-balance sheet loans pursuant to structured program transactions was $2.8 billion , of which $89.0 million was attributable to off-balance sheet loans that were 31 days or more past due. As of December 31, 2018 , the aggregate unpaid principal balance of the off-balance sheet loans pursuant to structured program transactions was $2.3 billion , of which $87.1 million was attributable to off-balance sheet loans that were 31 days or more past due.

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Retained Interests from Unconsolidated VIEs

The Company and other investors in the subordinated interests issued by securitization trusts have rights to cash flows only after the investors holding the senior securities issued by the securitization trusts have first received their contractual cash flows. The investors and the securitization trusts have no direct recourse to the Company’s assets, and holders of the securities issued by the securitization trusts can look only to the assets of the securitization trusts that issued their securities for payment. The beneficial interests held by the Company and the Company’s MOA are subject principally to the credit and prepayment risk stemming from the underlying unsecured personal whole loans.

See “ Note 8. Fair Value of Assets and Liabilities ” for additional information on the fair value sensitivity of asset-backed securities related to structured program transactions.

8. Fair Value of Assets and Liabilities

For a description of the fair value hierarchy and the Company’s fair value methodologies, see “ Part II – Item 8. Financial Statements and Supplementary Data – Note 2. Summary of Significant Accounting Policies ” in the Annual Report. The Company records certain assets and liabilities at fair value as listed in the following tables.

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Financial Instruments, Assets and Liabilities Recorded at Fair Value

The following tables present the fair value hierarchy for assets and liabilities measured at fair value at March 31, 2019 and December 31, 2018 :



March 31, 2019	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Balance at Fair Value
Assets:
Loans held for investment	$	—	$	—	$	1,698,198	$	1,698,198
Loans held for investment by the Company	—		—		8,757		8,757
Loans held for sale by the Company	—		—		552,166		552,166
Securities available for sale:
Securitized asset-backed senior securities and subordinated residual certificates	—		60,079		11,664		71,743
CLUB Certificate asset-backed securities	—		—		67,761		67,761
Certificates of deposit	—		17,729		—		17,729
Corporate debt securities	—		14,790		—		14,790
Asset-backed securities	—		13,631		—		13,631
Commercial paper	—		11,355		—		11,355
Other securities	—		500		—		500
Total securities available for sale	—		118,084		79,425		197,509
Servicing assets	—		—		71,848		71,848
Total assets	$	—	$	118,084	$	2,410,394	$	2,528,478

Liabilities:
Notes, certificates and secured borrowings	$	—	$	—	$	1,703,226	$	1,703,226
Loan trailing fee liability	—		—		10,061		10,061
Total liabilities	$	—	$	—	$	1,713,287	$	1,713,287

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)



December 31, 2018	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Balance at Fair Value
Assets:
Loans held for investment	$	—	$	—	$	1,883,251	$	1,883,251
Loans held for investment by the Company	—		—		2,583		2,583
Loans held for sale by the Company	—		—		840,021		840,021
Securities available for sale:
Securitized asset-backed senior securities and subordinated residual certificates	—		56,489		11,849		68,338
CLUB Certificate asset-backed securities	—		—		48,430		48,430
Corporate debt securities	—		17,328		—		17,328
Certificates of deposit	—		14,929		—		14,929
Asset-backed securities	—		11,225		—		11,225
Commercial paper	—		9,720		—		9,720
Other securities	—		499		—		499
Total securities available for sale	—		110,190		60,279		170,469
Servicing assets	—		—		64,006		64,006
Total assets	$	—	$	110,190	$	2,850,140	$	2,960,330

Liabilities:
Notes, certificates and secured borrowings	$	—	$	—	$	1,905,875	$	1,905,875
Loan trailing fee liability	—		—		10,010		10,010
Total liabilities	$	—	$	—	$	1,915,885	$	1,915,885

The Company has elected the fair value option for notes, certificates, secured borrowings, and the loan trailing fee liability. Changes in the fair value of these financial liabilities caused by a change in the Company’s risk are reported in other comprehensive income (OCI). For the first quarter of 2019 , the amount reported in OCI is zero because these financial liabilities are either payable only upon receipt of cash flows from underlying loans or secured by cash collateral.

Financial instruments are categorized in the valuation hierarchy based on the significance of unobservable factors in the overall fair value measurement. Since the Company’s loans held for investment and related notes, certificates, and secured borrowings, loans held for sale, loan servicing rights, asset-backed securities related to structured program transactions, and loan trailing fee liability do not trade in an active market with readily observable prices, the Company uses significant unobservable inputs to measure the fair value of these assets and liabilities. These fair value estimates may also include observable, actively quoted components derived from external sources. As a result, changes in fair value for assets and liabilities within the Level 2 or Level 3 categories may include changes in fair value that were attributable to observable and unobservable inputs, respectively. The Company primarily uses a discounted cash flow model to estimate the fair value of Level 3 instruments based on the present value of estimated future cash flows. This model uses inputs that are inherently judgmental and reflect our best estimates of the assumptions a market participant would use to calculate fair value. The Company did not transfer any assets or liabilities in or out of Level 3 during the first quarter of 2019 or the year ended December 31, 2018 .

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Fair valuation adjustments are recorded through earnings related to Level 3 instruments for the first quarters of 2019 and 2018 . Certain unobservable inputs may (in isolation) have either a directionally consistent or opposite impact on the fair value of the financial instrument for a given change in that input. When multiple inputs are used within the valuation techniques, a change in one input in a certain direction may be offset by an opposite change from another input.

Loans Held for Investment, Notes, Certificates and Secured Borrowings

Significant Unobservable Inputs

The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for loans held for investment, notes, certificates and secured

borrowings at March 31, 2019 and December 31, 2018 :



	Loans Held for Investment, Notes, Certificates and Secured Borrowings
	March 31, 2019						December 31, 2018
	Minimum		Maximum		Weighted- Average		Minimum		Maximum		Weighted- Average
Discount rates	6.1	%	12.2	%	8.8	%	6.3	%	16.4	%	9.1	%
Net cumulative expected loss rates ⁽¹⁾	2.8	%	36.4	%	12.6	%	2.8	%	36.9	%	12.8	%
Cumulative expected prepayment rates ⁽¹⁾	28.0	%	35.8	%	31.4	%	27.8	%	40.3	%	31.2	%


⁽¹⁾	Expressed as a percentage of the original principal balance of the loan, note, certificate or secured borrowing.

Significant Recurring Level 3 Fair Value Input Sensitivity

At March 31, 2019 and December 31, 2018 , the discounted cash flow methodology used to estimate the note, certificate and secured borrowings’ fair values used the same projected net cash flows as their related loans. As demonstrated by the following tables, the fair value adjustments for loans held for investment and loans held for sale were largely offset by the fair value adjustments of the notes, certificates and secured borrowings due to the payment dependent design of the notes, certificates and secured borrowings and because the principal balances of the loans were close to the combined principal balances of the notes, certificates and secured borrowings.

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Fair Value Reconciliation

The following tables present additional information about Level 3 loans held for investment, loans held for sale, and notes, certificates and secured borrowings measured at fair value on a recurring basis for the first quarters of 2019 and 2018 :



	Loans Held for Investment									Loans Held for Sale									Notes, Certificates and Secured Borrowings
	Outstanding Principal Balance			Valuation Adjustment			Fair Value			Outstanding Principal Balance			Valuation Adjustment			Fair Value			Outstanding Principal Balance			Valuation Adjustment			Fair Value
Balance at December 31, 2018	$	2,013,438		$	(130,187	)	$	1,883,251		$	—		$	—		$	—		$	2,033,258		$	(127,383	)	$	1,905,875
Purchases	193,092			(21		)	193,071			563,036			—			563,036			—			—			—
Transfers (to) from loans held for investment and/or loans held for sale	(223		)	—			(223		)	—			—			—			—			—			—
Issuances	—			—			—			—			—			—			193,092			—			193,092
Sales	—			—			—			(563,036		)	(1,165		)	(564,201		)	—			—			—
Principal payments and retirements	(340,444		)	—			(340,444		)	—			—			—			(360,487		)	14			(360,473		)
Charge-offs, net of recoveries	(60,785		)	46,876			(13,909		)	—			—			—			(60,785		)	46,876			(13,909		)
Change in fair value recorded in earnings	—			(23,548		)	(23,548		)	—			1,165			1,165			—			(21,359		)	(21,359		)
Balance at March 31, 2019	$	1,805,078		$	(106,880	)	$	1,698,198		$	—		$	—		$	—		$	1,805,078		$	(101,852	)	$	1,703,226

	Loans Held for Investment									Loans Held for Sale									Notes, Certificates and Secured Borrowings
	Outstanding Principal Balance			Valuation Adjustment			Fair Value			Outstanding Principal Balance			Valuation Adjustment			Fair Value			Outstanding Principal Balance			Valuation Adjustment			Fair Value
Balance at December 31, 2017	$	3,141,391		$	(209,066	)	$	2,932,325		$	—		$	—		$	—		$	3,161,080		$	(206,312	)	$	2,954,768
Purchases	292,114			9			292,123			1,133,277			(1,772		)	1,131,505			—			—			—
Issuances	—			—			—			—			—			—			292,461			—			292,461
Sales	—			—			—			(1,133,277		)	835			(1,132,442		)	—			—			—
Principal payments and retirements	(500,949		)	—			(500,949		)	—			—			—			(503,710		)	8			(503,702		)
Charge-offs, net of recoveries	(102,791		)	85,332			(17,459		)	—			—			—			(102,791		)	85,332			(17,459		)
Change in fair value recorded in earnings	—			(70,627		)	(70,627		)	—			937			937			—			(70,651		)	(70,651		)
Balance at March 31, 2018	$	2,829,765		$	(194,352	)	$	2,635,413		$	—		$	—		$	—		$	2,847,040		$	(191,623	)	$	2,655,417

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Loans Invested in by the Company

Significant Unobservable Inputs

The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for loans invested in by the Company at March 31, 2019 and December 31, 2018 :



	Loans Invested in by the Company
	March 31, 2019						December 31, 2018
	Minimum		Maximum		Weighted- Average		Minimum		Maximum		Weighted- Average
Discount rates	5.6	%	12.6	%	9.7	%	5.9	%	16.7	%	9.4	%
Net cumulative expected loss rates ⁽¹⁾	2.8	%	37.0	%	14.2	%	2.6	%	36.8	%	13.2	%
Cumulative expected prepayment rates ⁽¹⁾	27.2	%	41.0	%	32.7	%	27.0	%	45.5	%	32.5	%


⁽¹⁾	Expressed as a percentage of the original principal balance of the loan.

Significant Recurring Level 3 Fair Value Input Sensitivity

The fair value sensitivity of loans invested in by the Company to adverse changes in key assumptions as of March 31, 2019 and December 31, 2018 , are as follows:



	March 31, 2019			December 31, 2018
Fair value of loans invested in by the Company	$	560,923		$	842,604
Expected weighted-average life (in years)	1.5			1.4
Discount rates
100 basis point increase	$	(6,793	)	$	(10,487	)
200 basis point increase	$	(13,424	)	$	(20,720	)
Expected credit loss rates on underlying loans
10% adverse change	$	(8,579	)	$	(11,304	)
20% adverse change	$	(17,087	)	$	(22,504	)
Expected prepayment rates
10% adverse change	$	(2,080	)	$	(2,422	)
20% adverse change	$	(4,117	)	$	(4,785	)

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Fair Value Reconciliation

The following tables present additional information about Level 3 loans invested in by the Company measured at fair value on a recurring basis for the first quarters of 2019 and 2018 :



	Loans Held for Investment by the Company									Loans Held for Sale by the Company									Total Loans Invested in by the Company
	Outstanding Principal Balance			Valuation Adjustment			Fair Value			Outstanding Principal Balance			Valuation Adjustment			Fair Value			Outstanding Principal Balance			Valuation Adjustment			Fair Value
Balance at December 31, 2018	$	3,518		$	(935	)	$	2,583		$	869,715		$	(29,694	)	$	840,021		$	873,233		$	(30,629	)	$	842,604
Purchases	381			(379		)	2			843,548			—			843,548			843,929			(379		)	843,550
Transfers (to) from loans held for investment and/or loans held for sale	8,533			(1,471		)	7,062			(8,310		)	1,471			(6,839		)	223			—			223
Sales	—			—			—			(1,045,880		)	21,750			(1,024,130		)	(1,045,880		)	21,750			(1,024,130		)
Principal payments and retirements	(535		)	—			(535		)	(67,818		)	—			(67,818		)	(68,353		)	—			(68,353		)
Charge-offs, net of recoveries	(664		)	437			(227		)	(6,383		)	6,180			(203		)	(7,047		)	6,617			(430		)
Change in fair value recorded in earnings	—			(128		)	(128		)	—			(32,413		)	(32,413		)	—			(32,541		)	(32,541		)
Balance at March 31, 2019	$	11,233		$	(2,476	)	$	8,757		$	584,872		$	(32,706	)	$	552,166		$	596,105		$	(35,182	)	$	560,923


	Loans Held for Investment by the Company									Loans Held for Sale by the Company									Total Loans Invested in by the Company
	Outstanding Principal Balance			Valuation Adjustment			Fair Value			Outstanding Principal Balance			Valuation Adjustment			Fair Value			Outstanding Principal Balance			Valuation Adjustment			Fair Value
Balance at December 31, 2017	$	371,379		$	(10,149	)	$	361,230		$	242,273		$	(6,448	)	$	235,825		$	613,652		$	(16,597	)	$	597,055
Purchases	1,496			(160		)	1,336			791,675			(280		)	791,395			793,171			(440		)	792,731
Transfers (to) from loans held for investment and/or loans held for sale	106			—			106			(106		)	—			(106		)	—			—			—
Sales	—			—			—			(742,732		)	10,048			(732,684		)	(742,732		)	10,048			(732,684		)
Principal payments and retirements	(32,194		)	—			(32,194		)	(30,418		)	—			(30,418		)	(62,612		)	—			(62,612		)
Charge-offs, net of recoveries	(1,172		)	973			(199		)	(2,215		)	2,203			(12		)	(3,387		)	3,176			(211		)
Change in fair value recorded in earnings	—			(12,821		)	(12,821		)	—			(15,656		)	(15,656		)	—			(28,477		)	(28,477		)
Balance at March 31, 2018	$	339,615		$	(22,157	)	$	317,458		$	258,477		$	(10,133	)	$	248,344		$	598,092		$	(32,290	)	$	565,802

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Asset-Backed Securities Related to Structured Program Transactions

Significant Unobservable Inputs

The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for asset-backed securities related to structured program transactions at March 31, 2019 and December 31, 2018 :



	Asset-Backed Securities Related to Structured Program Transactions
	March 31, 2019						December 31, 2018
	Minimum		Maximum		Weighted- Average		Minimum		Maximum		Weighted- Average
Discount rates	3.2	%	19.6	%	10.0	%	3.2	%	19.6	%	8.8	%
Net cumulative expected loss rates ⁽¹⁾	8.3	%	43.5	%	20.0	%	6.3	%	43.9	%	18.4	%
Cumulative expected prepayment rates ⁽¹⁾	18.1	%	34.1	%	28.7	%	21.0	%	33.0	%	30.1	%


⁽¹⁾	Expressed as a percentage of the outstanding collateral balance.

Significant Recurring Level 3 Fair Value Input Sensitivity

The following tables present adverse changes to the fair value sensitivity of asset-backed securities related to structured program transactions to changes in key assumptions at March 31, 2019 and December 31, 2018 :



	March 31, 2019
	Asset-Backed Securities Related to Structured Program Transactions
	Senior Securities			Subordinated Residual Certificates			CLUB Certificates
Fair value of interests held	$	60,079		$	11,664		$	67,761
Expected weighted-average life (in years)	1.0			1.3			1.2
Discount rates
100 basis point increase	$	(542	)	$	(141	)	$	(648	)
200 basis point increase	$	(1,067	)	$	(279	)	$	(1,280	)
Expected credit loss rates on underlying loans
10% adverse change	$	—		$	(1,679	)	$	(1,585	)
20% adverse change	$	—		$	(3,092	)	$	(3,128	)
Expected prepayment rates
10% adverse change	$	—		$	(611	)	$	(414	)
20% adverse change	$	—		$	(1,240	)	$	(793	)

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)



	December 31, 2018
	Asset-Backed Securities Related to Structured Program Transactions
	Senior Securities			Subordinated Residual Certificates			CLUB Certificates
Fair value of interests held	$	56,489		$	11,849		$	48,430
Expected weighted-average life (in years)	1.0			1.3			1.2
Discount rates
100 basis point increase	$	(526	)	$	(149	)	$	(472	)
200 basis point increase	$	(1,032	)	$	(293	)	$	(932	)
Expected credit loss rates on underlying loans
10% adverse change	$	—		$	(1,573	)	$	(1,070	)
20% adverse change	$	—		$	(3,159	)	$	(2,112	)
Expected prepayment rates
10% adverse change	$	—		$	(786	)	$	(291	)
20% adverse change	$	—		$	(1,599	)	$	(562	)

Fair Value Reconciliation

The following table presents additional information about Level 3 asset-backed subordinated residual certificates related to Company-sponsored securitization and CLUB Certificate transactions measured at fair value on a recurring basis for the first quarters of 2019 and 2018 :



	Three Months Ended March 31,
	2019			2018
Fair value at beginning of period	$	60,279		$	10,029
Additions	27,913			11,508
Redemptions	—			—
Cash received	(7,438		)	(174		)
Change in unrealized gain (loss)	(166		)	88
Other-than-temporary impairment	(1,163		)	(1,322		)
Fair value at end of period	$	79,425		$	20,129

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Servicing Assets

Significant Unobservable Inputs

The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for servicing assets at March 31, 2019 and December 31, 2018 :



	Servicing Assets
	March 31, 2019						December 31, 2018
	Minimum		Maximum		Weighted- Average		Minimum		Maximum		Weighted- Average
Discount rates	5.9	%	14.8	%	8.7	%	4.8	%	16.7	%	9.0	%
Net cumulative expected loss rates ⁽¹⁾	2.9	%	38.3	%	12.2	%	2.8	%	38.7	%	12.5	%
Cumulative expected prepayment rates ⁽¹⁾	27.1	%	36.5	%	31.8	%	13.9	%	42.9	%	31.9	%
Total market servicing rates (% per annum on outstanding principal balance) ⁽²⁾	0.66	%	0.66	%	0.66	%	0.66	%	0.66	%	0.66	%


⁽¹⁾	Expressed as a percentage of the original principal balance of the loan.


⁽²⁾	Includes collection fees estimated to be paid to a hypothetical third-party servicer.

Significant Recurring Level 3 Fair Value Input Sensitivity

The Company’s selection of the most representative market servicing rates for servicing assets is inherently judgmental. The Company reviews third-party servicing rates for its loans, loans in similar credit sectors, and market servicing benchmarking analyses provided by third-party valuation firms, when available. The table below shows the impact on the estimated fair value of servicing assets, calculated using different market servicing rate assumptions as of March 31, 2019 and December 31, 2018 :



Servicing Assets	March 31, 2019			December 31, 2018
Weighted-average market servicing rate assumptions	0.66		%	0.66		%
Change in fair value from:
Servicing rate increase by 0.10%	$	(11,800	)	$	(10,878	)
Servicing rate decrease by 0.10%	$	11,806		$	10,886

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Fair Value Reconciliation

The following table presents additional information about Level 3 servicing assets measured at fair value on a recurring basis for the first quarters of 2019 and 2018 :



	Three Months Ended March 31,
	2019			2018
Fair value at beginning of period	$	64,006		$	33,676
Issuances ⁽¹⁾	15,846			11,980
Change in fair value, included in investor fees	(11,039		)	(5,606		)
Other net changes included in deferred revenue	3,035			834
Fair value at end of period	$	71,848		$	40,884


⁽¹⁾	Represents the gains or losses on sales of the related loans.

Loan Trailing Fee Liability

Significant Unobservable Inputs

The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for loan trailing fee liability at March 31, 2019 and December 31, 2018 :



	Loan Trailing Fee Liability
	March 31, 2019						December 31, 2018
	Minimum		Maximum		Weighted- Average		Minimum		Maximum		Weighted- Average
Discount rates	5.9	%	14.8	%	9.4	%	4.8	%	16.7	%	9.5	%
Net cumulative expected loss rates ⁽¹⁾	2.9	%	38.2	%	14.2	%	2.8	%	38.7	%	14.0	%
Cumulative expected prepayment rates ⁽¹⁾	27.6	%	41.1	%	32.3	%	16.5	%	43.1	%	32.2	%


⁽¹⁾	Expressed as a percentage of the original principal balance of the loan.

Significant Recurring Level 3 Fair Value Input Sensitivity

The fair value sensitivity of the loan trailing fee liability to adverse changes in key assumptions would not result in a material impact on the Company’s financial position.

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Fair Value Reconciliation

The following table presents additional information about Level 3 loan trailing fee liability measured at fair value on a recurring basis for the first quarters of 2019 and 2018 :



	Three Months Ended March 31,
	2019			2018
Fair value at beginning of period	$	10,010		$	8,432
Issuances	1,490			1,775
Cash payment of Loan Trailing Fee	(1,969		)	(1,554		)
Change in fair value, included in Origination and Servicing	530			171
Fair value at end of period	$	10,061		$	8,824

Financial Instruments, Assets, and Liabilities Not Recorded at Fair Value

The following tables present the fair value hierarchy for financial instruments, assets, and liabilities not recorded at fair value at March 31, 2019 and December 31, 2018 :



March 31, 2019	Carrying Amount		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Balance at Fair Value
Assets:
Cash and cash equivalents ⁽¹⁾	$	402,311	$	—	$	402,311	$	—	$	402,311
Restricted cash ⁽¹⁾	167,954		—		167,954		—		167,954
Servicer reserve receivable	406		—		406		—		406
Deposits	898		—		898		—		898
Total assets	$	571,569	$	—	$	571,569	$	—	$	571,569
Liabilities:
Accrued expenses and other liabilities	$	19,838	$	—	$	—	$	19,838	$	19,838
Accounts payable	24,804		—		24,804		—		24,804
Payables to investors	72,175		—		72,175		—		72,175
Payable to securitization note holders	233,269		—		233,269		—		233,269
Credit facilities and securities sold under repurchase agreements	263,863		—		46,468		217,396		263,864
Total liabilities	$	613,949	$	—	$	376,716	$	237,234	$	613,950


⁽¹⁾	Carrying amount approximates fair value due to the short maturity of these financial instruments.

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)



December 31, 2018	Carrying Amount		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Balance at Fair Value
Assets:
Cash and cash equivalents ⁽¹⁾	$	372,974	$	—	$	372,974	$	—	$	372,974
Restricted cash ⁽¹⁾	271,084		—		271,084		—		271,084
Servicer reserve receivable	669		—		669		—		669
Deposits	1,093		—		1,093		—		1,093
Total assets	$	645,820	$	—	$	645,820	$	—	$	645,820
Liabilities:
Accrued expenses and other liabilities	$	18,483	$	—	$	—	$	18,483	$	18,483
Accounts payable	7,104		—		7,104		—		7,104
Payables to investors	149,052		—		149,052		—		149,052
Payable to securitization note holders	256,354		—		256,354		—		256,354
Credit facilities and securities sold under repurchase agreements	458,802		—		57,012		401,790		458,802
Total liabilities	$	889,795	$	—	$	469,522	$	420,273	$	889,795


⁽¹⁾	Carrying amount approximates fair value due to the short maturity of these financial instruments.

9. Property, Equipment and Software, Net

Property, equipment and software, net, consist of the following:



	March 31, 2019			December 31, 2018
Internally developed software ⁽¹⁾	$	149,882		$	141,233
Leasehold improvements	32,178			31,109
Computer equipment	25,289			24,204
Purchased software	10,650			10,139
Furniture and fixtures	8,252			8,468
Construction in progress	7,173			4,106
Total property, equipment and software	233,424			219,259
Accumulated depreciation and amortization	(115,267		)	(105,384		)
Total property, equipment and software, net	$	118,157		$	113,875


⁽¹⁾	Includes $15.9 million and $10.3 million of development in progress as of March 31, 2019 and December 31, 2018 , respectively.

Depreciation and amortization expense on property, equipment and software was $13.3 million and $10.3 million for the first quarters of 2019 and 2018 , respectively. The Company recorded impairment expense on its internally developed software of $1.6 million and $0.3 million for the first quarters of 2019 and 2018 , respectively. The Company records impairment expense on its internally developed software in “Engineering and product development” expense in the Condensed Consolidated Statements of Operations .

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

10. Other Assets

Other assets consist of the following:



	March 31, 2019		December 31, 2018
Operating lease assets ⁽¹⁾	$	107,455	$	—
Loan servicing assets, at fair value ⁽²⁾	71,848		64,006
Prepaid expenses	22,828		25,598
Accounts receivable	18,273		19,322
Other investments	8,507		8,503
Deferred financing costs	2,391		2,117
Servicer reserve receivable	406		669
Other	3,556		4,752
Total other assets	$	235,264	$	124,967


⁽¹⁾	The Company adopted ASU 2016-02, Leases, as of January 1, 2019 and has elected not to restate comparative periods presented in the condensed consolidated financial statements. For additional information, see “ Note 2. Summary of Significant Accounting Policies ” and “ Note 17. Leases .”


⁽²⁾	Loans underlying loan servicing rights had a total outstanding principal balance of $11.8 billion and $10.9 billion as of March 31, 2019 and December 31, 2018 , respectively.

11. Intangible Assets

Intangible assets net of accumulated amortization was $17.1 million and $18.0 million at March 31, 2019 and December 31, 2018 , respectively. Amortization expense associated with intangible assets for the first quarters of 2019 and 2018 was $0.9 million and $1.0 million , respectively.

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

12. Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consist of the following:



	March 31, 2019		December 31, 2018
Operating lease liabilities ⁽¹⁾	$	122,667	$	—
Accrued expenses	38,564		42,507
Transaction fee refund reserve	20,695		19,543
Accrued compensation	17,461		36,105
Contingent liabilities ⁽²⁾	12,700		12,750
Deferred revenue	12,386		9,420
Loan trailing fee liability, at fair value	10,061		10,010
Payable to issuing banks	1,229		1,182
Deferred rent ⁽¹⁾	—		16,211
Other	3,178		4,390
Total accrued expenses and other liabilities	$	238,941	$	152,118


⁽¹⁾	The Company adopted ASU 2016-02, Leases, as of January 1, 2019 and has elected not to restate comparative periods presented in the condensed consolidated financial statements. As such, effective January 1, 2019, deferred rent is included within operating lease liabilities. For additional information, see “ Note 2. Summary of Significant Accounting Policies ” and “ Note 17. Leases .”


⁽²⁾	See “ Note 18. Commitments and Contingencies ” for further information.

13. Debt

Credit Facilities and Securities Sold Under Repurchase Agreements

The Company may enter into arrangements in the ordinary course of business pursuant to which the Company can incur indebtedness. Below is a description of certain of these arrangements:

Warehouse Credit Facilities

The Company’s wholly-owned subsidiaries, Warehouse I, Warehouse II, and Warehouse III (Warehouse Subsidiaries) originally entered into secured warehouse credit facilities (Warehouse Facilities) with certain lenders during 2017 and 2018. The Warehouse Subsidiaries each entered into a credit agreement and security agreement with a commercial bank as administrative agent and a national banking association as collateral trustee and paying agent, as further described below. The credit agreement for Warehouse Facility I was amended and restated in its entirety on March 25, 2019.

Warehouse I may borrow up to $250.0 million (Warehouse Facility I) and Warehouse II may borrow up to $200.0 million (Warehouse Facility II), each on a revolving basis until the earliest of October 10, 2020 for Warehouse Facility I and March 23, 2020 for Warehouse Facility II, or another event that constitutes a “Commitment Termination Date” under the respective credit agreements. Proceeds may only be used to purchase certain unsecured personal loans, including related assets, from the Company and to pay fees and expenses related to the applicable facilities. Warehouse I matures on March 25, 2022 and Warehouse II matures on the earlier to occur of twelve months after the Commitment Termination Date or January 23, 2021 , at which dates Warehouse I and Warehouse II must repay all outstanding borrowings of the facilities.

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Warehouse III borrowed $34.2 million on a term loan basis (Warehouse Facility III) maturing June 29, 2021 . Proceeds under Warehouse Facility III were used to purchase certain auto refinance loans, including related assets, from the Company and to pay fees and expenses related to the facility. The amount borrowed under Warehouse Facility III amortizes over time through regular principal and interest payments collected from the auto refinance loans. The entire amount of the outstanding debt may be prepaid at any time without penalty.

The creditors of the Warehouse Facilities have no recourse to the general credit of the Company. Borrowings under the Warehouse Facilities bear interest at an annual benchmark rate of LIBOR (London Inter-bank Offered Rate) plus a spread ranging from 1.85% to 2.10% , or at an alternative commercial paper rate (which is either (i) the per annum rate equivalent to the weighted-average of the per annum rates at which all commercial paper notes were issued by certain lenders to fund advances or maintain loans or (ii) the daily weighted-average of LIBOR, as set forth in the applicable credit agreement). Interest is payable monthly. Borrowings may be prepaid without penalty. In addition, Warehouse Facility I and Warehouse Facility II require payment of a monthly unused commitment fee ranging from 0.50% to 1.25% per annum on the average undrawn portion available under such facilities.

The Warehouse Facilities contain certain covenants. As of March 31, 2019 , the Company was in material compliance with all applicable covenants under the respective credit agreements.

As of March 31, 2019 and December 31, 2018 , the Company had $122.4 million and $306.8 million in aggregate debt outstanding under the Warehouse Facilities, respectively, with collateral consisting of aggregate outstanding principal balances of $193.0 million and $467.4 million included in “Loans held for sale by the Company at fair value,” respectively, and restricted cash of $9.6 million and $25.2 million included in the Condensed Consolidated Balance Sheets , respectively.

Revolving Credit Facility

On December 17, 2015 , the Company entered into a credit and guaranty agreement and pledge and security agreement with several lenders for an aggregate $120.0 million secured revolving credit facility (Revolving Facility). In connection with the credit agreement, the Company entered into a pledge and security agreement with a financial services company, as collateral agent.

The Company may borrow under the Revolving Facility until December 17, 2020 . Repayment of any outstanding proceeds are payable on December 17, 2020 , but may be prepaid without penalty.

Borrowings under the Revolving Facility bear interest, at the Company’s option, at an annual rate of LIBOR plus a spread of 1.75% to 2.00% , which is fixed for a Company-selected interest period of one, two, three, six or 12 months, or at an alternative base rate (which is tied to either the prime rate, federal funds effective rate, or the adjusted eurocurrency rate, as defined in the credit agreement). Base rate borrowings may be prepaid at any time without penalty, however pre-payment of LIBOR-based borrowings before the end of the selected interest period may result in the Company incurring expense to compensate the lenders for their funding costs through the end of the interest period. Interest is payable quarterly. Additionally, the Company is required to pay a quarterly commitment fee to the lenders of between 0.25% and 0.375% per annum, depending on the Company’s total net leverage ratio, on the average undrawn portion available under the Revolving Facility.

The Revolving Facility contains certain covenants. As of March 31, 2019 , the Company was in material compliance with all applicable covenants in the credit and guaranty agreement.

The Company had $95.0 million in debt outstanding under the Revolving Facility as of both March 31, 2019 and December 31, 2018 .

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Repurchase Agreements

On August 8, 2018 and November 8, 2018 , the Company entered into master repurchase agreements, pursuant to which the Company may sell securities (subject to an obligation to repurchase such securities at a specified future date and price) in exchange for cash. The Company is subject to margin calls based on the fair value of the collateral pledged. As of March 31, 2019 and December 31, 2018 , the Company had $46.5 million and $57.0 million in aggregate debt outstanding under its repurchase agreements, respectively, with contractual repurchase dates ranging from February 20, 2019 to January 15, 2026 , which correspond to either a set repurchase schedule or to the maturity dates of the underlying securities which have been sold, and which have a weighted-average estimated life of approximately one year. Such debt is included in “Credit facilities and securities sold under repurchase agreements” on the Condensed Consolidated Balance Sheets . As of March 31, 2019 and December 31, 2018 , the Company had $54.4 million and $64.1 million , respectively, of underlying assets pledged as collateral.

Payable to Securitization Note Holders

On December 13, 2018 , the Company sponsored an asset-backed securities securitization transaction consisting of approximately $300.0 million in unsecured personal whole loans facilitated through the Company’s platform. The Depositor sold 95% of the notes to third-party investors for $256.2 million in net proceeds. The residual certificates were retained by the Company. The securitization trust used to effect this transaction is a VIE that the Company consolidates because the Company is the primary beneficiary of the VIE.

The notes held by third-party investors are classified as debt in the Company’s Condensed Consolidated Balance Sheets . The notes are carried at amortized cost. The associated debt issuance costs of $2.6 million are deferred and amortized into interest expense over the contractual life of the notes. As of March 31, 2019 and December 31, 2018 , the notes held by third-party investors and the respective unamortized debt issuance costs of $233.3 million and $256.4 million are included in “Payable to securitization note holders” in the Condensed Consolidated Balance Sheets , respectively, and are secured by an aggregate outstanding principal balance of $270.9 million and $294.8 million included in “Loans held for Sale by the Company at fair value,” respectively, and restricted cash of $14.7 million and $9.3 million included in the Condensed Consolidated Balance Sheets , respectively.

14. Secured Borrowings

In October 2017, LendingClub Asset Management, LLC (LCAM), a wholly-owned subsidiary of LendingClub that previously acted as the general partner for certain private funds, initiated the wind-down of six funds by redeeming the LC Trust certificates issued to the funds and transferring the loan participations underlying the redeemed certificates to third party investors. Certain of the loan participations for two of the funds transferred did not meet the definition of participating interests because the Company provided a credit support agreement under which the investor has a recourse to the Company for credit losses. The transfer of these loan participations from these two funds was accounted for as a secured borrowing and the underlying whole loans were not derecognized from the Company’s Condensed Consolidated Balance Sheets . The Company has elected the fair value option for the secured borrowings.

As of March 31, 2019 , the fair value of the secured borrowings was $61.6 million secured by aggregate outstanding principal balance of $59.4 million included in “Loans held for investment at fair value” in the Condensed Consolidated Balance Sheets . As of December 31, 2018 , the fair value of the secured borrowings was $80.6 million secured by aggregate outstanding principal balance of $81.1 million included in “Loans held for investment at fair value” in the Condensed Consolidated Balance Sheets . Changes in the fair value of the secured borrowings are partially offset by the associated loan participations, and the net effect results in changes in fair value of the credit support agreement through earnings. As of March 31, 2019 and December 31, 2018 , the fair value of this credit support agreement was $5.0 million and $2.8 million . The fair value of the credit support agreement is equal to the

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

present value of the probability-weighted estimate of expected payments over a range of loss scenarios. See “ Note 6. Loans Held for Investment, Loans Held for Sale, Notes, Certificates and Secured Borrowings ” for additional information.

15. Employee Incentive Plans

The Company’s 2014 Equity Incentive Plan (EIP) provides for granting awards, including restricted stock units (RSUs), performance-based restricted stock units (PBRSUs) and stock options to employees, officers and directors.

Stock-based compensation expense was as follows for the periods presented:



	Three Months Ended March 31,
	2019		2018
RSUs and PBRSUs	$	17,185	$	14,793
Stock options	715		2,567
ESPP	352		441
Total stock-based compensation expense	$	18,252	$	17,801

The following table presents the Company’s stock-based compensation expense recorded in the Condensed Consolidated Statements of Operations :



	Three Months Ended March 31,
	2019		2018
Sales and marketing	$	1,571	$	1,860
Origination and servicing	924		1,072
Engineering and product development	5,231		5,279
Other general and administrative	10,526		9,590
Total stock-based compensation expense	$	18,252	$	17,801

The Company capitalized $1.9 million and $2.2 million of stock-based compensation expense associated with developing software for internal use during the first quarters of 2019 and 2018 , respectively.

Restricted Stock Units

The following table summarizes the activities for the Company’s RSUs during the first quarter of 2019 :



	Number of Units		Weighted- Average Grant Date Fair Value
Unvested at December 31, 2018	43,199,014		$	4.05
Granted	26,113,561		$	3.13
Vested	(3,645,135	)	$	4.56
Forfeited/expired	(3,544,662	)	$	3.91
Unvested at March 31, 2019	62,122,778		$	3.64

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

During the first quarter of 2019 , the Company granted 26,113,561 RSUs with an aggregate fair value of $81.7 million .

As of March 31, 2019 , there was $214.8 million of unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over the next 3.2 years .

Performance-based Restricted Stock Units

PBRSUs are equity awards that are earned, and eligible for time-based vesting, based upon the achievement of certain pre-established performance metrics over a specific performance period. Depending on the level of achievement of the pre-established performance metrics, the PBRSUs earned and eligible for time-based vesting can range from 0% to 200% of the target amount. PBRSUs granted under the Company’s EIP generally have a one -year performance period with the earned shares, if any, vesting over an additional approximately two -year period. Over the performance period, the number of PBRSUs that may be earned and the related stock-based compensation expense that is recognized is adjusted upward or downward based upon the probability of achieving the pre-established performance metrics.

During the first quarter of 2019 , the Company expanded the use of its PBRSU program to nearly all of the executive team in the form of PBRSUs. The following table summarizes the activities for the Company’s PBRSUs during the first quarter of 2019 :



	Number of Units		Weighted- Average Grant Date Fair Value
Unvested at December 31, 2018	1,273,218		$	3.71
Granted	1,869,015		$	3.28
Vested	(114,221	)	$	5.20
Forfeited/expired ⁽¹⁾	(295,463	)	$	3.46
Unvested at March 31, 2018	2,732,549		$	3.38


⁽¹⁾	Represents the portion of PBRSUs granted in 2018 that were unearned as a result of not achieving certain pre-established performance metrics during the performance period.

For the first quarters of 2019 and 2018 , the Company recognized $0.9 million and $0.6 million in stock-based compensation expense related to PBRSUs, respectively.

As of March 31, 2019 , there was $7.4 million of unrecognized compensation cost related to unvested PBRSUs, which is expected to be recognized over the next 2.3 years .

16. Income Taxes

The Company continues to recognize a full valuation allowance against net deferred tax assets. This determination was based on the assessment of the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets.

17. Leases

The Company has operating leases for its headquarters in San Francisco, California, as well as additional office space in the Salt Lake City area and Westborough, Massachusetts. As of March 31, 2019, the lease agreements have

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

remaining lease terms ranging from two to ten years. Some of the lease agreements include options to extend the lease term for up to an additional fifteen years and some of them include options to terminate the lease with six months’ prior notice. In addition, the Company is the sublessor of a portion of its office space in San Francisco, with lease terms ranging from two to four years. As of March 31, 2019 , the Company pledged $0.9 million of cash and $6.6 million in letters of credit as security deposits in connection with its lease agreements.

Supplemental balance sheet information as of March 31, 2019 related to leases was as follows:



ROU Assets and Lease Liabilities	Balance Sheet Classification	March 31, 2019
Operating lease assets	Other assets	$	107,455
Operating lease liabilities ⁽¹⁾	Accrued expenses and other liabilities	$	122,667


⁽¹⁾	The difference between operating lease assets and operating lease liabilities is the unamortized balance of deferred rent, which prior to January 1, 2019 was included as a separate liability within Accrued expenses and other liabilities.

Components of net lease costs for the first quarter of 2019 were as follows:



		Three Months Ended March 31,
Net Lease Costs	Income Statement Classification	2019			2018
Operating lease costs ⁽¹⁾	Other general and administrative expense	$	(5,192	)	$	(4,316	)
Sublease income	Other revenue	1,007			77
Net lease costs		$	(4,185	)	$	(4,239	)


⁽¹⁾	Includes variable lease costs of $0.3 million and $0.2 million for the first quarters of 2019 and 2018 , respectively.

Supplemental cash flow information for the first quarter of 2019 related to the Company’s operating leases was as follows:



	Three Months Ended March 31, 2019
Non-cash operating activity:
Leased assets obtained in exchange for new operating lease liabilities ⁽¹⁾	$	15,277


⁽¹⁾	Represents non-cash activity and, accordingly, is not reflected in the Condensed Consolidated Statements of Cash Flows .

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

The Company’s future minimum undiscounted lease payments under operating leases and anticipated sublease revenue as of March 31, 2019 were as follows:



	Operating Lease Payments		Sublease Revenue			Net
2019	$	12,750	$	(3,411	)	$	9,339
2020	19,442		(5,232		)	14,210
2021	19,900		(5,389		)	14,511
2022	15,626		(2,304		)	13,322
2023	11,624		—			11,624
Thereafter	86,277		—			86,277
Total lease payments	$	165,619	$	(16,336	)	$	149,283
Discount effect	42,952
Present value of future minimum lease payments	$	122,667

The weighted-average remaining lease term and discount rate used in the calculation of the Company’s operating lease assets and liabilities were as follows:



Lease Term and Discount Rate	March 31, 2019
Weighted-average remaining lease term (in years)	9.95
Weighted-average discount rate	5.0	%

18. Commitments and Contingencies

Operating Lease Commitments

For discussion regarding the Company’s operating lease commitments, see “ Note 17. Leases . ”

Loan Purchase Obligation

Under the Company’s loan account program with WebBank, which serves as the Company’s primary issuing bank for loans facilitated through the Company’s platform, WebBank retains ownership of the loans it originates for two business days after origination. As part of this arrangement, the Company is committed to purchase the loans at par plus accrued interest, at the conclusion of the two business days. As of March 31, 2019 and December 31, 2018 , the Company was committed to purchase loans with an outstanding principal balance of $43.0 million and $55.9 million at par, respectively.

Loan Repurchase Obligations

The Company is generally required to repurchase loans or interests therein in the event of identity theft or fraud on the part of the borrower. The Company may also repurchase loans or interests therein in connection with certain customer accommodations. In connection with certain whole loan and CLUB Certificate sales, as well as to facilitate access to securitization markets, the Company has agreed to repurchase loans if representations and warranties made with respect to such loans are breached under certain circumstances. In the case of certain securitization transactions, the Company has also agreed to repurchase or substitute loans for which a borrower fails to make the first payment due under a loan. The Company believes such provisions are customary and consistent with institutional loan and securitization market standards.

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

In addition to and distinct from the repurchase obligations described in the preceding paragraph, the Company performs certain administrative functions for a variety of retail and institutional investors, including executing, without discretion, loan investments as directed by the investor. To the extent loans do not meet the investor’s investment criteria at the time of issuance, or are transferred to the investor as a result of a system error by the Company, the Company repurchases such loans or interests therein at par.

As a result of the loan repurchase obligations described above, the Company repurchased $2.0 million and $1.6 million in loans or interests therein during the first quarters of 2019 and 2018 , respectively.

Purchase Commitments

As required by applicable regulations, the Company must make firm offers of credit with respect to prescreened direct mail it sends out to prospective applicants provided such applicants continue to meet the credit worthiness criteria which were used to screen them at the time of their application. If such loans are accepted by the applicants but not otherwise funded by investors on the platform, the Company is required to facilitate funding for the loans directly with its issuing bank partners. The Company was not required to purchase any such loans during the first quarter of 2019 . Additionally, loans in the process of being facilitated through the Company’s platform and originated by the Company’s issuing bank partner at March 31, 2019 , were substantially funded in April 2019 . As of the date of this report, no loans remained without investor commitments and the Company was not required to purchase any of these loans.

In addition, if neither the Company nor Springstone can arrange for other investors to invest in or purchase loans that Springstone facilitates and that are originated by an issuing bank partner but do not meet the credit criteria for purchase by the issuing bank partner (Pool B loans), the Company and Springstone are contractually committed to purchase these loans. As of both March 31, 2019 and December 31, 2018 , the Company had a $9.0 million deposit in a bank account to secure potential future purchases of these loans, if necessary. The funds are recorded as restricted cash on the Company’s Condensed Consolidated Balance Sheets . During the first quarter of 2019 , the Company was required to purchase $5.3 million of Pool B loans. Pool B loans are held on the Company’s Condensed Consolidated Balance Sheets and have an outstanding principal balance and fair value of $30.6 million and $27.0 million as of March 31, 2019 , respectively, and $30.4 million and $26.6 million as of December 31, 2018 , respectively. The Company believes it will be required to purchase additional Pool B loans in 2019 as it seeks to arrange for other investors to invest in or purchase these loans.

Credit Support Agreement

The Company is subject to a credit support agreement with Cirrix Capital (Investment Fund). The credit support agreement requires the Company to pledge and restrict cash in support of its contingent obligation to reimburse the Investment Fund for net credit losses on loans underlying the Investment Fund’s certificates that are in excess of a specified, aggregate net loss threshold. On April 14, 2017, the credit support agreement was terminated effective December 31, 2016. However, the Company remains subject to the credit support agreement for credit losses on loans underlying the Investment Fund’s certificates that were issued on or prior to December 31, 2016. The Company pledged and restricted cash in the amount of $0.7 million and $0.8 million as of March 31, 2019 and December 31, 2018 , respectively, to support this contingent obligation. The Company’s maximum exposure to loss under this credit support agreement was limited to $6.0 million as of March 31, 2019 and December 31, 2018 , for which no liability has been accrued as of March 31, 2019 or December 31, 2018 .

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Legal

The Company is subject to various claims brought in a litigation or regulatory context. These matters include lawsuits and federal regulatory actions relating to and arising from the internal board review described more fully in “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Board Review ” contained in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (the Board Review). Of these matters relating to and arising from the Board Review, the Company has settled certain significant class action and subsequent “opt-out” lawsuits and investigations conducted by the Securities and Exchange Commission and Department of Justice, leaving derivative lawsuits and litigation with the FTC outstanding. In addition to the Board Review related matters, the Company continues to cooperate in federal and state regulatory examinations, investigations, and actions relating to the Company’s business practices and licensing, and is a party to a number of routine litigation matters arising in the ordinary course of business. The majority of these claims and proceedings relate to or arise from alleged state or federal law and regulatory violations, or are alleged commercial disputes or consumer complaints. The Company accrues for costs related to contingencies when a loss from such claims is probable and the amount of loss can be reasonably estimated. In determining whether a loss from a claim is probable and the loss can be reasonably estimated, the Company reviews and evaluates its litigation and regulatory matters on at least a quarterly basis in light of potentially relevant factual and legal developments. If the Company determines an unfavorable outcome is not probable or the amount of loss cannot be reasonably estimated, the Company does not accrue for a potential litigation loss. In those situations, the Company discloses an estimate or range of the reasonably possible losses, if such estimates can be made. Except as otherwise specifically noted below, at this time, the Company does not believe that it is possible to estimate the reasonably possible losses or a range of reasonably possible losses related to the matters described below.

Derivative Lawsuits

In May 2016 and August 2016, respectively, two putative shareholder derivative actions were filed ( Avila v. Laplanche, et al. , No. CIV538758 and Dua v. Laplanche, et al. , CGC-16-553731) against certain of the Company’s current and former officers and directors and naming the Company as a nominal defendant. Both actions were voluntarily dismissed without prejudice. On December 14, 2016, another putative shareholder derivative action was filed in the Delaware Court of Chancery ( Steinberg, et al. v. Morris, et al., C.A. No. 12984-CB), against certain of the Company’s current and former officers and directors and naming the Company as a nominal defendant. In addition, on August 18, 2017, another putative shareholder derivative action was filed in the Delaware Court of Chancery ( Fink, et al. v. Laplanche, et al., C.A. No. 2017-0600). These matters arise from claims that the Board allegedly breached its fiduciary duty by failing to provide adequate oversight over the Company’s practices and procedures, and purport to plead derivative claims under Delaware law. The court ultimately consolidated the cases, selecting the Steinberg plaintiffs as lead plaintiffs, and designating the Steinberg complaint as the operative complaint (consolidated Delaware matter). In June 2018, the Company and the individual defendants brought a motion to dismiss the consolidated Delaware matter on demand futility grounds or in the alternative to stay the matter. Defendants in the consolidated Delaware matter later consented to the filing of a supplemental consolidated complaint in the case, and the plaintiffs filed that supplemental complaint on January 11, 2019. The Company and individual defendants in the case filed motions to dismiss the supplemental complaint on February 22, 2019.

On November 6, 2017, another putative shareholder derivative action was filed in the U.S. District Court for the Northern District of California ( Sawyer v. Sanborn, et al., No. 3:17-cv-06447) against certain of the Company’s current and former officers and directors and naming the Company as a nominal defendant. This action was based on allegations similar to those in a consolidated putative securities class action litigation ( In re LendingClub Securities Litigation , No. 16-cv-02627 (N.D. Cal.)) that was successfully settled in 2018. The plaintiffs in the consolidated Delaware matter were permitted to join with the plaintiffs in the Sawyer action for the purposes of settlement. The Court in the Sawyer action concurrently ordered all parties (including the intervening consolidated

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

Delaware matter plaintiffs) to participate in a mediation in May 2018, but that mediation did not result in a settlement.

In July 2018, the Company and the individual defendants brought a motion to dismiss the Sawyer matter on the grounds that the action was not filed within the applicable statute of limitations. The court granted that motion and judgment was entered in favor of the defendants. The Sawyer plaintiff also attempted to intervene in a previously filed derivative action in the U.S. District Court for the Northern District of California ( Stadnicki v. LaPlanche, et al. , No. 3:16-cv-03072). The Company and the individual defendants opposed the intervention, and the original Stadnicki plaintiff moved to voluntarily dismiss the case. The motion to intervene was denied and the motion to voluntarily dismiss the Stadnicki action was granted. Notices of appeal were filed in both the Sawye r and Stadnicki actions. The appeal in the Sawyer matter has been dismissed at the Sawyer plaintiff’s request. The appeal in the Stadnicki matter remains pending. It is not possible for the Company to predict the outcome of the derivative litigation matters discussed above.

FTC Lawsuit

In 2016, the Company received a formal request for information from the Federal Trade Commission (the FTC). The FTC commenced an investigation concerning certain of the Company’s policies and practices and related legal compliance.

On April 25, 2018, the FTC filed a complaint in the Northern District of California ( FTC v. LendingClub Corporation , No. 3:18-cv-02454) alleging causes of action for violations of the FTC Act, including claims of deception in connection with disclosures related to the origination fee associated with loans available through the Company’s platform, and in connection with communications relating to the likelihood of loan approval during the application process, and a claim of unfairness relating to certain unauthorized charges to borrowers’ bank accounts. The FTC’s complaint also alleged a violation of the Gramm-Leach-Bliley Act regarding the Company’s practices in delivering its privacy notice. In June 2018, the Company brought a motion to dismiss the FTC’s complaint, which was heard on September 13, 2018. In an order dated October 3, 2018, the Court denied the motion in part and granted the motion in part, providing the FTC with leave to amend its pleadings. On October 22, 2018, the FTC filed an amended complaint which reasserted the same causes of action from the original complaint. On November 13, 2018, the Company filed an answer to the amended complaint. The FTC subsequently filed a motion seeking to strike certain affirmative defenses pled in the answer and the Company has filed an opposition to the motion. Briefing on the motion was completed on February 7, 2019. On April 29, 2019, the court issued a ruling denying the FTC’s motion in part and granting it in part and allowing the Company to replead certain of the affirmative defenses that were the subject of the FTC’s motion. Discovery in the case is ongoing. The Company denies, and will continue to vigorously defend against, the claims asserted in this case. Notwithstanding the Company’s vigorous defense, the Company and the FTC have participated in voluntary settlement conferences and may engage in additional settlement discussions. No assurances can be given as to the timing, outcome or consequences of this matter.

Securities Class Action Lawsuit Following Announcement of FTC Litigation

In May 2018, following the announcement of the FTC’s litigation against the Company, putative shareholder class action litigation was filed in the U.S. District Court of the Northern District of California ( Veal v. LendingClub Corporation et.al., No. 5:18-cv-02599) against the Company and certain of its current and former officers and directors alleging violations of federal securities laws in connection with the Company’s description of fees and compliance with federal privacy law in securities filings. The court appointed lead plaintiffs and lead counsel for the litigation in November 2018. On January 7, 2019, the lead plaintiffs filed a consolidated amended class action complaint which asserts the same causes of action as the original complaint and adds additional allegations. On March 8, 2019, the Company and the individual defendants in the case filed motions to dismiss the consolidated

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

amended class action complaint. These motions are set for hearing in September 2019. This lawsuit is in the early stages. The Company denies and will vigorously defend against the allegations. No assurances can be given as to the timing, outcome or consequences of this matter.

Derivative Lawsuits Following FTC Litigation

In July 2018, a putative shareholder derivative action was filed in the U.S. District Court for the Northern District of California ( Baron v. Sanborn, et al. No. 3:18-cv-04391) against certain of the Company’s current and former officers and directors and naming the Company as a nominal defendant. This action is based on allegations that the individuals breached their fiduciary duties to the Company and violated federal securities laws by, among other things, permitting the actions alleged in the FTC litigation and the description of fees and other practices in the Company’s securities filings. This lawsuit has been stayed pending further developments in the Veal action. In January 2019, a second putative shareholder derivative action was filed in the U.S. District Court for the Northern District of California ( Cheekatamarla v. Sanborn, et al ., No. 3:19-cv-00563) against certain of the Company’s current officers and directors and naming the Company as a nominal defendant. Like the Baron action, this action is based on allegations that the individuals breached their fiduciary duties to the Company and violated federal securities laws by, among other things, permitting the actions alleged in the FTC litigation and the description of fees and other practices in the Company’s securities filings. Pursuant to a stipulation by the parties in both of these derivative cases, the court has consolidated the two cases and has stayed the consolidated action pending further developments in Veal . It is not possible for the Company to predict the outcome of these consolidated derivative litigation matters.

Regulatory Investigation by the State of Massachusetts

In June 2018, the Company received a civil investigative demand from the office of the Attorney General of the State of Massachusetts. The investigation relates to the advertisement and provision of personal loans to Massachusetts’ consumers facilitated by the Company. The Company is cooperating with the investigation. The Company and the Attorney General’s Office have recently communicated regarding questions and concerns the Attorney General’s Office has regarding the Company’s compliance with the Massachusetts Small Loan Law and the Small Loan Rate Order promulgated under it. More recently, the Attorney General’s Office has sent additional information requests to the Company. Although the Company is not able to predict with certainty the timing, outcome, or consequence of the investigation, it could result in claims or actions against the Company, including litigation, regulatory enforcement actions, injunctions, monetary damages, fines or penalties, or require us to change our business practices or expend operational resources, all of which could result in a material loss or otherwise harm our business.

Regulatory Investigation by the Alaska Division of Banking and Securities

In the fourth quarter of 2018, the Company received a letter from the Alaska Division of Banking and Securities (Division) notifying it of an investigation by the Division into possible violations by the Company of the Alaska Small Loan Act. The Company has cooperated with the Division in connection with the investigation and has also notified the Division and the Alaska Department of Law of its position that the Company is not subject to the Alaska Small Loan Act. This matter is in the early stages. No assurances can be given as to the timing, outcome or consequences of this matter.

Regulatory Examinations and Actions Relating to the Company’s Business Practices and Licensing

The Company has been subject to periodic inquiries and enforcement actions brought by federal and state regulatory agencies relating to the Company’s business practices, the required licenses to operate its business and its manner of operating in accordance with the requirements of its licenses. In the past, the Company has successfully resolved

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

inquiries in a manner that was not material to its results of financial operations in any period and that did not materially limit the Company’s ability to conduct its business. At the state level, the Company has had discussions with the Colorado Department of Law (the CDL) concerning the licenses required for the Company’s servicing operations and the structure of its offerings in the State of Colorado. No assurances can be given as to the timing or outcome of this matter. The Company is also in discussions with the CDL about entering into a terminable agreement to, among other things: (i) toll the statutes of limitations on any action the CDL might bring against the Company based on the rates and charges on the loans the Company facilitates and (ii) refrain from making certain loans available for investment by certain investors. No assurances can be given as to the timing, outcome or consequences of this matter.

In addition, the Company has also responded to inquiries from the California Department of Business Oversight and the New York Department of Financial Services regarding the operation of the Company’s business and the overall “FinTech” industry.

Putative Class Actions

In December 2017, a putative class action lawsuit was filed against the Company in the State of Nevada (Moses v. LendingClub Corporation , 2:17-cv-03071-JAD-PAL) alleging violations of the federal Fair Credit Reporting Act. The complaint alleged that the Company improperly accessed the credit report of the plaintiff, who had formerly had a loan serviced by the Company. The complaint further alleged, on information and belief, that the Company improperly accessed credit reports of other similarly situated individuals. The Company filed a motion to compel arbitration on the grounds that the plaintiff waived the right to bring a class action and must individually arbitrate any claim. On February 6, 2019, the court issued an order granting this motion, dismissed the putative class action without prejudice, and ordered the parties to arbitrate the plaintiff’s claim. The Company denies the plaintiff’s claim and is prepared to vigorously defend against it in the event the plaintiff initiates an arbitration following the court’s recent order. No assurances can be given as to the timing, outcome or consequences of this matter.

In March 2019, a putative class action lawsuit was filed against the Company in the State of Florida ( Plouffe v. LendingClub Corporation , 0:19-cv-60715-FAM) alleging violations of the federal Fair Credit Reporting Act. The complaint alleges that the Company made unauthorized credit report inquiries relating to the plaintiff following the receipt of a bankruptcy discharge by the plaintiff. The plaintiff seeks to represent a class of similarly situated individuals in the lawsuit. The case is in the early stages and the Company has not yet filed a response to the plaintiff’s complaint. No assurances can be given as to the timing, outcome or consequences of this matter.

In September 2018, a lawsuit was filed against the Company in the State of New York ( Accardo v. Lending Club, et al. , 2:18-cv-05030-JS-AKT) asserting an individual claim under the federal Fair Credit Reporting Act against the Company. In early 2019, the plaintiff filed a motion for leave to amend his complaint in the case to assert a putative class claim under the Fair Credit Reporting Act. The plaintiff’s proposed amended complaint contends that LendingClub failed to conduct a reasonable investigation into plaintiff’s identity theft dispute and plaintiff seeks to represent a class of similarly situated individuals. The Company filed an opposition to plaintiff’s motion for leave to amend and also filed a motion to compel arbitration of plaintiff’s claim against the Company on an individual basis. The court has not yet ruled on either motion. Discovery in the case is stayed. This matter is in the early stages. No assurances can be given as to the timing, outcome or consequences of this matter.

California Private Attorneys General Lawsuit

In September 2018, a putative action under the California Private Attorney General Act was brought against the Company in the California Superior Court ( Brott v. LendingClub Corporation, et al. , CGC-18-570047) alleging violations of the California Labor Code. The complaint by a former employee alleges that the Company improperly failed to pay certain hourly employees for all wages owed, pay the correct rate of pay including overtime, and

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

provide accurate wage statements. The lawsuit alleges that the plaintiff and aggrieved employees are entitled to recover civil penalties under the California Labor Code. On January 11, 2019, the Company filed a petition to compel arbitration of the plaintiff’s claims and stay the litigation pending a ruling on the motion and arbitration of the matter. Pursuant to the parties’ stipulation, in March 2019, the court issued an order staying the lawsuit pending the parties’ participation in a mediation in September 2019. This lawsuit is in the early stages. The Company denies and will vigorously defend against the allegations. No assurances can be given as to the timing, outcome or consequences of this matter.

Certain Financial Considerations Relating to Litigation and Investigations

With respect to the matters discussed above, the Company had $12.7 million and $12.8 million in accrued contingent liabilities at March 31, 2019 and December 31, 2018 , respectively. Class action and regulatory litigation expense for the first quarter of 2018 was $13.5 million . The Company had no class action and regulatory litigation expense during the first quarter of 2019 . In addition to the foregoing, the Company is subject to, and may continue to be subject to, legal proceedings and regulatory actions in the ordinary course of business. No assurance can be given as to the timing, outcome or consequences of any of these matters.

19. Segment Reporting

The Company defines operating segments to be components of the Company for which discrete financial information is evaluated regularly by the Company’s executive management committee as chief operating decision maker (CODM). For purposes of allocating resources and evaluating financial performance, the Company’s CODM reviews financial information by loan product types of personal, education and patient finance, small business and auto. These product types are individually reviewed as operating segments but are aggregated to represent one reportable segment because the education and patient finance, small business and auto loan product types are immaterial both individually and in the aggregate.

All of the Company’s revenue is generated in the United States. No individual borrower or investor accounted for 10% or more of consolidated net revenue for any of the periods presented.

20. Related Party Transactions

Related party transactions must be reviewed and approved by the Audit Committee of the Company’s board of directors when not conducted in the ordinary course of business subject to the standard terms of the Company’s lending marketplace or certificate investment program. Any material amendment or modification to an existing related party transaction is also subject to the review and approval of the Audit Committee. Related party transactions may include any transaction between entities under common control or with a related person that has occurred since the beginning of the Company’s latest fiscal year or is currently proposed. The Company has defined related persons as members of the board of directors, executive officers, principal owners of the Company’s outstanding stock and any immediate family members of each such related person, as well as any other person or entity with significant influence over the Company’s management or operations.

Several of the Company’s executive officers and directors (including immediate family members) have made deposits and withdrawals to their investor accounts and purchased loans or interests therein or had investments in and distributions from private funds managed by LCAM. The Company believes all such transactions by related persons were made in the ordinary course of business and were transacted on terms and conditions that were not more favorable than those obtained by similarly situated third-party investors.

As of March 31, 2019 , the Company had an $8.1 million investment and an approximate 23% ownership interest in an Investment Fund, a private fund that participates in a family of funds with other unrelated third parties. This

LENDINGCLUB CORPORATION

Notes to Condensed Consolidated Financial Statements

(Tabular Amounts in Thousands, Except Share and Per Share Amounts, Ratios, or as Noted)

(Unaudited)

family of funds purchases whole loans and interests in loans from the Company, as well as other assets from third parties unrelated to the Company. The Company’s investment in the Investment Fund is recorded in “Other assets” on the Company’s Condensed Consolidated Balance Sheets .

During the first quarter of 2019 , the family of funds purchased $77 thousand of whole loans. During the first quarter of 2019 , the Company earned $28 thousand in investor fees from this family of funds, and paid interest of $327 thousand on the funds’ interests in whole loans. The Company believes that the investor fees charged were on terms and conditions that were not more favorable than those obtained by other third-party investors.

21. Subsequent Events

The Company has evaluated the impact of events that have occurred subsequent to March 31, 2019 , through the date the condensed consolidated financial statements were filed with the SEC. Based on this evaluation, other than as recorded or disclosed within these condensed consolidated financial statements and related notes, the Company has determined no additional subsequent events were required to be recognized or disclosed.

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)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and related notes that appear in this Quarterly Report on Form 10-Q (Report). In addition to historical condensed consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Report, and in “Part I – Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (Annual Report). The forward-looking statements included in this Report are made only as of the date hereof.

Overview

LendingClub operates America’s largest online lending marketplace platform that connects borrowers and investors. Qualified consumers borrow through LendingClub to generally lower the cost of their credit and enjoy a better experience than that provided by most traditional banks. The capital to invest in the loans enabled through our lending marketplace comes from a wide range of investors, including banks, managed accounts, institutional investors, and self-directed investors.

We generate revenue primarily from transaction fees from our lending marketplace’s role in marketing to customers, accepting and decisioning applications for our bank partners to enable loan originations, investor fees that include servicing fees from investors for various services, including servicing and collection efforts, gains on sales of whole loans sold, interest income earned net of interest expenses and fair value gains/losses from loans invested in by the Company and held on our balance sheet.

The transaction fees we receive from issuing banks in connection with our lending marketplace’s role in facilitating loan originations generally range from 0% to 6% of the initial principal amount of the loan. Alternatively, for education and patient finance loans, we collect fees from issuing banks and from the related education and patient service providers.

Investor fees paid to us vary based on investment channel. Whole loan purchasers pay a monthly fee of up to 1.3% per annum, which is generally based on the month-end principal balance of loans serviced by us. Note investors generally pay us a fee equal to 1% of payment amounts received from the borrower. Certificate holders generally pay a monthly fee of up to 1.2% per annum of the month-end balance of assets under management or the month-end balance of unpaid principal of the underlying certificate. Investor fees may also vary based on the delinquency status of the loan.

Loans facilitated through our lending marketplace are funded by the sale of whole loans to banks and institutional investors, the issuance of asset-backed securities through securitizations and CLUB Certificates, the issuance of notes and certificates to our self-directed investors or funded directly by the Company with its own capital.

The Company securitizes a portion of the unsecured personal loans we facilitate through asset-backed securitization transactions and the issuance of pass-through securities called CLUB Certificates. In connection with asset-backed securitizations, the Company is the sponsor and establishes securitization trusts to ultimately purchase the loans from the Company and/or third-party whole loan investors. Securities issued from our asset-backed securitizations are senior or subordinated based on the waterfall criteria of loan payments to each security class. The residual interests issued from these transactions are first to absorb credit losses in accordance with the waterfall criteria. As the sponsor for securitization transactions, the Company manages the completion of the transaction and earns fees from third-party participants. In addition, the Company sponsors the sale of unsecured personal whole loans through the issuance of pass-through securities called CLUB Certificates, which are collateralized by loans transferred to a

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)

series of a master trust and trade in the over-the-counter market with a CUSIP. The sale of CLUB Certificates results in more liquidity and demand for our unsecured personal loans. Each owner of a CLUB Certificate has an undivided and equal interest in the underlying loans of each transaction.

We continue to use our own capital to fund the purchase of loans for future structured program transactions, and related risk retention requirements, as well as for whole loan sales. Additionally, at our discretion, we use our capital to fund the purchase of loans to support marketplace equilibrium when a matching third-party investor is not available at time of origination, to reflect changes in market value through loan pricing, to test new product offerings, and to make accommodations to customers. In situations where we use our own capital to invest in loans, we earn interest income and record fair value adjustments attributable to changes in actual and expected credit and prepayment performance, or any difference between sale price and carrying value.

Current Economic and Business Environment

Our online lending marketplace platform seeks to adapt to changing marketplace conditions and investors’ return on investment expectations. LendingClub monitors a variety of economic, credit and competitive indicators to propose changes to issuing banks’ credit policies and interest rates.

In the first quarter of 2019 , our marketplace facilitated $2.7 billion of loan originations, of which $1.7 billion was issued through whole loan sales, $830.4 million was purchased or pending purchase by the Company, $169.7 million were issued through member payment dependent notes and $20.5 million were issued through trust certificates. Loans held by the Company at quarter end are available loan inventory for future structured program transactions and whole loan sales, excluding loans held by the Company as a result of consolidated securitization trusts.

The following table shows the volume of loan originations facilitated through the Company’s platform, loans purchased or pending purchase by the Company, and the available loan inventory as of the end of each period presented (in millions):



	March 31, 2019			December 31, 2018			September 30, 2018
Loan originations	$	2,727.8		$	2,871.0		$	2,886.5
Loans purchased or pending purchase by the Company during the quarter	$	830.4		$	1,180.4		$	1,174.0
LendingClub inventory ⁽¹⁾	$	266.9		$	527.5		$	441.6
LendingClub inventory as a percentage of loan originations ⁽¹⁾	10		%	18		%	15		%


⁽¹⁾	LendingClub inventory reflects loans purchased or pending purchase by the Company during the period, excluding loans held by the Company through consolidated securitization trusts, and not yet sold as of the period end.

During 2018, market interest rates rose which increased certain of our investors’ cost of funding and expectations regarding return on investment. As market interest rates rise, we see higher yield expectations from investors for certain prime loans. Throughout 2018 and in February 2019, we increased interest rates on certain loans. In addition, we experienced underperformance and increased investor yield expectations for certain prime loans with higher credit risk and have continued to take credit actions to reduce credit loss expectations on targeted grades of prime and near prime loans. Separately, we periodically adjust products available on our marketplace to reflect investor demand. As a result, beginning in May 2019, except for certain previously qualified or approved loans, we will no longer facilitate new grade E loans due to lack of investor demand on our marketplace. Grade E loans have historically accounted for less than 5% of volume on our marketplace.

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)

Because of timing differences between changes in market interest rates, interest rates on loans, credit performance and investor yield expectations, there may be a difference between the actual yield and the investor required yield on a loan. In these circumstances we continue to use our own capital to purchase loans from our issuing banks. This allows us to adjust the effective yield on a loan through its sale price, thereby maintaining marketplace equilibrium. Any discount to par will result in negative fair value adjustments, which is offset by interest income earned while we own the loans.

We have been reviewing our cost structure and have a number of expense initiatives underway with the goal of increasing our operating efficiency. As a result of our review, we signed a lease to establish a site in a more cost-effective location in the Salt Lake City area. We started to hire full-time employees in the first quarter of 2019 in the Salt Lake City area and increased the use of third-party business process outsource providers. We plan on relocating our origination and servicing operations from San Francisco, California to the Salt Lake City area by the end of 2019. In conjunction with this initiative, we have sublet office space in San Francisco, California, and may continue to do so in the future. While we expect the implementation of these expense initiatives to increase expenses in the short-term, they are expected to result in overall increased operating efficiency for the Company.

In April 2019, we announced that we will connect applicants looking for a small business loan with strategic partners and earn certain fees, instead of facilitating these loans on our platform. In addition, we continue to evaluate strategic alternatives related to our portfolio.

Factors That Can Affect Revenue

As an operator of a lending marketplace, we work to match the supply of loans facilitated through our platform and demand from investors while also growing the overall volume of originations and correspondingly revenue at a pace commensurate with proper planning, compliance, risk management, user experience, and operational controls that work to optimize the quality of the customer experience, customer satisfaction and long term growth. In addition, we utilize our balance sheet to support our structured program transactions, manage marketplace equilibrium, hold loans for testing new or existing loan products and repurchase loans that did not meet an investor’s criteria. In some instances, we may subsequently sell those loans, recognizing a gain or loss on their sale.

Loan supply, which is partly driven by borrower-related activities within our business, combined with investor demand to purchase loans on our platform as well as our own loan purchases, can affect our revenue in any particular period. These drivers collectively affect transaction fees, investor fees earned by us related to these transactions, interest income, fair value adjustments and other revenue related to loans held on balance sheet, including the performance of such loans. As these drivers can be affected by a variety of factors, both in and out of our control, revenues may fluctuate from period to period. Factors that can affect these drivers and ultimately revenue and its timing include:


•	market confidence in our data, controls, and processes,


•	announcements and terms of resolution of governmental inquiries or private litigation,


•	the mix of borrower products and corresponding transaction fees,


•	availability or the timing of the deployment of investment capital by investors,


•	the availability and amount of new capital from pooled investment vehicles and managed accounts that typically deploy their capital at the start of a period,


•	the amount of purchase limitations we can impose on larger investors as a way to maintain investor balance and fairness,


•	the attractiveness of alternative opportunities for borrowers or investors, through changes in interest rates, transaction fees, terms, or risk profile,


•	the responsiveness of applicants to our marketing efforts,


•	expenditures on marketing initiatives in a period,

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 sufficiency of operational staff to process any manual portion of the loan applications in a timely manner,


•	the responsiveness of borrowers to satisfy additional income or employment verification requirements related to their application,


•	borrower withdrawal rates,


•	the percentage distribution of loans between the whole and fractional loan platforms,


•	platform system performance,


•	seasonality in demand for our platform and services, which is generally lower in the first quarter,


•	determination to hold loans for purposes of subsequently distributing the loans through sale or structured program transaction,


•	changes in the credit performance of loans or market interest rates,


•	the success of our models to predict borrower risk levels and related investor demand, and


•	other factors.

At any point in time we have loan applications in various stages from initial application through issuance. Depending upon the timing and impact of the factors described above, loans may not be issued by the issuing banks who originate loans facilitated through our marketplace in the same period in which the corresponding application was originally made, resulting in a portion of that subsequent period’s revenue being earned from loan applications that were initiated in the immediately prior period. Consistent with our revenue recognition accounting policy under GAAP, we do not recognize the transaction fee revenue associated with a loan until the loan is issued by the issuing bank and the proceeds are delivered to the borrower. Our transaction fees are generally paid by the issuing bank, or in the case of education and patient finance loans, may also be paid by the medical or education service provider, and are accordingly independent of who is investing in a loan or how a loan is invested in.

Key Operating and Financial Metrics

We regularly review several metrics to evaluate our business, measure our performance, identify trends, formulate financial projections and make strategic decisions. The following presents our key operating and financial metrics:



	Three Months Ended
	March 31, 2019			December 31, 2018			March 31, 2018
Loan originations	$	2,727,831		$	2,871,019		$	2,306,003
Sales and marketing expense as a percent of loan originations	2.44		%	2.38		%	2.49		%
Net revenue	$	174,418		$	181,521		$	151,667
Consolidated net loss	$	(19,900	)	$	(13,412	)	$	(31,180	)
Contribution ⁽¹⁾	$	85,688		$	91,023		$	74,436
Contribution margin ⁽¹⁾	49.1		%	50.1		%	49.1		%
Adjusted EBITDA ⁽¹⁾	$	22,589		$	28,464		$	15,333
Adjusted EBITDA margin ⁽¹⁾	13.0		%	15.7		%	10.1		%
Adjusted net loss ⁽¹⁾	$	(11,518	)	$	(4,110	)	$	(14,208	)
Adjusted EPS ⁽¹⁾	$	(0.03	)	$	(0.01	)	$	(0.03	)


⁽¹⁾	Represents non-GAAP financial measures. For more information regarding these measures and a reconciliation of these measures to the most comparable GAAP measures, see “ Non-GAAP Financial Measures ” below.

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)

Loan Originations

We believe the volume of loans facilitated through our platform and originated by our issuing banks is a key indicator of the attractiveness of our lending marketplace, growth of our brand, scale of our business, strength of our network effect, economic competitiveness of our products and future growth.

We classify the loans facilitated by our platform into three major loan products: standard program personal loans, custom program personal loans and other loans. The majority of the loans facilitated through our platform are standard program personal loans that represent loans made to prime borrowers that are available to both public investors (in the form of member payment dependent notes) and other private investors. Custom program personal loans include all other personal loans to borrowers who are not eligible for our standard program, including loans made to super-prime and near-prime borrowers, and are available only to private investors. Other loans are comprised of education and patient finance loans, auto refinance loans, and small business loans.

Loan origination volume and weighted-average transactions fees (as a percent of origination balance) by major loan products are as follows:



	Three Months Ended
	March 31, 2019				December 31, 2018				March 31, 2018
(in millions, except percentages)	Origination Volume		Weighted- Average Transaction Fee		Origination Volume		Weighted- Average Transaction Fee		Origination Volume		Weighted- Average Transaction Fee
Personal loans – standard program	$	1,928.4	5.1	%	$	2,050.9	5.0	%	$	1,741.8	4.8	%
Personal loans – custom program	585.5		4.8	%	610.8		4.9	%	346.5		5.2	%
Total personal loans	2,513.9		5.0	%	2,661.7		5.0	%	2,088.3		4.9	%
Other loans	213.9		4.3	%	209.3		4.1	%	217.7		4.4	%
Total	$	2,727.8	5.0	%	$	2,871.0	4.9	%	$	2,306.0	4.8	%

The increase in the total weighted-average transaction fee in the first quarter of 2019 compared to the first quarter of 2018 was primarily driven by an increase in the average transaction fees earned in our standard personal loans program.

Personal loan origination volume for our standard loan program by loan grade were as follows:



	Three Months Ended
(in millions)	March 31, 2019				December 31, 2018				March 31, 2018
Personal loan originations by loan grade – standard loan program:	Amount		% of Total		Amount		% of Total		Amount		% of Total
A	$	608.3	32	%	$	604.9	29	%	$	414.6	24	%
B	574.5		30	%	591.6		29	%	524.5		30	%
C	452.5		23	%	495.9		24	%	474.8		27	%
D	243.5		13	%	267.1		13	%	248.0		14	%
E	49.4		2	%	83.8		5	%	63.3		4	%
F	0.2		—	%	6.3		N/M		14.0		1	%
G	—		—	%	1.3		N/M		2.6		N/M
Total	$	1,928.4	100	%	$	2,050.9	100	%	$	1,741.8	100	%

N/M – Not meaningful

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)

Credit and pricing policy changes continued to be made by the Company during the first quarter of 2019 , resulting in a change in the mix of personal loan origination volume from higher risk grades E through G to lower risk A through D grades. These changes broadly focused on tightening credit to shift overall platform mix towards lower risk and higher credit quality borrowers.

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)

Results of Operations

The following table sets forth the Condensed Consolidated Statements of Operations data for each of the periods presented:



	Three Months Ended									Change (%)
	March 31, 2019			December 31, 2018			March 31, 2018			Q1 2019 vs Q1 2018		Q1 2019 vs Q4 2018
Net revenue:

Transaction fees	$	135,397		$	142,053		$	111,182		22	%	(5	)%

Interest income	100,172			106,170			138,018			(27	)%	(6	)%
Interest expense	(75,360		)	(83,222		)	(110,843		)	(32	)%	(9	)%
Net fair value adjustments	(34,729		)	(25,865		)	(28,713		)	21	%	34	%
Net interest income and fair value adjustments	(9,917		)	(2,917		)	(1,538		)	N/M		N/M
Investor fees	31,731			30,419			27,895			14	%	4	%
Gain on sales of loans	15,152			10,509			12,671			20	%	44	%
Net investor revenue ⁽¹⁾	36,966			38,011			39,028			(5	)%	(3	)%

Other revenue	2,055			1,457			1,457			41	%	41	%

Total net revenue	174,418			181,521			151,667			15	%	(4	)%
Operating expenses: ⁽²⁾
Sales and marketing	66,623			68,353			57,517			16	%	(3	)%
Origination and servicing	28,273			25,707			22,645			25	%	10	%
Engineering and product development	42,546			39,552			36,837			15	%	8	%
Other general and administrative	56,876			61,303			52,309			9	%	(7	)%
Class action and regulatory litigation expense	—			—			13,500			N/M		N/M
Total operating expenses	194,318			194,915			182,808			6	%	—	%
Loss before income tax expense	(19,900		)	(13,394		)	(31,141		)	(36	)%	49	%
Income tax expense	—			18			39			N/M		N/M
Consolidated net loss	$	(19,900	)	$	(13,412	)	$	(31,180	)	(36	)%	48	%
Less: Income attributable to noncontrolling interests	35			50			1			N/M		(30	)%
LendingClub net loss	$	(19,935	)	$	(13,462	)	$	(31,181	)	(36	)%	48	%
N/M – Not meaningful
⁽¹⁾ See “ Item 1. Financial Statements – Notes to Condensed Consolidated Financial Statements – Note 1. Basis of Presentation ” for additional information.
⁽²⁾ Includes stock-based compensation expense as follows:
	Three Months Ended									Change (%)
	March 31, 2019			December 31, 2018			March 31, 2018			Q1 2019 vs Q1 2018		Q1 2019 vs Q4 2018
Sales and marketing	$	1,571		$	1,688		$	1,860		(16	)%	(7	)%
Origination and servicing	924			1,044			1,072			(14	)%	(11	)%
Engineering and product development	5,231			4,403			5,279			(1	)%	19	%
Other general and administrative	10,526			10,583			9,590			10	%	(1	)%
Total stock-based compensation expense	$	18,252		$	17,718		$	17,801		3	%	3	%

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)

Total Net Revenue



	Three Months Ended									Change (%)
	March 31, 2019			December 31, 2018			March 31, 2018			Q1 2019 vs Q1 2018		Q1 2019 vs Q4 2018
Net revenue:

Transaction fees	$	135,397		$	142,053		$	111,182		22	%	(5	)%

Interest income	100,172			106,170			138,018			(27	)%	(6	)%
Interest expense	(75,360		)	(83,222		)	(110,843		)	(32	)%	(9	)%
Net fair value adjustments	(34,729		)	(25,865		)	(28,713		)	21	%	34	%
Net interest income and fair value adjustments	(9,917		)	(2,917		)	(1,538		)	N/M		N/M
Investor fees	31,731			30,419			27,895			14	%	4	%
Gain on sales of loans	15,152			10,509			12,671			20	%	44	%
Net investor revenue	36,966			38,011			39,028			(5	)%	(3	)%

Other revenue	2,055			1,457			1,457			41	%	41	%

Total net revenue	$	174,418		$	181,521		$	151,667		15	%	(4	)%

N/M – Not meaningful

The analysis below is presented for the following periods: First quarter of 2019 compared to the first quarter of 2018 (Quarter Over Quarter) and first quarter of 2019 compared to the fourth quarter of 2018 (Sequential).

Transaction Fees

Transaction fees are fees paid by issuing banks or education and patient service providers to us for the work we perform in facilitating the origination of loans by our issuing bank partners. The amount of these fees is based upon the terms of the loan, including grade, rate, term, channel and other factors. As of March 31, 2019 , these fees ranged from 0% to 6% of the initial principal amount of a loan. With respect to loans for which WebBank acts as the issuing bank, we record transaction fee revenue net of program fees paid to WebBank.

Transaction fees were $135.4 million and $111.2 million for the first quarters of 2019 and 2018 , respectively, an increase of 22% . The increase was primarily due to higher loan origination volume and an increase in the average transaction fees earned in our standard personal loans program. Loans facilitated through our lending marketplace increased to $2.7 billion for the first quarter of 2019 compared to $2.3 billion for the first quarter of 2018 , an increase of 18% . The average transaction fee as a percentage of the initial principal balance of the loan was 5.0% for the first quarter of 2019 compared to 4.8% for the first quarter of 2018 .

Transaction fees were $135.4 million and $142.1 million for the first quarter of 2019 and fourth quarter of 2018 , respectively, a decrease of 5% . The decrease was primarily due to lower loan origination volume partially offset by an increase in the average transaction fees earned in our standard personal loans program. Loans facilitated through our lending marketplace to decreased to $2.7 billion for the first quarter of 2019 compared to $2.9 billion in the fourth quarter of 2018 , a decrease of 5% . The average transaction fee as a percentage of the initial principal balance of the loan was 5.0% for the first quarter of 2019 compared to 4.9% for the fourth quarter of 2018 .

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)

In April 2019 , we recognized approximately $6.6 million in transaction fee revenue associated with the issuance of loans in which the loan application process had commenced prior to the end of the first quarter of 2019 . In April 2018 , we recognized approximately $5.7 million in transaction fee revenue associated with the issuance of loans in which the loan application process had commenced prior to the end of the first quarter of 2018 .

Net Interest Income and Fair Value Adjustments

Loans Invested in by the Company: In the second quarter of 2017, the Company began to invest in loans to support securitizations and whole loan sale initiatives. We earn interest income and assume principal and interest rate risk on loans during the period we own the loans. We have financed a portion of the purchase of these loans with draws on our credit facilities and the associated interest expense reduces net interest income. Fair value adjustments on loans invested in by the Company are generally negative due to interest cash flow receipts and if there are expected increases and any acceleration in the timing of expected charge-offs and prepayments. As we continue to use our own capital to invest in loans for strategic business purposes, we expect the net negative fair value adjustments on loans to fluctuate due to the impact of discounts offered to meet yield expectations of our loan investors and the holding period of the loans. However, we anticipate these fair value adjustments will generally be offset by the interest income earned from holding such loans.

Loans, Notes, Certificates and Secured Borrowings: We do not assume principal or interest rate risk on loans facilitated through our lending marketplace that are funded by notes, certificates and certain secured borrowings because loan balances, interest rates and maturities are matched and offset by an equal balance of notes, certificates or secured borrowings with the exact same interest rates and maturities. The changes in fair value of loans, notes, certificates and secured borrowings are shown on our Condensed Consolidated Statements of Operations on a net basis. Due to the payment dependent feature of the notes, certificates and secured borrowings, fair value adjustments on loans funded with notes, certificates and secured borrowings result in no net effect on our earnings, except for changes in fair value of any applicable credit support agreements relating to secured borrowings.

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 additional detail related to net interest income and fair value adjustments for assets invested in by the Company, assets with equal and offsetting liabilities, and total interest income, interest expenses and net fair value adjustments:



	Three Months Ended									Change (%)
	March 31, 2019			December 31, 2018			March 31, 2018			Q1 2019 vs Q1 2018		Q1 2019 vs Q4 2018
Loans invested in by the Company, securities available for sale, cash and cash equivalents, and debt:
Interest income:
Loans held for investment and held for sale by the Company at fair value	$	28,785		$	26,924		$	30,708		(6	)%	7	%
Securities available for sale	3,096			2,644			1,225			153	%	17	%
Cash and cash equivalents	1,784			1,488			749			138	%	20	%
Total	33,665			31,056			32,682			3	%	8	%
Interest expense:
Credit facilities and securities sold under repurchase agreements	(6,279		)	(7,576		)	(3,175		)	98	%	(17	)%
Securitization notes	(2,574		)	(532		)	(2,332		)	10	%	384	%
Total	(8,853		)	(8,108		)	(5,507		)	61	%	9	%
Net interest income	$	24,812		$	22,948		$	27,175		(9	)%	8	%
Net fair value adjustments	(34,729		)	(25,865		)	(28,713		)	21	%	34	%
Net interest income and fair value adjustments	$	(9,917	)	$	(2,917	)	$	(1,538	)	N/M		N/M

Loans, notes, certificates and secured borrowings:
Interest income:
Loans held for investment at fair value	$	66,507		$	75,114		$	105,336		(37	)%	(11	)%
Interest expense:
Notes, certificates and secured borrowings	(66,507		)	(75,114		)	(105,336		)	(37	)%	(11	)%
Net interest income	$	—		$	—		$	—		N/M		N/M

Total net interest income and fair value adjustments:
Interest income	$	100,172		$	106,170		$	138,018		(27	)%	(6	)%
Interest expense	(75,360		)	(83,222		)	(110,843		)	(32	)%	(9	)%
Net fair value adjustments	(34,729		)	(25,865		)	(28,713		)	21	%	34	%
Net interest income and fair value adjustments	$	(9,917	)	$	(2,917	)	$	(1,538	)	N/M		N/M

N/M – Not meaningful

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 the outstanding quarterly average balances, which are key drivers of interest income and interest expense in the periods presented:



	Outstanding Quarterly Average Balances for Three Months Ended						Change (%)
	March 31, 2019		December 31, 2018		March 31, 2018		Q1 2019 vs Q1 2018		Q1 2019 vs Q4 2018
Loans held for investment by the Company	$	5,627	$	10,241	$	354,695	(98	)%	(45	)%
Loans held for sale by the Company	$	757,513	$	684,024	$	327,859	131	%	11	%
Credit facilities and securities sold under repurchase agreements	$	357,343	$	433,662	$	95,025	N/M		(18	)%
Securitization notes	$	247,060	$	64,088	$	297,783	(17	)%	N/M
Loans held for investment	$	1,906,205	$	2,147,177	$	2,988,625	(36	)%	(11	)%
Notes, certificates and secured borrowings	$	1,914,675	$	2,165,814	$	3,012,660	(36	)%	(12	)%

N/M – Not meaningful

Interest income associated with loans invested in by the Company, securities available for sale, and cash and cash equivalents was $33.7 million and $32.7 million for the first quarters of 2019 and 2018 , respectively, an increase of 3% . The increase was primarily due to an increase in the average outstanding balance of loans invested in by the Company.

Interest income associated with loans invested in by the Company, securities available for sale, and cash and cash equivalents was $33.7 million and $31.1 million for the first quarter of 2019 and fourth quarter of 2018 , respectively, an increase of 8% . The increase was primarily due to an increase in the average outstanding balances of loans invested in by the Company.

Interest expense associated with credit facilities, securities sold under repurchase agreements and securitization notes was $8.9 million and $5.5 million for the first quarters of 2019 and 2018 , respectively, an increase of 61% . The increase was primarily due to an increase in the average outstanding balances of credit facilities and an increase in LIBOR (London Inter-bank Offered Rate).

Interest expense associated with credit facilities, securities sold under repurchase agreements and securitization notes was $8.9 million and $8.1 million for the first quarter of 2019 and fourth quarter of 2018 , respectively, an increase of 9% . The increase was primarily due to an increase in the average outstanding balances of securitization notes and an increase in LIBOR.

Net fair value adjustments were $(34.7) million and $(28.7) million for the first quarters of 2019 and 2018 , respectively, an increase of 21% . The increase was primarily due to increases in the average outstanding balances and investor required yields related to loans invested in by the Company to support structured program transactions and whole loan sales as well as a fair value expense related to the dissolution of certain private funds managed by LCAM.

Net fair value adjustments were $(34.7) million and $(25.9) million for the first quarter of 2019 and fourth quarter of 2018 , respectively, an increase of 34% . The increase was primarily due to increases in the average outstanding balances and investor required yields related to loans invested in by the Company to support structured program transactions and whole loan sales as well as a fair value expense related to the dissolution of certain private funds managed by LCAM.

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)

Interest income from loans held for investment and the offsetting interest expense from notes, certificates and secured borrowings were both $66.5 million and $105.3 million for the first quarters of 2019 and 2018 , respectively, a decrease of 37% . The decrease was primarily due to a decrease in the average outstanding balances of loans held for investment and notes, certificates and secured borrowings, due to a larger portion of loans originated being sold to whole loan investors and structured program transactions.

Interest income from loans held for investment and the offsetting interest expense from notes, certificates and secured borrowings were both $66.5 million and $75.1 million for the first quarter of 2019 and fourth quarter of 2018 , respectively, a decrease of 11% . The decrease was primarily due to a decrease in the average outstanding balances of loans held for investment and notes, certificates and secured borrowings, due to a larger portion of loans originated being sold to whole loan investors and structured program transactions.

Investor Fees

The table below illustrates the composition of investor fees and the outstanding principal balance of loans serviced, which is a key driver of investor fees, by the method in which the loans were financed for each period presented:



	Three Months Ended						Change (%)
	March 31, 2019		December 31, 2018		March 31, 2018		Q1 2019 vs Q1 2018		Q1 2019 vs Q4 2018
Investor Fees:
Whole loans sold	$	24,613	$	23,180	$	19,235	28	%	6	%
Notes, certificates and secured borrowings	7,118		7,239		8,619		(17	)%	(2	)%
Funds and separately managed accounts ⁽¹⁾	—		—		41		N/M		—	%
Total	$	31,731	$	30,419	$	27,895	14	%	4	%

Outstanding Principal Balance of Loans Serviced On Our Platform (in millions):
Whole loans sold	$	11,761	$	10,890	$	8,571	37	%	8	%
Notes, certificates and secured borrowings	1,805		2,013		2,830		(36	)%	(10	)%
Total excluding loans invested in by the Company	$	13,566	$	12,903	$	11,401	19	%	5	%
Loans invested in by the Company	565		843		581		(3	)%	(33	)%
Total	$	14,131	$	13,746	$	11,982	18	%	3	%

N/M – Not meaningful


⁽¹⁾	Funds are the private funds for which LendingClub Asset Management, LLC (LCAM), or its subsidiaries acted as general partner. In March 2019, we completed the dissolution of those funds. The Company does not expect to earn investor fees from private funds and separately managed accounts in the future.

For each investment channel, the Company receives fees to compensate us for the costs we incur in servicing the related loan, including managing payments from borrowers, collections, payments to investors, maintaining investors’ account portfolios, providing information, and issuing monthly statements. The amount of investor fee revenue earned is predominantly affected by the servicing rates paid by investors, the outstanding principal balance of loans and the amount of principal and interest collected from borrowers and remitted to investors.

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)

Investor fee revenue related to whole loans sold also includes the change in fair value of our servicing assets and liabilities associated with the loans. Servicing rights are recorded as either an asset or liability in “Gain on sales of loans” in the Company’s Condensed Consolidated Statements of Operations depending on the degree to which the contractual loan servicing fee is above or below, respectively, an estimated market rate loan servicing fee. The change in fair value of servicing rights does not affect the contractual fees that we collect monthly from the whole loan investors.

Investor fees – whole loans sold : Investor fee revenue related to the servicing of whole loans sold was $24.6 million and $19.2 million for the first quarters of 2019 and 2018 , respectively, an increase of 28% . The increase was primarily due to a higher balance of whole loans serviced and increases in delinquent loan collections and charged-off loan sales, partially offset by the change in fair value of servicing rights.

Investor fee revenue related to the servicing of whole loans sold was $24.6 million and $23.2 million for the first quarter of 2019 and fourth quarter of 2018 , respectively, an increase of 6% . The increase was primarily due to a higher balance of whole loans serviced and increases in delinquent loan collections and charged-off loan sales, partially offset by the change in fair value of servicing rights.

Investor fees – notes, certificates and secured borrowings : Investor fee revenue related to the servicing of loans underlying notes, certificates and secured borrowings was $7.1 million and $8.6 million for the first quarters of 2019 and 2018 , respectively, a decrease of 17% . The decrease was primarily due to a lower principal balance of loans serviced and charged-off loan sales, partially offset by an increase in delinquent loan collections.

Investor fee revenue related to the servicing of loans underlying notes, certificates and secured borrowings was $7.1 million and $7.2 million for the first quarter of 2019 and fourth quarter of 2018 , respectively. The decrease was primarily due to a lower principal balance of loans serviced and charged-off loan sales, partially offset by an increase in delinquent loan collections.

Gain (Loss) on Sales of Loans

In connection with loan sales and structured program transactions, in addition to investor fees earned with respect to the corresponding loan, we recognize a gain or loss on the sale of that loan based on the level to which the contractual loan servicing fee is above or below an estimated market rate loan servicing fee. Additionally, we recognize program fees, net of transaction costs, as a gain or loss on sale of loans contributed to structured program transactions.

Gain on sales of loans was $15.2 million and $12.7 million for the first quarters of 2019 and 2018 , respectively, an increase of 20% . The increase was primarily due to increases in the weighted-average contractual loan servicing fee that resulted in higher gains on sales of loans, partially offset by decreases in the volume of loans sold.

Gain on sales of loans was $15.2 million and $10.5 million for the first quarter of 2019 and fourth quarter of 2018 , respectively, an increase of 44% . The increase was primarily due to increases in the volume of loans sold and the weighted-average contractual loan servicing fee that resulted in higher gains on sales of loans.

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)

Other Revenue

Other revenue primarily consists of sublease revenue from our sublet office space in San Francisco, California, and referral revenue that relates to fees earned from third-party companies when customers referred by us complete specified actions with such third-party companies. The table below illustrates the composition of other revenue for each period presented:



	Three Months Ended						Change (%)
	March 31, 2019		December 31, 2018		March 31, 2018		Q1 2019 vs Q1 2018		Q1 2019 vs Q4 2018
Sublease revenue	$	1,007	$	165	$	77	N/M		N/M
Referral revenue	695		830		836		(17	)%	(16	)%
Other ⁽¹⁾	353		462		544		(35	)%	(24	)%
Other revenue	$	2,055	$	1,457	$	1,457	41	%	41	%


⁽¹⁾	Beginning in the first quarter of 2019, the Company separately reported “Sublease revenue” from “Other” in the table above. Prior period amounts have been reclassified to conform to the current period presentation.

Operating Expenses

Our operating expenses consist of sales and marketing, origination and servicing, engineering and product development and other general and administrative expenses, as described below.

Sales and Marketing: Sales and marketing expense consists primarily of borrower and investor acquisition efforts, including costs attributable to marketing and selling the loans facilitated through the platform we operate. This includes costs of building general brand awareness, and salaries, benefits and stock-based compensation expense related to our sales and marketing team.

Origination and Servicing: Origination and servicing expense consists of salaries, benefits and stock-based compensation expense and vendor costs attributable to activities that most directly relate to facilitating the origination of loans and servicing loans for borrowers and investors. These costs relate to the credit, collections, customer support and payment processing teams and related vendors.

Engineering and Product Development: Engineering and product development expense consists primarily of salaries, benefits and stock-based compensation expense for engineering and product management teams, and the cost of contractors who work on the development and maintenance of our platform. Engineering and product development expense also includes non-capitalized hardware and software costs and depreciation, amortization and impairment of technology assets.

Other General and Administrative: Other general and administrative expense consists primarily of salaries, benefits and stock-based compensation expense for our accounting, finance, legal, risk, compliance, human resources and facilities teams, professional services fees and facilities expense.

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)



	Three Months Ended						Change (%)
	March 31, 2019		December 31, 2018		March 31, 2018		Q1 2019 vs Q1 2018		Q1 2019 vs Q4 2018
Sales and marketing	$	66,623	$	68,353	$	57,517	16	%	(3	)%
Origination and servicing	28,273		25,707		22,645		25	%	10	%
Engineering and product development	42,546		39,552		36,837		15	%	8	%
Other general and administrative	56,876		61,303		52,309		9	%	(7	)%
Class action and regulatory litigation expense	—		—		13,500		N/M		N/M
Total operating expenses	$	194,318	$	194,915	$	182,808	6	%	—	%

N/M – Not meaningful

Sales and marketing : Sales and marketing expense was $66.6 million and $57.5 million for the first quarters of 2019 and 2018 , respectively, an increase of 16% . The increase was primarily due to a $9.1 million increase in variable marketing expenses based on higher loan origination volume. Sales and marketing expense as a percent of loan originations was 2.4% in the first quarter of 2019 compared to 2.5% in the first quarter of 2018 .

Sales and marketing expense was $66.6 million and $68.4 million for the first quarter of 2019 and fourth quarter of 2018 , respectively, a decrease of 3% . The decrease was primarily due to a $1.2 million decrease in variable marketing expenses based on lower loan origination volume. Sales and marketing expense as a percent of loan originations was 2.4% in both the first quarter of 2019 and the fourth quarter of 2018 .

Origination and servicing : Origination and servicing expense was $28.3 million and $22.6 million for the first quarters of 2019 and 2018 , respectively, an increase of 25% . The increase was primarily due to a $3.2 million increase in cost structure simplification expense resulting from establishing a site in the Salt Lake City area and a $2.0 million increase in loan processing and servicing costs associated with higher loan origination volume and loans serviced. Outsourced service provider expense increased by $2.6 million from the first quarter of 2018, which was offset by a $2.4 million decrease in personnel-related expenses for full-time employees and contractors.

Origination and servicing expense was $28.3 million and $25.7 million for the first quarter of 2019 and fourth quarter of 2018 , respectively, an increase of 10% . The increase was primarily due to a $2.5 million increase in cost structure simplification expense resulting from establishing a site in the Salt Lake City area and a $0.7 million increase in loan processing and servicing costs resulting from a higher balance of loans serviced on our platform. The outstanding principal balance of loans serviced on our platform has increased 3% from the fourth quarter of 2018 to the first quarter of 2019 . Additionally, outsourced service provider expense increased by $0.6 million from the fourth quarter of 2018, which was offset by a $0.9 million decrease in personnel-related expenses for full-time employees and contractors.

Engineering and product development : Engineering and product development expense was $42.5 million and $36.8 million for the first quarters of 2019 and 2018 , respectively, an increase of 15% . The increase was primarily driven by continued investment in technology and platform improvements that are focused on enhancing our credit decisioning capabilities, loan servicing, internal testing environment and cloud infrastructure, which included a $4.1 million increase in depreciation and impairment expense and a $0.7 million increase in equipment and software expense.

We capitalized $10.7 million and $12.8 million in software development costs for the first quarters of 2019 and 2018 , respectively.

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)

Engineering and product development expense was $42.5 million and $39.6 million for the first quarter of 2019 and fourth quarter of 2018 , respectively, an increase of 8% . The increase was primarily due to a $2.4 million increase in personnel-related expense and a $1.0 million increase in depreciation and impairment expense.

We capitalized $10.7 million and $10.6 million in software development costs for the first quarter of 2019 and fourth quarter of 2018 , respectively.

Other general and administrative expense : Other general and administrative expense was $56.9 million and $52.3 million for the first quarters of 2019 and 2018 , respectively, an increase of 9% . The increase was primarily due to a $3.0 million increase in personnel-related expenses associated with higher headcount levels and a $1.1 million increase in facilities expense associated with establishing a site in the Salt Lake City area.

Other general and administrative expense was $56.9 million and $61.3 million for the first quarter of 2019 and fourth quarter of 2018 , respectively, a decrease of 7% . The decrease was primarily due to a $5.1 million decrease in cost structure simplification expense related to external advisory fees, partially offset by a $1.7 million increase in personnel-related expenses associated with higher headcount levels.

Class Action and Regulatory Litigation Expense

Class action and regulatory litigation expense for the first quarter of 2018 was $13.5 million related to ongoing governmental and regulatory investigations following the internal board review described more fully in “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Board Review ” contained in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (Board Review). There was no class action and regulatory litigation expense for the first quarter of 2019 .

Income Taxes

We continued to recognize a full valuation allowance against net deferred tax assets. This determination was based on the assessment of the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets.

Non-GAAP Financial Measures and Supplemental Financial Information

We use certain non-GAAP financial measures in evaluating our operating results. We believe that Contribution, Contribution Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income (Loss), Adjusted Earnings (Loss) Per Share (Adjusted EPS) and Net Cash and Other Financial Assets help identify trends in our core business results and allow for greater transparency with respect to key metrics used by our management in its decision making.

Our non-GAAP measures have limitations as analytical tools and you should not consider them in isolation. These non-GAAP measures should not be viewed as substitutes for, or superior to, net income (loss) as prepared in accordance with GAAP. In evaluating these non-GAAP measures, you should be aware that in the future we will incur expenses similar to the adjustments in this presentation. There are a number of limitations related to the use of these non-GAAP financial measures versus their most directly comparable GAAP measures, which include the following:


•	Other companies, including companies in our industry, may calculate these measures differently, which may reduce their usefulness as a comparative measure.


•	These measures do not consider the potentially dilutive impact of stock-based compensation.

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)


•	Although depreciation, impairment and amortization are non-cash charges, the assets being depreciated, impaired and amortized may have to be replaced in the future and Adjusted EBITDA and Adjusted EBITDA Margin do not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements.


•	These measures do not reflect tax payments that may represent a reduction in cash available to us.

In the fourth quarter of 2018, the Company included a new adjustment for cost structure simplification expense to calculate Contribution, Adjusted EBITDA and Adjusted Net Income (Loss). This expense relates to a review of our cost structure and a number of expense initiatives underway, including the establishment of a site in the Salt Lake City area. The expense includes incremental and excess personnel-related expenses associated with establishing our Salt Lake City area site and external advisory fees.

Beginning in the first quarter of 2019, we included supplemental financial information to the existing financial statements. We believe this supplemental financial information is useful because it indicates the effect of pass-through items (Pass-throughs) related to our member payment dependent retail program (Retail Program) notes as well as certain VIEs that we are required to consolidate in accordance with GAAP. We are delineating between assets which are legally ours and those which are not, as well as liabilities which are only payable from the cash flows of those assets. In addition, in the first quarter of 2019, the Company introduced “Net Cash and Other Financial Assets” as a new non-GAAP measure that is calculated as cash and certain other financial assets, including loans and securities available for sale which are partially secured and offset by the related credit facilities. We believe this is a useful measure because it illustrates the overall financial stability and operating leverage of the Company.

Contribution and Contribution Margin

Contribution is a non-GAAP financial measure that is calculated as net revenue less “sales and marketing” and “origination and servicing” expenses on the Company’s Condensed Consolidated Statements of Operations , adjusted to exclude cost structure simplification and non-cash stock-based compensation expenses within these captions and income or loss attributable to noncontrolling interests. These costs represent the costs that are most directly related to generating such revenue. Contribution Margin is a non-GAAP financial measure calculated by dividing Contribution by total net revenue.

Contribution and Contribution Margin are measures of overall direct product profitability that our management and board of directors find useful, and believe investors may find useful, in understanding the relationship between costs most directly associated with revenue generating activities and the related revenue, and remaining amount available to support our costs of engineering and product development and other general and administrative expense to evaluate our operating performance and trends. While we believe Contribution and Contribution Margin are useful for the reasons above, they are not an overall measure of our profitability, as they exclude engineering and product development and other general and administrative expenses that are required to run our business. Factors that affect our Contribution and Contribution Margin include revenue mix, variable marketing expenses and origination and servicing expenses.

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 shows the calculation of Contribution and Contribution Margin:



	Three Months Ended
	March 31, 2019			December 31, 2018			March 31, 2018
Total net revenue	$	174,418		$	181,521		$	151,667
Sales and marketing expense	66,623			68,353			57,517
Origination and servicing expense	28,273			25,707			22,645
Total direct expenses	94,896			94,060			80,162
Cost structure simplification expense ⁽¹⁾	3,706			880			—
Stock-based compensation ⁽²⁾	2,495			2,732			2,932
Income attributable to noncontrolling interests	(35		)	(50		)	(1		)
Contribution	$	85,688		$	91,023		$	74,436
Contribution margin	49.1		%	50.1		%	49.1		%


⁽¹⁾	Contribution excludes the portion of personnel-related expense associated with establishing a site in the Salt Lake City area that is included in the “Sales and marketing” and “Origination and servicing” expense categories.


⁽²⁾	Contribution excludes stock-based compensation expense included in the “Sales and marketing” and “Origination and servicing” expense categories.

The following table presents a reconciliation of net loss to Contribution for each of the periods indicated:



	Three Months Ended
	March 31, 2019			December 31, 2018			March 31, 2018
Consolidated net loss	$	(19,900	)	$	(13,412	)	$	(31,180	)
Engineering and product development expense	42,546			39,552			36,837
Other general and administrative expense	56,876			61,303			52,309
Cost structure simplification expense ⁽¹⁾	3,706			880			—
Class action and regulatory litigation expense	—			—			13,500
Stock-based compensation expense ⁽²⁾	2,495			2,732			2,932
Income tax expense	—			18			39
Income attributable to noncontrolling interests	(35		)	(50		)	(1		)
Contribution	$	85,688		$	91,023		$	74,436
Total net revenue	$	174,418		$	181,521		$	151,667
Contribution margin	49.1		%	50.1		%	49.1		%


⁽¹⁾	Contribution excludes the portion of personnel-related expense associated with establishing a site in the Salt Lake City area that is included in the “Sales and marketing” and “Origination and servicing” expense categories.


⁽²⁾	Contribution excludes stock-based compensation expense included in the “Sales and marketing” and “Origination and servicing” expense categories.

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA is a non-GAAP financial measure defined as net income (loss) before (1) depreciation, impairment and amortization expense, (2) stock-based compensation expense, (3) income tax expense (benefit),

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)

(4) acquisition related expenses, (5) legal, regulatory and other expense related to legacy issues, (6) cost structure simplification expense, (7) goodwill impairment and (8) income or loss attributable to noncontrolling interests. Adjusted EBITDA Margin is a non-GAAP financial measure calculated by dividing Adjusted EBITDA by total net revenue.

We believe that Adjusted EBITDA is an important measure of operating performance because it allows management, investors and our board to evaluate and compare our core operating results, including our return on capital and operating efficiencies, from period to period by removing legacy issues that result in elevated legal costs (including ongoing regulatory and government investigations, indemnification obligations and litigation), expenses related to our cost structure simplification, the impact of depreciation, impairment and amortization in our asset base, stock-based compensation, income tax effects and other non-operating expenses. Additionally, we utilize Adjusted EBITDA as an operating performance measure as an input into the Company’s calculation of the annual bonus plan.

The following table presents a reconciliation of net loss to Adjusted EBITDA for each of the periods indicated:



	Three Months Ended
	March 31, 2019			December 31, 2018			March 31, 2018
Consolidated net loss	$	(19,900	)	$	(13,412	)	$	(31,180	)
Depreciation and impairment expense:
Engineering and product development	13,373			12,372			9,247
Other general and administrative	1,542			1,525			1,419
Amortization of intangible assets	940			941			1,035
Cost structure simplification expense ⁽¹⁾	4,272			6,782			—
Legal, regulatory and other expense related to legacy issues ⁽²⁾	4,145			2,570			16,973
Stock-based compensation expense	18,252			17,718			17,801
Income tax expense	—			18			39
Income attributable to noncontrolling interests	(35		)	(50		)	(1		)
Adjusted EBITDA	$	22,589		$	28,464		$	15,333
Total net revenue	$	174,418		$	181,521		$	151,667
Adjusted EBITDA margin	13.0		%	15.7		%	10.1		%


⁽¹⁾	Includes personnel-related expenses associated with establishing a site in the Salt Lake City area and external advisory fees. These expenses are included in “Sales and marketing,” “Origination and servicing,” “Engineering and product development” and “Other general and administrative” expense on the Company’s Condensed Consolidated Statements of Operations .

⁽²⁾

Includes class action and regulatory litigation expense of $13.5 million for the first quarter of 2018 , which is included in “Class action and regulatory litigation expense” on the Company’s Condensed Consolidated Statements of Operations . There was no class action and regulatory litigation expense for the first quarter of 2019 or fourth quarter of 2018 . For the first quarter of 2019 , includes expense related to the dissolution of certain private funds managed by LCAM of $2.2 million and legal expenses of $1.9 million, which are included in “Net fair value adjustments” and “Other general and administrative” expense on the Company’s Condensed Consolidated Statements of Operations , respectively. For the fourth quarter of 2018 and first quarter of 2018 , also includes legal and other expenses of $2.6 million and $3.5 million, respectively, which are included in “Other general and administrative” expense on the Company’s Condensed Consolidated Statements of Operations .

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)

Adjusted Net Income (Loss) and Adjusted EPS

Adjusted Net Income (Loss) is a non-GAAP financial measure defined as net income (loss) attributable to LendingClub adjusted to exclude certain expenses that are either non-recurring or unusual in nature, such as expenses related to our cost structure simplification, goodwill impairment and legal, regulatory and other expense related to legacy issues, net of tax. Adjusted EPS is a non-GAAP financial measure calculated by dividing Adjusted Net Income (Loss) by the weighted-average diluted common shares outstanding. We believe that Adjusted Net Income (Loss) and Adjusted EPS are important measures because they directly reflect the financial performance of our business operations.

The following table presents a reconciliation of LendingClub Net Loss to Adjusted Net Loss and the calculation of Adjusted EPS for each of the periods indicated:



	Three Months Ended
	March 31, 2019			December 31, 2018			March 31, 2018
LendingClub net loss	$	(19,935	)	$	(13,462	)	$	(31,181	)
Cost structure simplification expense ⁽¹⁾	4,272			6,782			—
Legal, regulatory and other expense related to legacy issues ⁽²⁾	4,145			2,570			16,973
Adjusted net loss	$	(11,518	)	$	(4,110	)	$	(14,208	)

Weighted-average common shares - diluted	430,544,355			427,697,182			418,299,301
Weighted-average other dilutive equity awards	—			—			—
Non-GAAP diluted shares ⁽³⁾	430,544,355			427,697,182			418,299,301

Adjusted EPS - diluted	$	(0.03	)	$	(0.01	)	$	(0.03	)


⁽¹⁾	Includes personnel-related expense associated with establishing a site in the Salt Lake City area and external advisory fees. These expenses are included in “Sales and marketing,” “Origination and servicing,” “Engineering and product development” and “Other general and administrative” expense on the Company’s Condensed Consolidated Statements of Operations .

⁽²⁾

Includes class action and regulatory litigation expense and legal and other expenses, which are included in “Class action and regulatory litigation expense” and “Other general and administrative” expense, respectively, on the Company’s Condensed Consolidated Statements of Operations . For the first quarter of 2019 , also includes expense related to the dissolution of certain private funds managed by LCAM, which is included in “Net fair value adjustments” on the Company’s Condensed Consolidated Statements of Operations .


⁽³⁾	Net of shares repurchased in the first quarter of 2016 under the Company’s share repurchase program.

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)

Supplemental Financial Information

The following table is provided to delineate between the assets and liabilities belonging to our Retail Program noteholders and certain VIEs that we are required to consolidate in accordance with GAAP. Such assets are not legally ours and the associated liabilities are payable only from the cash flows generated by those assets (i.e. Pass-throughs). As such, these debtholders do not have a secured interest in any other assets of LendingClub.



	March 31, 2019								December 31, 2018
	Retail Program ⁽¹⁾		Consolidated VIEs ⁽²⁾		All Other LendingClub ⁽³⁾		Condensed Consolidated Balance Sheet		Retail Program ⁽¹⁾		Consolidated VIEs ⁽²⁾		All Other LendingClub ⁽³⁾		Condensed Consolidated Balance Sheet
Assets
Cash and cash equivalents	$	—	$	—	$	402,311	$	402,311	$	—	$	—	$	372,974	$	372,974
Restricted cash	—		14,665		153,289		167,954		15,551		17,660		237,873		271,084
Securities available for sale	—		—		197,509		197,509		—		—		170,469		170,469
Loans held for investment at fair value	1,158,504		539,694		—		1,698,198		1,241,157		642,094		—		1,883,251
Loans held for investment by the Company at fair value	—		—		8,757		8,757		—		—		2,583		2,583
Loans held for sale by the Company at fair value	—		216,753		335,413		552,166		—		245,345		594,676		840,021
Accrued interest receivable	8,855		6,972		3,830		19,657		8,914		7,242		6,099		22,255
Property, equipment and software, net	—		—		118,157		118,157		—		—		113,875		113,875
Intangible assets, net	—		—		17,108		17,108		—		—		18,048		18,048
Other assets	—		254		235,010		235,264		—		530		124,437		124,967
Total assets	$	1,167,359	$	778,338	$	1,471,384	$	3,417,081	$	1,265,622	$	912,871	$	1,641,034	$	3,819,527
Liabilities and Equity
Accounts payable	$	—	$	—	$	24,804	$	24,804	$	—	$	—	$	7,104	$	7,104
Accrued interest payable	8,855		5,375		699		14,929		11,484		7,594		163		19,241
Accrued expenses and other liabilities	—		—		238,941		238,941		—		15		152,103		152,118
Payable to investors	—		—		72,175		72,175		—		—		149,052		149,052
Notes, certificates and secured borrowings at fair value	1,158,504		539,694		5,028		1,703,226		1,254,138		648,908		2,829		1,905,875
Payable to securitization note holders	—		233,269		—		233,269		—		256,354		—		256,354
Credit facilities and securities sold under repurchase agreements	—		—		263,863		263,863		—		—		458,802		458,802
Total liabilities	1,167,359		778,338		605,510		2,551,207		1,265,622		912,871		770,053		2,948,546
Total equity	—		—		865,874		865,874		—		—		870,981		870,981
Total liabilities and equity	$	1,167,359	$	778,338	$	1,471,384	$	3,417,081	$	1,265,622	$	912,871	$	1,641,034	$	3,819,527

⁽¹⁾

Represents loans held for investment at fair value that are funded directly by our Retail Program notes. The liabilities are only payable from the cash flows generated by the associated assets. We do not assume principal or interest rate risk on loans facilitated through our lending marketplace that are funded by our Retail Program because loan balances, interest rates and maturities are matched and offset by an equal balance of notes with the exact same interest rates and maturities. We do not retain any economic interests from our Retail Program. Interest expense on Retail Program notes of

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)

$42.0 million was equally matched and offset by interest income from the related loans of $42.0 million for the first quarter of 2019, resulting in no net effect on our Net interest income and fair value adjustments.

⁽²⁾

Represents assets and equal and offsetting liabilities of certain VIEs that we are required to consolidate in accordance with GAAP, but which are not legally ours. The liabilities are only payable from the cash flows generated by the associated assets. The creditors of the VIEs have no recourse to the general credit of the Company. This includes LC Trust (which issues certificates backed by loans held by the trust) and any consolidated securitization trusts. Interest expense on these liabilities owned by third-parties of $27.1 million and net fair value adjustments of $7.7 million for the first quarter of 2019 were equally matched and offset by interest income on the loans of $34.8 million, resulting in no net effect on our Net interest income and fair value adjustments. Economic interests held by LendingClub, including retained interests, residuals and equity of the VIEs, are reflected in “Loans held for sale by the Company at fair value” and “Restricted cash,” respectively, within the “All Other LendingClub” column.


⁽³⁾	Represents all other assets and liabilities of LendingClub, other than those related to our Retail Program and certain consolidated VIEs, but includes any retained interests, residuals and equity of those consolidated VIEs.

Net Cash and Other Financial Assets

The following table provides additional detail related to components of our net cash and other financial assets:



	March 31, 2019			December 31, 2018
Cash and loans held for investment by the Company
Cash and cash equivalents	$	402,311		$	372,974
Loans held for investment by the Company at fair value	8,757			2,583
Total	411,068			375,557

Other financial assets partially secured by credit facilities
Securities available for sale	197,509			170,469
Loans held for sale by the Company at fair value	552,166			840,021
Payable to securitization note holders	(233,269		)	(256,354		)
Credit facilities and securities sold under repurchase agreements	(263,863		)	(458,802		)
Total	$	252,543		$	295,334

Net cash and other financial assets ⁽¹⁾	$	663,611		$	670,891


⁽¹⁾	Comparable GAAP measure cannot be provided as not practicable.

Investments in Quarterly Originations by Investment Channel and Investor Concentration

Our investment channels consist of (1) banks, which are deposit taking institutions or their affiliates, (2) other institutional investors, which include asset managers, insurance companies, hedge funds and other large non-bank investors, (3) managed accounts, which include dedicated third-party funds, (4) LendingClub inventory, which include loan originations purchased by the Company during the period and not yet sold as of the period end, and (5) self-directed investors, which include our self-directed Retail Program investor base or publicly issued member payment dependent notes.

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 shows the percentage of loan origination volume issued in the period and purchased or pending purchase by each investment channel as of the end of each period presented:



	March 31, 2019		December 31, 2018		September 30, 2018		June 30, 2018		March 31, 2018
Investor Type:
Banks	49	%	41	%	38	%	40	%	48	%
Other institutional investors	18	%	19	%	19	%	16	%	13	%
Managed accounts	17	%	16	%	21	%	19	%	20	%
LendingClub inventory ⁽¹⁾	10	%	18	%	15	%	18	%	9	%
Self-directed investors	6	%	6	%	7	%	7	%	10	%
Total	100	%	100	%	100	%	100	%	100	%

⁽¹⁾

The total loan activity during a period and loans purchased or pending purchase by LendingClub at each period end is discussed in “ Item 1. Financial Statements – Notes to Condensed Consolidated Financial Statements – Note 6. Loans Held for Investment, Loans Held for Sale, Notes, Certificates and Secured Borrowings ” and “ Note 8. Fair Value of Assets and Liabilities . ” LendingClub inventory percentage reflects all securitizations during the period as sold loans for the portion of securities sold to third parties.

The following table provides the percentage of loans invested in by the ten largest external investors and by the largest single investor during each of the previous five quarters (by dollars invested):



	March 31, 2019		December 31, 2018		September 30, 2018		June 30, 2018		March 31, 2018
Percentage of loans invested in by ten largest investors	65	%	58	%	56	%	53	%	57	%
Percentage of loans invested in by largest single investor	36	%	29	%	22	%	16	%	14	%

The composition of the top ten investors may vary from period to period. The increase in the percentage of loans invested in by a single investor from the fourth quarter of 2018 to the first quarter of 2019 was primarily due to an increase in the volume of lower credit risk grade A and B loans, facilitated on our marketplace, which are a preferred investment by banks, including our largest investor.

Effectiveness of Scoring Models

Our ability to attract borrowers and investors to our lending marketplace is significantly dependent on our platform’s ability to effectively evaluate a borrower’s credit profile.

Our online lending marketplace platform’s credit decisioning and scoring models are evaluated on a regular basis and the additional data on loan history experience, borrower behavior and prepayment trends that we accumulate are leveraged to continually improve our underwriting models. We believe we have the experience to effectively evaluate a borrower’s creditworthiness and likelihood of default. If our lending marketplace’s credit decisioning and scoring models ultimately prove to be ineffective or fail to appropriately account for a decline in future macroeconomic environment, investors may experience higher than expected losses.

Our current underwriting model leverages a number of custom attributes developed by LendingClub. We work with our primary issuing bank partner to modify their credit and pricing policies, leveraging insights on current market conditions and recent vintage performance.

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 charts provided below display the historical lifetime cumulative net charge-off rates (expressed as a percent of original loan balances) through March 31, 2019 , by booking year, for all grades and 36 or 60 month terms of standard program loans for each of the years shown. These charts display lifetime cumulative net charge-off rates using months on book for each annual vintage presented. Each annual vintage’s lifetime cumulative net charge-offs vary based on the maturity of each loan’s month on book. For the first quarter of 2019 , standard program loans accounted for 71% of all loan origination volume.

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)

Loan Portfolio Information and Credit Metrics

Fair Value and Delinquencies

For loans held for investment that are backed by notes, certificates and secured borrowings on our Condensed Consolidated Balance Sheets , the outstanding principal balance, fair value and percentage of loans that are delinquent, by loan product, are as follows:



	March 31, 2019						December 31, 2018
(in millions, except percentages)	Outstanding Principal Balance		Fair Value ⁽²⁾		Delinquent Loans ⁽²⁾		Outstanding Principal Balance		Fair Value ⁽²⁾		Delinquent Loans ⁽²⁾
Personal loans – standard program	$	1,792.1	94.1	%	3.1	%	$	1,994.1	93.5	%	3.5	%
Personal loans – custom program	13.0		93.6		6.2		19.2		92.8		7.1
Other loans ⁽¹⁾	—		—		—		0.1		96.0		10.6
Total	$	1,805.1	94.1	%	3.1	%	$	2,013.4	93.5	%	3.5	%


⁽¹⁾	Components of other loans are less than 10% of the outstanding principal balance presented individually.


⁽²⁾	Expressed as a percent of outstanding principal balance.

Increases in the fair value of loans as a percent of outstanding principal balance from December 31, 2018 to March 31, 2019 were primarily due to a shift in the mix of personal loan origination volume toward lower risk grades.

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 loans invested in directly by the Company for which there were no associated notes, certificate or secured borrowings, the outstanding principal balance, fair value and percentage of loans that are delinquent, by loan product, are as follows:



	March 31, 2019						December 31, 2018
(in millions, except percentages)	Outstanding Principal Balance ⁽²⁾		Fair Value ⁽³⁾		Delinquent Loans ⁽³⁾		Outstanding Principal Balance ⁽²⁾		Fair Value ⁽³⁾		Delinquent Loans ⁽³⁾
Personal loans – standard program	$	485.4	94.0	%	1.5	%	$	706.1	96.5	%	0.7	%
Personal loans – custom program	29.0		96.1		2.0		89.4		98.5		0.7
Other loans ⁽¹⁾	81.7		94.1		2.9		77.7		93.9		0.2
Total	$	596.1	94.1	%	1.7	%	$	873.2	96.5	%	0.7	%


⁽¹⁾	Components of other loans are less than 10% of the total outstanding principal balance if presented individually.


⁽²⁾	Includes both loans held for investment and loans held for sale.


⁽³⁾	Expressed as a percent of outstanding principal balance.

Declines in the fair value of loans invested in by the Company as a percent of outstanding principal balance from December 31, 2018 to March 31, 2019 were primarily due to increases in yields required by investors to purchase our loans, which resulted in discounts reducing the fair value of loans.

Net Annualized Charge-Off Rates

The following tables show annualized net charge-off rates, which are a measure of the performance of the loans facilitated by our platform. In contrast to the graphs above, these tables show the annualized charged-off balance of loans in a specific period as a percentage of the average outstanding balance for such period.

Net annualized charge-off rates are affected by the average age and grade distribution of the loans outstanding for a given quarter and the credit performance of those loans. Additionally, in any particular quarter the portfolios include loans from past vintages that were originated under prior credit underwriting parameters, and thus do not reflect the current credit underwriting parameters used to originate new loans.

The annualized net charge-off rates for personal loans for both standard and custom programs in total for the last five quarters are as follows:



Total Platform ⁽¹⁾	March 31, 2019		December 31, 2018		September 30, 2018		June 30, 2018		March 31, 2018
Personal Loans – Standard Program:
Annualized net charge-off rate	7.0	%	7.0	%	6.2	%	7.2	%	7.8	%
Weighted-average age in months	12.4		12.3		12.3		12.5		12.8

Personal Loans – Custom Program:
Annualized net charge-off rate	12.8	%	12.4	%	11.0	%	13.7	%	15.0	%
Weighted-average age in months	9.7		9.5		9.6		10.2		10.7


⁽¹⁾	Total platform comprises all loans facilitated through our lending marketplace, including whole loans sold and loans financed by notes, certificates and secured borrowings, but excluding education and patient finance loans, auto refinance loans and small business loans.

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 decrease in annualized net charge-off rates in the first quarter of 2019 compared to the first quarter of 2018 for the total platform primarily reflects the effect of an increase in average outstanding balance in both the standard and custom personal loan programs. This decrease was primarily driven by a combination of credit tightening and the composition of the outstanding balance toward lower risk grades. The increase in annualized net charge-off rates in the first quarter of 2019 compared to the fourth quarter of 2018 for the custom personal loan program is primarily due to the effect of higher observed actual charge-offs.

The annualized net charge-off rates for personal loans for both standard and custom programs for loans retained on our Condensed Consolidated Balance Sheets for the last five quarters are as follows:



Loans Retained on Balance Sheet ⁽¹⁾	March 31, 2019		December 31, 2018		September 30, 2018		June 30, 2018		March 31, 2018
Personal Loans – Standard Program:
Annualized net charge-off rate	8.2	%	9.0	%	7.9	%	8.9	%	9.7	%
Weighted-average age in months	15.5		14.3		15.7		15.6		14.9

Personal Loans – Custom Program:
Annualized net charge-off rate	4.9	%	5.9	%	2.7	%	10.3	%	11.1	%
Weighted-average age in months	13.4		6.9		9.2		6.6		17.0


⁽¹⁾	Loans retained on balance sheet include loans invested in by the Company as well as loans held for investment that are funded directly by member payment dependent notes related to our Retail Program and certificates.

The decrease in annualized net charge-off rates for the standard personal loan program in the first quarter of 2019 compared to both the first quarter of 2018 and fourth quarter of 2018 for the loans retained on our Condensed Consolidated Balance Sheets reflects the effect of lower outstanding principal balance with higher weighted-average age in months and lower observed actual charge-offs. This decrease was primarily driven by a reduction of outstanding principal balance for loans with an increased weighted-average age in months.

The annualized net charge-off rates and weighted-average age in months for custom program loans retained on our Condensed Consolidated Balance Sheets reflect the change in outstanding principal balance period-over-period based on purchase and sale activity of recently issued near-prime loans.

The annualized net charge-off rates for standard program loans are higher for loans retained on our Condensed Consolidated Balance Sheets compared to loans reflected at the total platform level for each quarter because of, among other reasons, a difference in grade distribution for the two portfolios. The proportion of grade A and B loans is 33% of the retained loan portfolio compared to 51% for the total platform level as of March 31, 2019 . This difference in loan grade distribution results in higher net charge-off rates for the loans on the Condensed Consolidated Balance Sheets compared to the total platform, as grade A and B loans have lower expected and actual credit losses.

Regulatory Environment

We are regularly subject to claims, individual and class action lawsuits, lawsuits alleging regulatory violations, government (including state agencies) and regulatory exams, investigations, inquiries or requests, and other proceedings. The number and significance of these claims, lawsuits, exams, investigations, inquiries, requests and proceedings have increased in part because our business has expanded in scope and geographic reach, and our products and services have increased in complexity. For example, we have been subject to and experienced, and will likely continue to be subject to and experience, exams from state regulators and our legal, compliance and other costs related to such proceedings may elevate from current levels. See “ Part I – Item 1. Business – Regulatory and

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)

Compliance Framework, ” “ Part I – Item 1A. Risk Factors – Risks Related to Our Business and Regulation ” including the risk factors titled “ We are regularly subject to litigation, and government and regulatory investigations, inquiries and requests, including matters related to our legacy management and the resignation of our former Chief Executive Officer, ” “ If the loans facilitated through our lending marketplace were found to violate a state’s usury laws, and/or we were found to be the true lender (as opposed to our issuing bank(s)), we may have to alter our business model and our business could be harmed ” and “ The regulatory framework for our business is evolving and uncertain as federal and state governments consider new laws to regulate online lending marketplaces such as ours. New laws and regulations, including uncertainty as to how the actions of any federal or state regulator could impact our business or that of our issuing bank(s) ” in our Annual Report for more information, additional discussion and disclosure, including the potential adverse outcomes and consequences, from such proceedings.

As a result of the Board Review and resignation of our former CEO, we have received inquiries from governmental entities, and we continue to cooperate fully with such governmental entities. An inquiry by the Federal Trade Commission (FTC) led to an action brought against the Company by the FTC. Responding to inquiries of this nature and defending the allegations in the FTC’s complaint, is costly and time consuming, can generate negative publicity, and could have a material and adverse effect on our business. See “ Item 1. Financial Statements – Notes to Condensed Consolidated Financial Statements – Note 18. Commitments and Contingencies ” for further discussion regarding the FTC litigation and related matters.

In addition, there has been (and may continue to be) an increase in inquiries, regulatory proceedings, including exams by state regulators, and litigation challenging, among other things, licensing requirements, the application of state usury rates and lending arrangements where a bank or other third-party has made a loan and then sells and assigns it to an entity that is engaged in assisting with the origination and servicing of a loan.

For example, in January 2017, the Colorado Administrator (Administrator) of the Uniform Consumer Credit Code filed suit against Avant, Inc., a company that operates an online consumer loan platform. The Administrator asserts that loans to Colorado residents facilitated through Avant’s platform were required to comply with Colorado laws regarding interest rates and fees, and that those laws were not preempted by federal laws that apply to loans originated by WebBank, the federally regulated issuing bank who originates loans through Avant’s platform, as well as through our platform. Although Avant removed its case to federal court in March 2017, the United States District Court for the District of Colorado issued an order in March 2018 remanding the case to the District Court for the City and County of Denver. In March 2018, the United States District Court for the District of Colorado also issued an order dismissing a parallel case brought by WebBank that sought a declaratory judgment regarding the applicability of preemption to Colorado usury laws and permanent injunctions against the Administrator that would prevent the Administrator from enforcing Colorado usury laws against WebBank and certain parties associated with loans originated by it. Avant thereafter filed a Motion to Dismiss in District Court for the State of Colorado and WebBank moved to intervene in the case. In August 2018, the Court granted WebBank’s motion but denied Avant’s motion. In November 2018, the Administrator added as defendants certain securitization trusts that had acquired Avant loans. The Administrator is seeking a penalty of ten times the amount of the “excess” finance charges.

The Company has had discussions with the Colorado Department of Law (CDL) concerning the licenses required for the Company’s servicing operations and the structure of its offerings in the State of Colorado. While we believe that our program with WebBank has been structured in accordance with governing federal law, the Administrator has identified alleged “exceptions” to our compliance with provisions of the Colorado Uniform Consumer Credit Code, including with respect to permitted rates and charges. We believe that our model differs in important respects from Avant’s business model as alleged in the litigation involving Avant in Colorado. We are also in discussions with the CDL about entering into a terminable agreement with the CDL to, among other things: (i) toll the statutes of limitations on any action the CDL might bring against the Company based on the rates and charges on the loans the Company facilitates and (ii) refrain from facilitating certain loans to borrowers located in Colorado available for

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)

investment by certain investors. No assurance can be given as to the timing or outcome of the CDL inquiry or any other related matters.

As of the date of this Report, we are subject to examination by the New York Department of Financial Services (NYDFS). In July 2018, the NYDFS issued an Online Lending Report (Lending Report). The Lending Report included, among other things, an analysis of the online lenders operating in New York including their methods of operations, lending practices, interest rates and costs, products offered and complaints and investigations relating to online lenders. The Lending Report also included information and recommendations regarding protecting New York’s markets and consumers. For example, although the Lending Report noted that the rapid growth of online lending demonstrates there is value to new technologies that allow financial institutions to connect with borrowers in new ways, it noted that in many cases an online lender is the “true lender” and that lending in New York, whether through banks, credit unions or online lenders, should be subject to applicable usury limits. We periodically have discussions with various regulatory agencies regarding our business model and have recently engaged in similar discussions with the NYDFS. During the course of such discussions, which remain ongoing, we decided to voluntarily comply with certain rules and regulations of the NYDFS.

If we are found to not have complied with applicable laws, regulations or requirements, we could: (i) lose one or more of our licenses or authorizations, (ii) become subject to a consent order or administrative enforcement action, (iii) face lawsuits (including class action lawsuits), sanctions or penalties, (iv) be in breach of certain contracts, which may void or cancel such contracts, (v) decide or be compelled to modify or suspend certain of our business practices (including limiting the maximum interest rate on certain loans facilitated through our platform and/or refraining from making certain loans available for investment by certain investors), or (vi) be required to obtain a license in such jurisdiction, which may have an adverse effect on our ability to continue to facilitate loans through our lending marketplace, perform our servicing obligations or make our lending marketplace available to borrowers in particular states; any of which may harm our business.

Liquidity and Capital Resources

Liquidity

Our short-term liquidity needs generally relate to our working capital requirements, including the purchase of loans invested in by the Company. These liquidity needs are generally met through cash generated from the operations of facilitating loan originations, servicing fee revenue, proceeds from the sales of loans and draws on our credit facilities.

Given the member payment dependent structure of the notes, certificates and secured borrowings, principal and interest payments on notes, certificates and secured borrowings are paid only when received from borrowers on the corresponding retained loans, resulting in no material impact to our liquidity. During the first quarter of 2019 we purchased $756.1 million in loans which were contemporaneously funded by whole loan sales and by the issuance of notes and certificates. We may use our own capital and available credit facilities to purchase loans for future structured program transactions, whole loan sales and if we experience a reduction in available investor capital to fund loans on our marketplace. During the first quarter of 2019 , we used our own capital to purchase $843.9 million in loans and sold $1.0 billion in loans, of which $834.5 million was contributed to structured program transactions and $211.3 million was sold to whole loan investors. As of March 31, 2019 , the fair value of loans invested in by the Company was $560.9 million , of which $437.4 million were pledged as collateral under our credit facilities and for payables to securitization note holders.

We may use our cash, cash equivalents and securities available for sale as additional sources of liquidity. Cash, cash equivalents and securities available for sale were $599.8 million (which included $45.2 million of securities pledged as collateral) and $543.4 million (which included $53.6 million of securities pledged as collateral) as of March 31,

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)

2019 and December 31, 2018 , respectively. Our cash and cash equivalents are primarily held in institutional money market funds, interest-bearing deposit accounts at investment grade financial institutions, certificates of deposit, and commercial paper. Our securities available for sale consist of asset-backed securities related to structured program transactions, corporate debt securities, asset-backed securities, commercial paper, certificates of deposit and other securities. Changes in the balance of cash and cash equivalents are generally a result of timing related to working capital requirements, purchase or sale of loans and securities available for sale, changes in debt outstanding under our credit facilities, and changes in restricted cash and other investments. Changes in the balance of securities available for sale are generally a result of activity related to our structured program transactions. Future cash requirements include certain contingent liabilities, including litigations and ongoing regulatory and government investigations primarily related to outstanding legacy issues. As of March 31, 2019 and December 31, 2018 , we had $12.7 million and 12.8 million in accrued contingent liabilities, respectively, but actual cash payments may vary if outcomes of legal actions or settlements are different. See “ Item 1. Financial Statements – Notes to Condensed Consolidated Financial Statements – Note 18. Commitments and Contingencies ” for further information.

Our credit facilities and securities sold under repurchase agreements are comprised of three Warehouse Facilities, a Revolving Facility and repurchase agreements. The Warehouse Facilities have an aggregated credit limit of $484.2 million , with $122.4 million of debt outstanding secured by $193.0 million of loans as of March 31, 2019 . The Revolving Facility has a credit limit of $120.0 million , with $95.0 million of debt outstanding as of March 31, 2019 . We have two master repurchase agreements with counterparties where we may sell securities (subject to an obligation to repurchase such securities at a specified future date and price) in exchange for cash. As of March 31, 2019 , we had $46.5 million in aggregate debt outstanding under our repurchase agreements secured by $54.4 million of underlying assets pledged as collateral. In addition, during 2018 , we sponsored and consolidated an asset-backed securities securitization transaction for which the notes held by third-party investors and the unamortized debt issuance costs of $233.3 million are included in “Payable to securitization note holders” in the Condensed Consolidated Balance Sheets as of March 31, 2019 and are secured by an aggregate outstanding principal balance of $270.9 million and restricted cash of $14.7 million . See “ Item 1. Financial Statements – Notes to Condensed Consolidated Financial Statements – Note 13. Debt ” for further information.

We believe based on our projections that our cash on hand, securities available for sale, funds available from our lines of credit, and our cash flow from operations to be sufficient to meet our liquidity needs for the next twelve months.

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 certain cash flow information for the periods presented:



	Three Months Ended March 31,
Condensed Cash Flow Information:	2019			2018
Cash provided by (used for) loan operating activities	$	208,780		$	(23,582	)
Cash provided by all other operating activities	35,210			37,281
Net cash provided by operating activities ⁽¹⁾	$	243,990		$	13,699

Cash provided by loan investing activities ⁽²⁾	$	163,733		$	228,816
Cash (used for) provided by all other investing activities	(2,635		)	862
Net cash provided by investing activities	$	161,098		$	229,678

Cash used for note, certificate and secured borrowings financing ⁽²⁾	$	(181,289	)	$	(228,700	)
Cash (used for) provided by issuance of securitization notes and residual certificates, credit facilities and securities sold under repurchase agreements	(218,619		)	10,171
Cash used for all other financing activities	(78,973		)	(37,241		)
Net cash used for financing activities	$	(478,881	)	$	(255,770	)
Net decrease in cash, cash equivalents and restricted cash	$	(73,793	)	$	(12,393	)


⁽¹⁾	Cash provided by operating activities primarily includes the purchase and sale of loans held for sale by the Company.

⁽²⁾

Cash provided by loan investing activities includes the purchase of and repayment of loans held for investment. Cash used for note, certificate and secured borrowings financing activities includes the issuance of notes, certificates and secured borrowings to investors and the repayment of those notes, certificates and secured borrowings. These amounts generally correspond to and offset each other.

Operating Activities. Net cash provided by operating activities was $244.0 million and $13.7 million during the first quarters of 2019 and 2018 , respectively. Net cash provided by operating activities was primarily driven by proceeds from sales of loans held for sale offset by the purchase of loans held for sale. The timing of the purchases and sales of loans held for sale can vary between periods and can therefore impact the amount of cash provided by or used for operating activities. In periods where we accumulate loans held for sale that are sold in a subsequent period, cash flow from operating activities will be negatively affected.

Investing Activities. Net cash provided by investing activities was $161.1 million and $229.7 million during the first quarters of 2019 and 2018 , respectively. Net cash provided by loan investing activities was primarily driven by purchases of loans held for investment offset by the repayment of such loans. Net cash (used for) provided by all other investing activities was primarily driven by purchases of securities available for sale and purchases of property, equipment and software, offset by proceeds from securities available for sale.

Financing Activities. Net cash used for financing activities was $(478.9) million and $(255.8) million during the first quarters of 2019 and 2018 , respectively. Net cash used for financing activities was primarily driven by principal payments on our credit facilities and principal payments on and retirements of notes and certificates, offset by proceeds from our credit facilities, the issuance of notes and certificates, and proceeds from securities sold under repurchase agreements.

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)

Capital Resources

Net capital expenditures were $15.9 million , or 9.1% , of total net revenue, and $13.6 million , or 9.0% , of total net revenue, for the first quarters of 2019 and 2018 , respectively. Capital expenditures generally consist of internally developed software, computer equipment, and construction in progress. Capital expenditures in 2019 are expected to be approximately $55.0 million, primarily related to costs associated with the continued development and support of our online lending marketplace platform, implementation of a third-party loan servicing system, and the build-out of our Salt Lake City area site. In the future, we expect our capital expenditures to increase as we continue to enhance our platform to support the growth in our business.

Off-Balance Sheet Arrangements

At March 31, 2019 and December 31, 2018 , a total of $6.6 million and $5.5 million , respectively, in standby letters of credit were outstanding related to certain financial covenants required for our leased facilities. To date, no amounts have been drawn against the letters of credit, which renew annually and expire at various dates through July 2026 .

In the ordinary course of business, we engage in other activities that are not reflected on our Condensed Consolidated Balance Sheets , generally referred to as off-balance sheet arrangements. These activities involve transactions with unconsolidated variable interest entities including Company sponsored securitizations and CLUB Certificate transactions. These transactions are used frequently by the Company to provide a source of liquidity to finance our business and to diversify our investor base. The Company retains at least 5% of securities and residual interests from these transactions and enters into a servicing arrangement with the unconsolidated variable interest entity. We are exposed to market risk in the securitization market. We provide additional information regarding transactions with unconsolidated variable interest entities in “ Item 1. Financial Statements – Notes to Condensed Consolidated Financial Statements – Note 7. Securitizations and Variable Interest Entities . ”

Contingencies

For a comprehensive discussion of contingencies as of March 31, 2019 , see “ Item 1. Financial Statements – Notes to Condensed Consolidated Financial Statements – Note 18. Commitments and Contingencies . ”

Critical Accounting Policies and Estimates

Certain of the Company’s accounting policies that involve a higher degree of judgment and complexity are discussed in “ Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates ” in the Annual Report. There have been no significant changes to these critical accounting estimates during the first quarter of 2019 .

LENDINGCLUB CORPORATION

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk represents the risk of loss that may impact our financial position due to adverse changes in market discount rates and servicing rates, interest rates and credit performance of loans. We are exposed to market risk directly through loans and securities held on our balance sheet, access to the securitization markets, investor demand for our loans, current and future debt under our credit facilities, and our servicing assets.

Market Rate Sensitivity

Market rate sensitivity refers to the risk of loss to future earnings, values or future cash flows that may result from changes in market discount rates and servicing rates.

Loans Invested in by the Company. As of March 31, 2019 and December 31, 2018 , we were exposed to market rate risk on $560.9 million and $842.6 million of loans invested in by the Company at fair value, respectively, which have fixed interest rates. The fair values of loans are estimated using a discounted cash flow methodology, where the discount rate represents an estimate of the required rate of return by market participants. The discount rates for our loans may change due to expected loan performance or changes in the expected returns of similar financial instruments available in the market. Any realized or unrealized losses from market rate changes on loans invested in by the Company are recorded in earnings.

The Company’s continued facilitation of loan originations depends on an active liquid market, third-party investor demand for loans and successful structured program transactions and loan sales. The Company could respond to disruptions in ongoing investor demand due to changes in yield expectations, availability and yield of alternative investments, and liquidity in capital markets with reductions in origination facilitations or sales of loans at discounts, thereby negatively impacting revenue.

The following table presents the impact to the fair value of loans invested in by the Company due to a hypothetical change in discount rates as of March 31, 2019 and December 31, 2018 :



	Loans Invested in by the Company
	March 31, 2019			December 31, 2018
Fair value	$	560,923		$	842,604
Discount rates
100 basis point increase	$	(6,793	)	$	(10,487	)
100 basis point decrease	$	6,959		$	10,749

Servicing Assets. As of March 31, 2019 and December 31, 2018 , we were exposed to market servicing rate risk on $71.8 million and $64.0 million of servicing assets, respectively. Our selection of the most representative market servicing rates is inherently judgmental. The following table presents the impact to the fair value of servicing assets due to a hypothetical change in the weighted-average market servicing rate assumption as of March 31, 2019 and December 31, 2018 :



	Servicing Assets
	March 31, 2019			December 31, 2018
Fair value	$	71,848		$	64,006
Weighted-average market servicing rate assumption	0.66		%	0.66		%
Change in fair value from:
Servicing rate increase by 10 basis points	$	(11,800	)	$	(10,878	)
Servicing rate decrease by 10 basis points	$	11,806		$	10,886

LENDINGCLUB CORPORATION

Interest Rate Sensitivity

The fair values of certain of our assets and liabilities are sensitive to changes in interest rates. Fixed rates may adversely affect market value due to a rise in interest rates, while floating rates may produce less income than expected if interest rates fall. The impact of changes in interest rates would be reduced by the fact that increases or decreases in fair values of assets would be partially offset by corresponding changes in fair values of liabilities.

Loans Invested in by the Company. As of March 31, 2019 and December 31, 2018 , we were exposed to interest rate risk on $560.9 million and $842.6 million of loans invested in by the Company at fair value, respectively, which have fixed interest rates. Any realized or unrealized losses from interest rate changes are recorded in earnings. The following table presents the impact to the fair value of loans invested in by the Company due to a hypothetical change in interest rates as of March 31, 2019 and December 31, 2018 :



	Loans Invested in by the Company
	March 31, 2019			December 31, 2018
Fair value	$	560,923		$	842,604
Interest rates
100 basis point increase	$	(6,793	)	$	(9,945	)
100 basis point decrease	$	6,959		$	10,163

Securities Available for Sale. As of March 31, 2019 , we were exposed to interest rate risk on $197.5 million of securities available for sale, including $139.5 million of asset-backed securities related to structured program transactions and $58.0 million of certificates of deposit, asset-backed securities, corporate debt securities, commercial paper and other securities. As of December 31, 2018 , we were exposed to interest rate risk on $170.5 million of securities available for sale, including $116.8 million of asset-backed securities related to structured program transactions and $53.7 million of certificates of deposit, asset-backed securities, corporate debt securities, commercial paper and other securities. To manage this risk, we limit and monitor maturities, credit ratings, performance of loans underlying asset-backed securities, residual interests, CLUB Certificates and concentrations within the investment portfolio. Any unrealized gains or losses resulting from such interest rate changes would only be recorded in earnings if we sold the securities prior to maturity or if the securities were not considered other-than-temporarily impaired.

The following table presents the impact to the fair value of securities available for sale due to a hypothetical change in interest rates as of March 31, 2019 and December 31, 2018 :



	Securities Available for Sale
	March 31, 2019			December 31, 2018
Fair value	$	197,509		$	170,469
Interest rates
100 basis point increase	$	(1,452	)	$	(1,259	)
100 basis point decrease	$	1,452		$	1,259

Credit Facilities and Securities Sold Under Repurchase Agreements. As of March 31, 2019 and December 31, 2018 , we were exposed to interest rate risk on $122.4 million and $306.8 million of funding under the Warehouse Facilities, $95.0 million of funding under the Revolving Facility, and $46.5 million and $57.0 million of funding under our repurchase agreements, respectively. Future funding activities may increase our exposure to interest rate risk, as the interest rates payable on such funding are tied to LIBOR or other short-term market rates.

LENDINGCLUB CORPORATION

The following table presents the impact to the annualized interest expense related to our credit facilities and securities sold under repurchase agreements due to a hypothetical change in the one-month LIBOR rate as of March 31, 2019 and December 31, 2018 :



	Credit Facilities and Securities Sold Under Repurchase Agreements
	March 31, 2019			December 31, 2018
Carrying value	$	263,863		$	458,802
One-month LIBOR
100 basis point increase	$	2,639		$	4,588
100 basis point decrease	$	(2,639	)	$	(4,588	)

Cash and Cash Equivalents. As of March 31, 2019 and December 31, 2018 , we had cash and cash equivalents of $402.3 million and $373.0 million , respectively. These amounts were held primarily in interest-bearing deposits at investment grade financial institutions, institutional money market funds, certificates of deposit, and commercial paper, which are short-term. Due to their short-term nature, we do not believe we have material exposure to changes in the fair value of these liquid investments as a result of changes in interest rates.

Credit Performance Sensitivity

Credit performance sensitivity refers to the risk of loss arising from default when borrowers are unable or unwilling to meet their financial obligations. We invest in loans and asset-backed securities (including residual interests) related to structured program transactions. The performance of these loans and asset-backed securities is dependent on the credit performance of loans facilitated by us. To manage this risk, we monitor borrower payment performance and how it may impact the valuation of our investments. The valuation of these investments is based on a discounted cash flow analysis and includes Level 3 assumptions. Any unrealized losses on asset-backed securities (including residual interests) are evaluated for other-than-temporary impairment and any impairment is recorded in earnings. All other unrealized gains and losses are recorded in the Condensed Consolidated Statements of Comprehensive Income (Loss) .

Loans Invested in by the Company. As of March 31, 2019 and December 31, 2018 , we were exposed to credit performance risk on $560.9 million and $842.6 million of loans invested in by the Company at fair value, respectively, which have fixed interest rates. The following table presents the impact to the fair value of loans invested in by the Company due to a hypothetical change in credit loss rates as of March 31, 2019 and December 31, 2018 :



	Loans Invested in by the Company
	March 31, 2019			December 31, 2018
Fair value	$	560,923		$	842,604
Credit loss rates
10 percent increase	$	(8,579	)	$	(11,304	)
10 percent decrease	$	8,618		$	11,526

LENDINGCLUB CORPORATION

Asset-backed Securities Related to Structured Program Transactions. As of March 31, 2019 and December 31, 2018 , we were exposed to credit performance risk on $139.5 million and $116.8 million of asset-backed securities related to structured program transactions, including securities pledged as collateral. The following table presents the impact to the fair value of asset-backed securities related to structured program transactions due to a hypothetical change in credit loss rates as of March 31, 2019 and December 31, 2018 :



	Asset-backed Securities Related to Structured Program Transactions
	March 31, 2019			December 31, 2018
Fair value	$	139,504		$	116,768
Credit loss rates
10 percent increase	$	(3,264	)	$	(2,643	)
10 percent decrease	$	3,279		$	2,643

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management evaluated, with the participation of the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of March 31, 2019 . In designing and evaluating its disclosure controls and procedures, the Company’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance, not absolute assurance, of achieving the desired control objectives, and is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures as of March 31, 2019 , were designed and functioned effectively to provide reasonable assurance that the information required to be disclosed by the Company in reports filed under the Securities and Exchange Act of 1934, as amended, is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to management, including the principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

No change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during the first quarter of 2019 , that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For a comprehensive discussion of legal proceedings, see “ Part I. Financial Information – Item 1. Financial Statements – Notes to Condensed Consolidated Financial Statements – Note 18. Commitments and Contingencies – Legal, ” which is incorporated herein by reference.

Item 1A. Risk Factors

The risks described in “ Part I – Item 1A. Risk Factors ,” in our Annual Report, could materially and adversely affect our business, financial condition, operating results and prospects, and the trading price of our common stock could

LENDINGCLUB CORPORATION

decline. While we believe the risks and uncertainties described therein include all material risks currently known by us, it is possible that these may not be the only ones we face. Due to risks and uncertainties, known and unknown, our past financial results may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. The Risk Factors section of the Annual Report remains current in all material respects.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

LENDINGCLUB CORPORATION

Item 6. Exhibits

Exhibit Index

The exhibits noted in the accompanying Exhibit Index are filed or incorporated by reference as a part of this Report and such Exhibit Index is incorporated herein by reference.



		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Exhibit	Filing Date	Filed Herewith
10.1	Form of Borrower Agreement					X
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X
32.1	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X
101.INS	XBRL Instance Document					X
101.SCH	XBRL Taxonomy Extension Schema Document					X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase					X
101.DEF	XBRL Taxonomy Extension Definition Linkbase					X
101.LAB	XBRL Taxonomy Extension Label Linkbase					X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase					X

LENDINGCLUB CORPORATION

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




		LENDINGCLUB CORPORATION
		(Registrant)

Date:	May 8, 2019	/s/ SCOTT SANBORN
		Scott Sanborn
		Chief Executive Officer

Date:	May 8, 2019	/s/ THOMAS W. CASEY
		Thomas W. Casey
		Chief Financial Officer

EXHIBIT 10.1

Page 1

Borrower Agreement

(April 2019)

The following Borrower Agreement ("Agreement") is between you ("you" and "your" mean each and every borrower, including any joint applicant/co-borrower) and WebBank, a Utah-chartered industrial bank ("we," or "us"). This Agreement governs the process by which you may make a request or requests for a loan from us through the website Lendingclub.com, including any subdomains thereof, or other application channels offered by us (collectively, the "Site") and operated by LendingClub Corporation ("LendingClub"). If you make a loan request, and if that request results in a loan that is approved and funded by us, then your loan will be governed by the terms of the Loan Agreement and Promissory Note, which is attached to this Agreement as Exhibit A, and as it may be revised from time to time. The version in effect when you make a loan request will apply to any loan made in response to that request, and any secondary loan would be governed by the terms of the document then in effect. This Agreement will remain in effect for the applicable loan, and will terminate if your loan request is cancelled, withdrawn, or declined.

BY ELECTRONICALLY SIGNING THIS AGREEMENT, YOU HAVE SIGNIFIED YOUR AGREEMENT TO THESE TERMS.

1. Loans. Under this Agreement, you can request an installment loan funded and originated by us that is facilitated through the Site. When you make a request, you agree to receive and timely repay the loan that may be made in response to that request, subject to your right to cancel the request before closing and our right, as both are further described in section 23 below. Your agreement means you agree to repay the money provided by us to you and to abide by the terms of this Agreement, the Loan Agreement and Promissory Note, and all other agreements or disclosures provided to you during the loan process and which may be found in your LendingClub account. Any dispute with us, LendingClub or any subsequent holder of the Loan Agreement and Promissory Note will be resolved by binding arbitration, subject to your right to opt out as set forth below. Each loan request is subject to our credit criteria in effect at the time of your loan request.

2. Account Verification. In addition to our rights in section 23 below, you understand that if we are unable to verify your bank account for any reason, we will cancel your application, your loan request will not be posted on the Site, and this Agreement will be terminated.

3. Loan Requests. You may post a qualifying loan request on the Site. You may not post more than one loan request on the site at a time and you may not have more than two loans outstanding at any

EXHIBIT 10.1

Page 2

given time. You may post a loan request on the Site, and LendingClub investors ("Investors") will be able to review your loan request. Investors may commit to (i) purchase the loan by subsequently acquiring the loan itself, in whole or in part, from us or LendingClub or (ii) invest indirectly in your loan through the purchase of securities issued or sold by LendingClub or another entity which has indirectly or directly acquired your loan from LendingClub. You acknowledge that an Investor's commitment to invest in all or a portion of your loan does not confer any rights to you or obligate us to issue your loan. You understand that Investors make their own decisions whether to invest in your loan. Finally, LendingClub may also choose to invest in all or part of your loan request, but is not obligated to do so.

We may elect in our sole discretion to give you a partial funding option, if necessary, which means your loan will be funded if it receives commitments totaling less than the full amount of your requested loan (subject to any applicable minimum loan size).

WE DO NOT WARRANT OR GUARANTEE (1) THAT YOUR LOAN REQUEST WILL ATTRACT INVESTMENT INTEREST, OR (2) THAT YOU WILL RECEIVE A LOAN AS A RESULT OF POSTING A REQUEST.

No later than thirty (30) days after your application is complete, we will tell you if your loan is approved and will issue for some or all of your requested amount, or is declined, or if we are making you a counter-offer. Your loan request will be listed on the marketplace for at least fourteen (14) days, subject to investor interest. It may take up to forty-five (45) days to process and issue your loan. If at any point, you no longer want a loan under your pending loan request, you must notify us in writing of your election to terminate your loan request sufficiently far in advance of the loan closing for us to cancel the loan.

4. Loan Terms. Your loan will have a principal balance in the amount set forth in the Truth in Lending disclosure and Loan Agreement and Promissory Note, each of which is provided to you and placed into the on-line account you established upon registration. You agree and acknowledge that the initial loan disclosures made to you are estimates and are subject to change based on the actual, initial principal balance of the loan funded and your selected payment option (check or Automated Clearing House ("ACH")). Opting to pay by check will result in a processing fee that will increase your APR. All loans are unsecured, fully-amortizing, closed-end loans for the term stated in your Truth in Lending disclosure and Loan Agreement and Promissory Note. Your obligations, including your obligation to repay principal and interest, are set forth in the Loan Agreement and Promissory Note. Other fees and terms of the loan will also be set forth in the Loan Agreement and

EXHIBIT 10.1

Page 3

Promissory Note. All payments are to be applied to Borrower's obligations as Lender determines in its sole discretion.

5. Credit Decisions. If you make a loan request, you must fully complete the application on the Site. You do not need to disclose alimony, child support or separate maintenance income if you do not wish to have it considered as a basis for repaying a loan. You agree and acknowledge that we may verify any information you submit either by asking for true and complete copies of necessary documentation, by information provided through a third party, or by other proof. Additionally, by proceeding with the application, you consent to our use of any information provided by you or provided through any third party, for any lawful purpose, including but not limited to identity verification, fraud prevention and credit underwriting. Failure to timely provide information can result in your loan application being incomplete and closed by us. Furthermore, we may terminate consideration of your application at any time in our sole discretion.

6. Authorization to Obtain Consumer Report and Rights Related to Consumer Reporting Agencies.

You authorize us and LendingClub to investigate your credit history by obtaining consumer reports about you. We may request a consumer report from consumer reporting agencies in considering any application or loan request, and we and LendingClub may request such reports on a periodic basis during the term of this Agreement or any Loan Agreement and Promissory Note. The terms of such authorization are set forth more fully in the Credit Profile Authorization.

Under the Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), (i) you have a right to review any file maintained on you by a consumer reporting agency, (ii) your file is available for review at no charge on request made to the consumer reporting agency within thirty days after the date of the receipt of notice that credit has been denied, and your file is available for a minimal reporting charge at any other time; (iii) you have a right to dispute directly with your consumer reporting agency the completeness of accuracy of any item contained in a file on you maintained by that consumer reporting agency; (iv) no consumer reporting agency may make any consumer report containing any adverse item of information dating from more than seven (7) years before the report; (v) ACCURATE INFORMATION CANNOT BE PERMANENTLY REMOVED FROM THE FILES OF A CONSUMER REPORTING AGENCY; and (vi) non-profit organizations which provide credit and debt counseling service are available.

EXHIBIT 10.1

Page 4

7. Limited Power of Attorney Grant.

As a condition to receiving a loan from us, you hereby grant to LendingClub a limited power of attorney ("Power of Attorney") and appoint them and/or their designees as your true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, for you and in your name, place and stead, in any and all capacities, to:


•	Complete and execute the Loan Agreement and Promissory Note(s) in the form attached as Exhibit A that reflect- the accepted terms set forth in each of your final Truth in Lending Disclosure(s) as such may be posted from time to time in response to your loan request(s) in the on-line account you have established with LendingClub where documents are stored;


•	Agree to any changes necessary to correct any errors or omissions in any Loan Agreement and Promissory Note(s) before or after execution; provided that notice is given to you; and


•	Otherwise act with full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection with such other powers above as fully to all intents and purposes as you might or could do in person.

This Power of Attorney is limited solely to the purpose described above and will expire automatically upon the termination of this Borrower Agreement. You may revoke this Power of Attorney by contacting us at support@lendingclub.com or calling 888-596-3157 and closing your account with us; provided, however, if a loan request has been approved you must provide such notice before the loan proceeds are transferred to your Designated Account and before the Loan Agreement and Promissory Note is executed on your behalf. Once the Loan Agreement and Promissory Note is signed by LendingClub or its designee acting as your attorney-in-fact, it is deemed executed on your behalf and shall be your valid and binding obligation thereafter.

You agree and acknowledge that LendingClub is an intended third-party beneficiary of this Section 7 for purposes of receiving a loan from us.

If you choose to revoke this Power of Attorney prior to execution, we will be unable to proceed with your loan request and your pending loan request will be considered withdrawn, your account closed, and you may be prohibited from posting additional qualifying loan requests in the future in our discretion.

8. Loan Consummation.

YOU AGREE AND ACKNOWLEDGE THAT YOU ARE NOT OBLIGATED UNDER THE TERMS OF THE LOAN AGREEMENT AND PROMISSORY NOTE AND THE LOAN TRANSACTION WITH US

EXHIBIT 10.1

Page 5

IS NOT COMPLETED (I.E. CONSUMMATED) UNTIL YOUR ABILITY TO CANCEL YOUR LOAN APPLICATION HAS PASSED. YOU ACKNOWLEDGE THAT WE ARE MATERIALLY RELYING UPON THIS UNDERSTANDING IN UNDERTAKING THE POTENTIAL ISSUANCE OF YOUR LOAN.

Your ability to cancel your loan application is governed by section 23(A) of this Agreement, which is below.

9. Military Lending Act. Federal law provides important protections to members of the Armed Forces and their dependents relating to extensions of consumer credit. In general, the cost of consumer credit to a member of the Armed Forces and his or her dependent may not exceed an annual percentage rate of 36 percent. This rate must include, as applicable to the credit transaction or account: the costs associated with credit insurance premiums; fees for ancillary products sold in connection with the credit transaction; any application fee charged (other than certain application fees for specified credit transactions or accounts); and any participation fee charged (other than certain participation fees for a credit card account). Federal law requires that you receive a clear description of your required payments. Please review the disclosures and your credit agreement carefully to understand your payment obligations. To hear these disclosures over the telephone, call the following toll-free number (844) 538-6754.

10. Servicing by LendingClub. You acknowledge and agree that LendingClub may provide services to us in connection with evaluating your loan requests, and all other aspects of your relationship with us. LendingClub will also act as the servicer of any loan that you obtain. LendingClub may delegate servicing to another entity in its sole discretion without notice.

11. Other Borrower Agreements; Use of Loan Proceeds. You agree that you (A) are a US citizen, permanent resident or non-permanent resident alien in the United States on a valid long term visa; (B) will not, in connection with your loan request: (i) make any false, misleading or deceptive statements or omissions of fact, including but not limited to your loan description and any other credit you have applied for; (ii) misrepresent your identity, or describe, present or portray yourself as a person other than yourself; (iii) give to or receive from, or offer or agree to give to or receive from any LendingClub member or other person any fee, bonus, additional interest, kickback or thing of value of any kind except in accordance with the terms of your loan; (iv) represent yourself to any person, as a representative, employee, or agent of ours, or purport to speak to any person on our behalf; (v) use any of the loan proceeds to fund any post-secondary educational expenses, including, but not limited to, tuition, fees, books, supplies, miscellaneous expenses, or room and board; (vi) use any of the loan proceeds to fund any illegal activity or any other activity or use not otherwise allowed under

EXHIBIT 10.1

Page 6

this Agreement or the Site; (vii) use any of the loan proceeds for the purpose of purchasing or carrying any securities; (viii) use any of the loan proceeds for the purpose of investing, trading, or speculating in any currencies, including without limitation cryptocurrencies or digital currencies or any futures or derivatives thereof; or (ix) use the Site to request or obtain a loan for someone other than yourself; and (C) that you have all necessary consents, permissions, acknowledgements or agreements from all joint applicants/co-borrowers and we may rely upon this agreement without any investigation or verification. You further acknowledge and agree that we may rely without independent verification on the accuracy, authenticity, and completeness of all information you provide to us. To the extent that we determine, in our sole discretion, that your loan request violates this Agreement, the Terms of Use or any other agreement entered into with us or LendingClub, we may terminate your loan request and cancel this Agreement immediately.

12. Liability of the Borrower and Joint Applicant/Co&dash;Borrower is Joint and Several. The liability of any joint applicant/co-borrower under this Agreement and under the Loan Agreement and Promissory Note is in addition to and not in lieu of the obligations of the primary borrower. The joint applicant/co-borrower agrees to abide by the terms and conditions of this Agreement, the Loan Agreement and Promissory Note and any other agreement and documents as if an original signatory.

We and our successors and assigns have sole discretion to proceed, at any time, against any party responsible under this Agreement. Further, we can accept instructions from either you or the joint applicant/co-borrower, and notice can be given to either you or the joint applicant/co-borrower, and shall be binding on both and deemed received by all parties.

13. TCPA Consent & Privacy. Notwithstanding any current or prior election to opt in or opt out of receiving telemarketing calls or SMS messages (including text messages) from us, our agents, representatives, affiliates, or anyone calling on our behalf, you expressly consent to be contacted by us, our agents, representatives, affiliates, or anyone calling on our behalf for any and all purposes arising out of or relating to your loan and/or account, at any telephone number, or physical or electronic address you provide or at which you may be reached. You agree we may contact you in any way, including SMS messages (including text messages), calls using prerecorded messages or artificial voice, and calls and messages delivered using auto telephone dialing system or an automatic texting system. Automated messages may be played when the telephone is answered, whether by you or someone else. In the event that an agent or representative calls, he or she may also leave a message on your answering machine, voice mail, or send one via text.

EXHIBIT 10.1

Page 7

You consent to receive SMS messages (including text messages), calls and messages (including prerecorded and artificial voice and autodials) from us, our agents, representatives, affiliates or anyone calling on our behalf at the specific number(s) you have provided to us, or numbers we can reasonably associate with your account (through skip trace, caller ID capture or other means), with information or questions about your application, loan and/or account. You certify, warrant and represent that the telephone numbers that you have provided to us are your contact numbers. You represent that you are permitted to receive calls at each of the telephone numbers you have provided to us. You agree to promptly alert us whenever you stop using a particular telephone number.

Your cellular or mobile telephone provider will charge you according to the type of plan you carry. You also agree that we may contact you by e-mail, using any email address you have provided to us or that you provide to us in the future. We may listen to and/or record phone calls between you and our representatives without notice to you as permitted by applicable law. For example, we listen to and record calls for quality monitoring purposes.

14. Assignment; Registration of Note Owners, Termination. We may assign this Agreement and the Loan Agreement and Promissory Note, or any of our rights under this Agreement or the Loan Agreement and Promissory Note, in whole or in part at any time. You further understand, acknowledge and agree that LendingClub or another third party may further sell, assign or transfer your Loan Agreement and Promissory Note and all associated documents and information related to the and the Loan Agreement and Promissory Note, in whole or in part at any time, without your consent or notice to you (subject to the registration requirement below). You may not assign, transfer, sublicense or otherwise delegate your rights or obligations under this Agreement to another person without our prior written consent. Any such assignment, transfer, sublicense or delegation in violation of this section 14 shall be null and void.

You hereby appoint LendingClub as your agent (in such capacity, the " Note Registrar ") for the purpose of maintaining a book-entry system (the " Register ") for recording the names and addresses of any owner of beneficial interests in this Note (the " Note Owners ") and the principal amounts and interest on this Note owing to each pursuant to the terms hereof from time to time. The person or persons identified as the Note Owners in the Register shall be treated as the owner(s) of this Note for purposes of receiving payment of principal and interest on such Note and for all other purposes. With respect to any transfer by a Note Owner of its beneficial interest in this Note, the right to payment of principal and interest on this Note shall not be effective until the transfer is recorded in the Register.

EXHIBIT 10.1

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We may terminate this Agreement and your ability to make loan requests at any time. If you committed fraud or made a misrepresentation in connection with your registration on the Site or any application or request for a loan, performed any prohibited activity, or otherwise failed to abide by the terms of this Agreement, we will have all remedies authorized or permitted by this Agreement and applicable law.

15. Entire Agreement. This Agreement, and any Loan Agreement and Promissory Note that may be agreed for a loan, represent the entire agreement between you and us regarding the subject matter hereof and supersede all prior or contemporaneous communications, promises and proposals, whether oral, written or electronic, between us with respect to your loan request and loan. The WebBank Privacy Notice attached as Exhibit B is incorporated by reference into this Agreement.

16. Electronic Transactions. THIS AGREEMENT IS FULLY SUBJECT TO YOUR CONSENT TO ELECTRONIC TRANSACTIONS AND DISCLOSURES, WHICH CONSENT IS SET FORTH IN THE TERMS OF USE FOR THE SITE.

17. Notices. All notices relating to legal actions or matters, including bankruptcy notices, must be sent to us at WebBank, c/o LendingClub Corporation, 595 Market Street, #200, San Francisco CA, 94105, Attention: Legal Department. Legal notices sent to any other address will not satisfy any legal requirement that you provide notice to us. All notices and other communications to you hereunder may be given by email to your registered email address or posted on your Account Summary on the Site, and shall be deemed to have been duly given and effective upon transmission. You acknowledge that you have control of such email account and your Account Summary on the Site and that communications from us may contain sensitive, confidential, and collections related communications. If your registered email address changes, you must notify LendingClub of the change by sending an email to support@lendingclub.com or calling 888-596-3157. You also agree to update your registered residence address and telephone number on the Site if they change.

18. NO WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, WE MAKE NO REPRESENTATIONS OR WARRANTIES TO YOU, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

19. LIMITATION ON LIABILITY. IN NO EVENT SHALL WE BE LIABLE TO YOU FOR ANY LOST PROFITS OR SPECIAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE DAMAGES, EVEN IF INFORMED OF THE POSSIBILITY OF SUCH DAMAGES. FURTHERMORE, WE MAKE NO REPRESENTATION OR WARRANTY TO YOU REGARDING THE EFFECT THAT THE AGREEMENT MAY HAVE UPON YOUR FOREIGN, FEDERAL, STATE OR LOCAL TAX LIABILITY.

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Page 9

20. Choice of Law. We are located in the state of Utah, this Agreement is entered into in the state of Utah, and funds for loans are disbursed from Utah. The provisions of this Agreement will be governed by federal laws and the laws of the state of Utah to the extent not preempted, without regard to any principle of conflicts of laws that would require or permit the application of the laws of any other jurisdiction.

21. Miscellaneous. The parties acknowledge that there are no third party beneficiaries to this Agreement (other than LendingClub). Any waiver of a breach of any provision of this Agreement will not be a waiver of any other subsequent breach. Failure or delay by either party to enforce any term or condition of this Agreement will not constitute a waiver of such term or condition. Without limiting the foregoing, we may extend the time to make a payment without extending the time to make other payments, accept late or partial payments without waiving our right to have future payments made when they are due, or waive any fee without losing the right to impose that fee when due in the future. If at any time after the date of this Agreement, any of the provisions of this Agreement shall be held by any court of competent jurisdiction to be illegal, void or unenforceable, such provision shall be of no force and effect, but the illegality and unenforceability of such provision shall have no effect upon and shall not impair the enforceability of any other provisions of this Agreement. The headings in this Agreement are for reference purposes only and shall not affect the interpretation of this Agreement in any way.

22. Arbitration. RESOLUTION OF DISPUTES: YOU HAVE READ THIS PROVISION CAREFULLY AND UNDERSTAND THAT IT LIMITS YOUR RIGHTS IN THE EVENT OF A DISPUTE BETWEEN YOU AND US. YOU UNDERSTAND THAT YOU HAVE THE RIGHT TO REJECT THIS PROVISION AS PROVIDED IN PARAGRAPH (b) BELOW. If you are a "Covered Borrower" as defined by the Military Lending Act (32 CFR §232, as amended from time to time) at the time of entering into this Agreement, this section 22 Arbitration is not applicable, and you do not need to opt out of or take any action to ensure inapplicability.

a. Either party to this Agreement, or any subsequent holder, may, at its sole election, require that the sole and exclusive forum and remedy for resolution of a Claim be final and binding arbitration pursuant to this section 22 (the "Arbitration Provision"), unless you opt out as provided in section 22(b) below. As used in this Arbitration Provision, "Claim" shall include any past, present, or future claim, dispute, or controversy involving you (or persons claiming through or connected with you), on the one hand, and us and/or any subsequent holder (or persons claiming through or connected with us and/or the subsequent holders), on the other hand, relating to or arising out of this Agreement, any Loan Agreement and Promissory Note(s), the Site, and/or the activities or relationships that

EXHIBIT 10.1

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involve, lead to, or result from any of the foregoing, including (except to the extent provided otherwise in the last sentence of section 22(f) below) the validity or enforceability of this Arbitration Provision, any part thereof, or the entire Agreement. Claims are subject to arbitration regardless of whether they arise from contract; tort (intentional or otherwise); a constitution, statute, common law, or principles of equity; or otherwise. Claims include matters arising as initial claims, counter-claims, cross-claims, third-party claims, or otherwise. The scope of this Arbitration Provision is to be given the broadest possible interpretation that is enforceable.

b. You may opt out of this Arbitration Provision for all purposes by sending an arbitration opt out notice to WebBank, c/o LendingClub Corporation, 595 Market Street, #200, San Francisco CA, 94105, Attention: Legal Department, which is received at the specified address within 30 days of the date of your electronic acceptance of the terms of this Agreement. The opt out notice must clearly state that you are rejecting arbitration; identify the Agreement to which it applies by date; provide your name, address, and social security number; and be signed by you. You may send an opt out notice in any manner you see fit as long as it is received at the specified address within the specified time. No other methods can be used to opt out of this Arbitration Provision. If the opt out notice is sent on your behalf by a third party, such third party must include evidence of his or her authority to submit the opt out notice on your behalf.

c. If a Claim arises, our goal is to learn about and address your concerns and, if we are unable to do so to your satisfaction, to provide you with a neutral and cost effective means of resolving the dispute quickly. You agree that before filing any claim in arbitration, you may submit Claims by sending an email to customeradvocacy@lendingclub.com at any time, or by calling (888) 596-3157 from Mon-Fri 6:00 AM to 5:00 PM PT and Sat 8:00 AM to 5:00 PM PT.

The party initiating arbitration shall do so with the American Arbitration Association (the "AAA") or Judicial Alternatives and Mediation Services ("JAMS"). The arbitration shall be conducted according to, and the location of the arbitration shall be determined in accordance with, the rules and policies of the administrator selected, except to the extent the rules conflict with this Arbitration Provision or any countervailing law. If you have any questions concerning the AAA or would like to obtain a copy of the AAA arbitration rules, you may call 1(800) 778-7879 or visit the AAA’s web site at: www.adr.org. If you have any questions concerning JAMS or would like to obtain a copy of the JAMS arbitration rules, you may call 1(800) 352-5267 or visit their web site at: www.jamsadr.com. In the case of a conflict between the rules and policies of the administrator and this Arbitration Provision, this Arbitration Provision shall control, subject to countervailing law, unless all parties to the arbitration consent to have the rules and policies of the administrator apply.

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d. If we (or the subsequent holder) elect arbitration, we (or the subsequent holder, as the case may be) shall pay all the administrator’s filing costs and administrative fees (other than hearing fees). If you elect arbitration, filing costs and administrative fees (other than hearing fees) shall be paid in accordance with the rules of the administrator selected, or in accordance with countervailing law if contrary to the administrator’s rules. We (or the subsequent holder, as the case may be) shall pay the administrator’s hearing fees for one full day of arbitration hearings. Fees for hearings that exceed one day will be paid by the party requesting the hearing, unless the administrator’s rules or applicable law require otherwise, or you request that we (or the subsequent holder) pay them and we agree (or the subsequent holder agrees) to do so. Each party shall bear the expense of its own attorneys’ fees, except as otherwise provided by law. If a statute gives you the right to recover any of these fees, these statutory rights shall apply in the arbitration notwithstanding anything to the contrary herein.

e. Within 30 days of a final award by the arbitrator, any party may appeal the award for reconsideration by a three-arbitrator panel selected according to the rules of the arbitrator administrator. In the event of such an appeal, any opposing party may cross-appeal within 30 days after notice of the appeal. The panel will reconsider de novo all aspects of the initial award that are appealed. Costs and conduct of any appeal shall be governed by this Arbitration Provision and the administrator’s rules, in the same way as the initial arbitration proceeding. Any award by the individual arbitrator that is not subject to appeal, and any panel award on appeal, shall be final and binding, except for any appeal right under the Federal Arbitration Act ("FAA"), and may be entered as a judgment in any court of competent jurisdiction.

f. We agree not to invoke our right to arbitrate an individual Claim you may bring in Small Claims Court or an equivalent court, if any, so long as the Claim is pending only in that court. NO ARBITRATION SHALL PROCEED ON A CLASS, REPRESENTATIVE, OR COLLECTIVE BASIS (INCLUDING AS PRIVATE ATTORNEY GENERAL ON BEHALF OF OTHERS), EVEN IF THE CLAIM OR CLAIMS THAT ARE THE SUBJECT OF THE ARBITRATION HAD PREVIOUSLY BEEN ASSERTED (OR COULD HAVE BEEN ASSERTED) IN A COURT AS CLASS REPRESENTATIVE, OR COLLECTIVE ACTIONS IN A COURT. Unless consented to in writing by all parties to the arbitration, no party to the arbitration may join, consolidate, or otherwise bring claims for or on behalf of two or more individuals or unrelated corporate entities in the same arbitration unless those persons are parties to a single transaction. Unless consented to in writing by all parties to the arbitration, an award in arbitration shall determine the rights and obligations of the named parties only, and only with respect to the claims in arbitration, and shall not (a) determine the rights, obligations, or interests of anyone other than a named party, or resolve any Claim of anyone other

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than a named party; nor (b) make an award for the benefit of, or against, anyone other than a named party. No administrator or arbitrator shall have the power or authority to waive, modify, or fail to enforce this section 22(f), and any attempt to do so, whether by rule, policy, arbitration decision or otherwise, shall be invalid and unenforceable. Any challenge to the validity of this section 22(f) shall be determined exclusively by a court and not by the administrator or any arbitrator.

g. This Arbitration Provision is made pursuant to a transaction involving interstate commerce and shall be governed by and enforceable under the FAA. The arbitrator will apply substantive law consistent with the FAA and applicable statutes of limitations. The arbitrator may award damages or other types of relief permitted by applicable substantive law, subject to the limitations set forth in this Arbitration Provision. The arbitrator will not be bound by judicial rules of procedure and evidence that would apply in a court. The arbitrator shall take steps to reasonably protect confidential information.

h. This Arbitration Provision shall survive (i) suspension, termination, revocation, closure, or amendments to this Agreement and the relationship of the parties and/or LendingClub; (ii) the bankruptcy or insolvency of any party or other person; and (iii) any transfer of any loan or Loan Agreement or Promissory Note(s) or any other promissory note(s) which you owe, or any amounts owed on such loans or notes, to any other person or entity. If any portion of this Arbitration Provision other than section 22(f) is deemed invalid or unenforceable, the remaining portions of this Arbitration Provision shall nevertheless remain valid and in force. If an arbitration is brought on a class, representative, or collective basis, and the limitations on such proceedings in section 22(f) are finally adjudicated pursuant to the last sentence of section 22(f) to be unenforceable, then no arbitration shall be had. In no event shall any invalidation be deemed to authorize an arbitrator to determine Claims or make awards beyond those authorized in this Arbitration Provision.

THE PARTIES ACKNOWLEDGE THAT THEY HAVE A RIGHT TO LITIGATE CLAIMS THROUGH A COURT BEFORE A JUDGE OR JURY, BUT WILL NOT HAVE THAT RIGHT IF ANY PARTY ELECTS ARBITRATION PURSUANT TO THIS ARBITRATION PROVISION. THE PARTIES HEREBY KNOWINGLY AND VOLUNTARILY WAIVE THEIR RIGHTS TO LITIGATE SUCH CLAIMS IN A COURT BEFORE A JUDGE OR JURY UPON ELECTION OF ARBITRATION BY ANY PARTY.

23. Cancellation

A. Cancellation of Application Prior to Loan Funding

You may cancel your application without any fee or penalty prior to funding of the loan, as long as you provide us with sufficient advance notice to stop the loan funding.

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We may cancel any loan or loan request by you prior to funding, including if (a) you have provided any false, misleading, or incomplete information in connection with any loan request or other communication with us, LendingClub, or those acting on behalf of us or LendingClub; (b) you are delinquent or in default under any outstanding Loan Agreement and Promissory Note; (c) we learn of any new information affecting your creditworthiness; (c) you file or have instituted against you or any joint applicant/co-borrower any bankruptcy or insolvency proceedings or make any assignment for the benefit of creditors; or (d) you are in breach of any term or representation in this Agreement. If you meet one of these conditions, then we may refuse to fund any loan or loan request that has not yet been funded and cancel any related Loan Agreement and Promissory Note, even if already executed. Your access to or the functionality available at the Site may also be suspended or modified.

B. Cancellation of Loan Agreement and Promissory Note After Funding

YOU MAY CANCEL THE LOAN AGREEMENT AND PROMISSORY NOTE AT ANY TIME UP TO MIDNIGHT OF THE FIFTH DAY AFTER THE LOAN HAS BEEN FUNDED. IF YOU DECIDE TO CANCEL, ALL LOAN PROCEEDS WILL BE WITHDRAWN FROM YOUR ACCOUNT IN THE NEXT TEN (10) BUSINESS DAYS. IF LENDER, OR ITS AGENT, CAN'T WITHDRAW THE FULL AMOUNT FROM YOUR BANK ACCOUNT AND YOU DO NOT OTHERWISE RETURN THE LOAN PROCEEDS WITHIN TEN BUSINESS DAYS, YOU WILL STILL BE RESPONSIBLE FOR PERFORMANCE OF ALL OBLIGATIONS UNDER THE BORROWER AGREEMENT, LOAN AGREEMENT AND PROMISSORY NOTE, INCLUDING BUT NOT LIMITED TO PAYMENT OF ANY FEES, INTEREST, AND PRINCIPAL OF THE LOAN. YOU MAY CANCEL THE LOAN AGREEMENT AND PROMISSORY NOTE BY CONTACTING US AT SUPPORT@LENDINGCLUB.COM OR CALLING 888-596-3157.

FOR BALANCE TRANSFER OR DIRECT PAY LOANS: IF YOU HAVE DIRECTED US TO DELIVER LOAN PROCEEDS TO ACCOUNTS ("DIRECTED ACCOUNTS") OUTSIDE OF YOUR CONTROL, LENDER WILL NOT BE ABLE TO RECOVER THESE FUNDS. LENDER, OR ITS AGENT, WILL ATTEMPT TO WITHDRAW AN AMOUNT EQUAL TO YOUR LOAN PROCEEDS WITHIN TEN (10) DAYS FOLLOWING YOUR REQUEST TO CANCEL. IF LENDER, OR ITS AGENT, IS UNABLE TO WITHDRAW SUCH AMOUNT AND YOU DO NOT OTHERWISE RETURN THE LOAN PROCEEDS WITHIN 30 DAYS, YOU WILL REMAIN RESPONSIBLE FOR PERFORMANCE OF ALL OBLIGATIONS UNDER THE BORROWER AGREEMENT, LOAN AGREEMENT AND PROMISSORY NOTE.

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Exhibit A

LOAN AGREEMENT AND PROMISSORY NOTE

Borrower Member ID: _____________________________________________________________

Joint Applicant/Co-Borrower Member ID: __________________________________________________________

$_______________

_____________, 20_

For value received, I (referred to herein as "Borrower" which for purposes of this Loan Agreement and Promissory Note (the "Note") includes all parties obligated hereunder, including any joint applicant/co-borrower) promise to pay to the order of WebBank or any subsequent holder ("you" or "Lender") of this Note the principal sum of ________________ ($_________) Dollars with interest as set forth below. Borrower intends to be legally bound by this Note. Borrower has read, understood, and agreed to all of the terms of this Note.

Interest Rate. This Note bears interest during each calendar month from the date hereof until paid in full, at a fixed rate of ______ (%) per annum.

Interest Calculation Method. Interest is calculated daily on the basis of a 360-day year with 12 months each of which is 30 days (or 30/360) long, regardless if a month has more or fewer than 30 days. This Note shall bear interest on any overdue installment of principal and, to the extent permitted by applicable law, on any overdue installment of interest, at the interest rate stated and as calculated above.

Payments. Principal and interest are to be paid during and throughout the period of ________ months in the following manner:

Payments of principal and interest in the amount of ________________ ($______) Dollars are to be made by the Borrower to the Lender commencing _____________, 20_, and on the same day of each successive month thereafter until __________, 20__, when the full amount of unpaid principal, together with unpaid accrued interest is due and payable. If the monthly anniversary is on the 29th, 30th, or 31st of the month, and the following month does not have a 29th, 30th, or 31st day, the monthly payment will be due on the last day of the month in which the payment was due.

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Borrower’s last payment might be of a different amount, which could be higher than the monthly installment amounts, to adjust for rounding and/or due to calculation of daily interest charges in certain instances such as a payment due date change or Borrower making a payment after the payment due date. In such cases, the amount of the last monthly payment will be adjusted by the amount necessary to repay the loan in full.

Borrower must pay us in U.S. dollars using a check (subject to any applicable check processing fee) or electronic debit that is drawn on and honored by a bank in the United States. Borrower may not make payments in cash. Borrower agrees that Lender can accept late or partial payments, or payments marked "paid in full" or other restrictive endorsements, without losing its rights.

Borrower may authorize any Lender to debit Borrower's designated account by ACH transfer each month. The debit amount may be a range of payments, which would include your monthly principal and interest, and fees, if any. Borrower is responsible for ensuring that all names, and account, routing or other similar information provided by Borrower to Lender for accounts that Borrower is directing Lender to deliver loan proceeds to ("Directed Accounts") are accurate and complete. Borrower agrees to hold Lender and LendingClub harmless for any alleged or actual loss, claim, fee or other damage or expense Borrower may suffer related to the failure of a Directed Account to receive such proceeds if such failure was the result (directly or indirectly) of any error in any name, or account, routing or other similar information provided by Borrower to Lender. Borrower acknowledges that neither Lender nor LendingClub has any obligation to confirm or investigate the accuracy or completeness of the information Borrower has provided. Borrower further agrees that if the loan proceeds are rejected by a Directed Account that is not Borrower's designated bank account, then Lender may deliver the loan proceeds into the designated bank account to satisfy our obligation of loan proceed delivery. In all events under this section, interest will begin to accrue as of the date of issuance of the loan, and not upon the actual receipt of proceeds by Borrower or any other designated third party, except that no interest will be due to the extent this Note is canceled. If we are unable to deliver any portion of the loan proceeds to the Directed Account(s) or Borrower's designated bank account after 14 days from the initial delivery attempt, the loan will be canceled and only in this circumstance will Borrower not owe any interest on the loan. For avoidance of doubt, if partial loan proceeds (any amount above $0) are delivered to the Directed Account(s) or Borrower's designated bank account, then the loan will not be canceled. If we are only able to deliver partial loan proceeds to the Directed Account(s) or Borrower's designated bank account after 14 days, we will apply the undelivered portion to the outstanding balance in accordance with our normal payment application procedures.

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If Borrower elects to make payments by automatic withdrawal, Borrower has the right to stop payment of these automatic withdrawals or revoke prior authorization for automatic withdrawals by notifying Lender and LendingClub of the exercise of its right to stop a payment or revoke authorization for automatic withdrawals no less than three (3) banking days before Borrower’s next payment due date.

If Borrower elects to make payments by check, Borrower must send the check either by regular mail or by overnight mail or UPS delivery to Wells Fargo Lock Box Services, Dept #34268, 3440 Walnut Ave, Window H, Fremont, CA 94538. There will be a $7 check processing fee per payment, subject to applicable law. Borrower may change its payment method by contacting support@lendingclub.com .

Borrower’s payment method and any necessary authorization do not affect its obligation to pay when due all amounts payable on the Note, whether or not there are sufficient funds in the applicable deposit account. The foregoing authorization is in addition to, and not in limitation of, any rights of setoff Lender may have.

Origination fee. If this loan is subject to an origination fee, such fee is deducted from the loan proceeds and paid to the Lender. Any origination fee of 5% or less is not refundable regardless of when, or if, the loan is paid in full. Any origination fee amount in excess of 5% is refundable on a prorated basis over the term of the loan when and if the loan is paid in full prior to its maturity date. A partial pre-payment will not result in the refund of any origination fee amount. Borrower acknowledges that the origination fee is considered part of the principal of Borrower’s loan and is subject to the accrual of interest.

Insufficient funds fee. If a payment is returned, dishonored, or fails due to insufficient funds in the designated account, Borrower may be charged a fee of $15, to the extent permitted by applicable law. An insufficient funds fee may be assessed no more than once for a single failed payment. However, Lender may, at its option, choose to resubmit such payments. The bank that holds Borrower's deposit account may assess its own fee in addition to the fee assessed under this Note.

Late fee. If any part of Borrower's payment, other than payments owed for any fee(s) assessed on a prior monthly payment, is more than 15 days late, a late fee may be charged in an amount equal to the greater of 5% of the outstanding payment or $15, to the extent permitted by applicable law. Only one late fee may be charged on each late payment. Any check payment received after 12:30 P.M., Mountain Time, on a banking day is deemed received on the next succeeding banking day.

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Borrower authorizes Lender, and its successors and assigns, to deduct any fees due by ACH transfers initiated to the deposit account on file for Borrower.

Prepayments and Partial Payments. Borrower may make any payment early, in whole or in part, without penalty or premium at any time. Any partial prepayment will be credited against the loan balance as described in the Payments section above. Any partial repayment does not postpone the due date of any subsequent monthly payment, unless expressly agreed to in writing. If Borrower prepays this Note in part, Borrower agrees to continue to make regularly scheduled payments until all amounts due under this Note are paid. Any regularly scheduled monthly installment of principal and interest that is received by Lender before the date it is due shall be deemed to have been received on the due date solely for the purpose of calculating interest due. Lender may extend the time to make a payment without extending the time to make other payments, accept late or partial payments without waiving Lender's right to have future payments made when they are due, or waive any fee without losing the right to impose that fee when due in the future.

Use of Funds. Borrower certifies that the proceeds of the loan will not be used for the purpose of purchasing or carrying any securities or to fund any illegal activity, or to fund any post-secondary educational expenses, including, but not limited to, tuition, fees, books, supplies, miscellaneous expenses, or room and board.

Default. Borrower may be deemed in default (each, an "Event of Default") of Borrower's obligations under this Note if Borrower: (1) fails to pay timely any amount due on the loan; (2) files or has instituted against it or any joint applicant/co-borrower any bankruptcy or insolvency proceedings or make any assignment for the benefit of creditors; (3) commits fraud or makes any material misrepresentation in this Note, the Borrower Agreement or in any other documents, applications or related materials delivered to Lender in connection with its loan, or (4) has breached or otherwise fails to abide by the terms of this Note or the Borrower Agreement. Upon the occurrence of an Event of Default, Lender may exercise all remedies available under applicable law and this Note, including without limitation, accelerate all amounts owed on this Note and demand that Borrower immediately pay such amounts.

Lender may report information about Borrower's account to credit bureaus. Should there be more than one Borrower, Lender may report that loan account to the credit bureaus in the names of all Borrowers. Late payments, missed payments, or other defaults on an account may be reflected in Borrower's credit report. Borrower agrees to pay all costs of collecting any delinquent payments, including reasonable attorneys' fees, as permitted by applicable law.

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Joint and Several Liability.

The liability of any joint applicant/co-borrower to repay in full this loan is in addition to and not in lieu of the obligations of the primary Borrower to repay the loan in full. The joint applicant/co-borrower agrees to abide by the terms and conditions of this Note or any other agreements or documents provide or executed as part of the application process, as if an original signatory.

Lender (or its designee) has sole discretion to proceed against both the Borrower and any joint applicant/co-borrower to recover all the amounts due under this Note. Further, Lender (or its designee) can accept instructions from either Borrower or the joint applicant/co-borrower, and notice given to either party shall be binding on both parties and all disclosures provided to a party will be deemed simultaneously received by all parties.

Loan Charges. If a law that applies to the Loan and sets maximum loan charges is finally interpreted so that the interest or other loan charges collected or to be collected in connection with the Loan exceed the permitted limits, then: (a) any such loan charge shall be reduced by the amount necessary to reduce the charge to the permitted limit; and (b) any sums already collected from Borrower that exceeded permitted limits will be refunded to Borrower. Lender may choose to make this refund by reducing the principal owed under this Note or by making a direct payment to Borrower.

Electronic Transactions. THIS AGREEMENT IS FULLY SUBJECT TO BORROWER’S CONSENT TO ELECTRONIC TRANSACTIONS AND DISCLOSURES, WHICH CONSENT IS SET FORTH IN THE TERMS OF USE FOR THE SITE. BORROWER EXPRESSLY AGREES THAT THE NOTE IS A "TRANSFERABLE RECORD" FOR ALL PURPOSES UNDER THE ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT AND THE UNIFORM ELECTRONIC TRANSACTIONS ACT.

Registration of Note Owners.

I have appointed LendingClub as my agent (in such capacity, the " Note Registrar ") for the purpose of maintaining a book-entry system (the " Register ") for recording the names and addresses of any future owner of beneficial interests in this Note (the " Note Owners ") and the principal amounts and interest on this Note owing to each pursuant to the terms hereof from time to time. The person or persons identified as the Note Owners in the Register shall be treated as the owner(s) of this Note for purposes of receiving payment of principal and interest on such Note and for all other purposes. With respect to any transfer by a Note Owner of its beneficial interest in this Note, the right to

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payment of principal and interest on this Note shall not be effective until the transfer is recorded in the Register.

Miscellaneous.

Lender may, without notice to Borrower, assign all of its right, title and interest (or any portion thereof) in this Note to any other third party, and Borrower further understands, acknowledges and agrees that any assignee may sell, assign or transfer the Note and all associated documents and information related to the Note without Borrower's consent or delivery of notice (subject in each case to the registration requirement above). Borrower may not assign this Note without the prior written consent of Lender. This Note inures to the successors, permitted assigns, heirs and representatives of Borrower and Lender.

Borrower hereby waives demand, notice of non-payment, protest, and all other notices or demands whatsoever, and hereby consents that without notice to and without releasing the liability of any party, the obligations evidenced by this Note may from time to time, in whole or part, be renewed, extended, modified, accelerated, compromised, settled, canceled (as provided for in the Borrower Agreement) or released by Lender.

Any changes to this Note must be in writing signed by Borrower and Lender. Notices will be provided electronically to Borrower’s account, unless Borrower has opted out of electronic delivery and then will be mailed to the addresses then on record.

This Note is subject to the arbitration provisions of the Borrower Agreement between Lender and Borrower, which is incorporated by reference into this Note.

Controlling Law. Lender is located in the State of Utah, this Note is executed and delivered in the State of Utah and is a contract made under such state's law, and funds are disbursed from Utah. The provisions of this Note will be governed by federal laws and the laws of the State of Utah to the extent not preempted, without regard to any principle of conflicts of law. The unenforceability of any provision of this Note shall not affect the enforceability or validity of any other provision of this Note.

STATE LAW NOTICES:

CALIFORNIA RESIDENTS ONLY: A married applicant may apply for a separate account. If Lender takes any adverse action as defined by § 1785.3 of the California Civil Code and the adverse action is based, in whole or in part, on any information contained in a consumer credit report, Borrower has the right to obtain within 60 days a free copy of Borrower’s consumer credit report from the

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consumer reporting agency who furnished the consumer credit report and from any other consumer credit reporting agency that complies and maintains files on consumers on a nationwide basis.

CALIFORNIA AND UTAH RESIDENTS: As required by California and Utah law, Borrower is hereby notified that a negative credit report reflecting on Borrower’s credit record may be submitted to a credit reporting agency if Borrower fails to fulfill the terms of Borrower’s credit obligations.

KANSAS: NOTICE TO CONSUMER: 1. Do not sign this Note before you read it. 2. You are entitled to a copy of this Note. 3. You may prepay the unpaid balance at any time without penalty.

MARYLAND RESIDENTS ONLY: Lender elects to make this loan pursuant to Subtitle 10 (Credit Grantor Closed End Credit provisions) of Title 12 of the Maryland Commercial Law Article only to the extent that such provisions are not inconsistent with Lender’s authority under federal law (12 U.S.C. § 85, § 1463(g), or § 1831d, as appropriate) and related regulations and interpretations, which authority Lender expressly reserves.

MASSACHUSETTS RESIDENTS ONLY: Massachusetts law prohibits discrimination based upon marital status or sexual orientation.

MISSOURI AND NEBRASKA RESIDENTS: ORAL LOAN AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF SUCH DEBT, INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT, ARE NOT ENFORCEABLE. TO PROTECT BORROWER(S) AND THE LENDER AND ANY HOLDER OF THIS NOTE FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.

NEW JERSEY RESIDENTS: The section headings of the Note are a table of contents and not contract terms. Portions of this Note with references to actions taken to the extent of applicable law apply to acts or practices that New Jersey law permits or requires. In this Note, actions or practices (i) by which Lender is or may be permitted by "applicable law" are permitted by New Jersey law, and (ii) that may be or will be taken by Lender unless prohibited by "applicable law" are permitted by New Jersey law.

NEW YORK , RHODE ISLAND and VERMONT RESIDENTS: : Borrower understands and agrees that Lender may obtain a consumer credit report in connection with this application and in connection with any update, renewals for extension of any credit as a result of this application. If

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Borrower asks, Borrower will be informed whether or not such a report was obtained, and if so, the name and address of the agency that furnished the report. Borrower also understands and agrees that Lender may obtain a consumer credit report in connection with the review or collection of any loan made to Borrower as a result of this application or for other legitimate purposes related to such loans.

OHIO RESIDENTS ONLY: The Ohio laws against discrimination require that all creditors make credit equally available to all credit-worthy customers, and that credit reporting agencies maintain separate credit histories on each individual upon request. The Ohio Civil Rights Commission administers compliance with the law.

WASHINGTON RESIDENTS ONLY: Oral agreements or oral commitments to loan money, extend credit, or to forbear from enforcing repayment of a debt are not enforceable under Washington law.

WISCONSIN RESIDENTS ONLY: For married Wisconsin residents, Borrower’s signature confirms that this loan obligation is being incurred in the interest of Borrower’s marriage or family. No provision of any marital property agreement (pre-marital agreement), unilateral statement under § 766.59 of the Wisconsin statutes or court decree under § 766.70 adversely affects Lender’s interest unless, prior to the time that the loan is approved, Lender is furnished with a copy of the marital property agreement, statement, or decree or have actual knowledge of the adverse provision. If this loan for which Borrower is applying is granted, Borrower will notify Lender if Borrower has a spouse who needs to receive notification that credit has been extended to Borrower.

WEST VIRGINIA RESIDENTS ONLY: For borrowers located in West Virginia, LendingClub is operating as a Credit Services Organization ("CSO") in connection with your loan. LendingClub may be reached at LendingClub Corporation, 595 Market Street, #200, San Francisco, CA 94105. LendingClub's agent for service of process is CSC - Lawyers Incorporating Service, 2710 Gateway Oaks Dr., Suite 150N, Sacramento, CA 95833.

Description of Services: LendingClub operates as an online marketplace platform. It does not issue, fund, or lend loans directly to the consumer; rather, it operates under an "originating bank" model in which it is a third-party vendor of a federally regulated and insured bank. The "originating bank" model allows the bank to originate loans to applicants through LendingClub's Platform. Loans facilitated through LendingClub's marketplace are originated by WebBank.

LendingClub's CSO services are rendered within 180 days. Borrowers through LendingClub's platform do not pay LendingClub any money or consideration. LendingClub generates revenue in

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one or more of the following three ways: (1) transaction fees from WebBank; (2) servicing fees from investors; and (3) management fees from investment funds.

Surety Notice: LendingClub has obtained and retains in effect a surety bond or maintains a surety account in the amount of $15,000. You have the right to maintain an action at law against the CSO and against the surety or trustee for damages incurred by violation of the Credit Service Organization Act, Article 6C, Chapter 46A of the WV Code. The name and address of the surety company which issued the surety bond is International Fidelity Insurance Company, One Newark Center, Newark, NJ 07102.

As required by West Virginia Law, Borrower is notified that: (i) you have a right to review any file maintained on you by a consumer reporting agency, as provided by the Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.); (ii) your file is available for review at no charge on request made to the consumer reporting agency within thirty days after the date of the receipt of notice that credit has been denied, and your file is available for a minimal reporting charge at any other time; (iii) you have a right to dispute directly with your consumer reporting agency the completeness of accuracy of any item contained in a file on you maintained by that consumer reporting agency; (iv) no consumer reporting agency may make any consumer report containing any adverse item of information dating from more than seven (7) years before the report; (v) ACCURATE INFORMATION CANNOT BE PERMANENTLY REMOVED FROM THE FILES OF A CONSUMER REPORTING AGENCY; and (vi) non-profit organizations which provide credit and debt counseling service are available. The WV Association of Consumer Credit Counseling Services (call 1-800-869-7758) or the National Foundation for Consumer Credit (call 1-800-388 2227) will connect you to a local organization, or check your yellow pages under "Credit Counseling Services" to find a non-profit service.

MEMBER ID OF BORROWER & CO-BORROWER (if any)

BY: LENDINGCLUB CORPORATION

ATTORNEY-IN-FACT FOR BORROWER and CO-BORROWER (if any)

(SIGNED ELECTRONICALLY)

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Exhibit B

WEBBANK PRIVACY NOTICE

FACTS

WHAT DOES WebBank DO WITH YOUR PERSONAL INFORMATION?

Why?

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

What?

The types of personal information we collect and share depend on the product or service you have with us. This information can include:


•	Social Security number and income


•	Payment history and transaction history


•	Credit history and credit scores

When you are no longer our customer, we continue to share your information as described in this notice.

How?

All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons WebBank chooses to share; and whether you can limit this sharing.



Reasons we can share your personal information	Does WebBank share?	Can you limit this sharing?
For our everyday business purposes - such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus	YES	NO
For our marketing purposes - to offer our products and services to you	YES	NO
For joint marketing with other financial companies	NO	We don't share
For our affiliates' everyday business purposes - information about your transactions and experiences	NO	We don't share
For our affiliates' everyday business purposes - information about your creditworthiness	NO	We don't share
For our affiliates to market to you	NO	We don't share
For nonaffiliates to market to you	NO	We don't share

Questions?

Call (888) 596-3157 or go to www.lendingclub.com

EXHIBIT 10.1

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EXHIBIT 10.1

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Who we are
Who is providing this notice?	WebBank
What we do
How does WebBank protect my personal information?	To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings.
How does WebBank collect my personal information?	We collect your personal information, for example, when you Ÿ Open an account or pay us by check Ÿ Provide account information or give us your contact information Ÿ Show your driver's license We also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
Why can't I limit all sharing?	Federal law gives you the right to limit only Ÿ sharing for affiliates' everyday business purposes-information about your creditworthiness Ÿ affiliates from using your information to market to you Ÿ sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing.
Definitions
Affiliates	Companies related by common ownership or control. They can be financial and nonfinancial companies. Ÿ WebBank does not share with our affiliates.
Nonaffiliates	Companies not related by common ownership or control. They can be financial and nonfinancial companies. Ÿ WebBank does not share with non-affiliates so they can market to you.
Joint marketing	A formal agreement between nonaffiliated financial companies that together market financial products or services to you. Ÿ WebBank does not jointly market.

Exhibit 31.1

CERTIFICATION

I, Scott Sanborn, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of LendingClub Corporation;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 8, 2019

/s/ SCOTT SANBORN

Scott Sanborn

Chief Executive Officer

(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION

I, Thomas W. Casey, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of LendingClub Corporation;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 8, 2019

/s/ THOMAS W. CASEY

Thomas W. Casey

Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of LendingClub Corporation (the “Company”) on Form 10-Q for the quarter ended March 31, 2019 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:


1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



	/s/ SCOTT SANBORN
	Scott Sanborn
	Chief Executive Officer
	(Principal Executive Officer)

	/s/ THOMAS W. CASEY
	Thomas W. Casey
	Chief Financial Officer


	Dated:	May 8, 2019