Oportun Financial Corp (OPRT)

CIK: 0001538716. SIC: 6199 Finance Services. Latest 10-K as of: 2026-02-27.

SIC breadcrumb: Finance, Insurance, And Real Estate > SIC Major Group 61 > SIC 6199 Finance Services

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1538716. Latest filing source: 0001538716-26-000015.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-27. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001538716.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-08. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001538716.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001538716-26-000039.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-08. Report date: 2026-03-31.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

An index to our management's discussion and analysis follows:

Topic

Forward-Looking Statements

21

Overview

22

Key Financial and Operating Metrics

23

Historical Credit Performance

25

Results of Operations

27

Fair Value Estimate Methodology for Loans Receivable at Fair Value

32

Non-GAAP Financial Measures

32

Liquidity and Capital Resources

35

Critical Accounting Policies and Significant Judgments and Estimates

39

Recently Issued Accounting Pronouncements

39

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes and other financial information included elsewhere in this report and the audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the fiscal year ended December 31, 2025 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, on February 27, 2026, as amended. Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the “Risk Factors” section of this report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Forward-Looking Statements

This report contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business operations and financial performance and condition. Any statements contained herein that are not statements of historical facts are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would,” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These forward-looking statements include, but are not limited to, statements about:

•our future financial performance, including our expectations regarding our revenue, our operating expenses and our ability to achieve and maintain profitability;

•our ability to increase the volume of loans we make;

•our ability to manage loan non-performance, delinquencies and charge-off rates, and identify high-quality originations;

•our ability to effectively estimate the fair value of our loans receivable held for investment and our asset-backed notes;

•our expectations regarding the effect of and trends in fair value mark-to-market adjustments on our loan portfolio and asset-backed notes;

•our expectations and management of future growth, including expanding our markets served, member base and product and service offerings, and realizing the benefits and synergies from acquisitions;

•our ability to successfully adjust our proprietary credit risk models and products in response to changing macroeconomic conditions and fluctuations in the credit market;

•our ability to successfully manage our interest rate spread against our cost of capital;

•our expectations regarding the sufficiency of our cash to meet our operating and cash expenditures;

•our plans for and our ability to successfully maintain our diversified funding strategy, including warehouse facilities, loan sales and securitization transactions;

•our ability to obtain any additional financing, any advances on our secured financing facilities, or any refinancing of our debt;

•our expectations to manage our loan purchase obligations with our current partners;

•our ability to realize the expected benefits from reductions in workforce and other streamlining measures, including our estimate of the changes and expenditures;

•our expectations regarding our costs and seasonality;

21

•our ability to successfully build our brand and protect our reputation from negative publicity;

•our ability to increase the effectiveness of our marketing efforts;

•our ability to grow market share in existing markets or any new markets we may enter;

•our ability to continue to expand our demographic focus;

•our ability to maintain or expand our relationships with our current partners, including bank partners, and our plans to acquire additional partners using our Lending as a Service model;

•our ability to provide an attractive and comprehensive member experience, and further our position as a financial services company;

•our ability to maintain the terms on which we lend to our borrowers;

•our ability to manage fraud risk, including regulatory intervention and impacts on our brand reputation;

•our ability to develop our technology, including our digital platform, and to successfully implement, maintain, and adapt artificial intelligence and machine learning capabilities (“A.I.”);

•our ability to effectively secure and maintain the confidentiality of the information provided and utilized across our systems;

•our ability to detect and protect our systems against unauthorized access, use or disclosure of sensitive information;

•our ability to successfully compete with companies that are currently in, or may in the future enter, the markets in which we operate;

•our ability to attract, integrate and retain qualified employees;

•our ability to manage impacts from, and uncertainties regarding, current and future actions that may be taken by activist stockholders;

•the effect of macroeconomic conditions on our business, including the impact of tariffs and other non-tariff trade barriers, immigration patterns and policies, fluctuating interest rates, and inflation;

•our ability to effectively manage and expand the capabilities of our contact centers, outsourcing relationships and other business operations abroad; and

•our ability to successfully adapt to complex and evolving regulatory environments, including those related to A.I., and managing potential exposure in connection with new and pending investigations, proceedings and other contingencies.

Forward-looking statements are based on our management’s current expectations, estimates, forecasts, and projections about our business and the industry in which we operate and on our management’s beliefs and assumptions. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate we have conducted exhaustive inquiry into, or review of, all potentially available relevant information. We anticipate that subsequent events and developments may cause our views to change. Forward-looking statements do not guarantee future performance or development and involve known and unknown risks, uncertainties, and other factors that are in some cases beyond our control. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the heading “Risk Factors” and elsewhere in this report. We also operate in a rapidly changing environment and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in, or implied by, any forward-looking statements. As a result, any or all of our forward-looking statements in this report may turn out to be inaccurate. Furthermore, if the forward-looking statements prove to be inaccurate, the inaccuracy may be material.

You should read this report with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect.

These forward-looking statements speak only as of the date of this report. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. We qualify all of our forward-looking statements by these cautionary statements.

As used in this report, the terms “Oportun Financial Corporation,” “Oportun,” “Company,” “we,” “us,” and “our” mean Oportun Financial Corporation and its subsidiaries unless the context indicates otherwise.

Overview

We are a mission-driven financial services company that puts our members’ financial goals within reach. With intelligent borrowing, savings, and budgeting capabilities, we empower members with the confidence to build a better financial future. By intentionally designing our products to help solve the financial health challenges facing a majority of people in the U.S., we believe our business is well positioned for significant growth in the future. We take a holistic approach to serving our members and view it as our purpose to responsibly meet their current capital needs, help grow our members’ financial profiles, increase their financial awareness and put them on a path to a financially healthy life. In our 20-year lending history, we have extended more than $22.2 billion in responsible credit through more than 8.2 million lending products. We have been certified as a Community Development Financial Institution by the U.S. Department of the Treasury since 2009.

We offer access to a suite of financial products, offered either directly or through partners, including unsecured and secured lending and savings.

22

Our financial products allow us to meet our members where they are and assist them with their overall financial health, resulting in opportunities to present multiple relevant products to our members. Our credit products include unsecured and secured personal loans. We also offer automated savings, through our Set & Save product. Consumers are able to become members and access our products through the Oportun Mobile App and the Oportun.com website, which are our primary channels for onboarding and serving members. As of March 31, 2026, our personal lending products are also available over the phone or through our 126 retail locations, and 460 of our Lending as a Service partner locations.

Credit Products

Personal Loans - Our personal loan is a simple-to-understand, affordable, unsecured, fully amortizing installment loan with fixed payments throughout the life of the loan. Our loans do not have prepayment penalties or balloon payments, and range in size from $300 to $10,000 with terms of 12 to 54 months. Generally, loan payments are structured on a bi-weekly or semi-monthly basis to coincide with our members' receipt of income. As part of our underwriting process, we verify income for all applicants and only approve loans that meet our ability-to-pay criteria. We charge fixed interest rates on our loans, which vary based on the amount disbursed, appl

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture. Confidence: high. Filing date: 2026-02-27. Report date: 2025-12-31.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

For more information about terms and abbreviations used in this report see the “Glossary” at the end of Part II of this report.

An index to our management's discussion and analysis follows:

Topic

Overview

39

Key Financial and Operating Metrics

40

Seasonality

42

Historical Credit Performance

41

Results of Operations

43

Fair Value Estimate Methodology for Loans Receivable at Fair Value

48

Non-GAAP Financial Measures

48

Liquidity and Capital Resources

51

Critical Accounting Policies and Significant Judgments and Estimates

55

Recently Issued Accounting Pronouncements

56

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information included elsewhere in this report and the audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the information contained in Part I, Item 1A. “Risk Factors” of this Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a mission-driven financial services company that puts our members’ financial goals within reach. With intelligent borrowing, savings, and budgeting capabilities, we empower members with the confidence to build a better financial future. By intentionally designing our products to help solve the financial health challenges facing a majority of people in the U.S., we believe our business is well positioned for significant growth in the future. We take a holistic approach to serving our members and view it as our purpose to responsibly meet their current capital needs, help grow our members’ financial profiles, increase their financial awareness and put them on a path to a financially healthy life. In our 19-year lending history, we have extended more than $21.8 billion in responsible credit through more than 8.0 million loans and credit cards. We have been certified as a Community Development Financial Institution (“CDFI”) by the U.S. Department of the Treasury since 2009.

We offer access to a suite of financial products, offered either directly or through partners, including unsecured and secured lending and savings. Our financial products allow us to meet our members where they are and assist them with their overall financial health, resulting in opportunities to present multiple relevant products to our members. Our credit products include unsecured and secured personal loans. We also offer automated savings, through our Set & Save product. Consumers are able to become members and access our products through the Oportun Mobile App and the Oportun.com website, which are our primary channels for onboarding and serving members. As of December 31, 2025, our personal loan products are also available over the phone or through our 126 retail locations, and 465 of our Lending as a Service partner locations.

Credit Products

Personal Loans - Our personal loan is a simple-to-understand, affordable, unsecured, fully amortizing installment loan with fixed payments throughout the life of the loan. Our loans do not have prepayment penalties or balloon payments, and range in size from $300 to $10,000 with terms of 12 to 54 months. Generally, loan payments are structured on a bi-weekly or semi-monthly basis to coincide with our members' receipt of income. As part of our underwriting process, we verify income for all applicants and only approve loans that meet our ability-to-pay criteria. We charge fixed interest rates on our loans, which vary based on the amount disbursed, applicable state law, and other factors, with a cap of 36% annual percentage rate (“APR”) in all cases. As of December 31, 2025, for all active loans in our portfolio and at time of disbursement, the weighted average term and APR at origination was 38 months and 35.2%, respectively. The average loan size for loans we originated in 2025 was $3,098. As of December 31, 2025, we originated unsecured personal loans in 41 states, primarily through our partnership with Pathward.

Secured Personal Loans - We also offer a personal installment loan product secured by an automobile, which we refer to as secured personal loans. Our secured personal loans range in size from $2,525 to $18,500 with terms ranging from 24 to 64 months. The average loan size for secured personal loans we originated in 2025 was $6,474. As of December 31, 2025, for all active loans in our portfolio and at time of disbursement, the weighted average term and APR at origination was 46 months and 33.0%, respectively. As part of our underwriting process, we evaluate the collateral value of the vehicle, verify income for all applicants and only approve loans that meet our ability-to-pay criteria. Our secured personal loans are currently offered in 8 states and we are in the process of expanding into other states.

39

Set & Save

Savings – Our Set & Save product is designed to understand a member’s cash flows and save the right amount on a regular basis to effortlessly achieve savings goals. Members link their bank account with the platform and Set & Save utilizes machine learning to analyze a member’s transaction activity and build forecasts of the member’s future cash flows to make small, frequent savings decisions according to the member’s financial goals in a personalized manner. Since 2015, our savings product has helped members save more than $12.5 billion and helped our members save an average of more than $1,800 annually.

The funds in these savings accounts are owned by members of our products and are not the assets of the Company. Therefore, these funds are not included in the Consolidated Balance Sheets.

Lending as a Service

We leverage our proprietary credit scoring and underwriting model to partner with other consumer brands and expand our member base. For example, we have partnered with DolFinTech in certain of their locations where they provide us with information for potential members and we are able to offer loans through our existing channels by phone, online, or in our retail locations. In addition, we have entered into a collaboration with Western Union. As part of these programs, Oportun originates, underwrites, and services the loan. We believe we will be able to offer our Lending as a Service Lead Generation program to additional partners with a much faster lead-to-market time, expanding our membership base while offering a true Oportun service experience.

Capital Markets Funding

To fund our growth at a low and efficient cost, we have built a diversified and well-established capital markets funding program, which allows us to partially hedge our exposure to rising interest rates or credit spreads by locking in our interest expense. We have issued one-, two- and three-year fixed rate bonds which have provided us committed capital to fund future loan originations at a fixed Cost of Debt. As of December 31, 2025, since 2015, we have participated in 27 sponsored or co-sponsored amortizing and revolving bond offerings in the asset-backed securities market, all of which include tranches that have been rated investment grade.

Additionally, we have entered into certain agreements with institutional investors to sell a portion of our loans as part of structured and whole loan agreements. Refer to Liquidity and Capital Resources in Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" for information regarding these transactions.

Key Financial and Operating Metrics

We monitor and evaluate the following key metrics in order to measure our current performance, develop and refine our growth strategies, and make strategic decisions.

The following table and related discussion set forth key financial and operating metrics for our operations as of and for the years ended December 31, 2025 and 2024. For similar financial and operating metrics and discussion of our 2024 results compared to our 2023 results, refer to Part II. Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on February 20, 2025.

As of or for the Year Ended December 31,

(in thousands of dollars)

2025

2024

Key Financial and Operating Metrics

Aggregate Originations

$

1,956,781 

$

1,775,304 

Portfolio Yield

33.1 

%

33.5 

%

30+ Day Delinquency Rate

4.9 

%

4.8 

%

Annualized Net Charge-Off Rate

12.0 

%

12.0 

%

Other Metrics

Managed Principal Balance at End of Period

$

2,914,038 

$

2,973,537 

Owned Principal Balance at End of Period

$

2,738,985 

$

2,678,232 

Average Daily Principal Balance (1)

$

2,701,702 

$

2,766,634 

(1) As of December 31, 2024, Average Daily Principal Balance included $83.6 million related to credit card receivables. On November 12, 2024, the Company completed the sale of its credit cards receivable portfolio to a third-party credit card marketer and servicer.

See “Glossary” at the end of Part II of this report for formulas and definitions of our key performance metrics.

40

Aggregate Originations

Aggregate Originations increased to $1.96 billion for the year ended December 31, 2025, from $1.78 billion for the year ended December 31, 2024, representing a 10.2% increase. The increase was driven by growth in returning‑member originations and expansion of our SPL product to eight states, and increase in referral-driven originations. We also continued a targeted loan program which offers small, short‑term loans to applicants who do not qualify for our principal loan products to help build payment history and potentially transition borrowers into our core products. These gains were partially offset by strategic underwriting changes implemented in 2025 in response to macro conditions, that reduced approval rates and average loan size.

Portfolio Yield

Portfolio yield decreased to 33.1% for the year ended December 31, 2025, from 33.5% for the year ended December 31, 2024. The decrease was primarily due to changes in product mix, and vintage mix, and partially offset by higher origination fees.

30+ Day Delinquency Rate

Our 30+ Day Delinquency Rate increased 13 basis points to 4.9% as of December 31, 2025, from 4.8% as of December 31, 2024. The increase was primarily due to a higher proportion of originations to new members in the first half of 2025.

Annualized Net Charge-Off Rate

Annualized Net Charge-Off Rate of 12.0% for the year ended December 31, 2025 was in line with the 12.0% attained in 2024.

Historical Credit Performance

Due to credit tightening in response to the COVID-19 pandemic and government stimulus payments, our Annualized Net Charge-off Rate was 6.8% in 2021, lower than our historical norms. Our Annualized Net Charge-off Rate increased to 10.1% in 2022 primarily due the impact of historically high inflation, the cessation of COVID-19 stimulus payments and a higher mix of first-time borrowers in 2021 and the first half of 2022. In response to this increase, in the second half of 2022 and continuing throughout 2023 and 2024, we tightened our credit underwriting standards and focused lending towards returning members to improve credit outcomes. The Annualized Net Charge-off Rate for the years ended December 31, 2025 and 2024 were both 12.0%. On a dollar basis for the year ended December 31, 2025, Net Charge-offs decreased by $5.9 million, while our average daily principal balance declined by 2%, when compared to the year ended December 31, 2024. For the year ended December 31, 2025, the back book, loans originated prior to our significant credit tightening actions in July 2022, had principally run off and made-up less than 1% of the loans receivable, although contributing 5% of gross charge-offs for three months ended December 31, 2025. We evaluate our loan portfolio and charge a loan off at the earlier of when the loan is determined to be uncollectible or when loans are 120 days contractually past due.

In addition to monitoring our loss and delinquency performance on an owned portfolio basis, we also monitor the performance of our loans by the period in which the loan was disbursed, generally years or quarters, which we refer to as a vintage. We calculate net lifetime loan loss rate by vintage as a percentage of original principal balance. Net lifetime loan loss rates equal the net lifetime loan losses for a given year through December 31, 2025, divided by the total origination loan volume for that year.

41

The below chart and table show our net lifetime loan loss rate for each annual vintage of our personal loan product since 2015, excluding loans originated from July 2017 to August 2020 and beginning December 2023 under a loan program for borrowers who did not meet the qualifications for our core loan origination program; 100% of those loans were sold pursuant to a whole loan sale agreement. Cumulative net lifetime loan losses for the 2015, 2016, 2017, and 2018 vintages increased partially due to the delay in tax refunds in 2017 and 2019, the impact of natural disasters such as Hurricane Harvey, and the longer duration of the loans. The 2018 and 2019 vintages were increasing due to the COVID-19 pandemic. The 2021 vintage is experiencing higher charge-offs than prior vintages primarily due to a higher percentage of loan disbursements to new members. We tightened credit, reduced loan size and loan term, and began reducing loan volumes to new and returning members beginning in the third quarter of 2022. In the second half of 2023 we did further tightening and shortened average term length which resulted in stronger performance of the 2023 vintages in the second half of the year as compared to the 2022 vintages for the same period. Higher costs for food, fuel, and rent along with macro-economic uncertainty have continued to put pressure on our members through the end of 2025. We employ collection strategies and tools to help customers make ongoing payments against their loans, with new efforts launched that: expanded the frequency and content of our digital and telephony communications; broadened eligibility for collection tools that help customers address payment difficulties; and eased customer access to those collection tools via new online and mobile app self-enrollment capability, supported by a new collections strategy system that enables centralized, faster, and more-targeted application of strategies.

Year of Origination

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Dollar weighted average original term for vintage in months

22.3

24.2

26.3

29.0

30.0

32.0

33.3

37.8

39.2

35.6

Net lifetime loan losses as of December 31, 2025 as a percentage of original principal balance

7.1%

8.0%

8.2%

9.8%

10.8%

9.0%

18.4%

21.9%*

13.8%*

6.1%*

Outstanding principal balance as of December 31, 2025 as a percentage of original amount disbursed

—%

—%

—%

—%

0.1%

0.3%

0.8%

6.5%

26.6%

56.1%

* Vintage is not yet fully mature from a loss perspective.

Seasonality

Our quarterly results of operations may not necessarily be indicative of the results for the full year or the results for any future periods. Our business is highly seasonal, and the fourth quarter is typically our strongest quarter in terms of loan originations. We have historically experienced a seasonal decline in credit performance in the fourth quarter primarily attributable to competing demand of our borrowers’ available cash flow around the holidays. General increases in our borrowers’ available cash flow in the first quarter, including from cash received from tax refunds, temporarily reduces our borrowers’ borrowing needs.

42

Results of Operations

The following tables and related discussion set forth our Consolidated Statements of Operations for the years ended December 31, 2025 and 2024. For a discussion regarding our operating and financial data for the year ended December 31, 2024, as compared to the same period in 2023, refer to Part II, Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 20, 2025.

Years Ended December 31,

(in thousands of dollars)

2025

2024

Revenue

Interest income

$

893,222 

$

925,468 

Non-interest income

63,463 

76,307 

Total revenue

956,685 

1,001,775 

Less:

Interest expense

231,503 

238,158 

Total net decrease in fair value

(319,345)

(468,413)

Net revenue

405,837 

295,204 

Operating expenses:

Technology and facilities

142,441 

166,177 

Sales and marketing

70,596 

66,973 

Personnel

79,949 

87,166 

Outsourcing and professional fees

34,795 

36,847 

General, administrative and other

33,980 

53,218 

Total operating expenses

361,761 

410,381 

Income (loss) before taxes

44,076 

(115,177)

Income tax expense (benefit)

18,830 

(36,495)

Net income (loss)

$

25,246 

$

(78,682)

Total revenue

Year Ended December 31,

2025 vs. 2024 Change

(in thousands, except percentages)

2025

2024

$

%

Revenue

Interest income

$

893,222 

$

925,468 

$

(32,246)

(3.5)

%

Non-interest income

63,463 

76,307 

(12,844)

(16.8)

%

Total revenue

$

956,685 

$

1,001,775 

$

(45,090)

(4.5)

%

Percentage of total revenue:

Interest income

93.4 

%

92.4 

%

Non-interest income

6.6 

%

7.6 

%

Total revenue

100.0 

%

100.0 

%

Interest income. Total interest income decreased by $32.2 million, or 3.5%, from $925.5 million for 2024 to $893.2 million for 2025. The decrease is primarily attributable to a decline in our Average Daily Principal Balance, which declined from $2.77 billion for 2024 to $2.70 billion for 2025, a decrease of 2.3%, primarily due to the sale of our credit card portfolio, This was additionally driven by a decrease in portfolio yield of 39 basis points in the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to secured personal loans—which generally carry lower contractual yields than our unsecured personal loans—representing a larger portion of our originations.

Non-interest income. Total non-interest income decreased by $12.8 million, or 16.8%, from $76.3 million for 2024 to $63.5 million for 2025. The decrease was primarily driven by a $6.8 million decline in interest earned on Set & Save member accounts, a $3.7 million decline attributable to the sale of the credit card portfolio, a $3.2 million decrease in subscription revenue, and a $2.0 million decrease in servicing and documentation fees. These decreases were partially offset by a $1.3 million increase in gain on loan sales and a $1.2 million increase in income from our strategic partnerships.

See Note 2, Summary of Significant Accounting Policies, and Note 12, Revenue, of the Notes to the Consolidated Financial Statements included elsewhere in this report for further discussion on our interest income, non-interest income and revenue.

43

Interest expense

Year Ended December 31,

2025 vs. 2024 Change

(in thousands, except percentages)

2025

2024

$

%

Interest expense

$

231,503 

$

238,158 

$

(6,655)

(2.8)

%

Percentage of total revenue

24.2 

%

23.8 

%

Cost of Debt

8.2 

%

8.4 

%

Interest expense decreased by $6.7 million, or 2.8%, from $238.2 million for 2024 to $231.5 million for 2025. Our Average Daily Debt Balance decreased from $2.85 billion to $2.82 billion for 2025, a decrease of 0.8%. Our Cost of Debt has decreased primarily due to higher cost asset-backed securitizations being replaced with lower cost asset-backed securitizations.

See Note 8, Borrowings, in the Notes to the Consolidated Financial Statements included elsewhere in this report for further information on our Interest expense and our borrowings.

Total net decrease in fair value

Total net decrease in fair value in fair value reflects changes in fair value of loans receivable held for investment and asset-backed notes at fair value on an aggregate basis and is based on a number of factors, including benchmark interest rates, credit spreads, remaining cumulative charge-offs and borrower payment rates. Increases in the fair value of loans increase Net Revenue. Conversely, decreases in the fair value of loans decrease Net Revenue. Increases in the fair value of asset-backed notes decrease Net Revenue. Decreases in the fair value of asset-backed notes increase Net Revenue. As of December 31, 2025 we also had a derivative instrument related to our bank partnership program with Pathward. Changes in the fair value of the derivative instrument are reflected in the total fair value mark-to-market adjustment below.

Year Ended December 31,

2025 vs. 2024 Change

(in thousands, except percentages)

2025

2024

$

%

Fair value mark-to-market adjustment:

Fair value mark-to-market adjustment on Loans Receivable at Fair Value

$

32,953 

$

(1,706)

$

34,659 

*

Fair value mark-to-market adjustment on asset-backed notes

(17,820)

(72,089)

54,269 

*

Fair value mark-to-market adjustment on derivatives

(15,018)

4,464 

(19,482)

*

Total fair value mark-to-market adjustment

115 

(69,331)

69,446 

*

Charge-offs, net of recoveries on Loans Receivable at Fair Value

(325,547)

(331,413)

5,866 

*

Net settlements on derivative instruments

6,087 

7,531 

(1,444)

*

Fair value mark on loans sold

— 

(75,200)

75,200 

*

Total net decrease in fair value

$

(319,345)

$

(468,413)

$

149,068 

*

Percentage of total revenue:

Fair value mark-to-market adjustment

— 

%

(6.9)

%

Charge-offs, net of recoveries on Loans Receivable at Fair Value

(34.0)

%

(33.1)

Total net decrease in fair value

(34.0)

%

(40.0)

%

Discount rate

6.26 

%

7.92 

%

Remaining cumulative charge-offs

12.28 

%

11.68 

%

Average life in years

1.06 

1.11 

* Not meaningful

Net decrease in fair value for 2025 was $319.3 million. This amount represents a total fair value mark-to-market increase of $0.1 million on Asset-backed notes, Loans Receivable at Fair Value, and our derivative assets. The total fair value mark-to-market adjustment consists of a decrease in the discount rate from 7.92% as of December 31, 2024 to 6.26% as of December 31, 2025, partially offset by a $33.0 million mark-to-market adjustment on Loans Receivable at Fair Value due to an increase in remaining cumulative charge-offs from 11.68% as of December 31, 2024 to 12.28% as of December 31, 2025 and a decrease in average life from 1.11 years as of December 31, 2024 to 1.06 years as of December 31, 2025. The $17.8 million mark-to-market adjustment on Asset-backed notes is due to falling rates and narrowing asset-backed securitization spreads. The net decrease in charge-offs, net of recoveries, for 2025 was $325.5 million.

Net decrease in fair value for 2024 was $468.4 million. This amount represents a total fair value mark-to-market decrease of $69.3 million on Asset-backed notes, Loans Receivable at Fair Value, and our derivative assets. The total fair value mark-to-market adjustment consists of a $(1.7) million mark-to-market adjustment on Loans Receivable at Fair Value due to a decrease in remaining cumulative charge-offs from 12.10% as of December 31, 2023 to 11.68% as of December 31, 2024, a decrease in the discount rate from 10.10% as of December 31, 2023 to 7.92% as of December 31, 2024, and an increase in average life from 1.01 years as of December 31, 2023 to 1.11 years as of December 31, 2024. These were offset by a $33.7 million decrease in fair value associated with the sale of the credit cards receivable portfolio. The $(72.1) million mark-to-market adjustment on Asset-backed notes is due to falling rates and narrowing asset-backed securitization spreads. The net decrease in charge-offs, net of recoveries, for 2024 was $331.4 million. The total net decrease in fair value for the year ended December 31, 2024 includes a $(75.2) million adjustment related to the fair value mark on other loan sales in 2024.

See Item 1A. Risk Factors for further discussion of the risks associated with our fair value elections on our financial statements.

44

Charge-offs, net of recoveries

Year Ended December 31,

2025 vs. 2024 Change

(in thousands, except percentages)

2025

2024

$

%

Total charge-offs, net of recoveries

$

325,547 

$

331,413 

$

(5,866)

(1.8)

%

Average Daily Principal Balance

2,701,702 

2,766,634 

(64,932)

(2.3)

%

Annualized Net Charge-Off Rate

12.0 

%

12.0 

%

Net Charge-Offs decreased by $5.9 million for the year ended December 31, 2025. The annualized net charge-off rate increased 7 basis points due to a 2.3% decrease in average daily principal balance, offset by a 1.8% decrease in total charge-offs net of recoveries. Consistent with our charge-off policy, we evaluate our loan portfolio and charge a loan off at the earlier of when the loan is determined to be uncollectible or when the loan is 120 days contractually past due.

Operating expenses

Operating expenses consist of technology and facilities, sales and marketing, personnel, outsourcing and professional fees, and general, administrative and other expenses. We anticipate operating expenses to be substantially flat in 2026 as compared to 2025.

Technology and facilities

Technology and facilities expense is the largest segment of our operating expenses, representing the costs required to build and maintain our multi-channel platform, and consists of three components. The first component comprises costs associated with our technology, engineering, information security, cybersecurity, platform development, maintenance, and end user services, including fees for consulting, legal and other services as a result of our efforts to grow our business, as well as personnel expenses. The second component includes rent for retail and corporate locations, utilities, insurance, telephony costs, property taxes, equipment rental expenses, licenses and fees, and depreciation and amortization. Lastly, the third component includes all software licenses, subscriptions, and technology service costs to support our corporate operations, excluding sales and marketing.

Year Ended December 31,

2025 vs. 2024 Change

(in thousands, except percentages)

2025

2024

$

%

Technology and facilities

$

142,441 

$

166,177 

$

(23,736)

(14.3)

%

Percentage of total revenue

14.9 

%

16.6 

%

Technology and facilities expense decreased by $23.7 million, or 14.3%, from $166.2 million for 2024 to $142.4 million for 2025. The decrease is primarily due to a $6.4 million reduction in amortization, driven by the write-off of certain credit card portfolio software and lower amortization of other internally developed software assets, a $3.8 million increase in capitalization of internally developed software, a $3.3 million decrease in our outsourcing and professional fees, a $2.6 million decrease in amortization of intangible assets, a $2.5 million decrease in office rent due to the 2024 impairment of a right-of-use asset related to our San Carlos office, and a $2.0 million decrease in software costs due to lower usage and lower renewal costs. The decrease was also driven by a $1.6 million decrease in depreciation of computer hardware and leasehold improvements following store closures and a $1.2 million decrease primarily due to the absence of termination fees incurred in 2024 related to discontinued products

Sales and marketing

Sales and marketing expenses consist of two components and represents the costs to acquire our members. The first component is comprised of the expense to acquire a member through various paid marketing channels including direct mail, digital marketing, and brand marketing. The second component is comprised of the costs associated with our telesales, lead generation and retail operations, including personnel expenses, but excluding costs associated with retail locations.

Year Ended December 31,

2025 vs. 2024 Change

(in thousands, except percentages and CAC)

2025

2024

$

%

Sales and marketing

$

70,596 

$

66,973 

$

3,623 

5.4 

%

Percentage of total revenue

7.4 

%

6.7 

%

Customer Acquisition Cost (CAC)

$

117 

$

125 

$

(8)

(6.4)

%

Sales and marketing expenses to acquire our members increased by $3.6 million, or 5.4%, from $67.0 million for 2024 to $70.6 million for 2025. Our increase in sales and marketing expenses during the year ended December 31, 2025 was primarily attributable to a $1.2 million increase in direct mail marketing volume and a $1.1 million increase in our customer referral program. Sales and marketing expense also increased due to a $1.0 million increase in salaries and benefits. As a result of our increase in number of loans originated during the year ended December 31, 2025, our CAC decreased by 6.4%, from $125 for the year ended December 31, 2024, to $117 for the year ended December 31, 2025.

Personnel

Personnel expense represents compensation and benefits that we provide to our employees, and include salaries, wages, bonuses, commissions,

45

related employer taxes, medical and other benefits provided and stock-based compensation expense for all of our staff with the exception of our telesales, lead generation, and retail operations which are included in sales and marketing expenses, and technology which is included in technology and facilities.

Year Ended December 31,

2025 vs. 2024 Change

(in thousands, except percentages)

2025

2024

$

%

Personnel

$

79,949 

$

87,166 

$

(7,217)

(8.3)

%

Percentage of total revenue

8.4 

%

8.7 

%

Personnel expense decreased by $7.2 million, or 8.3%, from $87.2 million for 2024, to $79.9 million for 2025. The decrease is primarily driven by our workforce optimization efforts in 2023 and 2024.

Outsourcing and professional fees

Outsourcing and professional fees consist of costs for various third-party service providers and contact center operations, primarily for the sales, customer service, collections and store operation functions. Professional fees also include the cost of legal and audit services, credit reports, recruiting, cash transportation, collection services and fees and consultant expenses. Direct loan origination expenses related to application processing are expensed when incurred. In addition, outsourcing and professional fees include any financing expenses, including legal and underwriting fees, related to our asset-backed notes at fair value.

Year Ended December 31,

2025 vs. 2024 Change

(in thousands, except percentages)

2025

2024

$

%

Outsourcing and professional fees

$

34,795 

$

36,847 

$

(2,052)

(5.6)

%

Percentage of total revenue

3.6 

%

3.7 

%

Outsourcing and professional fees decreased by $2.1 million, or 5.6%, from $36.8 million for 2024 to $34.8 million for 2025. The decrease is primarily attributable to a $2.9 million decrease in professional consulting services, a $1.3 million decrease in legal fees, and a $1.1 million decrease in outsourced services. These were offset by a $2.2 million increase in expenses associated with debt recovery and court filings and $1.1 million increase in credit reports due to increased loan application volume.

General, administrative and other

General, administrative and other expense includes non-compensation expenses for employees, who are not a part of the technology and sales and marketing organization, which include travel, lodging, meal expenses, political and charitable contributions, office supplies, printing and shipping. Also included are franchise taxes, bank fees, foreign currency gains and losses, transaction gains and losses, debit card expenses, litigation reserve, expenses related to workforce optimization and streamlining operations, acquisition-related expenses, and shareholder activism.

Year Ended December 31,

2025 vs. 2024 Change

(in thousands, except percentages)

2025

2024

$

%

General, administrative and other

$

33,980 

$

53,218 

$

(19,238)

(36.1)

%

Percentage of total revenue

3.6 

%

5.3 

%

General, administrative and other expense decreased by $19.2 million, or 36.1%, from $53.2 million for 2024, to $34.0 million for 2025, primarily due to a $9.0 million decrease primarily related to interest of deferred costs related to our Acquisition Financing, which was terminated in November 2024, a $6.7 million decrease related to impairment of right-of-use asset and fixed asset disposal of our San Carlos office, a $2.8 million decrease related to the 2024 sale of the credit card portfolio and aged vendor balances, a $2.2 million decrease from costs associated with our 2024 debt extinguishment, a $2.1 million decrease in bank origination fees, and $2.1 million decrease from our lower costs related to our workforce optimization. These decreases were partially offset by a $5.2 million increase related to activism and proxy efforts, and a $2.3 million increase in postage and printing driven by higher volumes of operational and collections related customer communications.

Income taxes

Income taxes consist of U.S. federal, state and foreign income taxes, if any. For the years ended December 31, 2025 and 2024 we recognized tax expense (benefit) attributable to U.S. federal, state and foreign income taxes.

Year Ended December 31,

2025 vs. 2024 Change

(in thousands, except percentages)

2025

2024

$

%

Income tax expense (benefit)

$

18,830 

$

(36,495)

$

55,325 

151.6 

%

Percentage of total revenue

2.0 

%

(3.6)

%

Effective tax rate

42.7 

%

31.7 

%

Income tax expense increased by $55.3 million or 151.6%, from $36.5 million benefit for 2024 to $18.8 million expense for 2025, primarily due

46

to having a higher pre-tax income for 2025, compared to a pre-tax loss in 2024.

Valuation Allowance. As of December 31, 2025, we have $65.8 million of U.S. net deferred tax assets, of which $62.9 million is related to the tax-effected net operating losses, tax credits, and other carryforwards that can be used to offset future U.S. taxable income. Certain of these carryforwards will expire if they are not used within a specified timeframe. At this time, we consider it more likely than not that we will have sufficient U.S. taxable income in the future that will allow us to realize these net deferred tax assets. However, it is possible that some, or all, of these tax attributes could ultimately expire unused. Therefore, if we are unable to generate sufficient U.S. taxable income from our operations, a valuation allowance to reduce the U.S. net deferred tax assets may be required, which would materially increase income tax expense in the period in which the valuation allowance is recorded.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact on our consolidated financial statements.

See Note 2, Summary of Significant Accounting Policies, and Note 13, Income Taxes, of the Notes to the Consolidated Financial Statements included elsewhere in this report for further discussion on our income taxes.

47

Fair Value Estimate Methodology for Loans Receivable at Fair Value

Summary

Fair value is an electable option under GAAP to account for any financial instruments, including loans receivable and debt. It differs from amortized cost accounting in that loans receivable and debt are recorded on the balance sheet at fair value rather than on a cost basis. Under the fair value option credit losses are recognized through income as they are incurred rather than through the establishment of an allowance and provision for losses. The fair value of instruments under this election is updated at the end of each reporting period, with changes since the prior reporting period reflected in the Consolidated Statements of Operations as net increase (decrease) in fair value which impacts Net Revenue. Changes in interest rates, credit spreads, realized and projected credit losses and cash flow timing will lead to changes in fair value and therefore impact earnings. These changes in the fair value of the Loans Receivable at Fair Value may be partially offset by changes in the fair value of the asset-backed notes where the fair value option has been elected, depending upon the relative duration of the instruments.

Fair Value Estimate Methodology for Loans Receivable at Fair Value

We calculate the fair value of Loans Receivable at Fair Value using a model that projects and discounts expected cash flows. The fair value is a function of:

•Portfolio yield;

•Average life;

•Prepayments (or principal payment rate for our credit card receivables);

•Remaining cumulative charge-offs; and

•Discount rate.

Portfolio yield is the expected interest and fees collected from the loans and credit cards as an annualized percentage of outstanding principal balance. Portfolio yield is based upon (a) the contractual interest rate, reduced by expected delinquencies and interest charge-offs and (b) late fees, net of late fee charge-offs based upon expected delinquencies. Origination fees are not included in portfolio yield for personal loans since they are recognized into income at origination.

Average life is the time-weighted average of expected principal payments divided by outstanding principal balance. The timing of principal payments is based upon the contractual amortization of loans, adjusted for the impact of prepayments, Good Customer Program refinances, and charge-offs.

For personal loans, prepayments are the expected remaining cumulative principal payments that will be repaid earlier than contractually required over the life of the loan, divided by the outstanding principal balance. For credit cards, we estimate principal payment rates which are the expected amount and timing of principal payments over the life of the receivable.

Remaining cumulative charge-offs is the expected net principal charge-offs over the remaining life of the loans and credit cards, divided by the outstanding principal balance.

For personal loans and credit card, the discount rate is determined by using the Weighted Average Capital Cost, which was calculated using the Capital Asset Pricing Model method, also considering several components of financing, debt and equity.

Non-GAAP Financial Measures

We believe that the provision of non-GAAP financial measures in this report, including Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Adjusted Operating Expense, Adjusted Operating Expense Ratio, and Adjusted Return on Equity, can provide useful measures for period-to-period comparisons of our core business and useful information to investors and others in understanding and evaluating our operating results. However, non-GAAP financial measures are not calculated in accordance with United States generally accepted accounting principles, or GAAP, and should not be considered as an alternative to any measures of financial performance calculated and presented in accordance with GAAP. There are limitations related to the use of these non-GAAP financial measures versus their most directly comparable GAAP measures, which include the following:

▪Other companies, including companies in our industry, may calculate these measures differently, which may reduce their usefulness as a comparative measure.

▪These measures do not consider the potentially dilutive impact of stock-based compensation.

▪Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements.

▪Although the fair value mark-to-market adjustment is a non-cash adjustment, it does reflect our estimate of the price a third party would pay for our loans receivable held for investment or our asset-backed notes.

▪Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us.

48

Reconciliations of non-GAAP to GAAP measures can be found below.

Adjusted EBITDA

We define Adjusted EBITDA as our net income, adjusted to eliminate the effect of certain items as described below. We believe that Adjusted EBITDA is an important measure because it allows management, investors and our Board to evaluate and compare operating results, including return on capital and operating efficiencies, from period to period, by making the adjustments described below. In addition, it provides a useful measure for period-to-period comparisons of our business, as it removes the effect of income taxes, certain non-cash items, variable charges and timing differences.

•We believe it is useful to exclude the impact of income tax expense, as reported, because historically it has included irregular income tax items that do not reflect ongoing business operations.

•We believe it is useful to exclude depreciation and amortization and stock-based compensation expense because they are non-cash charges.

•We believe it is useful to exclude the impact of interest expense associated with our corporate financing facilities, including the senior secured term loan and the residual financing facility, as we view this expense as related to our capital structure rather than our funding.

•We exclude the impact of certain non-recurring charges because we do not believe that these items reflect ongoing business operations. Other non-recurring charges include litigation reserve, impairment charges, workforce optimization expenses, shareholder activism costs, debt amendment, extinguishment, and warrant amortization costs.

•We also exclude fair value mark-to-market adjustments on the loans receivable portfolio and asset-backed notes carried at fair value because these adjustments do not impact cash.

Components of Fair Value Mark-to-Market Adjustment (in thousands)

Year Ended December 31,

2025

2024

Fair value mark-to-market adjustment on Loans Receivable at Fair Value (1)

$

32,953 

$

(1,706)

Fair value mark-to-market adjustment on asset-backed notes

(17,820)

(72,089)

Fair value mark-to-market adjustment on derivatives

(15,018)

4,464 

Total fair value mark-to-market adjustment

$

115 

$

(69,331)

(1) The fair value mark-to-market adjustment on Loans Receivable at Fair Value excludes mark-to-market adjustments associated with loans sold. See the section titled "Total net increase (decrease) in fair value" in the Results of Operations section for additional information regarding the fair value mark on loans sold.

The following table presents a reconciliation of net income (loss) to Adjusted EBITDA for the years ended December 31, 2025 and 2024:

Year Ended December 31,

Adjusted EBITDA (in thousands)

2025

2024

Net income (loss)

$

25,246 

$

(78,682)

Adjustments:

Income tax expense (benefit)

18,830 

(36,495)

Interest on corporate financing

35,729 

51,135 

Depreciation and amortization

41,470 

52,186 

Stock-based compensation expense

10,686 

13,053 

Other non-recurring charges (1)

16,579 

34,019 

Fair value mark-to-market adjustment

(115)

69,331 

Adjusted EBITDA

$

148,425 

$

104,547 

(1) Certain prior-period financial information has been reclassified to conform to current period presentation.

Adjusted Net Income

We define Adjusted Net Income as net income adjusted to eliminate the effect of certain items as described below. We believe that Adjusted Net Income is an important measure of operating performance because it allows management, investors, and our Board to evaluate and compare our operating results, including return on capital and operating efficiencies, from period to period, excluding the after-tax impact of non-cash, stock-based compensation expense and certain non-recurring charges.

•We believe it is useful to exclude the impact of income tax expense (benefit), as reported, because historically it has included irregular income tax items that do not reflect ongoing business operations. We also include the impact of normalized income tax expense by applying a normalized statutory tax rate.

49

•We believe it is useful to exclude the impact of certain non-recurring charges because we do not believe that these items reflect our ongoing business operations. Other non-recurring charges include litigation reserve, impairment charges, workforce optimization expenses, shareholder activism costs, debt amendment, extinguishment and warrant amortization costs.

•We believe it is useful to exclude stock-based compensation expense because it is a non-cash charge.

•We also exclude the fair value mark-to-market adjustment on our asset-backed notes carried at fair value to align with the 2023 accounting policy decision to account for new debt financings at amortized cost.

The following table presents a reconciliation of net income (loss) to Adjusted Net Income for the years ended December 31, 2025 and 2024:

Year Ended December 31,

Adjusted Net Income (in thousands)

2025

2024

Net income (loss)

$

25,246 

$

(78,682)

Adjustments:

Income tax expense (benefit)

18,830 

(36,495)

Stock-based compensation expense

10,686 

13,053 

Other non-recurring charges (1)

16,579 

34,019 

Net decrease in fair value of credit cards receivable

— 

36,177 

Mark-to-market adjustment on asset-backed notes

17,820 

72,089 

Adjusted income before taxes

89,161 

40,161 

Normalized income tax expense

24,073 

10,843 

Adjusted Net Income

$

65,088 

$

29,318 

Income tax rate (2)

27.0 

%

27.0 

%

(1) Certain prior-period financial information has been reclassified to conform to current period presentation.

(2) Income tax rates for the years ended December 31, 2025 and December 31, 2024, are based on a normalized statutory rate.

Adjusted Earnings Per Share (“Adjusted EPS”)

Adjusted Earnings Per Share is a non-GAAP financial measure that allows management, investors, and our Board to evaluate the operating results, operating trends, and profitability of the business in relation to diluted adjusted weighted-average shares outstanding.

The following table presents a reconciliation of Diluted EPS to Diluted Adjusted EPS for the years ended December 31, 2025 and 2024. For the reconciliation of net income to Adjusted Net Income, see the immediately preceding table “Adjusted Net Income.”

Year Ended December 31,

(in thousands, except share and per share data)

2025

2024

Diluted earnings (loss) per share

$

0.53 

$

(1.95)

Adjusted EPS

Adjusted Net Income

$

65,088 

$

29,318 

Basic weighted-average common shares outstanding

46,418,934 

40,356,025 

Weighted average effect of dilutive securities:

Stock options

— 

— 

Restricted stock units

1,439,697 

500,705 

Diluted adjusted weighted-average common shares outstanding

47,858,631 

40,856,730 

Adjusted Earnings Per Share

$

1.36 

$

0.72 

Return on Equity and Adjusted Return on Equity

We define Adjusted Return on Equity as annualized Adjusted Net Income divided by average stockholders’ equity. Average stockholders’ equity is an average of the beginning and ending stockholders’ equity balance for each period. We believe Adjusted Return on Equity is an important measure because it allows management, investors, and our Board to evaluate the profitability of the business in relation to stockholders' equity and how efficiently we generate income from stockholders’ equity.

50

The following table presents a reconciliation of Return on Equity to Adjusted Return on Equity for the years ended December 31, 2025 and 2024. For the reconciliation of net income to Adjusted Net Income, see the immediately preceding table “Adjusted Net Income.”

As of or for the Year Ended December 31,

(in thousands)

2025

2024

Return on Equity

6.8 

%

(20.8)

%

Adjusted Return on Equity

Adjusted Net Income

$

65,088 

$

29,318 

Average stockholders’ equity

$

371,946 

$

379,107 

Adjusted Return on Equity

17.5 

%

7.7 

%

Adjusted Operating Expense and Adjusted Operating Expense Ratio

We define Adjusted Operating Expense as total operating expenses adjusted to exclude stock-based compensation expense and certain non-recurring charges. Other non-recurring charges include litigation reserve, impairment charges, workforce optimization expenses, shareholder activism costs, and debt amendment costs. We define Adjusted Operating Expense Ratio as Adjusted Operating Expense divided by Average Daily Principal Balance. We believe Adjusted Operating Expense is an important measure because it allows management, investors and our Board to evaluate and compare its operating costs from period to period, excluding the impact of non-cash, stock-based compensation expense and certain non-recurring charges. We believe Adjusted Operating Expense Ratio is an important measure because they allow management, investors and our Board to evaluate how efficiently we are managing costs relative to revenue and Average Daily Principal Balance.

The following table presents a reconciliation of Operating Expense to Adjusted Operating Expense and Operating Expense Ratio to Adjusted Operating Expense Ratio for the years ended December 31, 2025 and 2024:

As of or for the Year Ended December 31,

(in thousands)

2025

2024

Operating Expense Ratio

13.4 

%

14.8 

%

Adjusted Operating Expense Ratio

Total operating expense

361,761 

410,381 

Stock-based compensation expense

(10,686)

(13,053)

Other non-recurring charges (1)

(8,206)

(15,988)

Total adjusted operating expenses

$

342,869 

$

381,340 

Average Daily Principal Balance

$

2,701,702 

$

2,766,634 

Adjusted Operating Expense Ratio

12.7 

%

13.8 

%

(1) Certain prior-period financial information has been reclassified to conform to current period presentation.

Liquidity and Capital Resources

To date, we fund the majority of our operating liquidity and operating needs through a combination of cash flows from operations, securitizations, secured borrowings, Corporate Financing and structured and whole loan sales. We may utilize these or other sources in the future. Our material cash requirements relate to funding our lending activities, our debt service obligations, our operating expenses, and investments in the long-term growth of the Company.

We generally target liquidity levels to support at least twelve months of our expected net cash outflows, including new originations, without access to our Corporate Financing facility or equity markets. Elevated and fluctuating interest rates, credit trends and other macroeconomic conditions could continue to have an impact on market volatility which could adversely impact our business, liquidity, and capital resources. Future decreases in cash flows from operations resulting from delinquencies, defaults, and losses would decrease the cash available for the capital uses described above. We may incur additional indebtedness or issue equity in order to meet our capital spending and liquidity requirements, as well as to fund growth opportunities that we may pursue.

The following table summarizes our total liquidity reserves:

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As of or for the Year Ended December 31, 2025

(in thousands)

Total capacity

Amount borrowed/utilized

Remaining available capacity

Cash and cash equivalents

$

105,525 

N/A

$

105,525 

Restricted cash

93,409 

N/A

93,409 

Secured financing

1,139,091 

204,833 

934,258 

Structured and Whole loan forward flow agreements

50,000 

4,218 

45,782 

Total liquidity

$

1,388,025 

$

209,051 

$

1,178,974 

Cash and cash flows

The following table summarizes our cash and cash equivalents, restricted cash and cash flows for the periods indicated:

Year Ended December 31,

(in thousands)

2025

2024

Cash, cash equivalents and restricted cash

$

198,934 

$

214,625 

Cash provided by (used in)

Operating activities

413,409 

393,522 

Investing activities

(369,725)

(193,689)

Financing activities

(59,375)

(191,224)

Our cash is held for working capital purposes and originating loans. Our restricted cash principally represents collections held in our securitizations and is applied currently after month-end to pay principal, interest expense, and satisfy any amount due to whole loan buyers with any excess amounts returned to us.

Operating Activities

Our net cash provided by operating activities was $413.4 million and $393.5 million for the years ended December 31, 2025 and 2024, respectively. Cash flows from operating activities primarily include net income or losses adjusted for (i) non-cash items included in net income or loss, including depreciation and amortization expense, fair value adjustments, net, origination fees for loans at fair value, net, gain on loan sales, stock-based compensation expense and deferred tax provision, net, (ii) originations of loans sold and held for sale, and proceeds from sale of loans and (iii) changes in the balances of operating assets and liabilities, which can vary significantly in the normal course of business due to the amount and timing of various payments. The $19.9 million increase in our net cash provided by operating activities is primarily driven by a $103.9 million increase in our net income, a $48.6 million increase attributed to changes in our deferred tax assets as a result of our year-end tax provision, $28.0 million increase related to our other assets and other liabilities, and $23.5 million increase from in proceeds from loan sales. These were partially offset by a $149.1 million decline in our fair value mark to market adjustment, $20.8 million decline in origination fees for loans sold and held for sale, $9.7 million decrease from depreciation and amortization, $4.8 million lower origination fees for Loans Receivable at Fair Value, net, and $2.3 million lower stock compensation expense, for the current year compared to prior year, respectively.

Investing Activities

Our net cash used in investing activities was $369.7 million and $193.7 million for the years ended December 31, 2025 and 2024, respectively. Our investing activities consist primarily of loan originations and loan repayments. We invest in purchases of property and equipment and incur system development costs. Purchases of property and equipment, and capitalization of system development costs may vary from period to period due to the timing of the expansion of our operations, the addition of employee headcount and the development cycles of our system development. The change in our net cash used in investing activities is primarily due to $237.1 million lower loan disbursements, $54.5 million decrease in proceeds from loan sales originated as held for investment, and $5.1 million lower capitalization of system development costs, which were partially offset by a $120.8 million decrease in repayments of loan principal for the year ended December 31, 2025, compared to the year ended December 31, 2024.

Financing Activities

Our net cash used in financing activities was $59.4 million and $191.2 million for the years ended December 31, 2025 and 2024, respectively. For the year ended December 31, 2025, net cash used in financing activities was primarily driven by borrowings under our Asset-backed borrowings at amortized cost and borrowings on our Secured Financing, partially offset by amortization payments on our Asset-backed notes at fair value, Asset-backed borrowings at amortized cost, and repayments of borrowings on our Secured Financing and Corporate Financing. For the year ended December 31, 2024, net cash used in financing activities was primarily driven by amortization payments on our asset-backed notes and asset-backed borrowings and repayments of our Secured Financing and Acquisition and Corporate Financing facilities. These were partially offset by issuances of Asset-backed borrowings at amortized cost.

Sources of Funds

Debt and Available Credit

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Asset-Backed Securitizations

As of December 31, 2025, we had $2.2 billion of outstanding asset-backed notes. Our securitizations utilize special purpose entities which are also VIEs that meet the requirements to be consolidated in our financial statements. For more information regarding our VIEs and asset-backed securitizations, see Note 4, Variable Interest Entities and Note 8, Borrowings of the Notes to the Consolidated Financial Statements included elsewhere in this report.

Our ability to utilize our asset-backed securitizations as described herein is subject to compliance with various requirements including eligibility criteria for the loan collateral and covenants and other requirements. As of December 31, 2025, we were in compliance with all covenants and requirements of all our asset-backed notes.

Secured Financings

As of December 31, 2025, we had Secured Financings with warehouse lines of $1.1 billion in the aggregate with undrawn capacity of $934.3 million. On November 10, 2024, we terminated our Credit Card Warehouse facility, which had a commitment amount of $60.0 million at termination. Our ability to utilize our Secured Financing facilities as described herein is subject to compliance with various requirements, including eligibility criteria for collateral, concentration limits for our collateral pool, and covenants and other requirements.

On October 14, 2025, in connection with the closing of the Personal Loan Warehouse IV Facility (PLW IV), Oportun PLW IV Trust, a subsidiary of the Company, entered into a loan and security agreement with certain lenders and Wilmington Trust, National Association as collateral agent, administrative agent, paying agent, securities intermediary and depositary bank. The PLW IV Facility has a revolving period ending in October 2028 and a borrowing capacity of $246.8 million. Borrowings under the loan and security agreement accrue interest at a rate equal to Term SOFR plus a weighted average spread of 2.56%. The advance rate for the PLW IV Facility is 95.0%, subject to certain triggers that could lower the advance rate to 92.0%.

On April 2, 2025, in connection with the closing of the Personal Loan Warehouse III Facility (PLW III), Oportun PLW III Trust, a subsidiary of the Company, entered into a loan and security agreement with certain lenders and Wilmington Trust, National Association as collateral agent, administrative agent, paying agent, securities intermediary and depositary bank. The PLW III Facility has a revolving period ending in April 2027 and a borrowing capacity of $187.5 million. Borrowings under the loan and security agreement accrued interest at a rate equal to Term SOFR plus a weighted average spread up to 3.18%. The advance rate for the PLW III Facility is 95.0%, subject to certain triggers that could lower the advance rate to 92.0%. On October 8, 2025, the PLW III Facility was amended. Prior to the amendment, borrowings under the loan and security agreement accrued interest at a rate equal to Term SOFR plus a weighted average spread up to 3.34%.

On August 5, 2024, in connection with the closing of the Personal Loan Warehouse II Facility (PLW II), Oportun PLW II Trust, a subsidiary of the Company, entered into a loan and security agreement with certain lenders and Wilmington Trust, National Association as collateral agent, administrative agent, paying agent, securities intermediary and depositary bank. The PLW II Facility has a revolving period ending in August 2027 and a borrowing capacity of $337.1 million. Borrowings under the loan and security agreement accrued interest at a rate equal to Term SOFR plus a weighted average spread of 2.76%. The advance rate for the PLW II Facility is 95.0%, subject to certain triggers that could lower the advance rate to 92.0%. On October 8, 2025, the PLW II Facility was amended. Prior to the amendment, borrowings under the loan and security agreement accrued interest at a rate equal to Term SOFR plus a weighted average spread of 3.07%.

On September 8, 2021, in connection with the closing of the Personal Loan Warehouse Facility (PLW), Oportun PLW Trust, a subsidiary of the Company, entered into a loan and security agreement with certain lenders and Wilmington Trust, National Association as collateral agent, administrative agent, paying agent, securities intermediary and depositary bank. The PLW Facility has a revolving period ending in September 2027, and a borrowing capacity of $367.7 million. Borrowings under the loan and security agreement accrue interest at a rate equal to Term SOFR plus a weighted average spread of 2.84%. The advance rate for the PLW Facility is 95.0%, subject to certain triggers that could lower the advance rate to 92.0%. The PLW Facility was amended in prior years, and most recently on October 10, 2025. Prior to the most recent amendment, the PLW Facility had a revolving period ending in September 2026; a borrowing capacity of $429.0 million, and borrowings accrued interest at a rate equal to, Term SOFR plus a weighted average spread of 3.35%.

Asset-Backed Borrowings at Amortized Cost

On October 17, 2025, we issued $441.2 million of Series 2025-D asset-backed notes secured by a pool of its unsecured and secured personal installment loans (the “2025-D Securitization”). The 2025-D Securitization included five classes of fixed rate notes. The Notes were offered and sold in a private placement in reliance on Rule 144A under the U.S. Securities Act of 1933, as amended, and were priced with a weighted average yield of 5.77% per annum and a weighted average coupon of 5.69% per annum.

On August 21, 2025, we issued $538.5 million of Series 2025-C asset-backed notes secured by a pool of unsecured and secured personal installment loans (the "2025-C Securitization"). The 2025-C Securitization included five classes of fixed rate notes. The Notes were offered and sold in a private placement in reliance on Rule 144A under the U.S. Securities Act of 1933, as amended, and were priced with a weighted average yield of 5.29% per annum and weighted average coupon of 5.23% per annum.

On June 5, 2025, we issued $439.3 million of Series 2025-B asset-backed notes secured by a pool of unsecured and secured personal installment loans (the "2025-B Securitization"). The 2025-B Securitization included five classes of fixed rate notes. The Notes were offered and sold in a private placement in reliance on Rule 144A under the U.S. Securities Act of 1933, as amended, and were priced with a weighted average yield of 5.67% per annum and weighted average coupon of 5.57% per annum.

On January 16, 2025, we issued $425.1 million of Series 2025-A asset-backed notes secured by a pool of our unsecured and secured personal

53

installment loans (the "2025-A Securitization"). The 2025-A Securitization included five classes of fixed rate notes. The Notes were offered and sold in a private placement in reliance on Rule 144A under the U.S. Securities Act of 1933, as amended, and were priced with a weighted average yield of 6.95% per annum and weighted average coupon of 6.15% per annum.

On August 29, 2024, we issued $223.3 million of series 2024-2 asset-backed notes secured by a pool of our unsecured and secured personal installment loans (the "2024-2 Securitization"). The 2024-2 Securitization included four classes of fixed rate notes. The Notes were offered and sold in a private placement in reliance on Rule 144A under the U.S. Securities Act of 1933, as amended, and were priced with a weighted average yield of 8.22% per annum and weighted average coupon of 8.07% per annum.

On February 13, 2024, we issued $199.5 million of Series 2024-1 asset-backed notes secured by a pool of our unsecured and secured personal installment loans (the "2024-1 Securitization"). The 2024-1 Securitization included four classes of fixed rate notes. The Notes were offered and sold in a private placement in reliance on Rule 144A under the U.S. Securities Act of 1933, as amended, and were priced with a weighted average yield of 8.60% per annum and weighted average coupon of 8.43% per annum.

On October 19, 2023, we entered into a Receivables Loan and Security Agreement (the “Receivables Loan and Security Agreement”) 2023-A, pursuant to which the Company borrowed $197.4 million. Borrowings under the Receivables Loan and Security Agreement accrue interest at a weighted average interest rate equal to 10.05%. On November 10, 2025, we redeemed the 2023-A financing transaction. The financing was carried at amortized cost, and the unamortized costs were recognized in the Consolidated Statements of Operations as part of the Interest Expense.

On August 3, 2023 and April 26, 2024, we entered into separate forward flow whole loan sale agreements with institutional investors to sell up to $400.0 million and $150.0 million of personal loan originations, respectively. No loans were transferred under either agreement during the year ended December 31, 2025, as our sale commitments had been previously satisfied, but we do continue to service any loans transferred. Although each arrangement is structured as a whole loan sale and we would continue to service any loans transferred, the transfers do not qualify as sales for accounting purposes. As a result, the related loan assets remain on our balance sheet and the cash proceeds are recorded as secured borrowings within asset-backed borrowings at amortized cost, with interest expense recognized over the term.

Corporate Financing

We previously entered into the Original Credit Agreement, as defined below, which provided for a senior secured term loan with an initial borrowing capacity of up to $150.0 million and was subsequently amended to increase total borrowing capacity by up to an additional $75.0 million and modify certain terms (including the interest rate structure and certain covenant and repayment provisions). On November 14, 2024, the Original Credit Agreement (as amended) was terminated and the outstanding term loan was repaid in full in connection with the Credit Agreement described below.

On October 23, 2024, we entered into a Credit Agreement with certain affiliates of Neuberger and McLaren Harbor LLC as lenders, and Wilmington Savings Fund Society, FSB, as administrative agent and collateral agent, pursuant to which we borrowed $235 million through a senior secured term loan (the “Credit Agreement” and the “Term Loan”). The Term Loan bears interest at (a) a cash rate of 12.50% per annum plus (b) an amount payable in cash or in kind, at our option, equal to 2.50% and is scheduled to mature on November 14, 2028. On November 14, 2024, we repaid in full the Original Credit Agreement, as amended. Certain prepayments under the Agreement are subject to a prepayment premium. The obligations under the Credit Agreement are secured by our assets and certain of subsidiaries guaranteeing the loan, including pledges of the equity interests of certain subsidiaries that are directly or indirectly owned by us, subject to customary exceptions. The Credit Agreement contains several financial covenants; these covenants are included together with other customary affirmative and negative covenants (including reporting requirements), representations and warranties and events of default.

Under the Credit Agreement, we were required to repay a combined $12.5 million and $27.5 million of the Term Loan, prior to July 31, 2025 and January 31, 2026, respectively. As of December 31, 2025, we have fully repaid the required $12.5 million and $27.5 million of principal. In addition, the Company made additional prepayments of $20 million, not subject to a prepayment premium, and $10 million subject to a prepayment premium. Voluntary prepayment of the Term Loans in excess of certain thresholds and with certain other exceptions as set forth in the Credit Agreement, will be subject to a prepayment premium. As of December 31, 2025, the Company has made a total of $30.0 million of voluntary prepayments of principal, along with a total of $0.5 million in prepayment premiums.

As of December 31, 2025, we were in compliance with all covenants and requirements on our outstanding debt and available credit. For more information regarding our Secured Financing and Corporate Financing, see Note 8, Borrowings of the Notes to the Consolidated Financial Statements included elsewhere in this report.

Other loan sales

From time to time, we may enter into agreements to sell certain populations of our personal loans and credit card receivables, including non-performing loans originated as held for investment. For the twelve months ended December 31, 2025, we did not sell any such loans. For further information on these sales, see Note 5, Loans Held for Sale and Loans Sold of the Notes to the Consolidated Financial Statements included elsewhere in this report.

Whole loan sales

In November 2022, we entered into a forward flow whole loan sale agreement with an institutional investor. Pursuant to this agreement, we have a commitment to sell a minimum of $2.0 million of our unsecured loan originations each month, with an option to sell up to $4.2 million each month, subject to certain eligibility criteria. The agreement is set to expire in December 2026, after being extended in December 2025.

In November 2023, we entered into a forward flow whole loan sale agreement with an institutional investor, under which we expect to sell

54

approximately $100 million of our secured and unsecured personal loans in fiscal year 2026, subject to certain eligibility criteria. This agreement is scheduled to expire in November 2026.

The originations of loans sold and held for sale during the year ended December 31, 2025 were $140.3 million. For further information on the whole loan sale transactions, see Note 5, Loans Held for Sale and Loans Sold of the Notes to the Consolidated Financial Statements included elsewhere in this report.

Bank Partnership Program and Servicing Agreement

In August 11, 2020 we entered into a bank partnership program with Pathward, which was subsequently amended and restated, effective August 11, 2025. Under the program, we are obligated to purchase an increasing percentage of loans originated by Pathward based on thresholds specified in the agreements. On September 26, 2025, we entered into an amendment to the program that simplified the partnership by providing that Pathward would cease retaining our loans by the end of February 2026.

Effective October 1, 2025, we were purchasing from Pathward 100% of all newly originated loans. The amendment also required us to acquire Pathward’s existing retained loan portfolio by February 2026. On October 3, 2025, we made an initial purchase of loans that were current or 30 days delinquent.

Contractual Obligations and Commitments

The material cash requirements for our contractual and other obligations primarily include those related our outstanding borrowings under our asset-backed notes, Secured Financing, corporate and retail leases, and purchase commitments for technology used in the business. See Note 8, Borrowings and Note 15, Leases, Commitments and Contingencies of the Notes to the Consolidated Financial Statements included elsewhere in this report for more information.

Liquidity Risks

We believe that our existing cash balance, anticipated positive cash flows from operations and available borrowing capacity under our credit facilities will be sufficient to meet our anticipated cash operating expense and capital expenditure requirements through at least the next 12 months. We do not have any significant unused sources of liquid assets. If our available cash balances are insufficient to satisfy our liquidity requirements, we will seek additional debt or equity financing and we may have to take additional actions to decrease expenses, curtail the origination of loans, and our ability to continue to support our growth and to respond to challenges could be impacted. In a higher interest rate environment, our ability to issue additional equity or incur debt may be impaired and our borrowing costs may increase. If we raise additional funds through the issuance of additional debt, the agreements governing such debt could contain covenants that would restrict our operations and such debt would rank senior to shares of our common stock. The sale of equity may result in dilution to our stockholders and those securities may have rights senior to those of our common stock. We may require additional capital beyond our currently anticipated amounts and additional capital may not be available on reasonable terms, or at all.

Critical Accounting Policies and Significant Judgments and Estimates

Our Management's Discussion and Analysis of Financial Condition and Results of Operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. In accordance with GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are more fully described in Note 2, Summary of Significant Accounting Policies, in our Notes to the Consolidated Financial Statements included elsewhere in this report, we believe the following critical accounting policies affect the more significant estimates, assumptions and judgments we use to prepare our consolidated financial statements.

Fair Value of Loans Held for Investment

We elected the fair value option for our loans receivable held for investment. We primarily use a discounted cash flow model to estimate fair value based on the present value of estimated future cash flows. This model uses inputs that are not observable but reflect our best estimates of the assumptions a market participant would use to calculate fair value. The following describes the primary inputs that require significant judgment:

•Remaining Cumulative Charge-offs - Remaining cumulative charge-offs are estimates of the principal payments that will not be repaid over the life of a loan held for investment. Remaining cumulative loss expectations are adjusted to reflect the expected principal recoveries on charged-off loans. Remaining cumulative loss expectations are primarily based on the historical performance of our loans but also incorporate adjustments based on our expectations of future credit performance and are quantified by the remaining cumulative charge-off rate.

•Remaining Cumulative Prepayments - Remaining cumulative prepayments are estimates of the principal payments that will be repaid earlier than contractually required over the life of a loan held for investment. Remaining cumulative prepayment rates are primarily based on the historical performance of our loans but also incorporate adjustments based on our expectations of future borrower behavior and refinancings through our Good Customer Program.

•Average Life - Average life is the time weighted average of the estimated principal payments divided by the principal balance at the measurement date. The timing of estimated principal payments is impacted by scheduled amortization of loans, charge-offs, and

55

prepayments.

•Discount Rates - The discount rates applied to the expected cash flows of loans held for investment reflect our estimates of the rates of return that investors would require when investing in financial instruments with similar risk and return characteristics. Discount rates are based on our estimate of the rate of return likely to be received on new loans. Discount rates for aged loans are adjusted to reflect the market relationship between interest rates and remaining time to maturity.

We 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 our 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.

We test the fair value model by comparing modeled cash flows to historical loan performance to ensure that the model is complete, accurate and reasonable for our use. In addition, we engage 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.

As discussed above, our fair value model uses inputs that are not observable but reflect our best estimates of the assumptions a market participant would use to calculate fair value.

Recently Issued Accounting Pronouncements

See Note 2, Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements included elsewhere in this report for a discussion of recent accounting pronouncements and future application of accounting standards.