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Fair Value of Financial Instruments | 3 Months Ended
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Mar. 31, 2025
Fair Value Disclosures [Abstract] |
Fair Value of Financial Instruments | 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, 2025 |  | December 31, 2024
(in thousands) |  | Unpaid Principal Balance |  | Fair Value |  | Unpaid Principal Balance |  | Fair Value
Assets |  |  |  |  |  |  |  |
Loans Receivable at Fair Value |  | $ | 2,696,587 |  |  | $ | 2,770,486 |  |  | $ | 2,716,992 |  |  | $ | 2,778,523 |
Liabilities |  |  |  |  |  |  |  |
Asset-backed notes |  | $ | 878,286 |  |  | $ | 863,859 |  |  | $ | 1,103,002 |  |  | $ | 1,080,690 |
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. 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. The personal loans receivable balance at fair value as of March 31, 2025, consists of $2,569.7 million of unsecured personal loans receivable and $200.8 million of secured personal loans receivable.
|  | March 31, 2025 |  | December 31, 2024
Personal Loans Receivable |  | Minimum |  | Maximum |  | Weighted Average (2) |  | Minimum |  | Maximum |  | Weighted Average (2)
Remaining cumulative charge-offs (1) |  | 9.20% |  | 53.50% |  | 11.83% |  | 8.92% |  | 54.72% |  | 11.68%
Remaining cumulative prepayments (1) |  | 0.00% |  | 37.23% |  | 25.33% |  | 0.00% |  | 34.55% |  | 24.70%
Average life (years) |  | 0.28 |  | 1.65 |  | 1.10 |  | 0.29 |  | 1.74 |  | 1.11
Discount rate |  | 7.69% |  | 7.69% |  | 7.69% |  | 7.92% |  | 7.92% |  | 7.92%
(1) Figure disclosed as a percentage of outstanding principal balance. (2) 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, 2025 and 2024. 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. For personal loans receivable, the Company developed an internal model to estimate the fair value of loans receivable held for investment. To generate future expected cash flows, the model combines 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 unsecured personal loan fair value model by comparing modeled cash flows to historical loan performance to ensure that the model was 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. The Company has derivative instruments in connection with its bank partnership program with Pathward, N.A. related to excess interest proceeds it expects to receive on loans retained by Pathward, N.A. Based on the agreement underlying the bank partnership program, for all loans originated and retained by Pathward, Pathward receives a fixed interest rate. The Company bears the risk of credit loss and has the benefit of any excess interest proceeds after satisfying various obligations under the agreement. The fair value of the derivative instrument as of March 31, 2025 and December 31, 2024, were $14.2 million and $13.8 million, respectively. The underlying cash flows as of March 31, 2025 and December 31, 2024, were $16.8 million and $16.9 million, respectively. The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for derivative instruments presented within Other Assets in the Condensed Consolidated Balance Sheets (Unaudited):
|  | March 31, 2025 |  | December 31, 2024
|  | Low |  | High |  | Weighted Average |  | Low |  | High |  | Weighted Average
Remaining cumulative charge-offs |  | —% |  | 59.24% |  | 15.75% |  | —% |  | 30.92% |  | 10.43%
Remaining cumulative prepayments |  | 2.04% |  | 26.23% |  | 14.81% |  | 1.53% |  | 42.63% |  | 21.16%
Average life (years) |  | 0.37 |  | 1.77 |  | 1.56 |  | 0.44 |  | 2.05 |  | 1.45
Discount rate |  | 16.11% |  | 16.11% |  | 16.11% |  | 17.29% |  | 17.29% |  | 17.29%
For the derivative, the Company uses a base set of cash flows derived from historical data and management assumptions. From this base set of cash flows, funds that are projected to be released to the Company according to the contractual terms outlined in the waterfall agreement are calculated on an aggregate basis then discounted at a rate that is representative of equity yield. 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) |  | 2025 |  | 2024 |  |  |  |
Balance – beginning of period |  | $ | 2,778,523 |  |  | $ | 2,962,352 |  |  |  |  |
Principal disbursements |  | 659,398 |  |  | 584,162 |  |  |  |  |
Principal and interest payments from members |  | (581,607) |  |  | (596,033) |  |  |  |  |
Other loan sales |  | — |  |  | (34,857) |  |  |  |  |
Gross charge-offs |  | (98,197) |  |  | (103,037) |  |  |  |  |
Net increase (decrease) in fair value |  | 12,369 |  |  | 28,938 |  |  |  |  |
Balance – end of period |  | $ | 2,770,486 |  |  | $ | 2,841,525 |  |  |  |  |
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, 2025
|  | Carrying value |  | Estimated fair value |  | Estimated fair value
(in thousands) | Level 1 |  | Level 2 |  | Level 3
Assets |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 78,542 |  |  | $ | 78,542 |  |  | $ | 78,542 |  |  | $ | — |  |  | $ | — |
Restricted cash |  | 152,431 |  |  | 152,431 |  |  | 152,431 |  |  | — |  |  | — |
Liabilities |  |  |  |  |  |  |  |  |  |
Accounts payable |  | 6,781 |  |  | 6,781 |  |  | 6,781 |  |  | — |  |  | — |
Secured financing (Note 8) |  | 448,937 |  |  | 446,226 |  |  | — |  |  | 446,226 |  |  | — |
Asset-backed borrowings at amortized cost (Note 8) |  | 1,280,960 |  |  | 1,282,845 |  |  | — |  |  | 854,464 |  |  | 428,381 |
Corporate financing (Note 8) |  | 230,000 |  |  | 228,798 |  |  | — |  |  | 228,798 |  |  | — |
|  | December 31, 2024
|  | Carrying value |  | Estimated fair value |  | Estimated fair value
(in thousands) | Level 1 |  | Level 2 |  | Level 3
Assets |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 59,968 |  |  | $ | 59,968 |  |  | $ | 59,968 |  |  | $ | — |  |  | $ | — |
Restricted cash |  | 154,657 |  |  | 154,657 |  |  | 154,657 |  |  | — |  |  | — |
Liabilities |  |  |  |  |  |  |  |  |  |
Accounts payable |  | 6,586 |  |  | 6,586 |  |  | 6,586 |  |  | — |  |  | — |
Secured financing (Note 8) |  | 539,204 |  |  | 537,646 |  |  | — |  |  | 537,646 |  |  | — |
Asset-backed borrowings at amortized cost (Note 8) |  | 982,582 |  |  | 984,687 |  |  | — |  |  | 481,655 |  |  | 503,032 |
Corporate financing (Note 8) |  | 235,768 |  |  | 236,105 |  |  | — |  |  | 236,105 |  |  | — |
The Company uses the following methods and assumptions to estimate fair value: •Cash, cash equivalents, restricted cash and accounts payable ‑ The carrying values of certain of the Company’s financial instruments, including cash and cash equivalents, restricted cash and accounts payable, approximate Level 1 fair values of these financial instruments due to their short-term nature. •Secured financing and corporate financing ‑ The fair values of the secured financing, and corporate financing facilities have been calculated using discount rates equivalent to the weighted-average market yield of comparable debt securities, which is a Level 2 input measure. •Asset-backed borrowings at amortized cost ‑ The fair values of the asset-backed borrowings at amortized cost include both securitizations carried at amortized cost and secured borrowings. We obtain indicative pricing on comparable debt securities for securitizations carried at amortized cost, which is a Level 2 input measure. Fair values of secured borrowings included in asset-backed borrowings at amortized cost have been calculated by discounting the contractual cash flows at the interest rate the Company estimates such arrangement would bear if executed in the current market, which is a Level 3 input measure. There were no transfers in or out of Level 3 assets and liabilities for the three months ended March 31, 2025 and 2024. As of the year ended December 31, 2024, the Oportun CL Trust 2023-A asset-backed note transferred from Level 3 to Level 2.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 107 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-107 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 100 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-100 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (c)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2E -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 940 -SubTopic 820 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478119/940-820-50-1 + Details
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