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Securitization and Variable Interest Entities | 6 Months Ended
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Jun. 30, 2026
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Securitization and Variable Interest Entities |
Note 7. Securitization and Variable Interest Entities
Consolidated VIEs We consolidate certain securitization trusts in which we have a variable interest and are deemed to be the primary beneficiary. Our consolidation policy is further discussed in Note 1. Organization, Summary of Significant Accounting Policies and New Accounting Standards in our Annual Report on Form 10-K. The VIEs are SPEs with portfolio loans securing debt obligations. The SPEs were created and designed to transfer credit and interest rate risk associated with consumer loans through the issuance of collateralized notes and trust certificates. We make standard representations and warranties to repurchase or replace qualified portfolio loans. Aside from these representations, the holders of the asset-backed debt obligations have no recourse to the Company if the cash flows from the underlying portfolio loans securing such debt obligations are not sufficient to pay all principal and interest on the asset-backed debt obligations. We hold a significant interest in these financing transactions through our ownership of a portion of the residual interest in certain VIEs. In addition, in some cases, we invest in the debt obligations issued by the VIE. Our investments in consolidated VIEs eliminate in consolidation. The residual interest is the first VIE interest to absorb losses should the loans securing the debt obligations not provide adequate cash flows to satisfy more senior claims and is the interest that we expect to absorb the expected gains and losses of the VIE. Our maximum exposure to credit risk in sponsoring SPEs is limited to our investment in the VIE. VIE creditors have no recourse against our general credit. There are no liquidity arrangements, guarantees or other commitments that may affect the fair value or risk of our variable interests in consolidated VIEs. As of June 30, 2026 and December 31, 2025, we had one consolidated VIE, respectively, on our condensed consolidated balance sheets. During the six months ended June 30, 2026, we did not exercise any securitization clean up call related to consolidated VIEs. The assets of consolidated VIEs that were included in our condensed consolidated balance sheets may only be used to settle obligations of consolidated VIEs and were in excess of those obligations as of June 30, 2026 and December 31, 2025. Intercompany balances are eliminated upon consolidation. Nonconsolidated VIEs We have created and designed personal loan and student loan trusts to transfer associated credit and interest rate risk associated with the loans through the issuance of collateralized notes and residual certificates. We have a variable interest in the nonconsolidated loan trusts, through our ownership of collateralized notes in the form of asset-backed bonds and residual certificates in the loan trusts that absorb variability. We have also transferred secured loans and personal loans, including the associated risks, to other SPEs that are considered VIEs. In both the loan trusts and other VIEs, we have continuing, non-controlling involvement with the entity as the servicer. When our servicing rights meet the definition of a variable interest, in that role, we may have the power to perform the activities which most impact the economic performance of the VIE, but since either we hold an insignificant financial interest in the trusts or rights held by other variable interest holders convey power, we are not the primary beneficiary. In loan trusts, our collateralized notes and residual certificates represent the equity ownership interest in the loan trusts, wherein there is an obligation to absorb losses and the right to receive benefits from residual certificate ownership. The maximum exposure to loss as a result of our involvement with the nonconsolidated loan trust VIEs is limited to our investment. In other VIEs, our interest is represented by secured loans, servicing rights, or both, with our maximum exposure to loss is limited to the total amount of our secured loans and servicing rights. We did not provide financial support to any nonconsolidated VIEs beyond our initial equity investment. There are no liquidity arrangements, guarantees or other commitments by third parties that may affect the fair value or risk of our variable interests in nonconsolidated VIEs. As of June 30, 2026 and December 31, 2025, we had investments in 25 and 22 nonconsolidated VIEs, respectively. During the six months ended June 30, 2026, we established four nonconsolidated trusts and called one nonconsolidated trust. The following table presents the carrying value of Company assets associated with these nonconsolidated VIEs as of the dates presented.
| June 30, 2026 |  | December 31, 2025
Securitization investments | $ | 248,117 |  |  | $ | 144,627 |
Secured loans | 615,195 |  |  | 873,981 |
Servicing rights | 51,060 |  |  | 72,077 |
Securitization Investments The following table presents additional detail of the aggregate outstanding value of asset-backed bonds and residual investments owned by the Company in nonconsolidated VIEs, which are presented within investment securities in the condensed consolidated balance sheets. These risk retention interests represent the carrying value of our holdings in nonconsolidated VIEs, and the maximum exposure to a loss as a result of our involvement as of the dates presented.
| June 30, 2026 |  | December 31, 2025
Personal loans | $ | 223,978 |  |  | $ | 117,322 |
Student loans | 24,139 |  |  | 27,305 |
Securitization investments(1) | $ | 248,117 |  |  | $ | 144,627 |
_____________________ (1)As of June 30, 2026, includes $12.4 million and $3.3 million of asset-backed bonds and residual investments, respectively, classified as available for sale. See Note 6. Investment Securities for additional information. See Note 12. Fair Value Measurements for the key inputs used in the fair value measurements of these asset-backed bonds and residual interests. Low Income Housing Tax Credit Investments In addition to the nonconsolidated VIEs noted above, the Company also makes equity investments as a limited partner in various entities that sponsor affordable housing projects that qualify for the LIHTC program. The purpose of these investments is not only to support the Company’s community reinvestment initiatives, but also to provide an investment return, primarily through the realization of tax benefits. Each of these entities is managed by an unrelated third-party general partner or managing member that has the power to direct the activities which most significantly affect the performance of each entity. Therefore, the Company has determined that it is not the primary beneficiary of any of these LIHTC entities and accordingly, does not consolidate the VIEs. The Company's funding requirements are limited to its invested capital and any additional unfunded commitments for future equity contributions. The Company's maximum exposure to loss as a result of its involvement is limited to the carrying amounts of the investments, including the unfunded commitments, which are included in other assets and accounts payable, accruals and other liabilities, respectively, in the condensed consolidated balance sheets. Our investments were $105.7 million and $53.5 million as of June 30, 2026 and December 31, 2025, respectively. The unfunded commitments, included as part of our investments, were $88.7 million and $47.2 million as of June 30, 2026 and December 31, 2025, respectively, the majority of which are expected to be funded over the next 3 years. The Company accounts for its LIHTC investments under the proportional amortization method. Under this method, the Company amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance as a component of income tax expense. The related tax credits and other benefits recognized, as well as the amortization of the related investments were immaterial for the three and six months ended June 30, 2026 and 2025, respectively.

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- Definition The entire disclosure for a variable interest entity (VIE), including but not limited to, judgments and assumptions in determining whether to consolidate and in identifying the primary beneficiary, gain (loss) recognized on the initial consolidation of the VIE, terms of arrangements, amounts and classification of the VIE's assets and liabilities, and the entity's maximum exposure to loss. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 810 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/810/tableOfContent + Details
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