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Fair Value of Financial Instruments
 3 Months Ended
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, 2025December 31, 2024
(in thousands)Unpaid Principal BalanceFair ValueUnpaid Principal BalanceFair 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, 2025December 31, 2024
Personal Loans Receivable
MinimumMaximum
Weighted Average (2)
MinimumMaximum
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)0.281.651.100.291.741.11
Discount rate7.69%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, 2025December 31, 2024
LowHighWeighted AverageLowHighWeighted Average
Remaining cumulative charge-offs—%59.24%15.75%—%30.92%10.43%
Remaining cumulative prepayments2.04%26.23%14.81%1.53%42.63%21.16%
Average life (years)0.371.771.560.442.051.45
Discount rate16.11%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)20252024
Balance – beginning of period$2,778,523 $2,962,352 
Principal disbursements659,398 584,162 
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 value12,369 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 valueEstimated fair valueEstimated fair value
(in thousands)Level 1Level 2Level 3
Assets
Cash and cash equivalents$78,542 $78,542 $78,542 $— $— 
Restricted cash152,431 152,431 152,431 — — 
Liabilities
Accounts payable6,781 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 valueEstimated fair valueEstimated fair value
(in thousands)Level 1Level 2Level 3
Assets
Cash and cash equivalents$59,968 $59,968 $59,968 $— $— 
Restricted cash154,657 154,657 154,657 — — 
Liabilities
Accounts payable6,586 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.