SoFi Technologies Inc

Previous wording

In order to help achieve our mission, we offer personal loans, student loans, home loans and related servicing. We offer a variety of financial services products, such as SoFi Money, SoFi Credit Card, SoFi Invest and SoFi Relay, that provide more daily interactions with our members, as well as lending as a service which helps a broader range of borrowers to find lending solutions. We offer products and capabilities, such as SoFi At Work, that are designed to appeal to enterprises. We have also made strategic acquisitions to further expand our platform capabilities for enterprises, which we believe will deepen our participation in the entire technology ecosystem powering digital financial services.

Current wording

In order to help achieve our mission, we offer personal loans, student loans, home loans and related servicing. We offer a variety of financial services products, such as SoFi Money, SoFi Credit Card, SoFi Invest and SoFi Relay, that provide more daily interactions with our members, as well as our Loan Platform Business which helps a broader range of borrowers to find lending solutions. We offer products and capabilities, such as SoFi At Work, that are designed to appeal to enterprises. We have also made strategic acquisitions to further expand our platform capabilities for enterprises, which we believe will deepen our participation in the entire technology ecosystem powering digital financial services.

Previous wording

(1)Lending as a service includes referred loans which are originated by a third-party partner to which we provide pre-qualified borrower referrals, certain loans which we originate and subsequently sell to a third-party partner, and certain loans associated with our Lantern Credit financial services marketplace platform.

Current wording

(1)Loan Platform Business, formerly referred to as lending as a service, includes referred loans which are originated by a third-party partner to which we provide pre-qualified borrower referrals, certain loans which we originate in order to subsequently sell to a third-party partner, and certain loans associated with our Lantern Credit financial services marketplace platform.

Previous wording

Personal Loans. We originate personal loans to help our members with a variety of financial needs, such as debt consolidation, home improvement projects, family planning, travel and weddings, to name a few. We offer fixed rate loans with flexible repayment terms, including unemployment protection. We generally offer loan sizes of $5,000 to $100,000, subject to legal and/or licensing requirements, with terms generally ranging from 2 to 7 years. We regularly update the annual percentage rates offered on our personal loans.

Current wording

Personal Loans. We originate personal loans to help our members with a variety of financial needs, such as debt consolidation, home improvement projects, family planning, travel and weddings, to name a few. We offer fixed rate loans with flexible repayment terms. We generally offer loan sizes of $5,000 to $100,000, subject to legal and/or licensing requirements, with terms generally ranging from 2 to 7 years. We regularly update the annual percentage rates offered on our personal loans.

Previous wording

Home Loans. We offer agency, non-agency and certain government loans (e.g., VA and Federal Housing Administration loans) for members purchasing a home or refinancing an existing mortgage. In the first quarter of 2024, we began offering fixed rate, closed end second mortgages with a maximum loan amount of $350,000. For our home loan products, we offer competitive rates, flexible down payment options for as little as 3% (or 0% for VA loans), a close on time guarantee, and educational tools and calculators. For one-unit properties, we generally offer loan sizes of $75,000 to $766,550 in conforming normal cost areas (with exceptions for smaller loan sizes considered on a case-by-case basis), up to $1,149,825 in conforming high cost areas (GSE-eligible loans above the normal conforming limit, which is determined by county). For multi-unit properties, we offer loan sizes up to $2,211,600. In addition, we offer loan sizes up to $3,000,000 for jumbo loans (loans in the jumbo loan program), up to $1,500,000 for VA loans, and up to $472,030 for Federal Housing Administration loans in most areas. Our fixed rate home loans generally have terms of 10, 15, 20, 25 or 30 years. We offer adjustable rate mortgage products for conforming and jumbo loans, with a fixed rate for 5, 7 or 10 years followed by rate adjustments every six months for the remainder of the 30-year term, and for VA and Federal Housing Administration loans, with a fixed rate for 5 years followed by rate adjustments every year for the remainder of the 30-year term. We regularly update the annual percentage rates offered on our home loans.

Current wording

Home Loans. We offer agency, non-agency and certain government loans (e.g., VA and Federal Housing Administration loans) for members purchasing a home or refinancing an existing mortgage. During 2024, we began offering fixed rate home equity loans and HELOCs. For our home loan products, we offer competitive rates, flexible down payment options for as little as 3% (or 0% for VA loans), a close on time guarantee, and educational tools and calculators. For one-unit properties, we generally offer loan sizes of $75,000 to $766,550 in conforming normal cost areas (with exceptions for smaller loan sizes considered on a case-by-case basis), up to $1,149,825 in conforming high cost areas (GSE-eligible loans above the normal conforming limit, which is determined by county). For multi-unit properties, we offer loan sizes up to $2,211,600. In addition, we offer loan sizes up to $3,000,000 for jumbo loans (loans in the jumbo loan program), up to $1,500,000 for VA loans, and up to $472,030 for Federal Housing Administration loans in most areas. Our fixed rate home loans generally have terms of 10, 15, 20, 25 or 30 years. We offer adjustable rate mortgage products for conforming and jumbo loans, with a fixed rate for 5, 7 or 10 years followed by rate adjustments every six months for the remainder of the 30-year term, and for VA and Federal Housing Administration loans, with a fixed rate for 5 years followed by rate adjustments every year for the remainder of the 30-year term. We regularly update the annual percentage rates offered on our home loans.

Previous wording

We have developed an extensive underwriting process across each lending product that is focused on willingness to pay (measured by credit attributes and risk scores), ability to pay (measured through income and free cash flow), and stability (measured by credit experience). A key element of our underwriting process is the ability to facilitate risk-based interest rates that we believe are appropriate for each loan using proprietary risk models through which we project quarterly loan performance, including expected losses and prepayments. We believe the outcome of this process helps us determine a more data-driven, risk-adjusted interest rate that we can offer our members. Further, our data and monitoring tools enable us to implement risk mitigation strategies quickly and efficiently, including underwriting standard adjustments to adapt our operations to changing environments and expectations.

Current wording

We have developed an extensive underwriting process across each lending product that is focused on willingness to pay (measured by credit attributes and risk scores), ability to pay (measured through free cash flow), and stability (measured by credit experience). A key element of our underwriting process is the ability to facilitate risk-based interest rates that we believe are appropriate for each loan using proprietary risk models. We believe the outcome of this process helps us determine a more data-driven, risk-adjusted interest rate that we can offer our members. Further, our data and monitoring tools enable us to implement risk mitigation strategies quickly and efficiently, including underwriting standard adjustments to adapt our operations to changing environments and expectations.

Previous wording

Our personal loan and student loan underwriting models are typically based on credit reports, industry credit and bankruptcy prediction models, custom credit assessment models, and debt capacity analysis, as indicated by borrower free cash flow. Our underwriting strategy utilizes an advanced risk model that provides refined risk separation. Home loans originated by SoFi that are agency-conforming loans are subject to credit, debt service, and collateral eligibility established by GSEs. Government loans, such as VA and Federal Housing Administration loans, are subject to the underwriting requirements established by the appropriate government agency. In addition to these requirements, agency-conforming and government loans are subject to credit eligibility overlays imposed by SoFi as well as individual investor requirements. Other non-agency loans originated by us, such as Jumbo loans, are subject to investor credit criteria, which typically includes a minimum tri-bureau credit score, established credit history requirements, income verification, as well as maximum limits on debt-to-income service and caps on loan-to-value based on an accredited appraisal.

Current wording

Our personal loan and student loan underwriting models are typically based on credit reports, standard industry credit scores, custom credit assessment models, and debt capacity analysis, as indicated by borrower free cash flow. Our underwriting strategy utilizes an advanced risk model that provides refined risk separation. Home loans originated by SoFi that are agency-conforming loans are subject to credit, debt-to-income, and collateral eligibility established by GSEs. Government loans, such as VA and Federal Housing Administration loans, are subject to the underwriting requirements established by the appropriate government agency. In addition to these requirements, agency-conforming and government loans are subject to credit eligibility overlays imposed by SoFi as well as individual investor requirements. Other non-agency loans originated by us, such as jumbo loans, are subject to investor credit criteria, which typically includes a minimum tri-bureau credit score, established credit history requirements, income verification, as well as maximum limits on debt-to-income and caps on loan-to-value based on an accredited appraisal.

Previous wording

We provide technology platform services through a diversified suite of offerings which include an event and authorization platform accessed via application programming interfaces, a cloud-native digital and core banking platform and services related to both platforms. Our customers include financial and non-financial institutions in North America and Latin America. We earn technology product and solutions revenue through the use of the platforms, either on a per use basis, or from overall license and maintenance fee service arrangements related to those respective platforms. We also offer additional add-on technology solutions to support our clients and drive engagement, such as an AI-based virtual assistant for customers of banks and financial institutions, and a real-time payment risk platform to enhance payment fraud mitigation strategies for financial customers. We continue to leverage investments made to integrate Galileo and Technisys and position the Technology Platform segment for diversified durable growth.

Current wording

We provide technology platform services through a diversified suite of offerings which include an event and authorization platform accessed via application programming interfaces, a cloud-native digital and core banking platform and services related to both platforms. Our customers include financial and non-financial institutions in North America and Latin America. We earn technology product and solutions revenue through the use of the platforms, either on a per use basis, or from overall license and maintenance fee service arrangements related to those respective platforms. We also offer additional add-on technology solutions to support our clients and drive engagement, such as a conversational AI engine for customers of banks and financial institutions, and a real-time payment risk platform which employs AI and machine learning technology to enhance payment fraud mitigation strategies for financial customers. We continue to leverage investments made to integrate Galileo and Technisys and position the Technology Platform segment for diversified durable growth.

Previous wording

•Other lending as a service: Includes referred loans which are originated by a third-party partner to which we provide pre-qualified borrower referrals, and certain loans which we originate and subsequently sell to a third-party partner.

Current wording

•Other Loan Platform Business: Includes referred loans which are originated by a third-party partner to which we provide pre-qualified borrower referrals, and certain loans which we originate in order to subsequently sell to third-party partners.

Previous wording

We achieved a number of key financial achievements in the three months ended March 31, 2024, including total net revenue of $645.0 million, representing an increase of 37% over total net revenue in the same period of 2023, as well as our second consecutive quarter of net income, achieving $88.0 million in the first quarter of 2024, which includes a $59.2 million gain from exchanging convertible debt during the three months ended March 31, 2024. This compares to a loss of $34.4 million in the same prior year period. Diluted earnings per share for the three months ended March 31, 2024 was $0.02, which did not include a benefit from the convertible debt exchange in the quarter, compared to a loss per share of $0.05 in the same period of 2023. Continued growth in both total members and products reflects the benefits of our broad product suite and Financial Services Productivity Loop strategy. Total members reached over 8.1 million as of March 31, 2024, a 44% increase from the prior year period, while total products reached over 11.8 million as of March 31, 2024, a 38% year over year increase.

Current wording

We achieved a number of key financial achievements in the three and six months ended June 30, 2024, including total net revenue of $598.6 million and $1.2 billion, respectively, representing increases of 20% and 28% over total net revenue in the same periods of 2023, respectively, as well as our third consecutive quarter of net income, achieving $17.4 million in the second quarter of 2024. This compares to a loss of $47.5 million in the same prior year period. Diluted earnings per share for the three and six months ended June 30, 2024 was $0.01 and $0.03, respectively, compared to a loss per share of $0.06 and $0.11, respectively, in the same periods of 2023. Diluted EPS for the six month 2024 period did not include a benefit from the convertible debt exchange in the first quarter of 2024.

Previous wording

Lending segment contribution profit of $207.7 million for the three months ended March 31, 2024 at a margin of 63%, decreased 1% over the respective 2023 period, which had a contribution margin of 62%. Growth in net interest income of $65.5 million, or 33%, was driven by higher loan balances and an average net interest margin of 5.91% in the three months ended March 31, 2024, an increase of 43 basis points compared to 5.48% in the respective 2023 period. Net interest margin expansion was driven by an increase in both average interest-earning assets and average yields, partially offset by an increase in the cost of interest-bearing liabilities. Origination volume increased 22% year over year, primarily driven by continued strong demand for personal loans and stable growth in the student loan business, despite continued macroeconomic headwinds. Student loans saw some increasing demand in the third quarter of 2023 ahead of the resumption of principal and interest payments on federally-held student loans, and we expect that we may continue to see modest growth in student loan refinancing. Our acquisition of Wyndham in the second quarter of 2023 provided increased capacity and capabilities for our home loans product, which contributed to a notable year over year increase in home loans, and which we expect to continue to provide benefits, while we expect overall home loans growth could be correlated with rate movements in 2024.

Current wording

Lending segment contribution profit of $197.9 million and $405.7 million for the three and six months ended June 30, 2024, respectively, at a margin of 58% and 60%, respectively, increased 8% and 3% over the respective 2023 periods, which had a contribution margin of 55% and 59%, respectively. Lending segment performance was driven by net interest income as a result of higher loan balances and yields. Average net interest margin of 5.83% and 5.87% in the three and six months ended June 30, 2024, respectively, an increase of 9 and 18 basis points, respectively, compared to 5.74% and 5.69% in the respective 2023 periods. Net interest margin expansion was driven by an increase in both average interest-earning assets and average yields, partially offset by an increase in the cost of interest-bearing liabilities. Origination volume increased 22% for both the three and six months ended June 30, 2024, primarily driven by continued strong demand for personal loans and home loans and stable growth in the student loan business, despite continued macroeconomic headwinds. Student loans saw some increasing demand in the third quarter of 2023 ahead of the resumption of principal and interest payments on federally-held student loans, and we expect that we may continue to see modest growth in student loan refinancing. Our acquisition of Wyndham in the second quarter of 2023 provided increased capacity and capabilities for our home loans product, which we expect to continue to provide benefits. This contributed to a notable year over year increase in home loans alongside further diversification and expansion of our home loan product offerings in 2024, while we expect overall home loans growth could be correlated with rate movements in 2024.

Previous wording

Technology Platform segment contribution profit of $30.7 million for the three months ended March 31, 2024 increased 107% over the respective 2023 period, and total net revenue of $94.4 million for the three months ended March 31, 2024 increased 21% over the respective 2023 period. Growth was driven by continued strong organic growth of existing clients and new product adoption, as well as notable contributions from increasingly diversified clients which have launched since the second half of 2023. Margin improvements were driven primarily by account growth, as we begin to realize the benefits of earlier investments made to support Technology Platform product development and the integration of Galileo and Technisys. We continue to make significant strides in our strategy of leveraging our unique product suite to pursue diversified growth and expansion via new products and geographies, in addition to larger, more durable revenue opportunities. We expect growth in segment revenue to continue to accelerate in 2024, as we are well positioned to capture opportunities from traditional financial institutions and nonfinancial categories.

Current wording

Technology Platform segment contribution profit of $31.2 million and $61.9 million for the three and six months ended June 30, 2024, respectively, increased 82% and 93% over the respective 2023 periods, and total net revenue of $95.4 million and $189.8 million for the three and six months ended June 30, 2024, respectively, increased 9% and 15% over the respective 2023 periods. Growth was driven by continued strong organic growth of existing clients and new product adoption, as well as notable contributions from increasingly diversified clients which have launched since the second half of 2023. Margin improvements were driven primarily by account growth, as we begin to realize the benefits of earlier investments made to support Technology Platform product development. We continue to make significant strides in our strategy of leveraging our unique product suite to pursue diversified growth and expansion via new products and geographies, in addition to larger, more durable revenue opportunities. We expect growth in segment revenue to continue to accelerate in 2024, as we are well positioned to capture opportunities from traditional financial institutions and nonfinancial categories.

Previous wording

Within Financial Services, contribution profit of $37.2 million for the three months ended March 31, 2024 significantly improved compared to a contribution loss of $24.2 million in the respective 2023 period, and total net revenue of $150.6 million for the three months ended March 31, 2024 increased 86% over the respective 2023 period. We achieved continued strong growth in deposits, ending the period with $21.6 billion of deposits as of March 31, 2024, allowing us to maintain diversified sources of funding and driving an increase in net interest income earned on our deposits. By continuously innovating with new and relevant offerings, features and rewards for members, we grew total Financial Services products by 42% year over year to 10.1 million at quarter-end. We continue to realize scale in our marketing spend and improvement in operating leverage in the segment. We expect to continue to scale our products through increased brand awareness and network effects, and continue to improve contribution profit in the segment.

Current wording

Within Financial Services, contribution profit of $55.2 million and $92.4 million for the three and six months ended June 30, 2024, respectively, significantly improved compared to a contribution loss of $4.3 million and $28.6 million in the respective 2023 periods, and total net revenue of $176.1 million and $326.7 million for the three and six months ended June 30, 2024 increased 80% and 82% over the respective 2023 periods. We achieved continued strong growth in deposits, ending the period with $23.0 billion of deposits as of June 30, 2024, allowing us to maintain diversified sources of funding and driving an increase in net interest income earned on our deposits. Further, noninterest income increased primarily due to an increase in interchange fees related to credit card and debit card transactions, as well as growth in referrals from our Loan Platform Business. By continuously innovating with new and relevant offerings, features and rewards for members, we grew total Financial Services products by 39% year over year to 11.0 million at quarter-end. We continue to realize scale in our marketing spend and improvement in operating leverage in the segment. We expect to continue to scale our products through increased brand awareness and network effects, and continue to improve contribution profit in the segment.

Previous wording

During 2024, we continued to have strong deposit contribution from direct deposit members with a high quality median FICO score. We expect that our funding mix will continue to move towards deposit funding, which has a lower borrowing cost of funds than our warehouse and securitization financing model. We also continue to provide our members with access to expanded FDIC insurance coverage through a network of participating banks in our Insured Deposit Program, further enhancing our benefits offering to our members. Our total capital ratio, as calculated under applicable regulatory capital rules, was 17.3% as of March 31, 2024.

Current wording

During 2024, we continued to have strong deposit contribution from direct deposit members with a high quality median FICO score. We expect that our funding mix will continue to move towards deposit funding, which has a lower borrowing cost of funds than our warehouse and securitization financing model. We also continue to provide our members with access to expanded FDIC insurance coverage through a network of participating banks in our Insured Deposit Program, further enhancing our benefits offering to our members. Our total capital ratio, as calculated under applicable regulatory capital rules, was 16.8% as of June 30, 2024.

Previous wording

Our management and Board of Directors use adjusted net revenue and adjusted EBITDA, which are non-GAAP financial measures, to evaluate our operating performance, formulate business plans, help better assess our overall liquidity position, and make strategic decisions, including those relating to operating expenses and the allocation of internal resources. Accordingly, we believe that these non-GAAP measures provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.

Current wording

Our management and Board of Directors use adjusted net revenue and adjusted EBITDA, which are non-GAAP financial measures, to evaluate our operating performance, formulate business plans, help better assess our overall liquidity position, and make strategic decisions, including those relating to operating expenses and the allocation of internal resources.

Previous wording

(1)Our adjusted EBITDA measure adjusts for corporate borrowing-based interest expense, as these expenses are a function of our capital structure. Corporate borrowing-based interest expense includes interest on our revolving credit facility, as well as interest expense and the amortization of debt discount and debt issuance costs on our convertible notes. Revolving credit facility interest expense in the 2024 period increased due to higher interest rates relative to the prior year periods on identical outstanding debt. Convertible note interest expense in the 2024 period increased related to the issuance of interest-bearing convertible senior notes during the period.

Current wording

(1)Our adjusted EBITDA measure adjusts for corporate borrowing-based interest expense, as these expenses are a function of our capital structure. Corporate borrowing-based interest expense includes interest on our revolving credit facility, as well as interest expense and the amortization of debt discount and debt issuance costs on our convertible notes. Convertible note interest expense in the 2024 periods increased related to the issuance of interest-bearing convertible senior notes during the first quarter of 2024.

Previous wording

(3)Depreciation and amortization expense for the 2024 period increased compared to the 2023 period primarily in connection with growth in our internally-developed software balance.

Current wording

(3)Depreciation and amortization expense increased for the six months ended June 30, 2024 compared to the prior year period, primarily in connection with growth in our internally-developed software balance.

Previous wording

(4)Restructuring charges in the 2023 period primarily included employee-related wages, benefits and severance associated with a reduction in headcount in our Technology Platform segment, which do not reflect expected future operating expenses and are not indicative of our core operating performance.

Current wording

(4)Restructuring charges in the six-month 2023 period primarily included employee-related wages, benefits and severance associated with a reduction in headcount in our Technology Platform segment in the first quarter of 2023, which do not reflect expected future operating expenses and are not indicative of our core operating performance.

Previous wording

(5)Impairment expense in the 2023 period relates to a sublease arrangement, which is not indicative of our core operating performance.

Current wording

(5)Impairment expense in the six-month 2023 period relates to a sublease arrangement, which is not indicative of our core operating performance.

Previous wording

(7)Reflects changes in fair value inputs and assumptions, including market servicing costs, conditional prepayment, default rates and discount rates. This non-cash change is unrealized during the period and, therefore, has no impact on our cash flows from operations. As such, these positive and negative changes in fair value attributable to assumption changes are adjusted out of net income (loss) to provide management and financial users with better visibility into the earnings available to finance our operations.

Current wording

(8)Reflects changes in fair value inputs and assumptions, including market servicing costs, conditional prepayment, default rates and discount rates. This non-cash change is unrealized during the period and, therefore, has no impact on our cash flows from operations. As such, these positive and negative changes in fair value attributable to assumption changes are adjusted out of net income (loss) to provide management and financial users with better visibility into the earnings available to finance our operations.

Previous wording

(8)Reflects changes in fair value inputs and assumptions, including conditional prepayment, default rates and discount rates. When third parties finance our consolidated VIEs through purchasing residual interests, we receive proceeds at the time of the securitization close and, thereafter, pass along contractual cash flows to the residual interest owner. These obligations are measured at fair value on a recurring basis, which has no impact on our initial financing proceeds, our future obligations to the residual interest owner (because future residual interest claims are limited to contractual securitization collateral cash flows), or the general operations of our business. As such, these positive and negative non-cash changes in fair value attributable to assumption changes are adjusted out of net income (loss) to provide management and financial users with better visibility into the earnings available to finance our operations.

Current wording

(9)Reflects changes in fair value inputs and assumptions, including conditional prepayment, default rates and discount rates. When third parties finance our consolidated VIEs through purchasing residual interests, we receive proceeds at the time of the securitization close and, thereafter, pass along contractual cash flows to the residual interest owner. These obligations are measured at fair value on a recurring basis, which has no impact on our initial financing proceeds, our future obligations to the residual interest owner (because future residual interest claims are limited to contractual securitization collateral cash flows), or the general operations of our business. As such, these positive and negative non-cash changes in fair value attributable to assumption changes are adjusted out of net income (loss) to provide management and financial users with better visibility into the earnings available to finance our operations.

Previous wording

(9)Reflects gain on extinguishment of debt. Gains and losses are recognized during the period of extinguishment for the difference between the net carrying amount of debt extinguished and the fair value of equity securities issued. These non-cash charges are not indicative of our core operating performance, and as such are adjusted out of total net revenue to provide management and financial users with better visibility into the net revenue available to finance our operations and our overall performance.

Current wording

(10)Reflects gain on extinguishment of debt. Gains and losses are recognized during the period of extinguishment for the difference between the net carrying amount of debt extinguished and the fair value of equity securities issued. These non-cash charges are not indicative of our core operating performance, and as such are adjusted out of total net revenue to provide management and financial users with better visibility into the net revenue available to finance our operations and our overall performance.

Previous wording

Since our inception through March 31, 2024, we have served approximately 8.1 million members who have used approximately 11.8 million products on the SoFi platform.

Current wording

Since our inception through June 30, 2024, we have served approximately 8.8 million members who have used approximately 12.8 million products on the SoFi platform.

Previous wording

(2)In the fourth quarter of 2023, we transferred the crypto services provided by SoFi Digital Assets, LLC, and began closing existing digital assets accounts and removing the account from Invest products. This process was completed in the first quarter of 2024. As of March 31, 2023, Invest products included 415,298 digital assets accounts. Excluding these accounts (that were closed as part of the transfer of the crypto services), total Invest products increased by 429,032, or 24%, year over year.

Current wording

(2)In the fourth quarter of 2023, we transferred the crypto services provided by SoFi Digital Assets, LLC, and began closing existing digital assets accounts and removing the account from Invest products. This process was completed in the first quarter of 2024. As of June 30, 2023, SoFi Invest products included 435,076 digital assets accounts. Excluding these accounts (that were closed as part of the transfer of the crypto services), total Invest products increased by 451,344, or 24%, year over year, and total financial services products increased by 3,527,793, or 47%, year over year.

Previous wording

The Federal Reserve increased the benchmark interest rate several times in 2023, largely in response to high inflation, low unemployment and strong consumer demand, while balancing macroeconomic risks, such as increased market volatility. We have continued to see strong demand for our deposits as a result of our competitive interest rate offering and access to expanded FDIC insurance coverage through a network of participating banks in our Insured Deposit Program. Rate cuts are expected in 2024, but the timing of such cuts remains uncertain. However, over past quarters rising interest rates have unfavorably impacted, and could continue to unfavorably impact, demand for refinancing loan products. Economic and market volatility may continue to occur and could worsen, including if there is additional turmoil in the banking and financial services sectors, which could adversely impact our liquidity, results of operations and financial condition. These market developments have negatively impacted customer confidence in the safety and soundness of certain banks. As a result, although we have not observed a decline in our overall deposits to date, our members may choose to maintain deposits with other financial institutions or spread their deposit funds among multiple financial institutions. In addition, if the Federal Reserve does not effectively curb inflation or interest rates further rise unexpectedly or too quickly or macroeconomic conditions deteriorate or do not improve, it could have a negative impact on the overall economy and result in increased unemployment, which could adversely impact our results of operations. In the first quarter of 2024, we saw a continuation from 2023 of elevated credit spreads across capital markets and changes in consumer credit. Our increased personal loan annualized charge-off rate year over year was reflective of our expectation of credit metrics to revert over time to more normalized levels, but remains healthy, while our lower credit card annualized charge-off rate was reflective of improvement in credit card delinquency rates. Negative changes to macroeconomic conditions may result in decreased demand for our products, increased operating costs and negatively impact our results of operations.

Current wording

The Federal Reserve increased the benchmark interest rate several times in 2022 and 2023, largely in response to high inflation, low unemployment and strong consumer demand, while balancing macroeconomic risks, such as increased market volatility. We have continued to see strong demand for our deposits as a result of our competitive interest rate offering and access to expanded FDIC insurance coverage through a network of participating banks in our Insured Deposit Program. Rate cuts are anticipated by the market over 2024 and 2025, but the timing of such cuts remains uncertain. High or rising interest rates have unfavorably impacted, and could continue to unfavorably impact, demand for refinancing loan products. In addition to benchmark interest rate considerations, economic and market volatility may adversely impact our liquidity, results of operations and financial condition. In addition, if the Federal Reserve does not effectively curb inflation or interest rates further rise unexpectedly or too quickly or macroeconomic conditions deteriorate or do not improve, it could have a negative impact on the overall economy and result in increased unemployment, which could adversely impact our results of operations. Our increased personal loan annualized charge-off rate year over year was reflective of our expectation of credit metrics to revert over time to more normalized levels, but remains healthy, while our lower credit card annualized charge-off rate was reflective of improvement in credit card delinquency rates. Negative changes to macroeconomic conditions may result in decreased demand for our products, increased operating costs and negatively impact our results of operations.

Previous wording

As of the first quarter of 2024 relative to the fourth quarter of 2023, we observed the following trends:

Current wording

As of the second quarter of 2024 relative to the first quarter of 2024, we observed the following trends:

Previous wording

•The weighted average conditional prepayment rates on personal loans and student loans increased by 154 bps and 8 bps, respectively. Increases reflect the impacts of observed increases in prepayments during the first quarter.

Current wording

•The weighted average conditional prepayment rates on personal loans and student loans increased by 145 bps and 48 bps, respectively. Increases reflect the impacts of observed increases in prepayments during the second quarter.

Previous wording

•The weighted average discount rates on personal loans and student loans increased by 26 bps and 6 bps, respectively. For personal loans and student loans, our discount rate assumptions increased in the first quarter due to benchmark rates increasing by 48 bps and 49 bps, respectively, partially offset by spreads tightening. Spread changes are indicated by asset-backed security and secondary bond markets.

Current wording

•The weighted average discount rates on personal loans and student loans decreased by 3 bps and increased by 11 bps, respectively. For personal loans, our discount rate assumptions decreased in the second quarter due to spreads tightening , partially offset by benchmark rates increasing by 3 bps. For student loans, our discount rate assumptions increased in the second quarter due to benchmark rates increasing by 6 bps, as well as spreads widening. Spread changes are indicated by asset-backed security and secondary bond markets.

Previous wording

•Annualized net charge-off rates on personal loans in the first quarter of 2024 were 3.5%, which remained lower than the assumed weighted average default rates in our fair value model of 4.8%. Personal loan charge-offs during the first quarter of 2024 were impacted by delinquent loan sales of $62.5 million of aggregate unpaid principal balance, a portion of which we expect to recover in future periods. Annualized net charge-off rates on student loans in the first quarter of 2024 of 0.6% were consistent with the assumed weighted average default rates in our fair value model. Our fair value assumption for annual default rate incorporates fair value markdowns on loans beginning when they are 10 days or more delinquent, with additional markdowns at 30 days, 60 days and 90 days past due. For instance, personal loans are marked down on average 70% when the loans are 30 days past due.

Current wording

•Annualized net charge-off rates on personal loans in the second quarter of 2024 were 3.8%, which remained lower than the assumed weighted average default rates in our fair value model of 4.8%. Personal loan charge-offs during the first and second quarters of 2024 were impacted by delinquent loan sales of $62.5 million and $69.4 million, respectively, of aggregate unpaid principal balance, a portion of which we expect to recover in future periods. Annualized net charge-off rates on student loans in the second quarter of 2024 of 0.6% were consistent with the assumed weighted average default rates in our fair value model. Our fair value assumption for annual default rate incorporates fair value markdowns on loans beginning when they are 10 days or more delinquent, with additional markdowns at 30 days, 60 days and 90 days past due.

Previous wording

The combination of these and other factors resulted in fair value losses recognized on our personal loans portfolio and fair value gains recognized on our student loans portfolio during the first quarter of 2024.

Current wording

The combination of these and other factors resulted in fair value gains recognized on our personal and student loans portfolios, during the second quarter of 2024.

Previous wording

In June 2023, Congress passed the Fiscal Responsibility Act of 2023 which, among other things, ended the suspension of principal and interest payments on federally-held student loans pursuant to the CARES Act passed in 2020, which became effective 60 days after June 30, 2023, and prohibits the Secretary of Education from implementing any extension of any executive action or rule pursuant to the CARES Act. Following the end of the federal student loan payment moratorium on August 30, 2023, President Biden indicated that, between October 1, 2023 and September 30, 2024, he would allow federal loan borrowers to not be considered delinquent if they miss a payment and that the U.S. Department of Education will not refer borrowers who fail to pay their student loan bills to credit agencies. Additionally, President Biden has announced multiple relief measures for federal student loan borrowers, despite legal challenges at the Supreme Court to certain of President Biden’s student loan forgiveness proposals. For example, the Biden Administration announced on July 14, 2023 that $39 billion in federal student loan debt would be eliminated to remedy mistakes of loan servicers, and that other student loan holders will have their loans adjusted. In the fall and winter of 2023, the Biden Administration estimated that it would cancel more than $132 billion of student debt for more than three million borrowers and continue to pursue debt forgiveness strategies including through the Saving on a Valuable Education (“SAVE”) Plan which offers forgiveness after as few as 10 years of payments for borrowers who originally took out $12,000 or less for college. In February 2024, the Biden Administration announced that it will automatically discharge $1.2 billion in loans for nearly 153,000 eligible borrowers under the SAVE Plan. In March 2024, the Biden Administration announced the approval of $5.8 billion in additional student loan debt relief for 77,700 borrowers made possible by the U.S. Department of Education’s Public Service Loan Forgiveness Program (“PSLF”). Most recently, on April 17, 2024, the U.S. Department of Education issued a notice of proposed rulemaking to include targeted student loan debt forgiveness to certain borrowers, including provisions under the Higher Education Act of 1965, as amended, that would provide relief for eligible borrowers of runaway interest, forgiveness of outstanding debt related to loans which entered repayment at least 20 years ago, and additional provisions to facilitate relief related to income-driven repayment plans.

Current wording

In June 2023, Congress passed the Fiscal Responsibility Act of 2023 which, among other things, ended the suspension of principal and interest payments on federally-held student loans pursuant to the CARES Act passed in 2020, which became effective 60 days after June 30, 2023, and prohibits the Secretary of Education from implementing any extension of any executive action or rule pursuant to the CARES Act. Following the end of the federal student loan payment moratorium on August 30, 2023, President Biden indicated that, between October 1, 2023 and September 30, 2024, he would allow federal loan borrowers to not be considered delinquent if they miss a payment and that the U.S. Department of Education will not refer borrowers who fail to pay their student loan bills to credit agencies. Additionally, President Biden has announced multiple relief measures for federal student loan borrowers, despite legal challenges at the Supreme Court to certain of President Biden’s student loan forgiveness proposals. For example, the Biden Administration announced on July 14, 2023 that $39 billion in federal student loan debt would be eliminated to remedy mistakes of loan servicers, and that other student loan holders will have their loans adjusted. In the fall and winter of 2023, the Biden Administration estimated that it would cancel more than $132 billion of student debt for more than three million borrowers and continue to pursue debt forgiveness strategies including through the Saving on a Valuable Education (“SAVE”) Plan which offers forgiveness after as few as 10 years of payments for borrowers who originally took out $12,000 or less for college. In February 2024, the Biden Administration announced that it will automatically discharge $1.2 billion in loans for nearly 153,000 eligible borrowers under the SAVE Plan. In March 2024 and July 2024, the Biden Administration announced the approval of a cumulative $7 billion in additional student loan debt relief for 112,700 borrowers made possible by the U.S. Department of Education’s Public Service Loan Forgiveness Program (“PSLF”). Recently, on April 17, 2024, the U.S. Department of Education issued a notice of proposed rulemaking to include targeted student loan debt forgiveness to certain borrowers, including provisions under the Higher Education Act of 1965, as amended, that would provide relief for eligible borrowers of runaway interest, forgiveness of outstanding debt related to loans which entered repayment at least 20 years ago, and additional provisions to facilitate relief related to income-driven repayment plans.

Previous wording

(2)Interest expense on other debt primarily includes debt issuance and discount expense, as well as interest expense on the revolving credit facility.

Current wording

(2)Interest expense on other debt primarily includes debt issuance and discount expense, as well as interest expense on the revolving credit facility and convertible senior notes.

Previous wording

For the three months ended March 31, 2024 compared to the three months ended March 31, 2023, net interest income increased by $166.7 million, or 71%, and net interest margin increased by 43 basis points. Average interest-earning assets increased by 59%, and average yields increased by 114 basis points. The increases were primarily driven by (i) higher interest income from personal loans, which was primarily a function of increases in the average balance and origination volume, as well as longer loan holding periods for both personal and student loans, (ii) interest-bearing deposits with banks, which reflected our strong liquidity position in a rising interest rate environment, and (iii) lower interest expense on warehouse facilities and securitizations primarily attributable to lower average balances, which is reflective of our continued funding mix towards deposit funding, and partially offset by higher interest rates incurred on our facilities which is reflective of the higher interest rate environment year over year. These items were partially offset by higher interest expense on deposits attributable to a higher average balance and higher interest rates offered to our members.

Current wording

For the three months ended June 30, 2024 compared to the three months ended June 30, 2023, net interest income increased by $121.5 million, or 42%, and net interest margin increased by 9 basis points. Average interest-earning assets increased by 40%, and average yields increased by 27 basis points. For the six months ended June 30, 2024 compared to the six months ended June 30, 2023, net interest income increased by $288.2 million, or 55%, and net interest margin increased by 18 basis points. Average interest-earning assets increased by 50%, and average yields increased by 56 basis points. The increases were primarily driven by (i) higher interest income from personal loans and student loans, which was primarily a function of increases in the average balance and origination volume, as well as longer loan holding periods, (ii) interest-bearing deposits with banks, which reflected our strong liquidity position in a rising interest rate environment, (iii) higher interest income from investment securities primarily attributable to higher average balances, and (iv) lower interest expense on warehouse facilities and securitizations primarily attributable to lower average balances, which is reflective of our continued funding mix towards deposit funding, and partially offset by higher interest rates incurred on our facilities which is reflective of the higher interest rate environment year over year. These items were partially offset by higher interest expense on deposits attributable to a higher average balance and higher interest rates offered to our members.

Previous wording

These increases were partially offset by: (i) higher loan write-offs in the 2024 period, primarily driven by longer loan holding periods and elevated charge off rates, and (ii) the net effect of gains in the 2024 period compared to losses in the 2023 period on student loan, personal loan and risk retention interest rate swap positions primarily driven by increases in interest rates during the 2024 period compared to decreases in interest rates during the 2023 period, and fair value losses on personal loans in the 2024 period compared to gains during the 2023 period, which were primarily impacted by higher prepayment rate, discount rate and default rate assumptions, and lower fair value gains on student loans in the 2024 period, which were primarily impacted by higher unpaid principal balance.

Current wording

Six Months. Total noninterest income decreased by $14.7 million, or 3%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease was primarily attributable to: (i) higher loan write-offs in the 2024 period, primarily driven by longer loan holding periods and elevated charge off rates, and (ii) the net effect of fair value losses on personal loans in the 2024 period compared to gains during the 2023 period, which were primarily impacted by higher prepayment and default rate assumptions as well as higher unpaid principal balance, lower fair value gains on student loans in the 2024 period, which were primarily impacted by higher prepayment rate assumptions and higher unpaid principal balance, and higher gains in the 2024 period on student loan, personal loan and risk retention interest rate swap positions primarily driven by larger increases in interest rates during the 2024 period and increased derivative instruments outstanding,

Previous wording

Total noninterest income increased by $6.1 million, or 3%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase was primarily attributable to: (i) gain on extinguishment of debt of $59.2 million during the 2024 period, (ii) higher origination fees primarily related to a product feature offered on personal loans, whereby a borrower may optionally elect to pay origination fees to qualify for a lower annual percentage rate, and (iii) growth in technology services fees driven by account growth, as well as increased processing and service arrangement activity among our integrated technology solutions clients.

Current wording

These decreases were partially offset by: (i) higher origination fees primarily related to a product feature offered on personal loans, whereby a borrower may optionally elect to pay origination fees to qualify for a lower annual percentage rate, (ii) gain on extinguishment of debt of $59.2 million during the 2024 period, (iii) growth in technology services fees driven by increased processing and service arrangement activity among our integrated technology solutions clients as well as account growth, and (iv) an increase in interchange and referrals revenue.

Previous wording

Total noninterest expense increased by $42.6 million, or 8%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily driven by: (i) increased amortization of purchased and internally-developed software, and in tools and subscriptions costs, reflective of continued investments in technology, (ii) increases in direct member incentives, advertising and marketing expenditures, (iii) an increase in product fulfillment costs, which included debit card fulfillment services, primarily related to our SoFi Money product, as well as payment processing network association fees associated with increased activity on our technology platform, and (iv) amortization of premiums on a credit default swap related to our student loans during the 2024 period. This increase was partially offset by decreased employee compensation and benefits, which was attributable to decreases in share-based compensation expense, partially offset by increases in headcount and salary related to support of our growth and impacts of the inflationary environment, as well as restructuring charges during the first quarter of 2023.

Current wording

Six Months. Total noninterest expense increased by $78.5 million, or 7%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily driven by: (i) increases in amortization of purchased and internally-developed software, and tools and subscriptions costs, reflective of continued investments in technology, (ii) increases in professional services costs, (iii) an increase in product fulfillment costs, which included debit card fulfillment services, primarily related to our SoFi Money product, as well as payment processing network association fees associated with increased activity on our technology platform, and (iv) amortization of premiums on a credit default swap related to our student loans during the 2024 period. This increase was partially offset by decreased employee compensation and benefits, which was attributable to decreases in share-based compensation expense and restructuring charges during the first quarter of 2023, partially offset by increases in headcount and salary related to support of our growth and impacts of the inflationary environment.

Previous wording

(2)The decrease in the ratio was primarily attributable to senior secured loans, for which we did not recognize an allowance for credit losses, partially offset by credit cards, which was primarily reflective of an increase in total balances and associated loss reserves.

Current wording

(2)The decrease in the ratio was primarily attributable to senior secured loans, for which we did not recognize an allowance for credit losses as we determined that our expected exposure to credit losses was immaterial, partially offset by credit cards, which was primarily reflective of an increase in total balances and associated loss reserves.

Previous wording

The provision for credit losses for the three months ended March 31, 2024 decreased by $1.2 million, or 15%, compared to the same period in 2023. The decrease during the three-month period was primarily related to improvement in credit card delinquency rates.

Current wording

The provision for credit losses for the three and six months ended June 30, 2024 decreased by $1.0 million, or 8%, and $2.2 million, or 10%, respectively, compared to the same periods in 2023. The decreases during the three and six months ended June 30, 2024 were primarily related to improvement in credit card delinquency rates.

Previous wording

For the three months ended March 31, 2024 and 2023, we recorded income tax (expense) benefit of $(6.2) million and $1.6 million, respectively. Our income tax positions in both the 2024 and 2023 periods were impacted by income tax expenses associated with the profitability of SoFi Bank in state jurisdictions where separate filings are required, as well as federal taxes where our tax credits and loss carryforwards may be limited. Our income tax benefit position in the 2023 period was primarily attributable to income tax benefits from foreign losses in jurisdictions with net deferred tax liabilities related to Technisys.

Current wording

For the three and six months ended June 30, 2024, we recorded income tax (expense) benefit of $2.1 million and $(4.1) million, respectively. For the three and six months ended June 30, 2023, we recorded income tax benefit of $1.8 million and $3.4 million, respectively. Our income tax positions in both the 2024 and 2023 periods were impacted by income tax expenses associated with the profitability of SoFi Bank in state jurisdictions where separate filings are required, as well as federal taxes where our tax credits and loss carryforwards may be limited. Our income tax benefit position in the 2023 period was primarily attributable to income tax benefits from foreign losses in jurisdictions with net deferred tax liabilities related to Technisys.

Previous wording

Personal Loans. During the three months ended March 31, 2024, personal loan origination volume increased relative to the corresponding 2023 period, primarily due to increased demand driven by expanded marketing efforts and increased demand for debt consolidation products in a rising interest rate environment during 2023 that has persisted into 2024.

Current wording

Personal Loans. During the three and six months ended June 30, 2024, personal loan origination volume increased relative to the corresponding 2023 periods, primarily due to increased demand driven by expanded marketing efforts and increased demand for debt consolidation products in a rising interest rate environment during 2023 that has persisted into 2024.

Previous wording

Student Loans. During the three months ended March 31, 2024, student loan origination volume increased relative to the corresponding 2023 period, as demand for student loan refinancing products increased after the resumption of principal and interest payments on federally-held student loans as borrowers looked to refinance at a lower rate or, given the high interest rate environment, to extend the loan term. Demand for student loan refinancing products during the prior year was affected by the unfavorable impact of the suspension of principal and interest payments on federally-held student loans through August 30, 2023 and the expectation of debt cancellation for certain federal student loan borrowers which was struck down by the U.S. Supreme Court in June 2023, combined with a continued rising interest rate environment in 2023.

Current wording

Student Loans. During the three and six months ended June 30, 2024, student loan origination volume increased relative to the corresponding 2023 periods, as demand for student loan refinancing products increased after the resumption of principal and interest payments on federally-held student loans as borrowers looked to refinance at a lower rate or, given the high interest rate environment, to extend the loan term. Demand for student loan refinancing products during the prior year was affected by the unfavorable impact of the suspension of principal and interest payments on federally-held student loans through August 30, 2023 and the expectation of debt cancellation for certain federal student loan borrowers which was struck down by the U.S. Supreme Court in June 2023, combined with a continued rising interest rate environment in 2023.