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LendingClub Reports Fourth Quarter and Full Year 2020 Results


SAN FRANCISCO, March 10, 2021 /PRNewswire/ — LendingClub Corporation (NYSE: LC), America’s first digital marketplace bank, today announced financial results for the fourth quarter and full year ended December 31, 2020.

“I am proud of our accomplishments in 2020, which led us to complete the groundbreaking acquisition of Radius Bank. Combining the award-winning digital bank with LendingClub’s leading online marketplace provides us with substantial advantages over both traditional banks and fintech marketplace lenders,” said Scott Sanborn, Chief Executive Officer of LendingClub. “Adding deposit capabilities builds on our tech and data advantages as it allows us to better serve our more than 3 million loyal and highly-motivated members and digitally manage their lending, spending, and savings. We are fully aligned with both our customers and shareholders to realize incremental long-term value for decades to come.”

Fourth Quarter 2020 Results

GAAP Consolidated Net Loss for the quarter improved $7.7 million from the third quarter of 2020 to $(26.7) million. Quarter-over-quarter results reflected a 56% increase in origination volumes, a 77% increase in related transaction fees and a reduction in expenses from the third quarter of 2020. Origination volume of $912 million exceeded the high end of previously provided guidance. The improvement in expenses reflected tight control over fixed costs and lower legal expenses related to legacy issues. These benefits were partially offset by lower net interest income reflecting prior loan sales, as well as positive asset revaluations in the third quarter of 2020.

Year-over-year results primarily reflected an expected decrease in origination volume and transaction fees, and an expected reduction in net interest income, partially offset by an improvement in expenses. The change in loan origination volumes resulted in a 71% decline in transaction fees year-over-year. Lower net interest income reflected the sale of $470 million of loans in the second half of 2020 to accumulate capital in preparation for the company’s acquisition of Radius. The improvement in expenses year-over-year primarily reflected significantly lower sales and marketing expense and the company’s focus on originating loans to existing customers, which increased efficiency and resulted in lower marketing costs. The improvement in expenses also reflected proactive actions taken to improve efficiency, reduce costs and mitigate the impact of the pandemic.

“We are encouraged by the continued growth in loan originations with volume above the upper end of our fourth quarter guidance range,” said Tom Casey, Chief Financial Officer. “With the addition of bank deposits, we enhance our resiliency and unleash a new recurring revenue stream that will drive significant long-term growth once the bank is fully integrated.”

Earnings Guidance







First Quarter
2021

Full Year
2021

Commentary


Loan Originations

$1.2B to $1.3B

+45% YoY

Loan volumes and revenue reflecting continued
growth


Net Revenue

$87M to $95M

+55% YoY

Impacted by deferral of origination fees for loans
held for investment due to accounting conventions


GAAP Consolidated Net Loss

($75M) to ($85M)

($175M) to ($200M)

Impacted primarily by timing of earnings
recognition due to growth in consumer loans
held for investment (deferral of origination fees
and current expected credit loss (CECL) provisions), as
well as one-time acquisition costs


Fourth Quarter 2020 Financial Highlights




Three Months Ended  


Year Ended
December 31,

($ in millions)

December 31,
2020


September 30,
2020


December 31,
2019


2019


2020


Loan Originations

$

912.0


$

584.1


$

3,083.1


$

4,343.4


$

12,290.1


Net Revenue

$

75.9


$

74.7


$

188.5


$

314.7


$

758.6


GAAP Consolidated Net Income (Loss)

$

(26.7)


$

(34.3)


$

0.2


$

(187.5)


$

(30.7)


Adjusted EBITDA

$

3.9


$

4.3


$

39.0


$

(27.2)


$

134.8


Adjusted Net Income (Loss)

$

(22.1)


$

(23.1)


$

7.0


$

(138.6)


$

2.2


















Loan Originations – Loan originations in the fourth quarter of 2020 were $912.0 million, down 70% compared to the same quarter last year and improving 56% sequentially.

Net Revenue – Net Revenue in the fourth quarter of 2020 was $75.9 million, down 60% compared to the same quarter last year and improving 2% sequentially.

GAAP Consolidated Net Income (Loss) – GAAP Consolidated Net Loss was $(26.7) million for the fourth quarter of 2020, compared to GAAP Consolidated Net Income of $0.2 million in the same quarter last year and $(34.3) million in the third quarter of 2020.

Adjusted EBITDA  Adjusted EBITDA was $3.9 million in the fourth quarter of 2020, compared to $39.0 million in the same quarter last year and $4.3 million in the third quarter of 2020.

Adjusted Net Income (Loss) Adjusted Net Loss was $(22.1) million in the fourth quarter of 2020, compared to Adjusted Net Income of $7.0 million in the same quarter last year and Adjusted Net Loss of $(23.1) million in the third quarter of 2020.

Contribution Contribution was $47.2 million in the fourth quarter of 2020, compared to $101.3 million in the same quarter last year and $53.4 million in the third quarter of 2020, with Contribution Margin of 62.1% compared to 53.7% in the same quarter last year and 71.5 % in the third quarter of 2020.

Earnings Per Share (EPS) – Basic and diluted EPS attributable to common stockholders was $(0.29) in the fourth quarter of 2020, compared to basic and diluted EPS attributable to common stockholders of $0.00 in the same quarter last year and $(0.38) in the third quarter of 2020.

Adjusted EPS – Adjusted EPS was $(0.24) in the fourth quarter of 2020, compared to Adjusted EPS of $0.08 in the same quarter last year and $(0.25) in the third quarter of 2020.

Cash and cash equivalents – As of December 31, 2020, Cash and cash equivalents totaled $525.0 million compared to $243.8 million as of December 31, 2019 and $445.2 million as of September 30, 2020.

For a calculation of Adjusted EBITDA, Adjusted Net Income (Loss), Contribution, and Adjusted EPS, refer to the “Reconciliation of GAAP to Non-GAAP Measures” tables at the end of this release.

About LendingClub

LendingClub Corporation (NYSE: LC) is the parent company of LendingClub Bank, National Association, Member FDIC. It is the first digital marketplace bank in the US. Members can gain access to a broad range of financial products and services through a technology-driven platform, designed to help them pay less when borrowing and earn more when saving. Since 2007, more than 3 million members have joined the Club to help reach their financial goals. For more information about LendingClub, visit https://www.lendingclub.com.

Conference Call and Webcast Information

The LendingClub fourth quarter 2020 webcast and teleconference is scheduled to begin at 2:00 p.m. Pacific Time (or 5:00 p.m. Eastern Time) on Wednesday, March 10, 2021. A live webcast of the call will be available at http://ir.lendingclub.com under the Filings & Financials menu in Quarterly Results. To access the call, please dial +1 (888) 317-6003, or outside the U.S. +1 (412) 317-6061, with conference ID 0419659, ten minutes prior to 2:00 p.m. Pacific Time (or 5:00 p.m. Eastern Time). An audio archive of the call will be available at http://ir.lendingclub.com. An audio replay will also be available 1 hour after the end of the call until March 17, 2021, by calling +1 (877) 344-7529 or outside the U.S. +1 (412) 317-0088, with Conference ID 10151870. LendingClub has used, and intends to use, its investor relations website, blog (http://blog.lendingclub.com), Twitter handle (@LendingClub) and Facebook page (https://www.facebook.com/LendingClubTeam) as a means of disclosing material non-public information and to comply with its disclosure obligations under Regulation FD.

Contacts

For Investors:
[email protected]

Media Contact:
[email protected]

Non-GAAP Financial Measures and Supplemental Financial Statement Information

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: Contribution, Contribution Margin, Adjusted Net Income (Loss), Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Earnings (Loss) Per Share (Adjusted EPS) and Net Cash and Other Financial Assets. Our non-GAAP measures do have limitations as analytical tools and you should not consider them in isolation or as a substitute for an analysis of our results under GAAP.

We believe these non-GAAP measures provide management and investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and enable comparison of our financial results with other public companies, many of which present similar non-GAAP financial measures.

In particular, we believe Contribution and Contribution Margin are useful measures of overall direct product profitability because the measures illustrate the relationship between costs most directly associated with revenue generating activities and the related revenue, and the effectiveness of the direct costs in obtaining revenue. Contribution is calculated as net revenue less “Sales and marketing” and “Origination and servicing” expenses on the Company’s Statements of Operations, adjusted to exclude cost structure simplification, restructuring costs, other items (related to one-time expenses resulting from COVID-19) and non-cash stock-based compensation expenses within these captions and income or loss attributable to noncontrolling interests. The adjustment for cost structure simplification 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. The adjustment for restructuring costs included severance and other personnel-related expenses, lease-related expenses and software impairment related to the impact of COVID-19 on the Company’s business. Contribution Margin is a non-GAAP financial measure calculated by dividing Contribution by total net revenue.

We believe Adjusted Net Income (Loss) is an important measure because it directly reflects the financial performance of our business. Adjusted Net Income (Loss) adjusts for certain items that are either non-recurring, do not contribute directly to management’s evaluation of its operating results, or non-cash items, such as (1) expenses related to our cost structure simplification, as discussed above, (2) goodwill impairment, (3) legal, regulatory and other expense related to legacy issues, (4) acquisition and related expenses, (5) restructuring costs and (6) other items (including certain non-legacy litigation and/or regulatory settlement expenses, gains on disposal of certain assets and expenses resulting from COVID-19), net of tax. Legacy items are generally those expenses that arose from the decisions of legacy management prior to the board review initiated in 2016 and resulted in the resignation of our former CEO, including legal and other costs associated with ongoing regulatory and government investigations, indemnification obligations, litigation, and termination of certain legacy contracts. In the second quarter of 2020, we added an adjustment to Adjusted Net Income (Loss) for “Restructuring costs” to adjust for severance and other personnel-related expenses, lease-related expenses and software impairment related to the impact of COVID-19 on the Company’s business. In the fourth quarter of 2019, we added an adjustment to Adjusted Net Income (Loss) for “Acquisition and related expenses” to adjust for costs related to the acquisition of Radius. In the second quarter of 2019, we added an adjustment to Adjusted Net Income (Loss) and Adjusted EBITDA for Other items to adjust for expenses or gains that are not part of our core operating results.

We believe that Adjusted EBITDA and Adjusted EBITDA Margin are important measures of operating performance because they allow for the comparison of our core operating results, including our return on capital and operating efficiencies, from period to period. Adjusted EBITDA adjusts for certain items that are either non-recurring, do not contribute directly to management’s evaluation of its operating results, or non-cash items, such as (1) cost structure simplification expense, (2) goodwill impairment, (3) legal, regulatory and other expense related to legacy issues, (4) acquisition and related expenses, (5) restructuring costs, (6) other items, as discussed above, (7) depreciation, impairment and amortization expense, (8) stock-based compensation expense and (9) income tax expense (benefit). Additionally, we utilize Adjusted EBITDA as an input into the Company’s calculation of the annual bonus plan. Adjusted EBITDA Margin is a non-GAAP financial measure calculated by dividing Adjusted EBITDA by total net revenue.

We believe Adjusted EPS is an important measure because it directly reflects the financial performance of our business. Adjusted EPS is a non-GAAP financial measure calculated by dividing Adjusted Net Income (Loss) attributable to both common and preferred stockholders by the weighted-average diluted common and preferred shares outstanding.

We believe Net Cash and Other Financial Assets is a useful measure because it illustrates the overall financial stability and operating leverage of the Company. This measure is calculated as cash and certain other assets and liabilities, including loans and securities available for sale, which are partially secured and offset by related credit facilities, and working capital.

There are a number of limitations related to the use of these non-GAAP financial measures versus their most comparable GAAP measure. In particular, many of the adjustments to derive the non-GAAP financial measures reflect the exclusion of items that are recurring and will be reflected in our financial results for the foreseeable future. Other companies, including companies in our industry, may calculate these measures differently, which may reduce their usefulness as a comparative measure.

For more information on our non-GAAP financial measures and a reconciliation of such measures to the nearest GAAP measure, please see the “Reconciliation of GAAP to Non-GAAP Measures” tables at the end of this release.

Safe Harbor Statement

Some of the statements above, including statements regarding future products and services, our ability to effectuate and the effectiveness of certain strategy initiatives, anticipated future financial results, value delivery for customers and stockholders, and the impact of the Radius acquisition and resulting bank charter on our business are “forward-looking statements.” The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,” “predict,” “project,” “will,” “would” and similar expressions may identify forward-looking statements, although not all forward-looking statements contain these identifying words. Factors that could cause actual results to differ materially from those contemplated by these forward-looking statements include: the outcomes of pending governmental investigations and pending or threatened litigation, which are inherently uncertain; the impact of management changes and the ability to continue to retain key personnel; our ability to achieve cost savings from restructurings; our ability to continue to attract and retain new and existing borrowers and investors; our ability to obtain or add bank functionality and a bank charter; competition; overall economic conditions; demand for the types of loans facilitated by us; default rates and those factors set forth in the section titled “Risk Factors” in our most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K, each as filed with the Securities and Exchange Commission, as well as our subsequent reports on Form 10-Q and 10-K each as filed with the Securities and Exchange Commission. 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. Actual results or events could differ materially from the plans, intentions and expectations disclosed in forward-looking statements. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Information in this press release is not an offer to sell securities or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

LENDINGCLUB CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)



Three Months Ended
December 31,


Year Ended
December 31,



2020


2019


2020


2019


Net revenue:


















Transaction fees

$

43,151



$

149,951



$

207,640



$

598,760












Interest income

32,950



74,791



209,694



345,345



Interest expense

(27,056)



(49,251)



(141,503)



(246,587)



Net fair value adjustments

(8,435)



(42,659)



(117,247)



(144,990)



Net interest income and fair value adjustments

(2,541)



(17,119)



(49,056)



(46,232)



Investor fees

24,940



30,258



111,864



124,532



Gain on sales of loans

7,088



20,373



30,812



67,716



Net investor revenue

29,487



33,512



93,620



146,016












Other revenue

3,276



5,023



13,442



13,831












Total net revenue

75,914



188,486



314,702



758,607



Operating expenses: (1)









Sales and marketing

13,347



67,222



79,055



279,423



Origination and servicing

16,774



22,203



71,193



103,403



Engineering and product development

29,189



41,080



139,050



168,380



Other general and administrative

43,583



57,607



213,021



238,292



Total operating expenses

102,893



188,112



502,319



789,498



Income (Loss) before income tax expense (benefit)

(26,979)



374



(187,617)



(30,891)



Income tax expense (benefit)

(324)



140



(79)



(201)



Consolidated net income (loss)

(26,655)



234



(187,538)



(30,690)



Less: Income attributable to noncontrolling interests







55



LendingClub net income (loss)

$

(26,655)



$

234



$

(187,538)



$

(30,745)





















Net income (loss) per share attributable to common stockholders – Basic and Diluted (2)

$

(0.29)



$

0.00



$

(2.63)



$

(0.35)



Weighted-average common shares – Basic and Diluted

81,368,674



88,371,672



77,934,302



87,278,596



Net income (loss) per share attributable to preferred stockholders – Basic and Diluted (2)

$

(0.29)



$

0.00



$

1.39



$

0.00



Weighted-average common shares, as converted – Basic and Diluted

10,512,486





12,505,393






(1)  Includes stock-based compensation expense as follows:



Three Months Ended
December 31,


Year Ended
December 31,



2020


2019


2020


2019


Sales and marketing

$

830



$

1,479



$

4,104



$

6,095



Origination and servicing

610



533



2,689



3,155



Engineering and product development

2,833



4,417



13,411



19,860



Other general and administrative

9,805



10,312



41,329



44,529



Total stock-based compensation expense

$

14,078



$

16,741



$

61,533



$

73,639





(2)  The following table details the computation of the Company’s basic and diluted net income (loss) per share of common stock and preferred stock (presented on an as-converted basis):







Three Months Ended
December 31,


Year Ended
December 31,



2020


2019


2020


2019



Common
Stock


Preferred
Stock


Common
Stock


Common
Stock


Preferred
Stock


Common
Stock


Allocation of undistributed LendingClub net income (loss)

$

(23,605)



$

(3,050)



$

234



$

(154,664)



$

(32,874)



$

(30,745)



Deemed dividend







(50,204)



50,204





Net income (loss) attributable to stockholders (3)

$

(23,605)



$

(3,050)



$

234



$

(204,868)



$

17,330



$

(30,745)
















Weighted-average common shares – Basic and Diluted

81,368,674



10,512,486



88,371,672



77,934,302



12,505,393



87,278,596



Net income (loss) per share attributable to stockholders – Basic and Diluted

$

(0.29)



$

(0.29)



$



$

(2.63)



$

1.39



$

(0.35)




(3)  For the year ended December 31, 2020, reflects a deemed dividend paid to our largest stockholder in the first quarter of 2020 upon the exchange of all shares of LendingClub common stock held by it for newly issued shares of mandatorily convertible, non-voting, LendingClub Series A preferred stock.

LENDINGCLUB CORPORATION
OPERATING HIGHLIGHTS
(In thousands, except percentages and number of employees, or as noted)
(Unaudited)



Three Months Ended


% Change



December 31,
2020


September 30,
2020


June 30,
2020


March 31,
2020


December 31,
2019


Q/Q


Y/Y


Operating Highlights:


Loan originations (in millions)

$

912



$

584



$

326



$

2,521



$

3,083



56

%


(70)

%


Net revenue

$

75,914



$

74,713



$

43,869



$

120,206



$

188,486



2

%


(60)

%


Consolidated net income (loss)

$

(26,655)



$

(34,325)



$

(78,471)



$

(48,087)



$

234



22

%


N/M



Contribution (1)

$

47,178



$

53,384



$

21,395



$

51,902



$

101,261



(12)

%


(53)

%


Contribution margin (1)

62.1

%


71.5

%


48.8

%


43.2

%


53.7

%


(13)

%


16

%


Adjusted EBITDA (1)

$

3,890



$

4,313



$

(27,619)



$

(7,831)



$

38,981



10

%


(90)

%


Adjusted EBITDA margin (1)

5.1

%


5.8

%


(63.0)

%


(6.5)

%


20.7

%


12

%


(75)

%


Adjusted net income (loss) (1)

$

(22,085)



$

(23,079)



$

(54,252)



$

(39,151)



$

6,981



4

%


N/M



EPS (common stockholders) – diluted (2)

$

(0.29)



$

(0.38)



$

(0.87)



$

(1.10)



$

0.00



24

%


N/M



Adjusted EPS – diluted (1)

$

(0.24)



$

(0.25)



$

(0.60)



$

(0.44)



$

0.08



4

%


N/M



Loan Originations by Investor Type:


Banks

33

%


41

%


68

%


43

%


32

%






Managed accounts

51

%


44

%


10

%


16

%


17

%






Self-directed retail investors

8

%


13

%


17

%


4

%


3

%






LendingClub inventory(3) 

1

%


2

%


5

%


20

%


23

%






Other institutional investors

7

%


%


%


17

%


25

%






Total

100

%


100

%


100

%


100

%


100

%






Loan Originations by Program:


Personal loans – standard program

68

%


68

%


68

%


70

%


68

%






Personal loans – custom program

17

%


8

%


3

%


23

%


26

%






Other – custom program (4)

15

%


24

%


29

%


7

%


6

%






Total

100

%


100

%


100

%


100

%


100

%






Personal Loan Originations by Loan Grade – Standard Loan Program (in millions):


A

$

323.5



$

214.4



$

105.7



$

620.0



$

654.1



51

%


(51)

%


B

183.1



114.0



74.5



544.6



644.7



61

%


(72)

%


C

109.9



69.8



38.4



357.3



479.6



57

%


(77)

%


D





3.0



249.1



309.1



0

%


(100)

%


Total

$

616.5



$

398.2



$

221.6



$

1,771.0



$

2,087.5



55

%


(70)

%


N/M – Not meaningful



(1) 

Represents a non-GAAP measure. See “Reconciliation of GAAP to Non-GAAP Measures.



(2) 

For the first quarter of 2020, reflects a $50.2 million deemed dividend paid to our largest stockholder upon the exchange of all shares of
LendingClub common stock held by it for newly issued shares of mandatorily convertible, non-voting, LendingClub Series A preferred stock.



(3)  

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



(4)  

Comprised of education and patient finance loans, auto refinance loans, and small business loans.

LENDINGCLUB CORPORATION
OPERATING HIGHLIGHTS (Continued)
(In thousands, except percentages and number of employees, or as noted)
(Unaudited)



Three Months Ended


% Change



December 31,
2020


September 30,
2020


June 30,
2020


March 31,
2020


December 31,
2019


Q/Q


Y/Y


Servicing Portfolio by Method Financed (in millions, at end of period):


Whole loans sold

$

10,139



$

11,249



$

12,421



$

14,118



$

14,118



(10)

%


(28)

%


Notes

622



674



736



833



919



(8)

%


(32)

%


Certificates

57



79



109



147



211



(28)

%


(73)

%


Secured borrowings

1



3



6



11



19



(67)

%


(95)

%


Loans invested in by the Company

183



262



690



866



744



(30)

%


(75)

%


Total

$

11,002



$

12,267



$

13,962



$

15,975



$

16,011



(10)

%


(31)

%


Employees and contractors (4)

1,030



998



1,008



1,542



1,538



3

%


(33)

%




(4) 

As of the end of each respective period.

LENDINGCLUB CORPORATION
Condensed Consolidated Balance Sheets
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)



December 31,
2020


December 31,
2019


Assets





Cash and cash equivalents

$

524,963



$

243,779



Restricted cash

103,522



243,343



Securities available for sale at fair value

142,226



270,927



Loans held for investment at fair value

636,686



1,079,315



Loans held for investment by the Company at fair value

49,954



43,693



Loans held for sale by the Company at fair value

121,902



722,355



Accrued interest receivable

5,205



12,857



Property, equipment and software, net

96,641



114,370



Operating lease assets

74,037



93,485



Intangible assets, net

11,427



14,549



Other assets

96,730



143,668



Total assets

$

1,863,293



$

2,982,341



Liabilities and Equity





Accounts payable

$

3,698



$

10,855



Accrued interest payable

4,572



9,260



Operating lease liabilities

94,538



112,344



Accrued expenses and other liabilities

101,457



142,636



Payable to investors

40,286



97,530



Notes, certificates and secured borrowings at fair value

636,774



1,081,466



Payable to Structured Program note and certificate holders at fair value

152,808



40,610



Credit facilities and securities sold under repurchase agreements

104,989



587,453



Total liabilities

1,139,122



2,082,154



Equity





Series A Preferred stock, $0.01 par value; 1,200,000 shares authorized; 43,000 and 0 shares issued and outstanding, respectively





Common stock, $0.01 par value; 180,000,000 shares authorized; 88,149,510 and 89,218,797 shares issued, respectively; 88,149,510 and 88,757,406 shares outstanding, respectively

881



892



Additional paid-in capital

1,508,020



1,467,882



Accumulated deficit

(786,214)



(548,472)



Treasury stock, at cost; 0 and 461,391 shares, respectively



(19,550)



Accumulated other comprehensive loss

1,484



(565)



Total equity

724,171



900,187



Total liabilities and equity

$

1,863,293



$

2,982,341



LENDINGCLUB CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In thousands, except percentages and per share data)
(Unaudited)



Three Months Ended


Year Ended



December 31,
2020


September 30,
2020


June 30,
2020


March 31,
2020


December 31,
2019


December 31,
2020


December 31,
2019


GAAP LendingClub net income (loss)

$

(26,655)



$

(34,325)



$

(78,471)



$

(48,087)



$

234



$

(187,538)



$

(30,745)



Engineering and product development expense

29,189



31,984



39,167



38,710



41,080



139,050



168,380



Other general and administrative expense

43,583



54,332



56,620



58,486



57,607



213,021



238,292



Cost structure simplification expense (1)







175



188



175



7,318



Restructuring costs (2)

(79)



(142)



2,285







2,064





Other items (2)

24



8



341







373





Stock-based compensation expense (2)

1,440



1,601



1,453



2,299



2,012



6,793



9,250



Income tax expense (benefit)

(324)



(74)





319



140



(79)



(201)



Contribution

$

47,178



$

53,384



$

21,395



$

51,902



$

101,261



$

173,859



$

392,294



Total net revenue

$

75,914



$

74,713



$

43,869



$

120,206



$

188,486



$

314,702



$

758,607



Contribution margin

62.1

%


71.5

%


48.8

%


43.2

%


53.7

%


55.2

%


51.7

%




(1)

Contribution excludes the portion of personnel-related expenses 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 the portion of expenses included in the “Sales and marketing” and “Origination and servicing” expense categories.

LENDINGCLUB CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (Continued)
(In thousands, except percentages and per share data)
(Unaudited)



Three Months Ended


Year Ended



December 31,
2020


September 30,
2020


June 30,
2020


March 31,
2020


December 31,
2019


December 31,
2020


December 31,
2019


GAAP LendingClub net income (loss)

$

(26,655)



$

(34,325)



$

(78,471)



$

(48,087)



$

234



$

(187,538)



$

(30,745)



Cost structure simplification expense (1)







228



284



228



9,933



Legal, regulatory and other expense related to legacy issues (2)

183



6,120



4,354



4,476



4,531



15,133



19,609



Acquisition and related expenses (3)

4,744



4,373



456



3,611



932



13,184



932



Restructuring costs (4)



753



17,036







17,789





Other items (5)

(357)





2,373



621



1,000



2,637



2,453



Adjusted net income (loss)

$

(22,085)



$

(23,079)



$

(54,252)



$

(39,151)



$

6,981



$

(138,567)



$

2,182



Depreciation and impairment expense:















Engineering and product development

10,099



10,198



10,177



10,423



12,532



40,897



49,207



Other general and administrative

1,370



1,394



1,480



1,603



1,739



5,847



6,446



Amortization of intangible assets

752



752



772



846



848



3,122



3,499



Stock-based compensation expense

14,078



15,122



14,204



18,129



16,741



61,533



73,639



Income tax expense (benefit)

(324)



(74)





319



140



(79)



(201)



Adjusted EBITDA

$

3,890



$

4,313



$

(27,619)



$

(7,831)



$

38,981



$

(27,247)



$

134,772



Total net revenue

$

75,914



$

74,713



$

43,869



$

120,206



$

188,486



$

314,702



$

758,607



Adjusted EBITDA margin

5.1

%


5.8

%


(63.0)

%


(6.5)

%


20.7

%


(8.7)

%


17.8

%




(1) 

Includes personnel-related expenses associated with establishing a site in the Salt Lake City area. 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. In 2019, also includes external advisory fees which are included in
“Other general and administrative” expense on the Company’s Condensed Consolidated Statements of Operations.



(2) 

Consists of legal legacy expenses, which are included in “Other general and administrative” expense on the Company’s Condensed
Consolidated Statements of Operations. In 2019, also includes expense related to the dissolution of certain private funds previously
managed by LCAM and expense related to the termination of a legacy contract, which are included in “Net fair value adjustments” and
“Other general and administrative” expense on the Company’s Consolidated Statements of Operations, respectively.



(3) 

Represents costs related to the acquisition of Radius.



(4) 

Includes severance and other personnel-related expenses, lease-related expenses and software impairment related to the impact of
COVID-19 on the Company’s business.



(5) 

In 2020, includes expenses related to certain non-legacy litigation and regulatory matters, which are included in “Other general and
administrative” expense on the Company’s Condensed Consolidated Statements of Operations and one-time expenses resulting from
COVID-19, which 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. In 2019, includes expenses
related to certain non-legacy litigation and regulatory matters and a gain on the sale of our small business operating segment, which are
included in “Other general and administrative” expense on the Company’s Condensed Consolidated Statements of Operations.

LENDINGCLUB CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (Continued)
(In thousands, except percentages and per share data)
(Unaudited)



Three Months Ended


Year Ended



December 31,
2020


September 30,
2020


June 30,
2020


March 31,
2020


December 31,
2019


December 31,
2020


December 31,
2019



Common and
Preferred
Stock (1)


Common and
Preferred Stock (1)


Common and
Preferred
Stock (1)


Common
Stock


Common Stock


Common and
Preferred Stock (1)


Common Stock


Adjusted net income (loss) attributable to stockholders

$

(22,085)



$

(23,079)



$

(54,252)



$

(39,151)



$

6,981



$

(138,567)



$

2,182


















Weighted-average GAAP diluted shares (2)

91,881,160



90,901,870



89,866,880



89,085,270



88,912,677



90,439,695



87,278,596



Non-GAAP diluted shares (2)

91,881,160



90,901,870



89,866,880



89,085,270



88,912,677



90,439,695



87,794,035


















Adjusted EPS – diluted (3)

$

(0.24)



$

(0.25)



$

(0.60)



$

(0.44)



$

0.08



$

(1.53)



$

0.02





(1) 

Presented on an as-converted basis, as the preferred stock is considered common shares because it participates in earnings similar to common stock and does not receive any significant preferences over the common stock.

(2) 

Beginning in the first quarter of 2020, includes the total weighted-average shares outstanding of both common and preferred stock on an as-converted basis.

LENDINGCLUB CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
(In thousands)
(Unaudited)


The following table is provided to delineate between the assets and liabilities belonging to our member payment dependent self-directed retail program (Retail Program) note holders 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 debt holders do not have a secured interest in any other assets of LendingClub. We believe this is a useful measure because it illustrates the overall financial stability and operating leverage of the Company.



December 31, 2020


December 31, 2019


Retail Program (1)

Consolidated VIEs (2) (4)

All Other LendingClub (3)

Condensed Consolidated Balance Sheet


Retail Program (1)

Consolidated VIEs (2)(4)

All Other LendingClub (3)

Condensed Consolidated Balance Sheet

Assets










Cash and cash equivalents

$


$


$

524,963


$

524,963



$


$


$

243,779


$

243,779


Restricted cash


13,473


90,049


103,522




2,894


240,449


243,343


Securities available for sale



142,226


142,226





270,927


270,927


Loans held for investment at fair value

584,066


52,620



636,686



881,473


197,842



1,079,315


Loans held for investment by the Company at fair value (4)


46,120


3,834


49,954




37,638


6,055


43,693


Loans held for sale by the Company at fair value (4)


92,802


29,100


121,902





722,355


722,355


Accrued interest receivable

3,797


1,134


274


5,205



5,930


1,815


5,112


12,857


Property, equipment and software, net



96,641


96,641





114,370


114,370


Operating lease assets



74,037


74,037





93,485


93,485


Intangible assets, net



11,427


11,427





14,549


14,549


Other assets



96,730


96,730





143,668


143,668


Total assets

$

587,863


$

206,149


$

1,069,281


$

1,863,293



$

887,403


$

240,189


$

1,854,749


$

2,982,341


Liabilities and Equity










Accounts payable

$


$


$

3,698


$

3,698



$


$


$

10,855


$

10,855


Accrued interest payable

3,797


721


54


4,572



5,930


1,737


1,593


9,260


Operating lease liabilities



94,538


94,538





112,344


112,344


Accrued expenses and other liabilities



101,457


101,457





142,636


142,636


Payable to investors



40,286


40,286





97,530


97,530


Notes, certificates and secured borrowings at fair value

584,066


52,620


88


636,774



881,473


197,842


2,151


1,081,466


Payable to Structured Program note and certificate holders at fair value (4)


152,808



152,808




40,610



40,610


Credit facilities and securities sold under repurchase agreements



104,989


104,989





587,453


587,453


Total liabilities

587,863


206,149


345,110


1,139,122



887,403


240,189


954,562


2,082,154


Total equity



724,171


724,171





900,187


900,187


Total liabilities and equity

$

587,863


$

206,149


$

1,069,281


$

1,863,293



$

887,403


$

240,189


$

1,854,749


$

2,982,341




(1) 

Represents loans held for investment at fair value that were 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 were 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 $98.3 million and $148.0 million was equally matched and offset by interest income from the related loans of
$98.3 million and $148.0 million in 2020 and 2019, respectively, 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. Interest expense on these liabilities owned by third parties of $123.2 million and net fair value adjustments
of $9.4 million in 2020 were equally matched and offset by interest income on the loans of $134.6 million, resulting in no net effect on our Net
interest income and fair value adjustments. Interest expense on these liabilities owned by third parties of $70.8 million and net fair value
adjustments of $13.5 million in 2019 were equally matched and offset by interest income on the loans of $84.3 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,” “Loans held for investment 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 economic interests held by LendingClub, including retained interests, residuals and equity of those consolidated VIEs.



(4) 

The Company has sponsored Structured Program transactions that have been consolidated, resulting in an increase to “Loans held for investment
by the Company at fair value,” “Loans held for sale by the Company at fair value” and the related “Payable to Structured Program note and
certificate holders at fair value.”

LENDINGCLUB CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (Continued)
NET CASH AND OTHER FINANCIAL ASSETS
(In thousands)
(Unaudited)



December 31,
2020


September 30,
2020


June 30,
2020


March 31,
2020


December 31,
2019


Cash and cash equivalents (1)

$

524,963



$

445,180



$

338,394



$

294,345



$

243,779



Restricted cash committed for loan purchases (2)

2,692



308



290



4,572



68,001



Securities available for sale

142,226



187,375



221,930



256,554



270,927



Loans held for investment by the Company at fair value (3)

49,954



59,099



65,557



71,003



43,693



Loans held for sale by the Company at fair value (3)

121,902



180,801



587,093



741,704



722,355



Payable to Structured Program note and certificate holders at fair value (3)

(152,808)



(173,410)



(193,034)



(206,092)



(40,610)



Credit facilities and securities sold under repurchase agreements

(104,989)



(120,159)



(480,079)



(621,020)



(587,453)



Other assets and liabilities (4)

(7,792)



363



23,916



61,107



(6,226)



Net cash and other financial assets (5)

$

576,148



$

579,557



$

564,067



$

602,173



$

714,466





(1) 

Variations in cash and cash equivalents are primarily due to variations in the amount and timing of loan purchases invested in by the Company and the
corresponding loan sales.



(2) 

Represents cash and cash equivalents that are transferred to restricted cash for loans that are pending purchase by the Company.



(3) 

The Company has sponsored Structured Program transactions that have been consolidated, resulting in an increase to “Loans held for
investment by the Company at fair value” and the related “Payable to Structured Program note and certificate holders at fair value.”



(4) 

“Other assets and liabilities” is a total of “Accrued interest receivable,” “Other assets,” “Accounts payable,” “Accrued interest payable” and
“Accrued expenses and other liabilities,” included on our Consolidated Balance Sheets. This line item represents certain assets and
liabilities that impact working capital and are affected by timing differences between revenue and expense recognition and related cash
activity.



(5) 

Comparable GAAP measure cannot be provided as not practicable.

SOURCE LendingClub Corporation

Related Links

https://www.lendingclub.com



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