15 unchanged sentences
“Risk Factors” of this Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in this MD&A.
−Removed: We are a digital banking platform that puts our members’ financial goals within reach.
−Removed: With intelligent borrowing, savings, budgeting, and spending capabilities, we empower members with the confidence to build a better financial future .
−Removed: By intentionally designing our products to help solve the financial health challenges facing a majority of people in the U.S., we believe our business is well positioned for significant growth.
+Added: We are a mission-driven fintech that puts our members’ financial goals within reach.
+Added: With intelligent borrowing, savings, and budgeting capabilities, we empower members with the confidence to build a better financial future .
+Added: By intentionally designing our products to help solve the financial health challenges facing a majority of people in the U.S., we believe our business is well positioned for significant growth in the future.
We take a holistic approach to serving our members and view it as our purpose to responsibly meet their current capital needs, help grow our members’ financial profiles, increase their financial awareness and put them on a path to a financially healthy life.
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Department of the Treasury since 2009.
−Removed: With our acquisition of Digit in 2021, we believe we now have a strong competitive advantage over other fintechs and neobanks.
−Removed: As a combined company, we can now 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.
+Added: We offer access to a comprehensive suite of financial products, offered either directly or through partners, including lending, and savings powered by A.I.
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.
−Removed: Our credit products include personal loans, secured personal loans and credit cards.
−Removed: Our digital banking products include digital banking, automated savings, long-term investing and retirement savings.
−Removed: Consumers are able to become members and access our products through our digital banking app — the Oportun Mobile app — and the Oportun.com website, which are our primary channels for onboarding and serving members.
−Removed: Our personal loan products are also available over the phone or through over 700 retail locations, which includes 590 of our Lending as a Service partner locations.
+Added: Our credit products include unsecured and secured personal loans.
+Added: We also offer automated savings through our Set & Save platform.
+Added: Consumers are able to become members and access our products through the Oportun Mobile app and the Oportun.com website, which are our primary channels for onboarding and serving members.
+Added: As of December 31, 2023, our personal loan products are also available over the phone or through over 560 retail locations, which includes 393 of our Lending as a Service partner locations.
Credit Products
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Our loans do not have prepayment penalties or balloon payments, and range in size from $300 to $10,000 with terms of 12 to 54 months.
−Removed: Generally, loan payments are structured on a bi-weekly or semi-monthly basis to coincide with our members' receipt of their income.
+Added: Generally, loan payments are structured on a bi-weekly or semi-monthly basis to coincide with our members' receipt of income.
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 December 31, 2022, we originate unsecured personal loans in 12 states through state licenses and in 30 states through our partnership with Pathward, N.A.
−Removed: (formerly known as MetaBank, N.A.).
+Added: As of December 31, 2023, we originated unsecured personal loans in 4 states through state licenses and in 38 states through our partnership with Pathward, N.A.
Secured Personal Loans - In April 2020, we launched a personal installment loan product secured by an automobile, which we refer to as secured personal loans.
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As of December 31, 2023, for all active loans in our portfolio and at time of disbursement, the weighted average term and APR at origination was 52 months and 28.9%, respectively.
−Removed: As part of our underwriting process, we
−Removed: 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.
+Added: 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.
+Added: Our secured personal loans are currently offered in California and we are in the process of expanding into other states.
Credit Cards - We lau nched Oportun® Visa® Credit Card, issued by WebBank, Member FDIC, in December 2019, and offer credit cards in 36 states as of December 31, 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 December 31, 2022 .
+Added: average APR of the outstanding credit card receivables was 29.8% as of December 31, 2023 .
The average credit line for credit cards activated in 2023 was $979.
−Removed: Digital Banking Products
−Removed: Savings – Our Savings product is designed to understand a member’s cash flows and save the right amount on a regular basis to effortlessly achieve savings goals.
+Added: On November 6, 2023, the Company announced that it was exploring strategic options for our credit card portfolio.
+Added: Oportun Savings
+Added: Savings – Our savings product, Set & Save, is designed to understand a member’s cash flows and save the right amount on a regular basis to effortlessly achieve savings goals.
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 or they can make the Set & Save product their primary banking relationship through a bank partner.
After one year using the automated savings product, members have been able to increase their liquid savings by approximately 50%.
−Removed: Since 2015 Digit has helped members save more than $8.9 billion .
−Removed: Direct – Our Direct product offers a full checking account, through a bank partner, that intelligently organizes and budgets a member’s money across bills, savings, and spending.
−Removed: The bank account with a brain™, Direct leverages the same A.I.
−Removed: engine used for our savings product to automatically identify and organize recurring bills and guides spending to ensure members' savings goals are met, and that members know exactly what they can safely spend.
−Removed: This is on top of what members can expect from a traditional checking account, including a physical and virtual debit card to use for purchases and ATM withdrawals and checks.
−Removed: Investing and Retirement – Our investment and retirement products are a longer-term savings solution via an A.I.-driven portfolio allocation into low-cost investments based upon risk-tolerance.
−Removed: Our long-term investment solutions automatically allocates our members' savings into low-cost risk-adjusted portfolios held in brokerage accounts or tax-advantaged IRAs.
−Removed: Since 2020, our members have invested $66.6 million into long-term goals through low-cost ETF portfolios.
−Removed: 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.
−Removed: The funds in these savings, checking, investing and retirement accounts are owned by members of our digital banking products and are not the assets of the Company.
+Added: Since 2015 our savings product has helped members save more than $10.2 billion .
+Added: The funds in these savings accounts are owned by members of our products and are not the assets of the Company.
Therefore, these funds are not included in the Consolidated Balance Sheets.
Lending as a Service
−Removed: Beyond our core direct-to-consumer lending business, we believe that we can leverage our proprietary credit scoring and underwriting model to partner with other consumer brands and expand our member base.
−Removed: With our Lending as a Service model, our partner markets loans and enters borrower applications into our system and Oportun underwrites, originates and services the loans.
−Removed: Our first lending as a service partner was DolEx Dollar Express, Inc.
+Added: Beyond our core direct-to-consumer lending business, we leverage our proprietary credit scoring and underwriting model to partner with other consumer brands and expand our member base.
+Added: Our first Lending as a Service strategic partner was DolEx Dollar Express, Inc.
with an initial launch in December 2020.
In October of 2021, we launched another Lending as a Service partnership with Barri Financial Group in select locations.
−Removed: In January of 2022, we announced our first all-digital Lending as a Service partnership with Sezzle, a leading provider of Buy Now Pay Later ("BNPL") 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.
−Removed: We believe we will be able to offer Lending as a Service to additional partners, and expand our membership base.
+Added: We recently re-launched our Lending as a Service program with a new streamlined Lead Generation program through which we are able to offer loans through our existing channels by phone, online, or in our retail locations.
+Added: Oportun originates, underwrites, and services the loan.
+Added: 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.
+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 investment grade.
−Removed: We have 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.
−Removed: On July 22, 2022, we issued $400.0 million of amortizing asset-backed notes.
−Removed: On September 14, 2022, we entered into a credit agreement for a $150.0 million senior secured term loan, which was upsized and amended on March 10, 2023 to provide the ability to be able to borrow up to an additional $75.0 million.
−Removed: On March 10, 2023, we borrowed $20.8 million of Incremental Tranche A-1 Loans and intend to borrow an additional $4.2 million of Incremental Tranche A-2 Loans on or about March 27, 2023, which amount has been committed by the applicable lenders.
−Removed: We may borrow up to an aggregate additional amount of $50.0 million on an uncommitted basis, in two $25.0 million tranches, expected to be available, if provided by the applicable lenders, on or about April 21, 2023 and June 23, 2023, respectively.
−Removed: On November 3, 2022, we issued $300.0 million of amortizing asset-backed notes.
−Removed: Through March 4, 2022, we were also party to a whole loan sale program whereby we sold a percentage of our loans to a third-party financial institution.
−Removed: We allowed the whole loan sale program agreement to expire on its own terms.
−Removed: In March 2022, we participated in a securitization and sold loans through the issuance of amortizing asset-backed notes secured by a pool of our unsecured and secured personal installment loans.
−Removed: We also sold our share of the residual interest in the pool.
−Removed: The sold loans had an aggregate unpaid principal balance of approximately $227.6 million ("2022-1 transaction").
−Removed: During 2022, we sold certain populations of our personal loans and credit card receivables that had an aggregate unpaid principal balance, including unpaid interest and fees, of approximately $66.2 million.
−Removed: In addition to possible future whole loan, structured or other loan sales, we also have a $600.0 million Personal Loan Warehouse facility with a term through September 2024 and a $150.0 million Credit Card Warehouse facility with a term through December 2023 which also helps to fund our receivables growth.
−Removed: On March 8, 2023, the Credit Card Warehouse facility
−Removed: was amended, extending its term through December 2024 and reducing its commitment from $150.0 million to $120.0 million.
−Removed: Streamlining Operations
−Removed: On February 9, 2023, we announced that we are taking a series of measures to streamline our operations, including reducing the size of our corporate staff by 10%, impacting approximately 155 employees, and reducing our expenditures on external contractors.
−Removed: In relation to these and other personnel related activities, we expect to incur non-recurring, pre-tax charges of $6 to $7 million in the first quarter of 2023.
−Removed: These reductions are anticipated to result in annualized run-rate savings in compensation and benefits of approximately $38 million beginning in 2023.
−Removed: We have also identified certain non-personnel related operational efficiencies that are anticipated to result in annualized run-rate savings of $10 to $15 million beginning in 2023.
−Removed: Retail Network Optimization
−Removed: During the first quarter of 2022, we closed an additional 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 for the twelve months ended December 31, 2022 was $1.9 million, and was recorded through General, administrative and other on the Consolidated Statements of Operations .
−Removed: This amount included expenses related to the retail location closures and all severance and benefits-related costs.
+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.
+Added: 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.
+Added: In higher interest rate environments we may consider issuing amortizing bonds.
+Added: Workforce Optimization and Streamlining Operations
+Added: During 2023, we announced a series of personnel and other cost savings measures to reduce expenses and streamline efficiency, including reducing our corporate staff by approximately 40%.
+Added: In relation to these and other personnel related activities, the income statement impact of $21.3 million was recorded through General, administrative and other on the Consolidated Statements of Operations for the twelve months ended December 31, 2023.
+Added: We routinely evaluate the balance of investment and productivity of our retail locations.
+Added: During 2023, we made the decision to close 32 retail locations and reduce a portion of the workforce who manage and operate these retail locations.
+Added: The income statement impact of $1.1 million was recorded through General, administrative and other on the Consolidated Statements of Operations for the twelve months ended December 31, 2023.
+Added: These amounts included expenses related to the retail location closures and all severance and benefits-related costs.
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.
−Removed: During the first quarter of 2021, pursuant to our retail network optimization plan we closed 136 retail locations and reduced a portion of the employee workforce who managed and operated these retail locations.
+Added: During 2022, we closed 27 retail locations and we reduced a portion of the workforce who manage and operate these retail locations.
The income statement impact for the twelve months ended December 31, 2022 was $1.9 million, and was recorded through General, administrative and other on the Consolidated Statements of Operations .
This amount 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.
Key Financial and Operating Metrics
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Aggregate Originations $ 1,813,058 $ 2,922,871
+Added: Portfolio Yield
+Added: 32.2 % 32.0 %
30+ Day Delinquency Rate 5.9 % 5.6 %
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$ 2,992,592 $ 2,740,318
−Removed: (1) The 1,479,660 Members and 1,545,463 Products reported as of December 31, 2021 reflect our previously defined and disclosed "Members" and "Products" metrics.
−Removed: Beginning January 1, 2022, we modified our definition of Members to reflect the long-term nature of our relationship with our members and modified our definition of Products to reflect multiproduct adoption by our members.
See “ Glossary ” at the end of Part II of this report for formulas and definitions of our key performance metrics.
We define Members as borrowers with an outstanding or successfully paid off loan, originated by us or under a bank partnership program that we service, or individuals who have been approved for a credit card issued under a bank partnership program.
−Removed: Members also include individuals who have signed-up to use or are using any of our Savings, Direct, Investing and/or Retirement products.
+Added: Members also include individuals who had signed-up to use or are using our Set & Save product or historically our checking, investing and/or retirement products.
We view Members as an indication of growth of our business and our ability to establish long term relationships with the users of our products.
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Members as of December 31, 2023 grew to 2.2 million, as compared to 1.9 million as of December 31, 2022.
−Removed: This increase was due to the success in our marketing efforts during the year.
+Added: This increase was primarily due to our marketing efforts.
+Added: New members seeking our personal loan products are discovering and also activating the Set & Save product via the Oportun Mobile App.
Products refers to the aggregate number of personal loans and/or credit card accounts that our Members have had or been approved for that have been originated by us or through one of our bank partners.
−Removed: Products also include the aggregate number of digital banking products we offer as a result of our acquisition of Digit, including Savings, Direct, Investing and Retirement, that our Members use or have signed-up to use.
−Removed: We view Products as an indicator of the effectiveness of our member acquisition efforts and multiproduct adoption.
+Added: Products also include Set & Save, checking, investing and/or retirement products that our Members use or have signed-up to use.
Products as of December 31, 2023, grew to 2.4 million, compared to the 2.0 million Products we had as of December 31, 2022.
−Removed: This increase was due to growth in both our credit products and our digital banking products.
Aggregate Originations
−Removed: Aggregate Originations increased to $2.92 billion for the year ended December 31, 2022 from $2.30 billion for the year ended December 31, 2021, representing a 27.4% increase.
−Removed: The increase is primarily driven by a growth in average loan size due to a focus on returning members with historically lower credit risk and a larger number of loans originated.
+Added: Aggregate Originations decreased to $1.81 billion for the year ended December 31, 2023, from $2.92 billion for the year ended December 31, 2022, representing a 38.0% decrease.
We originated 467,188 and 764,516 loans for the years ended December 31, 2023 and 2022, respectively.
−Removed: The increase is primarily driven by an increased number of applications due to higher demand, partially offset by a reduction in our approval rate as we tightened credit.
+Added: The decrease in the number of loans originated is primarily due to actions taken to focus lending efforts towards existing members to improve credit outcomes and lower marketing spend.
+Added: Further, given macroeconomic factors, such as inflation, our borrowers are facing higher costs for food, fuel and rent.
+Added: 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.
+Added: We further tightened underwriting standards for returning members in December 2022.
+Added: During the second half of 2023 we continued to tighten underwriting standards for returning members.
+Added: The decrease in number of loans originated was partially offset by growth in average loan size due to a focus on returning members.
+Added: Portfolio Yield
+Added: Portfolio yield increased to 32.2% for the year ended December 31, 2023, from 32.0% for the year ended December 31, 2022 primarily attributable to higher pricing on our personal loan products.
30+ Day Delinquency Rate
Our 30+ Day Delinquency Rate increased to 5.9% as of December 31, 2023, from 5.6% as of December 31, 2022.
−Removed: The increase reflects the higher mix of first-time borrowers and the return to pre-pandemic underwriting criteria later in 2021.
−Removed: In mid-2022, we took numerous actions to improve the credit performance on newly originated loans;
−Removed: 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.
−Removed: We also focused lending towards existing and returning members to address rising delinquencies.
+Added: The increase was partially
+Added: caused by decreasing originations which caused receivables to decrease throughout 2023 as we continued to tighten credit standards throughout the second half of 2023 after significantly tightening underwriting standards in 2022.
+Added: Macroeconomic factors, such as inflation, our borrowers are facing higher costs for food, fuel and rent are also putting pressure on our members.
+Added: Another driver of the increase in the 30+ Day Delinquency rate was that the back book, defined as loans originated prior to July 2022, continued to season.
+Added: As the average life of our loans is only one year, we expect the back book to become less impactful on our losses throughout 2024.
+Added: We further tightened underwriting standards for returning members in December 2022.
+Added: During the second half of 2023 we continued to tighten underwriting standards for returning members.
Annualized Net Charge-Off Rate
Annualized Net Charge-Off Rate for the years ended December 31, 2023 and 2022 was 12.2% and 10.1%, respectively.
−Removed: The increase is primarily driven by a higher mix of first-time borrowers in 2022 compared to 2021.
−Removed: In mid-2022, we took numerous actions to improve the credit performance on newly originated loans;
−Removed: 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.
−Removed: We also focused lending towards existing and returning members to improve credit outcomes as existing and returning members historically have had lower loss rates.
−Removed: Further, due to credit tightening in response to the COVID-19 pandemic and government stimulus payments our Annualized Net Charge-Off Rate was lower in 2021.
−Removed: We anticipate that this rate may increase in 2023 due to the impact of inflation and other macroeconomic factors on members.
+Added: The increase is primarily driven by a deterioration in our back book and deterioration of the vintages originated in the second half of 2022 prior to further tightening underwriting standards for returning members in December 2022.
+Added: The back book continued to season and made-up 68% of charge-offs while only making up 41% of average receivables.
+Added: In addition, the increase was partially caused by decreasing originations which caused receivables to decrease throughout 2023 as we continued to tighten credit standards throughout the second half of 2023.
+Added: We further tightened underwriting standards for returning members in December 2022 and the second half of 2023.
+Added: Following these credit tightening actions, we expect to see improvement in the credit performance of the portfolio in 2024.
Return on Equity and Adjusted Return on Equity
For the year ended December 31, 2023 and 2022, Return on Equity was (37.8)% and (13.5)%, respectively.
−Removed: The decrease in Return on Equity is primarily due to lower net income, primarily as a result of the goodwill impairment.
For the year ended December 31, 2023 and 2022, Adjusted Return on Equity was (26.1)% and 12.1%, respectively.
−Removed: The decrease in Adjusted Return on Equity is primarily due to lower Adjusted Net Income.
−Removed: Adjusted Net Income was lower due to higher credit losses, higher cost of funds and decreased fair value of our loan portfolio as a result of higher loss and discount rate assumptions.
+Added: The decrease in Return on Equity during the period is primarily due to lower net income as a result of higher credit losses.
+Added: The decrease in Adjusted Return on Equity is primarily due to lower Adjusted Net Income as a result of higher credit losses during the period.
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.
−Removed: Our Annualized Net Charge-off Rate increased to 10.1% in 2022 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 10.1% in 2022 primarily due to an increasing interest rate environment, inflation and the cessation of COVID-19 stimulus payments and 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.
−Removed: 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
−Removed: card account when it is 180 days contractually past due.
+Added: The increase is primarily driven by a deterioration in our back book and deterioration of the vintages originated in the second half of 2022 prior to further tightening underwriting standards for returning members in December 2022.
+Added: The back book continued to season and made-up 68% of charge-offs while only making up 41% of average receivables.
+Added: In addition, the increase was partially caused by decreasing originations which caused receivables to decrease throughout 2023 as we continued to tighten credit standards throughout the second half of 2023.
+Added: 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 at the earlier of when the account is determined to be uncollectible or when it is 180 days contractually past due.
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.
−Removed: We calculate net lifetime loan loss rate by vintage as a percentage of original principal balance.
+Added: We calculate net lifetime loan loss rate by
+Added: vintage as a percentage of original principal balance.
Net lifetime loan loss rates equal the net lifetime loan losses for a given year through December 31, 2023, divided by the total origination loan volume for that year.
1 unchanged sentence
100% of those loans were sold pursuant to a whole loan sale agreement.
−Removed: We have managed to stabilize cumulative net loan losses since the financial crisis that started in 2008.
+Added: We were able to stabilize cumulative net loan losses after the financial crisis that started in 2008.
We even achieved a net lifetime loan loss rate of 5.5% during the peak of the recession in 2009.
2 unchanged sentences
The 2018 and 2019 vintages are increasing due to the COVID-19 pandemic.
−Removed: The 2021 vintage is running higher than prior vintages primarily due to a higher percentage of loan disbursements to new members.
−Removed: We have tightened credit and began reducing loan volumes to new and returning members in the third quarter of 2021 and reduced further in the second half of 2022.
+Added: The 2021 vintage is experiencing higher charge-offs than prior vintages primarily due to a higher percentage of loan disbursements to new members.
+Added: We have 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.
+Added: We refer to the post-July 2022 underwriting vintages as our front book and we refer to the originations made prior to our significant credit-tightening in July 2022 as the back book.
+Added: Net Lifetime Loan Loss Rates on vintages originated since significant July 2022 credit tightening are performing near comparable vintages originated in 2019 for the first 7 to 9 months on books but start to diverge due to underperformance of larger loans relative to 2019 and due to longer average term length.
+Added: Macroeconomic factors, such as inflation, our borrowers are facing higher costs for food, fuel and rent are also putting pressure on our members.
+Added: First Payment Defaults on newly-originated loans continue to come in at near pre-pandemic 2019 levels.
+Added: We regard First Payment Defaults to be an early indicator of credit performance as the outstanding principal balance of loans that have their first payment past due are regarded as more likely to default and result in a charge-off.
+Added: First Payment Defaults are calculated as the principal balance of any loan whose first payment becomes 30 days past due, divided by the aggregate principal balance of all loans originated during that same week.
+Added: We employ collection strategies and tools to help customers make ongoing payments against their loans, with new efforts launched that:
+Added: expanded the frequency and content of our digital and telephony communications;
+Added: broadened eligibility for collection tools that help customers address payment difficulties;
+Added: and eased customer access to those collection tools via new online and mobile app self-enrollment capability, supported by a new Collections strategy system that enables centralized, faster, and more-targeted application of strategies.
Year of Origination
31 unchanged sentences
Income (loss) before taxes (253,653) (75,286)
−Removed: Income tax expense 2,458 15,377
+Added: Income tax expense (benefit) (73,702) 2,458
Net income (loss) $ (179,951) $ (77,744)
11 unchanged sentences
Total interest income increased by $87.4 million, or 10.0%, from $876.1 million for 2022 to $963.5 million for 2023.
−Removed: The increase is primarily attributable to growth in our Average Daily Principal Balance, which grew from $1.76 billion for 2021 to $2.74 billion for 2022 , an increase of 56.0%.
−Removed: The increase was partially offset by a decrease in portfolio yield of 82 basis points in the year ended December 31, 2022 compared to the year ended December 31, 2021 driven by 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.
+Added: The increase is primarily attributable to growth in our Average Daily Principal Balance, which grew from $2.74 billion for 2022 to $2.99 billion for 2023 , an increase of 9.2% and an increase in portfolio yield of 23 basis points in the year ended December 31, 2023, compared to the year ended December 31, 2022.
Non-interest income.
Total non-interest income increased by $17.0 million, or 22.2%, from $76.4 million for 2022 to $93.4 million for 2023.
−Removed: This increase is primarily due to $37.5 million attributable to Digit subscription income and $6.7 million increase in servicing revenue.
−Removed: This was partially offset by decreased gain on loans sold of $21.5 million under our whole loan sale programs due to the expiration of our whole loan sale agreement on March 4, 2022.
+Added: This increase is primarily due to a $20.3 million increase in interest earned on Set & Save member accounts, $10.3 million increase in documentation fees and servicing fees on loans retained by Pathward, and $2.8 million increase related to the gain on loan sales.
+Added: The increase was offset by $7.8 million decrease in servicing revenue due to the amortization of our serviced portfolio, a $6.5 million decrease related to subscription revenue, a $1.3 million decrease as a result of a decline in credit card income and a $0.8 million decrease in sublease income.
See Note 2, Summary of Significant Accounting Policies , and Note 12 , Revenue , of the Notes to the Consolidated Financial Statements included elsewhere in this report for further discussion on our interest income, non-interest income and revenue.
9 unchanged sentences
We financed approximately 99.2% of our loans receivable through debt for 2023 as compared to 91.2% for 2022, and our Average Daily Debt Balance increased from $2.50 billion to $2.97 billion for 2023, an increase of 16.6%.
−Removed: Our Cost of Debt has increased due to increases in interest rates and wider credit spreads on our new asset-backed securitization issuances.
−Removed: We expect our interest expense to increase as benchmark interest rates rise and as we continue to fund our portfolio growth through debt.
+Added: Our Cost of Debt has increased due to higher benchmark interest rates and wider credit spreads on financings in 2023 relative to 2022 and higher interest rate on our floating rate debt.
+Added: We expect our interest rates to increase as our asset-backed notes at fair value with lower interest rates are replaced with more expensive current funding.
See Note 2, Summary of Significant Accounting Policies , and Note 8 , Borrowings , in the Notes to the Consolidated Financial Statements included elsewhere in this report for further information on our Interest expense and our borrowings.
5 unchanged sentences
Decreases in the fair value of asset-backed notes increase Net Revenue.
−Removed: We also have derivative instruments related to our bank partnership program with Pathward, N.A.
+Added: We also have a derivative instrument related to our bank partnership program with Pathward, N.A.
Changes in the fair value of the derivative instrument are reflected in the total fair value mark-to-market adjustment below.
19 unchanged sentences
* Not meaningful
−Removed: (1) The fair value mark-to-market adjustment on loans receivable at fair value shown for the year ended December 31, 2022, excludes $(46.1) million related to the cumulative fair value mark on loans sold as part of the structured and other loan sales in 2022.
−Removed: For details regarding the structured and other loan sales in 2022, refer to Note 5, Loans Held for Sale and Loans Sold of the Notes to the Consolidated Financial Statements included elsewhere in this report.
+Added: (1) The fair value mark-to-market adjustment on loans receivable at fair value shown for the year ended December 31, 2023, includes $(118.2) million related to the cumulative fair value mark on loans sold in other sales in 2023.
+Added: 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.
+Added: For details regarding other loan sales, refer to Note 5, Loans Held for Sale and Loans Sold of the Notes to the Consolidated Financial Statements included elsewhere in this report.
Net decrease in fair value.
Net decrease in fair value for 2023 was $596.8 million.
−Removed: This amount represents a total fair value mark-to-market increase of $119.7 million, and $276.8 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 $(68.9) million mark-to-market adjustment on Loans Receivable at Fair Value due to (a) an increase in remaining cumulative charge-offs from 9.60% as of December 31, 2021 to 10.38% as of December 31, 2022, (b) an increase in the discount rate from 6.94% as of December 31, 2021 to 11.48% as of December 31, 2022, partially offset by (c) an increase in average life from 0.86 years as of December 31, 2021 to 1.00 years as of December 31, 2022.
−Removed: The $184.9 million mark-to-market adjustment on asset-back notes is due to rising rates and widening asset-backed securitization spreads.
−Removed: The total net increase (decrease) in fair value for the year ended December 31, 2022 includes a $(46.1) million adjustment related to the fair value mark on loans sold as part of the structured and other loan sales in 2022.
−Removed: In 2023, we expect to continue to see volatility in fair value primarily as a result of macroeconomic conditions.
+Added: This amount represents a total fair value mark-to-market decrease of $109.5 million on Loans Receivable at Fair Value.
+Added: The total fair value mark-to-market adjustment consists of a $(18.2) million mark-to-market adjustment on Loans Receivable at Fair Value due to an increase in remaining cumulative charge-offs from 10.38% as of December 31, 2022 to 12.10% as of December 31, 2023, partially offset by a decrease in the discount rate from 11.48% as of December 31, 2022 to 10.10% as of December 31, 2023.
+Added: The $(100.0) million mark-to-market adjustment on Asset-backed notes is due to rising rates and widening asset-backed securitization spreads.
+Added: The net decrease in charge-offs, net of recoveries, for 2023 was $363.8 million.
+Added: The total net decrease in fair value for the year ended December 31, 2023 includes a $(118.2) million adjustment related to the fair value mark on other loan sales in 2023.
+Added: We expect to continue to see volatility in fair value primarily as a result of macroeconomic conditions.
Charge-offs, net of recoveries
8 unchanged sentences
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.
−Removed: Further, due to credit tightening in response to the COVID-19 pandemic and government stimulus payments, our charge-offs were lower in 2021.
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 the loan is 120 days contractually past due and we charge-off a credit card account when it is 180 days contractually past due.
3 unchanged sentences
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.
−Removed: The first component comprises costs associated with our technology, engineering, information security, cybersecurity, platform development, maintenance, and end user services, including fees for software licenses, consulting, legal and other services as a result of our efforts to grow our business, as well as personnel expenses.
+Added: 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.
The second component includes rent for retail and corporate locations, utilities, insurance, telephony costs, property taxes, equipment rental expenses, licenses and fees and depreciation and amortization.
6 unchanged sentences
Technology and facilities expense increased by $3.3 million, or 1.5%, from $216.1 million for 2022 to $219.4 million for 2023.
−Removed: The increase is primarily due to a $31.7 million increase in salaries and benefits due to the increase in headcount, a $27.2 million increase in service costs related to higher usage of software and cloud services which includes a $7.4 million increase attributable to Digit bank processing fees, $13.5 million incurred for India off-shoring services and other temporary contractors to supplement staffing related to new product investment and $11.5 million of increased depreciation commensurate with growth in internally developed software.
−Removed: These increases are partially offset by $8.0 million lower expense due to higher capitalization of internally developed software in 2022 compared to 2021 and $1.9 million lower office rent due to retail location closures in early 2021 and early 2022.
−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: The increase is primarily due to a $7.8 million increase in depreciation costs commensurate with growth in our internally developed software balance, $7.2 million increase due to a decrease in capitalization of internally developed software following the reductions in force in 2023, $5.7 million increase due to an impairment charge related to the write-off of embedded finance, investing, and retirement products, and a $3.1 million increase in service cost and software.
+Added: The increase was offset by $8.9 million decrease in wages and salaries and benefits, $7.9 million decrease in outsourcing and professional fees, $1.9 million decrease in other expenses and $1.1 million decrease in utilities.
Sales and marketing
9 unchanged sentences
Sales and marketing expenses to acquire our members decreased by $34.7 million, or 31.6%, from $110.0 million for 2022 to $75.3 million f or 2023.
−Removed: Our net decrease in marketing spend during the year ended December 31, 2022 was $14.8 million across various marketing channels, including digital advertising and direct mail.
+Added: Our net decrease in marketing spend during the year ended December 31, 2023 was $21.6 million across various marketing channels, including pay per lead, digital advertising and direct mail.
We decreased marketing spend as we shifted our strategy to focus lending towards existing and returning members to improve credit outcomes.
−Removed: The decrease in marketing spend was partially offset by an increase of $4.1 million related to outsourcing and professional fees primarily due to outsourced telesales FTEs as a result of an increase in demand for new applications and $2.7 million higher salaries and benefit costs due to increased headcount and increase in average compensation.
−Removed: As a result of our decreased marketing spend during the year ended December 31, 2022, our CAC decreased by 7.1%, from $155 for the year ended December 31, 2021 to $144 for the year ended December 31, 2022.
−Removed: 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.
+Added: The decrease was also attributable to a $8.1 million decrease related to outsourcing and professional fees and $6.9 million decrease in salaries and benefits due to the decrease in headcount following our efforts to streamline operations.
+Added: As a result of our decrease in number of loans originated during the year ended December 31, 2023, our CAC increased by 11.8%, from $144 for the year ended December 31, 2022, to $161 for the year ended December 31, 2023.
+Added: We expect our sales and marketing to decrease in 2024 compared to 2023 as we maintain focus on our strategy to improve credit outcomes by focusing on lending towards existing and returning members.
Personnel expense represents compensation and benefits that we provide to our employees, and include salaries, wages, bonuses, commissions, related employer taxes, medical and other benefits provided and stock-based compensation expense for all of our staff with the exception of our telesales, lead generation, and retail operations which are included in sales and marketing expenses and technology which is included in technology and facilities.
3 unchanged sentences
Percentage of total revenue 11.5 % 16.3 %
−Removed: Personnel expense increased by $39.0 million, or 33.7%, from $115.8 million for 2021 to $154.9 million for 2022.
−Removed: $13.2 million of the increase is attributable to the Digit acquisition and the remaining increase is due to a 17.0% increase in U.S.
−Removed: We expect our personnel expense to decrease in 2023 compared to 2022 as a result of our recently announced plan to reduce headcount and streamline operations.
+Added: Personnel expense decreased by $33.0 million, or 21.3%, from $154.9 million for 2022, to $121.8 million for 2023.
+Added: The decrease is attributable to a $19.2 million decrease in wages and salaries, a $7.2 million decrease in stock compensation, a $5.2 million decrease in bonus and a $1.9 million decrease in benefits.
+Added: The decrease was primarily driven by the reductions in force announced during the annual period ended December 31, 2023.
+Added: We expect our personnel expense to decrease in 2024 compared to 2023 as a result of transitioning certain roles to lower cost jurisdictions.
Outsourcing and professional fees
5 unchanged sentences
In addition, outsourcing and professional fees include any financing expenses, including legal and underwriting fees, related to our asset-backed notes.
+Added: We expect our outsourcing and professional fees expense to decrease in 2024 compared to 2022 as a result of our focus to reduce our reliance on outsourced services.
Year Ended December 31, 2023 vs.
3 unchanged sentences
Outsourcing and professional fees .
−Removed: Outsourcing and professional fees increased by $9.7 million, or 16.7%, from $57.9 million for 2021 to $67.6 million for 2022.
−Removed: The increase is primarily attributable to $7.5 million of higher professional service costs related to credit card programs and other consulting services and $3.3 million related to 84.2% growth in contact center outsourced FTEs as a result of an increase in demand for new applications and the new Philippines contact center.
−Removed: These increases were partially offset by a $3.4 million decrease in debt financing fees and expenses incurred on asset-backed notes issued in 2022 compared to asset-backed notes issued in 2021.
−Removed: We expect our outsourcing and professional fees to decrease in 2023 compared to 2022 as a result of our continued focus on cost cutting and streamlining operations.
+Added: Outsourcing and professional fees decreased by $22.2 million, or 32.9%, from $67.6 million for 2022 to $45.4 million for 2023.
+Added: The decrease is primarily attributable to a $7.1 million decrease in outsourcing services, a $6.9 million decrease in fees and expenses related to debt financing, a $5.7 million decrease in professional services, a $3.0 million decrease in credit reports, and a $1.5 million decrease in other expenses.
+Added: The decrease was partially offset by a $2.0 million increase in debt recovery, court filing and legal fees.
+Added: We expect our outsourcing and professional fees to decrease in 2024 compared to 2023 as a result of our continued focus on strong expense discipline and streamlining operations.
General, administrative and other
General, administrative and other expense includes non-compensation expenses for employees, who are not a part of the technology and sales and marketing organization, which include travel, lodging, meal expenses, political and charitable contributions, office supplies, printing and shipping.
−Removed: Also included are franchise taxes, bank fees, foreign currency gains and losses, transaction gains and losses, debit card expenses, litigation reserve, retail network optimization expenses and Digit-related acquisition and integration expenses.
+Added: Also included are franchise taxes, bank fees, foreign currency gains and losses, transaction gains and losses, debit card expenses, litigation reserve, expenses related to workforce optimization and streamlining operations, and Digit-related acquisition and integration expenses.
Year Ended December 31, 2023 vs.
3 unchanged sentences
General, administrative and other .
−Removed: General, administrative and other expense increased by $21.4 million, or 57.0%, from $37.5 million for 2021 to $58.8 million for 2022, primarily due to an increase of $19.6 million of transaction and integration related expenses as a result of the Digit acquisition, $6.1 million of losses related to fraudulent loans, $2.7 million increase in litigation expense related to Digit CID litigation and $7.1 million increase in postage and printing expenses, travel expenses and other general and administrative expenses due to new products and services
−Removed: and continuing growth of the business.
−Removed: These increases were partially offset by a $3.3 million decrease attributable to an impairment charge recognized in 2021 on a right-of-use asset related to our leased office space in San Carlos, California, not present in 2022 and a $10.9 million decrease in retail network optimization expenses incurred in the year ended December 31, 2022 compared to the year ended December 31, 2021.
−Removed: We expect our general, administrative and other expense to decrease in 2023 compared to 2022 as a result of our continued focus on cost cutting and strong expense discipline.
−Removed: Goodwill impairment
−Removed: Year Ended December 31, 2022 vs.
−Removed: (in thousands, except percentages) 2022 2021 $ %
−Removed: Goodwill impairment $ 108,472 $ — $ 108,472 *
−Removed: Percentage of total revenue 11.4 % — %
−Removed: Goodwill impairment.
−Removed: In response to a sustained decline in our share price primarily driven by macroeconomic conditions, we conducted a quantitative test of our goodwill as of September 30, 2022.
−Removed: As a result of this quantitative test, we identified an impairment to goodwill resulting in recognition of a $108.5 million non-cash goodwill impairment charge for the year ended December 31, 2022 .
−Removed: There were no goodwill impairment charges during the year ended December 31, 2021 .
+Added: General, administrative and other expense increased by $13.5 million, or 23.0%, from $58.8 million for 2022, to $72.4 million for 2023, primarily due to an increase of $21.3 million driven by the reductions in force, offset by $2.6 million decrease in litigation expense, a $2.0 million decrease in travel and entertainment, and a $2.0 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 years ended December 31, 2022 and 2021 we recognized tax expense attributable to U.S.
+Added: For the years ended December 31, 2023 and 2022 we recognized tax expense (benefit) attributable to U.S.
federal, state and foreign income taxes.
1 unchanged sentence
(in thousands of dollars) 2023 2022 $ %
−Removed: Income tax expense $ 2,458 $ 15,377 $ (12,919) 84.0 %
+Added: Income tax expense (benefit) $ (73,702) $ 2,458 $ (76,160) 3,098.5 %
Percentage of total revenue (7.0) % 0.3 %
1 unchanged sentence
Income tax expense .
−Removed: Income tax expense decreased by $12.9 million or 84.0%, from $15.4 million for 2021 to $2.5 million for 2022, primarily resulting from the tax benefits of the return-to-provision adjustments, generation of tax credits, and having lower pretax income for the year ended December 31, 2022 as a result of the goodwill impairment, which is non-deductible for income tax purposes.
+Added: Income tax expense decreased by $76.2 million or 3098.5%, from $2.5 million tax expense for 2022 to $73.7 million tax benefit for 2023, primarily resulting from larger pretax losses for the annual period ended December 31, 2023, the tax benefits of the return-to-provision adjustments and the generation of tax credits.
+Added: Valuation Allowance .
+Added: As of December 31, 2023, we have $45.9 million of U.S.
+Added: net deferred tax assets, of which $69.5 million is related to the tax-effected net operating losses, tax credits, and other carryforwards that can be used to offset future U.S.
+Added: taxable income.
+Added: Certain of these carryforwards will expire if they are not used within a specified timeframe.
+Added: At this time, we consider it more likely than not that we will have sufficient U.S.
+Added: taxable income in the future that will allow us to realize these net deferred tax assets.
+Added: However, it is possible that some, or all, of these tax attributes could ultimately expire unused.
+Added: Therefore, if we are unable to generate sufficient U.S.
+Added: taxable income from our operations, a valuation allowance to reduce the U.S.
+Added: net deferred tax assets may be required, which would materially increase income tax expense in the period in which the valuation allowance is recorded.
See Note 2 , Summary of Significant Accounting Policies , and Note 13 , Income Taxes , of the Notes to the Consolidated Financial Statements included elsewhere in this report for further discussion on our income taxes.
5 unchanged sentences
Changes in interest rates, credit spreads, realized and projected credit losses and cash flow timing will lead to changes in fair value and therefore impact earnings.
−Removed: These changes in the fair value of the Loans Receivable at Fair Value may be partially offset by changes in the fair value of the asset-backed notes, depending upon the relative duration of the instruments.
+Added: These changes in the fair value of the Loans Receivable at Fair Value may be partially offset by changes in the fair value of asset-backed notes where the fair value option has been elected, depending upon the relative duration of the instruments.
Fair Value Estimate Methodology for Loans Receivable at Fair Value
14 unchanged sentences
Remaining cumulative charge-offs is the expected net principal charge-offs over the remaining life of the loans and credit cards, divided by the outstanding principal balance.
−Removed: For personal loans, the discount rate is the sum of the interest rate and the credit spread.
−Removed: The interest rate is based upon the interpolated treasury curve rate that corresponds to the average life.
−Removed: The credit spread is based upon the credit spread implied by the loan purchase price at the time loans are sold, updated for observable changes in the fixed income markets, which serve as a proxy for how a potential loan buyer would adjust their yield requirements relative to the originally agreed price.
−Removed: For credit cards, the discount rate is the sum of our weighted average cost of funds and the spread implied by the personal loan discount rate.
−Removed: An implied spread is calculated by subtracting the weighted average borrowing cost of the Personal Loan Warehouse from the personal loan discount rate.
−Removed: This spread is then added to the weighted average borrowing cost of the Credit Card Warehouse to arrive at a discount rate for credit cards.
+Added: For personal loans and credit card, the discount rate is determined by using the Weighted Average Capital Cost (WACC), which was calculated using the Capital Asset Pricing Model (CAPM) method, also considering several components of financing, debt and equity.
It is also possible to estimate the fair value of our loans using a simplified calculation.
1 unchanged sentence
• Subtracting the servicing fee from the weighted average portfolio yield over the remaining life of the loans to calculate net portfolio yield;
−Removed: • Multiplying the net portfolio yield by the weighted average life in years of the loans receivable, which is based upon the contractual amortization of the loans and expected remaining prepayments and charge-offs to calculate net cash flow;
+Added: • Multiplying the net portfolio yield by the weighted average life in years of the loans receivable, which is based upon the contractual amortization of the loans and expected remaining prepayments and charge-offs, to calculate pre-loss net cash flow;
• Subtracting the remaining cumulative charge-offs from the net portfolio yield to calculate the net cash flow;
2 unchanged sentences
The table below reflects the application of this methodology for the eight quarters since January 1, 2022, on loans held for investment.
−Removed: The data for the periods ending on or after December 31, 2021 in the table below represents all of our credit products.
−Removed: The data for the three months ended September 30, 2021 in the table below represents our secured and unsecured loan portfolio.
−Removed: For prior quarters, the data in the table below represents only our unsecured personal loan portfolio which was the primary driver of fair value during those periods.
+Added: The data in the table below represents all of our credit products.
Three Months Ended
16 unchanged sentences
Non-GAAP Financial Measures
−Removed: We believe that the provision of non-GAAP financial measures in this report, including Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Adjusted Operating Efficiency and Adjusted Return on Equity, can provide useful measures for period-to-period comparisons of our core business and useful information to investors and others in understanding and evaluating our operating results.
+Added: We believe that the provision of non-GAAP financial measures in this report, including Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted EPS, Adjusted Operating Efficiency and Adjusted Return on Equity, can provide useful measures for period-to-period comparisons of our core business and useful information to investors and others in understanding and evaluating our operating results.
However, non-GAAP financial measures are not calculated in accordance with United States generally accepted accounting principles, or GAAP, and should not be considered as an alternative to any measures of financial performance calculated and presented in accordance with GAAP.
5 unchanged sentences
▪ Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us.
−Removed: Reconciliations of non-GAAP to GAAP measures can be found below.
Adjusted EBITDA
5 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 a litigation reserve, our retail network optimization plan, impairment charges and acquisition and integration related expenses because these items do not reflect ongoing 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.
+Added: Other non-recurring charges include litigation reserve, impairment charges, debt amendment and warrant amortization costs related to our Corporate Financing.
• We also reverse origination fees for Loans Receivable at Fair Value, net.
9 unchanged sentences
Total fair value mark-to-market adjustment $ (109,548) $ 119,711
−Removed: (1) The fair value mark-to-market adjustment on loans receivable at fair value shown for the year ended December 31, 2022, excludes $(46.1) million related to the cumulative fair value mark on loans sold as part of the structured and other loan sales in 2022.
−Removed: For details regarding the structured and other loan sales in 2022, refer to Note 5, Loans Held for Sale and Loans Sold of the Notes to the Consolidated Financial Statements included elsewhere in this report.
+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.
The following table presents a reconciliation of net income (loss) to Adjusted EBITDA for the years ended December 31, 2023 and 2022 :
2 unchanged sentences
Net income (loss) $ (179,951) $ (77,744)
−Removed: Income tax expense 2,458 15,377
+Added: Income tax expense (benefit) (73,702) 2,458
Interest on corporate financing 37,684 5,987
Depreciation and amortization 42,978 35,182
−Removed: Impairment 108,472 3,324
Stock-based compensation expense 17,997 27,620
−Removed: Litigation reserve 2,750 —
−Removed: Retail network optimization expenses
+Added: Workforce optimization expenses
Acquisition and integration related expenses 27,640 29,682
Origination fees for loans receivable at fair value, net (18,536) (26,845)
+Added: Other non-recurring charges (1)
+Added: 15,524 111,222
Fair value mark-to-market adjustment 109,548 (119,711)
Adjusted EBITDA $ 1,667 $ (10,267)
−Removed: Adjusted Net Income
−Removed: We define Adjusted Net Income as our net income, adjusted to exclude income tax expense, stock-based compensation expenses and certain non-recurring charges.
−Removed: We believe that Adjusted Net Income is an important measure of operating performance because it allows management, investors, and our Board to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period to period.
+Added: (1) Certain prior-period financial information has been reclassified to conform to current period presentation.
+Added: Adjusted Net Income (Loss)
+Added: We define Adjusted Net Income (Loss) as our net income, adjusted to exclude income tax expense, stock-based compensation expenses and certain non-recurring charges.
+Added: We believe that Adjusted Net Income (Loss) is an important measure of operating performance because it allows management, investors, and our Board to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period to period.
• We believe it is useful to exclude the impact of income tax expense (benefit), as reported, because historically it has included irregular tax items that do not reflect our ongoing business operations.
−Removed: • We believe it is useful to exclude the impact of certain non-recurring charges, such as expenses associated with a litigation reserve, our retail network optimization plan, impairment charges and acquisition and integration related expenses, because these items do not reflect ongoing 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.
+Added: Other non-recurring charges include litigation reserve, impairment charges, debt amendment and warrant amortization costs related to our Corporate Financing.
• We believe it is useful to exclude stock-based compensation expense because it is a non-cash charge.
4 unchanged sentences
Net income (loss) $ (179,951) $ (77,744)
−Removed: Income tax expense 2,458 15,377
−Removed: Impairment 108,472 3,324
+Added: Income tax expense (benefit) (73,702) 2,458
Stock-based compensation expense 17,997 27,620
−Removed: Litigation reserve 2,750 —
−Removed: Retail network optimization expenses
+Added: Workforce optimization expenses
Acquisition and integration related expenses 27,640 29,682
+Added: Other non-recurring charges (1)
+Added: 15,524 111,222
Adjusted income before taxes (170,007) 95,120
3 unchanged sentences
27.0 % 27.0 %
+Added: (1) Certain prior-period financial information has been reclassified to conform to current period presentation.
(2) Income tax rates for the years ended December 31, 2023 and December 31, 2022, are based on a normalized statutory rate.
−Removed: Adjusted Earnings Per Share (“Adjusted EPS”)
−Removed: Adjusted Earnings 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.
+Added: 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.
The following table presents a reconciliation of Diluted EPS to Diluted Adjusted EPS for the years ended December 31, 2023 and 2022.
−Removed: For the reconciliation of net income (loss) to Adjusted Net Income, see the immediately preceding table “Adjusted Net Income.”
+Added: For the reconciliation of net income to Adjusted Net Income (Loss), see the immediately preceding table “Adjusted Net Income (Loss).”
Year Ended December 31,
9 unchanged sentences
Adjusted Return on Equity
−Removed: We define Adjusted Return on Equity as annualized Adjusted Net Income divided by average stockholders’ equity.
+Added: We define Adjusted Return on Equity as annualized Adjusted Net Income (Loss) divided by average stockholders’ equity.
Average stockholders’ equity is an average of the beginning and ending stockholders’ equity balance for each period.
1 unchanged sentence
The following table presents a reconciliation of Return on Equity to Adjusted Return on Equity for the years ended December 31, 2023 and 2022.
−Removed: For the reconciliation of net income (loss) to Adjusted Net Income, see the immediately preceding table “Adjusted Net Income.”
+Added: For the reconciliation of net income to Adjusted Net Income (Loss), see the immediately preceding table “Adjusted Net Income (Loss).”
As of or for the Year Ended December 31,
4 unchanged sentences
Average stockholders ’ equity
+Added: $ 476,002 $ 575,740
Adjusted Return on Equity (26.1) % 12.1 %
Adjusted Operating Efficiency
−Removed: We define Adjusted Operating Efficiency as total operating expenses adjusted to exclude stock-based compensation expense and certain non-recurring charges such as expenses associated with a litigation reserve, our retail network optimization plan, impairment charges and acquisition and integration related expenses divided by total revenue.
+Added: We define Adjusted Operating Efficiency as total operating expenses adjusted to exclude stock-based compensation expense and certain non-recurring charges such as expenses associated with our workforce optimization, acquisition and integration related expenses, and other non-recurring charges divided by total revenue.
+Added: Other non-recurring charges include litigation reserve, impairment charges, and debt amendment costs related to our Corporate Financing.
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.
5 unchanged sentences
Total revenue $ 1,056,919 $ 952,545
+Added: Fair Value Pro Forma Total Revenue adjustments — —
+Added: Fair Value Pro Forma Total Revenue 1,056,919 952,545
Total operating expense 534,319 715,943
−Removed: Impairment (108,472) (3,324)
Stock-based compensation expense (17,997) (27,620)
−Removed: Litigation reserve (2,750) —
−Removed: Retail network optimization expenses
+Added: Workforce optimization expenses
(22,485) (1,882)
Acquisition and integration related expenses (27,640) (29,682)
+Added: Other non-recurring charges (1)
+Added: (14,409) (111,222)
Total adjusted operating expenses $ 451,788 $ 545,537
Adjusted Operating Efficiency 42.7 % 57.3 %
+Added: (1) Certain prior-period financial information has been reclassified to conform to current period presentation.
Liquidity and Capital Resources
−Removed: To date, we fund the majority of our operating liquidity and operating needs through a combination of cash flows from operations, securitizations, secured borrowings, corporate financing and whole loan sales.
+Added: To date, we fund the majority of our operating liquidity and operating needs through a combination of cash flows from operations, securitizations, secured financings, structured loan sales, Corporate Financing, and whole loan sales.
We may utilize these or other sources in the future.
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 2022, available liquidity increased primarily due to the closing of our Corporate Financing facility and the issuance of additional asset-backed securitizations.
−Removed: 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.
−Removed: Rising interest rates, credit trends and other macroeconomic conditions could continue to have an impact on market volatility which could adversely impact our business, liquidity, and capital resources.
+Added: During 2023, available liquidity increased primarily due to draws under our PLW facility, the amendment and upsizing of our Corporate Financing and our Asset-backed borrowings at amortized cost and our whole loan sales.
+Added: 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 or equity markets.
+Added: Volatility in the interest rate environment, credit trends and other macroeconomic conditions could continue to have an impact on market volatility which could adversely impact our business, liquidity, and capital resources.
Future decreases in cash flows from operations resulting from delinquencies, defaults, losses, would decrease the cash available for the capital uses described above.
−Removed: In addition to the $75.0 million that may be available under the recent amendment to the Corporate Financing facility and the associated warrants, we may incur additional indebtedness or issue equity in order to meet our capital spending and liquidity requirements, as well as to fund growth opportunities that we may pursue.
+Added: We may incur additional indebtedness or issue equity in order to meet our capital spending and liquidity requirements, as well as to fund growth opportunities that we may pursue.
Cash and cash flows
11 unchanged sentences
Our net cash provided by operating activities was $392.8 million and $247.9 million for the years ended December 31, 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 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
−Removed: business due to the amount and timing of various payments.
+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
+Added: 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: The change in our net cash provided by operating activities is primarily driven by the $378M increase in our fair value adjustment, net offset by the $108M impairment charge in 2022 not present in the current year, and the $102M additional net loss in 2023 compared to prior year.
Investing Activities
3 unchanged sentences
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 used in investing activities is primarily due to disbursements on originations of loans increasing by $920.6 million while repayments of loan principal only increased by $289.0 million for the year ended December 31, 2022 compared to the year ended December 31, 2021.
−Removed: Our net cash used in investing activities for the year ended December 31, 2022, includes proceeds of $249.3 million related to a structured loan sale in the first quarter 2022 and other loan sales during the remainder of 2022.
−Removed: The change in our net cash used in investing activities is also driven by our acquisition of Digit, net of acquirer's cash received, of $111.7 million for the year ended December 31,2021.
+Added: The change in our net cash used in investing activities is primarily due to a reduction in disbursements on originations of loans of $1,182.7 million driven by a renewed focus on returning and existing members and more conservative underwriting, $245.2 million reduction in proceeds from structured loans sales, and a decrease of $74.3 million in repayments of loan principal for the year ended December 31, 2023, compared to the year ended December 31, 2022.
Financing Activities
−Removed: Our net cash provided by financing activities was $934.5 million and $745.7 million for the years ended December 31, 2022 and 2021, respectively.
−Removed: For the year ended December 31, 2022, net cash provided by financing activities was primarily driven the issuance of our Series 2022-A, Series 2022-2 and Series 2022-3 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, Series 2022-2 and Series 2022-3 asset-backed notes.
−Removed: For the year ended December 31, 2021, net cash provided by financing activities was primarily driven by the issuance of our Series 2021-A, Series 2021-B and Series 2021-C asset-backed notes and the borrowings under our Secured Financing facilities and Acquisition Financing, partially offset by redemptions of our Series 2018-A, Series 2018-B, Series 2018-C and Series 2018-D asset-backed notes and repayments of borrowings on our Secured Financing facility.
+Added: Our net cash (used in) provided by financing activities was $(104.4) million and $934.5 million for the years ended December 31, 2023 and 2022, respectively.
+Added: For the year ended December 31, 2023, net cash used in financing activities was primarily driven by principal 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 on our PLW facility, partially offset by borrowings under our PLW facility, Corporate Financing, and our asset-backed borrowings at amortized cost.
+Added: For the year ended December 31, 2022, net cash provided by financing activities was primarily driven the issuance of our Series 2022-A, Series 2022-2 and Series 2022-3 asset-backed notes and the borrowings under our Secured Financing and Acquisition and Corporate Financing, 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, Series 2022-2 and Series 2022-3 asset-backed notes.
Sources of Funds
1 unchanged sentence
Asset-Backed Securitizations
−Removed: As of December 31, 2022, we had $2.39 billion of outstanding asset-backed notes.
−Removed: During 2022, we issued $1.10 billion of asset-backed securities.
+Added: As of December 31, 2023, we had $1.78 billion of outstanding asset-backed notes at fair value.
Our securitizations utilize special purpose entities which are also variable interest entities (VIEs) that meet the requirements to be consolidated in our financial statements.
−Removed: For more information regarding our VIEs and asset-backed securitizations, see Note 4, Varia ble Interest Entities and Note 9, Borrowings of the Notes to the Consolidated Financial Statements included elsewhere in this report.
+Added: For more information regarding our VIEs and asset-backed securitizations, see Note 4 , Variable Interest Entities and Note 8 , Borrowings of the Notes to the Consolidated Financial Statements included elsewhere in this report.
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.
2 unchanged sentences
As of December 31, 2023 , we had Secured Financing facilities with warehouse lines of $700.0 million in the aggregate with undrawn capacity of $409.1 million.
−Removed: On March 8, 2023, the Credit Card Warehouse facility was amended, reducing its commitment from $150.0 million to $120.0 million, thereby reducing the combined commitment to $720.0 million.
+Added: On March 8, 2023, the Credit Card Warehouse facility was amended, reducing its commitment from $150.0 million to $120.0 million.
+Added: On December 22, 2023, the Credit Card Warehouse facility was further amended, reducing its commitment from $120.0 million to $100.0 million, thereby reducing the combined commitment to $700.0 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.
+Added: Asset-Backed Borrowings at Amortized Cost
+Added: On June 16, 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 $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.
+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 twelve months ended December 31, 2023 , we transferred loans receivable totaling $220.5 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 twelve months ended December 31, 2023 , we transferred loans receivable totaling $195.8 million.
+Added: On October 20, 2023, the Company entered into a Receivables Loan and Security Agreement (the “Receivables Loan and Security Agreement”), pursuant to which the Company borrowed $197 million.
+Added: Borrowings under the Receivables Loan and Security Agreement accrue interest at a weighted average interest rate equal to 10.05%.
Acquisition Financing
6 unchanged sentences
Corporate Financing
−Removed: On September 14, 2022, we entered into an agreement to borrow $150.0 million of a senior secured term loan (the “Corporate Financing”).
+Added: On September 14, 2022, we entered into an agreement to borrow $150.0 million of a senior secured term loan.
The term loan bears interest, payable in cash, at an amount equal to 1-month term SOFR plus 9.00%.
3 unchanged sentences
On March 10, 2023, we upsized and amended our Corporate Financing facility to be able to borrow up to an additional $75.0 million.
−Removed: At closing and as part of the Incremental Tranche A-1, we borrowed $20.8 million and intend to borrow an additional $4.2 million in Incremental Tranche A-2 loans on or about March 27, 2023, which amount has been committed by the applicable lenders.
−Removed: We may borrow up to an aggregate additional amount of $50.0 million on an uncommitted basis in two $25.0 million additional Incremental Tranche B and Incremental Tranche C loans expected to be available, if provided by the applicable lenders, on or about April 21, 2023 and June 23, 2023, respectively.
−Removed: 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 the Company’s option, equal to 3.00%.
+Added: At closing, we borrowed $20.8 million of incremental term loans (the “Incremental Tranche A-1 Loans”) and borrowed an additional $4.2 million of incremental term loans (the “Incremental Tranche A-2 Loans”) on March 27, 2023.
+Added: Under the Amended Credit Agreement, we borrowed an additional $25.0 million of incremental term loans (the “Incremental Tranche B Loans”) on May 5, 2023, and an additional $25.0 million of incremental term loans (the “Incremental Tranche C Loans”) on June 30, 2023.
+Added: 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%.
As of December 31, 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 Financing and Corporate Financing, see Note 8, Borrowings of the Notes to the Consolidated Financial Statements included elsewhere in this report.
+Added: Amendments to Acquisition and Corporate Financing
+Added: In order to execute our plans for 2024 and beyond, we recently completed two amendments, one to our residual facility and the other to our senior secured term loan.
+Added: The amendment to our residual facility provides us with a three month principal payment holiday and extends the term to January 2025.
+Added: We will make principal payments on the senior secured term loan in the amount equal to the payments that would have been made on the residual facility.
+Added: The senior secured term loan amendment reduces the minimum asset coverage ratio, which is the ratio of our unrestricted cash and equity in some of our financing facilities to the outstanding debt.
+Added: We needed to lower the escalating levels of this covenant for 2024, which were set before 2023's higher than expected losses and lower originations caused by credit tightening.
+Added: Given the scheduled increases in the asset coverage ratio covenant levels for the remainder of 2024 and into 2025, we are currently evaluating refinancing options.
+Added: For more information regarding our Secured Financing facilities and Acquisition Financing and Corporate Financing, see Note 8, Borrowings of the Notes to the Consolidated Financial Statements included elsewhere in this report.
Structured Loan Sales
4 unchanged sentences
Other Loan Sales
−Removed: During 2022, we entered into agreements to sell certain populations of its personal loans and credit card receivables that had an aggregate unpaid principal balance, including unpaid interest and fees, of approximately $66.2 million.
−Removed: For further information on these sales, see Note 5, Loans Held for Sale and Loans Sold of the Notes to the Consolidated Financial Statements included elsewhere in this report.
+Added: During 2023 , we entered into agreements to sell certain populations of its 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 $122.3 million.
+Added: For further information on these
+Added: sales, see Note 5, Loans Held for Sale and Loans Sold of the Notes to the Consolidated Financial Statements included elsewhere in this report.
Whole Loan Sales
1 unchanged sentence
We chose not to renew the arrangement and allowed the agreement to expire on its terms on March 4, 2022.
−Removed: The originations of loans sold and held for sale during the year ended December 31, 2022 was $52.7 million.
+Added: In November 2022, 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 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.
+Added: The agreement expired December 2, 2023.
+Added: The Company extended the agreement 30 days while finalizing the amendment to extend the original agreement an additional year.
+Added: During the extension period, the Company will continue to sell loans consistent with the terms of the original agreement.
+Added: In November 2023, the Company entered into a forward flow whole loan sale agreement with an institutional investor to sell up to $70 million of its unsecured personal loans over a one-year period beginning December 2023.
+Added: The originations of loans sold and held for sale during the year ended December 31, 2023 were $56.6 million.
For further information on the whole loan sale transactions, see Note 5, Loans Held for Sale and Loans Sold of the Notes to the Consolidated Financial Statements included elsewhere in this report.
10 unchanged sentences
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 term loans and intends to borrow an additional $4.2 million of Incremental Tranche A-2 Loans on or about March 27, 2023, which amount has been committed by the applicable lenders.
−Removed: Under the Amended Credit Agreement, the Company may borrow up to an aggregate additional amount of $50.0 million on an uncommitted basis, in two $25.0 million tranches, the Incremental Tranche B Loans and Incremental Tranche C Loans expected to be available, if provided by the applicable lenders, on or about April 21, 2023 and June 23, 2023, respectively.
−Removed: We anticipate that we will likely draw down these additional incremental commitments, however, given their uncommitted nature there can be no assurance that we will be able to access such additional capital.
+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.
+Added: 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 our personal loan originations over the following twelve-month periods.
+Added: During October 2023,we closed Oportun CL Trust 2023-A Asset-backed notes in the amount of $197 million.
+Added: Lastly, during February 2024, we announced the issuance of $199.5 million two-year asset-backed notes by Oportun Issuance Trust 2024-1.
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.
In a rising interest rate environment, our ability to issue additional equity or incur debt may be impaired and our borrowing costs may increase.
−Removed: If we raise additional funds through the issuance of additional debt, the agreements governing such debt could contain covenants that would restrict our operations and such debt would rank senior to shares of our
−Removed: common stock.
+Added: If we raise additional funds through the issuance of additional debt, the agreements governing such debt could contain covenants that would restrict our operations and such debt would rank senior to shares of our common stock.
The sale of equity may result in dilution to our stockholders and those securities may have rights senior to those of our common stock.
8 unchanged sentences
We elected the fair value option for our loans receivable held for investment.
−Removed: We primarily use a discounted cash flow model to estimate fair value based on the present value of estimated future cash flows.
+Added: We primarily use a discounted cash flow model to estimate fair
+Added: value based on the present value of estimated future cash flows.
This model uses inputs that are not observable but reflect our best estimates of the assumptions a market participant would use to calculate fair value.
15 unchanged sentences
We test the fair value model by comparing modeled cash flows to historical loan performance to ensure that the model is complete, accurate and reasonable for our use.
+Added: In addition, we engage 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.
As discussed above, our fair value model uses inputs that are not observable but reflect our best estimates of the assumptions a market participant would use to calculate fair value.
1 unchanged sentence
" Management's Discussion and Analysis of Financial Condition and Results of Operations ".
−Removed: For more information regarding the potential impact that changes in these inputs might have on our "Net increase (decrease) in fair value" on our Consolidated Statements of Operations, please refer to Item 7A.
−Removed: , " Quantitative and Qualitative Disclosures About Market Risk " included elsewhere in this report .
Goodwill Impairment
5 unchanged sentences
We recognized a $108.5 million non-cash impairment charge for the year ended December 31, 2022.
−Removed: no triggering events or goodwill impairment charges during the year ended December 31, 2021 (see Note 7 , Capitalized Software, Other Intangibles and Goodwill of the Notes to the Consolidated Financial Statements included elsewhere in this report for further details).
+Added: There were no triggering events or goodwill impairment charges during the year ended December 31, 2023.
Recently Issued Accounting Pronouncements
See Note 2, Summary of Significant Accounting Policies , of the Notes to the Consolidated Financial Statements included elsewhere in this report for a discussion of recent accounting pronouncements and future application of accounting standards.
+Added: Quantitative and Qualitative Disclosures About Market Risk
+Added: As a "Smaller Reporting Company" as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
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.