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LENDINGCLUB CORP - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations(Edgar Glimpses Via Acquire Media NewsEdge) The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Report. In addition to historical information, this Report contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the following "Management's Discussion and Analysis of Financial Condition and Results of Operations" as well as in Part II Item 1A, "Risk Factors." Actual results could differ materially. Important factors that could cause actual results to differ materially include, but are not limited to; the level of demand for our products and services; the intensity of competition; our ability to effectively expand and improve internal infrastructure; maintenance of positive cash flows from operations, and adverse financial, customer and employee consequences that might result to us if litigation were to be initiated and resolved in an adverse manner to us. Readers are cautioned not to place undue reliance on the forward-looking statements, including statements regarding our expectations, beliefs, intentions or strategies regarding the future, which speak only as of the date of this Report. We assume no obligation to update these forward-looking statements. Overview We are an online marketplace that facilitates loans to qualified borrowers and investments from qualified investors. We were incorporated in Delaware in October 2006, and in May 2007, we began operations. We expanded our operations in August 2007 with the launch of our public website, www.lendingclub.com. Pursuant to a prospectus that describes a public offering of Member Payment Dependent Notes ("Notes"), self-directed investors have the opportunity to purchase, directly on our website, Notes issued by us, with each series of Notes corresponding to an individual Member Loan facilitated through our platform. The Notes are unsecured, are dependent for payment on the related Member Loan and offer interest rates and credit characteristics that the investors find attractive. In addition to the public offering, we offer private placements to accredited investors and qualified purchasers. These private placements are managed by the Company's wholly-owned subsidiary, LC Advisors, LLC ("LCA"), a registered investment adviser that acts as the general partner for certain private funds (the "Funds") and separately managed accounts ("SMAs"). The Company established LC Trust I ("Trust"), a Delaware business trust in February 2011 to acquire and hold Member Loans for the sole benefit of investors that purchase through Trust Certificates ("Certificates") issued by the Trust and which are related to the underlying Member Loans. The Funds each purchase a Certificate from the Trust and the Trust uses these proceeds to acquire and hold Member Loans for the sole benefit of the Certificate holder. The Certificates can only be settled with cash flows from the underlying Member Loans and Certificate holder does not have recourse to the general credit or other assets of the Trust, Company, borrower members or other investors. We aim to use technology and a more efficient funding process to lower costs so we may provide borrower members with rates that are generally lower, on average, than the rates they obtain from unsecured credit provided through credit cards or traditional banks, and offer interest rates to investors that they find attractive. Our customer acquisition process, registration, underwriting, processing and payment systems are highly automated and electronic. We encourage the use of electronic payments as the preferred means to disburse member loan proceeds, receive payments on outstanding Member Loans, receive funds from investor members, and to disburse payments to applicable investors. We have no physical branches for loan application or payment-taking activities. All Member Loans are unsecured obligations of individual borrower members with fixed interest rates, three-year or five-year maturities, minimum amounts of $1,000 and maximum amounts up to $35,000. The Member Loans are posted on our website pursuant to a program agreement with WebBank, an FDIC-insured, state-chartered industrial bank organized under the laws of the state of Utah, approved loans are funded and issued by WebBank and sold to us after closing. As a part of operating our platform, we verify the identity of members, obtain borrower members' credit characteristics from consumer reporting agencies such as TransUnion, Experian or Equifax and screen borrower members for eligibility to participate in the platform and facilitate the posting of Member Loans. Also, after acquiring the Member Loans from WebBank, we service the Member Loans on an ongoing basis. As of March 31, 2013, the platform facilitated 118,608 Member Loans totaling approximately $1.5 billion since the platform's inception. Our agreement with WebBank enables us to make our platform available to borrower members on a uniform basis nationwide, except that as of March 31, 2013, we do not currently offer Member Loans in Idaho, Indiana, Iowa, Maine, Mississippi, Nebraska and North Dakota. We pay WebBank a monthly service fee based on the amount of loans issued by WebBank in each month, subject to a minimum monthly fee. To date, we have funded our operations primarily with proceeds from our debt financing, preferred stock issuances and common stock issuances and now with the operations of the Company, which are described under "Liquidity and Capital Resources" in our "Management's Discussion and Analysis of Financial Condition and Results of Operations". From inception of the Company through March 31, 2013, we have raised approximately $102.5 million (net) through preferred equity financings. 22 -------------------------------------------------------------------------------- Table of Contents We have incurred net losses since our inception through December 31, 2012. Our net income was $40,000 for the three months ended March 31, 2013. For the three months ended March 31, 2013, we were cash-flow positive on an operating basis. We expect that will continue operating at or near breakeven during the remainder of 2013. If our assumptions regarding continued growth and operating plan are incorrect, we may need to slow our investment spending, which could slow our rate of growth or ability to continue operating on a cash-flow positive basis, and our current liquidity resources may be consumed. We earn revenues from fees, primarily loan fees charged to borrower members, investor servicing fees and management fees charged by LCA. We expect that the number of borrower and investor members and the volume of Member Loans facilitated through our platform will continue to increase, and that we will generate increased revenue from these fees. Significant Accounting Policies and Estimates The preparation of our consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires us to make judgments, assumptions, and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. We believe that the judgments, assumptions and estimates upon which we rely are reasonable based upon information available to us at the time that these judgments, assumptions and estimates are made. However, any differences between these judgments, assumptions and estimates and actual results could have a material impact on our statement of operations and financial condition. The accounting policies which are more fully described in Note 2 to our consolidated financial statements reflect our most significant judgments, assumptions and estimates and which we believe are critical in understanding and evaluating our reported financial results include: (1) revenue recognition; (2) fair value determination; (3) share-based compensation; and (4) provision for income taxes, net of valuation allowances for deferred tax assets. These estimates and assumptions are inherently subjective in nature, actual results may differ from these estimates and assumptions, and the differences could be material. Member Loans at Fair Value We have elected fair value accounting for the vast majority of Member Loans facilitated through the platform since October 13, 2008, including all Member Loans originated since October 1, 2011, and all related Notes and Certificates. The fair value election for these Member Loans, Notes and Certificates allows symmetrical accounting for the timing and amounts recognized for both expected unrealized losses and realized losses on the Member Loans and the related Notes and Certificates, consistent with the member payment dependent design of the Notes and Certificates. All of our Member Loans are unsecured but the gross potential credit risk to the Company from Member Loans is significantly mitigated to the extent that loans are financed by Notes or Certificates that absorb the loans' credit losses pursuant to the member payment dependency provision. Absent the fair value elections for both Member Loans and the related Notes and Certificates, Member Loans held for investment would be accounted for at amortized cost and would record loan loss provisions for estimated expected losses, but the related Notes and Certificates also accounted for at amortized cost would recognize the losses passed-through by the related loans only when and in amounts of the loans actually charged-off, thereby resulting in a mismatch in the timing and amounts of loss recognition between a Member Loan and related Notes and Certificates, which is not an appropriate representation for instruments that are designed to have linked cash flows and loss realization. The loan origination fees for Member Loans at fair value are recognized as a component of non-interest revenue at the time of the loan origination. The costs to originate Member Loans at fair value are recognized in operating expenses as incurred. Interest income on Member Loans at fair value is recorded as earned. When we receive payments of principal and interest on Member Loans, we remit principal and interest payments on related Notes and/or Certificates, net of any applicable servicing fee on the payments received on the Member Loans at fair value. The principal payments reduce the carrying values of both the Member Loans at fair value and the related Notes and Certificates. Servicing fees withheld from payments made to Note investors are recorded as a component of non-interest revenue when received. Management fees from Certificate investors are recognized as a component of non-interest revenue when earned. We include in earnings the estimated unrealized fair value gains or losses during the period of Member Loans at fair value, and the offsetting estimated fair value losses or gains attributable to the expected changes in future payments on Notes and Certificates. At March 31, 2013, we estimated the fair values of Member Loans at fair value and their related Notes and Certificates using a discounted cash flow valuation methodology. The estimated fair values of Member Loans are computed by projecting the future contractual cash flows to be received on the loans, adjusting those cash flows for our expectations of prepayments (if significant), defaults and losses over the life of the loans, and expected net recoveries, if any. We then discount those projected net cash flows to a 23-------------------------------------------------------------------------------- Table of Contents present value, which is the estimated fair value. Our expectation of future defaults and losses on loans is based on analyses of actual defaults and losses that occurred on the various credit grades of Member Loans over the past several years. The expected net recovery reflects the actual historical recovery experience for the various types of defaulted loans and the contractual arrangements with collection agencies. The discount rates for the projected net cash flows of the Member Loans are our estimates of the rates of return that investors in unsecured consumer credit obligations would require when investing in the various credit grades of Member Loans. Our obligation to pay principal and interest on any Note and Certificate is equal to the pro-rata portion of the payments, if any, received on the related Member Loan at fair value, net of any applicable servicing fee. The gross effective interest rate associated with a Note or a Certificate is the same as the interest rate earned on the related Member Loan at fair value. At March 31, 2013, the discounted cash flow methodology used to estimate the Notes' and Certificates' fair values uses the same projected net cash flows as their related Member Loans. The discount rates for the projected net cash flows of the Notes and Certificates are our estimates of the rates of return, including any applicable risk premiums, if significant, that investors in unsecured consumer credit obligations would require when investing in Notes issued by LendingClub or Certificates issued by the Trust, with cash flows dependent on specific credit grades of Member Loans. For additional discussion on this topic, including the adjustments to the estimated fair values of Loans at fair value and Notes at fair value as of March 31, 2013, as discussed above, see Results of Operations and Note 4 - Member Loans at Fair Value and Notes and Certificates at Fair Value. Results of Operations Revenues Our business model consists primarily of charging fees to both borrower members and investor members for transactions through or related to our platform. During the three months ended March 31, 2013 and 2012, we facilitated $352.9 million and $109.6 million of loans, respectively, on our platform. Upon issuance of a loan, WebBank pays a fee to us for providing the service of arranging the Member Loan. The loan origination fee charged to each borrower member is determined by the term and credit grade of that borrower member's loan and as of March 31, 2013 and 2012 ranged from 1.11% to 5.00% of the aggregate Member Loan amount. The loan origination fees are included in the annual percentage rate calculation provided to the borrower member and is subtracted from the gross loan proceeds prior to disbursement of the loan funds to the borrower member. Investor members that purchase Notes pay servicing fees to us on the payments for the related Member Loans and maintaining account portfolios. We charge other investors that invest through the Trust a monthly management fee that is based on their account balances. These management fees, which are charged in lieu of servicing fees on the payments for principal, interest and late fees and are recorded in other revenue. Non-Interest Revenue The following table summarizes the components of non-interest revenue for the three months ended March 31, 2013 and 2012 (in thousands): Three Months Ended March 31, 2013 2012 Origination fees $ 13,587 $ 4,579 Servicing fees 710 439 Management fees from Certificate investors 494 100 Gain from sales of Member Loans 1,160 - Other revenue 292 - Total Non-Interest Revenue $ 16,243 $ 5,118 24 -------------------------------------------------------------------------------- Table of Contents Origination Fees Our borrower members pay a one-time origination fee upon issuance of a Member Loan. This fee is determined by the term and loan grade of the Member Loan. From September 8, 2011 to February 1, 2012, our origination fees for three year loans are as set forth below: Loan Grade A1 A2 A3-A5 B C D E F G Fee 1.11 % 2.00 % 3.00 % 4.00 % 5.00 % 5.00 % 5.00 % 5.00 % 5.00 % Beginning February 2, 2012, our loan origination fees for the three year loans are as set forth below: Loan Grade A1 A2 A3-A5 B C D E F G Fee 1.11 % 2.00 % 3.00 % 4.00 % 5.00 % 5.00 % 5.00 % 5.00 % 4.00 % Beginning January 7, 2011, our origination fees for five year loans are as set forth below: Loan Grade A B C D E F G Fee 3.00 % 5.00 % 5.00 % 5.00 % 5.00 % 5.00 % 5.00 % Loan fees received on Member Loans at fair value are recognized as a component of non-interest revenues at the time of loan origination and were $13.6 million and $4.6 million for the three months ended March 31, 2013 and 2012, respectively, an increase of 196%. The increase in these loan fees was primarily due to an increase in origination volumes of Member Loans at fair value during the three months ended March 31, 2013, to $312.8 million (excluding $40.1 million of loans sold to third party investors) versus originations of $109.6 million for the three months ended March 31, 2012, an increase of 185%. The average loan origination fees were 4.3% and 4.2% of the principal amount of Member Loans at fair value originated for the three months ended March 31, 2013 and 2012, respectively. The increase in the average loan origination fee in the current period was primarily due to changes in the mix of Member Loans between three and five year loans and also between the various loan grades from the prior year period. Servicing fees We charge investor members an ongoing service fee for Notes. The servicing fee offsets the costs we incur in servicing the related Member Loans at fair value, including managing payments from borrower members, payments to the investor members and maintaining investors' account portfolios. This service fee is charged based on payment amounts serviced by us on behalf of a Note investor in respect of a Member Loan. The servicing fees earned from Note holders that relate to cash flows serviced on related Member Loans at fair value were $0.7 million and $0.4 million for the three months ended March 31, 2013 and 2012, respectively, an increase of 75%. The increase in the servicing fees earned from Note holders were primarily due to increased balances of Notes outstanding during the three months ended March 31, 2013, versus the three months ended March 31, 2012. Servicing Asset/Liability For loans sold to third party purchasers, the Company estimates the current fair value of the loan servicing asset or loan servicing liability considering the contractual servicing fee revenue, adequate compensation for the Company's servicing obligations, the current principal balances of the loans and projected defaults and prepayments over the remaining lives of the loans. The remaining principal balance of loans sold to and serviced for third party investors was $49.7 million at March 31, 2013. We recorded $7,000 of servicing revenue for loans sold to third party investors for the three months ended March 31, 2013. Deferred servicing revenue as of March 31, 2013 was $0.2 million. No loans were sold to third parties during the three months ended March 31, 2012. Management Fees and Assets Under Management LCA charges Certificate holders a management fee based on their capital account balances in lieu of paying a servicing fee. LCA earned management fees from investors in Certificates totaling $0.5 million and $0.1 million for the three months ended March 31, 2013 and 2012, respectively. The increase in management fees earned during the three months ended March 31, 2013 versus the prior fiscal year was due primarily to an increase in total assets under management, which were $445.3 million at March 31, 2013 ($378.6 million in five investment funds and $66.7 million in certain SMAs) and $99.0 million at March 31, 2012. 25-------------------------------------------------------------------------------- Table of Contents Gain on sales of Member Loans Loans are sold by the Company after the loan is issued by WebBank and then purchased by us. A gain or loss on the sale of loans with servicing retained is recorded on the sale date. In order to calculate the gain or loss on the sale of the loans with servicing retained, the Company first determines whether the terms of the servicing arrangement with the investor result in a net servicing asset (i.e., when contractual/expected servicing revenues adequately compensate the Company) or a net servicing liability (i.e., when contractual/expected servicing revenues do not adequately compensate the Company). When contractual/expected servicing revenues do not adequately compensate the Company, a portion of the gross proceeds of the loans sold with servicing retained are allocated to the recording of a net servicing liability. The gain or loss on the sale of loans sold with servicing retained equals the net remaining proceeds from the sale of loans, after allocation of proceeds toward the recording of any net servicing liability, minus the net investment in the loans being sold. During the three months ended March 31, 2013, we recorded $1.2 million of gain from sales of member loans. No sales of member loans occurred during the three months ended March 31, 2012. Net Interest Income The following table summarizes interest income, interest expense and net interest income for the three months ended March 31, 2013 and 2012, as follows (in thousands): Three Months Ended March 31, 2013 2012 Interest Income Member Loans $ 32,358 $ 12,651 Cash and cash equivalents 6 9 Total Interest Income 32,364 12,660 Interest Expense Notes and Certificates at fair value (32,325 ) (12,485 ) Loans payable - (31 ) Total Interest Expense (32,325 ) (12,516 ) Net Interest Income $ 39 $ 144 We had net interest income of $39,000 and $0.1 million for the three months ended March 31, 2013 and 2012, respectively. Net interest income decreased in the three months ended March 31, 2013, when compared to the same period in the prior year primarily due to the reduction in loans funded by us and recorded as Member Loans at amortized cost which was zero at March 31, 2013 and December 31, 2012. Interest Income on Member Loans We record interest income from Member Loans. For the three months ended March 31, 2013 and 2012, we recorded interest income from Member Loans at fair value, excluding loan origination fees, of $32.4 million and $12.7 million, respectively. The increase in interest income in the three months ended March 31, 2013, compared to the comparable period in the prior year is primarily due to the significant increase in the outstanding balances of Member Loans at fair value. The average balance of Member Loans at fair value outstanding during the three months ended March 31, 2013, was $888.6 million as compared to an estimated average balance of $326.9 million during the three months ended March 31, 2012, an increase of 172%. Interest Earned on Cash and Investments Interest income from cash and cash equivalents is recognized as it is earned. For the three months ended March 31, 2013 and 2012, we recognized $6,000 and $9,000 of interest income earned on cash and cash equivalents, respectively. Interest Expense on Notes and Certificates We record interest expense on Notes and Certificates. We recorded interest expense for Notes and Certificates of $32.3 million and $12.5 million, respectively, for the three months ended March 31, 2013 and 2012, respectively. The increase in interest expense in the three months ended March 31, 2013, compared to the comparable period in the prior year was primarily due to the significant increase in the outstanding balances of Notes and Certificates. The estimated average balance of Notes and Certificates outstanding during the three months ended March 31, 2013, was $892.7 million as compared to an estimated average balance of $325.8 million in the prior year, an increase of 174%. 26-------------------------------------------------------------------------------- Table of Contents Interest Expense on Loans Payable We recorded interest expense for loans payable of zero and $31,000 respectively, for the three months ended March 31, 2013 and 2012, respectively. The decrease was due to the remaining loans payable balance being paid in full in July 2012. Fair Value Adjustments on Member Loans at Fair Value and Notes and Certificates at Fair Value At March 31, 2013, we estimated the fair values of Member Loans and their related Notes and Certificates using a discounted cash flow valuation methodology. The fair valuation methodology considers projected prepayments, if significant, and uses the historical actual defaults, losses and recoveries on our loans over the past several years to project future losses and net cash flows on loans. Fair value adjustment gains/(losses) for Member Loans at fair value were $(9.2 million) and $(4.8 million) for the three months ended March 31, 2013 and 2012, respectively. Fair value adjustment gains/(losses) for Notes and Certificates were $9.2 million and $4.8 million for the three months ended March 31, 2013 and 2012, respectively. The fair value adjustments for Member Loans at fair value were largely offset by the fair value adjustments of the Notes and Certificates at fair value due to the member payment dependent design of the Notes and Certificates, and because the principal balances of the Member Loans at fair value were very close to the combined principal balances of the Notes and Certificates. Accordingly, the net fair value adjustment gains/(losses) for Member Loans and Notes and Certificates were $(31,000) and $(40,000) for the three months ended March 31, 2013 and 2012, respectively. Provision for Loan Losses Loan loss provisions were zero and $(8,000) for the three months ended March 31, 2013 and 2012, respectively. Loan loss provisions arise only for Member Loans at amortized cost. The decline in the loan loss provisions for Member Loans at amortized cost was due to the zero balance of Member Loans at amortized cost during the three months ended March 31, 2013. Operating Expenses The following tables summarize our operating expenses for the three months ended March 31, 2013 and 2012, respectively (in thousands). Three Months Ended March 31, 2013 2012 $ Change % Change Sales, Marketing & Customer Service $ (10,341 ) $ (4,932 ) $ (5,409 ) 110 % Technology (2,248 ) (862 ) (1,386 ) 161 % General & Administrative (3,622 ) (2,044 ) (1,578 ) 77 % Total Operating Expenses $ (16,211 ) $ (7,838 ) $ (8,373 ) 107 % Sales, Marketing and Customer Service Expense Sales, marketing and customer service expense consists primarily of salaries, benefits and stock-based compensation expense related to sales, marketing, customer service, credit and collections personnel, costs of marketing campaigns and costs of borrower acquisitions such as credit scoring and screening. Sales, marketing and customer service expenses for the three months ended March 31, 2013 and 2012, were $10.3 million and $4.9 million, respectively, an increase of approximately 110%. The increase in spending during the three month period ended March 31, 2013 compared to the same period of the prior year was primarily due to a $2.1 million increase in personnel related expenses resulting from increased headcount and a $3.0 million increase in spending on new and ongoing marketing programs to attract borrowers on the platform. Technology Expense Technology expense consists primarily of salaries, benefits and stock-based compensation expense of technology personnel, and the cost of subcontractors who work on the development and maintenance of our platform and software enhancements that run our platform. Technology expenses for the three months ended March 31, 2013 and 2012 were $2.2 million and $0.9 million, respectively, an increase of 161%. The increase for the three month period ended March 31, 2013 versus the same periods in the prior year were primarily due to a $1.0 million increase in personnel related expenses resulting from increased headcount and contract labor expenses. 27-------------------------------------------------------------------------------- Table of Contents During the three months ended March 31, 2013, we capitalized $0.4 million of software development costs compared to zero costs capitalized for the three months ended March 31, 2012. General and Administrative Expense General and administrative expense consists primarily of salaries, benefits and stock-based compensation expense related to general and administrative personnel, professional fees primarily related to legal and accounting fees, facilities expenses and the related overhead, and expenses related to platform fraud prevention and remediation. General and administrative expenses for the three months ended March 31, 2013 and 2012, were $3.6 million and $2.1 million, respectively, an increase of approximately 77%. The increase was primarily due to a $0.6 million increase in personnel related expenses resulting from increased headcount, a $0.3 million increase in contract labor expenses and a $0.3 million increase in professional fees. We expect that general and administrative expenses will increase as we continue to expand our business. Liquidity and Capital Resources The following table summarizes our cash flows for the three months ended March 31, 2013 and 2012 (in thousands). Three Months Ended March 31, 2013 2012 Cash provided by (used in) Operating activities $ 2,977 $ (1,618 ) Investing activities (228,654 ) (72,301 ) Financing activities 224,431 80,451 Net increase (decrease) in cash $ (1,246 ) $ 6,532 Net cash provided by (used in) operating activities was $3.0 million and $(1.6 million) for the three months ended March 31, 2013 and 2012, respectively. Net cash provided by operating activities was positive for the three months ended March 31, 2013, due to increases in accounts payable, accrued interest payable, accrued expenses and liabilities and payable to member borrowers and investors. Cash used in operating activities was used to fund ongoing operations such as compensation and benefits, legal and accounting services, marketing expenses and cost of service expenses. Net cash used in investing activities for the three months ended March 31, 2013 and 2012 were $228.7 million and $72.3 million, respectively. Net cash used for the three months ended March 31, 2013 primarily represents originations of Member Loans at fair value of $352.9 million and a net increase in restricted cash of $4.3 million, partially offset by the repayment of Member Loans at fair value of $88.8 million and proceeds from sale of Member Loans of $41.2 million. Net cash provided by financing activities for the three months ended March 31, 2013 and 2012 were $224.4 million and $80.5 million, respectively. Net cash provided for the three months ended March 31, 2013 primarily represents proceeds from the issuance of Notes and Certificates at fair value of $312.8 million partially offset by payments on Notes and Certificates at fair value of $88.9 million. At March 31, 2013 we had $11.7 million in restricted cash. Restricted cash at March 31, 2013 consists primarily of approximately $3.4 million of member investors cash received but not yet applied to their accounts, pledges of $3.0 million of our funds as security for WebBank, approximately $2.9 million for an investor as part of a credit support agreement, and approximately $1.7 million as security for Wells Fargo Bank that clears our borrowers' and investors' cash transactions. We primarily hold our excess cash in short-term interest-bearing money market funds at highly-rated financial institutions. As of March 31, 2013, deposits were $1.1 million. This includes a deposit of $0.9 million placed with a nationally-recognized payment services provider we use for transactions related to our platform. The deposit is required pursuant to the agreement with the payment services provider, serves as collateral for the protection of the payment services provider and our members, and is restricted as to withdrawal. The deposit is ongoing throughout the term of the contract and the amount of the deposit depends on the volume of payment transactions processed. The deposit with the payment services provider is required to be returned to us when payment transaction volumes decline and upon termination or expiration of the agreement. 28-------------------------------------------------------------------------------- Table of Contents As of March 31, 2013, our accumulated deficit was $57.6 million and our total stockholders' deficit was $49.8 million. Our net income for the three months ended March 31, 2013 was $40,000. For the three months ended March 31, 2013, we were able to generate a positive cash flow from operations on an operating basis. We expect to continue to generate positive cash flows from operations through the end of calendar year 2013. If our assumptions regarding continued growth and operating plan are incorrect, we may need to slow our investment spending, which could slow our rate of growth or ability to continue operating on a cash-flow positive basis, and our current liquidity resources may be consumed. To date, we have funded our cash requirements with proceeds from the sale of our equity securities and issuance of loans payable. Assets Under Management - LCA As of March 31, 2013, LCA was the general partner to five private investment funds for accredited investors and qualified purchasers with differing investment strategies. These private investment funds are: Broad Based Consumer Credit Fund, L.P. ("BBF"), Broad Based Consumer Credit (Q) Fund, L.P. ("BBF-QP"), Broad Based Consumer Credit Fund, L.P. ("BBF II"), Conservative Consumer Credit Fund, L.P. ("CCF"), and Conservative Consumer Credit (Q) Fund, L.P. ("CCF-QP"). In connection with the funds, we formed LC Trust I (the "Trust), a Delaware business trust, to act as a bankruptcy remote for holding portions of Member Loans related to Certificates purchased by the funds separate and apart from the Member Loans and other assets of ours. We and the Trust have entered into a loan purchase agreement and a servicing agreement whereby we service the loans acquired by the Trust in a manner identical to other loans; the Trust earns a servicing fee equal to 40 basis points, which is paid by each of the funds. As of March 31, 2013, the funds had approximately $378.6 million in assets with $43.3 million in escrow, which was contributed to the funds on the first business day of April 2013. LCA earns a management fee paid by the limited partners of the funds, paid monthly in arrears, that ranges from 0.60% to 1.25% (annualized) of the month-end balances of partners' capital accounts. These management fees can be modified or waived for individual limited partners at the discretion of the general partner. Beginning January 2012, LCA also began offering SMAs to individual accredited investors or qualified purchasers. Funds in the SMAs are invested in Certificates issued by the Trust. As of March 31, 2013, the SMAs had approximately $66.7 million in assets. LCA earns management fees paid by SMA investors, monthly in arrears, based on balances in the SMA accounts. Summary of Changes in Assets Under Management The table below presents a summary of changes in total assets under management for LCA stated at amortized cost except for appreciation / (depreciation) which includes fair value adjustments for investments, for the three month periods ended March 31, 2013 (in millions). Balance at December 31, 2012 $ 288.8 Net capital contributions 149.3 Appreciation (depreciation) 7.2 Balance at March 31, 2013 $ 445.3 Income Taxes We incurred no net tax provision or benefit related to our pre-tax income for the three month ended March 31, 2013. Accounting Standards Codification Topic 740, "Income Taxes," provides for the recognition of deferred tax assets, such as the future benefit of net operating loss deductions against future taxable income, if realization of such tax-related assets is more likely than not. However, given our history of operating losses, it is difficult to accurately forecast when and in what amounts future results will be affected by the realization, if any, of the tax benefits of future deductions for our net operating loss carry forwards. Based upon the weight of available evidence, which includes our historical operating performance and the reported cumulative net losses in all prior years, we have provided a full valuation allowance against our net deferred tax assets. Such valuation allowance against the deferred tax assets fully offsets the current periods' tax benefits attributable to the pre-tax losses. As of March 31, 2013 we had federal and state net operating loss (NOL) carryforwards of $53.0 million and $54.5 million, respectively. As of March 31, 2013, we also had federal and state research and development (R&D) tax credit carry forwards of $0.3 million and $0.4 million, respectively. In general, a corporation's ability to utilize its NOL's and R&D credit carryforwards may be substantially limited due to ownership changes that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the Code), as well as similar state provisions. These ownership changes may limit the amount of NOL and R&D credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. The amount of such limitations on the Company's total federal net operating losses of approximately $53.0 million incurred since the Company's inception in October 2006 through March 31, 2013 has been analyzed, and the Company believes limitations exist only on the future annual deductibility of approximately $2.5 million of the Company's total net operating loss carryforwards. 29-------------------------------------------------------------------------------- Table of Contents Variable Interest Entities The Company is the primary beneficiary of the Trust and we have determined that the Trust is a variable interest entity ("VIE"). To determine whether we qualify as the primary beneficiary, the Company considers both qualitative and quantitative factors regarding the nature, size and form of the Company's involvement with the VIE. The Company assesses whether or not it is the primary beneficiary of a VIE on an ongoing basis. Intercompany transactions and balances have been eliminated in consolidation. The Trust acquires and holds Member Loans from the Company for the sole benefit of investors that purchase through Global Certificates issued by the Trust and which are related to the underlying Member Loans. The Certificates may only be settled with cash flows from the underlying Member Loans held by the Trust consistent with the member payment dependent design of the Notes; Certificate holders do not have recourse to the general credit of the Trust, Company, borrower members, or other investors. The Company's capital contributions to the Trust have been insufficient to allow the Trust to finance its purchase of any significant amount of Member Loans without the issuance of Certificates to investors. The Trust's low capitalization levels and structure, wherein investors' hold beneficial interests in Member Loans via the Certificates, qualifies the Trust as a VIE. The Company believes it is the primary beneficiary of the Trust because of its controlling financial interest in the Trust. The Company performs or directs activities that significantly affect the Trust's economic performance via (i) operation of the platform that enables borrowers to apply for Member Loans purchased by the Trust; (ii) credit underwriting and servicing of Member Loans purchased by the Trust and, (iii) LCA's role to source investors that ultimately purchase Certificates that supply the funds for the Trust to purchase Member Loans. Collectively, the activities of the Company, LCA and Trust described above allow the Company to fund more Member Loans and to collect the related loan origination fees, and for LCA to collect the management fees on the investors' capital used to purchase Trust Certificates, than would be the case without the existence of the Trust. Therefore, the Company receives significant economic benefits from the existence and activities conducted by the Trust. The Company has determined that the Trust meets the consolidation requirements. All intercompany transactions and accounts between the Company, the Trust, and LCA have been eliminated. Additional Information about the LendingClub Platform Historical Information about Our Borrower Members Loans: In regards to the following historical information, prior performance is no guarantee of future results or outcomes. From inception to March 31, 2013, we had facilitated Member Loans with an average original principal amount of $12,909 and an aggregate original principal amount of $1.5 billion. Out of 118,608 facilitated Member Loans, 19,843 Member Loans with an aggregate original principal amount of $208.2 million, or 13.60%, are fully paid. Including loans that are fully paid, 110,336 loans, representing $1.4 billion of the original principal balance of loans facilitated through the platform through March 31, 2013, had been through at least one billing cycle. Of this $1.4 billion of original principal balance, $35.0 million of outstanding principal balance less interest and fees received, or 2.50%, was either in default $1.1 million (0.08%) or had been charged off $33.9 million (2.42%). The defaulted or charged off loans were comprised of 4,757 Member Loans, of which 3,453 loans representing $24.4 million in outstanding principal balance less interest and fees received, were defaults and charge offs due to delinquency, while the remaining 1,304 loans were loans in which the borrower members filed for a Chapter 7 bankruptcy seeking liquidation. A Member Loan is considered defaulted when at least one payment is more than 120 days late. A loan is charged-off no later than when it reaches 150 days late. Of the remaining loans that had been through at least one billing cycle as of March 31, 2013, $931.8 million of principal remained outstanding of which $908.2 million (98.13%) was current, $6.1 million (0.28%) was 16 to 30 days late, $12.9 million (1.38%) was between 31 and 120 days late and $1.9 million (0.21%) was on a performing payment plan. During the three months ended March 31, 2013, of the 68,364 Member Loans which were not delinquent prior to the start of the year, 1,935 Member Loans became delinquent for some amount of time during the three months, excluding those that entered the 0 to 15 day grace period. 30-------------------------------------------------------------------------------- Table of Contents The following table presents aggregated information about loans for the period from inception to March 31, 2013, grouped by the loan grade assigned by us: Number of Average Total Amount Loan Grade Loans Interest Rate Issued A1 3,373 5.96 % $ 32,815,075 A2 3,573 6.52 % 33,317,175 A3 4,142 7.42 % 43,902,825 A4 6,765 7.80 % 76,005,700 A5 6,529 8.63 % 77,130,775 B1 5,536 10.04 % 62,374,150 B2 7,263 10.88 % 88,611,350 B3 10,382 11.78 % 125,179,375 B4 8,672 12.58 % 109,386,300 B5 7,159 13.07 % 85,899,400 C1 7,140 13.77 % 88,236,700 C2 6,675 14.53 % 85,194,150 C3 4,885 14.98 % 63,793,925 C4 4,460 15.51 % 58,879,200 C5 4,084 16.24 % 55,202,525 D1 3,689 16.80 % 45,422,025 D2 3,811 17.11 % 46,900,225 D3 3,227 17.36 % 44,072,775 D4 3,001 17.76 % 45,869,775 D5 2,571 18.31 % 42,462,125 E1 1,858 18.60 % 32,066,150 E2 1,818 19.18 % 31,901,675 E3 1,535 19.61 % 27,383,150 E4 1,402 20.18 % 26,848,400 E5 1,116 20.48 % 21,728,050 F1 942 21.08 % 19,035,425 F2 770 21.42 % 15,520,950 F3 576 21.80 % 11,641,225 F4 459 21.86 % 9,522,425 F5 366 22.15 % 8,271,675 G1 287 22.38 % 6,219,100 G2 189 22.22 % 3,888,225 G3 122 22.08 % 2,445,525 G4 125 21.44 % 2,393,800 G5 106 21.14 % 1,602,850 Total Portfolio 118,608 13.21 % $ 1,531,124,175 31 -------------------------------------------------------------------------------- Table of Contents The following table presents aggregated information for the period from inception to March 31, 2013, reported by a consumer reporting agency about our borrower members at the time of their loan applications, grouped by the loan grade assigned by us. As used in this table, "Delinquencies in the Last Two Years" means the number of 30+ days past-due incidences of delinquency in the borrower member's credit file for the past two years. We do not independently verify this information. All figures other than loan grade are agency reported: Average Average Inquiries Average Average Average Average Average Revolving in the Delinquencies Months Average Open Credit Total Credit Revolving Line Last Six in the Last Since Last Loan Grade FICO Lines Lines Credit Balance Utilization Months Two Years Delinquency A1 776 11 26 $ 12,556 22.08 % 0 0 40 A2 760 10 25 12,364 27.67 % 1 0 40 A3 750 10 24 14,252 32.95 % 1 0 39 A4 739 10 23 14,443 39.57 % 1 0 39 A5 730 10 24 16,455 44.49 % 1 0 38 B1 722 10 23 15,146 48.81 % 1 0 38 B2 715 10 24 16,092 51.93 % 1 0 38 B3 708 10 23 15,173 55.80 % 1 0 37 B4 703 10 23 15,530 56.41 % 1 0 37 B5 701 10 22 14,694 58.33 % 1 0 37 C1 696 10 23 15,027 60.38 % 1 0 36 C2 693 10 23 15,244 61.71 % 1 0 36 C3 692 10 23 16,024 60.65 % 1 0 35 C4 688 11 23 15,877 62.83 % 1 0 35 C5 686 11 23 15,249 63.25 % 1 0 34 D1 679 10 22 15,026 67.03 % 1 0 34 D2 683 10 22 14,454 65.67 % 1 0 35 D3 685 10 22 15,520 65.42 % 1 0 35 D4 684 10 23 15,666 66.46 % 1 0 35 D5 684 11 24 17,448 66.85 % 1 0 34 E1 684 10 24 16,597 67.90 % 1 0 35 E2 683 11 24 17,450 68.30 % 1 0 34 E3 681 11 24 18,351 69.55 % 1 0 33 E4 679 11 25 18,851 69.55 % 1 0 34 E5 678 11 25 18,874 70.09 % 1 0 33 F1 678 11 26 18,744 69.59 % 1 0 32 F2 676 11 25 19,474 72.82 % 1 0 33 F3 675 11 26 19,816 71.99 % 1 0 32 F4 672 11 26 18,877 71.20 % 2 0 31 F5 671 12 26 21,009 73.63 % 1 0 32 G1 669 12 27 18,174 70.65 % 2 1 30 G2 670 12 27 24,751 75.13 % 2 0 30 G3 668 11 25 18,557 77.73 % 2 0 27 G4 666 14 30 29,657 73.67 % 2 0 30 G5 664 15 32 40,370 71.06 % 3 0 28 Total Portfolio 706 10 23 $ 15,518 55.43 % 1 0 36 32 -------------------------------------------------------------------------------- Table of Contents The following table presents additional aggregated information for the period from inception to March 31, 2013, about borrower current and paid off loans, grouped by the loan grade assigned by us. Number Number Number of of Loans Fully Paid of All Total Origination Current Current loan Fully (%) of all Issued Amount for All Loan Grade loans ($) Paid Fully Paid ($) loans Loans Issued Loans A1 2,609 $ 19,493,410 492 $ 3,396,125 10.35 % 3,373 $ 32,815,075 A2 2,572 18,319,948 766 4,995,475 14.99 % 3,573 33,317,175 A3 2,811 23,391,140 991 7,200,850 16.40 % 4,142 43,902,825 A4 4,918 42,327,725 1,397 11,926,750 15.69 % 6,765 76,005,700 A5 4,381 40,214,849 1,465 13,897,600 18.02 % 6,529 77,130,775 B1 3,989 36,014,365 963 9,496,175 15.22 % 5,536 62,374,150 B2 5,234 53,207,058 1,084 11,465,775 12.94 % 7,263 88,611,350 B3 7,949 77,072,909 1,337 15,449,375 12.34 % 10,382 125,179,375 B4 6,381 67,287,375 1,176 13,029,550 11.91 % 8,672 109,386,300 B5 5,241 50,826,295 1,274 13,531,175 15.75 % 7,159 85,899,400 C1 5,200 54,073,780 1,051 10,934,700 12.39 % 7,140 88,236,700 C2 4,815 52,301,035 995 10,497,525 12.32 % 6,675 85,194,150 C3 3,178 36,753,074 819 8,501,625 13.33 % 4,885 63,793,925 C4 2,969 35,349,912 761 7,934,150 13.48 % 4,460 58,879,200 C5 2,683 32,473,286 635 6,487,250 11.75 % 4,084 55,202,525 D1 2,511 26,236,166 565 5,884,850 12.96 % 3,689 45,422,025 D2 2,599 27,444,471 648 7,454,725 15.89 % 3,811 46,900,225 D3 2,159 25,645,913 574 6,989,000 15.86 % 3,227 44,072,775 D4 2,004 27,805,803 497 6,029,775 13.15 % 3,001 45,869,775 D5 1,701 25,573,620 438 5,772,825 13.60 % 2,571 42,462,125 E1 1,244 19,584,524 327 4,551,675 14.19 % 1,858 32,066,150 E2 1,211 20,087,550 303 3,896,475 12.21 % 1,818 31,901,675 E3 1,021 17,275,217 250 3,447,750 12.59 % 1,535 27,383,150 E4 939 17,293,998 209 3,050,850 11.36 % 1,402 26,848,400 E5 740 13,567,498 188 2,754,300 12.68 % 1,116 21,728,050 F1 638 12,331,919 130 1,796,700 9.44 % 942 19,035,425 F2 514 9,752,351 105 1,593,800 10.27 % 770 15,520,950 F3 370 7,200,174 85 1,305,225 11.21 % 576 11,641,225 F4 286 5,804,349 69 966,450 10.15 % 459 9,522,425 F5 225 4,945,024 54 938,125 11.34 % 366 8,271,675 G1 182 3,879,515 54 989,075 15.90 % 287 6,219,100 G2 112 2,159,632 30 406,775 10.46 % 189 3,888,225 G3 55 1,089,516 28 425,675 17.41 % 122 2,445,525 G4 50 911,348 38 651,725 27.23 % 125 2,393,800 G5 28 485,310 45 529,350 33.03 % 106 1,602,850 Total 83,519 $ 908,180,058 19,843 $ 208,179,225 13.60 % 118,608 $ 1,531,124,175 33 -------------------------------------------------------------------------------- Table of Contents The following table presents aggregated information for the period from inception to March 31, 2013, about delinquencies and default loans, grouped by the loan grade assigned by us. The default and delinquency information presented in the table includes data only for Member Loans that had been through at least one billing cycle as of March 31, 2013. With respect to late Member Loans, the following table shows the entire amount of the principal remaining due, not just that particular payment. The third and fifth columns show the late Member Loan amounts as a percentage of Member Loans that have been through at least one billing cycle. Member Loans are placed on nonaccrual status and considered as defaulted when they become 120 days late. The data in the following table regarding loss experience may not be representative of the loss experience that will develop over time as additional Member Loans are facilitated through our platform and the Member Loans already facilitated through our platform have longer payment histories. Charged-Off / Default of Number of Charged- Through At Loans Number Off / 16-30 Least One excl of All Total Origination Default of 16-30 Days Days Late 31+ Days 31+ Days Charged-Off / Billing Cycle Issued / Issued Amount for All All Loan Grade Late ($) (%) Late ($) Late (%) Default ($) (%) Fully Paid Loans Issued Loans Issued (%) A1 $ - 0.00 % $ 81,827 0.41 % $ 134,331 0.46 % 2,651 3,373 $ 32,815,075 0.41 % A2 33,249 0.18 % 28,500 0.15 % 276,645 0.90 % 2,649 3,573 33,317,175 0.83 % A3 34,933 0.15 % 155,232 0.65 % 367,859 0.93 % 2,933 4,142 43,902,825 0.84 % A4 78,126 0.18 % 290,927 0.67 % 690,201 0.96 % 5,123 6,765 76,005,700 0.91 % A5 67,986 0.16 % 341,268 0.82 % 809,858 1.17 % 4,606 6,529 77,130,775 1.05 % B1 40,069 0.11 % 223,202 0.60 % 900,544 1.57 % 4,209 5,536 62,374,150 1.44 % B2 104,498 0.19 % 545,169 0.99 % 990,065 1.26 % 5,505 7,263 88,611,350 1.12 % B3 178,976 0.22 % 473,109 0.59 % 2,045,372 1.78 % 8,344 10,382 125,179,375 1.63 % B4 112,496 0.16 % 664,491 0.94 % 1,683,532 1.71 % 6,763 8,672 109,386,300 1.54 % B5 136,835 0.25 % 655,103 1.21 % 1,778,978 2.15 % 5,649 7,159 85,899,400 2.07 % C1 126,020 0.22 % 744,757 1.29 % 1,874,975 2.30 % 5,611 7,140 88,236,700 2.12 % C2 123,182 0.22 % 570,926 1.03 % 1,834,190 2.34 % 5,219 6,675 85,194,150 2.15 % C3 94,716 0.24 % 347,121 0.88 % 1,650,348 2.99 % 3,514 4,885 63,793,925 2.59 % C4 83,290 0.22 % 486,143 1.30 % 1,215,069 2.37 % 3,237 4,460 58,879,200 2.06 % C5 125,067 0.36 % 434,452 1.25 % 1,236,120 2.62 % 2,970 4,084 55,202,525 2.24 % D1 125,771 0.44 % 512,708 1.80 % 1,054,464 2.62 % 2,786 3,689 45,422,025 2.32 % D2 113,549 0.37 % 661,445 2.17 % 1,621,704 3.61 % 2,954 3,811 46,900,225 3.46 % D3 117,489 0.40 % 828,405 2.86 % 1,783,275 4.22 % 2,474 3,227 44,072,775 4.05 % D4 238,427 0.77 % 643,642 2.09 % 1,489,770 3.49 % 2,292 3,001 45,869,775 3.25 % D5 99,393 0.35 % 431,229 1.53 % 1,352,734 3.49 % 1,929 2,571 42,462,125 3.19 % E1 99,059 0.45 % 504,664 2.28 % 1,452,613 4.70 % 1,470 1,858 32,066,150 4.53 % E2 57,661 0.26 % 430,305 1.92 % 1,137,255 3.79 % 1,398 1,818 31,901,675 3.56 % E3 89,793 0.47 % 217,525 1.15 % 941,546 3.72 % 1,168 1,535 27,383,150 3.44 % E4 88,098 0.46 % 294,469 1.53 % 1,042,194 4.16 % 1,100 1,402 26,848,400 3.88 % E5 76,349 0.49 % 454,926 2.94 % 967,639 4.65 % 874 1,116 21,728,050 4.45 % F1 32,262 0.23 % 328,369 2.33 % 1,007,950 5.62 % 746 942 19,035,425 5.30 % F2 64,770 0.58 % 245,644 2.21 % 761,582 5.30 % 610 770 15,520,950 4.91 % F3 9,722 0.11 % 385,363 4.53 % 528,095 4.82 % 451 576 11,641,225 4.54 % F4 17,539 0.25 % 219,647 3.19 % 576,499 6.57 % 357 459 9,522,425 6.05 % F5 29,645 0.50 % 160,471 2.71 % 526,495 6.81 % 289 366 8,271,675 6.37 % G1 15,704 0.36 % 117,277 2.67 % 264,620 4.40 % 222 287 6,219,100 4.25 % G2 - 0.00 % 244,520 8.53 % 354,938 9.29 % 155 189 3,888,225 9.13 % G3 - 0.00 % 72,438 4.46 % 291,778 12.46 % 89 122 2,445,525 11.93 % G4 19,676 1.50 % 46,520 3.55 % 188,021 7.92 % 86 125 2,393,800 7.85 % G5 11,760 1.42 % 37,526 4.55 % 206,148 12.89 % 60 106 1,602,850 12.86 % Total $ 2,646,108 0.27 % $ 12,879,321 1.32 % $ 35,037,406 2.50 % 90,493 118,608 $ 1,531,124,175 2.29 % 34 -------------------------------------------------------------------------------- Table of Contents The following table presents aggregated information for the period from inception to March 31, 2013, on the results of our collection efforts for all corresponding Member Loans that became more than 30 days past due at any time, grouped by credit grade. For purposes of this inception-to-date analysis, we have excluded 64 loans that we classified as identity fraud. In these cases, we wrote-off the uncollectible loan and repaid holders of any related Notes an amount equal to the unpaid principal balances due on the Notes less any applicable servicing fees. Aggregate Gross Gross Amount Principal Amount Aggregate Collected on Number of Balance of Recovered Number of Total Amount Sent Accounts Sent Loans Charged- Loans Charged- on Loans Loans In Origination to Collections to Collections Off Due to Off Due to Charged-Off Loan Grade Collection (1) Amount (1) (1) (2) Delinquency (3) Delinquency (3) (4) A 1,312 $ 9,772,100 $ 893,221 $ 317,356 308 $ 1,482,182 $ 47,573 B 2,304 22,775,475 2,650,143 1,052,881 708 4,543,213 107,769 C 2,387 23,003,425 2,999,196 1,212,692 833 5,106,670 122,744 D 1,882 20,790,500 2,846,696 1,144,129 710 4,992,081 118,850 E 1,052 13,540,500 1,876,445 807,202 435 3,862,043 79,971 F 461 7,634,400 1,117,489 434,497 223 2,446,128 72,932 G 231 3,529,725 581,013 268,449 99 904,610 23,364 Total 9,629 $ 101,046,125 $ 12,964,203 $ 5,237,207 3,316 $ 23,336,926 $ 573,203 1) Represents accounts 31 to 120 days past due. 2) Represents the gross amounts collected on corresponding Member Loans while such accounts were in collection during the 31 to 120 days past-due period. This amount does not represent payments received after an account has been sent to collection, cured and returned to current status. 3) Represents accounts that have been delinquent for 120 days at which time the account is charged-off. Any money recovered after charge-off is no longer included as amounts collected on accounts sent to collection. Through March 31, 2013, a total of 3,316 loans have been charged off due to delinquency, none of which were on a payment plan as of March 31, 2013. 4) Represents the gross amounts we received on charged-off accounts after the accounts were charged-off (i.e., a payment received on an account after 120 days past due). 35 -------------------------------------------------------------------------------- Table of Contents The following graph presents the dollar weighted average interest rate for Member Loans originated from inception to March 31, 2013, by grade. [[Image Removed: LOGO]] Actual Loss Rates Loan performance is reviewed on a monthly basis to determine how loss rate estimates compare to the actual performance of loans. As part of our monthly review, the processes for calculating and assigning loss rates and LendingClub grades are reassessed to ensure continued accuracy. The graph below shows the actual cumulative net charge-offs by LendingClub grades for Member Loans booked from January 1, 2008 through March 31, 2013, as a percentage of originations. The loss performance is tracked by vintage, meaning each line represents all loans originated in a given period. [[Image Removed: LOGO]] 36 -------------------------------------------------------------------------------- Table of Contents The graphs below show cumulative net charge-offs for Member Loans as a percentage of originations for each LendingClub grade presented by vintage from January 1, 2008 to March 31, 2013. [[Image Removed: LOGO]] [[Image Removed: LOGO]] 37 -------------------------------------------------------------------------------- Table of Contents [[Image Removed: LOGO]] [[Image Removed: LOGO]] 38 -------------------------------------------------------------------------------- Table of Contents [[Image Removed: LOGO]] [[Image Removed: LOGO]] 39 -------------------------------------------------------------------------------- Table of Contents |