21 unchanged sentences
• our ability to manage loan non-performance, delinquencies and charge-off rates;
−Removed: • our ability to obtain any additional financing or any refinancing of our debt, including our plan to draw down an additional incremental commitment under the Amended Credit Agreement;
+Added: • our ability to obtain any additional financing or any refinancing of our debt;
• our ability to effectively estimate the fair value of our loans receivable held for investment and our asset-backed notes;
8 unchanged sentences
• our expectation regarding the transfer of certain loans receivable;
−Removed: • our ability to realize the expected benefits from the reduction in workforce and other streamlining measures announced in February and
+Added: • our ability to realize the expected benefits from the reduction in workforce and other streamlining measures announced in February, May, and November 2023, including our estimate of the charges and expenditures, and the timing thereof;
+Added: • our plans to review strategic options for our credit card portfolio;
• our expectations regarding our costs and seasonality;
36 unchanged sentences
We offer access to a comprehensive suite of digital banking products, offered either directly or through partners, including lending, savings and investing powered by A.I.
−Removed: and tailored to each member's goals to make achieving financial health automated.
−Removed: Our financial products allow us to meet our members where they are and assist them with their overall financial health, resulting in opportunities to present multiple relevant products to our
−Removed: Our credit products include personal loans, secured personal loans and credit cards.
+Added: Our financial products allow us to meet our members where they are and assist them with their overall financial health, resulting in opportunities to present multiple relevant products to our members.
+Added: Our credit products include personal loans, secured personal loans
+Added: and credit cards.
Our digital banking products include automated savings, long-term investing and retirement savings.
Consumers are able to become members and access our products through our Oportun Mobile App and the Oportun.com website, which are our primary channels for onboarding and serving members.
−Removed: As of July 31, 2023, our personal loan products are also available over the phone or through our 167 Oportun retail locations, and at 74 of our Lending as a Service partner locations.
+Added: As of September 30, 2023 our personal loan products are also available over the phone or through our 170 Oportun retail locations, and at 363 of our Lending as a Service partner locations.
Credit Products
1 unchanged sentence
We charge fixed interest rates on our loans, which vary based on the amount disbursed and applicable state law, with a cap of 36% annual percentage rate (“APR”) in all cases.
−Removed: As of June 30, 2023, for all active loans in our portfolio and at time of disbursement, the weighted average term and APR at origination was 40 months and 32.3%, respectively.
−Removed: The average loan size for loans we originated during the three months ended June 30, 2023 was $4,101.
+Added: As of September 30, 2023, for all active loans in our portfolio and at time of disbursement, the weighted average term and APR at origination was 40 months and 32.6%, respectively.
+Added: The average loan size for loans we originated during the three months ended September 30, 2023 was $4,036.
Our loans do not have prepayment penalties or balloon payments, and typically range in size from $300 to $10,000 with terms of 12 to 54 months.
1 unchanged sentence
As part of our underwriting process, we verify income for all applicants and only approve loans that meet our ability-to-pay criteria.
−Removed: As of June 30, 2023, we originate unsecured personal loans in 6 states through state licenses and in 36 through our partnership with Pathward, N.A.
+Added: As of September 30, 2023, we originate unsecured personal loans in 6 states through state licenses and in 36 states through our partnership with Pathward, N.A.
(formerly known as MetaBank, N.A.).
1 unchanged sentence
Our secured personal loans range in size from $2,525 to $18,500 with terms ranging from 24 to 64 months.
−Removed: The average loan size for secured personal loans we originated during the three months ended June 30, 2023 was $7,486.
−Removed: As of June 30, 2023, for all active loans in our portfolio and at time of disbursement, the weighted average term and APR at origination was 51 months and 28.3%, respectively.
+Added: The average loan size for secured personal loans we originated during the three months ended September 30, 2023 was $7,190.
+Added: As of September 30, 2023, for all active loans in our portfolio and at time of disbursement, the weighted average term and APR at origination was 51 months and 28.6%, respectively.
As part of our underwriting process, we evaluate the collateral value of the vehicle, verify income for all applicants and only approve loans that meet our ability-to-pay criteria.
−Removed: Our secured personal loans are currently offered in California, Texas, Florida, Arizona and New Jersey and we are in the process of considering expansion into other states.
−Removed: Credit Cards - We lau nched Oportun® Visa® Credit Card, issued by WebBank, Member FDIC, in December 2019, and offer credit cards in 44 states as of June 30, 2023 .
+Added: Our secured personal loans are currently offered in California and we are in the process of considering expansion into other states.
+Added: Credit Cards - We lau nched Oportun® Visa® Credit Card, issued by WebBank, Member FDIC, in December 2019, and offer credit cards in 44 states as of September 30, 2023 .
Credit lines on our credit cards range in size from $300 to $3,000 with an APR between 24.9% to 29.9%.
−Removed: The average APR of the outstanding credit card receivables was 29.8% as of June 30, 2023 .
−Removed: The average credit line for credit cards activated during the three months ended June 30, 2023 was $876.
+Added: The average APR of the outstanding credit card receivables was 29.8% as of September 30, 2023 .
+Added: The average credit line for credit cards activated during the three months ended September 30, 2023 was $990.
Digital Banking Products
1 unchanged sentence
Our Savings product utilizes mac hine learning to analyze a member’s transaction activity and build forecasts of the member’s future cash flows to make small, frequent savings decisions according to the member’s financial goals in a personalized manner.
−Removed: Members integrate their existing bank accounts into the platform or they can make Digit their primary banking relationship through a bank partner.
+Added: Members integrate their existing bank accounts into the platform.
After one year using the automated savings product, members have been able to increase their liquid savings by approximately 50%.
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The investment products include a general investing account and a retirement account for our members’ longer term goals, utilizing smart recommendations to invest savings in risk-adjusted portfolios.
+Added: On November 6, 2023, we announced we are reviewing strategic options for our credit card portfolio, as well as discontinuing our investing and retirement products, in order to strategically realign our resources to focus on other products, as well as to reduce our expenses and simplify our business.
The funds in these savings and investing accounts are owned by our members and are not the assets of the Company.
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Through this new program, we believe we will be able to offer our Lending as a Service Lead Generation program to additional partners with a much faster lead-to-market time while expanding our membership base with a true Oportun service experience.
−Removed: In January 2022, we announced our first all-digital Lending as a Service partnership with Sezzle, a leading provider of Buy Now Pay Later financing options which launched in the first quarter of 2023.
−Removed: Oportun is now available as a checkout option, through Sezzle, for larger purchases which we believe will allow us to reach more new members.
+Added: In order to strategically realign our resources to focus on other products, on November 6, 2023, we announced the sunsetting of our embedded finance partnership with Sezzle, a provider of Buy Now Pay Later financing options, which launched in the first quarter of 2023.
Capital Markets Funding
To fund our growth at a low and efficient cost, we have built a diversified and well-established capital markets funding program, which allows us to partially hedge our exposure to rising interest rates or credit spreads by locking in our interest expense for up to three years.
−Removed: Over the past eight years, we have executed 20 bond offerings in the asset-backed securities market, the last 17 of which include tranches that have been rated
−Removed: investment grade.
+Added: Over the past ten years, we have executed 20 bond offerings in the asset-backed securities market, the last 17 of which include tranches that have been rated investment grade.
We have generally issued two- and three-year fixed rate bonds which have provided us committed capital to fund future loan originations at a fixed Cost of Debt.
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Workforce Optimization and Streamlining Operations
−Removed: On February 9, 2023 and on May 8, 2023, we announced a series of personnel and other cost saving measures to reduce expenses and streamline efficiency, including reducing the size of our corporate staff by 10% and 19%, respectively.
−Removed: These measures have resulted in the reduction of our corporate staff by approximately 28% in 2023.
−Removed: In relation to these and other personnel related activities, the income statement impact of $8.4 million and $15.2 million was recorded through General, administrative and other on the Condensed Consolidated Statements of Operations (Unaudited) for the three and six months ended June 30, 2023, respectively.
−Removed: These reductions are anticipated to result in annualized run-rate savings of $126.0 to $136.0 million.
+Added: On February 9, 2023 and May 8, 2023, we announced a series of personnel and other cost saving measures to reduce expenses and streamline efficiency, including reducing the size of our corporate staff by approximately 10% and 19%, respectively.
+Added: In relation to these and other personnel related activities, the income statement impact of $0.3 million and $14.4 million was recorded through General, administrative and other on the Condensed Consolidated Statements of Operations (Unaudited) for the three and nine months ended September 30, 2023, respectively.
+Added: On November 6, 2023, we announced a series of personnel and other cost saving measures to reduce expenses and streamline efficiency, including reducing the size of our corporate staff by approximately 18%.
We routinely evaluate the balance of investment and productivity of our retail locations.
During the second quarter of 2023, we made the decision to close 32 retail locations and reduce a portion of the workforce who manage and operate these retail locations.
−Removed: In the second quarter of 2023, we incurred $0.2 million in expenses related to these additional retail location closures and estimate remaining expenses of $0.2 million to be recognized in the third quarter of 2023.
−Removed: In addition, we have also recognized $0.8 million related to severance and benefits related to the store closures in the second quarter of 2023 which represents all severance and benefit related costs to be incurred as a result of these store closures.
−Removed: The income statement impact of $1.0 million was recorded through General, administrative and other on the Condensed Consolidated Statements of Operations (Unaudited) for the three and six months ended June 30, 2023.
+Added: The income statement impact of $0.2 million and $1.1 million was recorded through General, administrative and other on the Condensed Consolidated Statements of Operations (Unaudited) for the three and nine months ended September 30, 2023, respectively.
+Added: These amounts included expenses related to the retail location closures and all severance and benefits-related costs.
+Added: While we do not expect any significant additional expenses to be incurred related to these closures, we are continually evaluating the performance of retail and partner locations.
During the first quarter of 2022, we made the decision to close 27 retail locations in April 2022 and reduce a portion of the workforce who manage and operate these retail locations.
−Removed: The income statement impact of $1.5 million and $2.1 million was recorded through General, administrative and other on the Condensed Consolidated Statements of Operations (Unaudited) for the three and six months ended June 30, 2022, respectively .
+Added: The income statement impact of $0.2 million and $1.9 million was recorded through General, administrative and other on the Condensed Consolidated Statements of Operations (Unaudited) for the three and nine months ended September 30, 2022, respectively .
These amounts included expenses related to the retail location closures and all severance and benefits-related costs.
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As of or for the Three Months
−Removed: Ended June 30,
−Removed: As of or for the Six Months
−Removed: Ended June 30,
+Added: Ended September 30,
+Added: As of or for the Nine Months
+Added: Ended September 30,
(in thousands of dollars) 2023 2022 2023 2022
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Member growth is generally an indicator of future revenue, but is not directly correlated with revenue, since not all Members who sign up for one of our products fully utilize or continue to use our products.
−Removed: Members as of June 30, 2023 grew to 2.0 million, as compared to 1.8 million as of June 30, 2022.
+Added: Members as of September 30, 2023 grew to 2.1 million, as compared to 1.9 million as of September 30, 2022.
This increase was due to the success in our marketing efforts.
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We view Products as an indicator of the effectiveness of our member acquisition efforts and multiproduct adoption.
−Removed: Products as of June 30, 2023 grew to 2.2 million as compared to 1.9 million as of June 30, 2022.
−Removed: This increase was due to growth in both our credit products and our digital banking products.
+Added: Products as of September 30, 2023 grew to 2.3 million as compared to 2.0 million as of September 30, 2022.
Aggregate Originations
−Removed: Aggregate Originations decreased to $485.1 million for the three months ended June 30, 2023 from $878.2 million for the three months ended June 30, 2022, representing a 44.8% decrease.
−Removed: The decrease is primarily driven by a decrease in the number of loans originated .
−Removed: We originated 117,940 and 241,256 loans for the three months ended June 30, 2023 and 2022, respectively.
+Added: Aggregate Originations decreased to $482.7 million for the three months ended September 30, 2023 from $634.2 million for the three months ended September 30, 2022, representing a 23.9% decrease.
+Added: The decrease is primarily driven by a decrease in the number of loans originated and the decrease in average loan size.
+Added: We originated 121,431 and 153,680 loans for the three months ended September 30, 2023 and 2022, respectively.
The decrease is primarily due to actions taken to focus lending towards existing members to improve credit outcomes and lower marketing spend.
−Removed: Further, given macroeconomic factors, such as inflation, our borrowers are facing higher costs for food, fuel and rent.
In July 2022, we took numerous actions to improve the credit performance on newly originated loans, including significantly tightening our underwriting standards for all borrowers.
−Removed: The decrease in number of loans originated was partially offset by growth in average loan size due to a focus on returning members.
−Removed: Aggregate Originations decreased to $893.1 million for the six months ended June 30, 2023 from $1,678.3 million for the six months ended June 30, 2022, representing a 46.8% decrease.
+Added: Aggregate Originations decreased to $1,375.8 million for the nine months ended September 30, 2023 from $2,312.5 million for the nine months ended September 30, 2022, representing a 40.5% decrease.
The decrease is primarily driven by a decrease in the number of loans originated .
−Removed: We originated 218,062 and 469,984 loans for the six months ended June 30, 2023 and 2022, respectively.
−Removed: The increase is primarily due to actions taken to focus lending towards existing members to improve credit outcomes and lower marketing spend.
+Added: We originated 339,493 and 623,664 loans for the nine months ended September 30, 2023 and 2022, respectively.
+Added: The decrease is primarily due to actions taken to focus lending towards existing members to improve credit outcomes and lower marketing spend.
Further, given macroeconomic factors, such as inflation, our borrowers are facing higher costs for food, fuel and rent.
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30+ Day Delinquency Rate
−Removed: Our 30+ Day Delinquency Rate was 5.3% and 4.3% as of June 30, 2023 and 2022, respectively.
−Removed: The increase reflects the higher mix of first-time borrowers and the return to pre-pandemic underwriting criteria in late 2021 and early 2022.
+Added: Our 30+ Day Delinquency Rate was 5.5% and 5.4% as of September 30, 2023 and 2022, respectively.
+Added: The increase reflects the higher mix of first-time borrowers and the return to pre-COVID-19 pandemic underwriting criteria in late 2021 and early 2022.
In mid-2022, we took numerous actions to improve the credit performance on newly originated loans;
2 unchanged sentences
Annualized Net Charge-Off Rate
−Removed: Annualized Net Charge-Off Rate for the three months ended June 30, 2023 and 2022 was 12.5% and 8.6%, respectively.
−Removed: Annualized Net Charge-Off Rate for the six months ended June 30, 2023 and 2022 was 12.3% and 8.6%, respectively.
−Removed: The increase is primarily driven by growth in originations to a higher mix of first-time borrowers in 2021 and the first half of 2022.
+Added: Annualized Net Charge-Off Rate for the three months ended September 30, 2023 and 2022 was 11.8% and 9.8%, respectively.
+Added: Annualized Net Charge-Off Rate for the nine months ended September 30, 2023 and 2022 was 12.1% and 9.0%, respectively.
+Added: The increase is primarily driven by credit deterioration in our back book and deterioration of the early stage vintages post initial tightening.
Further, given macroeconomic factors, such as inflation, our borrowers are facing higher costs for food, fuel and rent.
In July 2022, we took numerous actions to improve the credit performance on newly originated loans, including significantly tightening our underwriting standards for all borrowers, particularly for higher risk digital marketing channels, and adjusting loan size based on member free cash flow.
+Added: Since July 2022, we have continued to take additional credit tightening actions.
We also focused lending towards existing and returning members to improve credit outcomes as existing and returning members historically have had lower loss rates.
1 unchanged sentence
As the average life of our loans is only one year, we expect the back book to become less impactful on our losses by the end of 2023.
−Removed: If macroeconomic conditions do not worsen, we anticipate our Annualized Net Charge-Off Rate will decline during 2023 as our back book of loans amortize down.
Return on Equity and Adjusted Return on Equity
−Removed: For the three months ended June 30, 2023 and 2022, Return on Equity was (13.1)% and (5.7)%, respectively, and Adjusted Return on Equity was 2.0% and 2.3%, respectively, For the six months ended June 30, 2023 and 2022, Return on Equity was (46.9)% and 11.8%, respectively, and Adjusted Return on Equity was (34.4)% and 18.2%, respectively.
−Removed: The decreases in Return on Equity for the three and six months ended were primarily due to lower net income.
−Removed: Net income was lower primarily due to higher credit losses and higher cost of funds, partially offset by increased revenue and decreased operating expenses for the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022.
−Removed: The decrease in Adjusted Return on Equity for the three and six months ended June 30, 2023 was primarily due to lower Adjusted Net Income.
−Removed: Adjusted Net Income was lower primarily due to increased fair value of our asset-backed notes, higher credit losses, and higher cost of funds, partially offset by increased revenue and decreased operating expenses for the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022.
+Added: For the three months ended September 30, 2023 and 2022, Return on Equity was (18.6)% and (70.1)%, respectively, and Adjusted Return on Equity was (15.5)% and 5.6%, respectively, For the nine months ended September 30, 2023 and 2022, Return on Equity was (37.3)% and (16.1)%, respectively, and Adjusted Return on Equity was (28.0)% and 15.0%, respectively.
+Added: The increase in Return on Equity for the three months ended September 30, 2023 is primarily due to higher net income.
+Added: Net income was higher primarily due to a 53% decrease in total operating expenses and increase in total revenue partially offset by a net decrease in fair value for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.
+Added: The decrease in Return on Equity for the nine months ended September 30, 2023 was primarily due to lower net income.
+Added: Net income was lower primarily due to net decrease in fair value and higher cost of funds, partially offset by increased revenue and decreased operating expenses for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.
+Added: The decrease in Adjusted Return on Equity for the three and nine months ended September 30, 2023 was primarily due to lower Adjusted Net Income.
+Added: Adjusted Net Income was lower primarily due to increased fair value of our asset-backed notes, higher credit losses, and higher cost of funds, partially offset b y i ncreased revenue and decreased operating expenses for the three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022.
For a reconciliation of Return on Equity to Adjusted Return on Equity, see “Non–GAAP Financial Measures.”
Historical Credit Performance
−Removed: Our Annualized Net Charge-Off Rate ranged between 7% and 9% from 2011 to 2019 and was 9.8% in 2020, a modest variance above this range during the pandemic.
+Added: Our Annualized Net Charge-Off Rate ranged between 7% and 9% from 2011 to 2019 and was 9.8% in 2020, a modest variance above this range during the COVID-19 pandemic.
Due to credit tightening in response to the COVID-19 pandemic and government stimulus payments our Annualized Net Charge-Off Rate decreased to 6.8% in 2021.
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Consistent with our charge-off policy, we evaluate our loan portfolio and charge a loan off at the earlier of when the loan is determined to be uncollectible or when loans are 120 days contractually past due and charge-off a credit card account when it is 180 days contractually past due.
−Removed: *Numbers shown reflect year-to-date amounts for the six months ended June 30, for the indicated fiscal year.
+Added: *Numbers shown reflect year-to-date amounts for the nine months ended September 30, for the indicated fiscal year.
In addition to monitoring our loss and delinquency performance on an owned portfolio basis, we also monitor the performance of our loans by the period in which the loan was disbursed, generally years or quarters, which we refer to as a vintage.
We calculate net lifetime loan loss rate by vintage as a percentage of original principal balance.
−Removed: Net lifetime loan loss rates equal the net lifetime loan losses for a given year through June 30, 2023 divided by the total origination loan volume for that year.
+Added: Net lifetime loan loss rates equal the net lifetime loan losses for a given year through September 30, 2023 divided by the total origination loan volume for that year.
The below chart and table show our net lifetime loan loss rate for each annual vintage of our personal loan product since we began lending in 2006, excluding loans originated from July 2017 to August 2020 under a loan program for borrowers who did not meet the qualifications for our core loan origination program.
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We even achieved a net lifetime loan loss rate of 5.5% during the peak of the recession in 2009.
−Removed: The evolution of our credit models has allowed us to increase our average loan size and commensurately extend our average loan terms.
Cumulative net lifetime loan losses for the 2015, 2016, 2017, and 2018 vintages increased partially due to the delay in tax refunds in 2017 and 2019, the impact of natural disasters such as Hurricane Harvey, and the longer duration of the loans.
1 unchanged sentence
The 2021 vintage is experiencing higher charge-offs than prior vintages primarily due to a higher percentage of loan disbursements to new members.
−Removed: We tightened credit and began reducing loan volumes to new and returning members in the third quarter of 2021 and reduced significantly in the second half of 2022.
+Added: We tightened credit, reduced loan size and loan term, and began reducing loan volumes to new and returning members in the third quarter of 2022 and reduced significantly in the second half of 2022.
We refer to the post-July 2022 underwriting vintages as our front book and the originations made prior to our significant credit-tightening in July 2022 we refer to as the back book.
As the average life of our loans is only one year, we expect the back book to become less impactful on our losses by the end of 2023.
−Removed: 30+ Day Delinquencies Rates on vintages originated since significant July 2022 credit tightening are performing near or better than comparable vintages originated in 2019.
+Added: Net Lifetime Loan Loss Rates on vintages originated since significant July 2022 credit tightening are performing near comparable vintages originated in 2019.
First Payment Defaults on newly-originated loans continue to come in at pre-pandemic 2019 levels.
4 unchanged sentences
Dollar weighted average original term for vintage in months 9.3 9.9 10.2 11.7 12.3 14.5 16.4 19.1 22.3 24.2 26.3 29.0 30.0 32.0 33.3 37.8
−Removed: Net lifetime loan losses as of June 30, 2023 as a percentage of original principal balance 7.7% 8.9% 5.5% 6.4% 6.2% 5.6% 5.6% 6.1% 7.1% 8.0% 8.2% 9.8% 10.7% 8.3%* 12.8%* 2.7%*
−Removed: Outstanding principal balance as of June 30, 2023 as a percentage of original amount disbursed —% —% —% —% —% —% —% —% —% —% —% —% 0.8% 6.1% 31.3% 80.0%
+Added: Net lifetime loan losses as of September 30, 2023 as a percentage of original principal balance 7.7% 8.9% 5.5% 6.4% 6.2% 5.6% 5.6% 6.1% 7.1% 8.0% 8.2% 9.8% 10.7% 8.6%* 14.3%* 6.3%*
+Added: Outstanding principal balance as of September 30, 2023 as a percentage of original amount disbursed —% —% —% —% —% —% —% —% —% —% —% —% 0.8% 2.3% 14.3% 52.8%
* Vintage is not yet fully mature from a loss perspective.
Results of Operations
−Removed: The following tables and related discussion set forth our Condensed Consolidated Statements of Operations (Unaudited) for each of the three and six months ended June 30, 2023 and 2022.
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: The following tables and related discussion set forth our Condensed Consolidated Statements of Operations (Unaudited) for each of the three and nine months ended September 30, 2023 and 2022.
+Added: Three Months Ended September 30, Nine Months Ended September 30,
(in thousands of dollars) 2023 2022 2023 2022
11 unchanged sentences
General, administrative and other 11,862 14,401 52,147 44,698
+Added: Goodwill impairment — 108,472 — 108,472
Total operating expenses 122,506 259,346 404,940 564,576
−Removed: Income (loss) before taxes (17,471) (12,672) (159,004) 44,998
+Added: Income before taxes (37,370) (112,363) (196,374) (67,365)
Income tax expense (benefit) (16,232) (6,536) (58,247) 1,956
−Removed: Net income (loss) $ (14,899) $ (9,157) $ (116,989) $ 36,506
+Added: Net loss $ (21,138) $ (105,827) $ (138,127) $ (69,321)
Total revenue
Three Months Ended
−Removed: Period-to-period Change Six Months Ended
+Added: September 30,
+Added: Period-to-period Change Nine Months Ended
+Added: September 30,
Period-to-period Change
8 unchanged sentences
Interest Income.
−Removed: Total interest income increased by $32.8 million, or 15.8%, from $207.7 million for the three months ended June 30, 2022 to $240.5 million for the three months ended June 30, 2023.
−Removed: This increase was primarily attributable to growth in our Average Daily Principal Balance, which increased from $2.58 billion for the three months ended June 30, 2022 to $2.99 billion for the three months ended June 30, 2023, an increase of 16.2%.
−Removed: The increase was partially offset by a decrease in portfolio yield of 10 basis points in the three months ended June 30, 2023 compared to the three months ended June 30, 2022 driven by lower originations and origination fees due to our tightening of credit underwriting standards and focusing lending towards existing and returning members in the second half of 2022.
−Removed: Existing and returning members generally receive lower APRs, but historically have lower loss rates compared to new members.
−Removed: Total interest income increased by $78.2 million, or 19.6%, from $399.9 million for the six months ended June 30, 2022 to $478.1 million for the six months ended June 30, 2023.
−Removed: This increase was primarily attributable to growth in our Average Daily Principal Balance, which increased from $2.50 billion for the six months ended June 30, 2022 to $3.03 billion for the six months ended June 30, 2023, an increase of 21.5%.
−Removed: The increase was partially offset by a decrease in portfolio yield of 51 basis points in the six months ended June 30, 2023 compared to the six months ended June 30, 2022 driven by lower originations and origination fees due to our tightening of credit underwriting standards and focusing lending towards existing and returning members in the second half of 2022.
+Added: Total interest income increased by $11.1 million, or 4.8%, from $232.1 million for the three months ended September 30, 2022 to $243.3 million for the three months ended September 30, 2023.
+Added: This increase was primarily attributable to growth in our Average Daily Principal Balance, which increased from $2.90 billion for the three months ended September 30, 2022 to $2.97 billion for the three months ended September 30, 2023, an increase of 2.2%.
+Added: The increase was further enhanced by an increase in portfolio yield of 81 basis points in the three months ended September 30, 2023 compared to the three months ended September 30, 2022 driven by an increase in origination fees.
+Added: Total interest income increased by $89.3 million, or 14.1%, from $632.0 million for the nine months ended September 30, 2022 to $721.3 million for the nine months ended September 30, 2023.
+Added: This increase was primarily attributable to growth in our Average Daily Principal Balance, which increased from $2.63 billion for the nine months ended September 30, 2022 to $3.01 billion for the nine months ended September 30, 2023, an increase of 14.3%.
+Added: The increase was partially offset by a decrease in portfolio yield of 5 basis points in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 driven by lower originations and origination fees due to our tightening of credit underwriting standards and focusing lending towards existing and returning members in the second half of 2022.
Existing and returning members generally receive lower APRs, but historically have lower loss rates compared to new members.
Non-interest income.
−Removed: Total non-interest income increased by $8.0 million, or 43.8%, from $18.1 million for the three months ended June 30, 2022 to $26.1 million for the three months ended June 30, 2023.
−Removed: This increase is primarily due to $6.4 million increase in interest earned on neobanking deposit accounts, $3.9 million increase in documentation fees on the Pathward retained loans, $2.3 million increase related to our gain on loan sales, partially offset by $2.8 million decrease in servicing revenue, and $2.2 million decrease in subscription revenue.
−Removed: Total non-interest income increased by $7.4 million, or 18.1%, from $40.6 million for the six months ended June 30, 2022 to $48.0 million for the six months ended June 30, 2023.
−Removed: This increase is primarily due to $11.4 million increase in interest earned on neobanking deposit accounts, $4.3 million increase in documentation fees on the Pathward retained loans, partially offset by $4.0 million decrease in subscription revenue, $3.1 million decrease in servicing revenue and $2.0 million lower gain on loans sold under our whole loan sale programs.
+Added: Total non-interest income increased by $7.0 million, or 39.0%, from $18.0 million for the three months ended September 30, 2022 to $25.0 million for the three months ended September 30, 2023.
+Added: This increase is primarily due to $4.3 million increase in interest earned on neobanking deposit accounts, $3.3 million increase in documentation fees on the Pathward retained loans and $2.4 million increase related to our gain on loan sales, partially offset by $1.5 million decrease in subscription revenue and $0.6 million decrease in sublease income.
+Added: Total non-interest income increased by $14.4 million, or 24.5%, from $58.6 million for the nine months ended September 30, 2022 to $73.0 million for the nine months ended September 30, 2023.
+Added: This increase is primarily due to $17.4 million increase in interest earned on neobanking deposit and other deposit accounts, $8.9 million increase in documentation fees on the Pathward retained loans, partially offset by $6.4 million decrease in servicing revenue, $5.5 million decrease in subscription revenue, and $1.6 million decrease in credit card and sublease income.
See Note 2, Summary of Significant Accounting Policies , and Note 12, Revenue , of the Notes to the Condensed Consolidated Financial Statements (Unaudited) included elsewhere in this report for further discussion on our interest income, non-interest income and revenue.
1 unchanged sentence
Three Months Ended
−Removed: Period-to-period Change Six Months Ended
+Added: September 30,
+Added: Period-to-period Change Nine Months Ended
+Added: September 30,
Period-to-period Change
5 unchanged sentences
Interest Expense.
−Removed: Interest expense increased by $24.3 million, or 142.3%, from $17.1 million for the three months ended June 30, 2022 to $41.4 million for the three months ended June 30, 2023.
+Added: Interest expense increased by $20.3 million, or 76.1%, from $26.7 million for the three months ended September 30, 2022 to $47.0 million for the three months ended September 30, 2023.
$19.8 million of the increase was driven by a 286 bps increase in interest rate.
$0.5 million of the increase was due to an increase in our Average Daily Debt Balance.
−Removed: Our Average Daily Debt Balance increased from $2.32 billion for the three months ended June 30, 2022 to $2.78 billion for the three months ended June 30, 2023, an increase of 19.8%.
−Removed: We financed approximately 92.9% of our loans receivable through debt for the three months ended June 30, 2023, as compared to 90.1% for the three months ended June 30, 2022.
+Added: Our Average Daily Debt Balance increased from $2.69 billion for the three months ended September 30, 2022 to $2.74 billion for the three months ended September 30, 2023, an increase of 1.7% .
+Added: We financed approximately 92.2% of our loans receivable through debt for the three months ended September 30, 2023, as compared to 92.7% for the three months ended September 30, 2022.
Our Cost of Debt has increased due to increases in interest rates and wider credit spreads on our new asset-backed securitization issuances.
−Removed: Interest expense increased by $49.7 million, or 161.3%, from $30.8 million for the six months ended June 30, 2022 to $80.4 million for the six months ended June 30, 2023.
+Added: Interest expense increased by $70.0 million, or 121.8%, from $57.5 million for the nine months ended September 30, 2022 to $127.4 million for the nine months ended September 30, 2023.
$61.5 million of the increase was driven by a 289 bps increase in interest rate.
$8.5 million of the increase was due to an increase in our Average Daily Debt Balance.
−Removed: Our Average Daily Debt Balance increased slightly from $2.24 billion for the six months ended June 30, 2022 to $2.82 billion for the six months ended June 30, 2023, an increase of 25.8%.
−Removed: We financed approximately 93.0% of our loans receivable through debt for the six months ended June 30, 2023, as compared to 89.8% for the six months ended June 30, 2022.
+Added: Our Average Daily Debt Balance increased from $2.39 billion for the nine months ended September 30, 2022 to $2.79 billion for the nine months ended September 30, 2023, an increase of 16.7% .
+Added: We financed approximately 92.7% of our loans receivable through debt for the nine months ended September 30, 2023, as compared to 90.9% for the nine months ended September 30, 2022.
Our Cost of Debt has increased due to increases in interest rates and wider credit spreads on our new asset-backed securitization issuances.
10 unchanged sentences
Three Months Ended
−Removed: Period-to-period Change Six Months Ended
+Added: September 30,
+Added: Period-to-period Change Nine Months Ended
+Added: September 30,
Period-to-period Change
18 unchanged sentences
* Not meaningful
−Removed: (1) The fair value mark on loans sold shown for the three and six months ended June 30, 2023 includes $(18.9) million related to the cumulative fair value mark on the loans sold in other loans sales in Q2 2023.
−Removed: The fair value mark on loans sold shown for the six months ended June 30, 2023 also includes $(37.2) million related to the cumulative fair value mark on the loans sold in other loans sales in Q1 2023.
−Removed: The fair value mark on loans sold shown for the three and six months ended June 30, 2022 includes $(14.1) million related to the cumulative fair value mark on loans sold in the Q2 2022 Loan Sales.
−Removed: The fair value mark on loans sold shown for the six months ended June 30, 2022 also includes $15.9 million related to the cumulative fair value mark on the loans sold in the 2022-1 transaction.
+Added: (1) The fair value mark on loans sold shown for the three and nine months ended September 30, 2023 includes $(31.3) million related to the cumulative fair value mark on the loans sold in other loan sales in Q3 2023.
+Added: The fair value mark on loans sold shown for the nine months ended September 30, 2023 also includes $(18.9) million and $(37.2) million related to the cumulative fair value mark on the loans sold in other loan sales in Q2 2023 and Q1 2023, respectively.
+Added: The fair value mark on loans sold shown for the three and nine months ended September 30, 2022 includes $(21.1) million related to the cumulative fair value mark on loans sold in other loan sales in Q3 2022.
+Added: The fair value mark on loans sold shown for the nine months ended September 30, 2022 also includes $15.9 million related to the cumulative fair value mark on the loans sold in the 2022-1 transaction and $(14.1) million related to the cumulative fair value mark on loans sold in other loan sales in Q2 2022.
This fair value mark on loans sold represents the life-to-date mark-to-market adjustment for the loans sold and is presented separately for the loans sold to assist in reconciling to our non-GAAP measure, Adjusted EBITDA.
−Removed: For details regarding the Q2 2023, Q1 2023 and Q2 2022 other loan sales and the 2022-1 transaction, refer to Note 5, Loans Held for Sale and Loans Sold of the Notes to the Condensed Consolidated Financial Statements (Unaudited) included elsewhere in this report.
+Added: For details regarding other loan sales, refer to Note 5, Loans Held for Sale and Loans Sold of the Notes to the Condensed Consolidated Financial Statements (Unaudited) included elsewhere in this report.
Net increase (decrease) in fair value.
−Removed: Net decrease in fair value for the three months ended June 30, 2023 was $106.5 million.
−Removed: This amount represents a total fair value mark-to-market increase of $7.8 million, and $93.5 million of charge-offs, net of recoveries on Loans Receivable at Fair Value.
−Removed: The total fair value mark-to-market adjustment consists of a $14.2 million mark-to-market adjustment on Loans Receivable at Fair Value due to (a) an increase in the discount rate from 11.07% as of March 31, 2023 to 11.10% as of June 30, 2023, partially offset by (b) a decrease in remaining cumulative charge-offs from 11.72% as of March 31, 2023 to 11.35% as of June 30, 2023.
−Removed: The $12.6 million mark-to-market adjustment on asset-backed notes is due to lower medium-term interest rates and tighter spreads.
−Removed: The total net increase (decrease) in fair value for the three months ended June 30, 2023 and June 30, 2022 also includes a $(18.9) million and ($14.1) million adjustment related to the fair value mark on the loans sold as part of the other loans sales for the three months ended June 30, 2023 and June 30, 2022, respectively.
−Removed: Net decrease in fair value for the six months ended June 30, 2023 was $322.2 million.
+Added: Net decrease in fair value for the three months ended September 30, 2023 was $136.1 million.
This amount represents a total fair value mark-to-market decrease of $16.5 million, and $88.0 million of charge-offs, net of recoveries on Loans Receivable at Fair Value.
−Removed: The total fair value mark-to-market adjustment consists of a $23.1 million mark-to-market reduction on Loans Receivable at Fair Value due to (a) an increase in remaining cumulative charge-offs from 10.38% as of December 31, 2022 to 11.35% as of June 30, 2023, (b) a decrease in average life from 1.00 years as of December 31, 2022 to 0.96 years as of June 30, 2023, partially offset by (c) a decrease in the discount rate from 11.48% as of December 31, 2022 to 11.10% as of June 30, 2023.
+Added: The total fair value mark-to-market adjustment consists of a $(9.0) million mark-to-market adjustment on Loans Receivable at Fair Value due to (a) an increase in remaining cumulative charge-offs from 11.35% as of June 30, 2023 to 11.93% as of September 30, 2023, (b) an increase in the discount rate from 11.10% as of June 30, 2023 to 11.15% as of September 30, 2023 , p artially offset by (c) an increase in average life from 0.96 as of June 30, 2023 to 0.995 as of September 30, 2023.
+Added: The $(14.9) million mark-to-market adjustment on asset-backed notes is due to tighter credit spreads.
+Added: The total net decrease in fair value for the three months ended September 30, 2023 and September 30, 2022 also includes a $(31.3) million and $(21.1) million adjustment related to the fair value mark on the loans sold as part of the other loan sales for the three months ended September 30, 2023 and September 30, 2022, respectively.
+Added: Net decrease in fair value for the nine months ended September 30, 2023 was $458.3 million.
+Added: This amount represents a total fair value mark-to-market decrease of $93.2 million, and $273.0 million of charge-offs, net of recoveries on Loans Receivable at Fair Value.
+Added: The total fair value mark-to-market adjustment consists of a $(32.1) million mark-to-market reduction on Loans Receivable at Fair Value due to (a) an increase in remaining cumulative charge-offs from 10.38% as of December 31, 2022 to 11.93% as of September 30, 2023, (b) a decrease in average life from 1.00 years as of December 31, 2022 to 0.995 years as of September 30, 2023, partially offset by (c) a decrease in the discount rate from 11.48% as of December 31, 2022 to 11.15% as of September 30, 2023.
The $(76.4) million mark-to-market adjustment on asset-backed notes is due to lower medium-term interest rates and tighter spreads.
−Removed: The total net increase (decrease) in fair value for the six months ended June 30, 2023 and June 30, 2022 includes $(56.1) million and $1.7 million in adjustments related to the fair value mark on loans sold as part of the structured and other loan sales for the six months ended June 30, 2023 and June 30, 2022, respectively.
+Added: The total net increase (decrease) in fair value for the nine months ended September 30, 2023 and September 30, 2022 includes $(87.4) million and $(19.4) million in adjustments related to the fair value mark on loans sold as part of the structured and other loan
+Added: sales for the nine months ended September 30, 2023 and September 30, 2022, respectively.
Through the remainder of 2023, we expect to continue to see volatility in fair value primarily as a result of macroeconomic conditions.
1 unchanged sentence
Three Months Ended
−Removed: Period-to-period Change Six Months Ended
+Added: September 30,
+Added: Period-to-period Change Nine Months Ended
+Added: September 30,
Period-to-period Change
4 unchanged sentences
Charge-offs, net of recoveries.
−Removed: Our Annualized Net Charge-Off Rate increased to 12.5% and 12.3% for the three and six months ended June 30, 2023, respectively, from 8.6% and 8.6% for the three and six months ended June 30, 2022, respectively.
−Removed: Net charge-offs for the three months and six months ended June 30, 2023 increased primarily due to a higher mix of first-time borrowers in 2021 and the first half of 2022.
+Added: Our Annualized Net Charge-Off Rate increased to 11.8% and 12.1% for the three and nine months ended September 30, 2023, respectively, from 9.8% and 9.0% for the three and nine months ended September 30, 2022, respectively.
+Added: Net charge-offs for the three months and nine months ended September 30, 2023 increased primarily due to a higher mix of first-time borrowers in 2021 and the first half of 2022.
In response to this increase, we tightened our credit underwriting standards and focused lending towards existing and returning members to improve credit outcomes in the second half of 2022.
5 unchanged sentences
Technology and facilities
−Removed: Technology and facilities expense is the largest segment of our operating expenses, representing the costs required to build and maintain our A.I.-enabled digital platform, and consisting of three components.
+Added: Technology and facilities expense is the largest segment of our operating expenses, representing the costs required to build and maintain our A.I.-enabled digital platform, and consists of three components.
The first component comprises costs associated with our technology, engineering, information security, cybersecurity, platform development, maintenance, and end user services, including fees for consulting, legal and other services as a result of our efforts to grow our business, as well as personnel expenses.
2 unchanged sentences
Three Months Ended
−Removed: Period-to-period Change Six Months Ended
+Added: September 30,
+Added: Period-to-period Change Nine Months Ended
+Added: September 30,
Period-to-period Change
3 unchanged sentences
Technology and facilities.
−Removed: Technology and facilities expense increased by $2.3 million, or 4.4%, from $52.8 million for the three months ended June 30, 2022 to $55.1 million for the three months ended June 30, 2023.
−Removed: The increase is primarily due to $2.8 million higher expenses due to lower capitalization of internally developed software costs related to fewer employees working on software development as a result of our workforce optimization efforts, and $2.0 million increased depreciation commensurate with growth in our internally developed software balance compared to prior year.
−Removed: These increases were offset by $1.4 million lower expenses incurred for temporary contractors to supplement staffing related to new product investment and $0.9 million decrease in salaries, benefits and stock compensation due to the decrease in headcount following our workforce optimization efforts.
−Removed: Technology and facilities expense increased by $10.0 million, or 9.8%, from $102.0 million for the six months ended June 30, 2022 to $112.0 million for the six months ended June 30, 2023.
−Removed: The increase is primarily due to $5.1 million increased depreciation commensurate with growth in our internally developed software balance, $4.1 million increase in salaries and benefits due to the increase in headcount prior to our workforce optimization efforts, $3.1 million increase in service costs related to higher usage of software and cloud services, and $2.3 million higher expenses due to lower capitalization of internally developed software costs related to fewer employees working on software development as a result of our workforce optimization efforts.
−Removed: These increases were offset by $1.5 million lower expenses incurred for temporary contractors to supplement staffing related to new product investment and $3.1 million lower expenses due to lower stock compensation expense, reduction in utility costs in 2023 compared to 2022 and other expenses.
−Removed: We expect our technology and facilities expense may increase in 2023 compared to 2022 due to increased depreciation related to internally developed software and increased service costs due to higher usage of software and cloud services.
+Added: Technology and facilities expense decreased by $3.5 million, or (6.1)%, from $56.1 million for the three months ended September 30, 2022 to $52.7 million for the three months ended September 30, 2023.
+Added: The decrease is primarily due to $4.7 million decrease in salaries and benefits as a result of our workforce optimization efforts and $2.5 million decrease in outsourcing and professional fees.
+Added: These decreases were offset by $1.8 million increase in service cost and $1.7 million increase in depreciation.
+Added: Technology and facilities expense increased by $6.6 million, or 4.2%, from $158.1 million for the nine months ended September 30, 2022 to $164.7 million for the nine months ended September 30, 2023.
+Added: The increase is primarily due to $6.9 million increased depreciation commensurate with growth in our internally developed software balance, $4.2 million increase due to a decrease in capitalization of internally developed software costs related to fewer employees working on software development as a result of our workforce optimization efforts, $2.2 million increase in services cost and $1.8 million increase in software.
+Added: These increases were offset by $4.0 million decrease in outsourcing and professional fees, $2.4 million decrease in other expenses and utilities and $1.8 million decrease in salaries and benefits.
+Added: We expe ct our technology and facilities expense may increase in 2023 compared to 2022 due to increased depreciation related to internally developed software and increased service costs due to higher usage of software and cloud services.
Sales and marketing
3 unchanged sentences
Three Months Ended
−Removed: Period-to-period Change Six Months Ended
+Added: September 30,
+Added: Period-to-period Change Nine Months Ended
+Added: September 30,
Period-to-period Change
4 unchanged sentences
Sales and marketing.
−Removed: Sales and marketing expenses to acquire our customers decreased by $13.2 million, or 40.7%, from $32.4 million for the three months ended June 30, 2022 to $19.2 million for the three months ended June 30, 2023.
−Removed: Our decrease in marketing spend during the three months ended June 30, 2023 was $9.6 million across various marketing channels, including direct mail and digital advertising.
+Added: Sales and marketing expenses to acquire our customers decreased by $2.9 million, or 13.4%, from $21.8 million for the three months ended September 30, 2022 to $18.9 million for the three months ended September 30, 2023 .
We decreased marketing spend as we shifted our strategy to focus lending towards existing and returning members to improve credit outcomes.
−Removed: The decrease was also attributable to a $2.5 million decrease related to outsourcing and professional fees and $1.4 million decrease in salaries and benefits due to the decrease in headcount following our efforts to streamline operations.
−Removed: As a result of our decrease in number of loans originated during the three months ended June 30, 2023, our CAC increased by 21.6% as compared to the three months ended June 30, 2022.
−Removed: Sales and marketing expenses to acquire our customers decreased by $28.5 million, or 42.6%, from $66.9 million for the six months ended June 30, 2022 to $38.4 million for the six months ended June 30, 2023 .
−Removed: Our decrease in marketing spend during the six months ended June 30, 2023 was $23.2 million across various marketing channels, including direct mail and digital advertising.
+Added: The decrease was also attributable to a $2.6 million decrease in salaries and benefits due to the decrease in headcount following our efforts to streamline operations and $2.5 million decrease related to outsourcing and profession al fees, partially offset by a net increase in marketing spend.
+Added: As a result of our decrease in number of loans originated during the three months ended September 30, 2023, our CAC increased by 9.2% as compared to the three months ended September 30, 2022.
+Added: Sales and marketing expenses to acquire our customers decreased by $31.5 million, or 35.5%, from $88.7 million for the nine months ended September 30, 2022 to $57.2 million for the nine months ended September 30, 2023 .
+Added: Our decrease in marketing spend during the nine months ended September 30, 2023 was $21.4 million across various marketing channels, including direct mail and digital advertising.
We decreased marketing spend as we shifted our strategy to focus lending towards existing and returning members to improve credit outcomes.
The decrease was also attributable to a $6.3 million decrease related to outsourcing and professional fees and $4.5 million decrease in salaries and benefits due to the decrease in headcount following our efforts to streamline operations.
−Removed: As a result of our decrease in number of loans originated during the six months ended June 30, 2023, our CAC increased by 23.9% as compared to the six months ended June 30, 2022.
+Added: As a result of our decrease in number of loans originated during the nine months ended September 30, 2023, our CAC increased by 19.0% as compared to the nine months ended September 30, 2022.
We expect our sales and marketing expense to decrease in 2023 compared to 2022 as we maintain focus on our strategy to improve credit outcomes by focusing lending towards existing and returning members.
1 unchanged sentence
Three Months Ended
−Removed: Period-to-period Change Six Months Ended
+Added: September 30,
+Added: Period-to-period Change Nine Months Ended
+Added: September 30,
Period-to-period Change
2 unchanged sentences
Percentage of total revenue 10.7 % 16.0 % 12.2 % 16.6 %
−Removed: Personnel expense decreased by $7.9 million, or 20.4%, from $38.6 million for the three months ended June 30, 2022 to $30.8 million for the three months ended June 30, 2023, primarily driven by the workforce optimization announced in February and May 2023.
−Removed: Personnel expense decreased by $6.5 million, or 8.7%, from $74.6 million for the six months ended June 30, 2022 to $68.1 million for the six months ended June 30, 2023, primarily driven by the workforce optimization announced in February and May 2023.
−Removed: We expect our personnel expense to decrease in 2023 compared to 2022 as a result of the reduction in headcount due to actions taken in February and May 2023 .
+Added: Personnel expense decreased by $11.3 million, or 28.3%, from $40.0 million for the three months ended September 30, 2022 to $28.6 million for the three months ended September 30, 2023, primarily driven by the workforce optimization announced in February and May 2023.
+Added: Personnel expense decreased by $17.8 million, or 15.5%, from $114.5 million for the nine months ended September 30, 2022 to $96.7 million for the nine months ended September 30, 2023, primarily driven by the workforce optimization announced in February and May 2023.
+Added: We expect our personnel expense to decrease in 2023 compared to 2022 as a result of the reduction in headcount due to actions taken in February, May 2023, and November 2023 .
Outsourcing and professional fees
6 unchanged sentences
Three Months Ended
−Removed: Period-to-period Change Six Months Ended
+Added: September 30,
+Added: Period-to-period Change Nine Months Ended
+Added: September 30,
Period-to-period Change
3 unchanged sentences
Outsourcing and professional fees.
−Removed: Outsourcing and professional fees decreased by $7.3 million, or 42%, from $17.2 million for the three months ended June 30, 2022 to $9.9 million for the three months ended June 30, 2023.
−Removed: The decrease is primarily attributable to $2.8 million lower debt financing fees not present in current year, $2.1 million decrease in professional service costs related to credit card programs and other consulting services, $1.5 million decrease related to 58% decline in contact center full-time equivalents ("FTEs") as a result of decrease in demand for new applications and a shift to in-house call services, and $0.7 million decrease in credit report expenses due to the decline in loan application volume.
−Removed: Outsourcing and professional fees decreased by $7.8 million, or 25%, from $31.5 million for the six months ended June 30, 2022 to $23.7 million for the six months ended June 30, 2023.
−Removed: The decrease is primarily attributable to $2.8 million lower debt financing fees not present in current year, $2.2 million decrease in professional service costs related to credit card programs and other consulting services, $1.5 million decrease in credit report expenses due to the decline in loan application volume, and $1.4 million decrease related to 58% decline in contact center FTEs as a result of decrease in demand for new applications and a shift to in-house call services.
+Added: Outsourcing and professional fees decreased by $8.1 million, or 44%, from $18.6 million for the three months ended September 30, 2022 to $10.5 million for the three months ended September 30, 2023.
+Added: The decrease is primarily attributable to $4.3 million decrease in professional service and outsourcing services related to credit card programs, a transition to in-house call services, and other
+Added: consulting services, $2.8 million lower debt financing fees not present in the current year, and $1.0 million decrease in credit report expenses due to the decline in loan application volume.
+Added: Outsourcing and professional fees decreased by $15.9 million, or 32%, from $50.1 million for the nine months ended September 30, 2022 to $34.2 million for the nine months ended September 30, 2023.
+Added: The decrease is primarily attributable to $7.9 million decrease in professional service and outsourced services costs related to credit card programs, a transition to in-house call services, and other consulting services, $5.6 million lower debt financing fees not present in current year, and $2.4 million decrease in credit report expenses due to the decline in loan application volume.
We expect our outsourcing and professional fees to decrease in 2023 compared to 2022 as a result of our continued focus on strong expense discipline and streamlining operations.
3 unchanged sentences
Three Months Ended
−Removed: Period-to-period Change Six Months Ended
+Added: September 30,
+Added: Period-to-period Change Nine Months Ended
+Added: September 30,
Period-to-period Change
3 unchanged sentences
General, administrative and other.
−Removed: General, administrative and other expense increased by $4.2 million, or 25%, from $16.9 million for the three months ended June 30, 2022 to $21.1 million for the three months ended June 30, 2023, primarily due to the establishment of a $7.4 million reserve related to the workforce optimization announced in May 2023.
−Removed: This increase was partially offset by $2.4 million decrease in legal expenses, and $1.2 million decrease in travel expenses.
−Removed: General, administrative and other expense increased by $10.0 million, or 33%, from $30.3 million for the six months ended June 30, 2022 to $40.3 million for the six months ended June 30, 2023, primarily due to the establishment of a $14.2 million reserve related to the workforce optimization announced in February and May 2023.
−Removed: These increases were partially offset by $2.6 million decrease in legal expenses, and $1.4 million decrease in travel expenses.
−Removed: We expect our general, administrative and other expense to decrease in 2023 compared to 2022 as a result of our continued focus on strong expense discipline.
+Added: General, administrative and other expense decreased by $2.5 million, or 18%, from $14.4 million for the three months ended September 30, 2022 to $11.9 million for the three months ended September 30, 2023, due to $1.3 million decrease in acquisition and integration related expenses and $1.1 million decrease in postage, printing, travel and entertainment and other expenses.
+Added: General, administrative and other expense increased by $7.4 million, or 17%, from $44.7 million for the nine months ended September 30, 2022 to $52.1 million for the nine months ended September 30, 2023, primarily due to the establishment of a $14.4 million reserve related to the workforce optimization announced in February and May 2023.
+Added: These increases were partially offset by $2.6 million decrease in legal expenses, $1.7 million decrease in travel expenses, and $1.3 million decrease in acquisition and integration related expenses.
Income taxes consist of U.S.
federal, state and foreign income taxes, if any.
−Removed: For the periods ended June 30, 2023 and 2022, we recognized tax expense (benefit) attributable to U.S.
+Added: For the periods ended September 30, 2023 and 2022, we recognized tax expense (benefit) attributable to U.S.
federal, state and foreign income taxes.
Three Months Ended
−Removed: Period-to-period Change Six Months Ended
+Added: September 30,
+Added: Period-to-period Change Nine Months Ended
+Added: September 30,
Period-to-period Change
4 unchanged sentences
Income tax expense (benefit).
−Removed: Income tax benefit decreased by $0.9 million or 27%, from $3.5 million for the three months ended June 30, 2022 to $2.6 million benefit for the three months ended June 30, 2023, primarily resulting from having lower income and discrete tax expense associated with stock-based compensation for the three months ended June 30, 2023.
−Removed: Income tax expense decreased by $50.5 million or 595%, from $8.5 million for the six months ended June 30, 2022 to $42.0 million benefit for the six months ended June 30, 2023, primarily resulting from the generation of tax credits and having a lower pretax income for the six months ended June 30, 2023 .
+Added: Income tax benefit increased by $9.7 million or 148%, from $6.5 million for the three months ended September 30, 2022 to $16.2 million benefit for the three months ended September 30, 2023, primarily as a result of having a larger pretax loss for the three months ended September 30, 2023.
+Added: Income tax expense decreased by $60.2 million or 3078%, from $2.0 million expense for the nine months ended September 30, 2022 to $58.2 million benefit for the nine months ended September 30, 2023, primarily as a result of having a larger pretax loss for the nine months ended September 30, 2023 and the 2022 goodwill impairment adjustment not present in the current year .
See Note 2, Summary of Significant Accounting Policies , and Note 13, Income Taxes , of the Notes to the Condensed Consolidated Financial Statements (Unaudited) included elsewhere in this report for further discussion on our income taxes.
30 unchanged sentences
• Subtracting the accrued interest and fees as a percentage of loan principal balance from the gross fair value premium as a percentage of loan principal balance to calculate the fair value premium as a percentage of loan principal balance.
−Removed: The table below reflects the application of this methodology for the five quarters since January 1, 2022, on loans held for investment.
+Added: The table below reflects the application of this methodology for the seven quarters since January 1, 2022, on loans held for investment.
The data in the table below represents all of our credit products.
Three Months Ended
−Removed: Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022
+Added: Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022
Weighted average portfolio yield over the remaining life of the loans 29.70 % 30.02 % 29.78 % 29.50 % 29.90 % 30.27 % 30.15 %
30 unchanged sentences
• We believe it is useful to exclude the impact of interest expense associated with the Company's Corporate Financing, as we view this expense as related to our capital structure rather than our funding.
−Removed: • We believe it is useful to exclude the impact of certain non-recurring charges, such as expenses associated with our workforce optimization, acquisition and integration related expenses and other non-recurring charges because these items do not reflect ongoing
−Removed: business operations.
+Added: • We believe it is useful to exclude the impact of certain non-recurring charges, such as expenses associated with our workforce optimization, acquisition and integration related expenses and other non-recurring charges because these items do not reflect ongoing business operations.
Other non-recurring charges include litigation reserve, impairment charges, debt amendment and warrant amortization costs related to our Corporate Financing facility.
4 unchanged sentences
Components of Fair Value Mark-to-Market Adjustment (in thousands)
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
4 unchanged sentences
Total fair value mark-to-market adjustment $ (16,462) $ 21,387 $ (93,159) $ 74,077
−Removed: (1) The fair value mark-to-market adjustment on loans receivable at fair value shown for the three and six months ended June 30, 2023 excludes $(18.9) million related to the cumulative fair value mark on the loans sold in other loan sales in Q2 2023.
−Removed: The fair value mark-to-market adjustment on loans receivable at fair value shown for the six months ended June 30, 2023 excludes $(37.2) million related to the cumulative fair value mark on the loans sold in other loan sales in Q1 2023.
−Removed: The fair value mark-to-market adjustment on loans receivable at fair value shown for the three and six months ended June 30, 2022 excludes $(14.1) million related to the cumulative fair value mark on the loans sold in other loan sales in Q2 2022.
−Removed: The fair value mark-to-market adjustment on loans receivable at fair value shown for the six months ended June 30, 2022 also excludes $15.9 million related to the cumulative fair value mark on the loans sold in the 2022-1 transaction.
−Removed: For details regarding the Q2 2023, Q1 2023 and Q2 2022 other loan sales and the 2022-1 transaction, refer to Note 5, Loans Held for Sale and Loans Sold of the Notes to the Condensed Consolidated Financial Statements (Unaudited) included elsewhere in this report.
−Removed: The following table presents a reconciliation of net income (loss) to Adjusted EBITDA for the three and six months ended June 30, 2023 and 2022:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: (1) The fair value mark-to-market adjustment on loans receivable at fair value excludes mark-to-market adjustments associated with loans sold.
+Added: See the section titled " Total net increase (decrease) in fair valu e" in the Results of Operations section for additional information regarding the fair value mark on loans sold.
+Added: The following table presents a reconciliation of net income (loss) to Adjusted EBITDA for the three and nine months ended September 30, 2023 and 2022:
+Added: Three Months Ended September 30, Nine Months Ended September 30,
Adjusted EBITDA (in thousands)
23 unchanged sentences
• We include the impact of normalized statutory income tax expense by applying the income tax rate noted in the table.
−Removed: The following table presents a reconciliation of net income to Adjusted Net Income (Loss) for the three and six months ended June 30, 2023 and 2022:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: The following table presents a reconciliation of net income to Adjusted Net Income (Loss) for the three and nine months ended September 30, 2023 and 2022:
+Added: Three Months Ended September 30, Nine Months Ended September 30,
Adjusted Net Income (Loss) (in thousands)
14 unchanged sentences
(1) Certain prior-period financial information has been reclassified to conform to current period presentation.
−Removed: (2) Income tax rate for the three and six months ended June 30, 2023 and 2022 is based on a normalized statutory rate.
+Added: (2) Income tax rate for the three and nine months ended September 30, 2023 and 2022 is based on a normalized statutory rate.
Adjusted Earnings (Loss) Per Share (“Adjusted EPS”)
Adjusted Earnings (Loss) Per Share is a non-GAAP financial measure that allows management, investors and our Board to evaluate the operating results, operating trends and profitability of the business in relation to diluted adjusted weighted-average shares outstanding.
−Removed: The following table presents a reconciliation of Diluted EPS to Diluted Adjusted EPS for the three and six months ended June 30, 2023 and 2022.
+Added: The following table presents a reconciliation of Diluted EPS to Diluted Adjusted EPS for the three and nine months ended September 30, 2023 and 2022.
For the reconciliation of net income to Adjusted Net Income (Loss), see the immediately preceding table “Adjusted Net Income (Loss).”
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except share and per share data) 2023 2022 2023 2022
11 unchanged sentences
We believe Adjusted Return on Equity is an important measure because it allows management, investors and our Board to evaluate the profitability of the business in relation to stockholders' equity and how efficiently we generate income from stockholders' equity.
−Removed: The following table presents a reconciliation of Return on Equity to Adjusted Return on Equity as of and for the three and six months ended June 30, 2023 and 2022.
+Added: The following table presents a reconciliation of Return on Equity to Adjusted Return on Equity as of and for the three and nine months ended September 30, 2023 and 2022.
For the reconciliation of net income to Adjusted Net Income (Loss), see the immediately preceding table “Adjusted Net Income (Loss).”
−Removed: As of or for the Three Months Ended June 30, As of or for the Six Months Ended June 30,
+Added: As of or for the Three Months Ended September 30, As of or for the Nine Months Ended September 30,
(in thousands) 2023 2022 2023 2022
8 unchanged sentences
We believe Adjusted Operating Efficiency is an important measure because it allows management, investors and our Board to evaluate how efficiently we manage costs relative to revenue.
−Removed: The following table presents a reconciliation of Operating Efficiency to Adjusted Operating Efficiency for the three and six months ended June 30, 2023 and 2022:
−Removed: As of or for the Three Months Ended June 30, As of or for the Six Months Ended June 30,
+Added: The following table presents a reconciliation of Operating Efficiency to Adjusted Operating Efficiency for the three and nine months ended September 30, 2023 and 2022:
+Added: As of or for the Three Months Ended September 30, As of or for the Nine Months Ended September 30,
(in thousands) 2023 2022 2023 2022
16 unchanged sentences
Our material cash requirements relate to funding our lending activities, our debt service obligations, our operating expenses, and investments in the long-term growth of the Company.
−Removed: During the six months ended June 30, 2023, available liquidity increased primarily due to draws under our PLW facility, the amendment and upsizing of our Corporate Financing facility and our asset-backed borrowings at amortized cost.
+Added: During the nine months ended September 30, 2023, available liquidity increased primarily due to draws under our PLW facility, the amendment and upsizing of our Corporate Financing facility and our asset-backed borrowings at amortized cost.
We generally target liquidity levels to support at least twelve months of our expected net cash outflows, including new originations, without access to our Corporate Financing facility or equity markets.
4 unchanged sentences
The following table summarizes our cash and cash equivalents, restricted cash and cash flows for the periods indicated:
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
(in thousands) 2023 2022
7 unchanged sentences
Operating Activities
−Removed: Our net cash provided by operating activities was $179.4 million and $91.6 million for the six months ended June 30, 2023 and 2022, respectively.
−Removed: Cash flows from operating activities primarily include net income or losses adjusted for (i) non-cash items included in net income or loss, including depreciation and amortization expense, goodwill impairment charges, fair value adjustments, net, origination fees for loans at fair value, net, gain on loan sales, stock-based compensation expense and deferred tax provision, net, (ii) originations of loans sold and held for sale, and
−Removed: proceeds from sale of loans and (iii) changes in the balances of operating assets and liabilities, which can vary significantly in the normal course of business due to the amount and timing of various payments.
+Added: Our net cash provided by operating activities was $286.5 million and $159.3 million for the nine months ended September 30, 2023 and 2022, respectively.
+Added: Cash flows from operating activities primarily include net income or losses adjusted for (i) non-cash items included in net income or loss, including depreciation and amortization expense, goodwill impairment charges, fair value adjustments, net, origination fees for loans at fair value, net, gain on loan sales, stock-based compensation expense and deferred tax provision, net, (ii) originations of loans sold and held for sale, and proceeds from sale of loans and (iii) changes in the balances of operating assets and liabilities, which can vary significantly in the normal course of
+Added: business due to the amount and timing of various payments.
Investing Activities
−Removed: Our net cash provided by (used in) investing activities was $(104.0) million and $(638.0) million for the six months ended June 30, 2023 and 2022, respectively.
+Added: Our net cash provided by (used in) investing activities was $(189.4) million and $(915.9) million for the nine months ended September 30, 2023 and 2022, respectively.
Our investing activities consist primarily of loan originations and loan repayments.
−Removed: Our net cash provided by (used in) investing activities for the six months ended June 30, 2023, includes $1.7 million of proceeds related to the loans sold in other loan sales in Q1 2023 and Q2 2023.
−Removed: Our net cash provided by (used in) investing activities for the six months ended June 30, 2022, includes $247.2 million of proceeds related to a structured loan sale in the first quarter 2022 and other loan sales in Q2 2022.
+Added: Our net cash provided by (used in) investing activities for the nine months ended September 30, 2023, includ es $2.8 million of proceeds related to the loans sold in other loan sales in 2023.
+Added: Our net cash provided by (used in) investing activities for the nine months ended September 30, 2022, includes $247.2 million of proceeds related to a structured loan sale in the first quarter 2022 and other loan sales in the second quarter of 2022.
We invest in purchases of property and equipment and incur system development costs.
Purchases of property and equipment, and capitalization of system development costs may vary from period to period due to the timing of the expansion of our operations, the addition of employee headcount and the development cycles of our system development.
−Removed: The change in our net cash provided by (used in) investing activities is due to disbursements on originations of loans increasing by $779.6 million while repayments of loan principal decreased by $6.0 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 and our proceeds from loan sales originated as held for investment decreased by $245.6 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022.
+Added: The change in our net cash provided by (used in) investing activities is due to disbursements on originations of loans increasing by $998.8 million while repayments of loan principal decreased by $41.0 million for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 and our proceeds from loan sales originated as held for investment decreased b y $245.2 million for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.
Financing Activities
−Removed: Our net cash provided by (used in) financing activities was $(76.8) million and $487.3 million for the six months ended June 30, 2023 and 2022, respectively.
−Removed: For the six months ended June 30, 2023, net cash used in financing activities was primarily driven by scheduled amortization payments on our Acquisition Financing facility, our Series 2019-A, Series 2021-A, Series 2022-2 and Series 2022-3 asset-backed notes, and repayments of borrowings on our CCW facility, partially offset by borrowings under our PLW facility, Corporate Financing facility, and our asset-backed borrowings at amortized cost.
−Removed: For the six months ended June 30, 2022, net cash provided by financing activities was primarily driven the issuance of our Series 2022-A asset-backed securitization and the borrowings under our Secured Financing facilities and Acquisition Financing, partially offset by repayments of borrowings on our Secured Financing facilities and scheduled amortization payments on our Acquisition Financing facility.
+Added: Our net cash provided by (used in) financing activities was $(101.3) million and $835.8 million for the nine months ended September 30, 2023 and 2022, respectively.
+Added: For the nine months ended September 30, 2023, net cash used in financing activities was primarily driven by amortization payments on our Acquisition Financing facility, our Series 2019-A, Series 2021-A, Series 2022-2 and Series 2022-3 asset-backed notes, and repayments of borrowings on our PLW facility and Acquisition Financing facility, partially offset by borrowings under our PLW facility, Corporate Financing facility, and our asset-backed borrowings at amortized cost.
+Added: For the nine months ended September 30, 2022, net cash provided by financing activities was primarily driven by the issuance of our Series 2022-A and Series 2022-2 asset-backed notes and the borrowings under our Secured Financing facilities and Acquisition and Corporate Financing facilities, partially offset by repayments of borrowings on our Secured Financing facilities and scheduled amortization payments on our Acquisition Financing facility and our Series 2019-A and Series 2022-2 asset-backed notes.
Sources of Funds
1 unchanged sentence
Asset-Backed Securitizations
−Removed: As of June 30, 2023, we had $2.12 billion of outstanding asset-backed notes.
+Added: As of September 30, 2023, we had $1.96 billion of outstanding asset-backed notes.
For additional information, see Note 8 , Borrowings of the Notes to the Condensed Consolidated Financial Statements (Unaudited) included elsewhere in this report.
4 unchanged sentences
Our ability to utilize our asset-backed securitization facilities as described herein is subject to compliance with various requirements including eligibility criteria for the loan collateral and covenants and other requirements .
−Removed: As of June 30, 2023, we were in compliance with all covenants and requirements of all our asset-backed notes.
+Added: As of September 30, 2023, we were in compliance with all covenants and requirements of all our asset-backed notes.
Secured Financings
−Removed: As of June 30, 2023 , we had Secured Financing facilities with warehouse lines of $720.0 million in the aggregate with undrawn capacity of $231.8 million.
+Added: As of September 30, 2023 , we had Secured Financing facilities with warehouse lines of $720.0 million in the aggregate with undrawn capacity of $295.5 million.
Our ability to utilize our Secured Financing facilities as described herein is subject to compliance with various requirements, including eligibility criteria for collateral, concentration limits for our collateral pool, and covenants and other requirements.
16 unchanged sentences
The term loan now bears interest at (a) an amount payable in cash equal to 1-month term SOFR plus 9.00% plus (b) an amount payable in cash or in kind, at our option, equal to 3.00%.
−Removed: As of June 30, 2023, we were in compliance with all covenants and requirements on our outstanding debt and available credit.
+Added: As of September 30, 2023, we were in compliance with all covenants and requirements on our outstanding debt and available credit.
For more information regarding our Secured Financing facilities and Acquisition and Corporate Financing, see Note 8, Borrowings of the Notes to the Condensed Consolidated Financial Statements (Unaudited) included elsewhere in this report.
2 unchanged sentences
Pursuant to this agreement, we have a commitment to sell up to $300.0 million of our personal loan originations over the next twelve months.
+Added: We will continue to service these loans upon transfer of the receivables.
While the economics of this transaction are structured as a whole loan sale, the transfer of these loans receivable does not qualify as a sale for accounting purposes.
Accordingly, the related assets remain on our balance sheet and cash proceeds received are reported as a secured borrowing under the caption of asset-backed borrowings at amortized cost with related interest expense recognized over the life of the related borrowing.
−Removed: As part of this agreement, during the three months ended June 30, 2023, we transferred loans receivable totaling $25.0 million.
+Added: As part of this agreement, during the three months ended September 30, 2023, we transferred loans receivable totaling $120.0 million.
+Added: On August 3, 2023, we entered into a forward flow whole loan sale agreement with an institutional investor.
+Added: Pursuant to this agreement, we have a commitment to sell up to $400.0 million of our personal loan originations over the next twelve months.
+Added: We will continue to service these loans upon transfer of the receivables.
+Added: While the economics of this transaction are structured as a whole loan sale, the transfer of these loans receivable does not qualify as a sale for accounting purposes.
+Added: Accordingly, the related assets remain on our balance sheet and cash proceeds received are reported as a secured borrowing under the caption of asset-backed borrowings at amortized cost with related interest expense recognized over the life of the related borrowing.
+Added: As part of this agreement, during the three months ended September 30, 2023, we transferred loans receivable totaling $105.9 million.
Structured loan sales
4 unchanged sentences
Other loan sales
−Removed: During the first quarter of 2023, we entered into agreements to sell certain populations of our personal loans and credit card receivables that had an aggregate unpaid principal balance, including unpaid interest and fees, of approximately $38.2 million.
−Removed: Additionally, during the second quarter of 2023, we entered into agreements to sell certain populations of our personal loans and credit card receivables that had an aggregate unpaid principal balance, including unpaid interest and fees, of approximately $19.5 million.
+Added: We have entered into agreements to sell certain populations of our personal loans and credit card receivables from time to time, including non-performing loans and credit card receivables originated as held for investment, of approximately $38.2 million during the first quarter of 2023, of approximately $19.5 million during the second quarter of 2023, and of approximately $32.5 million during the third quarter of 2023.
For further information on these sales, see Note 5, Loans Held for Sale and Loans Sold of the Notes to the Condensed Consolidated Financial Statements (Unaudited) included elsewhere in this report.
4 unchanged sentences
Pursuant to this agreement, we have a commitment to sell a minimum of $2.0 million of our unsecured loan originations each month, with an option to sell an additional $4.0 million each month, over an approximately one-year period, subject to certain eligibility criteria.
−Removed: The originations of loans sold and held for sale during the three and six months ended June 30, 2023 was $15.6 million and $25.7 million, respectively.
+Added: The originations of loans sold and held for sale during the three and nine months ended September 30, 2023 was $15.9 million and $41.6 million, respectively.
For further information on the whole loan sale transactions, see Note 5, Loans Held for Sale and Loans Sold of the Notes to the Condensed Consolidated Financial Statements (Unaudited) included elsewhere in this report.
6 unchanged sentences
The material cash requirements for our contractual and other obligations primarily include those related our outstanding borrowings under our asset-backed notes, Acquisition Financing and Secured Financing, corporate and retail leases, and purchase commitments for technology used in the business.
−Removed: See Note 8, Borrowings and Note 15, Leases, Commitments and Contingencies of the Notes to the Condensed Consolidated Financial
−Removed: Statements (Unaudited) included elsewhere in this report for more information.
+Added: See Note 8, Borrowings and Note 15, Leases, Commitments and Contingencies of the Notes to the Condensed Consolidated Financial Statements (Unaudited) included elsewhere in this report for more information.
Liquidity Risks
1 unchanged sentence
We do not have any significant unused sources of liquid assets.
−Removed: On the Second Amendment Closing Date, the Company borrowed $20.8 million of Incremental Tranche A-1 Loans and borrowed an additional $4.2 million of Incremental Tranche A-2 Loans on March 27, 2023.
+Added: On the Second Amendment Closing Date, we borrowed $20.8 million of Incremental Tranche A-1 Loans and borrowed an additional $4.2 million of Incremental Tranche A-2 Loans on March 27, 2023.
Under the Amended Credit Agreement, we borrowed an additional $25.0 million of Incremental Tranche B Loans on May 5, 2023 and an additional amount of $25.0 million of Incremental Tranche C Loans on June 30, 2023.
+Added: During June 2023 and August 2023, we entered into forward flow whole loan sale agreements with two institutional investors.
+Added: Pursuant to these agreements, we have a commitment to sell up to $300 million and $400 million of its personal loan originations over the following twelve-month periods.
If our available cash balances are insufficient to satisfy our liquidity requirements, we will seek additional debt or equity financing and we may have to take additional actions to decrease expenses, curtail the origination of loans, and our ability to continue to support our growth and to respond to challenges could be impacted.
16 unchanged sentences
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.