What changed in this filing

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Item 1. Financial Statements

2022-08-09 compared with 2022-05-10 · 134 added, 93 removed, 446 unchanged (34% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

March 31, December 31,

June 30, December 31,

Cash and cash equivalents $ 66,712 $ 130,959

15 unchanged sentences

Stockholders' equity

Common stock, $ 0.0001 par value - 1,000,000,000 shares authorized at March 31, 2022 and December 31, 2021;

33,078,916 shares issued and 32,806,893 shares outstanding at March 31, 2022;

Common stock, $ 0.0001 par value - 1,000,000,000 shares authorized at June 30, 2022 and December 31, 2021;

33,171,619 shares issued and 32,899,596 shares outstanding at June 30, 2022;

32,276,419 shares issued and 32,004,396 shares outstanding at December 31, 2021

1 unchanged sentence

Retained earnings 120,352 83,846

Treasury stock at cost, 272,023 shares at March 31, 2022 and December 31, 2021

Treasury stock at cost, 272,023 shares at June 30, 2022 and December 31, 2021

( 6,309 ) ( 6,309 )

5 unchanged sentences

(in thousands, except share and per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

2022 2021 2022 2021

Interest income $ 207,655 $ 128,589 $ 399,892 $ 255,780

2 unchanged sentences

Interest expense 17,104 12,163 30,781 25,667

Net increase (decrease) in fair value 3,971 ( 11,568 )

Net decrease in fair value ( 63,484 ) ( 5,902 ) ( 59,513 ) ( 17,470 )

Net revenue 145,214 120,189 350,228 230,430

6 unchanged sentences

Total operating expenses 157,886 110,386 305,230 216,652

Income before taxes 57,670 3,975

Income tax expense 12,007 956

Net income $ 45,663 $ 3,019

Net income attributable to common stockholders $ 45,663 $ 3,019

Earnings per share:

Income (loss) before taxes ( 12,672 ) 9,803 44,998 13,778

Income tax expense (benefit) ( 3,515 ) 2,553 8,492 3,509

Net income (loss) $ ( 9,157 ) $ 7,250 $ 36,506 $ 10,269

Net income (loss) attributable to common stockholders $ ( 9,157 ) $ 7,250 $ 36,506 $ 10,269

Earnings (loss) per share:

Basic $ ( 0.28 ) $ 0.26 $ 1.12 $ 0.37

7 unchanged sentences

(in thousands, except share data)

For the Three Months Ended March 31, 2022

For the Six Months Ended June 30, 2022

Shares Par Value Additional Paid-in Capital Retained Earnings Treasury Stock Total Stockholders' Equity

5 unchanged sentences

Balance – March 31, 2022 32,806,893 $ 7 $ 526,729 $ 129,509 $ ( 6,309 ) $ 649,936

Issuance of common stock upon exercise of stock options 32,345 — 78 — — 78

Repurchase of stock options ( 2,706 ) — ( 28 ) — — ( 28 )

Stock-based compensation expense — — 7,642 — — 7,642

Vesting of restricted stock units, net of shares withheld 63,064 — ( 273 ) — — ( 273 )

Net loss — — — ( 9,157 ) — ( 9,157 )

Balance – June 30, 2022 32,899,596 $ 7 $ 534,148 $ 120,352 $ ( 6,309 ) $ 648,198

See Notes to the Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands, except share data)

For the Three Months Ended March 31, 2021

For the Six Months Ended June 30, 2021

Shares Par Value Additional Paid-in Capital Retained Earnings Treasury Stock Total Stockholders' Equity

5 unchanged sentences

Balance – March 31, 2021 27,974,583 $ 6 $ 439,100 $ 39,451 $ ( 6,309 ) $ 472,248

Issuance of common stock upon exercise of stock options 10,114 — 159 — — 159

Stock-based compensation expense — — 5,366 — — 5,366

Vesting of restricted stock units, net 49,227 — ( 442 ) — — ( 442 )

Net income — — — 7,250 — 7,250

Balance – June 30, 2021 28,033,924 $ 6 $ 444,183 $ 46,701 $ ( 6,309 ) $ 484,581

See Notes to the Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities

13 unchanged sentences

Originations of loans ( 1,560,495 ) ( 595,849 )

Proceeds from structured loan sale 245,019 —

Proceeds from loan sales originated as held for investment 247,230 —

Repayments of loan principal 700,968 552,675

1 unchanged sentence

Other, net ( 2,147 ) ( 1,845 )

Net cash provided by (used in) investing activities ( 122,496 ) 8,987

Net cash used in investing activities ( 638,024 ) ( 57,151 )

Cash flows from financing activities

3 unchanged sentences

Repayments of asset-backed notes and acquisition financing ( 21,093 ) ( 425,005 )

Payments of deferred financing costs ( 314 ) —

Net payments related to stock-based activities ( 7,299 ) ( 2,771 )

Net cash provided by (used in) financing activities 61,529 ( 12,552 )

Net cash provided by financing activities 487,278 192,692

Net increase (decrease) in cash and cash equivalents and restricted cash ( 59,104 ) 189,379

14 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

March 31, 2022

June 30, 2022

Organization and Description of Business

27 unchanged sentences

Basic and diluted earnings (loss) per share are calculated as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands, except share and per share data) 2022 2021 2022 2021

Net income $ 45,663 $ 3,019

Net income (loss) $ ( 9,157 ) $ 7,250 $ 36,506 $ 10,269

Net income (loss) attributable to common stockholders $ ( 9,157 ) $ 7,250 $ 36,506 $ 10,269

4 unchanged sentences

Diluted weighted-average common shares outstanding 32,831,499 30,050,847 33,241,681 29,836,089

Earnings per share:

Earnings (loss) per share:

Basic $ ( 0.28 ) $ 0.26 $ 1.12 $ 0.37

1 unchanged sentence

The following common share equivalent securities have been excluded from the calculation of diluted weighted-average common shares outstanding because the effect is anti-dilutive for the periods presented:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Stock options 3,587,839 2,268,423 2,897,171 2,545,604

18 unchanged sentences

The following table represents the assets and liabilities of consolidated VIEs recorded on the Company’s Condensed Consolidated Balance Sheets (Unaudited):

March 31, December 31,

June 30, December 31,

(in thousands) 2022 2021

16 unchanged sentences

As part of the securitization, the Company sold loans to OPTN Funding Grantor Trust 2022-1 ("Grantor Trust") through the issuance of amortizing asset-backed notes secured by a pool of its unsecured and secured personal installment loans.

The Company also sold its share of the residual interest in the pool.

The Company also sold its share of the residual interest in the pool (collectively referred to as the "2022-1 transaction").

The Company's continued involvement in the unconsolidated VIEs is in the form of servicer of these loans.

The Company does not have variable interest in the Grantor Trust or the issuer established for this transaction.

The sold loans were accounted for under the fair value option and at the point they were designated as held for sale had an aggregate unpaid principal balance of approximately $ 227.6 million, a cumulative fair value mark of $ 15.9 million and unpaid interest of $ 1.5 million.

The sold loans were accounted for under the fair value option and had an aggregate unpaid principal balance of approximately $ 227.6 million, a cumulative fair value mark of $ 15.9 million and unpaid interest of $ 1.5 million.

The Company received $ 245.0 million of net proceeds and by selling both its notes and residual interest, the Company derecognized these loans from its Consolidated Balance Sheets.

Other Loan Sales - In April 2022, the Company entered into an agreement with an institutional investor to sell a population of loans ("Q2 2022 Loan Sale").

The sold loans were accounted for under the fair value option and had an aggregate unpaid principal balance of approximately $ 14.7 million, a cumulative fair value mark of $( 14.1 ) million and unpaid interest and fees of $ 1.6 million.

The Company received $ 2.2 million of net proceeds.

The Q2 2022 Loan Sale qualified for sale accounting treatment and the Company derecognized these loans from its Consolidated Balance Sheets.

Whole Loan Sale Program ‑ In November 2014, the Company entered into a whole loan sale agreement with an institutional investor.

1 unchanged sentence

The Company chose not to renew the arrangement and allowed the agreement to expire on its terms on March 4, 2022.

The originations of loans sold and held for sale during the three months ended March 31, 2022 related to our whole loan sale program was $ 48.7 million and the Company recorded a gain on sale of $ 5.7 million and servicing revenue of $ 4.0 million.

The originations of loans sold and held for sale during the three months ended March 31, 2021 was $ 33.5 million and the Company recorded a gain on sale of $ 4.4 million and servicing revenue of $ 3.1 million.

On December 22, 2021, the Company completed its acquisition of all the voting interests of Hello Digit, Inc.

The originations of loans sold and held for sale during the three months ended June 30, 2022 was insignificant.

Servicing revenue during the same time period was $ 6.3 million.

The gain on sale recorded during the three months ended June 30, 2022 was insignificant as a result of our whole loan sale agreement expiring on March 4, 2022.

The originations of loans sold and held for sale during the three months ended June 30, 2021 was $ 41.6 million and the Company recorded a gain on sale of $ 5.3 million and servicing revenue of $ 3.0 million.

The originations of loans sold and held for sale during the six months ended June 30, 2022 related to our loan sale program was $ 49.0 million and the Company recorded a gain on sale of $ 5.7 million and servicing revenue of $ 10.3 million.

The originations of loans sold and held for sale during the six months ended June 30, 2021 was $ 75.0 million and the Company recorded a gain on sale of $ 9.8 million and servicing revenue of $ 6.0 million.

On December 22, 2021, the Company completed its acquisition of Hello Digit, Inc.

(or "Digit").

4 unchanged sentences

The total consideration the Company provided for Digit, which consisted of cash and equity, was approximately $ 205.3 million.

The Company recognized acquisition and integration related costs of approximately $ 7.3 million in the three months ended March 31, 2022 which are included in the General, administrative and other expense in the Condensed Consolidated Statements of Operations (Unaudited).

The Company recognized acquisition and integration related costs of approximately $ 6.9 million in the three months ended June 30, 2022 and $ 14.2 million in the six months ended June 30, 2022 which are included in the General, administrative and other expense in the Condensed Consolidated Statements of Operations (Unaudited).

Capitalized Software, Other Intangibles and Goodwill

Capitalized software, net consists of the following:

March 31, December 31,

June 30, December 31,

(in thousands) 2022 2021

5 unchanged sentences

Capitalized software, net

Amortization of system development costs and acquired developed technology for three months ended March 31, 2022 and 2021 was $ 7.4 million and $ 3.5 million, respectively.

System development costs capitalized in the three months ended March 31, 2022 and 2021 were $ 11.2 million and $ 5.8 million, respectively.

Amortization of system development costs and acquired developed technology for three months ended June 30, 2022 and 2021 was $ 8.2 million and $ 3.9 million, respectively.

System development costs capitalized in the three months ended June 30, 2022 and 2021 were $ 14.2 million and $ 6.6 million, respectively.

Amortization of system development costs and acquired developed technology for six months ended June 30, 2022 and 2021 was $ 15.6 million and $ 7.4 million, respectively.

System development costs capitalized in the six months ended June 30, 2022 and 2021 were $ 25.4 million and $ 12.4 million, respectively.

Acquired developed technology was $ 48.5 million and is related to the acquisition of Digit on December 22, 2021.

1 unchanged sentence

The gross carrying amount and accumulated amortization, in total and by major intangible asset class are as follows:

March 31, December 31,

June 30, December 31,

(in thousands) 2022 2021

5 unchanged sentences

Total intangible assets, net $ 39,673 $ 43,564

Amortization of intangible assets for the three months ended March 31, 2022 was $ 2.0 million.

There were no intangible assets subject to amortization for the three months ended March 31, 2021.

Expected future amortization expense for intangible assets as of March 31, 2022 is as follows:

Amortization of intangible assets for the three months ended June 30, 2022 was $ 2.0 million.

There were no intangible assets subject to amortization for the three months ended June 30, 2021.

Amortization of intangible assets for the six months ended June 30, 2022 was $ 4.0 million.

There were no intangible assets subject to amortization for the six months ended June 30, 2021.

Expected future amortization expense for intangible assets as of June 30, 2022 is as follows:

(in thousands) Fiscal Years

2022 (remaining nine months)

2022 (remaining six months) $ ( 3,996 )

2024 ( 7,798 )

4 unchanged sentences

The Company recorded goodwill of $ 104.0 million arising from the acquisition of Digit on December 22, 2021.

During the three months ended March 31, 2022, the Company recorded a $ 0.1 million adjustment to goodwill.

During the three months ended June 30, 2022, the Company recorded no adjustments to goodwill.

During the six months ended June 30, 2022, the Company recorded $ 0.1 million adjustments to goodwill.

There was no impairment for the periods presented.

Other assets consist of the following:

March 31, December 31,

June 30, December 31,

(in thousands) 2022 2021

8 unchanged sentences

Total other assets $ 59,230 $ 72,344

Depreciation and amortization expense for the three months ended March 31, 2022 and 2021 was $ 1.3 million and $ 3.5 million, respectively.

Depreciation and amortization expense for the three months ended June 30, 2022 and 2021 was $ 1.3 million and $ 3.9 million, respectively, and for the six months ended June 30, 2022 and 2021 it was $ 2.6 million, and $ 7.3 million, respectively.

The following table presents information regarding the Company's Secured Financing facilities:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Variable Interest Entity Facility Amount Maturity Date (1)

8 unchanged sentences

(1) The interest rate on the Secured Financing - CCW facility is LIBOR (minimum of 1.00 %) plus 6.00 % on the first $ 18.8 million of principal outstanding and LIBOR (minimum of 0.00 %) plus 3.41 % on the remaining outstanding principal balance.

(2) The Credit Card Warehouse has an aggregate borrowing capacity of up to $ 150.0 million;

comprised of $ 75.0 million committed purchase amount and $ 75.0 million uncommitted purchase amount.

The following table presents information regarding asset-backed notes:

March 31, 2022

June 30, 2022

Variable Interest Entity Initial note amount issued (a)

6 unchanged sentences

Asset-backed notes recorded at fair value:

Oportun Issuance Trust (Series 2022-A) $ 400,000 $ 410,211 $ 384,896 $ 422,897 5.36 % 2 years

Oportun Issuance Trust (Series 2021-C) 500,000 512,762 456,610 520,998 2.48 % 3 years

22 unchanged sentences

The following table presents information regarding the Company's Acquisition Financing:

March 31, 2022 December 31, 2021

Variable Interest Entity Original Balance Maturity Date Interest Rate Balance Balance

June 30, 2022 December 31, 2021

Variable Interest Entity Original Balance (1)

Maturity Date Interest Rate (2)

Balance Balance

(in thousands)

Oportun RF, LLC $ 116,000 October 1, 2024 LIBOR (minimum of 0.00 %) + 8.00 %

Oportun RF, LLC $ 116,000 October 1, 2024 SOFR (minimum of 0.00 %) + 8.00 %

$ 113,951 $ 114,092

As of March 31, 2022, and December 31, 2021, the Company was in compliance with all covenants and requirements of the Secured Financing and Acquisition Financing facilities and asset-backed notes.

(1) The Acquisition Financing Facility was amended on May 24, 2022 and upsized for an additional $ 20.9 million.

(2) The interest rate on the Acquisition Financing facility was LIBOR (minimum of 0.00 %) plus 8.00 % as of December 31, 2021.

On May 24, 2022 the Company completed the issuance of $ 400.0 million of two-year asset-backed notes in a private asset-backed securitization secured by a pool of its unsecured and secured personal installment loans (the “2022-A Securitization”).

The 2022-A Securitization included four classes of fixed rate notes:

Class A, Class B, Class C and Class D notes.

The Class A, Class B and Class C notes were priced with a weighted average yield of 5.68 % per annum.

The Class D notes were initially retained by an affiliate of the Company and subsequently sold to third parties on July 28, 2022.

Also on May 24, 2022, pursuant to an amended indenture, Oportun RF, LLC, a wholly owned subsidiary of the Company issued an additional $ 20.9 million asset-backed floating rate variable funding note, and an asset-backed residual certificate, both of which were initially secured by Class D Notes and residual cash flows from the Company's 2022-A Securitization and guaranteed by Oportun, Inc.

The amendment also replaced the Acquisition Financing interest rate based on LIBOR with an interest rate based on the secured overnight financing rate (“SOFR”).

The notes bear interest at a rate of SOFR plus 8.00 %.

The amendment did not modify the maturity date of the Acquisition Financing facility, it is still scheduled to pay down based on an amortization schedule with a final payment in October 2024.

On July 28, 2022, Oportun RF, LLC further amended the indenture to incorporate the transfer of certain residual certificates and notes from and to Oportun RF, LLC and increasing the size of the Acquisition Financing facility to $119.5 million.

On July 22, 2022 the Company completed the issuance of $ 400.0 million of Series 2022-2 fixed rate asset-backed notes in a private asset-backed securitization transaction secured by a pool of unsecured and secured installment loans.

The notes were priced with a weighted average yield of 8.00 % per annum and weighted average interest rate of 7.77 % per annum.

As of June 30, 2022, and December 31, 2021, the Company was in compliance with all covenants and requirements of the Secured Financing and Acquisition Financing facilities and asset-backed notes.

Other Liabilities

Other liabilities consist of the following:

March 31, December 31,

June 30, December 31,

(in thousands) 2022 2021

9 unchanged sentences

Preferred Stock - The Board has the authority, without further action by the Company's stockholders, to issue up to 100,000,000 shares of undesignated preferred stock with rights and preferences, including voting rights, designated from time to time by the Board.

There were no shares of undesignated preferred stock issued or outstanding as of March 31, 2022 or December 31, 2021.

Common Stock - As of March 31, 2022 and December 31, 2021, the Company was authorized to issue 1,000,000,000 shares of common stock with a par value of $ 0.0001 per share.

As of March 31, 2022, 33,078,916 and 32,806,893 shares were issued and outstanding, respectively, and 272,023 shares were held in treasury stock.

There were no shares of undesignated preferred stock issued or outstanding as of June 30, 2022 or December 31, 2021.

Common Stock - As of June 30, 2022 and December 31, 2021, the Company was authorized to issue 1,000,000,000 shares of common stock with a par value of $ 0.0001 per share.

As of June 30, 2022, 33,171,619 and 32,899,596 shares were issued and outstanding, respectively, and 272,023 shares were held in treasury stock.

As of December 31, 2021, 32,276,419 and 32,004,396 shares were issued and outstanding, respectively, and 272,023 shares were held in treasury stock.

1 unchanged sentence

The Company's stock-based plans are described and informational disclosures are provided in the Notes to the Consolidated Financial Statements included in the Annual Report.

Stock-based Compensation - Total stock-based compensation expense included in the Condensed Consolidated Statements of Operations (Unaudited) is as follows:

Three Months Ended March 31,

Stock-based Compensation - Total stock-based compensation expense included in the Condensed Consolidated Statements of Operations (Unaudited), net of amounts capitalized to system development costs is as follows:

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2022 2021 2022 2021

4 unchanged sentences

$ 6,929 $ 5,113 $ 13,702 $ 9,936

(1) Amounts shown are net of $ 0.7 million of capitalized stock-based compensation for the three months ended March 31, 2022 and net of $ 0.3 million of capitalized stock-based compensation for the three months ended March 31, 2021.

As of March 31, 2022, and December 31, 2021, the Company’s total unrecognized compensation cost related to unvested stock-based option awards granted to employees was $ 9.5 million and $ 6.9 million, respectively, which will be recognized over a weighted-average vesting period of approximately 2.8 years and 2.2 years, respectively.

As of March 31, 2022 and December 31, 2021, the Company's total unrecognized compensation cost related to unvested restricted stock unit awards granted to employees was $ 72.2 million and $ 54.1 million, respectively, which will be recognized over a weighted average vesting period of approximately 3.1 years and 2.6 years, respectively.

Cash flows from the tax benefits for tax deductions resulting from the exercise of stock options in excess of the compensation expense recorded for those options (excess tax benefits) are required to be classified as cash from financing activities.

The total income tax expense recognized in the income statement for stock-based compensation arrangements for the three months ended March 31, 2022 was $ 0.7 million.

The total income tax expense recognized in the income statement for the stock-based compensation arrangements for the three months ended March 31, 2021 was insignificant.

(1) Amounts shown are net of $ 0.7 million and $ 1.4 million of capitalized stock-based compensation for the three and six months ended June 30, 2022, respectively, and net of $ 0.3 million and $ 0.5 million of capitalized stock-based compensation for the three and six months ended June 30, 2021, respectively.

As of June 30, 2022, and December 31, 2021, the Company’s total unrecognized compensation cost related to nonvested stock-based option awards granted to employees was $ 8.2 million and $ 6.9 million, respectively, which will be recognized over a weighted-average vesting period of approximately 2.8 years and 2.2 years, respectively.

As of June 30, 2022 and December 31, 2021, the Company's total unrecognized compensation cost related to nonvested restricted stock unit awards granted to employees was $ 66.6 million and $ 54.1 million, respectively, which will be recognized over a weighted average vesting period of approximately 2.9 years and 2.6 years, respectively.

Cash flows from the tax shortfalls or benefits for tax deductions resulting from the exercise of stock options in comparison to the compensation expense recorded for those options are required to be classified as cash from financing activities.

The total income tax expense recognized in the income statement for stock-based compensation arrangements for the three and six months ended June 30, 2022 was $ 0.2 million and $ 0.9 million, respectively.

The total income tax expense recognized in the income statement for stock-based compensation arrangements for the three and six months ended June 30, 2021 was insignificant.

Interest Income - Total interest income included in the Condensed Consolidated Statements of Operations (Unaudited) is as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2022 2021 2022 2021

4 unchanged sentences

Non-interest Income - Total non-interest income included in the Condensed Consolidated Statements of Operations (Unaudited) is as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2022 2021 2022 2021

4 unchanged sentences

Total non-interest income $ 18,147 $ 9,665 $ 40,630 $ 17,787

For the three months ended March 31, 2022 and 2021, the Company calculates its year-to-date income tax expense (benefit) by applying the estimated annual effective tax rate to the year-to-date income from operations before income taxes and adjusts the income tax expense (benefit) for discrete tax items recorded in the period.

During the three months ended March 31, 2022 and 2021, the Company recorded income tax expense of $ 12.0 million and $ 1.0 million, respectively, related to continuing operations.

The Company’s reported effective tax rates were 20.8 % and 24.1 % for the three months ended March 31, 2022 and 2021, respectively.

Our effective tax rates for the three months ended March 31, 2022 and 2021 differ from the statutory tax rates primarily due to the impacts of the R&D tax credit and a one-time exercise of stock-based awards.

For the three and six months ended June 30, 2022 and 2021, the Company calculates its year-to-date income tax expense (benefit) by applying the estimated annual effective tax rate to the year-to-date income from operations before income taxes and adjusts the income tax expense (benefit) for discrete tax items recorded in the period.

During the three and six months ended June 30, 2022, the Company recorded income tax expense (benefit) of $( 3.5 ) million and $ 8.5 million, respectively, related to continuing operations, representing an effective income tax rate of 27.7 % and 18.9 %, respectively.

Income tax expense for the three and six months ended June 30, 2021 was $ 2.6 million and $ 3.5 million, respectively, representing an effective income tax rate of 26.0 % and 25.5 %, respectively.

Our effective tax rates for the three and six months ended June 30, 2022 and 2021 differ from the statutory tax rates primarily due to the impacts of the research and development tax credit and a one-time exercise of stock-based awards.

Fair Value of Financial Instruments

1 unchanged sentence

The table below compares the fair value of loans receivable and asset-backed notes to their contractual balances for the periods shown:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

(in thousands) Unpaid Principal Balance Fair Value Unpaid Principal Balance Fair Value

5 unchanged sentences

The following tables present quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for Loans Receivable at Fair Value.

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Minimum Maximum Weighted Average (3)

11 unchanged sentences

(3) Unobservable inputs were weighted by outstanding principal balance, which are grouped by risk (type of customer, original loan maturity terms).

Fair value adjustments related to financial instruments where the fair value option has been elected are recorded through earnings for the three months ended March 31, 2022 and 2021.

Fair value adjustments related to financial instruments where the fair value option has been elected are recorded through earnings for the six months ended June 30, 2022 and 2021.

Certain unobservable inputs may (in isolation) have either a directionally consistent or opposite impact on the fair value of the financial instrument for a given change in that input.

4 unchanged sentences

The Company tested the fair value models by comparing modeled cash flows to historical loan performance to ensure that the models were complete, accurate and reasonable for the Company’s use.

The Company also engaged a third party to create an independent fair value estimate for the Loans Receivable at Fair Value, which provides a set of fair value marks using the Company’s historical loan performance data and whole loan sale prices to develop independent forecasts of borrower behavior.

The Company also engaged a third party to create an independent fair value estimate for substantially all Loans Receivable at Fair Value, which provides a set of fair value marks using the Company’s historical loan performance data and whole loan sale prices to develop independent forecasts of borrower behavior.

Their model generates expected cash flows which were then aggregated and compared to the Company’s actual cash flows within an acceptable range.

3 unchanged sentences

The table below presents a reconciliation of Loans Receivable at Fair Value on a recurring basis using significant unobservable inputs:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2022 2021 2022 2021

2 unchanged sentences

Principal payments from customers ( 436,028 ) ( 308,371 ) ( 1,072,072 ) ( 624,258 )

( 636,044 ) ( 315,887 )

Gross charge-offs ( 65,876 ) ( 32,238 ) ( 128,434 ) ( 73,197 )

Net increase (decrease) in fair value ( 34,605 ) 17,809 ( 51,542 ) 39,371

( 16,937 ) 21,562

Balance – end of period $ 2,854,594 $ 1,726,914 $ 2,854,594 $ 1,726,914

(1) The principal payment from customers shown for the three months ended March 31, 2022 includes $ 227.6 million of unpaid principal balance of loans sold in the 2022-1 transaction.

The net increase (decrease) in fair value shown for the three months ended March 31, 2022 includes $ 15.9 million related to the cumulative fair value mark on the loans sold in the 2022-1 transaction.

For details regarding the 2022-1 transaction, refer to Note 5, Loans Held for Sale and Loans Sold.

As of March 31, 2022, the aggregate fair value of loans that are 90 days or more past due and in non-accrual status was $ 3.7 million, and the aggregate unpaid principal balance for loans that are 90 days or more past due was $ 23.0 million.

As of June 30, 2022, the aggregate fair value of loans that are 90 days or more past due and in non-accrual status was $ 3.1 million, and the aggregate unpaid principal balance for loans that are 90 days or more past due was $ 25.3 million.

As of December 31, 2021, the aggregate fair value of loans that are 90 days or more past due and in non-accrual status was $ 3.5 million, and the aggregate unpaid principal balance for loans that are 90 days or more past due was $ 20.7 million.

1 unchanged sentence

The following table presents the carrying value and estimated fair values of financial assets and liabilities disclosed but not carried at fair value and the level within the fair value hierarchy:

March 31, 2022

June 30, 2022

Carrying value Estimated fair value Estimated fair value

17 unchanged sentences

• Loans held for sale ‑ The fair values of loans held for sale are based on a negotiated agreement with the purchaser.

• Secured financing ‑ The fair value of the secured financing facilities has been calculated using discount rates equivalent to the weighted-average market yield of comparable debt securities, which is a Level 2 input measure.

◦ Acquisition financing ‑ The fair value of the acquisition financing is estimated to equal carrying value due to it being a floating rate facility.

There were no transfers in or out of Level 3 assets and liabilities for the three months ended March 31, 2022 and 2021 and the year ended December 31, 2021.

• Secured financing and acquisition financing ‑ The fair values of the secured financing and acquisition financing facilities have been calculated using discount rates equivalent to the weighted-average market yield of comparable debt securities, which is a Level 2 input measure.

There were no transfers in or out of Level 3 assets and liabilities for the three and six months ended June 30, 2022 and 2021 and the year ended December 31, 2021.

Leases, Commitments and Contingencies

Leases - The Company’s leases are primarily for real property consisting of retail locations and office space and have remaining lease terms of 10 years or less.

During the first quarter of 2022, we made the decision to close an additional 27 retail locations in April 2022 and we have incurred $ 0.2 million in expenses in the first quarter of 2022 related to the accelerated amortization of right of use assets.

During the first quarter of 2022, we made the decision to close an additional 27 retail locations in April 2022 and we have incurred $ 1.2 million and $ 1.4 million for the three and six months ended June 30, 2022 in expenses related to the accelerated amortization of right of use assets.

The Company has elected the practical expedient to keep leases with terms of 12 months or less off the balance sheet as no recognition of a lease liability and a right-of-use asset is required.

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The Company uses its contractual borrowing rate to determine lease discount rates.

As of March 31, 2022, maturities of lease liabilities, excluding short-term leases and leases on a month-to-month basis, were as follows:

As of June 30, 2022, maturities of lease liabilities, excluding short-term leases and leases on a month-to-month basis, were as follows:

(in thousands) Operating Leases

Lease expense

2022 (remaining nine months) $ 11,228

2022 (remaining six months) $ 7,375

Total lease payments 45,564

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Sublease income

2022 (remaining nine months) $ ( 448 )

2022 (remaining six months) $ —

2023 and thereafter —

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Weighted average discount rate 4.01 %

Rental expenses under operating leases for the three months ended March 31, 2022 and 2021, w a s $ 4.4 million and $ 9.4 million, respectively.

Rental expenses under operating leases for the three and six months ended June 30, 2022, were $ 5.7 million, and $ 10.1 million, respectively, and for the three and six months ended June 30, 2021, were $ 6.2 million, and $ 15.6 million, respectively.

Purchase Commitments ‑ The Company has commitments to purchase information technology and communication services in the ordinary course of business, with various terms through 2026.

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The Company’s purchase obligations are $ 12.8 million for the remainder of 2022, $ 11.3 million in 2023, $ 4.7 million in 2024, $ 1.8 million in 2025 and $ 0.0 million in 2026 and thereafter.

Bank Partnership Program and Servicing Agreement - The Company entered into a bank partnership program with MetaBank, N.A.

on August 11, 2020.

In accordance with the agreements underlying the bank partnership program, Oportun has a commitment to purchase an increasing percentage of program loans originated by MetaBank based on thresholds specified in the agreements.

Lending under the partnership was launched in August of 2021 and as of March 31, 2022, the Company has a commitment to purchase an additional $ 3.4 million of program loans based on originations through March 31, 2022.

Bank Partnership Program and Servicing Agreement - The Company entered into a bank partnership program with Pathward, N.A.

(formerly known as MetaBank, N.A.) on August 11, 2020.

In accordance with the agreements underlying the bank partnership program, Oportun has a commitment to purchase an increasing percentage of program loans originated by Pathward based on thresholds specified in the agreements.

Lending under the partnership was launched in August of 2021 and as of June 30, 2022, the Company has a commitment to purchase an additional $ 1.2 million of program loans based on originations through June 30, 2022.

Whole Loan Sale Program ‑ Through March 4, 2022, the Company had a commitment to sell to a third-party institutional investor 10 % of its unsecured loan originations that satisfy certain eligibility criteria, and an additional 5 % at the Company’s sole option.

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For details regarding the whole loan sale program, refer to Note 5, Loans Held for Sale and Loans Sold .

Unfunded Loan and Credit Card Commitments - Unfunded loan and credit card commitments at March 31, 2022 and December 31, 2021 were $ 56.0 million and $ 39.8 million, respectively.

Unfunded Loan and Credit Card Commitments - Unfunded loan and credit card commitments at June 30, 2022 and December 31, 2021 were $ 58.5 million and $ 39.8 million, respectively.

WebBank has a direct obligation to borrowers to fund such credit card commitments subject to the respective account agreements with such borrowers;

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The stated purpose of the CID is to determine whether small-dollar lenders or associated persons, in connection with lending and debt-collection practices, have failed to comply with certain federal consumer protection laws over which the CFPB has jurisdiction.

The Company has received additional information requests related to the CID.

The Company received additional information requests related to the CID.

The information requests are focused on the Company's legal collection practices from 2019 to 2021 and hardship treatments offered to members during the COVID-19 pandemic.

The Company is cooperating fully with the CFPB with respect to this matter and the Company believes that its

business practices have been in full compliance with applicable laws.

Because the CFPB has broad authority to determine what it views as potentially unfair, deceptive or abusive acts or practices, at this time, the Company is unable to predict the outcome of the Oportun investigation.

Digit received a CID from the CFPB in June 2020.

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The stated purpose of the CID is to determine whether Digit, in connection with offering its products or services, misrepresented the terms, conditions, or costs of the products or services in a manner that is unfair, deceptive, or abusive.

The Company, including Digit, are cooperating fully with the CFPB with respect to both of these matters and, although the Company believes that the business practices of the Company, including Digit, have been in full compliance with applicable laws, because the CFPB has broad authority to determine what it views as potential unfair, deceptive or abusive acts or practices, at this time, the Company is unable to predict the outcomes of these CFPB investigations.

The Company, including Digit, have cooperated fully with the CFPB with respect to this matter and, while the Company believes that the business practices of the Company, including Digit, have been in full compliance with applicable laws, the Company and the CFPB have reached an agreement in principle with respect to resolution of the Digit matter.

The settlement will include a civil monetary penalty and the Company has established a reserve of approximately $ 2.8 million that was recorded in the Condensed Consolidated Statements of Operations (Unaudited) for the six months ended June 30, 2022.

From time to time, the Company may bring or be subject to other legal proceedings and claims in the ordinary course of business, including legal proceedings with third parties asserting infringement of their intellectual property rights, consumer litigation, and regulatory proceedings.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements