LendingClub (NYSE: LC) has agreed to acquire a $1.05 billion loan portfolio of personal loans that became available following US Bancorp’s acquisition of MUFG Union Bank’s core regional banking franchise. The loans were originated on the LendingClub platform.
On September 21, 2021, MUFG and MUFG Bank, a core banking subsidiary of MUFG, announced an agreement to sell all shares of MUFG Union Bank, N.A. to US Bancorp. The share transfer was completed on December 1, 2022.
Based in Tokyo, MUFG [Mitsubishi UFJ Financial Group] (MUFG) is one of the world’s top financial groups.
The loans are currently being serviced by LendingClub which reports they have a weighted average FICO score of 729.
Scott Sanborn, CEO of LendingClub, said his company utilized its strong balance sheet to support marketplace liquidity while mitigating a slowdown in revenue generated by the platform.
“This portfolio was acquired through a competitive bidding process and exemplifies a mutually beneficial transaction.”
LendingClub said that expenses associated with the acquisition are expected to be approximately $4 million, primarily related to the derecognition of the associated servicing asset, which will be offset over time by interest income from the loan portfolio.
The company added that due to the short remaining duration of the acquired loan portfolio, LendingClub has elected to account for the held-for investment loan portfolio under the fair value option, which will not require upfront credit loss provisioning under the Current Expected Credit Loss (CECL) methodology.
LendingClub expects the acquisition of the loan portfolio to be completed by the end of 2022.