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SoFi Technologies, Inc. - Quarter Report: 2023 March (Form 10-Q)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from     to
Commission file number 001-39606
SoFi_horz_RGB_Turquoise_CircleR_Upward-v2.jpg
SoFi Technologies, Inc.
(Exact name of registrant as specified in its charter)
Delaware
98-1547291
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
234 1st Street
San Francisco, California
94105
(Address of principal executive offices)(Zip Code)
(855) 456-7634
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.0001 par value per shareSOFIThe Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No   ☐ 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒   No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer  
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes   ☐     No  ☒
The number of shares of the registrant’s common stock, par value $0.0001 per share, outstanding as of April 28, 2023 was 940,895,594 shares.



SOFI TECHNOLOGIES, INC.
TABLE OF CONTENTS
Page
PART I – FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II – OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
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SoFi Technologies, Inc.
As used in this Quarterly Report on Form 10-Q, unless the context requires otherwise, references to “SoFi”, the “Company”, “we”, “us”, and “our”, and similar references refer to SoFi Technologies, Inc. and its wholly-owned subsidiaries following the Business Combination (as defined herein) and to Social Finance, Inc. prior to the Business Combination.
Social Finance, Inc. (“Social Finance”) entered into a merger agreement (the “Agreement”) with Social Capital Hedosophia Holdings Corp. V (“SCH”) on January 7, 2021. The transactions contemplated by the terms of the Agreement were completed on May 28, 2021 (the “Closing”), in conjunction with which SCH changed its name to SoFi Technologies, Inc. (hereafter referred to, collectively with its subsidiaries, as “SoFi”, the “Company”, “we”, “us” or “our”, unless the context otherwise requires). The transactions contemplated in the Agreement are collectively referred to as the “Business Combination”.
In March 2021, we entered into an agreement to acquire Golden Pacific Bancorp, Inc. (“Golden Pacific”), a bank holding company, and its wholly-owned subsidiary, Golden Pacific Bank, National Association, a national bank (the “Bank Merger”). The Bank Merger closed in February 2022, after which we became a bank holding company and renamed Golden Pacific Bank as SoFi Bank, National Association (“SoFi Bank”).
In February 2022, we entered into an agreement to acquire Technisys S.A. (“Technisys”), a Luxembourg société anonyme and a cloud-native digital multi-product core banking platform (the “Technisys Merger”). The Technisys Merger closed in March 2022.
See Note 2. Business Combinations to the Notes to Condensed Consolidated Financial Statements within Part I, Item 1. for additional information on our business combinations.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains statements that are forward-looking and as such are not historical facts. This includes, without limitation, statements regarding the financial position, business strategy and the plans and objectives of management for our future operations; anticipated trends and prospects in the industries in which our business operates; new products, services and related strategies; anticipated actions by governmental authorities; and macroeconomic conditions. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Quarterly Report on Form 10-Q, words such as “aim”, “allow”, “anticipate”, “believe”, “can”, “continue”, “could”, “estimate”, “expect”, “if”, “intend”, “likely”, “may”, “might”, “opportunity”, “plan”, “possible”, “potential”, “predict”, “project”, “should”, “strive”, “will”, “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
Forward-looking statements are subject to risks, uncertainties, and other factors described in Part II, Item 1A. “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and our other filings with the Securities and Exchange Commission (“SEC”) and include, among other things:
our ability to achieve and maintain profitability in the future;
the impact on our business of the regulatory environment and complexities with compliance;
the effect and impact of the extension of the federal student loan payment moratorium and the announced loan forgiveness by the federal government, and the potential impact and magnitude of any other governmental actions taken related to student loans;
the impact of adverse developments affecting the U.S. or global banking industry, including bank failures and liquidity concerns, which could cause continued or worsening economic and market volatility, and regulatory responses thereto;
our ability to manage our growth effectively and our expectations regarding the development and expansion of our business;
our ability to continue to originate and sell loans to third parties, and the impact of the performance of loans held on our balance sheet;
our ability to access sources of capital on favorable terms, if at all, including debt financing, deposits and other sources of capital to finance operations and growth;
the impact of and our ability to respond to general economic conditions and other macroeconomic and geopolitical factors, such as elevated and fluctuating interest rates, inflationary pressures, counterparty risk, changing customer demand, capital markets volatility, instability in the financial services industry, the possibility of a recession, and domestic or international conflicts or disputes;
the success of our marketing efforts and our ability to expand our member base;
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our ability to grow market share in existing markets or any new markets we may enter;
our ability to develop new products, features and functionality that are competitive and meet market needs;
our ability to diversify our business and broaden our suite of financial services offerings;
our ability to realize the benefits of our strategy, including what we refer to as our Financial Services Productivity Loop, and achieve scale in our Financial Services segment;
our ability to successfully operate as a bank holding company, and to operate SoFi Bank;
our ability to make accurate credit and pricing decisions or effectively forecast our loss rates;
our ability to establish and maintain an effective system of internal controls over financial reporting;
our ability to maintain the listing of our securities on The Nasdaq Global Select Market (“Nasdaq”);
our ability to realize the anticipated benefits of the Bank Merger, the Technisys Merger, and any other acquisitions we undertake, including our expectations with regards to such acquisitions;
our ability to successfully expand our operations into foreign jurisdictions, including compliance with a variety of foreign laws; and
the outcome of any legal or governmental proceedings that may be instituted against us.
Forward-looking statements are based on information available as of the date of this Quarterly Report on Form 10-Q and reflect current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
TRADEMARKS
This document contains references to trademarks, service marks and trade names owned by us or belonging to other entities. Solely for convenience, trademarks, service marks and trade names referred to in this document may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that we or the applicable licensor will not assert, to the fullest extent under applicable law, our or its rights to these trademarks, service marks and trade names. SoFi Technologies does not intend its use or display of other companies’ trademarks, service marks or trade names to imply a relationship with, or endorsement or sponsorship of it by, any other companies. All trademarks, service marks and trade names included in this document are the property of their respective owners.
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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
SoFi Technologies, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In Thousands, Except for Share Data)
March 31,
2023
December 31,
2022
Assets
Cash and cash equivalents$2,487,778 $1,421,907 
Restricted cash and restricted cash equivalents489,736 424,395 
Investment securities (includes available-for-sale securities of $174,836 and $195,438 at fair value with associated amortized cost of $180,629 and $203,418, as of March 31, 2023 and December 31, 2022, respectively)
360,068 396,769 
Loans held for sale, at fair value15,858,105 13,557,074 
Loans held for investment (less allowance for credit losses on loans at amortized cost of $38,937 and $40,788, as of March 31, 2023 and December 31, 2022, respectively)
328,029 307,957 
Servicing rights146,514 149,854 
Property, equipment and software180,109 170,104 
Goodwill1,622,991 1,622,991 
Intangible assets419,880 442,155 
Operating lease right-of-use assets94,283 97,135 
Other assets (less allowance for credit losses of $1,645 and $2,785, as of March 31, 2023 and December 31, 2022, respectively)
465,468 417,334 
Total assets$22,452,961 $19,007,675 
Liabilities, temporary equity and permanent equity
Liabilities:
Deposits:
Interest-bearing deposits$10,016,404 $7,265,792 
Noninterest-bearing deposits72,037 76,504 
Total deposits10,088,441 7,342,296 
Accounts payable, accruals and other liabilities
554,106 516,215 
Operating lease liabilities
114,902 117,758 
Debt 6,125,501 5,485,882 
Residual interests classified as debt 15,565 17,048 
Total liabilities16,898,515 13,479,199 
Commitments, guarantees, concentrations and contingencies (Note 15)
Temporary equity(1):
Redeemable preferred stock, $0.00 par value: 100,000,000 and 100,000,000 shares authorized; 3,234,000 and 3,234,000 shares issued and outstanding, as of March 31, 2023 and December 31, 2022, respectively
320,374 320,374 
Permanent equity:
Common stock, $0.00 par value: 3,100,000,000 and 3,100,000,000 shares authorized; 940,338,835 and 933,896,120 shares issued and outstanding, as of March 31, 2023 and December 31, 2022, respectively(2)
94 93 
Additional paid-in capital6,778,262 6,719,826 
Accumulated other comprehensive loss(6,341)(8,296)
Accumulated deficit(1,537,943)(1,503,521)
Total permanent equity5,234,072 5,208,102 
Total liabilities, temporary equity and permanent equity$22,452,961 $19,007,675 
______________
(1)Redemption amount is $323,400 as of March 31, 2023 and December 31, 2022.
(2)Includes 100,000,000 non-voting common shares authorized and no non-voting common shares issued and outstanding as of March 31, 2023 and December 31, 2022. See Note 10. Equity for additional information.

The accompanying notes are an integral part of these condensed consolidated financial statements.
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SoFi Technologies, Inc.
Condensed Consolidated Balance Sheets (Continued)
(Unaudited)
(In Thousands, Except for Share Data)
The following table presents the assets and liabilities of consolidated variable interest entities (“VIEs”) which are included in our condensed consolidated balance sheets. The assets in the below table may only be used to settle obligations of consolidated VIEs and are in excess of those obligations as of the dates presented. Additionally, the assets and liabilities in the table below exclude intercompany balances, which eliminate upon consolidation.
March 31,
2023
December 31,
2022
Assets
Restricted cash and restricted cash equivalents$138,952 $68,151 
Loans held for sale, at fair value1,164,464 931,701 
Total assets
$1,303,416 $999,852 
Liabilities
Accounts payable, accruals and other liabilities$3,082 $3,053 
Debt 964,932 771,454 
Residual interests classified as debt 15,565 17,048 
Total liabilities
$983,579 $791,555 




The accompanying notes are an integral part of these condensed consolidated financial statements.


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SoFi Technologies, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(In Thousands, Except for Share and Per Share Data)
Three Months Ended March 31,
20232022
Interest income
Loans
$357,342 $114,385 
Securitizations
3,054 2,758 
Other
11,168 1,269 
Total interest income371,564 118,412 
Interest expense
Securitizations and warehouses
54,324 19,906 
Deposits73,116 431 
Corporate borrowings8,000 2,649 
Other
114 493 
Total interest expense135,554 23,479 
Net interest income236,010 94,933 
Noninterest income
Loan origination and sales
126,511 157,704 
Securitizations
(3,177)(11,281)
Servicing
12,742 12,236 
Technology products and solutions
72,801 59,857 
Other
27,271 16,895 
Total noninterest income236,148 235,411 
Total net revenue472,158 330,344 
Noninterest expense
Technology and product development
117,059 81,908 
Sales and marketing
175,154 138,138 
Cost of operations
83,908 70,437 
General and administrative
123,689 136,505 
Provision for credit losses8,407 12,961 
Total noninterest expense508,217 439,949 
Loss before income taxes(36,059)(109,605)
Income tax benefit (expense)
1,637 (752)
Net loss$(34,422)$(110,357)
Other comprehensive income (loss)
Unrealized gains (losses) on available-for-sale securities, net2,248 (4,455)
Foreign currency translation adjustments, net(293)(38)
Total other comprehensive income (loss)1,955 (4,493)
Comprehensive loss$(32,467)$(114,850)
Loss per share (Note 16)
Loss per share – basic$(0.05)$(0.14)
Loss per share – diluted$(0.05)$(0.14)
Weighted average common stock outstanding – basic929,270,723 852,853,596 
Weighted average common stock outstanding – diluted929,270,723 852,853,596 

The accompanying notes are an integral part of these condensed consolidated financial statements.


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SoFi Technologies, Inc.
Condensed Consolidated Statements of Changes in Temporary Equity and Permanent Equity
(Unaudited)
(In Thousands, Except for Share Data)
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive LossAccumulated DeficitPermanent Equity Temporary Equity
SharesAmountSharesAmount
Balance at January 1, 2023933,896,120 $93 $6,719,826 $(8,296)$(1,503,521)$5,208,102 3,234,000 $320,374 
Share-based compensation expense— — 70,653 — — 70,653 — — 
Vesting of RSUs6,737,174 (1)— — — — — 
Stock withheld related to taxes on vested RSUs(455,690)— (2,416)— — (2,416)— — 
Exercise of common stock options161,231 — 168 — — 168 — — 
Redeemable preferred stock dividends— — (9,968)— — (9,968)— — 
Net loss— — — — (34,422)(34,422)— — 
Other comprehensive income, net of taxes— — — 1,955 — 1,955 — — 
Balance at March 31, 2023940,338,835 $94 $6,778,262 $(6,341)$(1,537,943)$5,234,072 3,234,000 $320,374 

Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive LossAccumulated DeficitPermanent EquityTemporary Equity
SharesAmountSharesAmount
Balance at January 1, 2022828,154,462 $83 $5,561,831 $(1,471)$(1,183,114)$4,377,329 3,234,000 $320,374 
Share-based compensation expense— — 81,617 — — 81,617 — — 
Vesting of RSUs4,951,204 — — — — — — — 
Stock withheld related to taxes on vested RSUs(343,698)— (3,593)— — (3,593)— — 
Exercise of common stock options1,055,775 — 1,867 — — 1,867 — — 
Issuance of common stock in acquisition81,856,112 875,034 — — 875,042 — — 
Vested awards assumed in acquisition— — 2,855 — — 2,855 — — 
Redeemable preferred stock dividends— — (9,968)— — (9,968)— — 
Net loss— — — — (110,357)(110,357)— — 
Other comprehensive loss, net of taxes— — — (4,493)— (4,493)— — 
Balance at March 31, 2022915,673,855 $91 $6,509,643 $(5,964)$(1,293,471)$5,210,299 3,234,000 $320,374 








The accompanying notes are an integral part of these condensed consolidated financial statements.


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SoFi Technologies, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In Thousands)
Three Months Ended March 31,
20232022
Operating activities
Net loss$(34,422)$(110,357)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation expense64,226 77,021 
Depreciation and amortization45,321 30,698 
Deferred debt issuance and discount expense4,852 4,209 
Provision for credit losses8,407 12,961 
Deferred income taxes68 (40)
Fair value changes in residual interests classified as debt89 2,963 
Fair value changes in securitization investments100 6,545 
Other(2,317)3,219 
Changes in operating assets and liabilities:
Changes in loans held for sale, net(2,301,031)(1,049,913)
Servicing assets3,340 (5,246)
Other assets15,823 (13,623)
Accounts payable, accruals and other liabilities(17,216)30,339 
Net cash used in operating activities$(2,212,760)$(1,011,224)
Investing activities
Purchases of property, equipment, software and intangible assets$(23,720)$(25,114)
Capitalized software development costs(2,814)— 
Purchases of available-for-sale investments(260,608)(36,825)
Proceeds from sales of available-for-sale investments265,634 17,651 
Proceeds from maturities and paydowns of available-for-sale investments20,409 11,964 
Changes in loans held for investment, net(29,544)(33,884)
Proceeds from securitization investments15,999 42,773 
Purchases of non-securitization investments(7,563)— 
Acquisition of businesses, net of cash acquired(17,946)73,314 
Net cash (used in) provided by investing activities
$(40,153)$49,879 
The accompanying notes are an integral part of these condensed consolidated financial statements.

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SoFi Technologies, Inc.
Condensed Consolidated Statements of Cash Flows (Continued)
(Unaudited)
(In Thousands)
Three Months Ended March 31,
20232022
Financing activities
Net change in deposits$2,754,540 $961,834 
Net change in debt facilities444,106 1,049,618 
Proceeds from other debt issuances339,995 — 
Repayment of other debt(147,985)(112,283)
Payment of debt issuance costs(3,865)(2,165)
Taxes paid related to net share settlement of share-based awards(2,416)(3,593)
Proceeds from stock option exercises168 1,867 
Finance lease principal payments(125)(120)
Net cash provided by financing activities$3,384,418 $1,895,158 
Effect of exchange rates on cash and cash equivalents
(293)(38)
Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents$1,131,212 $933,775 
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period
1,846,302 768,437 
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period
$2,977,514 $1,702,212 
Reconciliation to amounts on condensed consolidated balance sheets (as of period end)
Cash and cash equivalents
$2,487,778 $1,325,135 
Restricted cash and restricted cash equivalents
489,736 377,077 
Total cash, cash equivalents, restricted cash and restricted cash equivalents
$2,977,514 $1,702,212 
Supplemental non-cash investing and financing activities
Deposits credited but not yet received in cash$39,701 $36,072 
Share-based compensation capitalized related to internally-developed software6,427 4,596 
Non-cash loan reduction483 375 
Deferred debt issuance costs accrued but unpaid413 — 
Non-cash property, equipment, software and intangible asset additions82 — 
Deposits assumed in acquisition— 158,016 
Loans held for investment received in acquisition— 84,485 
Available-for-sale securities received in acquisition— 10,014 
Property, equipment and software acquired in acquisition— 3,192 
Debt assumed in acquisition— 2,000 


The accompanying notes are an integral part of these condensed consolidated financial statements.

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SoFi Technologies, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)

Note 1. Organization, Summary of Significant Accounting Policies and New Accounting Standards
Organization
SoFi is a financial services platform that was founded in 2011 to offer an innovative approach to the private student loan market by providing student loan refinancing options. The Company conducts its business through three reportable segments: Lending, Technology Platform and Financial Services. Since its founding, SoFi has expanded its lending and financial services strategy to offer personal loans, home loans and credit cards. The Company also developed additional financial products, such as money management and investment product offerings, and has also leveraged its financial services platform to empower other businesses. The Company has continued to expand its product offerings through strategic acquisitions. During 2020, the Company expanded its investment product offerings into Hong Kong through the acquisition of 8 Limited, and also began to operate as a platform-as-a-service for a variety of financial service providers, providing the infrastructure to facilitate core client-facing and back-end capabilities, such as account setup, account funding, direct deposit, authorizations and processing, payments functionality and check account balance features through the acquisition of Galileo. During 2022, the Company became a bank holding company and began operating SoFi Bank, National Association, through the Bank Merger, and expanded its platform to include a cloud-native digital and core banking platform with customers in Latin America through the Technisys Merger, allowing the Company to expand its technology platform services to a broader international market. For additional information on our recent business combinations, see Note 2. Business Combinations. For additional information on our reportable segments, see Note 17. Business Segment Information.
Summary of Significant Accounting Policies
Basis of Presentation
The condensed consolidated financial statements include the accounts of the Company, its wholly-owned and majority-owned subsidiaries and certain consolidated VIEs. All intercompany accounts were eliminated in consolidation. The condensed consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) and in accordance with the rules and regulations of the SEC. We condensed or omitted certain notes and other financial information from the interim financial statements presented herein.
These condensed consolidated financial statements should be read in conjunction with the consolidated statements included in our annual filing on Form 10-K filed with the SEC on March 1, 2023 (“Form 10-K”). In the opinion of management, the condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair statement of the Company’s financial condition and results of operations and cash flows for the interim periods presented. The results for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the full year ending December 31, 2023.
Use of Judgments, Assumptions and Estimates
The preparation of our condensed consolidated financial statements and related disclosures in conformity with GAAP requires management to make assumptions and estimates that affect the reported amounts of assets, liabilities, revenue, expenses, and the disclosures of contingent assets and liabilities. These estimates and assumptions are inherently subjective in nature and, therefore, actual results may differ from our estimates and assumptions, and the differences could be material. Management bases its estimates on historical experience and on various other factors it believes to be reasonable under the circumstances. These assumptions and estimates include, but are not limited to, the following: (i) fair value measurements; (ii) business combinations; and (iii) goodwill.
Restructuring
During the three months ended March 31, 2023, we recognized restructuring charges of $4,953 within noninterest expense in the condensed consolidated statements of operations and comprehensive income (loss) associated with a small reduction in headcount in the Technology Platform segment, which primarily included employee-related wages, benefits and severance.
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SoFi Technologies, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Recently Adopted Accounting Standards
Troubled Debt Restructurings and Vintage Disclosures
In March 2022, the FASB issued Accounting Standards Update (“ASU”) 2022-02, Financial Instruments — Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The ASU addresses two topics: (i) troubled debt restructuring (“TDR”) by creditors, and (ii) vintage disclosures for gross write offs. Under the TDR provisions, the ASU eliminates the recognition and measurement guidance under ASC 310-40, Receivables — Troubled Debt Restructurings by Creditors, and instead requires that an entity evaluate whether the modification represents a new loan or a continuation of an existing loan, consistent with the accounting for other loan modifications. Additionally, the ASU enhances existing disclosure requirements around TDRs and introduces new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. Under the vintage disclosure provisions, the ASU requires the entity to disclose current period gross write offs by year of origination for financing receivables and net investments in leases within the scope of ASC 326-20, Financial Instruments — Credit Losses — Measured at Amortized Cost. The standard should be applied prospectively; however, for the TDR provisions, an entity has the option to apply a modified retrospective transition method. We adopted the standard effective January 1, 2023. The adoption of this standard did not have a material impact on our consolidated financial statements.
Note 2. Business Combinations
Acquisition of Technisys S.A.
In the Technisys Merger, we acquired all of the outstanding equity interests in Technisys for total purchase consideration of $913,764. The Technisys Merger was accounted for as a business combination. Technisys is a cloud-native digital and core banking platform with an existing footprint of financial services customers in Latin America. With the acquisition of Technisys, we expanded our technology platform services to a broader international market.
During the three months ended March 31, 2023, we made payments of $17,946 related to settlements of vested employee performance awards, which was a component of the purchase consideration. There are 6,305,595 shares issued in the acquisition that remain held in escrow. The escrow shares are expected to be released no later than 15 months after the close of the acquisition, other than any escrow shares which remain subject to the indemnification provisions of the Technisys Merger agreement.
From the date of acquisition through March 31, 2022, the acquired results of operations for Technisys contributed total net revenue of $6.2 million and net loss of $1.8 million to the Company’s consolidated results, which was inclusive of amortization expense recognized on the acquired intangible assets.
The following unaudited supplemental pro forma financial information presents the Company’s consolidated results of operations as if the business combination had occurred on January 1, 2021:
Three Months Ended March 31,
2022
Total net revenue$342,109 
Net loss(103,983)
The unaudited supplemental pro forma financial information is presented for comparative purposes only and is not necessarily indicative of the actual results of operations that would have been achieved, nor is it indicative of future results of operations. The unaudited supplemental pro forma financial information reflects pro forma adjustments that give effect to applying the Company’s accounting policies and certain events the Company believes to be directly attributable to the acquisition. The pro forma adjustments primarily include:
incremental straight-line amortization expense associated with acquired intangible assets;
an adjustment to reflect post-combination share-based compensation expense associated with the Replacement Awards as if the conversion had occurred on January 1, 2021;
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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
an adjustment to reflect acquisition-related costs for both parties as if they were incurred during the earliest period presented; and
the related income tax effects, at the statutory tax rate applicable for each period, of the pro forma adjustments noted above.
The unaudited supplemental pro forma financial information does not give effect to any anticipated cost savings, operating efficiencies or other synergies that may be associated with the acquisition, or any estimated costs that have been or will be incurred by the Company to integrate the assets and operations of Technisys.
Acquisition of Golden Pacific Bancorp, Inc.
In the Bank Merger, we acquired all of the outstanding equity interests in Golden Pacific for total cash purchase consideration of $22.3 million. The Company is duly registered as a bank holding company with the Board of Governors of the Federal Reserve (the “Federal Reserve”). SoFi Bank is a national banking association whose primary federal regulator is the Office of the Comptroller of the Currency (the “OCC”). Deposit accounts of SoFi Bank are insured by the Federal Deposit Insurance Corporation (the “FDIC”) through the Deposit Insurance Fund to the fullest extent permitted by law.
As of March 31, 2023, a portion of the total cash purchase consideration ($3.3 million) remained held back, representing an amount payable to a dissenting Golden Pacific shareholder pending resolution of the shareholder’s dissenter’s rights appraisal claim, which could possibly result in a lower or higher amount paid to the dissenting shareholder once a ruling is made regarding the appraisal claim.
Goodwill and Intangible Assets
Goodwill as of both March 31, 2023 and December 31, 2022 was $1,622,991. Goodwill attributable to the Technology Platform and Financial Services reportable segments was $1,585,832 and $37,159, respectively. As of March 31, 2023, we did not identify any indicators of goodwill impairment nor any indicators that the carrying amounts of our intangible assets may not be recoverable.
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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Note 3. Revenue
In each of our revenue arrangements, revenue is recognized when control of the promised goods or services is transferred to the customer in an amount that reflects our expected consideration in exchange for those goods or services. Our arrangements are discussed in our Annual Report on Form 10-K, with notable updates provided herein.
Disaggregated Revenue
The table below presents revenue from contracts with customers disaggregated by type of service, which best depicts how the revenue and cash flows are affected by economic factors, and by the reportable segment to which each revenue stream relates, as well as a reconciliation of total revenue from contracts with customers to total noninterest income. Revenue from contracts with customers is presented within noninterest income—technology products and solutions and noninterest income—other in the condensed consolidated statements of operations and comprehensive income (loss). There were no revenues from contracts with customers attributable to our Lending segment for the periods presented.
Three Months Ended March 31,
20232022
Financial Services
Referrals
$9,626 $7,768 
Interchange
7,269 4,286 
Brokerage
4,878 4,730 
Other(1)
487 203 
Total financial services
22,260 16,987 
Technology Platform(2)
Technology services
72,129 59,157 
Software licenses672 700 
Other(1)
421 178 
Total technology platform
73,222 60,035 
Total revenue from contracts with customers
$95,482 $77,022 
Other Sources of Revenue
Loan origination and sales$126,511 $157,704 
Securitizations(3,177)(11,281)
Servicing12,742 12,236 
Other4,590 (270)
Total other sources of revenue
$140,666 $158,389 
Total noninterest income$236,148 $235,411 
_____________________
(1) In Financial Services, includes revenues from equity capital markets services and enterprise services. In Technology Platform, includes payment network fees for serving as a transaction card program manager for enterprise customers that are the program marketers for separate card programs.
(2) Related to these technology products and solutions arrangements, we had deferred revenues of $8,526 and $10,028 as of March 31, 2023 and December 31, 2022, respectively, which are presented within accounts payable, accruals and other liabilities in the condensed consolidated balance sheets. During the three months ended March 31, 2023 and 2022, we recognized revenue of $2,340 and $785, respectively, associated with deferred revenues within noninterest income—technology products and solutions in the condensed consolidated statements of operations and comprehensive income (loss).
Contract Balances
As of March 31, 2023 and December 31, 2022, accounts receivable, net associated with revenue from contracts with customers was $58,772 and $61,226, respectively, which were reported within other assets in the condensed consolidated balance sheets.
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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Note 4. Loans
As of March 31, 2023, our loan portfolio consisted of loans held for sale, including personal loans, student loans and home loans, which are measured at fair value under the fair value option, and loans held for investment, including credit cards, and commercial and consumer banking loans, which are measured at amortized cost. Below is a disaggregated presentation of our loans, inclusive of fair market value adjustments and accrued interest income and net of the allowance for credit losses, as applicable:
March 31,
2023
December 31,
2022
Loans held for sale
Personal loans(1)
$10,536,999 $8,610,434 
Student loans(2)
5,240,059 4,877,177 
Home loans
81,047 69,463 
Total loans held for sale, at fair value15,858,105 13,557,074 
Loans held for investment(3)
Credit card(4)
216,914 209,164 
Commercial and consumer banking:
Commercial real estate101,453 88,652 
Commercial and industrial6,659 7,179 
Residential real estate and other consumer3,003 2,962 
Total commercial and consumer banking111,115 98,793 
Total loans held for investment, at amortized cost328,029 307,957 
Total loans
$16,186,134 $13,865,031 
_____________________
(1) Includes $962,476 and $663,004 of personal loans in consolidated VIEs as of March 31, 2023 and December 31, 2022, respectively.
(2) Includes $201,988 and $268,697 of student loans in consolidated VIEs as of March 31, 2023 and December 31, 2022, respectively.
(3) See Note 5. Allowance for Credit Losses for additional information on our loans at amortized cost as it pertains to the allowance for credit losses.
(4) For credit cards, loan origination costs are expensed as incurred primarily within noninterest expense—sales and marketing in the condensed consolidated statements of operations and comprehensive income (loss).

Loans Held for Sale
The following table summarizes the aggregate fair value of our loans held for sale, for which we elected the fair value option and are, therefore, measured at fair value on a recurring basis. See Note 12. Fair Value Measurements for the assumptions used in our fair value model.
Personal Loans
Student Loans
Home Loans
Total
March 31, 2023
Unpaid principal
$10,039,769 $5,086,953 $89,782 $15,216,504 
Accumulated interest
69,049 20,787 162 89,998 
Cumulative fair value adjustments(1)
428,181 132,319 (8,897)551,603 
Total fair value of loans(2)
$10,536,999 $5,240,059 $81,047 $15,858,105 
December 31, 2022
Unpaid principal
$8,283,400 $4,794,517 $77,705 $13,155,622 
Accumulated interest
55,673 19,433 151 75,257 
Cumulative fair value adjustments(1)
271,361 63,227 (8,393)326,195 
Total fair value of loans(2)
$8,610,434 $4,877,177 $69,463 $13,557,074 
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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
__________________
(1) The increase in cumulative fair value adjustments for personal loans during the three months ended March 31, 2023 was primarily attributable to higher origination volume and higher coupon rates, while the increase for student loans was primarily attributable to lower prepayment assumptions and higher coupon rates.
(2) Each component of the fair value of loans is impacted by charge-offs during the period. 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, 60 and 90 days past due.
The following table summarizes the aggregate fair value of loans 90 days or more delinquent. As delinquent personal loans and student loans are charged off after 120 days of delinquency, amounts presented below represent the fair value of loans that are 90 to 120 days delinquent. There were no home loans that were 90 days or more delinquent as of the dates presented.
Personal Loans
Student Loans
Total
March 31, 2023
Unpaid principal balance
$37,754 $5,968 $43,722 
Accumulated interest
1,731 306 2,037 
Cumulative fair value adjustments(1)
(34,219)(3,283)(37,502)
Fair value of loans 90 days or more delinquent$5,266 $2,991 $8,257 
December 31, 2022
Unpaid principal balance$27,989 $6,435 $34,424 
Accumulated interest1,207 304 1,511 
Cumulative fair value adjustments(1)
(25,022)(3,332)(28,354)
Fair value of loans 90 days or more delinquent$4,174 $3,407 $7,581 
__________________
(1) 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, 60 and 90 days past due.
Transfers of Financial Assets
We regularly transfer financial assets and account for such transfers as either sales or secured borrowings depending on the facts and circumstances of the transfer. When a transfer of financial assets qualifies as a sale, in many instances we have continued involvement as the servicer of those financial assets. As we expect the benefits of servicing to be more than just adequate, we recognize a servicing asset. Further, in the case of securitization-related transfers that qualify as sales, we have additional continued involvement as an investor, albeit at insignificant levels relative to the expected gains and losses of the securitization. In instances where a transfer is accounted for as a secured borrowing, we perform servicing (but we do not recognize a servicing asset) and typically maintain a significant investment relative to the expected gains and losses of the securitization. In whole loan sales, we do not have a residual financial interest in the loans, nor do we have any other power over the loans that would constrain us from recognizing a sale. Additionally, we have no repurchase requirements related to transfers of personal loans, student loans and non-Government-Sponsored Enterprise (“GSE”) home loans other than standard origination representations and warranties, for which we record a liability based on expected repurchase obligations. For GSE home loans, we have customary GSE repurchase requirements, which do not constrain sale treatment but result in a liability for the expected repurchase requirement.
There were no loan securitization transfers qualifying for sale accounting treatment during the three months ended March 31, 2023 and 2022.
Deconsolidation of debt reflects the impacts of previously consolidated VIEs that became deconsolidated during the period because we no longer hold a significant financial interest in the underlying securitization entity, which can fluctuate from period to period. Gains and losses on deconsolidations are presented within noninterest income—securitizations in the condensed consolidated statements of operations and comprehensive income (loss). During the three months ended March 31, 2023, we did not have any deconsolidations of debt.
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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
The following table summarizes our whole loan sales:
Three Months Ended March 31,
20232022
Personal loans
Fair value of consideration received:
Cash$— $1,018,689 
Servicing assets recognized— 6,424 
Repurchase liabilities recognized— (2,298)
Total consideration received
— 1,022,815 
Aggregate unpaid principal balance and accrued interest of loans sold
— 981,855 
Gain from loan sales$— $40,960 
Student loans
Fair value of consideration received:
Cash$— $548,911 
Servicing assets recognized— 5,824 
Repurchase liabilities recognized— (80)
Total consideration— 554,655 
Aggregate unpaid principal balance and accrued interest of loans sold
— 546,287 
Gain from loan sales$— $8,368 
Home loans
Fair value of consideration received:
Cash$77,819 $359,700 
Servicing assets recognized954 4,238 
Repurchase liabilities recognized(96)(420)
Total consideration
78,677 363,518 
Aggregate unpaid principal balance and accrued interest of loans sold
77,976 365,560 
Gain (loss) from loan sales$701 $(2,042)
The following table presents information about the unpaid principal balances of transferred loans that are not recorded in our condensed consolidated balance sheets, but with which we have a continuing involvement through our servicing agreements:
Personal Loans
Student Loans
Home Loans
Total
March 31, 2023
Loans in delinquency
$130,475 $105,250 $15,677 $251,402 
Total loans serviced(1)
2,884,653 7,173,819 5,118,433 15,176,905 
December 31, 2022
Loans in delinquency
$136,179 $115,818 $16,510 $268,507 
Total loans serviced(1)
3,402,795 7,586,031 5,134,306 16,123,132 
_____________________
(1)Total loans serviced includes loans in delinquency, as well as loans in repayment, loans in-school/grace period/deferment (related to student loans), and loans in forbearance. The vast majority of total loans serviced represent loans in repayment as of the dates indicated.
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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
The following table presents additional information about the servicing cash flows received and net charge-offs related to transferred loans with which we have a continuing involvement:
Three Months Ended March 31,
20232022
Personal loans
Servicing fees collected
$7,193 $8,637 
Charge-offs, net of recoveries(1)
57,442 17,138 
Student loans
Servicing fees collected
9,190 9,168 
Charge-offs, net of recoveries(1)
9,153 8,220 
Home loans
Servicing fees collected
3,160 2,636 
Charge-offs, net of recoveries
— — 
Total
Servicing fees collected
$19,543 $20,441 
Charge-offs, net of recoveries(1)
66,595 25,358 
_____________________
(1)Personal loan and student loan charge-offs, net of recoveries, are impacted by the timing of charge-off sales performed on behalf of the purchasers of our loans, which lower the net amount disclosed.
Loans Held for Investment
Loan Portfolio Composition and Aging
The following table presents the amortized cost basis of our credit card and commercial and consumer banking portfolios (excluding accrued interest and before the allowance for credit losses) by either current status or delinquency status:
Delinquent Loans
Current30–59 Days60–89 Days
≥ 90 Days(1)
Total Delinquent Loans
Total Loans(2)
March 31, 2023
Credit card$231,057 $4,267 $3,332 $10,833 $18,432 $249,489 
Commercial and consumer banking:
Commercial real estate102,390 — — — — 102,390 
Commercial and industrial6,868 337 — 341 7,209 
Residential real estate and other consumer(3)
3,001 — — — — 3,001 
Total commercial and consumer banking112,259 337 — 341 112,600 
Total loans
$343,316 $4,271 $3,669 $10,833 $18,773 $362,089 
December 31, 2022
Credit card$225,165 $4,670 $3,626 $10,498 $18,794 $243,959 
Commercial and consumer banking:
Commercial real estate89,544 — — — — 89,544 
Commercial and industrial7,636 — — 7,637 
Residential real estate and other consumer(3)
2,966 — — — — 2,966 
Total commercial and consumer banking100,146 — — 100,147 
Total loans$325,311 $4,670 $3,627 $10,498 $18,795 $344,106 
_______________
(1)All of the credit cards ≥ 90 days past due continued to accrue interest. As of the dates indicated, there were no credit cards on nonaccrual status. As of the dates indicated, commercial and consumer banking loans on nonaccrual status were immaterial, and there were no loans that were 90 days or more past due.
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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
(2)For credit card, the balance is presented before allowance for credit losses of $37,089 and $39,110 as of March 31, 2023 and December 31, 2022, respectively, and accrued interest of $4,514 and $4,315, respectively. For commercial and consumer banking, the balance is presented before allowance for credit losses of $1,848 and $1,678, respectively, and accrued interest of $363 and $324, respectively.
(3)Primarily includes residential real estate loans acquired in the Bank Merger, for which we did not elect the fair value option.
Credit Quality Indicators
Credit Card
The following table presents the amortized cost basis of our credit card portfolio (excluding accrued interest and before the allowance for credit losses) based on FICO scores, which are obtained at origination of the account and are refreshed monthly thereafter. The pools estimate the likelihood of borrowers with similar FICO scores to pay credit obligations based on aggregate credit performance data.
FICOMarch 31, 2023December 31, 2022
≥ 800$16,835 $14,421 
780 – 79911,895 11,327 
760 – 77913,394 12,179 
740 – 75915,373 14,501 
720 – 73919,966 19,343 
700 – 71926,790 26,239 
680 – 69931,887 31,543 
660 – 67931,779 31,958 
640 – 65924,765 25,959 
620 – 63915,036 15,566 
600 – 6199,215 8,968 
≤ 59932,554 31,955 
Total credit card$249,489 $243,959 
Commercial and Consumer Banking
We analyze loans in our commercial and consumer banking portfolio by classification based on their associated credit risk, and perform an analysis on an ongoing basis as new information is obtained. Risk rating classifications are further described below. Loans with a lower expectation of credit losses are classified as Pass, while loans with a higher expectation of credit losses are classified as Substandard.
Pass — Loans that management believes will fully repay in accordance with the contractual loan terms.
Watch —  Loans that management believes will fully repay in accordance with the contractual loan terms, but for which certain credit attributes have changed from origination and warrant further monitoring.
Special mention — Loans with a potential weakness or weaknesses that deserves management’s close attention. If left uncorrected, the potential weaknesses may result in deterioration of the repayment prospects for the loan or our credit position at some future date.
Substandard — Loans that are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the full repayment. They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected.
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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
The following table presents the amortized cost basis of our commercial and consumer banking portfolio (excluding accrued interest and before the allowance for credit losses) by origination year and credit quality indicator:
Term Loans by Origination Year
March 31, 202320232022202120202019PriorTotal Term LoansRevolving Loans
Commercial real estate
Pass$13,011 $34,387 $5,725 $6,278 $10,178 $19,081 $88,660 $196 
Watch1,247 4,643 1,676 — 223 2,808 10,597 — 
Special mention— — — — 673 1,596 2,269 — 
Substandard— — — — — 668 668 — 
Total commercial real estate14,258 39,030 7,401 6,278 11,074 24,153 102,194 196 
Commercial and industrial
Pass30 — — 75 — 5,430 5,535 215 
Watch— — — — 127 33 160 24 
Substandard— — — — — 1,275 1,275 — 
Total commercial and industrial30 — — 75 127 6,738 6,970 239 
Residential real estate and other consumer
Pass— — — — — 2,894 2,894 65 
Watch— — — — — 41 41 
Total residential real estate and other consumer— — — — — 2,935 2,935 66 
Total commercial and consumer banking
$14,288 $39,030 $7,401 $6,353 $11,201 $33,826 $112,099 $501 

Note 5. Allowance for Credit Losses
Our allowance for credit losses represents our current estimate of expected credit losses over the remaining contractual life of certain financial assets, including credit cards as well as commercial and consumer banking loans acquired in the Bank Merger, which relate to our Financial Services segment, and accounts receivables primarily related to our Technology Platform segment. Given our methods of collecting funds on servicing receivables, our historical experience of infrequent write offs, and that we have not observed meaningful changes in our counterparties’ abilities to pay, we determined that the future exposure to credit losses on servicing related receivables was immaterial.
In estimating expected credit losses for credit cards, we segment loans based on credit quality indicators and reassess our pools periodically to confirm that all loans within each pool continue to share similar risk characteristics. We establish an allowance within each pool utilizing a proprietary risk model that relies on assumptions such as average annual percentage rate, payment rate, utilization, delinquency status and default probability. The model may then be adjusted for current conditions and reasonable and supportable forecasts of future conditions, including economic conditions. We apply the aforementioned assumptions to the drawn balance of credit cards within each pool to estimate the lifetime expected credit losses within each pool, which are then aggregated to determine the allowance for credit losses.
We further consider an evaluation of overall portfolio credit quality based on indicators such as changes in our credit decisioning process, underwriting and collection management policies; the effects of external factors, such as regulatory requirements; general economic conditions; and inherent uncertainties in applying the methodology. When a credit card balance is charged off, we record a reduction to the allowance and the credit card balance.
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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
The following table presents changes in our allowance for credit losses:
Credit Card(1)
Commercial and Consumer Banking(1)
Accounts Receivable(1)
Three Months Ended March 31, 2023
Balance at December 31, 2022$39,110 $1,678 $2,785 
Provision for credit losses(2)
8,237 170 (854)
Write-offs charged against the allowance(3)
(10,258)— (286)
Balance at March 31, 2023
$37,089 $1,848 $1,645 
Three Months Ended March 31, 2022
Balance at December 31, 2021$7,037 $— $2,292 
Provision for credit losses(2)
11,977 984 (591)
Allowance for PCD loans(4)
— 382 — 
Write-offs charged against the allowance
(2,514)— (49)
Balance at March 31, 2022
$16,500 $1,366 $1,652 
_____________________
(1)Credit cards and commercial and consumer banking loans measured at amortized cost, net of allowance for credit losses, are presented within loans held for investment in the condensed consolidated balance sheets. Accounts receivable balances, net of allowance for credit losses, are presented within other assets in the condensed consolidated balance sheets.
(2)The provision for credit losses on credit cards and commercial and consumer banking loans is presented within noninterest expense—provision for credit losses in the condensed consolidated statements of operations and comprehensive income (loss). There were immaterial recoveries of amounts previously reserved related to credit cards and commercial and consumer banking loans during the three months ended March 31, 2023 and 2022. The provision for credit losses on accounts receivable is presented within noninterest expense—general and administrative in the condensed consolidated statements of operations and comprehensive income (loss). During the three months ended March 31, 2023 and 2022, recoveries of amounts previously reserved related to accounts receivable were $1,161 and $1,392, respectively.
(3)The increase in credit card write-offs charged against the allowance during the three months ended March 31, 2023 relative to the corresponding period in 2022 was primarily related to our maturing portfolio.
(4)In connection with the Bank Merger, we obtained purchased credit deteriorated (“PCD”) loans, for which we measured an allowance, with a corresponding increase to the amortized cost basis as of the acquisition date. Therefore, recognition of the initial allowance for credit losses did not impact earnings.

Credit card: Accrued interest receivables written off by reversing interest income were immaterial during the three months ended March 31, 2023 and 2022.
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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Note 6. Investment Securities
Investments in AFS Debt Securities
The following table presents our investments in available-for-sale (“AFS”) debt securities:
Amortized CostAccrued InterestGross Unrealized Gains
Gross Unrealized Losses(1)
Fair Value
March 31, 2023
U.S. Treasury securities$101,944 $248 $— $(2,273)$99,919 
Multinational securities(2)
19,596 75 — (504)19,167 
Corporate bonds38,771 211 — (2,112)36,870 
Agency mortgage-backed securities8,648 21 — (871)7,798 
Other asset-backed securities9,542 — (417)9,130 
Other(3)
2,128 10 — (186)1,952 
Total investments in AFS debt securities$180,629 $570 $— $(6,363)$174,836 
December 31, 2022
U.S. Treasury securities$121,282 $217 $— $(3,510)$117,989 
Multinational securities(2)
19,658 109 — (724)19,043 
Corporate bonds41,890 257 — (2,644)39,503 
Agency mortgage-backed securities8,899 22 — (991)7,930 
Other asset-backed securities9,556 — (514)9,047 
Other(3)
2,133 21 — (228)1,926 
Total investments in AFS debt securities$203,418 $631 $— $(8,611)$195,438 
_____________________
(1) As of March 31, 2023 and December 31, 2022, we concluded that there was no credit loss attributable to securities in unrealized loss positions. Additionally, we do not intend to sell the securities in loss positions nor is it more likely than not that we will be required to sell the securities prior to recovery of the amortized cost basis.
(2) Includes sovereign foreign and supranational bonds.
(3) Includes state and city municipal bond securities.
The following table presents information about our investments in AFS debt securities with gross unrealized losses and the length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2023 and December 31, 2022.
Less than 12 Months12 Months or LongerTotal
Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
March 31, 2023
U.S. Treasury securities$7,705 $(196)$92,214 $(2,077)$99,919 $(2,273)
Multinational securities— — 19,167 (504)19,167 (504)
Corporate bonds— — 36,870 (2,112)36,870 (2,112)
Agency mortgage-backed securities— — 7,798 (871)7,798 (871)
Other asset-backed securities— — 9,130 (417)9,130 (417)
Other— — 1,952 (186)1,952 (186)
Total investments in AFS debt securities$7,705 $(196)$167,131 $(6,167)$174,836 $(6,363)
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(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Less than 12 Months12 Months or LongerTotal
Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
December 31, 2022
U.S. Treasury securities$27,759 $(1,171)$90,230 $(2,339)$117,989 $(3,510)
Multinational securities— — 19,043 (724)19,043 (724)
Corporate bonds4,480 (313)35,023 (2,331)39,503 (2,644)
Agency mortgage-backed securities6,448 (814)1,482 (177)7,930 (991)
Other asset-backed securities— — 9,047 (514)9,047 (514)
Other745 (200)1,181 (28)1,926 (228)
Total investments in AFS debt securities$39,432 $(2,498)$156,006 $(6,113)$195,438 $(8,611)
The following table presents the amortized cost and fair value of our investments in AFS debt securities by contractual maturity:
Due Within One YearDue After One Year Through Five YearsDue After Five Years Through Ten YearsDue After Ten YearsTotal
March 31, 2023
Investments in AFS debt securities—Amortized cost:
U.S. Treasury securities$72,228 $29,716 $— $— $101,944 
Multinational securities19,596 — — — 19,596 
Corporate bonds10,192 25,248 3,331 — 38,771 
Agency mortgage-backed securities— 180 804 7,664 8,648 
Other asset-backed securities— 7,599 1,943 — 9,542 
Other1,191 — — 937 2,128 
Total investments in AFS debt securities$103,207 $62,743 $6,078 $8,601 $180,629 
Weighted average yield for investments in AFS debt securities(1)
4.69 %5.70 %0.01 %9.04 %5.10 %
Investments in AFS debt securities—Fair value(2):
U.S. Treasury securities$71,098 $28,573 $— $— $99,671 
Multinational securities19,092 — — — 19,092 
Corporate bonds9,827 23,843 2,989 — 36,659 
Agency mortgage-backed securities— 170 736 6,871 7,777 
Other asset-backed securities— 7,252 1,873 — 9,125 
Other1,173 — — 769 1,942 
Total investments in AFS debt securities$101,190 $59,838 $5,598 $7,640 $174,266 
_____________________
(1) The weighted average yield represents the effective yield for the investment securities and is computed based on the amortized cost of each security.
(2) Presentation of fair values of our investments in AFS debt securities by contractual maturity excludes total accrued interest of $570 as of March 31, 2023.
Gross realized gains and losses on our investments in AFS debt securities were $3,356 and $509, respectively, during the three months ended March 31, 2023, and were immaterial during the three months ended March 31, 2022. During the three months ended March 31, 2023 and 2022, there were no transfers between classifications of our investments in AFS debt securities. See Note 10. Equity for unrealized gains and losses on our investments in AFS debt securities and amounts reclassified out of accumulated other comprehensive income (loss) (“AOCI”).
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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Securitization Investments
The following table presents the aggregate outstanding value of asset-backed bonds and residual interests owned by the Company in nonconsolidated VIEs, which are presented within investment securities in the condensed consolidated balance sheets:
March 31,
2023
December 31,
2022
Personal loans
$14,892 $20,172 
Student loans
170,340 181,159 
Securitization investments
$185,232 $201,331 

Note 7. Securitization and Variable Interest Entities
Consolidated VIEs
We consolidate certain securitization trusts in which we have a variable interest and are deemed to be the primary beneficiary.
The VIEs are SPEs with portfolio loans securing debt obligations. The SPEs were created and designed to transfer credit and interest rate risk associated with consumer loans through the issuance of collateralized notes and trust certificates. We make standard representations and warranties to repurchase or replace qualified portfolio loans. Aside from these representations, the holders of the asset-backed debt obligations have no recourse to the Company if the cash flows from the underlying portfolio loans securing such debt obligations are not sufficient to pay all principal and interest on the asset-backed debt obligations. We hold a significant interest in these financing transactions through our ownership of a portion of the residual interest in certain VIEs. In addition, in some cases, we invest in the debt obligations issued by the VIE. Our investments in consolidated VIEs eliminate in consolidation. The residual interest is the first VIE interest to absorb losses should the loans securing the debt obligations not provide adequate cash flows to satisfy more senior claims and is the interest that we expect to absorb the expected gains and losses of the VIE. Our exposure to credit risk in sponsoring SPEs is limited to our investment in the VIE. VIE creditors have no recourse against our general credit.
As of March 31, 2023 and December 31, 2022, we had seven and six consolidated VIEs, respectively, on our condensed consolidated balance sheets. During the three months ended March 31, 2023, we established one consolidated VIE. The assets of consolidated VIEs that were included in our condensed consolidated balance sheets may only be used to settle obligations of consolidated VIEs and were in excess of those obligations as of March 31, 2023 and December 31, 2022. Intercompany balances are eliminated upon consolidation.
Nonconsolidated VIEs
We have created and designed personal loan and student loan trusts to transfer associated credit and interest rate risk associated with the loans through the issuance of collateralized notes and residual certificates. We have a variable interest in the nonconsolidated loan trusts, as we own collateralized notes and residual certificates in the loan trusts that absorb variability. We also have continuing, non-controlling involvement with the trusts as the servicer. As servicer, we have the power to perform the activities which most impact the economic performance of the VIE, but since we hold an insignificant financial interest in the trusts, we are not the primary beneficiary. This financial interest represents the equity ownership interest in the loan trusts, wherein there is an obligation to absorb losses and the right to receive benefits from residual certificate ownership. The maximum exposure to loss as a result of our involvement with the nonconsolidated VIEs is limited to our investment. We did not provide financial support to any nonconsolidated VIEs beyond our initial equity investment. There are no liquidity arrangements, guarantees or other commitments by third parties that may affect the fair value or risk of our variable interests in nonconsolidated VIEs.
As of March 31, 2023 and December 31, 2022, we had investments in 22 and 23 nonconsolidated VIEs, respectively. During the three months ended March 31, 2023, we exercised a securitization clean up call on one nonconsolidated VIE and collapsed the associated trust.
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SoFi Technologies, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Note 8. Deposits
We commenced offering deposit accounts (referred to as “checking and savings” accounts within SoFi Money) to our members through SoFi Bank in the first quarter of 2022.
The following table presents a detail of interest-bearing deposits:
March 31, 2023December 31, 2022
Savings deposits$6,361,587 $4,383,953 
Demand deposits(1)
2,095,440 1,912,452 
Time deposits(1)(2)
1,559,377 969,387 
Total interest-bearing deposits $10,016,404 $7,265,792 
_____________________
(1) As of March 31, 2023 and December 31, 2022, includes brokered deposits of $1,620,767 and $1,026,400, respectively, of which $1,526,195 and $940,000, respectively, are time deposits and $94,572 and $86,400, respectively, are demand deposits.
(2) As of March 31, 2023 and December 31, 2022, the amount of time deposits that exceeded the insured limit (referred to as “uninsured deposits”) totaled $23,317 and $20,842, respectively.
We also have noninterest-bearing deposits associated with legacy Golden Pacific accounts.
As of March 31, 2023, future maturities of our total time deposits were as follows:
Remainder of 2023$1,201,290 
2024357,045 
2025550 
2026289 
2027— 
Thereafter203 
Total$1,559,377 
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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Note 9. Debt
The following table summarizes the components of our debt:
Borrowing Description
March 31, 2023December 31, 2022
Total Collateral(1)
Stated Interest Rate(2)
Termination/
Maturity(3)
Total Capacity
Total Outstanding(4)
Total Outstanding
Debt Facilities
Personal loan warehouse facilities

$1,845,226 

5.00% – 6.71%

June 2023 – January 2032

$4,100,000 

$1,539,865 

$1,452,085 
Student loan warehouse facilities2,737,906 
5.42% – 6.66%
April 2023 – June 2025
4,180,000 1,868,019 1,504,926 
Credit card warehouse facility— 6.26%August 2024100,000 — — 
Risk retention warehouse facilities(5)
117,157 
6.37% – 7.19%
January 2024 – October 2027
200,000 95,196 101,964 
Revolving credit facility(6)
5.86%

September 2023560,000 486,000 486,000 
Other Debt






Convertible senior notes(7)

—%October 20261,200,000 

1,200,000 
Other financing(8)
28,735 23,955 — 

— 
Securitizations


Personal loan securitizations
955,674 
0.49% – 6.21%
September 2030 – May 2031
738,588 

529,132 
Student loan securitizations
210,040 
1.83% – 9.29%
April 2023 – July 2040
231,927 

246,856 








Total, before unamortized debt issuance costs, premiums and discounts
$6,159,595 

$5,520,963 
Less: unamortized debt issuance costs, premiums and discounts
(34,094)(35,081)
Total debt
$6,125,501 

$5,485,882 
_________________
(1)As of March 31, 2023, represents the total of the unpaid principal balances within each debt category, with the exception of the risk retention warehouse facilities, which include securitization-related investments carried at fair value. In addition, certain securitization interests that eliminate in consolidation are pledged to risk retention warehouse facilities. Collateral balances relative to debt balances may vary period to period due to the timing of the next scheduled payment to the warehouse facility.
(2)For variable-rate debt, the ranges of stated interest rates are based on the interest rates in effect as of March 31, 2023. The interest on our variable-rate debt is typically designed as a reference rate plus a spread. Reference rates as of March 31, 2023 included one-month London Inter-Bank Offered Rate (“LIBOR”), three-month LIBOR, overnight Secured Overnight Financing Rate (“SOFR”), one-month SOFR, three-month SOFR, prime rate and commercial paper rates determined by the facility lenders. As debt arrangements are renewed, the reference rate and/or spread are subject to change. Unused commitment fees ranging from 0 to 65 basis points (“bps”) on our various warehouse facilities are recognized within noninterest expense—general and administrative in our condensed consolidated statements of operations and comprehensive income (loss).
(3)For securitization debt, the maturity of the notes issued by the various trusts occurs upon either the maturity of the loan collateral or full payment of the loan collateral held in the trusts. Our maturity date represents the legal maturity of the last class of maturing notes. Securitization debt matures as loan collateral payments are made.
(4)There were no debt discounts or premiums issued during the three months ended March 31, 2023.
(5)For risk retention warehouse facilities, we only state capacity amounts for facilities wherein we can pledge additional asset-backed bonds and residual investments as of the balance sheet date.
(6)As of March 31, 2023, $6.0 million of the revolving credit facility total capacity was not available for general borrowing purposes because it was utilized to secure a letter of credit. Refer to our letter of credit disclosures in Note 15. Commitments, Guarantees, Concentrations and Contingencies for more details. Additionally, the interest rate presented is the interest rate on standard withdrawals on our revolving credit facility, while same-day withdrawals incur interest based on prime rate. In April 2023, the Company amended and restated the terms of the revolving credit facility. See Note 18. Subsequent Events to the Notes to Condensed Consolidated Financial Statements for additional information.
(7)The original issue discount and debt issuance costs related to the convertible senior notes are amortized into interest expense—corporate borrowings in the condensed consolidated statements of operations and comprehensive income (loss) using the effective interest method over the contractual term of the notes. For the three months ended March 31, 2023 and 2022, total interest expense on the convertible notes was $1,272 and $1,267, respectively, related to amortization of debt discount and issuance costs, and the effective interest rate was 0.11% and 0.11%, respectively. As of March 31, 2023 and December 31, 2022, unamortized debt discount and issuance costs were $18.1 million and $19.4 million, respectively, and the net carrying amount was $1.18 billion and $1.18 billion, respectively.
(8)Includes $28.7 million of loans pledged as collateral to secure $19.0 million of available borrowing capacity with the Federal Home Loan Bank (“FHLB”), of which $13.7 million was not available as it was utilized to secure letters of credit. Refer to our letter of credit disclosures in Note 15. Commitments, Guarantees, Concentrations and Contingencies for more details. Also includes unsecured available borrowing capacity of $5.0 million with correspondent banks.
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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Material Changes to Debt Arrangements
During the three months ended March 31, 2023, we opened one personal loan warehouse facility with an aggregate maximum available capacity of $500.0 million, and closed one risk retention warehouse facility.
Our warehouse and securitization debt is secured by a continuing lien and security interest in the loans financed by the proceeds. Within each of our debt facilities, we must comply with certain operating and financial covenants. These financial covenants include, but are not limited to, maintaining: (i) a certain minimum tangible net worth, (ii) minimum cash and cash equivalents, and (iii) a maximum leverage ratio of total debt to tangible net worth. Our debt covenants can lead to restricted cash classifications in our condensed consolidated balance sheets. Our subsidiaries are restricted in the amount that can be distributed to the parent company only to the extent that such distributions would cause the financial covenants to not be met. We were in compliance with all financial covenants.
We act as a guarantor for our wholly-owned subsidiaries in several arrangements in the case of default. As of March 31, 2023, we have not identified any risks of nonpayment by our wholly-owned subsidiaries.
Maturities of Borrowings
Future maturities of our outstanding debt with scheduled payments, which included our revolving credit facility and convertible notes, were as follows:
March 31, 2023
Remainder of 2023$486,000 
2024— 
2025— 
20261,200,000 
2027— 
Thereafter— 
Total$1,686,000 
Note 10. Equity
Temporary Equity
Pursuant to SoFi Technologies’ Certificate of Incorporation dated May 28, 2021, the Company is authorized to issue 100,000,000 shares of preferred stock having a par value of $0.0001 per share (“SoFi Technologies Preferred Stock”) and 100,000,000 shares of redeemable preferred stock having a par value of $0.0000025 per share (“SoFi Technologies Redeemable Preferred Stock”). The Company’s Board of Directors has the authority to issue SoFi Technologies Preferred Stock and SoFi Technologies Redeemable Preferred Stock and to determine the rights, preferences, privileges and restrictions, including voting rights, of those shares. The authorized shares of SoFi Technologies Redeemable Preferred Stock is inclusive of 4,500,000 shares of Series 1 redeemable preferred stock (“Series 1 Redeemable Preferred Stock”), which reflect the conversion on a one-for-one basis of shares of Social Finance Series 1 preferred stock in conjunction with the Business Combination. Shares of SoFi Technologies Series 1 Redeemable Preferred Stock that are redeemed, purchased or otherwise acquired by the Company will be canceled and may not be reissued by the Company. The Series 1 Redeemable Preferred Stock remains classified as temporary equity because the Series 1 Redeemable Preferred Stock is not fully controlled by the issuer, SoFi Technologies.
As of March 31, 2023, there were 3,234,000 shares of Series 1 Redeemable Preferred Stock issued and outstanding, which had an original issuance price of $100.00.
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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Dividends
During both the three months ended March 31, 2023 and 2022, the Series 1 preferred stockholders were entitled to dividends of $9,968. Dividends payable were $9,968 as of March 31, 2023. There were no dividends payable as of December 31, 2022.
Permanent Equity
On June 1, 2021, the Company’s common stock began trading on the Nasdaq Global Select Market under the ticker symbol “SOFI”. Pursuant to SoFi Technologies’ Certificate of Incorporation, the Company is authorized to issue 3,000,000,000 shares of common stock, with a par value of $0.0001 per share, and 100,000,000 shares of non-voting common stock, with a par value of $0.0001 per share. As of March 31, 2023, the Company had 940,338,835 shares of common stock and no shares of non-voting common stock issued and outstanding.
The Company reserved the following common stock for future issuance:
March 31,
2023
December 31,
2022
Outstanding stock options, restricted stock units and performance stock units
122,782,283 107,851,565 
Outstanding common stock warrants12,170,990 12,170,990 
Conversion of convertible notes(1)
53,538,000 53,538,000 
Possible future issuance under stock plans
49,923,057 26,434,957 
Total common stock reserved for future issuance
238,414,330 199,995,512 
____________________
(1)Represents the number of common stock issuable upon conversion of all convertible notes at the conversion rate in effect at the balance sheet date.
Dividends
Common stockholders and non-voting common stockholders are entitled to dividends when and if declared by the Board of Directors and subject to government regulation over banks and bank holding companies. There were no dividends declared or paid to common stockholders during the three months ended March 31, 2023 and 2022.
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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Accumulated Other Comprehensive Income (Loss)
AOCI primarily consists of accumulated net unrealized gains or losses associated with our investments in AFS debt securities and foreign currency translation adjustments. The following table presents the rollforward of AOCI, inclusive of the changes in the components of other comprehensive income (loss):
AFS Debt SecuritiesForeign Currency Translation AdjustmentsTotal
Three Months Ended March 31, 2023
AOCI, beginning balance$(8,611)$315 $(8,296)
Other comprehensive income (loss) before reclassifications(1)
2,076 (293)1,783 
Amounts reclassified from AOCI into earnings172 — 172 
Net current-period other comprehensive income (loss)(2)
2,248 (293)1,955 
AOCI, ending balance$(6,363)$22 $(6,341)
Three Months Ended March 31, 2022
AOCI, beginning balance$(1,351)$(120)$(1,471)
Other comprehensive loss before reclassifications(1)
(4,616)(38)(4,654)
Amounts reclassified from AOCI into earnings161 — 161 
Net current-period other comprehensive loss(2)
(4,455)(38)(4,493)
AOCI, ending balance$(5,806)$(158)$(5,964)
____________________
(1)Gross realized gains and losses from sales of our investments in AFS debt securities that were reclassified from AOCI to earnings are recorded within noninterest income—other in the condensed consolidated statements of operations and comprehensive income (loss). There were no reclassifications related to foreign currency translation adjustments during the three months ended March 31, 2023 and 2022.
(2)There were no material tax impacts during the periods presented due to reserves against deferred tax assets in jurisdictions where other comprehensive loss activity was generated.
Note 11. Derivative Financial Instruments
The following table presents the gains (losses) recognized on our derivative instruments:
Three Months Ended March 31,
20232022
Interest rate swaps(1)
$(28,456)$134,514 
Interest rate caps(1)
(1,695)2,623 
Home loan pipeline hedges(1)
(1,077)23,470 
Derivative contracts to manage future loan sale execution risk(31,228)160,607 
Interest rate swaps(2)
(1,108)6,319 
Interest rate lock commitments (“IRLCs”)(1)
418 (6,798)
Interest rate caps(1)
1,771 (2,124)
Purchase price earn-out(1)(3)
831 
Third-party warrants(4)
24 75 
Total
$(30,114)$158,910 
_____________________
(1) Recorded within noninterest income—loan origination and sales in the condensed consolidated statements of operations and comprehensive income (loss).
(2) Represents derivative contracts to manage securitization investment interest rate risk, which are recorded within noninterest income—securitizations in the condensed consolidated statements of operations and comprehensive income (loss).
(3) In conjunction with a loan sale agreement, we are entitled to receive payments from the buyer of the loans underlying the agreement if the internal rate of return (as defined in the loan sale agreement) on such loans exceeds a specified hurdle, subject to a dollar cap.
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SoFi Technologies, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
(4) Includes amounts recorded within noninterest income—other, noninterest expense—cost of operations and noninterest expense—general and administrative in the condensed consolidated statements of operations and comprehensive income (loss), the latter of which represents the amortization of a deferred liability recognized at the initial fair value of the third party warrants acquired, as we are also a customer of the third party.
Certain derivative instruments are subject to enforceable master netting arrangements. Accordingly, we present our net asset or liability position by counterparty in the condensed consolidated balance sheets. Additionally, since our cash collateral balances do not approximate the fair value of the derivative position, we do not offset our right to reclaim cash collateral or obligation to return cash collateral against recognized derivative assets or liabilities. The following table presents information about derivative instruments subject to enforceable master netting arrangements:
March 31, 2023December 31, 2022
Gross Derivative AssetsGross Derivative LiabilitiesGross Derivative AssetsGross Derivative Liabilities
Interest rate swaps$3,465 $(1,281)$23,128 $— 
Interest rate caps— (7,481)— (9,251)
Home loan pipeline hedges(2,087)1,484 (80)
Total, gross3,474 (10,849)24,612 (9,331)
Derivative netting(1,290)1,290 (80)80 
Total, net(1)
$2,184 $(9,559)$24,532 $(9,251)
_____________________
(1) As of March 31, 2023, we had a cash collateral requirement related to these instruments of $2,078. We did not have a cash collateral requirement related to these instruments as of December 31, 2022.
The following table presents the notional amount of derivative contracts outstanding:
March 31, 2023December 31, 2022
Derivative contracts to manage future loan sale execution risk:
Interest rate swaps$5,428,177 $5,638,177 
Interest rate caps405,000 405,000 
Home loan pipeline hedges140,000 126,000 
Interest rate caps(1)
405,000 405,000 
Interest rate swaps(2)
196,823 171,823 
IRLCs(3)
108,375 82,335 
Total
$6,683,375 $6,828,335 
_____________________
(1) We sold an interest rate cap that was subject to master netting to offset an interest rate cap purchase made in conjunction with a contract to manage future loan sale execution risk.
(2) Represents interest rate swaps utilized to manage interest rate risk associated with certain of our securitization investments.
(3) Amounts correspond with home loan funding commitments subject to IRLC agreements.

While the notional amounts of derivative instruments give an indication of the volume of our derivative activity, they do not necessarily represent amounts exchanged by parties and are not a direct measure of our financial exposure. See Note 12. Fair Value Measurements for additional information on our derivative assets and liabilities.
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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Note 12. Fair Value Measurements
Recurring Fair Value Measurements
The following table summarizes, by level within the fair value hierarchy, the estimated fair values of our assets and liabilities measured at fair value on a recurring basis in the condensed consolidated balance sheets:
March 31, 2023December 31, 2022
Fair ValueFair Value
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets
Investments in AFS debt securities(1)(2)
$119,086 $55,750 $— $174,836 $137,032 $58,406 $— $195,438 
Asset-backed bonds(2)(3)
— 142,272 — 142,272 — 155,093 — 155,093 
Residual investments(2)(3)
— — 42,960 42,960 — — 46,238 46,238 
Loans at fair value— — 15,858,105 15,858,105 — — 13,557,074 13,557,074 
Servicing rights— — 146,514 146,514 — — 149,854 149,854 
Third party warrants(4)(5)
— — 630 630 — — 630 630 
Derivative assets(4)(6)(7)
— 3,474 — 3,474 — 24,612 — 24,612 
Purchase price earn-out(4)(8)
— — — — — — 54 54 
IRLCs(4)(9)
— — 634 634 — — 216 216 
Student loan commitments(4)(9)
— — 75 75 — — — — 
Interest rate caps(4)(7)
— 7,484 — 7,484 — 9,178 — 9,178 
Digital assets safeguarding asset(4)(10)
— 167,954 — 167,954 — 106,826 — 106,826 
Total assets
$119,086 $376,934 $16,048,918 $16,544,938 $137,032 $354,115 $13,754,066 $14,245,213 
Liabilities
Debt(11)
$— $74,675 $— $74,675 $— $89,142 $— $89,142 
Residual interests classified as debt— — 15,565 15,565 — — 17,048 17,048 
Derivative liabilities(4)(6)(7)
— 10,849 — 10,849 — 9,331 — 9,331 
Student loan commitments(4)(9)
— — — — — — 236 236 
Digital assets safeguarding liability(4)(10)
— 167,954 — 167,954 — 106,826 — 106,826 
Total liabilities$— $253,478 $15,565 $269,043 $— $205,299 $17,284 $222,583 
_____________________
(1)The investments in AFS debt securities that were classified as Level 2 rely upon observable inputs other than quoted prices, dealer quotes in markets that are not active and implied pricing derived from new issuances of similar securities. See Note 6. Investment Securities for additional information.
(2)These assets are presented within investment securities in the condensed consolidated balance sheets.
(3)These assets represent the carrying value of our holdings in VIEs wherein we were not deemed the primary beneficiary. See Note 7. Securitization and Variable Interest Entities for additional information. We classify asset-backed bonds as Level 2 due to the use of quoted prices for similar assets in markets that are not active, as well as certain factors specific to us. The key inputs used to value the asset-backed bonds include the discount rate and conditional prepayment rate. The fair value of our asset-backed bonds was not materially impacted by default assumptions on the underlying securitization loans, as the subordinate residual interests are expected to absorb all estimated losses based on our default assumptions for the period. We classify the residual investments as Level 3 due to the reliance on significant unobservable valuation inputs.
(4)These assets and liabilities are presented within other assets and accounts payable, accruals and other liabilities, respectively, in the condensed consolidated balance sheets.
(5)The key unobservable assumption used in the fair value measurement of the third party warrants was the price of the stock underlying the warrants. The fair value was measured as the difference between the stock price and the strike price of the warrants. As the strike price was insignificant, we concluded that the impact of time value on the fair value measure was immaterial.
(6)For certain derivative instruments for which an enforceable master netting agreement exists, we elected to net derivative assets and derivative liabilities by counterparty. These instruments are presented on a gross basis herein. See Note 11. Derivative Financial Instruments for additional information.
(7)Home loan pipeline hedges represent to-be-announced (“TBA”) securities used as economic hedges of loan fair values and are classified as Level 2, as we rely on quoted market prices from similar loan pools that transact in the marketplace. Interest rate swaps and interest rate caps are classified as Level 2, because these financial instruments do not trade in active markets with observable prices, but rely on observable inputs other than quoted prices. As of March 31, 2023 and December 31, 2022, interest rate swaps and interest rate caps were valued using the overnight SOFR curve and the implied volatilities suggested by the SOFR rate curve. These were determined to be observable inputs from active markets.
(8)The purchase price earn-out provision is classified as Level 3 because of our reliance on unobservable inputs related to the underlying loan portfolio performance, such as conditional prepayment rates, annual default rates and discount rates.
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Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
(9)IRLCs and student loan commitments are classified as Level 3 because of our reliance on assumed loan funding probabilities. The assumed probabilities are based on our internal historical experience with home loans and student loans similar to those in the funding pipelines on the measurement date.
(10)The digital assets safeguarding liability and corresponding safeguarding asset are classified as Level 2, because they do not trade in active markets, and are valued using quoted prices on an active exchange that has been identified as the principal market for the underlying digital assets that are being held by our third-party custodians for the benefit of our members.
(11)The fair value of our securitization debt was classified as Level 2 and valued using a discounted cash flow model, with key inputs relating to the underlying contractual coupons, terms, discount rate and expectations for defaults and prepayments. As of March 31, 2023 and December 31, 2022, the unpaid principal related to debt measured at fair value was $82,647 and $98,868, respectively. For the three months ended March 31, 2023, losses from changes in fair value were $944. The estimated amounts of gains (losses) included in earnings attributable to changes in instrument-specific credit risk, which were derived principally from observable changes in credit spread as observed in the bond market, were immaterial.
Level 3 Recurring Fair Value Rollforward
The following tables present the changes in our assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3). We did not have any transfers into or out of Level 3 during the periods presented.
Fair Value atFair Value at
January 1, 2023Impact on EarningsPurchasesSalesIssuancesSettlementsMarch 31, 2023
Assets
Personal loans$8,610,434 $86,094 $40,039 $— $2,951,358 $(1,150,926)$10,536,999 
Student loans4,877,177 67,190 — — 525,373 (229,681)5,240,059 
Home loans69,463 (494)552 (77,880)89,787 (381)81,047 
Loans at fair value(1)
13,557,074 152,790 40,591 (77,880)3,566,518 (1,380,988)15,858,105 
Servicing rights149,854 12,084 613 (135)954 (16,856)146,514 
Residual investments(2)
46,238 1,104 — (306)— (4,076)42,960 
Purchase price earn out54 — — — (63)— 
IRLCs(3)
216 634 — — — (216)634 
Student loan commitments(3)
(236)75 — — — 236 75 
Third party warrants630 — — — — — 630 
Liabilities
Residual interests classified as debt(2)
(17,048)(89)— — — 1,572 (15,565)
Net impact on earnings166,607 
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SoFi Technologies, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Fair Value atFair Value at
January 1, 2022Impact on EarningsPurchasesSalesIssuancesSettlementsMarch 31, 2022
Assets
Personal loans$2,289,426 $(7,016)$160,748 $(977,920)$2,026,004 $(372,454)$3,118,788 
Student loans3,450,837 (42,370)116,433 (544,150)983,804 (227,115)3,737,439 
Home loans212,709 (9,162)498 (365,370)312,383 (4,400)146,658 
Loans at fair value(1)
5,952,972 (58,548)277,679 (1,887,440)3,322,191 (603,969)7,002,885 
Servicing rights168,259 11,580 629 (1,410)16,486 (22,039)173,505 
Residual investments(2)
121,019 762 — — — (15,104)106,677 
Purchase price earn out4,272 830 — — — (2,817)2,285 
Student loan commitments(3)
2,220 23 — — — (2,220)23 
Third party warrants1,369 (142)— — — — 1,227 
Liabilities
Residual interests classified as debt(2)
(93,682)(2,963)— — — 26,113 (70,532)
IRLCs(3)
3,759 (3,039)— — — (3,759)(3,039)
Net impact on earnings(51,497)
_____________________
(1)For loans at fair value, issuances represent the principal balance of loans originated during the period. Purchases reflect unpaid principal balance and relate to previously transferred loans. Purchase activity during the three months ended March 31, 2023 and 2022 included securitization clean-up calls of $39,936 and $275,499, respectively. The remaining purchases during the periods presented related to standard representations and warranties pursuant to our various loan sale agreements. Gains and losses recognized in earnings include changes in accumulated interest and fair value adjustments on loans originated during the period and on loans held at the balance sheet date, as well as loan charge-offs. Changes in fair value are impacted by valuation assumption changes, as well as sales price execution and amount of time the loans are held prior to sale. The estimated amount of gains (losses) included in earnings attributable to changes in instrument-specific credit risk were $(50,529) and $6,496 during the three months ended March 31, 2023 and 2022, respectively. The gains (losses) attributable to instrument-specific credit risk were estimated by incorporating our current default and loss severity assumptions for the loans. These assumptions are based on historical performance, market trends and performance expectations over the term of the underlying instrument.
(2)For residual investments, sales include the derecognition of investments associated with securitization clean up calls. The estimated amounts of gains and losses for residual investments included in earnings attributable to changes in instrument-specific credit risk were immaterial during the periods presented. For residual investments and residual interests classified as debt, we record changes in fair value within noninterest income—securitizations in the condensed consolidated statements of operations and comprehensive income (loss), a portion of which is subsequently reclassified to interest expense—securitizations and warehouses for residual interests classified as debt and to interest income—securitizations for residual investments, but does not impact the liability or asset balance, respectively.
(3)For IRLCs and student loan commitments, settlements reflect funded and unfunded adjustments representing the unpaid principal balance of funded and unfunded loans during the quarter multiplied by the IRLC or student loan commitment price in effect at the beginning of the quarter. For year-to-date periods, amounts represent the summation of the per-quarter effects. Changes in fair value are recorded within noninterest income—loan origination and sales in the condensed consolidated statements of operations and comprehensive income (loss).
Level 3 Significant Inputs
Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Level 3 fair value measurements include unobservable inputs for assets or liabilities for which there is little or no market data, which requires us to develop our own assumptions. These unobservable assumptions reflect estimates of inputs that market participants would use in pricing the asset or liability. Valuation techniques include the use of option pricing models, discounted cash flow models, or similar techniques, which incorporate management’s own estimates of assumptions that market participants would use in pricing the asset or liability.
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SoFi Technologies, Inc.
Notes to Condensed Consolidated Financial Statements (Continued)
(Unaudited)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Loans
The following key unobservable assumptions were used in the fair value measurement of our loans:
March 31, 2023December 31, 2022
RangeWeighted AverageRangeWeighted Average
Personal loans
Conditional prepayment rate
14.0% – 24.2%
19.1%
17.3% – 25.5%
19.1%
Annual default rate
3.2% – 52.8%
4.6%
3.8% – 37.7%
4.4%
Discount rate
5.2% – 8.6%
5.5%
5.4% – 8.3%
6.1%
Student loans
Conditional prepayment rate
8.5% – 12.9%
10.4%
16.3% – 21.8%
20.4%
Annual default rate
0.2% – 4.3%
0.4%
0.2% – 4.5%
0.5%
Discount rate
3.7% – 8.1%
4.1%
3.6% – 8.7%
4.0%
Home loans
Conditional prepayment rate
2.1% – 13.4%
8.9%
2.0% – 10.2%
7.0%
Annual default rate
0.1% – 0.9%
0.1%
0.1% – 1.3%
0.1%
Discount rate
5.6% – 14.5%
6.0%
5.7% – 14.1%
5.9%
The key assumptions are defined as follows:
Conditional prepayment rateR