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Allowance for Credit Losses | 9 Months Ended
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Sep. 30, 2023
Receivables [Abstract] |
Allowance for Credit Losses | Note 5. Allowance for Credit Losses
Our allowance for credit losses represents our current estimate of expected credit losses over the remaining contractual life of certain financial assets, including credit cards as well as commercial and consumer banking loans acquired in the Bank Merger, which relate to our Financial Services segment, and accounts receivables primarily related to our Technology Platform segment. Given our methods of collecting funds on servicing receivables, our historical experience of infrequent write offs, and that we have not observed meaningful changes in our counterparties’ abilities to pay, we determined that the future exposure to credit losses on servicing related receivables was immaterial. In estimating expected credit losses for credit cards, we segment loans based on credit quality indicators and reassess our pools periodically to confirm that all loans within each pool continue to share similar risk characteristics. We establish an allowance within each pool utilizing a proprietary risk model that relies on assumptions such as average annual percentage rate, payment rate, utilization, delinquency status and default probability. The model may then be adjusted for current conditions and reasonable and supportable forecasts of future conditions, including economic conditions. We apply the aforementioned assumptions to the drawn balance of credit cards within each pool to estimate the lifetime expected credit losses within each pool, which are then aggregated to determine the allowance for credit losses. We further consider an evaluation of overall portfolio credit quality based on indicators such as changes in our credit decisioning process, underwriting and collection management policies; the effects of external factors, such as regulatory requirements; general economic conditions; and inherent uncertainties in applying the methodology. When a credit card balance is charged off, we record a reduction to the allowance and the credit card balance. The following table presents changes in our allowance for credit losses:
| Credit Card(1) |  | Commercial and Consumer Banking(1) |  | Accounts Receivable(1)
Three Months Ended September 30, 2023 |  |  |  |  |
Balance at June 30, 2023 | $ | 39,361 |  |  | $ | 1,866 |  |  | $ | 1,937 |
Provision for credit losses(2) | 21,821 |  |  | 10 |  |  | (148) |
Write-offs charged against the allowance(3) | (11,127) |  |  | (8) |  |  | (208) |
Balance at September 30, 2023 | $ | 50,055 |  |  | $ | 1,868 |  |  | $ | 1,581 |
Three Months Ended September 30, 2022 |  |  |  |  |
Balance at June 30, 2022 | $ | 21,974 |  |  | $ | 1,204 |  |  | $ | 2,720 |
Provision for credit losses(2) | 16,119 |  |  | 204 |  |  | (929) |
Write-offs charged against the allowance | (5,133) |  |  | 2 |  |  | — |
Balance at September 30, 2022 | $ | 32,960 |  |  | $ | 1,410 |  |  | $ | 1,791 |
Nine Months Ended September 30, 2023 |  |  |  |  |
Balance at December 31, 2022 | $ | 39,110 |  |  | $ | 1,678 |  |  | $ | 2,785 |
Provision for credit losses(2) | 42,658 |  |  | 195 |  |  | 94 |
Write-offs charged against the allowance(3) | (31,713) |  |  | (5) |  |  | (1,298) |
Balance at September 30, 2023 | $ | 50,055 |  |  | $ | 1,868 |  |  | $ | 1,581 |
Nine Months Ended September 30, 2022 |  |  |  |  |
Balance at December 31, 2021 | $ | 7,037 |  |  | $ | — |  |  | $ | 2,292 |
Provision for credit losses(2) | 38,361 |  |  | 1,026 |  |  | (408) |
Allowance for PCD loans(4) | — |  |  | 382 |  |  | — |
Write-offs charged against the allowance | (12,438) |  |  | 2 |  |  | (93) |
Balance at September 30, 2022 | $ | 32,960 |  |  | $ | 1,410 |  |  | $ | 1,791 |
_____________________ (1)Credit cards and commercial and consumer banking loans measured at amortized cost, net of allowance for credit losses, are presented within loans held for investment in the condensed consolidated balance sheets. Accounts receivable balances, net of allowance for credit losses, are presented within other assets in the condensed consolidated balance sheets. (2)The provision for credit losses on credit cards and commercial and consumer banking loans is presented within noninterest expense—provision for credit losses in the condensed consolidated statements of operations and comprehensive loss. There were immaterial recoveries of amounts previously reserved related to credit cards and commercial and consumer banking loans during the three and nine months ended September 30, 2023 and 2022. The provision for credit losses on accounts receivable is presented within noninterest expense—general and administrative in the condensed consolidated statements of operations and comprehensive loss. During the three and nine months ended September 30, 2023, recoveries of amounts previously reserved related to accounts receivable were $45 and $1,224, respectively. During the three and nine months ended September 30, 2022, recoveries of amounts previously reserved related to accounts receivable were $937 and $2,697, respectively. (3)The increases in credit card write-offs charged against the allowance during the three and nine months ended September 30, 2023 relative to the corresponding periods in 2022 were primarily related to our maturing portfolio. (4)In connection with the Bank Merger, we obtained purchased credit deteriorated (“PCD”) loans, for which we measured an allowance, with a corresponding increase to the amortized cost basis as of the acquisition date. Therefore, recognition of the initial allowance for credit losses did not impact earnings. Credit card: Accrued interest receivables written off by reversing interest income were immaterial during the three and nine months ended September 30, 2023 and 2022.

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