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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
or
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number 001-39050
OPORTUN FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware45-3361983
State or Other Jurisdiction of
Incorporation or Organization
I.R.S. Employer Identification No.
2 Circle Star Way
San Carlos,CA94070
Address of Principal Executive OfficesZip Code
(650) 810-8823
Registrant’s Telephone Number, Including Area Code

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.0001 par value per shareOPRTNasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes      No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes     No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Smaller reporting company
Accelerated filer
Emerging growth company
Non-accelerated filer
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes     No 
The number of shares of registrant’s common stock outstanding as of May 3, 2022 was 32,814,113.



TABLE OF CONTENTS
PART I ‑ FINANCIAL INFORMATION
PART II ‑ OTHER INFORMATION

2


PART I ‑ FINANCIAL INFORMATION

Item 1. Financial Statements

OPORTUN FINANCIAL CORPORATION
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data)
March 31,December 31,
20222021
Assets
Cash and cash equivalents$109,864 $130,959 
Restricted cash60,694 62,001 
Loans receivable at fair value2,450,987 2,386,807 
Interest and fees receivable, net22,823 20,916 
Capitalized software and other intangibles, net133,093 131,181 
Goodwill104,162 104,014 
Right of use assets - operating36,689 38,403 
Other assets74,239 72,344 
Total assets$2,992,551 $2,946,625 
Liabilities and stockholders' equity
Liabilities
Secured financing$473,311 $393,889 
Asset-backed notes at fair value 1,593,435 1,651,706 
Acquisition financing103,869 114,092 
Lease liabilities44,959 47,699 
Other liabilities127,041 135,358 
Total liabilities2,342,615 2,342,744 
Stockholders' equity
Common stock, $0.0001 par value - 1,000,000,000 shares authorized at March 31, 2022 and December 31, 2021; 33,078,916 shares issued and 32,806,893 shares outstanding at March 31, 2022; 32,276,419 shares issued and 32,004,396 shares outstanding at December 31, 2021
7 6 
Common stock, additional paid-in capital526,729 526,338 
Retained earnings129,509 83,846 
Treasury stock at cost, 272,023 shares at March 31, 2022 and December 31, 2021
(6,309)(6,309)
Total stockholders’ equity649,936 603,881 
Total liabilities and stockholders' equity$2,992,551 $2,946,625 
See Notes to the Condensed Consolidated Financial Statements.

3


OPORTUN FINANCIAL CORPORATION
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share data)
Three Months Ended March 31,
20222021
Revenue
Interest income$192,237 $127,191 
Non-interest income22,483 8,122 
Total revenue214,720 135,313 
Less:
Interest expense13,677 13,504 
Net increase (decrease) in fair value3,971 (11,568)
Net revenue205,014 110,241 
Operating expenses:
Technology and facilities49,189 32,924 
Sales and marketing34,541 23,893 
Personnel35,926 26,827 
Outsourcing and professional fees14,327 12,625 
General, administrative and other13,361 9,997 
Total operating expenses147,344 106,266 
Income before taxes57,670 3,975 
Income tax expense12,007 956 
Net income$45,663 $3,019 
Net income attributable to common stockholders$45,663 $3,019 
Share data:
Earnings per share:
Basic$1.42 $0.11 
Diluted$1.37 $0.10 
Weighted average common shares outstanding:
Basic32,216,641 27,770,063 
Diluted33,323,134 29,620,034 
See Notes to the Condensed Consolidated Financial Statements.
4


OPORTUN FINANCIAL CORPORATION
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
(in thousands, except share data)
For the Three Months Ended March 31, 2022
Common Stock
SharesPar Value Additional Paid-in CapitalRetained EarningsTreasury StockTotal Stockholders' Equity
Balance – January 1, 202232,004,396 $6 $526,338 $83,846 $(6,309)$603,881 
Issuance of common stock upon exercise of stock options505,945 1 (4,749)— — (4,748)
Stock-based compensation expense— — 7,467 — — 7,467 
Vesting of restricted stock units, net of shares withheld296,552 — (2,327)— — (2,327)
Net income— — — 45,663 — 45,663 
Balance – March 31, 202232,806,893 $7 $526,729 $129,509 $(6,309)$649,936 

See Notes to the Condensed Consolidated Financial Statements.



OPORTUN FINANCIAL CORPORATION
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
(in thousands, except share data)
For the Three Months Ended March 31, 2021
Common Stock
SharesPar Value Additional Paid-in CapitalRetained EarningsTreasury StockTotal Stockholders' Equity
Balance – January 1, 202127,679,263 $6 $436,499 $36,432 $(6,309)$466,628 
Issuance of common stock upon exercise of stock options33,526 — 307 — — 307 
Stock-based compensation expense— — 5,088 — — 5,088 
Vesting of restricted stock units, net261,794 — (2,794)— — (2,794)
Net income— — — 3,019 — 3,019 
Balance – March 31, 202127,974,583 $6 $439,100 $39,451 $(6,309)$472,248 

See Notes to the Condensed Consolidated Financial Statements.
5


OPORTUN FINANCIAL CORPORATION
Condensed Consolidated Statements of Cash Flow (Unaudited)
(in thousands)
Three Months Ended March 31,
2022

2021
Cash flows from operating activities
Net income$45,663 $3,019 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization10,697 6,957 
Fair value adjustment, net(3,971)11,568 
Origination fees for loans receivable at fair value, net(4,685)(1,422)
Gain on loan sales(5,715)(4,434)
Stock-based compensation expense6,773 5,088 
Other, net20,226 15,325 
Originations of loans sold and held for sale(48,665)(33,464)
Proceeds from sale of loans54,872 38,372 
Changes in other assets and other liabilities(36,630)(22,853)
Net cash provided by operating activities38,565 18,156 
Cash flows from investing activities
Originations of loans(707,108)(263,148)
Proceeds from structured loan sale245,019  
Repayments of loan principal351,324 278,659 
Capitalization of system development costs(10,641)(5,651)
Other, net(1,090)(873)
Net cash provided by (used in) investing activities(122,496)8,987 
Cash flows from financing activities
Borrowings under secured financing699,000  
Borrowings under asset-backed notes and acquisition financing 371,719 
Repayments of secured financing(620,000)(181,780)
Repayments of asset-backed notes and acquisition financing(10,395)(200,004)
Net payments related to stock-based activities(7,076)(2,487)
Net cash provided by (used in) financing activities61,529 (12,552)
Net increase (decrease) in cash and cash equivalents and restricted cash(22,402)14,591 
Cash and cash equivalents and restricted cash, beginning of period192,960 168,590 
Cash and cash equivalents and restricted cash, end of period$170,558 $183,181 
Supplemental disclosure of cash flow information
Cash and cash equivalents$109,864 $140,416 
Restricted cash60,694 42,765 
Total cash and cash equivalents and restricted cash$170,558 $183,181 
Cash paid for income taxes, net of refunds$328 $240 
Cash paid for interest$13,816 $13,625 
Cash paid for amounts included in the measurement of operating lease liabilities$4,238 $4,292 
Supplemental disclosures of non-cash investing and financing activities
Right of use assets obtained in exchange for operating lease obligations$1,064 $1,093 
Non-cash investments in capitalized assets$565 $625 
See Notes to the Condensed Consolidated Financial Statements.
6


OPORTUN FINANCIAL CORPORATION
Notes to the Condensed Consolidated Financial Statements (Unaudited)
March 31, 2022

1.Organization and Description of Business

Oportun is a financial technology company and digital banking platform driven by its mission to provide inclusive, affordable financial services that empower its members to build a better future. Oportun Financial Corporation (together with its subsidiaries, "Oportun" or the "Company") takes a holistic approach to serving its members and views as its purpose to responsibly meet their current capital needs, help grow its members' financial profiles, increase their financial awareness and put them on a path to a financially healthy life. With its acquisition of Hello Digit, Inc. ("Digit") on December 22, 2021, the Company 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. and tailored to each member's goals to make achieving financial health automated. The Company's credit products include personal loans, secured personal loans and credit cards. The Company's digital banking products include digital banking, automated savings, long-term investing and retirement savings. The Company is headquartered in San Carlos, California. The Company has been certified by the United States Department of the Treasury as a Community Development Financial Institution ("CDFI") since 2009.

Segments

Segments are defined as components of an enterprise for which discrete financial information is available and evaluated regularly by the chief operating decision maker ("CODM") in deciding how to allocate resources and in assessing performance. The Company’s Chief Executive Officer and the Company's Chief Financial Officer are collectively considered to be the CODM. The CODM reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. The Company’s operations constitute a single reportable segment.

2.Summary of Significant Accounting Policies

Basis of Presentation ‑ The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). These statements are unaudited and reflect all normal, recurring adjustments that are, in management's opinion, necessary for the fair presentation of results. The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Certain prior-period financial information has been reclassified to conform to current period presentation. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 (the "Annual Report"), filed with the Securities and Exchange Commission ("SEC") on March 1, 2022.

Use of Estimates ‑ The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of income and expenses during the reporting period. These estimates are based on information available as of the date of the condensed consolidated financial statements; therefore, actual results could differ from those estimates and assumptions.

Accounting Policies - There have been no changes to the Company's significant accounting policies from those described in Part II, Item 8 - Financial Statements and Supplementary Data in the Annual Report, except for the new accounting pronouncements subsequently adopted as noted below.

Recently Adopted Accounting Standards

None.



7


3.Earnings (Loss) per Share

Basic and diluted earnings (loss) per share are calculated as follows:
Three Months Ended March 31,
(in thousands, except share and per share data)20222021
Net income$45,663 $3,019 
Net income (loss) attributable to common stockholders$45,663 $3,019 
Basic weighted-average common shares outstanding32,216,641 27,770,063 
Weighted average effect of dilutive securities:
Stock options733,503 1,274,818 
Restricted stock units372,990 575,153 
Diluted weighted-average common shares outstanding33,323,134 29,620,034 
Earnings per share:
Basic$1.42 $0.11 
Diluted$1.37 $0.10 

The following common share equivalent securities have been excluded from the calculation of diluted weighted-average common shares outstanding because the effect is anti-dilutive for the periods presented:
Three Months Ended March 31,
20222021
Stock options2,723,777 2,822,785 
Restricted stock units1,692,599 45,306 
Total anti-dilutive common share equivalents4,416,376 2,868,091 

4.Variable Interest Entities

Variable interest entities ("VIEs") are legal entities that either have an insufficient amount of equity at risk for the entity to finance its activities without additional subordinated financial support or, as a group, the holders of equity investment at risk lack the ability to direct the entity's activities that most significantly impact economic performance through voting or similar rights, or do not have the obligation to absorb the expected losses or the right to receive expected residual returns of the entity.

For all VIEs in which we are involved, we assess whether we are the primary beneficiary of the VIE on an ongoing basis. In circumstances where we have both the power to direct the activities that most significantly impact the VIEs performance and the obligation to absorb losses or the right to receive the benefits of the VIE that could be significant, we would conclude that we are the primary beneficiary of the VIE, and we consolidate the VIE. In situations where we are not deemed to be the primary beneficiary of the VIE, we do not consolidate the VIE and only recognize our interests in the VIE.

Consolidated VIEs

As part of the Company’s overall funding strategy, the Company transfers a pool of designated loans receivable to wholly owned special-purpose subsidiaries ("VIEs") to collateralize certain asset-backed financing transactions. For these VIEs where the Company has determined that it is the primary beneficiary because it has the power to direct the activities that most significantly impact the VIEs’ economic performance and the obligation to absorb the losses or the right to receive benefits from the VIEs that could potentially be significant to the VIEs the VIEs assets and related liabilities are consolidated with the results of the Company. Such power arises from the Company’s contractual right to service the loans receivable securing the VIEs’ asset-backed debt obligations. The Company has an obligation to absorb losses or the right to receive benefits that are potentially significant to the VIEs because it retains the residual interest of each asset-backed financing transaction in the form of an asset-backed certificate. Accordingly, the Company includes the VIEs’ assets, including the assets securing the financing transactions, and related liabilities in its condensed consolidated financial statements.

Each consolidated VIE issues a series of asset-backed securities that are supported by the cash flows arising from the loans receivable securing such debt. Cash inflows arising from such loans receivable are distributed monthly to the transaction’s lenders and related service providers in accordance with the transaction’s contractual priority of payments. The creditors of the VIEs above have no recourse to the general credit of the Company as the primary beneficiary of the VIEs and the liabilities of the VIEs can only be settled by the respective VIE’s assets. The Company retains the most subordinated economic interest in each financing transaction through its ownership of the respective residual interest in each VIE. The Company has no obligation to repurchase loans receivable that initially satisfied the financing transaction’s eligibility criteria but subsequently became delinquent or a defaulted loans receivable.

8


The following table represents the assets and liabilities of consolidated VIEs recorded on the Company’s Condensed Consolidated Balance Sheets (Unaudited):
March 31,December 31,
(in thousands)20222021
Consolidated VIE assets
Restricted cash$33,246 $41,803 
Loans receivable at fair value2,344,635 2,267,205 
Interest and fee receivable20,767 19,869 
Total VIE assets2,398,648 2,328,877 
Consolidated VIE liabilities
Secured financing (1)
477,000 398,000 
Asset-backed notes at fair value 1,593,435 1,651,706 
Acquisition financing (1)
105,605 116,000 
Total VIE liabilities$2,176,040 $2,165,706 
(1) Amounts exclude deferred financing costs. See Note 9, Borrowings for additional information.

5.Loans Held for Sale and Loans Sold

Structured Loan Sales - On March 31, 2022, the Company participated in a securitization whereby the Company and funds managed by Ellington Management Group both contributed collateral and were co-sponsors of the transaction, which totaled $400.0 million in issued asset-backed notes. As part of the securitization, the Company sold loans to OPTN Funding Grantor Trust 2022-1 ("Grantor Trust") through the issuance of amortizing asset-backed notes secured by a pool of its unsecured and secured personal installment loans. The Company also sold its share of the residual interest in the pool. The Company's continued involvement in the unconsolidated VIEs is in the form of servicer of these loans. The Company does not have variable interest in the Grantor Trust or the issuer established for this transaction. The sold loans were accounted for under the fair value option and at the point they were designated as held for sale had an aggregate unpaid principal balance of approximately $227.6 million, a cumulative fair value mark of $15.9 million and unpaid interest of $1.5 million. The Company received $245.0 million of net proceeds and by selling both its notes and residual interest, the Company derecognized these loans from its Consolidated Balance Sheets.

Whole Loan Sale Program ‑ In November 2014, the Company entered into a whole loan sale agreement with an institutional investor. Pursuant to the agreement, the Company sold at least 10% of its unsecured loan originations, with an option to sell an additional 5%, subject to certain eligibility criteria and minimum and maximum volumes. The Company chose not to renew the arrangement and allowed the agreement to expire on its terms on March 4, 2022.

The originations of loans sold and held for sale during the three months ended March 31, 2022 related to our whole loan sale program was $48.7 million and the Company recorded a gain on sale of $5.7 million and servicing revenue of $4.0 million. The originations of loans sold and held for sale during the three months ended March 31, 2021 was $33.5 million and the Company recorded a gain on sale of $4.4 million and servicing revenue of $3.1 million.

6.Acquisition

On December 22, 2021, the Company completed its acquisition of all the voting interests of Hello Digit, Inc. (or "Digit"). Digit is a digital banking platform that provides automated savings, banking and investing tools. Digit members can keep and integrate their existing bank accounts into the platform, or they can make Digit their primary banking relationship by opening new accounts via Digit’s bank partner. By acquiring Digit, Oportun further expanded its A.I. and digital banking capabilities, adding to its services to provide its members a holistic offering built to address their financial needs. The total consideration the Company provided for Digit, which consisted of cash and equity, was approximately $205.3 million.

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

7.
Capitalized Software, Other Intangibles and Goodwill

Capitalized software, net consists of the following:

March 31,December 31,
(in thousands)20222021
Capitalized software, net:
System development costs$95,800 $84,550 
Acquired developed technology48,500 48,500 
Less: Accumulated amortization(52,864)(45,433)
Total capitalized software, net$91,436 $87,617 
9



Capitalized software, net

Amortization of system development costs and acquired developed technology for three months ended March 31, 2022 and 2021 was $7.4 million and $3.5 million, respectively. System development costs capitalized in the three months ended March 31, 2022 and 2021 were $11.2 million and $5.8 million, respectively. Acquired developed technology was $48.5 million and is related to the acquisition of Digit on December 22, 2021.

Intangible Assets

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

March 31,December 31,
(in thousands)20222021
Intangible assets:
Member relationships$34,500 $34,500 
Trademarks6,426 6,364 
Other3,000 3,000 
Less: Accumulated amortization(2,269)(300)
Total intangible assets, net$41,657 $43,564 

Amortization of intangible assets for the three months ended March 31, 2022 was $2.0 million. There were no intangible assets subject to amortization for the three months ended March 31, 2021. Expected future amortization expense for intangible assets as of March 31, 2022 is as follows:

(in thousands)Fiscal Years
2022 (remaining nine months)
$(5,980)
2023
(7,949)
2024(7,798)
2025(4,929)
2026(4,929)
2027(4,929)
Thereafter(4,779)
Total
$(41,293)

Goodwill

The Company recorded goodwill of $104.0 million arising from the acquisition of Digit on December 22, 2021. During the three months ended March 31, 2022, the Company recorded a $0.1 million adjustment to goodwill. There was no impairment for the periods presented.


8.Other Assets

Other assets consist of the following:
March 31,December 31,
(in thousands)20222021
Fixed assets
Total fixed assets$44,955 $44,100 
Less: Accumulated depreciation(35,370)(34,185)
Total fixed assets, net$9,585 $9,915 
Other Assets
Loans held for sale 491 
Prepaid expenses26,244 25,355 
Deferred tax assets3,565 3,923 
Current tax assets17,235 13,330 
Other17,610 19,330 
Total other assets$74,239 $72,344 

10


Fixed Assets

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

9.Borrowings

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

March 31, 2022December 31, 2021
Variable Interest EntityFacility Amount
Maturity Date (1)
Interest RateBalanceBalance
(in thousands)
Oportun CCW Trust (1)(2)
$150,000 December 1, 2023
Variable (1)
$59,223 $40,108 
Oportun PLW Trust600,000 September 1, 2024
LIBOR (minimum of 0.00%) + 2.17%
414,088 353,781 
Total secured financing$750,000 $473,311 $393,889 
(1) The interest rate on the Secured Financing - CCW facility is LIBOR (minimum of 1.00%) plus 6.00% on the first $18.8 million of principal outstanding and LIBOR (minimum of 0.00%) plus 3.41% on the remaining outstanding principal balance.
(2) The Credit Card Warehouse has an aggregate borrowing capacity of up to $150.0 million; comprised of $75.0 million committed purchase amount and $75.0 million uncommitted purchase amount.

The following table presents information regarding asset-backed notes:
March 31, 2022
Variable Interest Entity
Initial note amount issued (a)
Initial collateral balance (b)
Current balance (a)
Current collateral balance(b)
Weighted average interest rate(c)
Original revolving period
(in thousands)
Asset-backed notes recorded at fair value:
Oportun Issuance Trust (Series 2021-C)$500,000 $512,762 $472,972 $519,735 2.48 %3 years
Oportun Issuance Trust (Series 2021-B)500,000 512,759 475,772 520,594 2.05 %3 years
Oportun Funding XIV, LLC (Series 2021-A)375,000 383,632 364,808 390,705 1.79 %2 years
Oportun Funding XIII, LLC (Series 2019-A)279,412 294,118 279,883 299,832 3.46 %3 years
Total asset-backed notes recorded at fair value$1,654,412 $1,703,271 $1,593,435 $1,730,866 

December 31, 2021
Variable Interest Entity
Initial note amount issued (a)
Initial collateral balance (b)
Current balance (a)
Current collateral balance(b)
Weighted average interest rate(c)
Original revolving period
(in thousands)
Asset-backed notes recorded at fair value:
Oportun Issuance Trust (Series 2021-C)$500,000 $512,762 $497,774 $525,436 2.48 %3 years
Oportun Issuance Trust (Series 2021-B)500,000 512,759 498,487 521,174 2.05 %3 years
Oportun Funding XIV, LLC (Series 2021-A)375,000 383,632 374,363 391,325 1.79 %2 years
Oportun Funding XIII, LLC (Series 2019-A)279,412 294,118 281,082 299,310 3.46 %3 years
Total asset-backed notes recorded at fair value$1,654,412 $1,703,271 $1,651,706 $1,737,245 
(a)Initial note amount issued includes notes retained by the Company as applicable. The current balances are measured at fair value for asset-backed notes recorded at fair value.
(b)Includes the unpaid principal balance of loans receivable, cash, cash equivalents and restricted cash pledged by the Company.
(c)Weighted average interest rate excludes notes retained by the Company.

11


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

March 31, 2022December 31, 2021
Variable Interest EntityOriginal BalanceMaturity DateInterest RateBalanceBalance
(in thousands)
Oportun RF, LLC$116,000 October 1, 2024
LIBOR (minimum of 0.00%) + 8.00%
$103,869 $114,092 

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

10.Other Liabilities

Other liabilities consist of the following:
March 31,December 31,
(in thousands)20222021
Accounts payable$4,253 $8,343 
Accrued compensation18,824 36,417 
Accrued expenses28,946 36,464 
Accrued interest2,714 3,276 
Amount due to whole loan buyer17,289 14,062 
Deferred tax liabilities43,415 28,424 
Current tax liabilities and other11,600 8,372 
Total other liabilities$127,041 $135,358 

11.Stockholders' Equity

Preferred Stock - The Board has the authority, without further action by the Company's stockholders, to issue up to 100,000,000 shares of undesignated preferred stock with rights and preferences, including voting rights, designated from time to time by the Board. There were no shares of undesignated preferred stock issued or outstanding as of March 31, 2022 or December 31, 2021.

Common Stock - As of March 31, 2022 and December 31, 2021, the Company was authorized to issue 1,000,000,000 shares of common stock with a par value of $0.0001 per share. As of March 31, 2022, 33,078,916 and 32,806,893 shares were issued and outstanding, respectively, and 272,023 shares were held in treasury stock. As of December 31, 2021, 32,276,419 and 32,004,396 shares were issued and outstanding, respectively, and 272,023 shares were held in treasury stock.

12.Equity Compensation and Other Benefits

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

Stock-based Compensation - Total stock-based compensation expense included in the Condensed Consolidated Statements of Operations (Unaudited) is as follows:
Three Months Ended March 31,
(in thousands)20222021
Technology and facilities$1,870 $728 
Sales and marketing31 32 
Personnel4,872 4,067 
Total stock-based compensation (1)
$6,773 $4,827 
(1) Amounts shown are net of $0.7 million of capitalized stock-based compensation for the three months ended March 31, 2022 and net of $0.3 million of capitalized stock-based compensation for the three months ended March 31, 2021.

As of March 31, 2022, and December 31, 2021, the Company’s total unrecognized compensation cost related to unvested stock-based option awards granted to employees was $9.5 million and $6.9 million, respectively, which will be recognized over a weighted-average vesting period of approximately 2.8 years and 2.2 years, respectively. As of March 31, 2022 and December 31, 2021, the Company's total unrecognized compensation cost related to unvested restricted stock unit awards granted to employees was $72.2 million and $54.1 million, respectively, which will be recognized over a weighted average vesting period of approximately 3.1 years and 2.6 years, respectively.

12


Cash flows from the tax benefits for tax deductions resulting from the exercise of stock options in excess of the compensation expense recorded for those options (excess tax benefits) are required to be classified as cash from financing activities. The total income tax expense recognized in the income statement for stock-based compensation arrangements for the three months ended March 31, 2022 was $0.7 million. The total income tax expense recognized in the income statement for the stock-based compensation arrangements for the three months ended March 31, 2021 was insignificant.

13.Revenue

Interest Income - Total interest income included in the Condensed Consolidated Statements of Operations (Unaudited) is as follows:
Three Months Ended March 31,
(in thousands)20222021
Interest income
Interest on loans$187,387 $125,682 
Fees on loans4,850 1,509 
Total interest income192,237 127,191 

Non-interest Income - Total non-interest income included in the Condensed Consolidated Statements of Operations (Unaudited) is as follows:
Three Months Ended March 31,
(in thousands)20222021
Non-interest income
Gain on loan sales$5,715 $4,434 
Servicing fees3,957 3,078 
Other income12,811 610 
Total non-interest income$22,483 $8,122 

14.Income Taxes

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

During the three months ended March 31, 2022 and 2021, the Company recorded income tax expense of $12.0 million and $1.0 million, respectively, related to continuing operations. The Company’s reported effective tax rates were 20.8% and 24.1% for the three months ended March 31, 2022 and 2021, respectively. Our effective tax rates for the three months ended March 31, 2022 and 2021 differ from the statutory tax rates primarily due to the impacts of the R&D tax credit and a one-time exercise of stock-based awards.

15.Fair Value of Financial Instruments

Financial Instruments at Fair Value
The table below compares the fair value of loans receivable and asset-backed notes to their contractual balances for the periods shown:
March 31, 2022December 31, 2021
(in thousands)Unpaid Principal BalanceFair ValueUnpaid Principal BalanceFair Value
Assets
Loans receivable$2,353,981 $2,450,987 $2,272,864 $2,386,807 
Liabilities
Asset-backed notes1,654,412 1,593,435 1,654,412 1,651,706 

The Company calculates the fair value of the asset-backed notes using independent pricing services and broker price indications, which are based on quoted prices for identical or similar notes, which are Level 2 input measures.

13


The Company primarily uses a discounted cash flow model to estimate the fair value of Level 3 instruments based on the present value of estimated future cash flows. This model uses inputs that are inherently judgmental and reflect management’s best estimates of the assumptions a market participant would use to calculate fair value. The following tables present quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for Loans Receivable at Fair Value.

March 31, 2022December 31, 2021
MinimumMaximum
Weighted Average (3)
MinimumMaximumWeighted Average
Remaining cumulative charge-offs (1)
6.14%47.89%10.37%6.75%51.86%9.60%
Remaining cumulative prepayments (1)
41.11%33.16%44.25%32.47%
Principal payment rate (1)(2)
%%16.55%%%18.07%
Average life (years)0.201.510.850.221.510.86
Discount rate6.698.796.76%6.908.356.94%
(1) Figure disclosed as a percentage of outstanding principal balance.
(2) Remaining cumulative prepayments are estimated to calculate fair value on the unsecured and secured loan receivables and principal payment rates are estimated on the credit card receivables.
(3) Unobservable inputs were weighted by outstanding principal balance, which are grouped by risk (type of customer, original loan maturity terms).

Fair value adjustments related to financial instruments where the fair value option has been elected are recorded through earnings for the three months ended March 31, 2022 and 2021. Certain unobservable inputs may (in isolation) have either a directionally consistent or opposite impact on the fair value of the financial instrument for a given change in that input. When multiple inputs are used within the valuation techniques for loans, a change in one input in a certain direction may be offset by an opposite change from another input.

The Company developed internal models to estimate the fair value of loans receivable held for investment. To generate future expected cash flows, the models combine receivable characteristics with assumptions about borrower behavior based on the Company’s historical loan performance. These cash flows are then discounted using a required rate of return that management estimates would be used by a market participant.

The Company tested the fair value models by comparing modeled cash flows to historical loan performance to ensure that the models were complete, accurate and reasonable for the Company’s use. The Company also engaged a third party to create an independent fair value estimate for the Loans Receivable at Fair Value, which provides a set of fair value marks using the Company’s historical loan performance data and whole loan sale prices to develop independent forecasts of borrower behavior. Their model generates expected cash flows which were then aggregated and compared to the Company’s actual cash flows within an acceptable range.

The Company's internal valuation committee provides governance and oversight over the fair value pricing calculations and related financial statement disclosures. Additionally, this committee provides a challenge of the assumptions used and outputs of the model, including the appropriateness of such measures and periodically reviews the methodology and process to determine the fair value pricing. Any significant changes to the process must be approved by the committee.

The table below presents a reconciliation of loans receivable at fair value on a recurring basis using significant unobservable inputs:
Three Months Ended March 31,
(in thousands)20222021
Balance – beginning of period$2,386,807 $1,696,526 
Principal disbursements779,719 309,009 
Principal payments from customers (1)
(636,044)(315,887)
Gross charge-offs(62,558)(40,959)
Net increase (decrease) in fair value (1)
(16,937)21,562 
Balance – end of period$2,450,987 $1,670,251 
(1) The principal payment from customers shown for the three months ended March 31, 2022 includes $227.6 million of unpaid principal balance of loans sold in the 2022-1 transaction. The net increase (decrease) in fair value shown for the three months ended March 31, 2022 includes $15.9 million related to the cumulative fair value mark on the loans sold in the 2022-1 transaction. For details regarding the 2022-1 transaction, refer to Note 5, Loans Held for Sale and Loans Sold.

As of March 31, 2022, the aggregate fair value of loans that are 90 days or more past due and in non-accrual status was $3.7 million, and the aggregate unpaid principal balance for loans that are 90 days or more past due was $23.0 million. As of December 31, 2021, the aggregate fair value of loans that are 90 days or more past due and in non-accrual status was $3.5 million, and the aggregate unpaid principal balance for loans that are 90 days or more past due was $20.7 million.

14


Financial Instruments Disclosed But Not Carried at Fair Value

The following table presents the carrying value and estimated fair values of financial assets and liabilities disclosed but not carried at fair value and the level within the fair value hierarchy:
March 31, 2022
Carrying valueEstimated fair valueEstimated fair value
(in thousands)Level 1Level 2Level 3
Assets
Cash and cash equivalents$109,864