Oportun Financial CorpOPRT
Oportun Financial Corp Fair Value Disclosure
| 14. | Fair Value of Financial Instruments | ||||
Financial Instruments at Fair Value
The table below compares the fair value of loans receivable and asset-backed notes to their contractual balances for the periods shown:
| December 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||
| (in thousands) | Unpaid Principal Balance | Fair Value | Unpaid Principal Balance | Fair Value | ||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Loans Receivable at Fair Value | $ | 2,779,608 | $ | 2,874,092 | $ | 2,716,992 | $ | 2,778,523 | ||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Asset-backed notes | $ | 268,291 | $ | 263,799 | $ | 1,103,002 | $ | 1,080,690 | ||||||||||||||||||
The Company calculates the fair value of the asset-backed notes using independent pricing services and broker price indications, which are based on quoted prices for identical or similar notes, which are Level 2 input measures.
The Company primarily uses a discounted cash flow model to estimate the fair value of Level 3 instruments based on the present value of estimated future cash flows. This model uses inputs that are inherently judgmental and reflect management’s best estimates of the assumptions a market participant would use to calculate fair value. The following tables present quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for Loans Receivable at Fair Value. The personal loans receivable balance at fair value as of December 31, 2025 consists of $2,621.5 million of unsecured personal loans receivable and $252.6 million of secured personal loans receivable.
| December 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||
Personal Loans Receivable | Minimum | Maximum | Weighted Average (2) | Minimum | Maximum | Weighted Average (2) | ||||||||||||||||||||||||||||||||
Remaining cumulative charge-offs (1) | 10.10% | 50.58% | 12.28% | 8.92% | 54.72% | 11.68% | ||||||||||||||||||||||||||||||||
Remaining cumulative prepayments (1) | —% | 38.29% | 24.90% | —% | 34.55% | 24.70% | ||||||||||||||||||||||||||||||||
| Average life (years) | 0.28 | 1.64 | 1.06 | 0.29 | 1.74 | 1.11 | ||||||||||||||||||||||||||||||||
| Discount rate | 6.26% | 6.26% | 6.26% | 7.92% | 7.92% | 7.92% | ||||||||||||||||||||||||||||||||
(2) Unobservable inputs were weighted by outstanding principal balance, which are grouped by risk (type of customer, original loan maturity terms).
Fair value adjustments related to financial instruments where the fair value option has been elected are recorded through earnings for the years ended December 31, 2025 and 2024. Certain unobservable inputs may (in isolation) have either a directionally consistent or opposite impact on the fair value of the financial instrument for a given change in that input. When multiple inputs are used within the valuation techniques for loans, a change in one input in a certain direction may be offset by an opposite change from another input.
For personal loans receivable, the Company developed an internal model to estimate the fair value of loans receivable held for investment. To generate future expected cash flows, the model combines receivable characteristics with assumptions about borrower behavior based on the Company’s historical loan performance. These cash flows are then discounted using a required rate of return that management estimates would be used by a market participant.
The Company tested the unsecured personal loan fair value model by comparing modeled cash flows to historical loan performance to ensure that the model was complete, accurate and reasonable for the Company’s use. The Company also engaged a third party to create an independent fair value estimate for the Loans Receivable at Fair Value, which provides a set of fair value marks using the Company’s historical loan performance data and whole loan sale prices to develop independent forecasts of borrower behavior.
The Company has derivative instruments in connection with its bank partnership program with Pathward related to excess interest proceeds it expects to receive on loans retained by Pathward Based on the agreement underlying the bank partnership program, for all loans originated and retained by Pathward, Pathward receives a fixed interest rate. The Company bears the risk of credit loss and has the benefit of any excess interest proceeds after satisfying various obligations under the agreement. On September 26, 2025, the Company and Pathward amended the program to simplify the partnership, including a provision that Pathward will cease retaining the Company’s loans by the end of February 2026. As of December 31, 2025, the remaining loans retained by Pathward were delinquent and had a low probability of collection; accordingly, the Company assumed a full loss on the remaining principal balance in estimating the derivative’s expected cash flows, which resulted in no expected excess interest proceeds. As a result, the derivative instrument as of December 31, 2025 was $(1.2) million, and as of December 31, 2024 was $13.8 million. The underlying cash flows as of December 31, 2024 were $16.9 million. The following table presents quantitative information about the significant unobservable inputs used for the Company’s Level 3 fair value measurements for derivative instruments presented within Other Assets in the Consolidated Balance Sheets:
December 31, 2024 | ||||||||||||||||||||
| Low | High | Weighted Average | ||||||||||||||||||
| Remaining cumulative charge-offs | —% | 30.92% | 10.43% | |||||||||||||||||
| Remaining cumulative prepayments | 1.53% | 42.63% | 21.16% | |||||||||||||||||
| Average life (years) | 0.44 | 2.05 | 1.45 | |||||||||||||||||
| Discount rate | 17.29% | 17.29% | 17.29% | |||||||||||||||||
For the derivative, the Company uses a base set of cash flows derived from historical data and management assumptions. From this base set of cash flows, funds that are projected to be released to the Company according to the contractual terms outlined in the waterfall agreement are calculated on an aggregate basis then discounted at a rate that is representative of equity yield.
The table below presents a reconciliation of Loans Receivable at Fair Value on a recurring basis using significant unobservable inputs:
| December 31, | ||||||||||||||
| (in thousands) | 2025 | 2024 | ||||||||||||
| Balance – beginning of period | $ | 2,778,523 | $ | 2,962,352 | ||||||||||
| Principal disbursements | 2,846,762 | 2,662,305 | ||||||||||||
Principal and interest payments from members | (2,377,341) | (2,305,839) | ||||||||||||
Other loan sales | — | (78,522) | ||||||||||||
| Gross charge-offs | (406,805) | (401,971) | ||||||||||||
Credit card receivables reclassified as held for sale | — | (55,720) | ||||||||||||
| Net (decrease) increase in fair value | 32,953 | (4,082) | ||||||||||||
| Balance ‑ end of period | $ | 2,874,092 | $ | 2,778,523 | ||||||||||
Financial Instruments Disclosed But Not Carried at Fair Value
The following table presents the carrying value and estimated fair values of financial assets and liabilities disclosed but not carried at fair value and the level within the fair value hierarchy:
| December 31, 2025 | ||||||||||||||||||||||||||||||||
| Carrying value | Estimated fair value | Estimated fair value | ||||||||||||||||||||||||||||||
| (in thousands) | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 105,525 | $ | 105,525 | $ | 105,525 | $ | — | $ | — | ||||||||||||||||||||||
| Restricted cash | 93,409 | 93,409 | 93,409 | — | — | |||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||
| Accounts payable | 6,273 | 6,273 | 6,273 | — | — | |||||||||||||||||||||||||||
| Secured financing (Note 8) | 204,833 | 205,152 | — | 205,152 | — | |||||||||||||||||||||||||||
| Asset-backed borrowings at amortized cost (Note 8) | 2,181,902 | 2,184,392 | — | 1,961,525 | 222,867 | |||||||||||||||||||||||||||
| Corporate financing (Note 8) | 165,000 | 165,836 | — | 165,836 | — | |||||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||
| Carrying value | Estimated fair value | Estimated fair value | ||||||||||||||||||||||||||||||
| (in thousands) | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 59,968 | $ | 59,968 | $ | 59,968 | $ | — | $ | — | ||||||||||||||||||||||
| Restricted cash | 154,657 | 154,657 | 154,657 | — | — | |||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||
| Accounts payable | 6,586 | 6,586 | 6,586 | — | — | |||||||||||||||||||||||||||
| Secured financing (Note 8) | 539,204 | 537,646 | — | 537,646 | — | |||||||||||||||||||||||||||
| Asset-backed borrowings at amortized cost (Note 8) | 982,582 | 984,687 | — | 481,655 | 503,032 | |||||||||||||||||||||||||||
| Acquisition and corporate financing (Note 8) | 235,768 | 236,105 | — | 236,105 | — | |||||||||||||||||||||||||||
The Company uses the following methods and assumptions to estimate fair value:
•Cash, cash equivalents, restricted cash and accounts payable ‑ The carrying values of certain of the Company’s financial instruments, including cash and cash equivalents, restricted cash and accounts payable, approximate Level 1 fair values of these financial instruments due to their short-term nature.
•Secured financing, acquisition and corporate financing ‑ The fair values of the secured financing, and acquisition and corporate financing facilities have been calculated using discount rates equivalent to the weighted-average market yield of comparable debt securities, which is a Level 2 input measure.
•Asset-backed borrowings at amortized cost ‑ The fair values of the asset-backed borrowings at amortized cost include both securitizations carried at amortized cost and secured borrowings. We obtain indicative pricing on comparable debt securities for securitizations carried at amortized cost, which is a Level 2 input measure. Fair values of secured borrowings included in the asset-backed borrowings at amortized cost have been calculated by discounting the contractual cash flows at the interest rate the Company estimates such arrangement would bear if executed in the current market, which is a Level 3 input measure.
As of the year ended December 31, 2025, there were no transfers in or out of Level 3 assets and liabilities.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Mar 15, 2024 | |
| 2022 | Mar 14, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Feb 23, 2021 | |
| 2019 | Feb 28, 2020 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.