Oportun Provides COVID-19 Operational Business Update - Seite 2

Strong capital and liquidity. Based on stress-test scenarios, Oportun continues to have more than 12 months of liquidity runway, even without accessing the securitization market, due to its well-established and diversified funding program. The Company’s balance sheet is characterized by relatively low leverage. Oportun’s term securitizations and its warehouse line are non-recourse to Oportun Financial Corporation and its operating subsidiaries. The Company’s term securitizations allow it to fund new loan originations for the remainder of each securitization’s revolving period; the revolving periods have end dates which range from September 2020 to July 2022.

The Company’s cash and cash equivalents balance as of March 31, 2020 was $119 million and restricted cash was $75 million; restricted cash is used to pay current liabilities, and excess amounts are released back to Oportun on a monthly basis. As of March 31, 2020, the Company had $120 million of undrawn capacity on its existing $400 million warehouse line, which is committed through October 2021 and provided by Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC, Jefferies LLC and Natixis Securities Americas LLC. Oportun also continues to sell a percentage of newly originated loans on a whole loan basis at a fixed price, pursuant to existing flow sale contracts.

Responsibly adjusting underwriting and verification procedures. As news of the pandemic’s spread began to surface, Oportun proactively implemented a series of changes to its underwriting criteria to reduce the Company’s exposure to the segments of the population that it believed would be most impacted. The cornerstone of Oportun’s mission is to only lend to customers whose ability to repay their loan is based upon verified income. The Company has always verified income for 100% of applicants and determined loan amounts based upon Oportun’s ability-to-pay ratio. In anticipation of the economic impact of the pandemic and the increasing unemployment rate, Oportun implemented more stringent employment verification and increased recency requirements for proof of income.

The Company has also tightened its underwriting criteria and reduced maximum and average loan size in order to better manage credit outcomes. The Company has previously used industry and regional factors in its underwriting score card and has now increased the weighting of these factors to reflect the changing employment dynamics in those industries and regions. Oportun continues to lend to income- and employment-verified customers who meet its revised credit criteria, but the decision to implement tighter underwriting has led to reduced originations that are consistent with the Company’s strategy to navigate this dynamic situation. The Company believes that its product structure, which generally requires a payment twice a month, provides early feedback on the pandemic’s impact on its customers. Oportun continues to diligently monitor portfolio performance and its other data sources daily and will rapidly revise its underwriting criteria as required to adapt to the changing environment.