LendingClub Corp (LC) Business
This page reproduces the company's own Item 1 Business text from the linked SEC filing. It is filer text, not grepcent analysis, scoring, or investment advice.
Informational only - not investment advice. See Disclaimer.
Item 1. Business
A Digital Bank for the Motivated Middle
LendingClub operates a leading nationally chartered digital bank focused on serving a large and underserved segment of creditworthy U.S. consumers that we refer to as the “motivated middle.” These consumers are digitally capable, value-conscious, and make frequent use of credit to achieve intentional financial goals; however, they are often poorly served by traditional financial institutions due to structural inefficiencies and limited transparency. Our branchless, mobile-first platform enables members to apply for and manage lending and banking products digitally, delivering competitive pricing and a streamlined experience. We focus on high-demand areas of lending where inefficiencies persist, including personal loans, auto refinance, and point-of-sale financing for major purchases.
Our competitive differentiation is grounded in four core advantages: (i) an underwriting platform built on nearly two decades of proprietary data and machine-learning models; (ii) products designed to provide meaningful value to our members; (iii) digital experiences that enhance transparency and drive engagement, loyalty, and operating efficiency; and (iv) a technology stack engineered for innovation and scalability. Our advanced decisioning, pricing, and risk management capabilities are enabled by an extensive and diverse dataset spanning borrower behavior, credit performance, and economic cycles. We leverage our data advantage, lower-cost deposit base, and complementary marketplace platform and bank balance sheet to optimize loan sales and retention, generating both recurring net interest income and capital-light fee revenue while maintaining attractive returns through economic cycles.
Our lending products typically serve as the entry point to our ecosystem, with members often returning for additional borrowing needs as their financial needs evolve. We supplement these lending interactions with ongoing engagement through our mobile application and award-winning banking products, including checking and savings accounts and digital tools that provide members with insights into their debt, spending, and savings behavior. We believe our expanding product suite and integrated business model enable flexibility, resilience, and the ability to efficiently scale originations across multiple lending verticals, supporting sustainable growth and long-term value creation for our members and stockholders. Since our founding in 2006, more than five million individuals have become members and more than $100 billion of loans have been originated through our platform.
Our Loan Origination and Deposit Business
Our sales and marketing efforts are designed to efficiently attract and retain members and support member satisfaction. We attract members through various channels such as our website and mobile app, online affiliate partners, direct mail, paid search engines, online display advertising, email, social media, strategic relationship referrals and small businesses such as merchants, healthcare providers and soon, home improvement providers. When our members need another loan or deposit product, many return to LendingClub – at a very low acquisition cost to us and experience a simple, streamlined application process for them – which increases the lifetime value of these repeat members while providing them additional opportunities to improve their financial position.
Once a loan application is received, multivariable, machine-learning driven, and automated processes allow us to assess risk and present decisioned applicants with one or more loan options, including the term(s), rate(s), and amount(s) for which the applicant qualifies. Once any additional verifications are completed, the loan is originated and funded often within 24 hours. Our loan products are intended to directly address the core borrowing needs of our members and are underpinned by our scalable technology platform and capabilities.
Our primary consumer loan products include the following:
•Personal Loans. Unsecured, fixed-rate, and fixed-term consumer loans that may be used for various purposes. We currently offer borrowers multiple features to lower their cost of debt and enhance their
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financial position, including balance transfers (where a borrower’s existing credit card debt(s) are directly paid down and the debt is consolidated into a fixed-rate term loan), joint applications (where borrowers may receive a better rate when they jointly apply for a personal loan), and TopUp (where borrowers can easily combine their existing LendingClub loan with additional loan proceeds into a new single payment loan).
•Major Purchase Finance. Unsecured, fixed-rate, and fixed-term consumer loans that help borrowers manage larger planned expenses such as elective medical, dental, and other healthcare procedures, as well as other higher cost goods and services. We partner with providers and merchants who offer our financing options directly to their customers. By leveraging our existing purchase finance capabilities, we intend to expand our loan offerings in 2026 to include home improvement financing, enabling payments directly to partner retail merchants and contractors and streamlining the customer financing experience.
•Auto Refinance. Secured consumer loans that help borrowers reduce the cost of their existing auto loan. We offer qualified borrowers the opportunity to lower their interest rate, reduce monthly payments, and/or adjust their repayment term by refinancing their existing auto loan.
Our commercial lending business is primarily focused on small businesses, and we participate in the U.S. Small Business Administration (SBA) lending programs, certain of which guarantee a portion of the loan in the case of borrower default. Commercial loans are sourced through relationships with businesses across the country. We underwrite loans based on the creditworthiness of businesses, including an assessment of cash flows, and on the underlying value of any collateral. In the first quarter of 2023, we ceased originating commercial real estate loans and equipment leases and currently intend to retain the existing loan portfolios to maturity. However, we continue to originate loans secured by real estate under the SBA lending programs.
Our deposit business includes sourcing deposits directly from customers and from third-party marketing channels and deposit brokers. For consumer depositors, we offer a range of FDIC-insured deposit products, including high-yield savings accounts, checking accounts, and certificates of deposit (CDs). Our LevelUp Savings product delivers a competitive interest rate and rewards members with our best interest rate on savings for engaging in positive ongoing savings behavior. Our flagship LevelUp Checking delivers an award-winning digital experience and member-friendly features, such as ATM fee rebates, no overdraft fees, and early direct deposits. Further, LevelUp Checking rewards our members with cash back when they make on-time LendingClub personal loan payments through their LevelUp Checking account and when they use their LevelUp Checking debit card for qualifying gas, grocery, and pharmacy purchases.
Our Marketplace
Our consumer loans are either retained by LendingClub Bank or sold to marketplace investors through our innovative and proprietary loan marketplace. The composition of our marketplace investors varies from time to time but generally includes asset managers (such as private credit and fund asset managers), other financial institutions and insurance companies. Our marketplace loan sales are executed as either loan sales or Structured Program transactions. Many of our loan sales are pursuant to singular transactions with marketplace investors. However, from time to time, we also enter into agreements with marketplace investors that outline terms of conditions pursuant to which multiple loan sales occur over an extended period of time.
Structured Program transactions deliver benefits to both marketplace investors and LendingClub. Marketplace investors earn compelling levered returns (benefiting from financing built into the structure) and LendingClub earns an attractive yield with remote credit risk on our retained senior securities. Since launch through the end of 2025, we sold approximately $8 billion of loans under this program.
Additionally, we may opportunistically and/or systematically purchase loans, including portfolios of loans that we previously originated and sold to marketplace investors.
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Our Competitive Advantages
As a digital marketplace bank, we have key business model and competitive advantages over both traditional banks and fintech marketplaces. These include:
•Financially attractive and resilient business model. As a bank, we benefit from two distinct revenue streams: (i) marketplace revenue in the form of origination fees from borrowers and servicing fees on loans sold to marketplace investors, which provides attractive in-period income, and (ii) net interest income earned from retaining loans and Structured Program securities, offset by interest expense on our deposits, which provides a recurring and resilient revenue source. In addition to improving our loan-level economics, our banking capabilities also substantially increase the long-term resiliency of our business by providing access to deposit funding, instead of higher-cost and more volatile third-party warehouse funding. Finally, as a digital marketplace bank without the typical brick-and-mortar branch network and related infrastructure of traditional banks, we are better able to leverage technology to meet customers where they are and provide them with smart, simple, and rewarding solutions.
•Unmatched data and analytics, which power our customer experience and underwriting results. We believe that lending is essentially a data problem and that we have the technology and expertise to solve it. We serve members across a wide band of the credit spectrum and more than $100 billion of loans have been originated through our platform since 2006. Through our interactions with applicants and members, we have collected more than 150 billion cells of performance and behavioral data across thousands of attributes and various economic cycles. That data informs our activities across the customer lifecycle – from marketing to underwriting, pricing, and servicing – and informs our proprietary credit decisioning and machine learning models to rapidly adapt and adjust to changing environments. As a result of our data advantage and iterative credit modeling, third-party data shows that we are able to assess credit risk more effectively than traditional scoring models and our peer set, which allows us to expand access to credit and generate savings for members while also generating competitive risk-adjusted returns. We also believe these advantages result in lower customer acquisition costs and give us a deep understanding of our members, which helps us anticipate their needs, informs future product offerings, and enables us to effectively customize offers.
•Strong, growing, and engaged customer base. Our scalable technology, customer-focused culture, and use of data and analytics has enabled us to provide loans and deposit accounts to our millions of members. Our typical member is among the industry’s most sought-after consumers: borrowers who have relatively high incomes and higher than average FICO scores. Many of our members have accumulated higher-cost debt and they want better, lower-cost solutions. We are able to help members refinance their higher-cost debt into a lower-cost, fixed-rate product, thereby providing both interest expense savings and a pathway toward an improved financial position. Our high net promoter score reflects the strong affinity our members have for our brand and the value we provide. In fact, many of our members return to us for a subsequent personal loan and/or to increase their savings through other loan products, like auto refinance, and deposit products. These repeat members have very low acquisition costs, demonstrate better loan performance, and are avid proponents of LendingClub, creating a powerful foundation for future products.
Our loan marketplace serves a broad range of investors who purchase and invest in our loans, including asset managers (such as private credit funds and fund asset managers), other financial institutions and insurance companies. Our marketplace primarily competes with other investment vehicles and asset classes, such as equities, bonds, and short-term fixed income securities. LendingClub’s key competitive advantages for marketplace investors include:
•Competitive risk-adjusted returns and short duration. We have over a 15-year track record of generating competitive risk-adjusted returns for marketplace investors. Our loans compare favorably to other alternative investment options due to their higher yield and shorter duration. We dynamically price loans based on a variety of inputs, such as competitive insights, supply and demand, and prevailing interest rates.
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•Portfolio diversification. Loans we sell through our marketplace can offer duration, geographic, and/or asset diversification to these investors.
•Innovative and easy-to-use technology platform. Our marketplace brings the traditional loan trading model into the digital age with faster and more efficient transactions. Our marketplace supports same-day automated settlements, flexible real-time market-based pricing, the ability to customize marketplace investor portfolios and trading activity, and passive or active loan selection strategies.
•Regulated and resilient counterparty. As a national bank subject to federal regulatory oversight and an investor in our own loans, LendingClub is a trusted partner, which is especially important for financial institutions participating in our loan marketplace.
LendingClub’s key competitive advantages also extend to our members, including:
•Access to affordable credit. We allow members to easily apply for a loan from a desktop or mobile device, presenting a variety of rate and term options with no impact to their credit score. Once an offer is selected, we run credit and identity verifications, relying on automation, when possible, to reduce friction, and, for 80% of approved applicants, deposit net loan proceeds within 24 hours.
•Improvements in their financial position. Members who use a LendingClub unsecured personal loan to pay off their existing debt not only reduce their cost of debt but also may increase their credit score over time.
•Other LendingClub products and services. Members have access to a growing set of financial products and services that are designed to work well together to deliver smart, simple, and rewarding solutions.
Seasonality
Historically, borrower demand for our loans is generally lower in the first and fourth quarters of the year, which can result in lower origination volume and contribute to fluctuations in our operating results. We believe that: (i) lower demand for our loans in the first quarter is attributable to the impact of tax refunds; and (ii) lower demand for our loans in the fourth quarter is attributable to holiday-driven behaviors.
Revenue
Our primary sources of revenue include:
•Net interest income. Interest earned on loans retained on our balance sheet, less interest paid on deposits and other interest-bearing liabilities.
•Origination fees. Fees charged to borrowers in connection with the origination of a loan.
•Servicing fees. Fees to compensate us for servicing loans on behalf of marketplace investors, including managing payments from borrowers and remittances to those investors.
•Gain on sales of loans. In connection with loan sales to marketplace investors, we capitalize the initial fair value of servicing rights. A gain or loss is recorded based on the level to which the contractual servicing fee is above or below an estimated market rate of servicing at the time of sale.
•Fair value adjustments. Adjustments to the carrying value of loans, for which we have elected to account for under the fair value option, to reflect their fair value.
The timing and classification of revenue depends, among other things, on whether the loans are accounted for at amortized cost or at fair value.
We elected to account for loans held for sale (HFS) under the fair value option. Revenue from HFS loans includes origination fees recognized at the time of loan origination, gain on sales of loans (recognition of servicing asset), servicing fees received from marketplace investors over the life of the sold loan, and net fair value adjustments
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(gains or losses from sale prices in excess of or less than the loan principal amount sold and realized net charge-offs). We also earn interest income on HFS loans from the time of origination until the loans have been sold.
Since becoming a bank in 2021 through 2025, loans originated as held for investment (HFI) were, and we expect will continue to be, accounted for at amortized cost. Revenue from HFI loans primarily consists of interest income, which includes the stated interest rate on the loans and the amortization of origination fees and marketing costs that are deferred at origination. We establish a CECL allowance on these loans based on an estimated net present value of lifetime expected credit losses. This allowance is initially recognized through earnings at the time of origination. Due to the timing difference caused by origination fee and marketing cost deferrals and upfront credit loss provisioning, earnings are initially disproportionately impacted from HFI loans accounted for at amortized cost before benefiting from higher levels of interest income in later periods. In addition, certain non-routine loan portfolio purchases designated as HFI were accounted under the fair value option on a transaction-specific basis, due to the short remaining duration of the acquired portfolios. Revenue from loan portfolio purchases includes interest income and net fair value adjustments which are recorded in current period earnings.
Effective January 1, 2026, we elected the fair value option to account for HFI loans that were originated on or after that date. Prior to this election, loans that were originated as HFI were, and we expect will continue to be, accounted for at amortized cost, which required the initial recognition of an allowance for lifetime expected credit losses under the CECL methodology, recognized within “Provision for credit losses” on the Income Statement. We believe that applying the fair value option, rather than the CECL methodology, to HFI loans more accurately reflects the in-period economic performance of the loans by better aligning the value of the loan to its then fair value. Under the fair value option, origination fee revenue and marketing costs are recognized in earnings at the time of loan origination, rather than being deferred, and changes in fair value of loans, including the impact of net credit losses, are recognized in current period earnings within “Net fair value adjustments” on the Income Statement. Further, by applying the fair value option to HFI loans, we are applying the same accounting methodology to all loans we originate after January 1, 2026, as both HFI and HFS loans will be measured at fair value.
Competition
The financial services industry is highly competitive and rapidly changing. We compete with a broad array of traditional and new financial services providers, including banks and non-banks. Some of these competitors have more resources and/or less regulatory oversight, and some may have lower cost structures. Further, the competition within the financial services industry is increasing as technology (such as artificial intelligence) enables efficiencies and innovations, additional companies obtain bank charters and non-banks expand the scope of their products and services.
See “Item 1A. Risk Factors – Substantial and increasing competition in our industry may harm our business” for further discussion of the potential impact of competition on our business.
Regulation and Supervision
General
The U.S. financial services and banking industry is highly regulated. The bank regulatory regime is intended primarily for the protection of customers, the public, the financial system and the Deposit Insurance Fund (DIF) of the Federal Deposit Insurance Corporation (FDIC), rather than our stockholders or creditors.
The legal and regulatory regime affects virtually all aspects of our operations. Statutes, regulations and regulatory and supervisory policies govern, among other things, the scope of activities that we may conduct and the manner in which we may conduct them; our business plan and growth; our board, management, and risk management infrastructure; the type, terms, and pricing of our products and services; our loan and investment portfolio; our capital and liquidity levels; our reserves against deposits; our ability to pay dividends, buy-back stock or distribute capital; and our ability to engage in mergers, acquisitions, strategic initiatives and transactions between LC Bank
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and its affiliates. The legal and regulatory framework is continually under review by legislatures, regulators and other governmental bodies, and changes regularly occur through the enactment or amendment of laws and regulations, through shifts in policy, implementation or enforcement or through legal challenges to new and/or existing agency regulations and interpretations. Changes are difficult to predict and could have significant effects on our business.
The material regulatory requirements that are applicable to us and our subsidiaries are summarized below. The description below, as well as other descriptions of laws and regulations in this Annual Report, are not intended to summarize all laws and regulations applicable to us and our subsidiaries, and are based upon the statutes, regulations, policies, interpretive letters and other written guidance that are in effect as of the date of this Annual Report.
Regulatory Framework
We are subject to regulation and supervision by multiple regulatory bodies. As a bank holding company, the Company is subject to the Bank Holding Company Act of 1956 (BHCA) and is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the Board of Governors of the Federal Reserve System (FRB). The FRB acts as the supervisor of the consolidated operations of bank holding companies.
As a national bank, LC Bank is subject to ongoing and comprehensive supervision, regulation, examination and enforcement by the Office of the Comptroller of the Currency (OCC). The OCC charges fees to national banks, including LC Bank, in connection with its supervisory activities. Further, as a depository institution with assets over $10 billion, LC Bank is subject to supervision and enforcement authority relating to federal consumer financial laws and regulations by the Consumer Financial Protection Bureau (CFPB).
LC Bank’s deposits are insured by the DIF of the FDIC up to applicable legal limits. As an FDIC-insured depository institution, LC Bank is subject under certain circumstances to supervision, regulation and examination by the FDIC. The FDIC charges deposit insurance assessments to FDIC-insured institutions, including LC Bank, to fund and support the DIF. The rate of these deposit insurance assessments is based on, among other things, the risk characteristics of LC Bank. The FDIC has the power to terminate LC Bank’s deposit insurance if it determines LC Bank is engaging in unsafe or unsound practices. Federal banking laws provide for the appointment of the FDIC as receiver in the event LC Bank were to fail, such as in connection with undercapitalization, insolvency, unsafe or unsound condition or other financial distress. In a receivership, the claims of the receiver for administrative expenses and the claims of LC Bank’s depositors (and those of the FDIC as subrogee of LC Bank) would have priority over other general unsecured claims against LC Bank.
We are subject to the disclosure and regulatory requirements of the Securities Act and the Exchange Act, both as administered by the SEC. Our common stock is listed on the New York Stock Exchange (NYSE) under the trading symbol “LC” and therefore we are also subject to the rules of the NYSE for listed companies.
Notwithstanding the forgoing, the change in U.S. presidential administration and composition of the U.S. Congress has led to significant changes to the existence, priorities, scope, practices and/or staffing levels of various regulatory agencies. For example, in February 2025, the current presidential administration directed the CFPB to, among other things, suspend rule implementations and cease supervision activities; and while the CFPB is still operating, it has rescinded rules set under the prior U.S. presidential administration. For more information, see “Item 1A. Risk Factors – Changes in the legal, regulatory or political environment could adversely affect our business, financial condition, and results of operations.”
Broad Powers to Ensure Safety and Soundness
A principal objective of the U.S. bank regulatory system is to ensure the safety and soundness of banking organizations. Safety and soundness is a broad concept that includes financial, operational, compliance and
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reputational considerations, including matters such as capital, asset quality, quality of board and management oversight, earnings, liquidity, and sensitivity to market and interest rate risk.
The U.S. banking regulators have broad examination and enforcement authority. The regulators require banking organizations to file detailed periodic reports and regularly examine the operations of banking organizations. Banking organizations that do not meet the regulators’ supervisory expectations can be subjected to increased scrutiny and supervisory criticism. The regulators have various remedies available, which may be public or of a confidential supervisory nature, if they determine that an institution’s condition, management, operations or risk profile is unsatisfactory. The regulators may also take action if they determine that the banking organization or its management is violating or has violated any law or regulation. The regulators have the power to, among other things:
•require affirmative actions to correct any violation or practice;
•issue administrative orders that can be judicially enforced;
•direct increases in capital;
•direct the sale of subsidiaries or other assets;
•limit dividends and distributions;
•restrict growth and activities;
•set forth parameters, obligations and/or limitations with respect to the operation of our business;
•assess civil monetary penalties;
•remove officers and directors; and
•terminate deposit insurance.
Engaging in unsafe or unsound practices or failing to comply with applicable laws, regulations and supervisory agreements could subject us and our subsidiaries or their officers, directors and institution-affiliated parties to a broad variety of sanctions or remedies, including those described above.
Limits on Activities and Approval Requirements
The BHCA generally restricts the Company’s ability, directly or indirectly, to engage in, or acquire more than 5% of any class of voting securities of a company engaged in, activities other than those determined by the FRB to be so closely related to banking as to be a proper incident thereto. The Gramm-Leach-Bliley Act expanded the scope of permissible activities to include those that are financial in nature or incidental or complementary to a financial activity for a bank holding company that elects to be a financial holding company, which requires the satisfaction of certain conditions. We have not elected financial holding company status.
The bank regulatory framework requires that we obtain prior approval of one or more regulators for various initiatives or corporate actions, including acquisitions or minority investments, the establishment, relocation or closure of branches, certain dividends or capital distributions. Regulators take into account a range of factors in determining whether to grant a requested approval, including the supervisory status of the applicant and its affiliates. Thus, there is no guarantee that a particular proposal by us would receive the required regulatory approvals.
The Community Reinvestment Act (CRA) requires federal banking regulators, in their review of certain applications by banking organizations, to take into account the applicant’s record in helping meet the credit needs of its community, including low- and moderate-income neighborhoods. LC Bank is subject to periodic examination under the CRA by the OCC, which will assign ratings based on the methodologies set forth in its regulations and guidance. Less favorable CRA ratings, or concerns raised under the CRA, may result in negative regulatory consequences for LC Bank. In July 2025, the federal banking regulators provided notice regarding a change in position on how the examine banks under regulations implementing the CRA that includes a potential for
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implementing new proposed rules, and subject to the outcome of related litigation and/or implementation of the new proposed rules, may impact how certain activities may be considered, and how regulators may assess performance, under the CRA.
Company as Source of Strength for LC Bank
Federal law and the FRB policy require that a bank holding company serve as a source of financial and managerial strength for any FDIC-insured depository institution that it controls. Thus, if LC Bank were to be in financial distress or to otherwise be viewed by the regulators as in an unsatisfactory condition, then the Federal Reserve has the authority to require the Company to act as a source of strength for LC Bank, which could include providing additional capital or liquidity support, or take other action, in support of LC Bank, even if doing so is not otherwise in the best interest of the Company.
Capital and Liquidity Requirements and Prompt Corrective Action
The Company and LC Bank are expected to have established policies and practices for identifying, measuring, monitoring and controlling their funding and liquidity risks. The banking regulators view capital levels as important indicators of an institution’s financial soundness. As a general matter, FDIC-insured depository institutions and their holding companies are required to maintain a specified level of capital relative to the amount and types of assets they hold. While capital can serve as an important cushion against losses, higher capital requirements can also adversely affect an institution’s ability to grow and/or increase leverage through deposit-gathering or other sources of funding.
The Company and LC Bank are each subject to generally similar capital requirements adopted by the FRB and the OCC, respectively. These requirements establish required minimum ratios for common equity tier 1 (CET1) risk-based capital, Tier 1 risk-based capital, total risk-based capital and a Tier 1 leverage ratio; set risk-weighting for assets and certain other items for purposes of the risk-based capital ratios; require an additional capital conservation buffer over the minimum required capital ratios in order to avoid certain limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses; and define what qualifies as capital for purposes of meeting the capital requirements. The U.S. capital requirements generally are modeled off the Capital Accords of the Basel Committee on Banking Supervision (BCBS). Specifically, the capital thresholds in order to be regarded as a well-capitalized institution under the BCBS standardized approach for U.S. banking organizations are as follows: a CET1 risk-based capital ratio of 6.5%, a Tier 1 risk-based capital ratio of 8.0%, a total risk-based capital ratio of 10.0% and a Tier 1 leverage ratio of 5.0%. The regulators assess any particular institution’s capital adequacy based on numerous factors and may require a particular banking organization to maintain capital at levels higher than the generally applicable minimums.
The Federal Deposit Insurance Act provides for a system of “prompt corrective action” (PCA). The PCA regime provides for capitalization categories ranging from “well-capitalized” to “critically undercapitalized.” An institution’s PCA category is determined primarily by its regulatory capital ratios. The PCA requires remedial actions and imposes limitations that become increasingly stringent as an institution’s condition deteriorates and its PCA capitalization category declines. Among other things, institutions that are less than well-capitalized become subject to increasingly stringent restrictions on their ability to accept and/or rollover brokered deposits.
In addition to capital requirements, depository institutions are required to maintain noninterest-bearing reserves at specified levels against their transaction accounts and certain non-personal time deposits.
Regulatory Limits on Dividends and Distributions
The ability of the Company or LC Bank to pay dividends, repurchase stock and make other capital distributions is limited by regulatory capital rules and other aspects of the regulatory regime. For example, a policy statement of the FRB provides that, among other things, a bank holding company generally should not pay dividends if its net
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income for the past year is not sufficient to cover both the cash dividends and a rate of earnings retention that is consistent with the company’s capital needs, asset quality, and overall financial condition. Because substantially all of our business activities, income and cash flow are expected to be generated by LC Bank, an inability of LC Bank to pay dividends or distribute capital to the Company would adversely affect the Company’s liquidity.
See “Part II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 19. Regulatory Requirements” and “Item 1A. Risk Factors – Risks Related to Regulation, Supervision and Compliance” for additional information.
Consumer Protection
We are subject to a broad array of federal, state and local laws and regulations that govern almost every aspect of our business relationships with consumers. These laws relate to, among other things, the content and adequacy of disclosures, pricing and fees, fair lending, anti-discrimination, privacy, cybersecurity, usury, mortgages and housing finance, lending to service members, escheatment, debt collection, loan servicing, collateral secured lending, availability of funds and unfair, deceptive or abusive acts or practices.
The CFPB has broad authority related to federal consumer financial laws and regulations impacting the provision of consumer financial products and services, and has substantial power to define the rights of consumers and responsibilities of financial institutions. In addition, the CFPB has primary supervision and enforcement authority relating to these federal consumer financial laws and regulations over banks with assets of $10 billion or more. As noted above, as a depository institution with assets over $10 billion, LC Bank is subject to supervision and enforcement authority relating to federal consumer financial laws and regulations by the CFPB. Many consumer financial laws and regulations adopted or amended by the CFPB currently apply to us and, prior to the CFPB, the OCC supervised our compliance with respect to these laws and regulations.
If we fail to comply with these laws and regulations, we may be subject to significant penalties, judgments, other monetary or injunctive remedies, lawsuits (including putative class action lawsuits and actions by state and local attorneys general or other officials), customer rescission rights, supervisory or enforcement actions, and civil or criminal liability.
Anti-Money Laundering, Sanctions and Financial Crime
We are subject to a wide range of laws related to anti-money laundering (AML), anti-corruption, anti-bribery, economic sanctions and prevention of financial crime, including the Bank Secrecy Act, the USA PATRIOT Act and economic sanctions programs. We are required to, among other things, maintain an effective anti-money laundering and counter-terrorist compliance program, identify and file suspicious activity and currency transaction reports, and block or reject transactions with sanctioned persons or jurisdictions. Compliance with these laws requires significant investment of management attention and resources. These laws are enforced by a number of federal and state regulatory and enforcement authorities, including the FRB, OCC, Office of Foreign Assets Control, the Financial Crimes Enforcement Network, the U.S. Department of Justice, Drug Enforcement Administration, and Internal Revenue Service. Failure to comply with these laws, or to meet our regulators’ supervisory expectations in connection with these laws, could subject us to supervisory or enforcement action, significant financial penalties, criminal liability and/or reputational harm.
Third-Party Relationship Risk Management
We utilize third-party service providers to perform a wide range of operations and other functions, which may present various risks. Our regulators expect us to maintain an effective program for managing risk arising from third-party relationships, which should be commensurate with the level of risk and complexity of our business and our third-party relationships. If not managed effectively, the use of third-party service providers may expose us to risks that could result in regulatory action, financial loss, litigation, and reputational harm.
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Privacy, Information Technology and Cybersecurity
We are subject to various laws related to the privacy of consumer information. For example, the Company and its subsidiaries are required under federal law periodically to disclose to their retail clients the Company’s policies and practices with respect to the sharing of nonpublic client information with their affiliates and others, and the confidentiality and security of that information. In some cases, LC Bank must obtain a consumer’s consent before sharing information with an unaffiliated third party, and LC Bank must allow a consumer to opt out of LC Bank’s sharing of information with its affiliates for marketing and certain other purposes. We are also subject to laws and regulatory requirements related to information technology and cybersecurity. For example, the Federal Financial Institutions Examination Council (FFIEC), which is a council comprised of the primary federal banking regulators, has issued guidance and supervisory expectations for banking organizations with respect to information technology and cybersecurity. Our regulators regularly examine us for compliance with applicable laws and adherence to industry best practices with respect to these topics. For example, they will evaluate our security of user and customer credentials, business continuity planning, and the ability to identify and thwart cyber-attacks. The federal banking regulators have also implemented rules to require banks and their service providers to provide certain notification when certain cybersecurity incidents occur.
State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations. Recently, several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs and providing detailed requirements with respect to these programs, including data encryption requirements. Many states have also recently implemented or modified their data breach notification and data privacy requirements. For example, the California Privacy Rights Act of 2020 became fully operative on January 1, 2023. We expect this trend of state-level activity in those areas to continue and are monitoring developments in the states in which our customers are located.
Limitations on Transactions with Affiliates and Loans to Insiders
LC Bank is subject to restrictions on its ability to conduct transactions with affiliates and other related parties. For example, federal banking laws impose quantitative limits, qualitative requirements, and collateral standards on certain extensions of credit and other transactions by an insured depository institution with, or for the benefit of, its affiliates. In addition, most types of transactions by an insured depository institution with, or for the benefit of, an affiliate must be on terms substantially the same or at least as favorable to the insured depository institution as if the transaction were conducted with an unaffiliated third party. Federal banking laws also impose restrictions and procedural requirements in connection with the extension of credit by an insured depository institution to directors, executive officers, principal stockholders (including the Company) and their related interests. In addition, extensions of credit between an insured depository institution and its executive officers, directors, principal stockholders, and their related interests are also limited by federal law. The Sarbanes-Oxley Act generally prohibits loans by public companies to their executive officers and directors. However, there is a specific exception for loans by financial institutions, such as LC Bank, to its executive officers and directors that are made in compliance with federal banking laws.
Acquisition of a Significant Interest in the Company
Banking laws impose various regulatory requirements on parties that may seek to acquire a significant interest in the Company. For example, the Change in Bank Control Act of 1978 would generally require that any party file a formal notice with, and obtain non-objection of, the FRB prior to acquiring (directly or indirectly, whether alone or acting in concert with any other party) 10% or more of any class of voting securities of the Company. Further approval requirements and significant ongoing regulatory consequences would apply to any company that (directly or indirectly, whether alone or as part of an association with another company) seeks to acquire “control” of the Company or LC Bank for purposes of the BHCA. The determination whether a party “controls” a depository institution or its holding company for purposes of these laws is based on applicable regulations and all of the facts and circumstances surrounding the investment.
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Effect on Economic Environment
The policies of regulatory authorities, including the monetary policy of the FRB, have a significant effect on the operating results of bank holding companies and their subsidiaries. Among the means available to the FRB to affect the money supply are open market operations in U.S. government securities, changes in the discount rate on borrowings and changes in reserve requirements with respect to deposits. These means are used in varying combinations to influence overall growth and distribution of bank loans, investments and deposits, and their use may affect interest rates charged on loans or paid for deposits. The FRB monetary policies have materially affected the operating results of commercial banks in the past and are expected to continue to do so in the future. Although we conduct stress tests to measure and prepare for the impact of potential changes in monetary policy, we cannot predict with certainty the nature of future monetary policies and the effect of such policies on our business and earnings.
Issuing Bank Model
Prior to becoming a bank holding company and establishing LC Bank, our issuing bank for unsecured personal and auto refinance loans was WebBank, a Utah-chartered industrial bank. Our partner banks for education and patient finance loans were NBT Bank and Comenity Capital Bank. NBT Bank is subject to oversight by the OCC and was phased out as a partner in 2021. Comenity Capital Bank, which originates, owns and services its loans, is subject to oversight by the FDIC and the Utah Department of Financial Institutions, and continues to be a partner. These authorities impose obligations and restrictions on our activities and the loans facilitated through our lending marketplace through issuing and partner banks. With respect to the issuing bank model, there have been challenges to the ability of a bank to “export” interest rates permitted by the laws of the state where the bank is located. For more information, see “Item 1A. Risk Factors – Any challenge to or adverse consequence from our prior use of the issuing bank partnership model (or litigation or legislation aimed at thwarting certain transactions based on this model) may harm our business.”
Regulatory Examinations and Actions Relating to the Company’s Legacy Business
The Company is subject to examination for compliance with applicable laws and regulations in the states in which it is licensed. Prior to becoming a bank holding company and establishing LC Bank, the Company conducted its business as a non-bank entity and maintained various financial services licenses in numerous jurisdictions. Since establishing LC Bank, the vast majority of the Company’s business is conducted through LC Bank pursuant to the laws applicable to national banks. Accordingly, many state level regulations and licensing requirements no longer apply to the Company in part because: (i) it is a bank holding company operating a national bank and therefore subject to the purview of the federal banking regulations and regulators, and (ii) the Company has ceased certain types of operations that were unique to its legacy business model, such as the LendingClub Member Payment Dependent Notes (Retail Notes) program.
Therefore, the Company has returned, and may continue to return, certain state financial services licenses that were used for legacy business activities that have since been discontinued. Nevertheless, even after state financial services licenses are returned, the Company may continue to be subject to the regulation, supervision and enforcement of various state regulatory authorities with respect to legacy or residual activities. Furthermore, the Company continues to maintain certain state licenses, which continue to subject the Company to the regulation, supervision and enforcement of some state regulatory authorities.
For more information on how the regulatory environment, enforcement actions, findings and ratings could also have an impact on our strategies, the value of our assets, or otherwise adversely affect our business see “Item 1A. Risk Factors – Risks Related to Regulation, Supervision and Compliance.”
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Intellectual Property
To establish and protect our technology and intellectual property rights, we rely on a combination of copyright, trade secret and other rights, as well as confidentiality procedures, non-disclosure agreements with third parties, employee disclosure and invention assignment agreements, and other contractual rights. We are not dependent on any one patent, related group of patents, or any other single right to use intellectual property. Despite our efforts to protect our proprietary rights, third parties may, in an authorized or unauthorized manner, attempt to use, copy, or otherwise obtain and market or distribute our intellectual property rights or technology, or otherwise develop a product with the same functionality as our solution. In addition, our competitors may develop products that are similar to our technology. Policing all unauthorized use of our intellectual property rights is nearly impossible, and we cannot be certain that the steps we have taken or will take in the future will prevent misappropriations of our technology or intellectual property rights.
Human Capital
The Company and its consolidated subsidiaries had 1,075 employees as of December 31, 2025, all of whom were located in the United States. Our success depends, in large part, on our ability to recruit, develop, motivate, and retain employees with the skills to execute our long-term strategy. We participate in a competitive market for talent and aim to distinguish ourselves by offering our employees the opportunity to make a meaningful positive impact on the financial success of Americans in an innovative technology-oriented environment. We also offer competitive compensation and benefits. Our compensation programs consist primarily of base salary, annual corporate bonus opportunity, and long-term equity and cash awards. We periodically conduct pay equity surveys to ensure our compensation programs are applied equitably across our workforce. Our benefits programs consist of comprehensive health, dental, and welfare benefits, including a 401(k) matching program and standalone mental health coverage. Since 2022, we have adopted a hybrid in-office work model.
We strive to create a welcoming and empowering environment where our employees feel that they are reaching their full potential, are highly engaged and are doing what they do best every day to accomplish our mission and vision. We support our employees professionally through onboarding programs, on-the-job training, career development sessions and performance check-ins. We monitor employee satisfaction and engagement through semi-annual engagement surveys. Our employee experience has earned a number of external recognitions, including being named to Newsweek’s list of the most loved workplaces.
Diversity of background and experience are core to our corporate culture because, among other things, we believe a diversity of talent better reflects, and thereby better allows us to serve, our customer base. We have executive-sponsored leadership programs and resource groups for all employees, as well as an allyship program designed to provide all interested employees with mentorship opportunities designed to enhance community and inclusiveness within the workplace. We also maintain a Business Conduct and Ethics Policy, which, among other things, sets forth numerous policies designed to provide for a safe, ethical, respectful and compliant work environment.
Available Information
Our website address is www.lendingclub.com. At our investor relations website, ir.lendingclub.com, we make available free of charge the following information and capabilities:
•Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to these reports as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC;
•Press releases, including with respect to our quarterly earnings;
•Announcements of public conference calls and webcasts;
•Corporate governance information, including our certificate of incorporation, bylaws, governance guidelines, committee charters, business conduct and ethics policy, and other governance-related policies;
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LENDINGCLUB CORPORATION
•Other news and market data that we may post from time to time that investors might find useful or interesting; and
•Opportunity to sign up for email notifications.
In addition to announcing material financial information through our investor relations website, press releases, SEC filings, and public conference calls and webcasts, we also intend to use other online and social media channels, including our Resource Center (https://www.lendingclub.com/resource-center), X (formerly Twitter) handles (@LendingClub and @LendingClubIR) and Facebook page (https://www.facebook.com/LendingClubTeam) as a means of disclosing material non-public information and to comply with our disclosure obligations under Regulation FD.
The contents of the websites referred to above are not incorporated into this filing or in any other report or document on file with the SEC. Further, our references to the URLs for these websites are intended to be inactive textual references only.
The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.
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