SoFi Technologies Inc

The following table presents the components of our total noninterest expense:

Three Months. Total noninterest expense decreased by $170.9 million, or 21%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily driven by: (i)goodwill impairment of $247.2 million in 2023 related to the Galileo and Technisys reporting units; and (ii) a decrease inprovision for credit losses of $15.8 million primarily related to credit card, see “Provision for Credit Losses”.

These decreases were partially offset by: (i) insales and marketing, increases in direct member incentives, advertising and marketing expenditures, and lead generation costs of $36.2 million primarily related to our Financial Services segment as we continue to drive expansion of our SoFi Money product and our Loan Platform Business; (ii) higher employee compensation and benefits of $26.3 million primarily reported ingeneral and administrative andcost of operations, which was attributable to increases in headcount and salary to support our growth and impacts of the inflationary environment; (iii) increases in amortization of purchased and internally-developed software, and tools and subscriptions costs of $15.5 million, primarily reported intechnology and product development, reflective of continued investments in technology; (iv) increases in professional services costs of $9.0 million, primarily reported incost of operationsand general and administrative ; (v) incost of operations, an increase in product fulfillment costs of $10.6 million, 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 (vi) ingeneral and administrative, amortization of premiums on a credit default swap of $7.1 million related to our student loans during the 2024 period.

Nine Months. Total noninterest expense decreased by $92.4 million, or 5%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily driven by: (i)goodwill impairment of $247.2 million in 2023 related to the Galileo and Technisys reporting units; and (ii) decreases inprovision for credit losses of $18.0 million primarily related to credit card, see “Provision for Credit Losses”.

These decreases were partially offset by: (i) insales and marketing, increases in direct member incentives, advertising and marketing expenditures, and lead generation costs of $49.5 million primarily related to our Financial Services and Lending segments; (ii) increases in amortization of purchased and internally-developed software, and tools and subscriptions costs of $45.4 million, primarily reported intechnology and product development, reflective of continued investments in technology; iii) increases in professional services costs of $35.2 million, primarily reported ingeneral and administrative andcost of operations; (iv) ingeneral and administrative, amortization of premiums on a credit default swap of $23.2 million related to our student loans during the 2024 period; (v) primarily incost of operations, an increase in product fulfillment costs of $29.1 million, 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 (vi) higher employee compensation and benefits of $13.7 million, which was attributable to increases in headcount and salary related to support of our growth and impacts of the inflationary environment, partially offset by decreases in share-based compensation expense and restructuring charges during the first quarter of 2023.

Provision for Credit Losses

Analysis of Allowance for Credit Losses

Allowance for Credit Losses Ratios

The following table presents the ratio of allowance for credit losses to total loans outstanding that are measured at amortized cost:

(1)Loans outstanding balance excludes accrued interest.

(2)The decrease in the ratio was primarily attributable to growth in secured loans, for which we did not recognize an allowance for credit losses, as well as a decrease in the allowance for credit losses related to credit card on improved delinquencies.

We omitted the credit ratios associated with nonaccrual loans, as the balance of nonaccrual loans was immaterial.

Allocation of Allowance for Credit Losses

The following table presents the allocation of the allowance for credit losses and the percentage of loans outstanding by category to total loans outstanding that are measured at amortized cost:

(1)Loans outstanding balances exclude accrued interest.

(2)Secured loans are term loan arrangements secured by underlying loans (collateral) owned by the debtor. The underlying loans were previously originated by us and were subject to our underwriting process and risk models, prior to being sold to the debtor and in most instances these loans continue to be serviced by us. We evaluate the credit quality of our secured loan portfolio relative to the fair value of the underlying collateral, reassessing it quarterly based on relevant information, including funded loan rates and historical loss experience. An allowance for credit losses is required when there is an expected credit loss after considering the fair value of the collateral as well as any anticipated future changes in the underlying collateral. As of September 30, 2024, based on this evaluation we did not recognize an allowance for credit losses on our secured loan.

Analysis of Charge-offs

The following table presents information regarding average loans outstanding, net charge-offs and the annualized ratio of net charge-offs to average loans outstanding:

(2)Net charge-offs include both credit- and certain non-credit-related charge-offs. Non-credit related charge-offs, which primarily relate to alleged or potential fraud, occur occasionally in our business and are impacted by factors different from our credit related charge-offs. Non-credit related charge-offs were immaterial for all periods presented.

(3)Net charge-offs related to personal, student and home loans are generally recorded innoninterest income - Loan origination, sales, and securitizations as part of the respective loans total change in fair value. Net charge-offs related to credit card and commercial and consumer banking are considered as part of theallowance for credit losses andnoninterest expense- provision for credit losses.

(4)Net charge-off ratio is calculated as net charge-offs divided by average loans.

For the three months ended September 30, 2024, the total net charge-off ratio was 2.54%, a decrease of 18 bps compared with the three months ended September 30, 2023. The decrease in the total net charge-off ratio was primarily due to a lower credit card net charge-off ratio reflective of improvement in delinquency rates (total credit card delinquency rate was 5.3%, down approximately 170 bps from the comparative period) as a result of tighter underwriting standards and risk mitigation actions, as well as secured loan originations ($992.0 million as of September 30, 2024 compared to none in the comparative period), partially offset by a higher student loan net charge-off ratio which was impacted by the end of the federal student loan payment moratorium on August 30, 2023. Total net charge-offs of $170.0 million increased $33.1 million from the comparable period primarily due to higher personal loans charge-offs of $27.2 million and student loans charge-offs of $7.5 million reflecting growth in the portfolios, seasoning of vintages and the impact of the end of the federal student loan payment moratorium. This increase in charge-offs was partially offset by lower credit card charge-offs of $1.6 million as a result of tighter underwriting standards and risk mitigation actions, despite growth in the credit card portfolio.

For the nine months ended September 30, 2024, the total net charge-off ratio was 2.69%, an increase of 20 bps compared with the nine months ended September 30, 2023, and total net charge-offs were $499.3 million, an increase of $173.3 million from the comparable period. The increases to the net charge-off ratio and net charge-offs were primarily driven by higher personal loan amounts of $155.0 million and 42 bps, respectively, and higher student loan amounts of $19.0 million and 26 bps, respectively. These increases reflect growth in the portfolios, seasoning of vintages and credit normalization, along with the impact of the end of the student loan payment moratorium. These increases were partially offset by lower credit card net charge-offs and net charge-off ratio on improved delinquency rates as a result of tighter underwriting standards and risk mitigation actions, and secured loan originations.

Provision for Credit Losses

The provision for credit losses was $6.0 million for the three months ended September 30, 2024, reflecting net charge-offs of $9.5 million and an allowance release of $3.5 million. Net charge-offs of $9.5 million decreased $1.6 million compared to the three months ended September 30, 2023, driven by lower credit card charge-offs primarily due to improved delinquency rate (total credit card delinquency rate was 5.3%, down approximately 170 bps from the comparative period) as a result of tighter underwriting standards and risk mitigation actions. The allowance release of $3.5 million was also primarily in credit card, reflecting improved credit quality of the portfolio, including higher borrower FICO scores. The prior year provision was $21.8 million, reflecting net charge-offs of $11.1 million and an allowance increase of $10.7 million.

The provision for credit losses was $24.8 million for the nine months ended September 30, 2024, reflecting net charge-offs of $31.1 million and an allowance release of $6.3 million. Net charge-offs of $31.1 million were down $0.7 million compared to the nine months ended September 30, 2023 driven by lower credit card charge-offs primarily due to improved delinquency rates. The net allowance release of $6.3 million was also primarily in credit card, reflecting improved credit quality of the portfolio. The prior year provision was $42.9 million, reflecting net charge-offs of $31.7 million and an allowance increase of $11.2 million.