Loans

6 Months Ended

Jun. 30, 2022

As of June 30, 2022, our loan portfolio consisted of personal loans, student loans and home loans, which are measured at fair value under the fair value option election, and loans measured at amortized cost, including credit card, and commercial and consumer banking loans. Below is a disaggregated presentation of our loans, inclusive of fair market value adjustments and accrued interest income and net of the allowance for credit losses, as applicable, as of the dates indicated:


	June 30,		December 31,
	2022		2021
Loans at fair value
Securitized student loans	$	466,865	$	574,328
Securitized personal loans	132,133		234,576
Student loans	3,247,510		2,876,509
Home loans	135,262		212,709
Personal loans	3,977,612		2,054,850
Total loans at fair value	7,959,382		5,952,972
Loans at amortized cost(1)
Credit card	173,867		115,912
Commercial and consumer banking:
Commercial real estate	67,742		—
Commercial and industrial	8,097		—
Residential real estate and other consumer	3,406		—
Total commercial and consumer banking	79,245		—

Total loans at amortized cost	253,112		115,912
Total loans	$	8,212,494	$	6,068,884

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(1) Amounts are presented net of the allowance for credit losses. See Note 1 for additional information on our loans at amortized cost as it pertains to the allowance for credit losses pursuant to ASC 326.

Loans Measured at Fair Value

The following table summarizes the aggregate fair value of our loans measured at fair value on a recurring basis as of the dates indicated:


	Student Loans		Home Loans		Personal Loans		Total
June 30, 2022
Unpaid principal(1)	$	3,657,693	$	142,118	$	3,943,768	$	7,743,579
Accumulated interest	9,601		159		23,055		32,815
Cumulative fair value adjustments(1)	47,081		(7,015)		142,922		182,988
Total fair value of loans	$	3,714,375	$	135,262	$	4,109,745	$	7,959,382
December 31, 2021
Unpaid principal(1)	$	3,356,344	$	210,111	$	2,188,773	$	5,755,228
Accumulated interest	9,990		190		12,310		22,490
Cumulative fair value adjustments(1)	84,503		2,408		88,343		175,254
Total fair value of loans	$	3,450,837	$	212,709	$	2,289,426	$	5,952,972

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(1) These items are impacted by charge-offs during the period.

The following table summarizes the aggregate fair value of loans 90 days or more delinquent as of the dates indicated. As delinquent personal loans and student loans are charged off after 120 days of delinquency, amounts presented below represent the fair value of loans that are 90 to 120 days delinquent. There were no home loans that were 90 days or more delinquent as of the dates presented.


	Student Loans		Personal Loans		Total
June 30, 2022
Unpaid principal	$	1,372	$	8,260	$	9,632
Accumulated interest	18		304		322
Cumulative fair value adjustments	(733)		(7,266)		(7,999)
Fair value of loans 90 days or more delinquent	$	657	$	1,298	$	1,955
December 31, 2021
Unpaid principal	$	1,589	$	4,765	$	6,354
Accumulated interest	32		149		181
Cumulative fair value adjustments	(865)		(4,189)		(5,054)
Fair value of loans 90 days or more delinquent	$	756	$	725	$	1,481

The following table presents the changes in our loans measured at fair value on a recurring basis:


	Student Loans		Home Loans		Personal Loans		Total
Three Months Ended June 30, 2022
Fair value as of March 31, 2022	$	3,737,439	$	146,658	$	3,118,788	$	7,002,885
Origination of loans	398,722		332,047		2,471,849		3,202,618
Principal payments	(167,049)		(701)		(461,178)		(628,928)
Sales of loans	(259,690)		(342,780)		(1,123,898)		(1,726,368)
Purchases(1)	5,274		330		67,189		72,793
Change in accumulated interest	(139)		(23)		5,162		5,000
Change in fair value(2)	(182)		(269)		31,833		31,382
Fair value as of June 30, 2022	$	3,714,375	$	135,262	$	4,109,745	$	7,959,382

Three Months Ended June 30, 2021
Fair value as of March 31, 2021	$	2,666,793	$	231,903	$	1,573,908	$	4,472,604
Origination of loans	859,497		792,228		1,294,384		2,946,109
Principal payments	(235,889)		(1,280)		(247,808)		(484,977)
Sales of loans	(610,941)		(841,642)		(970,135)		(2,422,718)
Purchases(1)	44,779		422		103,538		148,739
Change in accumulated interest	(403)		17		(153)		(539)
Change in fair value(2)	15,657		665		9,808		26,130
Fair value as of June 30, 2021	$	2,739,493	$	182,313	$	1,763,542	$	4,685,348

Six Months Ended June 30, 2022
Fair value as of January 1, 2022	$	3,450,837	$	212,709	$	2,289,426	$	5,952,972
Origination of loans	1,382,526		644,430		4,497,853		6,524,809
Principal payments	(394,164)		(5,101)		(833,632)		(1,232,897)
Sales of loans	(803,840)		(708,150)		(2,101,818)		(3,613,808)
Purchases(1)	121,707		828		227,937		350,472
Change in accumulated interest	(389)		(31)		10,745		10,325
Change in fair value(2)	(42,302)		(9,423)		19,234		(32,491)
Fair value as of June 30, 2022	$	3,714,375	$	135,262	$	4,109,745	$	7,959,382

Six Months Ended June 30, 2021
Fair value as of January 1, 2021	$	2,866,459	$	179,689	$	1,812,920	$	4,859,068
Origination of loans	1,864,182		1,527,832		2,100,073		5,492,087
Principal payments	(486,108)		(2,759)		(506,007)		(994,874)
Sales of loans	(1,547,101)		(1,519,208)		(1,749,576)		(4,815,885)
Purchases(1)	44,850		541		104,539		149,930
Change in accumulated interest	(1,652)		(18)		(2,340)		(4,010)
Change in fair value(2)	(1,137)		(3,764)		3,933		(968)
Fair value as of June 30, 2021	$	2,739,493	$	182,313	$	1,763,542	$	4,685,348

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(1) Purchases reflect unpaid principal balance and relate to previously transferred loans. Purchase activity during the three and six months ended June 30, 2022 included securitization clean-up calls of $60,240 and $335,739, respectively. Additionally, during the three and six months ended June 30, 2022, the Company elected to purchase $7,290 and $7,290, respectively, of previously sold loans from certain investors. Purchase activity during the three and six months ended June 30, 2021 included securitization clean-up calls of $131,372 and $131,372, respectively. Additionally, during the three and six months ended June 30, 2021, the Company elected to purchase $15,185 and $15,185, respectively, of previously sold loans from certain investors. The Company was not required to buy back these loans. The remaining purchases during the periods presented related to standard representations and warranties pursuant to our various loan sale agreements.

(2) Changes in fair value of loans are recorded in the unaudited condensed consolidated statements of operations and comprehensive income (loss) within noninterest income—loan origination and sales for loans held on the balance sheet prior to transfer to a third party through a sale or to a VIE and within noninterest income—securitizations for loans in a consolidated VIE. Changes in fair value are impacted by valuation assumption changes, as well as sales price execution and amount of time the loans are held prior to sale. The estimated amount of losses included in earnings attributable to changes in instrument-specific credit risk were $23,221 and $16,725 during the three and six months ended June 30, 2022, respectively, and $9,038 and $2,111 during the three and six months ended June 30, 2021, respectively. The losses attributable to instrument-specific credit risk were estimated by incorporating our current default and loss severity assumptions for the loans. These assumptions are based on historical performance, market trends and performance expectations over the term of the underlying instrument.

Loans Measured at Amortized Cost

Loan Portfolio Composition and Aging

The following table presents the amortized cost basis of our credit card and commercial and consumer banking portfolios (excluding accrued interest and before the allowance for credit losses) by either current status or delinquency status as of the dates indicated:


			Delinquent Loans
	Current		30–59 Days		60–89 Days		≥ 90 Days(1)		Total Delinquent Loans		Total Loans(2)
June 30, 2022
Credit card	$	177,732	$	3,570	$	3,105	$	8,417	$	15,092	$	192,824
Commercial and consumer banking:
Commercial real estate	68,479		—		—		—		—		68,479
Commercial and industrial	8,299		7		—		—		7		8,306
Residential real estate and other consumer(3)	3,417		—		—		—		—		3,417
Total commercial and consumer banking	80,195		7		—		—		7		80,202
Total loans	$	257,927	$	3,577	$	3,105	$	8,417	$	15,099	$	273,026

December 31, 2021
Credit card	$	115,356	$	1,893	$	1,683	$	2,658	$	6,234	$	121,590

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(1)All of the credit card loans ≥ 90 days past due continued to accrue interest. As of June 30, 2022 and December 31, 2021, there were no credit card loans on nonaccrual status. As of June 30, 2022, commercial and consumer banking loans on nonaccrual status were immaterial, and there were no loans that were 90 days or more past due.

(2)For credit card, the balance is presented before allowance for credit losses of $21,974 and $7,037 as of June 30, 2022 and December 31, 2021, respectively, and accrued interest of $3,017 and $1,359, respectively. For commercial and consumer banking, the balance is presented before allowance for credit losses of $1,204 and accrued interest of $247 as of June 30, 2022.

(3)Includes residential real estate loans acquired in the Bank Merger, for which we did not elect the fair value option.

Credit Quality Indicators

Credit Card

The following table presents the amortized cost basis of our credit card portfolio (excluding accrued interest and before the allowance for credit losses) as of the dates indicated based on FICO scores, which are obtained at the origination of the account, and are updated as new credit information is available. The pools estimate the likelihood of borrowers with similar FICO scores to pay credit obligations based on aggregate credit performance data.


FICO	June 30, 2022		December 31, 2021
≥ 800	$	9,560	$	10,016
780 – 799	8,388		8,624
760 – 779	9,882		9,976
740 – 759	12,289		13,581
720 – 739	16,471		18,358
700 – 719	22,579		22,579
680 – 699	26,430		21,736
660 – 679	26,513		14,044
640 – 659	19,889		1,969
< 640	40,823		707
Total credit card	$	192,824	$	121,590

Commercial and Consumer Banking

We evaluate the credit quality of our commercial and consumer banking loan portfolio on a quarterly basis based on regulatory risk ratings. Loans are categorized into risk ratings based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors. We analyze loans individually by classification based on their associated credit risk, and perform an analysis on an ongoing basis as new information is obtained. Risk rating classifications are further described below. Loans with a lower expectation of credit losses are classified as Pass, while loans with a higher expectation of credit losses are classified as Substandard.

•Pass — Loans that management believes will fully repay in accordance with the contractual loan terms.

•Watch — Loans that management believes will fully repay in accordance with the contractual loan terms, but for which certain credit attributes have changed from origination and warrant further monitoring.

•Special mention — Loans with a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or our credit position at some future date.

•Substandard — Loans that are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the full repayment. They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected.

The following table presents the amortized cost basis of our commercial and consumer banking portfolio (excluding accrued interest and before the allowance for credit losses) by origination year and credit quality indicator as of June 30, 2022:


	Term Loans by Origination Year
	2022		2021		2020		2019		2018		Prior		Total Term Loans		Revolving Loans
Commercial real estate
Pass	$	8,987	$	5,811	$	7,680	$	9,413	$	5,692	$	16,364	$	53,947	$	206
Watch	1,246		1,703		—		2,064		2,146		2,959		10,118		—
Special mention	—		—		—		687		2,263		413		3,363		—
Substandard	—		—		—		—		—		845		845		—
Total commercial real estate	$	10,233	$	7,514	$	7,680	$	12,164	$	10,101	$	20,581	$	68,273	$	206
Commercial and industrial
Pass	$	—	$	15	$	113	$	—	$	103	$	5,093	$	5,324	$	367
Watch	—		—		—		136		—		355		491		26
Special mention	—		—		—		—		—		757		757		—
Substandard	—		—		—		234		165		942		1,341		—
Total commercial and industrial	$	—	$	15	$	113	$	370	$	268	$	7,147	$	7,913	$	393
Residential real estate and other consumer
Pass	$	—	$	—	$	—	$	—	$	—	$	3,307	$	3,307	$	69
Watch	—		—		—		—		—		41		41		—


Total residential real estate and other consumer	$	—	$	—	$	—	$	—	$	—	$	3,348	$	3,348	$	69
Total commercial and consumer banking	$	10,233	$	7,529	$	7,793	$	12,534	$	10,369	$	31,076	$	79,534	$	668