LendingClub Corp
For the period ended Dec 31, 2024. Filed Feb 13, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 13, 2025
HAPN$15.96-1.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-16.
0001409970-24-000009
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-13.
0001409970-25-000009
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 153 previous paragraphs and 166 current paragraphs.
75 unchanged; 59 reworded; 29 added; 18 removed; 1 previous and 3 current paragraphs rearranged.
Tables are not compared: 28 previous and 32 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (29)
Current report
The following results for the year ended December 31, 2024, compared to thesame period in 2023, reflect growth in our Balance Sheet as well as an increase in net income.
Current report
◦Marketplace revenue: Marketplace revenue decreased $48.7 million, or 17%, for the year ended December 31, 2024 compared to the same period in 2023. The decrease was primarily due to a decrease in servicing fees due to lower loan balances serviced for others as well as a $7.7 million servicing asset write-off related to a loan portfolio purchase in the third quarter of 2024 of loans that we previously originated and sold. In addition, the decrease was also driven by an increased loss in net fair value adjustments due to the increase in the origination volume of marketplace loans, partially offset by higher loan sales prices.
Current report
•Net income: Net income increased $12.4 million, or 32%, for the year ended December 31, 2024 compared to the same period in 2023.
Current report
(3)Prior period amounts have been reclassified to conform to the current period presentation.
Current report
(4)The balance at December 31, 2024 includes a loan portfolio that was purchased with a $1.3 billion outstanding principal balance during the third quarter of 2024. This portfolio consisted of loans which we previously originated and sold.
Current report
(5)Calculated as ALLL or gross ALLL, where applicable, to the corresponding portfolio segment balance of loans and leases held for investment at amortized cost.
Current report
Origination fees were $283.4 million and $279.1 million for the years ended December 31, 2024 and 2023, respectively, an increase of 2%. The increase was primarily due to the increase in the origination volume of marketplace loans.
Current report
The following tables present the unpaid principal balance of the volume of marketplace loans sold, which is a key driver of our gain on sales revenue, during each of the periods set forth below:
Current report
Net fair value adjustments were $(154.7) million and $(134.1) million for the years ended December 31, 2024 and 2023, respectively, an increased loss of $20.5 million. The increased loss was primarily driven by the increase in the origination volume of marketplace loans. This was partially offset by higher loan sales prices compared to the prior year, resulting primarily from a decrease in interest rates.
Current report
Net fair value adjustments primarily consist of fair value adjustments on our loans HFS portfolio. See “Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 7. Fair Value Measurements” for additional information related to the significant unobservable inputs used in the fair value measurement of loans HFS and activity within the loans HFS portfolio.
Current report
Allowance for Credit Losses
Current report
The following table presents the components of the allowance for loan and lease losses:
Current report
(1)Calculated as ALLL or gross ALLL, where applicable, to total loans and leases held for investment at amortized cost.
Current report
Net Charge-Offs
Current report
The following table presents information regarding average loan and lease balances, net charge-offs and the ratio of net charge-offs to average outstanding loans and leases HFI at amortized cost, net, during the period:
Current report
Nonaccrual
Current report
Other non-interest expense decreased $4.0 million, or 7%, for the year ended December 31, 2024 compared to the same period in 2023. The decrease was primarily due to a decrease in miscellaneous operating expenses.
Current report
Reportable Segments
Current report
(1)Total net income from reportable segments reflects net income on a consolidated basis.
Current report
We believe ROTCE is an important measure because it reflects the Company's ability to generate income from its core assets. ROTCE is a non-GAAP financial measure calculated by dividing net income by the average tangible common equity for the applicable period.
Current report
The following table provides a reconciliation of ROTCE to the nearest GAAP measure:
Current report
The following table presents the actual capital amounts and ratios of the Company and LC Bank as well as the regulatory minimum and “well-capitalized” requirements (dollars in millions):
Current report
(1)Required minimums presented for risk-based capital ratios include the required capital conservation buffer of 2.5%.
Current report
(2)As of December 31, 2024 and 2023, the Company had $3.2 billion and $3.5 billion in loans pledged under the FRB Discount Window, respectively.
Current report
(3)As of December 31, 2024, the Company had$456.4 million in loans and $373.5 million in securities pledgedto the FHLB of Des Moines. As of December 31, 2023, the Company had $479.0 million in loans and $359.5 million in securities pledgedto the FHLB of Des Moines.
Current report
Deposits
Current report
Deposits represent an important source of funding for LC Bank. We offer deposit accounts to our members, which include both interest-bearing and noninterest-bearing deposits. As of December 31, 2024 and 2023, the amount of uninsured deposits totaled $1.2 billion and $0.9 billion, respectively, or 13% of total deposits as of both periods. Uninsured time deposits as of December 31, 2024, by remaining time to maturity, were as follows:
Current report
(1)Consist of certificates of deposit accounts that are in excess of the FDIC insurance limit of $250 thousand per account holder.
Current report
Capital Expenditures
Removed paragraphs (18)
Previous report
Despite the interest rate environment and broader economic volatility adversely impacting our business, predominantly through investor demand and pricing for marketplace loans, we have been able to sustain GAAP profitability as a result of our differentiated business model, strong execution, data advantage, and ongoing innovation. While we expect these headwinds to persist, we’re leveraging our Structured Certificates program to drive marketplace originations and managing the business prudently by aligning our expense base to current market conditions. Furthermore, we maintained strong liquidity and capital levels and delivered the following results, despite a challenging economic environment.
Previous report
In 2023, our total headcount decreased by 560 employees, or 35%, compared to the prior year, primarily due to the workforce reduction plans we implemented during the year to align our cost structure to our financial profile given the continued adverse impact of the evolving macroeconomic environment on our business.
Previous report
◦Marketplace revenue: Marketplace revenue decreased $392.1 million, or 57%, for the year ended December 31, 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in loan origination volume and lower loan sales prices resulting from a shift in investor demand from banks to asset managers.
Previous report
•Net income: Net income decreased $250.7 million, or 87%, for the year ended December 31, 2023 compared to the same period in 2022. Net income for the year ended December 31, 2022 included a $143.5 million income tax benefit related to the reversal of our valuation allowance against our deferred tax assets.
Previous report
•Cash and cash equivalents: Total cash and cash equivalents as of December 31, 2023 increased $195.5 million, or 18%, compared to the same period in 2022. The increase is primarily due to an increase in deposits.
Previous report
•Total equity: Total equity as of December 31, 2023 increased $87.5 million, or 8%, compared to the same period in 2022, primarily reflecting an increase in Additional Paid-In Capital resulting from Stock-Based Compensation expense and net income generated over the period.
Previous report
(1)Excludes loans held for investment at fair value, which primarily consists of a loan portfolio that was acquired at the end of 2022.
Previous report
Origination fees were $279.1 million and $499.2 million for the years ended December 31, 2023 and 2022, respectively, a decrease of 44%. The decrease was due to lower origination volume of marketplace loans. Loan origination volume of marketplace loans decreased to $5.3 billion for the year ended December 31, 2023 compared to $9.4 billion for the same period in 2022, a decrease of 44%, resulting from lower investor demand due to the rising interest rate environment.
Previous report
Net fair value adjustments were $(134.1) million and $8.5 million for the years ended December 31, 2023 and 2022, respectively, an increased loss of $142.6 million. The change to a loss from a gain was primarily due to lower loan sale prices.
Previous report
Other Non-interest Income
Previous report
Other non-interest income primarily consists of referral revenue that relates to fees earned from third-party companies when customers referred by us consider or purchase products or services from such third-party companies. The tables below illustrate the composition of other non-interest income for each period presented:
Previous report
(2) The average yield/rate for unsecured consumer loans decreased in 2023 compared to 2022 due to a shift in the mix toward higher credit quality loans, which generally have lower interest rates. The average yield/rate for interest-bearing deposits increased due to a higher federal funds rate and an increasing concentration of online deposits. We expect pressure on net interest margin to continue during 2024.
Previous report
(1) Excluding PPP loans, there were no loans that were 90 days or more past due and accruing as of both December 31, 2023 and 2022.
Previous report
Other non-interest expense decreased $6.9 million, or 11%, for the year ended December 31, 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in consumer credit services.
Previous report
(1)Because the LendingClub Bank reportable segment was formed upon the Acquisition on February 1, 2021, the associated results are presented for the eleven month period ended December 31, 2021.
Previous report
The following table summarizes the Company’s and LC Bank’s regulatory capital amounts (in millions) and ratios:
Previous report
(2)Includes both loans and securities available for sale pledged as collateral.
Previous report
(3)LC Bank’s available borrowing capacity under the FRB Discount Window increased upon including its unsecured personal loan portfolio among the loans pledged as collateral beginning in the second quarter of 2023.
Reworded paragraphs (59)
Previous wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes that appear in this Annual Report. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and in this Annual Report, particularly in “Part I – Item 1A. Risk Factors.”
Current wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes that appear in this Annual Report. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and in this Annual Report, particularly in “Part I – Item 1A. Risk Factors.” The forward-looking statements included in this Report are made only as of the date hereof and 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.
Previous wording
LendingClub was founded in 2006 and brought a traditional credit product – the installment loan – into the digital age by leveraging technology, data science, and a unique marketplace model. In February 2021, LendingClub completed the acquisition of Radius, becoming a bank holding company and forming LC Bank as its wholly-owned subsidiary. LendingClub now operates a leading digital marketplace bank and is one of a small number of fintech companies with a national bank charter. We are building a new of kind of bank, one that aims to advantage our members with the information, tools, and guidance they need to achieve their own version of financial success. We do this by leveraging data and technology to increase access to credit, lower borrowing costs, and improve the return on savings – all through a smart, simple, and rewarding digital experience.
Current wording
LendingClub operates a leading, nationally chartered, digital marketplace bank that aims to advantage our members with the information, tools, and guidance needed to achieve their own version of financial success. We do this through a smart, simple, and rewarding digital experience that leverages data and technology to increase access to credit, lower borrowing costs, and improve returns on savings.
Previous wording
•Loan originations: Loan originations decreased $5.7 billion, or 43%, for the year ended December 31, 2023 compared to the same period in 2022. The decrease was primarily driven by a decrease in unsecured personal loan origination volume. We attribute the decrease in volume and investor demand to the rising interest rate environment.
Current wording
•Loan originations: Loan originations decreased $0.2 billion, or 3%, for the year ended December 31, 2024 compared to the same period in 2023. The decrease was primarily driven by a decrease in unsecured personal loan origination volume.
Previous wording
◦Loan originations held for investment (HFI) at amortized cost decreased $1.5 billion, or 41%, for the year ended December 31, 2023 compared to the prior year.
Current wording
◦Loan originations held for investment (HFI) at amortized cost decreased $0.4 billion, or 21%, for the year ended December 31, 2024 compared to the prior year.
Previous wording
◦Loan originations HFI at amortized cost as a percentage of loan originations was 29% and 28% for the years ended December 31, 2023 and 2022, respectively. The percentage of loan originations HFI in any period is dependent on many factors, including quarterly loan origination volume, risk-adjusted returns, liquidity and general regulatory capital considerations. We expect this percentage to decrease in the near-term due to a shift in the mix toward retaining lower-risk securities associated with our Structured Certificates.
Current wording
◦Loan originations HFI at amortized cost as a percentage of loan originations was 24% and 29% for the years ended December 31, 2024 and 2023, respectively. The percentage of loan originations HFI in any period is dependent on many factors, including quarterly loan origination volume, risk-adjusted returns, liquidity and general regulatory capital considerations.
Previous wording
•Total net revenue: Total net revenue decreased $322.6 million, or 27%, for the year ended December 31, 2023 compared to the same period in 2022.
Current wording
•Total net revenue: Total net revenue decreased $77.6 million, or 9.0%, for the year ended December 31, 2024 compared to the same period in 2023.
Previous wording
◦Net interest income: Net interest income increased $87.0 million, or 18%, for the year ended December 31, 2023 compared to the same period in 2022. The increase was primarily driven byhigher interest income due to a higher average balance of loans retained as HFI in the current period, a higher average balance of securities retained associated with our Structured Certificatesand higher interest rates earned oncash and cash equivalents, partially offset by higher interest rates paid on a higher average balance of deposits.
Current wording
◦Net interest income: Net interest income decreased $27.8 million, or 5%, for the year ended December 31, 2024 compared to the same period in 2023. The decrease was primarily driven bylower interest income due to a lower average balance of loans retained as HFI in the current period. In addition, the decrease was also driven byan increase in interest expense associated with growth in interest-bearing deposits and an increase in interest rates. This was partially offset byhigher interest income due to a higher average balance of securities retained associated with our Structured Certificates and a higher average balance of loans held for sale (HFS).
Previous wording
◦Net interest margin: Net interest margin for the year ended December 31, 2023 was 7.0%, decreasing from 8.2% in the prior year.
Current wording
◦Net interest margin: Net interest margin for the year ended December 31, 2024 was 5.6%, decreasing from 7.0% in the prior year.
Previous wording
•Provision for credit losses: Provision for credit losses decreased $23.8 million, or 9%, for the year ended December 31, 2023 compared to the same period in 2022. The decrease was primarily due to lower volume of originated loans retained as HFI at amortized cost and the related initial provision for credit losses, partially offset by an increase in quantitative and qualitative allowance due to an increase in expected losses and a less favorable economic outlook.
Current wording
•Provision for credit losses: Provision for credit losses decreased $65.3 million, or 27%, for the year ended December 31, 2024 compared to the same period in 2023. The decrease was primarily driven by a decrease in the initial provision for credit losses from a lower volume of originated loans retained as HFI at amortized cost. In addition, the provision for credit losses in 2023 included a higher quantitative and qualitative allowance as a result of an increase in expected losses and a less favorable economic outlook. The year over year decrease was partially offset by the impact of a $8.0 million provision in our Commercial Real Estate (CRE) portfolio due to one legacy office loan, which was recognized in 2024. Excluding this one office loan, the CRE office loan portfolio balance was under $35 million as of December 31, 2024.
Previous wording
•Total non-interest expense: Total non-interest expense decreased $200.4 million, or 26%, for the year ended December 31, 2023 compared to the same period in 2022. The decrease was primarily driven by a decrease in variable marketing expenses based on lower origination volume and prudent management of expenses and a decrease in compensation expense due to a decrease in headcount as a result of the workforce reduction plans we implemented in January and October 2023.
Current wording
•Total non-interest expense: Total non-interest expense decreased $22.8, or 4%, for the year ended December 31, 2024 compared to the same period in 2023. The decrease was primarily due to a decrease in headcount as a result of the workforce reduction plans we implemented in 2023.
Previous wording
•Diluted Earnings Per Share (EPS): Diluted EPS was $0.36 for the year ended December 31, 2023, compared to $2.79 in the prior year. Diluted EPS for the year ended December 31, 2022 included a $1.38 per share benefit from the deferred tax valuation allowance reversal.
Current wording
•Diluted earnings per share (Diluted EPS): Diluted EPS was $0.45 for the year ended December 31, 2024, compared to $0.36 in the prior year.
Previous wording
•Pre-provision net revenue (PPNR): PPNR for the year ended December 31, 2023 decreased $122.2 million, or 29%, compared to the same period in 2022.
Current wording
•Pre-provision net revenue (PPNR): PPNR for the year ended December 31, 2024 decreased $54.8 million, or 18%, compared to the same period in 2023.
Previous wording
•Total assets: Total assets as of December 31, 2023 increased $847.7 million, or 11%, compared to the prior year, primarily reflecting growth in securities related to our Structured Certificates, growth in loans held for sale (HFS) related to our extended seasoning program and an increase in cash and cash equivalents due to the growth in deposits. This increase was partially offset by a decrease in loans retained as HFI.
Current wording
•Total assets: Total assets as of December 31, 2024 increased $1.8 billion, or 20%, compared to the prior year, primarily reflecting growth in securities related to our Structured Certificates program and loans held for investment at fair value, including the purchase of a $1.3 billion outstanding principal balance loan portfolio during the third quarter of 2024. This portfolio consisted of loans that we previously originated and sold. This increase was partially offset by a decrease in loans retained as HFI.
Previous wording
•Total deposits: Total deposits as of December 31, 2023 increased $940.9 million, or 15%, compared to the same period in 2022, primarily due to an increase in customer certificates of deposit. Federal Deposit Insurance Corporation (FDIC)-insured deposits represented approximately 87% of total deposits as of December 31, 2023.
Current wording
•Deposits: Total deposits as of December 31, 2024 increased $1.7 billion, or 24%, compared to the same period in 2023, primarily reflecting growth in our high-yield savings and certificates of deposit. Federal Deposit Insurance Corporation (FDIC)-insured deposits represent approximately 87% of total deposits as of December 31, 2024.
Previous wording
The above summary should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations in its entirety. For additional discussion related to our operating segments, see “Segment Information.”
Current wording
The above summary should be read in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations in its entirety. For additional discussion related to our operating segments, see “Segment Information.”
Previous wording
(5) Assets under management (AUM) reflects loans serviced on our platform, which includes outstanding balances of unsecured personal loans, auto refinance loans and education and patient finance loans serviced for others and retained for investment by the Company.
Current wording
(5) Assets under management (AUM) reflects loans serviced on our platform, which includes outstanding balances of unsecured personal loans, auto refinance loans and education and patient finance loans serviced for others and retained by the Company.
Previous wording
(1)Comprised of $355.8 million, $340.4 million and $145.2 million in allowance for future estimated net charge-offs on existing portfolio balances, net of a negative allowance of $45.4 million, $12.5 million and $0.8 million for expected recoveries of amounts previously charged-off as of December 31, 2023, 2022 and 2021, respectively.
Current wording
(2)Represents the negative allowance for expected recoveries of amounts previously charged-off.
Previous wording
(2)Calculated as net charge-offs divided by average outstanding loans and leases HFI at amortized cost during the period, excluding PPP loans.
Current wording
(6)Calculated as annualized net charge-offs divided by average outstanding loans and leases HFI at amortized cost, net, during the period.
Previous wording
We elected to account for HFS loans under the fair value option. With the election of the fair value option, origination fees, net fair value adjustments prior to sale of the loans, and servicing asset gains on the sales of the loans, are reported as separate components of “Marketplace revenue.”
Current wording
We elected to account for HFS loans under the fair value option. With the election of the fair value option, origination fees, net fair value adjustments prior to sale of the loans, and servicing asset gains on the sales of the loans, are reported as separate components within “Marketplace revenue.”
Previous wording
Origination fees recorded as a component of marketplace revenue are primarily fees earned related to originating and issuing unsecured personal loans that are held for sale.
Current wording
Origination fees recorded as a component of marketplace revenue are primarily fees earned related to originating and issuing unsecured personal loans that are HFS.
Previous wording
The table below illustrates AUM serviced on our platform by the method in which the loans were financed as of the periods presented. Loans sold and subsequently serviced on behalf of the investor represent a key driver of our servicing fee revenue.
Current wording
The tables below illustrate AUM serviced on our platform by the method in which the loans were financed as of the periods presented. Loans sold and subsequently serviced on behalf of the investor represent a key driver of our servicing fee revenue.
Previous wording
In addition to the loans serviced on our marketplace platform, we serviced $133.2 million, $167.0 million and $214.0 million in outstanding principal balance of commercial loans sold as of December 31, 2023, 2022 and 2021, respectively.
Current wording
In addition to the loans serviced on our marketplace platform, we serviced $102.0 million, $133.2 million and $167.0 million in outstanding principal balance of commercial loans sold as of December 31, 2024, 2023 and 2022, respectively.
Previous wording
Servicing fees were $98.6 million and $80.6 million for the years ended December 31, 2023 and 2022, respectively, an increase of 22%. This was primarily due to a one-time benefit related to recouping volume-based purchase incentives and an increase in the fair value of the servicing asset based on higher expected servicing fee revenue, partially offset by a decrease in loan balances serviced for others.
Current wording
Servicing fees were $64.9 million and $98.6 million for the years ended December 31, 2024 and 2023, respectively, a decrease of 34%. The decrease was primarily due to a decrease in loan balances serviced for others as well as a $7.7 million servicing asset write-off related to the loan portfolio purchase during the third quarter of 2024 of loans that we previously originated and sold. In addition, the decrease was also driven by a one-time benefit related to recouping volume-based purchase incentives during the third quarter of 2023 as well as an increase in the fair value of the servicing asset based on higher expected servicing fee revenue in 2023.
Previous wording
Gain on sales of loans was $47.8 million and $95.3 million for the years ended December 31, 2023 and 2022, respectively, a decrease of 50%. The decrease was primarily due to a decrease in the volume of marketplace loans sold.
Current wording
Gain on sales of loans was $49.1 million and $47.8 million for the years ended December 31, 2024 and 2023, respectively, an increase of 3%. The increase was primarily due to a decrease in the volume of loans sold with credit support agreements compared to the prior year.
Previous wording
We record fair value adjustments on loans that are recorded at fair value, including gains or losses from sale prices in excess of or less than the loan principal amount sold.
Current wording
We record fair value adjustments on loans that are recorded at fair value, which include gains or losses from sale prices in excess of or less than the loan principal amount sold and realized net charge-offs. In addition, as loans are held on the Balance Sheet, incremental fair value adjustments on the loans are recorded in “Net fair value adjustments” within “Marketplace revenue,” whereas the associated interest income is recorded within “Net interest income.”
Previous wording
An analysis of the year-over-year changes in the categories of interest income and interest expense resulting from changes in volume and rate is as follows:
Current wording
An analysis of the year-over-year changes in the categories of interest revenue and interest expense resulting from changes in volume and rate is as follows:
Previous wording
The allowance for loan and lease losses (ALLL) for lifetime expected losses under CECL on HFI loans and leases at amortized cost is initially recognized as “Provision for credit losses” at the time of origination. The ALLL is estimated using a discounted cash flow (DCF) approach, where effective interest rates are used to calculate the net present value (NPV) of expected cash flows. Theeffective interest rates are calculated based on the periodic interest income received from the loan’s contractual cash flows and the net investment in the loan, which includes deferred origination fees and costs, to provide a constant rate of return over the loan term. The NPV from the DCF approach is then compared to the amortized cost basis of the loans and leases to derive expected credit losses. Under the DCF approach, the provision for credit losses in subsequent periods includes a credit loss expense relating to the discounting effect due to the passage of time after the initial recognition of ALLL on originated HFI loans at amortized cost.
Current wording
The allowance for loan and lease losses (ALLL) for lifetime expected losses under CECL on HFI loans and leases at amortized cost is initially recognized as “Provision for credit losses” at the time of origination. The ALLL is estimated using a discounted cash flow (DCF) approach, where effective interest rates are used to calculate the net present value (NPV) of expected cash flows. Theeffective interest rates are calculated based on the periodic interest income received from the loan’s contractual cash flows and the net investment in the loan, which includes deferred origination fees and costs, to provide a constant rate of return over the loan term. The NPV from the DCF approach is then compared to the amortized cost basis of the loans and leases to derive expected credit losses. Under the DCF approach, the provision for credit losses in subsequent periods includes a credit loss expense related to the discounting effect due to the passage of time after the initial recognition of ALLL on originated HFI loans at amortized cost.
Previous wording
The provision for credit losses was $243.6 million and $267.3 million for the year ended December 31, 2023 and 2022, respectively, a decrease of 9%. The decrease was primarily due to the lower volume of originated loans retained as HFI at amortized cost and the related initial provision for credit losses, partially offset by an increase in quantitative and qualitative allowance due to an increase in expected losses and a less favorable economic outlook.
Current wording
The provision for credit losses was $178.3 million and $243.6 million for the years ended December 31, 2024 and 2023, respectively, a decrease of 27%. The decrease was primarily driven by a decrease in the initial provision for credit losses from a lower volume of originated loans retained as HFI at amortized cost. In addition, the provision for credit losses in 2023 included a higher quantitative and qualitative allowance as a result of an increase in expected losses and a less favorable economic outlook. The year over year decrease was partially offset by the impact of a $8.0 million provision in our CRE portfolio due to one legacy office loan, which was recognized in 2024. Excluding this one loan, the CRE office loan portfolio balance was under $35 million as of December 31, 2024.
Previous wording
(2)Relates to $78.1 million, $138.0 million and $110.8 million of unfunded commitments as of December 31, 2023, 2022 and 2021, respectively.
Current wording
(1)Relates to $105.0 million, $78.1 million and $138.0 million of unfunded commitments as of December 31, 2024, 2023 and 2022, respectively.
Previous wording
Loans and leases are generally placed on nonaccrual status when contractually past due 90 days or more, or earlier if management believes that the probability of collection does not warrant further accrual. Unsecured personal loans are charged-off no later than 120 days past due. The following table presents nonaccrual loans and leases(1):
Current wording
Loans and leases are generally placed on nonaccrual status when contractually past due 90 days or more, or earlier if management believes that the probability of collection does not warrant further accrual. Unsecured personal loans are generally charged-off no later than 120 days past due.
Previous wording
Compensation and benefits expense decreased $77.4 million, or 23%, for the year ended December 31, 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in headcount as a result of the workforce reduction plans we implemented in January and October of 2023.
Current wording
Compensation and benefits expense decreased $29.8 million, or 11%, for the year ended December 31, 2024 compared to the same period in 2023. The decrease was primarily due to a decrease in headcount as a result of the workforce reduction plans we implemented in 2023.
Previous wording
Marketing expense decreased $103.9 million, or 53%, for the year ended December 31, 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in variable marketing expenses based on lower origination volume.
Current wording
Marketing expense increased $6.6 million, or 7%, for the year ended December 31, 2024 compared to the same period in 2023. The increase was primarily due to an increase in variable marketing expenses based on higher origination volume of marketplace loans.
Previous wording
Equipment and software expense increased $4.3 million, or 9%, for the year ended December 31, 2023 compared to the same period in 2022. The increase was primarily due to an increase in subscription costs and hosting fees, partially offset by a decrease in support and maintenance expense.
Current wording
Equipment and software expense decreased $2.3 million, or 4%, for the year ended December 31, 2024 compared to the same period in 2023. The decrease was primarily due to a decrease in software license expense.
Previous wording
Depreciation and amortization expense increased $3.4 million, or 8%, for the year ended December 31, 2023 compared to the same period in 2022. The increase was primarily due to an increase in the amortization of internally-developed software and purchased software.
Current wording
Depreciation and amortization expense increased $11.6 million, or 25%, for the year ended December 31, 2024 compared to the same period in 2023. The increase was primarily due to an increase in the amortization of internally-developed software as well as a $5.5 million impairment expense for internally-developed software recorded in 2024.
Previous wording
Professional services expense decreased $15.3 million, or 30%, for the year ended December 31, 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in consulting fees.
Current wording
Professional services expense decreased $3.1 million, or 9%, for the year ended December 31, 2024 compared to the same period in 2023. The decrease was primarily due to a decrease in consulting fees.
Previous wording
Occupancy expense decreased $4.4 million, or 20%, for the year ended December 31, 2023 compared to the same period in 2022. The decrease was primarily due to a decrease in rent expense.
Current wording
Occupancy expense decreased $1.7 million, or 10%, for the year ended December 31, 2024 compared to the same period in 2023. The decrease was primarily due to a decrease in rent expense.
Previous wording
For the year ended December 31, 2023, we recorded an income tax expense of $15.7 million. The effective tax rate differs from the statutory rate due to the impact of state taxes, the favorable impact of recurring items such as tax credits, the unfavorable impact of the non-deductible portions of executive compensation and stock-based compensation, and the change in unrecognized tax benefits. For the year ended December 31, 2022, we recorded an income tax benefit of $136.6 million primarily due to the release of a $175.6 million valuation allowance against our deferred tax assets, of which $143.5 million was primarily based on our reassessment of the future realizability of our deferred tax assets. For the year ended December 31, 2021, we recorded an income tax benefit of $136 thousand primarily related to a tax benefit associated with the Acquisition, partially offset by income tax expense for state jurisdictions that limit net operating loss carryforward utilization.
Current wording
For the years ended December 31, 2024 and 2023, we recorded an income tax expense of $13.7 million and $15.7 million, representing an effective tax rate of 21.1% and 28.7%, respectively. The effective tax rate for the year ended December 31, 2024 differs from the statutory rate due to the favorable impact of recurring tax credits and the unfavorable impact of the non-deductible portions of executive compensation and stock-based compensation. The decrease in effective tax rate for the year ended December 31, 2024 compared to the same period in 2023 was primarily due to a decrease in the unfavorable impact of the non-deductible portions of executive compensation and stock-based compensation. For the year ended December 31, 2022, we recorded an income tax benefit of $136.6 million primarily due to the release of a $175.6 million valuation allowance against our deferred tax assets, of which $143.5 million was primarily based on our reassessment of the future realizability of our deferred tax assets.
Previous wording
As of December 31, 2023, we maintained a valuation allowance of $46.1 million related to certain state net operating loss carryforwards (NOLs) and state tax credit carryforwards. The realization and timing of any remaining state NOLs and state tax credit carryforwards is uncertain and may expire before being utilized, based primarily on the allocation of taxable income constraints to the Parent and not related to the earnings of the Company. Changes to deferred tax asset valuation allowances and liabilities related to uncertain tax positions are recorded as current period income tax expense or benefit.
Current wording
As of December 31, 2024, we maintained a valuation allowance of $46.3 million related to certain state net operating loss carryforwards (NOLs) and state tax credit carryforwards. The realization and timing of any remaining state NOLs and state tax credit carryforwards is uncertain and may expire before being utilized, based primarily on the allocation of taxable income constraints to the Parent and not related to the earnings of the Company. Changes to deferred tax asset valuation allowances and liabilities related to uncertain tax positions are recorded as current period income tax expense or benefit.
Previous wording
The Company defines operating segments to be components of the Company for which discrete financial information is evaluated regularly by the Company’s Chief Executive Officer and Chief Financial Officer to allocate resources and evaluate financial performance. This information is reviewed according to the legal organizational structure of the Company’s operations with products and services presented separately for the parent bank holding company and its wholly-owned subsidiary, LC Bank.
Current wording
The Company defines operating segments to be components of the Company for which discrete financial information is evaluated regularly by the Chief Operating Decision Maker (CODM) to allocate resources and evaluate financial performance. The measure of segment profit used by the CODM in this evaluation is net income. The CODM consists of the Company’s Chief Executive Officer and Chief Financial Officer. This information is reviewed according to the legal organizational structure of the Company’s operations with products and services presented separately for the parent bank holding company and its wholly-owned subsidiary, LC Bank, which are both considered reportable segments. Income taxes are recorded on a separate entity basis whereby each operating segment determines income tax expense or benefit as if it filed a separate tax return.
Previous wording
The LC Bank operating segment represents the national bank legal entity and reflects post-Acquisition operating activities. This segment provides a full complement of financial products and solutions, including loans, leases and deposits. It originates loans to individuals and businesses, retains loans for investment, sells loans to investors and manages relationships with deposit holders.
Current wording
The LC Bank operating segment represents the national bank legal entity and reflects operating activities after its formation. This segment provides a full complement of financial products and solutions, including loans and deposits. It originates loans to individuals and businesses, retains loans for investment, sells loans to investors and manages relationships with deposit holders.
Showing the first 40 of 59 pairs. Open the source sections for the rest.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
(1) Includes unsecured personal loans and auto loans only.
Current report — wording carried from elsewhere
(2)Represents a negative allowance for expected recoveries of amounts previously charged-off.
Current report — wording carried from elsewhere
The following table presents nonaccrual loans and leases:
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
(1) Calculated as net charge-offs divided by average outstanding loans and leases held for investment during the period, excluding PPP loans.