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Loans | 9 Months Ended
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Sep. 30, 2023
Receivables [Abstract] |
Loans | Note 4. Loans
As of September 30, 2023, our loan portfolio consisted of loans held for sale, including personal loans, student loans and home loans, which are measured at fair value under the fair value option, and loans held for investment, including credit cards, and commercial and consumer banking loans, which are measured at amortized cost. 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:
| September 30, 2023 |  | December 31, 2022
Loans held for sale |  |  |
Personal loans(1) | $ | 14,850,996 |  |  | $ | 8,610,434 |
Student loans(2) | 6,041,544 |  |  | 4,877,177 |
Home loans | 101,296 |  |  | 69,463 |
Total loans held for sale, at fair value | 20,993,836 |  |  | 13,557,074 |
Loans held for investment(3) |  |  |
Credit card(4) | 247,241 |  |  | 209,164 |
Commercial and consumer banking: |  |  |
Commercial real estate | 104,743 |  |  | 88,652 |
Commercial and industrial | 5,917 |  |  | 7,179 |
Residential real estate and other consumer | 3,347 |  |  | 2,962 |
Total commercial and consumer banking | 114,007 |  |  | 98,793 |
Total loans held for investment, at amortized cost | 361,248 |  |  | 307,957 |
Total loans | $ | 21,355,084 |  |  | $ | 13,865,031 |
_____________________ (1) Includes $618,829 and $663,004 of personal loans in consolidated VIEs as of September 30, 2023 and December 31, 2022, respectively. (2) Includes $275,244 and $268,697 of student loans in consolidated VIEs as of September 30, 2023 and December 31, 2022, respectively. (3) See Note 5. Allowance for Credit Losses for additional information on our loans at amortized cost as it pertains to the allowance for credit losses. (4) For credit cards, loan origination costs are expensed as incurred primarily within noninterest expense—sales and marketing in the condensed consolidated statements of operations and comprehensive loss. Loans Held for Sale The following table summarizes the aggregate fair value of our loans held for sale, for which we elected the fair value option. See Note 12. Fair Value Measurements for the assumptions used in our fair value model.
| Personal Loans |  | Student Loans |  | Home Loans |  | Total
September 30, 2023 |  |  |  |  |  |  |
Unpaid principal | $ | 14,177,004 |  |  | $ | 5,929,047 |  |  | $ | 110,320 |  |  | $ | 20,216,371 |
Accumulated interest | 105,156 |  |  | 26,497 |  |  | 163 |  |  | 131,816 |
Cumulative fair value adjustments(1) | 568,836 |  |  | 86,000 |  |  | (9,187) |  |  | 645,649 |
Total fair value of loans(2) | $ | 14,850,996 |  |  | $ | 6,041,544 |  |  | $ | 101,296 |  |  | $ | 20,993,836 |
December 31, 2022 |  |  |  |  |  |  |
Unpaid principal | $ | 8,283,400 |  |  | $ | 4,794,517 |  |  | $ | 77,705 |  |  | $ | 13,155,622 |
Accumulated interest | 55,673 |  |  | 19,433 |  |  | 151 |  |  | 75,257 |
Cumulative fair value adjustments(1) | 271,361 |  |  | 63,227 |  |  | (8,393) |  |  | 326,195 |
Total fair value of loans(2) | $ | 8,610,434 |  |  | $ | 4,877,177 |  |  | $ | 69,463 |  |  | $ | 13,557,074 |
__________________ (1) During the nine months ended September 30, 2023, the cumulative fair value adjustments for personal loans were primarily impacted by higher origination volume and higher coupon rates, partially offset by higher benchmark rates. (2) Each component of the fair value of loans is impacted by charge-offs during the period. Our fair value assumption for annual default rate incorporates fair value markdowns on loans beginning when they are 10 days or more delinquent, with additional markdowns at 30, 60 and 90 days past due. The following table summarizes the aggregate fair value of loans 90 days or more delinquent. 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.
| Personal Loans |  | Student Loans |  | Home Loans |  | Total
September 30, 2023 |  |  |  |  |  |  |
Unpaid principal balance | $ | 68,432 |  |  | $ | 8,502 |  |  | $ | 213 |  |  | $ | 77,147 |
Accumulated interest | 3,400 |  |  | 335 |  |  | — |  |  | 3,735 |
Cumulative fair value adjustments(1) | (58,676) |  |  | (5,104) |  |  | (140) |  |  | (63,920) |
Fair value of loans 90 days or more delinquent | $ | 13,156 |  |  | $ | 3,733 |  |  | $ | 73 |  |  | $ | 16,962 |
December 31, 2022 |  |  |  |  |  |  |
Unpaid principal balance | $ | 27,989 |  |  | $ | 6,435 |  |  | $ | — |  |  | $ | 34,424 |
Accumulated interest | 1,207 |  |  | 304 |  |  | — |  |  | 1,511 |
Cumulative fair value adjustments(1) | (25,022) |  |  | (3,332) |  |  | — |  |  | (28,354) |
Fair value of loans 90 days or more delinquent | $ | 4,174 |  |  | $ | 3,407 |  |  | $ | — |  |  | $ | 7,581 |
__________________ (1) Our fair value assumption for annual default rate incorporates fair value markdowns on loans beginning when they are 10 days or more delinquent, with additional markdowns at 30, 60 and 90 days past due. Transfers of Financial Assets We regularly transfer financial assets and account for such transfers as either sales or secured borrowings depending on the facts and circumstances of the transfer. When a transfer of financial assets qualifies as a sale, in many instances we have continuing involvement as the servicer of those financial assets. As we expect the benefits of servicing to be more than just adequate, we recognize a servicing asset. Further, in the case of securitization-related transfers that qualify as sales, we have additional continuing involvement as an investor, albeit at insignificant levels relative to the expected gains and losses of the securitization. In instances where a transfer is accounted for as a secured borrowing, we perform servicing (but we do not recognize a servicing asset) and typically maintain a significant investment relative to the expected gains and losses of the securitization. In whole loan sales, we do not have a residual financial interest in the loans, nor do we have any other power over the loans that would constrain us from recognizing a sale. Additionally, we generally have no repurchase requirements related to transfers of personal loans, student loans and non-government-sponsored enterprise home loans other than standard origination representations and warranties, for which we record a liability based on expected repurchase obligations. For government-sponsored enterprise (“GSE”) home loans, we have customary GSE repurchase requirements, which do not constrain sale treatment but result in a liability for the expected repurchase requirement. There were no loan securitization transfers qualifying for sale accounting treatment during the nine months ended September 30, 2023 and 2022. Deconsolidation of debt reflects the impacts of previously consolidated VIEs that became deconsolidated during the period because we no longer hold a significant financial interest in the underlying securitization entity, which can fluctuate from period to period. Gains and losses on deconsolidations are presented within noninterest income—securitizations in the condensed consolidated statements of operations and comprehensive loss. During the nine months ended September 30, 2023, we had deconsolidation of debt on student loans of $45.9 million. The impact on earnings from the deconsolidation was immaterial. During the three months ended September 30, 2023, we did not have any deconsolidation of debt. During the three and nine months ended September 30, 2022, we did not have any deconsolidations of debt. The following table summarizes our whole loan sales:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Personal loans |  |  |  |  |  |  |
Fair value of consideration received: |  |  |  |  |  |  |
Cash | $ | 15,098 |  |  | $ | 773,005 |  |  | $ | 66,571 |  |  | $ | 2,954,723 |
Servicing assets recognized | 767 |  |  | 6,789 |  |  | 1,655 |  |  | 20,872 |
Repurchase liabilities recognized | (45) |  |  | (2,074) |  |  | (405) |  |  | (7,161) |
Total consideration received | 15,820 |  |  | 777,720 |  |  | 67,821 |  |  | 2,968,434 |
Aggregate unpaid principal balance and accrued interest of loans sold | 15,098 |  |  | 753,259 |  |  | 65,420 |  |  | 2,864,351 |
Gain from loan sales | $ | 722 |  |  | $ | 24,461 |  |  | $ | 2,401 |  |  | $ | 104,083 |
Sale execution(1) | 105.1 | % |  | 103.5 | % |  | 104.3 | % |  | 103.9 | %
Student loans |  |  |  |  |  |  |
Fair value of consideration received: |  |  |  |  |  |  |
Cash | $ | — |  |  | $ | 77,089 |  |  | $ | 98,624 |  |  | $ | 883,859 |
Servicing assets recognized | — |  |  | 460 |  |  | 2,792 |  |  | 9,275 |
Repurchase liabilities recognized | — |  |  | (13) |  |  | (16) |  |  | (134) |
Total consideration | — |  |  | 77,536 |  |  | 101,400 |  |  | 893,000 |
Aggregate unpaid principal balance and accrued interest of loans sold | — |  |  | 74,311 |  |  | 99,916 |  |  | 881,922 |
Gain from loan sales | $ | — |  |  | $ | 3,225 |  |  | $ | 1,484 |  |  | $ | 11,078 |
Sale execution(1) | — | % |  | 104.4 | % |  | 101.5 | % |  | 101.3 | %
Home loans |  |  |  |  |  |  |
Fair value of consideration received: |  |  |  |  |  |  |
Cash | $ | 331,364 |  |  | $ | 244,788 |  |  | $ | 676,235 |  |  | $ | 926,707 |
Servicing assets recognized | 3,376 |  |  | 3,432 |  |  | 7,133 |  |  | 12,152 |
Repurchase liabilities recognized | (468) |  |  | (269) |  |  | (1,315) |  |  | (1,004) |
Total consideration | 334,272 |  |  | 247,951 |  |  | 682,053 |  |  | 937,855 |
Aggregate unpaid principal balance and accrued interest of loans sold | 333,951 |  |  | 252,168 |  |  | 678,561 |  |  | 960,680 |
Gain (loss) from loan sales | $ | 321 |  |  | $ | (4,217) |  |  | $ | 3,492 |  |  | $ | (22,825) |
Sale execution(1) | 100.2 | % |  | 98.4 | % |  | 100.7 | % |  | 97.7 | %
_____________________ (1)Sale execution represents the ratio of cash proceeds and servicing assets recognized to the aggregate unpaid principal balance and accrued interest of the loans sold. Amounts included in repurchase liabilities are excluded from the calculation, as they typically would not materially differ from the fair value markdown on the loans over the repurchase period had they been held on balance sheet and entered delinquency. For certain transferred loans that qualified for sale accounting and are, therefore, off-balance sheet, we have continuing involvement through our servicing agreements. For such loans, our exposure to loss is generally limited to the extent we would be required to repurchase such a loan due to a breach of representations and warranties associated with the loan transfer or servicing contract. The following table presents information about the unpaid principal balances of loans originated by us and subsequently transferred, but with which we have continuing involvement:
| Personal Loans |  | Student Loans |  | Home Loans |  | Total
September 30, 2023 |  |  |  |  |  |  |
Loans in delinquency (30+ days past due) | $ | 60,634 |  |  | $ | 58,308 |  |  | $ | 26,382 |  |  | $ | 145,324 |
Total loans in delinquency | 96,718 |  |  | 130,497 |  |  | 26,382 |  |  | 253,597 |
Total transferred loans serviced(1) | 1,696,118 |  |  | 6,462,082 |  |  | 5,457,959 |  |  | 13,616,159 |
December 31, 2022 |  |  |  |  |  |  |
Loans in delinquency (30+ days past due) | $ | 64,654 |  |  | $ | 46,986 |  |  | $ | 16,510 |  |  | $ | 128,150 |
Total loans in delinquency | 108,991 |  |  | 115,818 |  |  | 16,510 |  |  | 241,319 |
Total transferred loans serviced(1) | 2,995,601 |  |  | 7,586,031 |  |  | 5,134,306 |  |  | 15,715,938 |
_____________________ (1)Total transferred loans serviced includes loans in delinquency, as well as loans in repayment, loans in-school/grace period/deferment (related to student loans), and loans in forbearance. The vast majority of total transferred loans serviced represent loans in repayment as of the dates indicated. The following table presents additional information about the servicing cash flows received and net charge-offs related to loans originated by us and subsequently transferred, but with which we have continuing involvement:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Personal loans |  |  |  |  |  |  |
Servicing fees collected from transferred loans | $ | 4,033 |  |  | $ | 9,020 |  |  | $ | 15,080 |  |  | $ | 25,845 |
Charge-offs, net of recoveries, of transferred loans(1) | 40,916 |  |  | 24,190 |  |  | 128,442 |  |  | 62,852 |
Student loans |  |  |  |  |  |  |
Servicing fees collected from transferred loans | 5,375 |  |  | 8,224 |  |  | 20,967 |  |  | 28,437 |
Charge-offs, net of recoveries, of transferred loans(1) | 10,139 |  |  | 7,372 |  |  | 29,297 |  |  | 24,784 |
Home loans |  |  |  |  |  |  |
Servicing fees collected from transferred loans | 3,662 |  |  | 3,686 |  |  | 10,481 |  |  | 9,252 |
Total |  |  |  |  |  |  |
Servicing fees collected from transferred loans | $ | 13,070 |  |  | $ | 20,930 |  |  | $ | 46,528 |  |  | $ | 63,534 |
Charge-offs, net of recoveries, of transferred loans(1) | 51,055 |  |  | 31,562 |  |  | 157,739 |  |  | 87,636 |
_____________________ (1)Personal loan and student loan charge-offs, net of recoveries, are impacted by the timing of charge-off sales performed on behalf of the purchasers of our loans, which lower the net amount disclosed. Loans Held for Investment 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:
|  |  | Delinquent Loans |  |
| Current |  | 30–59 Days |  | 60–89 Days |  | ≥ 90 Days(1) |  | Total Delinquent Loans |  | Total Loans(2)
September 30, 2023 |  |  |  |  |  |  |  |  |  |  |
Credit card | $ | 271,827 |  |  | $ | 5,005 |  |  | $ | 4,078 |  |  | $ | 11,294 |  |  | $ | 20,377 |  |  | $ | 292,204 |
Commercial and consumer banking: |  |  |  |  |  |  |  |  |  |  |
Commercial real estate | 105,709 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 105,709 |
Commercial and industrial | 5,684 |  |  | 288 |  |  | — |  |  | 466 |  |  | 754 |  |  | 6,438 |
Residential real estate and other consumer(3) | 3,342 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3,342 |
Total commercial and consumer banking | 114,735 |  |  | 288 |  |  | — |  |  | 466 |  |  | 754 |  |  | 115,489 |
Total loans | $ | 386,562 |  |  | $ | 5,293 |  |  | $ | 4,078 |  |  | $ | 11,760 |  |  | $ | 21,131 |  |  | $ | 407,693 |
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |
Credit card | $ | 225,165 |  |  | $ | 4,670 |  |  | $ | 3,626 |  |  | $ | 10,498 |  |  | $ | 18,794 |  |  | $ | 243,959 |
Commercial and consumer banking: |  |  |  |  |  |  |  |  |  |  |
Commercial real estate | 89,544 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 89,544 |
Commercial and industrial | 7,636 |  |  | — |  |  | 1 |  |  | — |  |  | 1 |  |  | 7,637 |
Residential real estate and other consumer(3) | 2,966 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,966 |
Total commercial and consumer banking | 100,146 |  |  | — |  |  | 1 |  |  | — |  |  | 1 |  |  | 100,147 |
Total loans | $ | 325,311 |  |  | $ | 4,670 |  |  | $ | 3,627 |  |  | $ | 10,498 |  |  | $ | 18,795 |  |  | $ | 344,106 |
______________ (1)All of the credit cards ≥ 90 days past due continued to accrue interest. As of the dates indicated, there were no credit cards on nonaccrual status. As of the dates indicated, commercial and consumer banking loans on nonaccrual status were immaterial. (2)For credit card, the balance is presented before allowance for credit losses of $50,055 and $39,110 as of September 30, 2023 and December 31, 2022, respectively, and accrued interest of $5,092 and $4,315, respectively. For commercial and consumer banking, the balance is presented before allowance for credit losses of $1,868 and $1,678, respectively, and accrued interest of $386 and $324, respectively. (3)Primarily 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) based on FICO scores, which are obtained at origination of the account and are refreshed monthly thereafter. The pools estimate the likelihood of borrowers with similar FICO scores to pay credit obligations based on aggregate credit performance data.
FICO |  | September 30, 2023 |  | December 31, 2022
≥ 800 |  | $ | 22,999 |  |  | $ | 14,421 |
780 – 799 |  | 15,905 |  |  | 11,327 |
760 – 779 |  | 18,180 |  |  | 12,179 |
740 – 759 |  | 20,179 |  |  | 14,501 |
720 – 739 |  | 25,172 |  |  | 19,343 |
700 – 719 |  | 30,789 |  |  | 26,239 |
680 – 699 |  | 36,490 |  |  | 31,543 |
660 – 679 |  | 34,714 |  |  | 31,958 |
640 – 659 |  | 25,265 |  |  | 25,959 |
620 – 639 |  | 15,922 |  |  | 15,566 |
600 – 619 |  | 9,625 |  |  | 8,968 |
≤ 599 |  | 36,964 |  |  | 31,955 |
Total credit card |  | $ | 292,204 |  |  | $ | 243,959 |
Commercial and Consumer Banking We analyze loans in our commercial and consumer banking portfolio 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 or weaknesses that deserves management’s close attention. If left uncorrected, the 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:
|  | Term Loans by Origination Year |  |
September 30, 2023 |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  | Total Term Loans |  | Revolving Loans
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 20,550 |  |  | $ | 34,042 |  |  | $ | 5,667 |  |  | $ | 4,577 |  |  | $ | 9,396 |  |  | $ | 18,846 |  |  | $ | 93,078 |  |  | $ | 190 |
Watch |  | 1,238 |  |  | 4,609 |  |  | 1,658 |  |  | — |  |  | 217 |  |  | 2,760 |  |  | 10,482 |  |  | — |
Special mention |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,577 |  |  | 1,577 |  |  | — |
Substandard |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 382 |  |  | 382 |  |  | — |
Total commercial real estate |  | 21,788 |  |  | 38,651 |  |  | 7,325 |  |  | 4,577 |  |  | 9,613 |  |  | 23,565 |  |  | 105,519 |  |  | 190 |
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 56 |  |  | — |  |  | — |  |  | 67 |  |  | 100 |  |  | 4,950 |  |  | 5,173 |  |  | 50 |
Watch |  | 48 |  |  | — |  |  | — |  |  | — |  |  | 18 |  |  | 11 |  |  | 77 |  |  | — |
Substandard |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,138 |  |  | 1,138 |  |  | — |
Total commercial and industrial |  | 104 |  |  | — |  |  | — |  |  | 67 |  |  | 118 |  |  | 6,099 |  |  | 6,388 |  |  | 50 |
Residential real estate and other consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 735 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,480 |  |  | 3,215 |  |  | 87 |
Watch |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 40 |  |  | 40 |  |  | — |
Total residential real estate and other consumer |  | 735 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,520 |  |  | 3,255 |  |  | 87 |
Total commercial and consumer banking |  | $ | 22,627 |  |  | $ | 38,651 |  |  | $ | 7,325 |  |  | $ | 4,644 |  |  | $ | 9,731 |  |  | $ | 32,184 |  |  | $ | 115,162 |  |  | $ | 327 |

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