Log in
Log in
Or log in with
GoogleGoogle
Twitter Twitter
Facebook Facebook
Apple Apple     
Sign up
Or log in with
GoogleGoogle
Twitter Twitter
Facebook Facebook
Apple Apple     

SOFI TECHNOLOGIES, INC.

(SOFI)
  Report
Real-time Estimate Cboe BZX  -  02:55 2022-09-28 pm EDT
5.235 USD   +3.05%
10:06aGalileo and Juniper Research Reveals Surge in B2B Embedded Finance Demand
BU
06:07aSofi Technologies, Inc. : Change in Directors or Principal Officers (form 8-K)
AQ
09/27SoFi Launches ‘On The Money' To Provide Financial Education Resources for Members
BU
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisionsFunds 
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

SoFi Technologies : Quarterly Report for Quarter Ending June 30, 2022 (Form 10-Q)

08/09/2022 | 06:08pm EDT
sofi-20220630

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 June 30, 2022
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 number001-39606
SoFi Technologies, Inc.
(Exact name of registrant as specified in its charter)
Delaware
98-1547291
(State or other jurisdiction of incorporation)
(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 class Trading Symbol(s) Name of each exchange on which registered
Common stock, $0.0001 par value per share SOFI The 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" and "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 July 29, 2022 was 922,377,054 shares.


SOFI TECHNOLOGIES, INC.
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Item 1.
Financial Statements
Unaudited Condensed Consolidated Balance Sheets
4
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss
5
Unaudited Condensed Consolidated Statements of Changes in Temporary Equity and Permanent Equity
6
Unaudited Condensed Consolidated Statements of Cash Flows
8
Notes to Unaudited Condensed Consolidated Financial Statements
11
Note 1. Organization, Summary of Significant Accounting Policies and New Accounting Standards
11
Note 2. Business Combinations
19
Note 3. Investments in AFS Debt Securities
24
Note 4. Loans
26
Note 5. Variable Interest Entities
31
Note 6. Transfers of Financial Assets
33
Note 7. Allowance for Credit Losses
35
Note 8. Fair Value Measurements
37
Note 9. Debt
49
Note 10, Temporary Equity
52
Note 11. Permanent Equity
53
Note 12. Share-Based Compensation
54
Note 13. Income Taxes
57
Note 14. Related Parties
57
Note 15. Commitments, Guarantees, Concentrations and Contingencies
57
Note 16. Loss Per Share
59
Note 17. Business Segment Information
60
Note 18. Regulatory Capital
65
Note 19. Subsequent Events
66
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
67
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
106
Item 4.
Controls and Procedures
108
PART II - OTHER INFORMATION
Item 1.
Legal Proceedings
109
Item 1A.
Risk Factors
109
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
158
Item 3.
Defaults Upon Senior Securities
158
Item 4.
Mine Safety Disclosures
158
Item 5.
Other Information
158
Item 6.
Exhibits
159
Signatures
160
Supplemental Information
F-1
1
SoFi Technologies, Inc.
TABLE OF CONTENTS
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". As a result of the Business Combination, which was completed on May 28, 2021, share and per share amounts for periods prior to the Business Combination for Social Finance, Inc. have been retroactively converted by application of the exchange ratio of 1.7428.
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 cloud-native digital multi-product core banking platform (the "Technisys Merger"). The Technisys Merger closed in March 2022.
See Note 2 to the Notes to Unaudited Condensed Consolidated Financial Statements for information on our acquisitions.
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; 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", "anticipate", "believe", "continue", "could", "estimate", "expect", "intend", "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 "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q and our 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 any further extension of the federal student loan payment moratorium or any governmental actions taken to forgive student loans;
our ability to manage our growth effectively and our expectations regarding the development and expansion of our business;
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 increasing interest rates, inflationary pressures, counterparty risk, changing customer demand, capital markets volatility and domestic or international conflicts or disputes;
the success of our marketing efforts and our ability to expand our member base;
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;
2
SoFi Technologies, Inc.
TABLE OF CONTENTS
our ability to successfully operate as a bank holding company, and to own and 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 and the Technisys Merger;
our ability to successfully expand our operations into foreign jurisdictions, including compliance with a variety of foreign laws;
the outcome of any legal or governmental proceedings that may be instituted against us; and
the effect of and uncertainties related to the ongoing COVID-19 pandemic (including any emergence of additional variants or government responses thereto) and any continued recovery from the impact of the COVID-19 pandemic.
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.
3
SoFi Technologies, Inc.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SoFi Technologies, Inc.
Unaudited Condensed Consolidated Balance Sheets
(In Thousands, Except for Share Data)
June 30,
2022
December 31,
2021
Assets
Cash and cash equivalents $ 707,302 $ 494,711
Restricted cash and restricted cash equivalents(1)
291,631 273,726
Investments in available-for-sale securities (amortized cost of $205,168 and $195,796, respectively)
197,933 194,907
Loans, less allowance for credit losses on loans at amortized cost of $23,178 and $7,037, respectively(1)(2)
8,212,494 6,068,884
Servicing rights 176,964 168,259
Securitization investments 288,717 374,688
Equity method investments - 19,739
Property, equipment and software 148,744 111,873
Goodwill 1,625,375 898,527
Intangible assets 481,124 284,579
Operating lease right-of-use assets 108,736 115,191
Other assets, less allowance for credit losses of $2,720 and $2,292, respectively
431,866 171,242
Total assets $ 12,670,886 $ 9,176,326
Liabilities, temporary equity and permanent equity
Liabilities:
Deposits:
Noninterest-bearing deposits $ 82,801 $ -
Interest-bearing deposits 2,629,463 -
Total deposits 2,712,264 -
Accounts payable, accruals and other liabilities(1)
542,336 298,164
Operating lease liabilities
131,735 138,794
Debt(1)
3,723,561 3,947,983
Residual interests classified as debt(1)
54,436 93,682
Total liabilities 7,164,332 4,478,623
Commitments, guarantees, concentrations and contingencies (Note 15)
Temporary equity(3):
Redeemable preferred stock, $0.00 par value: 100,000,000 shares authorized; 3,234,000 shares issued and outstanding as of June 30, 2022 and December 31, 2021
320,374 320,374
Permanent equity:
Common stock, $0.00 par value: 3,100,000,000 and 3,100,000,000 shares authorized; 922,103,100 and 828,154,462 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively(4)
92 83
Additional paid-in capital 6,583,405 5,561,831
Accumulated other comprehensive loss (8,011) (1,471)
Accumulated deficit (1,389,306) (1,183,114)
Total permanent equity 5,186,180 4,377,329
Total liabilities, temporary equity and permanent equity $ 12,670,886 $ 9,176,326
______________
(1)Financial statement line items include amounts in consolidated variable interest entities ("VIEs"). See Note 5.
(2)As of June 30, 2022 and December 31, 2021, includes loans held for sale measured at fair value of $7,959,382 and $5,952,972, respectively.
(3)Redemption amount is $323,400 as of June 30, 2022 and December 31, 2021.
(4)Includes 100,000,000 non-voting common shares authorized and no non-voting common shares issued and outstanding as of June 30, 2022 and December 31, 2021. See Note 11 for additional information.


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss
(In Thousands, Except for Share and Per Share Data)
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Interest income
Loans
$ 145,337 $ 79,678 $ 259,722 $ 156,899
Securitizations
2,567 3,794 5,325 8,261
Related party notes
- - - 211
Other
1,608 636 2,877 1,265
Total interest income 149,512 84,108 267,924 166,636
Interest expense
Securitizations and warehouses
18,599 26,250 38,505 56,058
Deposits 4,543 - 4,974 -
Corporate borrowings 3,450 1,378 6,099 6,386
Other
191 468 684 900
Total interest expense 26,783 28,096 50,262 63,344
Net interest income 122,729 56,012 217,662 103,292
Noninterest income
Loan origination and sales
144,414 109,719 302,118 220,064
Securitizations
(11,737) (26) (23,018) (2,062)
Servicing
10,471 (224) 22,707 (12,333)
Technology products and solutions
81,670 44,950 141,527 90,609
Other
14,980 20,843 31,875 27,688
Total noninterest income 239,798 175,262 475,209 323,966
Total net revenue 362,527 231,274 692,871 427,258
Noninterest expense
Technology and product development
99,366 69,389 181,274 135,337
Sales and marketing
143,854 94,951 281,992 182,185
Cost of operations
79,091 60,624 149,528 118,194
General and administrative
125,829 171,216 262,334 332,913
Provision for credit losses 10,103 486 23,064 486
Total noninterest expense 458,243 396,666 898,192 769,115
Loss before income taxes (95,716) (165,392) (205,321) (341,857)
Income tax (expense) benefit
(119) 78 (871) (1,021)
Net loss $ (95,835) $ (165,314) $ (206,192) $ (342,878)
Other comprehensive loss
Unrealized losses on available-for-sale securities, net (1,991) - (6,446) -
Foreign currency translation adjustments, net (56) (266) (94) (346)
Total other comprehensive loss (2,047) (266) (6,540) (346)
Comprehensive loss $ (97,882) $ (165,580) $ (212,732) $ (343,224)
Loss per share (Note 16)
Loss per share - basic $ (0.12) $ (0.48) $ (0.26) $ (1.50)
Loss per share - diluted $ (0.12) $ (0.48) $ (0.26) $ (1.50)
Weighted average common stock outstanding - basic 910,046,750 365,036,365 881,608,165 241,282,003
Weighted average common stock outstanding - diluted 910,046,750 365,036,365 881,608,165 241,282,003

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


5
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Unaudited Condensed Consolidated Statements of Changes in Temporary Equity and Permanent Equity
(In Thousands, Except for Share Data)

Common Stock
Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Permanent Equity Temporary Equity
Shares
Amount
Shares Amount
Balance at March 31, 2022 915,673,855 $ 91 $ 6,509,643 $ (5,964) $ (1,293,471) $ 5,210,299 3,234,000 $ 320,374
Share-based compensation expense - - 85,902 - - 85,902 - -
Vesting of RSUs 6,360,894 1 (1) - - - - -
Stock withheld related to taxes on vested RSUs (318,764) - (2,253) - - (2,253) - -
Exercise of common stock options 387,115 - 193 - - 193 - -
Redeemable preferred stock dividends - - (10,079) - - (10,079) - -
Net loss - - - - (95,835) (95,835) - -
Other comprehensive loss, net of taxes - - - (2,047) - (2,047) - -
Balance at June 30, 2022 922,103,100 $ 92 $ 6,583,405 $ (8,011) $ (1,389,306) $ 5,186,180 3,234,000 $ 320,374
Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Permanent Equity Temporary Equity
Shares Amount Shares Amount
Balance at January 1, 2022 828,154,462 $ 83 $ 5,561,831 $ (1,471) $ (1,183,114) $ 4,377,329 3,234,000 $ 320,374
Share-based compensation expense - - 167,519 - - 167,519 - -
Vesting of RSUs 11,312,098 1 (1) - - - - -
Stock withheld related to taxes on vested RSUs (662,462) - (5,846) - - (5,846) - -
Exercise of common stock options 1,442,890 - 2,060 - - 2,060 - -
Issuance of common stock in acquisition 81,856,112 8 875,034 - - 875,042 - -
Vested awards assumed in acquisition - - 2,855 - - 2,855 - -
Redeemable preferred stock dividends - - (20,047) - - (20,047) - -
Net loss - - - - (206,192) (206,192) - -
Other comprehensive loss, net of taxes - - - (6,540) - (6,540) - -
Balance at June 30, 2022 922,103,100 $ 92 $ 6,583,405 $ (8,011) $ (1,389,306) $ 5,186,180 3,234,000 $ 320,374















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


6
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Unaudited Condensed Consolidated Statements of Changes in Temporary Equity and Permanent Equity (Continued)
(In Thousands, Except for Share Data)
Common Stock
Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Permanent Equity (Deficit) Temporary Equity
Shares
Amount
Shares Amount
Balance at March 31, 2021 119,018,914 $ - $ 583,349 $ (246) $ (876,741) $ (293,638) 469,150,522 $ 3,173,686
Share-based compensation expense
- - 52,154 - - 52,154 - -
Vesting of RSUs
291,264 - - - - - - -
Stock withheld related to taxes on vested RSUs
(134,008) - (2,614) - - (2,614) - -
Exercise of common stock options
523,956 - 741 - - 741 - -
Redeemable preferred stock dividends
- - (10,079) - - (10,079) - -
Issuance of contingently issuable stock 1,281,132 - - - - - - -
Cancellation of redeemable preferred stock related to a business combination - - - - - - (83,856) (743)
Conversion of redeemable preferred stock warrants into permanent equity - - 161,775 - - 161,775 - -
Conversion of redeemable preferred stock to common stock 450,832,666 45 2,702,524 - - 2,702,569 (450,832,666) (2,702,569)
Issuance of common stock in connection with Business Combination and PIPE Investment 222,878,889 22 1,789,579 - - 1,789,601 - -
Costs directly attributable to the issuance of common stock in connection with Business Combination and PIPE Investment - - (27,539) - - (27,539) - -
Repurchase of redeemable common stock - - - - - - (15,000,000) (150,000)
Change in par for historical SoFi common stock - 12 (12) - - - - -
Net loss - - - - (165,314) (165,314) - -
Other comprehensive loss, net of taxes - - - (266) - (266) - -
Balance at June 30, 2021 794,692,813 $ 79 $ 5,249,878 $ (512) $ (1,042,055) $ 4,207,390 3,234,000 $ 320,374
Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Permanent Equity (Deficit) Temporary Equity
Shares Amount Shares Amount
Balance at January 1, 2021 115,084,358 $ - $ 579,228 $ (166) $ (699,177) $ (120,115) 469,150,522 $ 3,173,686
Share-based compensation expense - - 89,608 - - 89,608 - -
Vesting of RSUs 3,945,698 - - - - - - -
Stock withheld related to taxes on vested RSUs (1,533,724) - (28,603) - - (28,603) - -
Exercise of common stock options 2,203,794 - 3,365 - - 3,365 - -
Redeemable preferred stock dividends - - (20,047) - - (20,047) - -
Issuance of contingently issuable stock 1,281,132 - - - - - - -
Cancellation of redeemable preferred stock related to a business combination - - - - - - (83,856) (743)
Conversion of redeemable preferred stock warrants into permanent equity - - 161,775 - - 161,775 - -
Conversion of redeemable preferred stock to common stock 450,832,666 45 2,702,524 - - 2,702,569 (450,832,666) (2,702,569)
Issuance of common stock in connection with Business Combination and PIPE Investment 222,878,889 22 1,789,579 - - 1,789,601 - -
Costs directly attributable to the issuance of common stock in connection with Business Combination and PIPE Investment - - (27,539) - - (27,539) - -
Repurchase of redeemable common stock - - - - - - (15,000,000) (150,000)
Change in par for historical SoFi common stock - 12 (12) - - - - -
Net loss - - - - (342,878) (342,878) - -
Other comprehensive loss, net of taxes - - - (346) - (346) - -
Balance at June 30, 2021 794,692,813 $ 79 $ 5,249,878 $ (512) $ (1,042,055) $ 4,207,390 3,234,000 $ 320,374


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


7
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(In Thousands)
Six Months Ended June 30,
2022 2021
Operating activities
Net loss $ (206,192) $ (342,878)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization
68,754 50,966
Deferred debt issuance and discount expense
8,118 11,450
Share-based compensation expense
157,163 89,608
Deferred income taxes
(2,319) 637
Fair value changes in residual interests classified as debt
5,625 13,668
Fair value changes in securitization investments
9,981 (5,502)
Fair value changes in warrant liabilities
- 160,909
Fair value adjustment to related party notes receivable
- (169)
Other
29,929 (3,937)
Changes in operating assets and liabilities:
Originations and purchases of loans
(6,875,281) (5,749,363)
Proceeds from sales and repayments of loans
4,846,705 5,848,655
Other changes in loans
22,166 5,231
Servicing assets
(8,705) (10,170)
Related party notes receivable interest income
- 1,399
Other assets
(49,569) (21,752)
Accounts payable, accruals and other liabilities
36,902 33,856
Net cash provided by (used in) operating activities $ (1,956,723) $ 82,608
Investing activities
Purchases of property, equipment, software and intangible assets
$ (50,028) $ (26,808)
Purchases of available-for-sale investments (44,974) -
Proceeds from sales of available-for-sale investments 23,497 -
Proceeds from maturities and paydowns of available-for-sale investments 13,906 -
Changes in loans, net (81,850) -
Proceeds from non-securitization investments
- 107,534
Proceeds from securitization investments
75,991 141,920
Acquisition of businesses, net of cash acquired
58,540 -
Proceeds from repayment of related party notes receivable - 16,693
Net cash provided by (used in) investing activities
$ (4,918) $ 239,339
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

8
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows (Continued)
(In Thousands)
Six Months Ended June 30,
2022 2021
Financing activities
Proceeds from debt issuances
$ 4,710,980 $ 3,849,645
Repayment of debt (4,986,952) (6,355,653)
Payment of debt issuance costs
(3,976) (4,520)
Net change in deposits 2,496,253 -
Taxes paid related to net share settlement of share-based awards
(5,846) (28,603)
Proceeds from stock option exercises
2,060 3,365
Payment of redeemable preferred stock dividends
(20,047) (20,047)
Finance lease principal payments
(241) (278)
Purchases of common stock
- (526)
Redemptions of redeemable common and preferred stock - (282,859)
Proceeds from Business Combination and PIPE Investment - 1,989,851
Payment of costs directly attributable to the issuance of common stock in connection with Business Combination and PIPE Investment - (26,951)
Net cash provided by (used in) financing activities $ 2,192,231 $ (876,576)
Effect of exchange rates on cash and cash equivalents
(94) (346)
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents $ 230,496 $ (554,975)
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period
768,437 1,323,428
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period
$ 998,933 $ 768,453
Reconciliation to amounts on unaudited condensed consolidated balance sheets (as of period end)
Cash and cash equivalents
$ 707,302 $ 461,920
Restricted cash and restricted cash equivalents
291,631 306,533
Total cash, cash equivalents, restricted cash and restricted cash equivalents
$ 998,933 $ 768,453
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

9
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows (Continued)
(In Thousands)
Six Months Ended June 30,
2022 2021
Supplemental non-cash investing and financing activities
Issuance of common stock in acquisition $ 875,042 $ -
Vested awards assumed in acquisition 2,855 -
Loans received in acquisition 84,485 -
Debt assumed in acquisition 2,000 -
Deposits assumed in acquisition 158,016 -
Deposits credited but not yet received in cash 57,995 -
Available-for-sale securities received in acquisition 10,014 -
Property, equipment and software received in acquisition 3,192 -
Non-cash loan reduction 886 -
Share-based compensation capitalized related to internally-developed software 10,356 -
Non-cash property, equipment, software and intangible asset additions
191 896
Deferred debt issuance costs accrued but unpaid 163 550
Securitization investments acquired via loan transfers
- 47,265
Costs directly attributable to the issuance of common stock paid in 2020 - 588
Reduction to temporary equity associated with purchase price adjustments - 743
Warrant liabilities recognized in conjunction with the Business Combination - 200,250
Series H warrant liabilities conversion to common stock warrants - 39,959
Conversion of temporary equity into permanent equity in conjunction with the Business Combination - 2,702,569


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

10
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
(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
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."
Upon the closing of the Business Combination, holders of Social Finance common stock received shares of SoFi Technologies common stock in an amount determined by application of the exchange ratio of 1.7428 ("Exchange Ratio"), which was based on Social Finance's implied price per share prior to the Business Combination. Additionally, holders of Social Finance preferred stock (with the exception of the holders of our Series 1 Redeemable Preferred Stock, as defined in Note 10) received shares of SoFi Technologies common stock in amounts determined by application of either the Exchange Ratio or a multiplier of the Exchange Ratio, as provided by the Agreement.
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 strategy to offer home loans, personal loans and credit cards. The Company has also developed non-lending 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 as SoFi Bank, National Association, through its acquisition of Golden Pacific Bancorp, Inc., and expanded its platform to include a cloud-native digital and core banking platform with customers in Latin America through its acquisition of Technisys S.A., 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. For additional information on our reportable segments, see Note 17.
Summary of Significant Accounting Policies
Basis of Presentation
The unaudited 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 unaudited 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. The financial data and other information disclosed in these Notes to Unaudited Condensed Consolidated Financial Statements related to the three and six months ended June 30, 2022 and 2021 are unaudited and should be read in conjunction with the annual consolidated statements included in our annual filing on Form 10-K filed with the SEC on March 1, 2022. In the opinion of management, the unaudited 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 and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the full year ending December 31, 2022. In our unaudited condensed consolidated statements of operations and comprehensive income (loss), we renamed the financial statement line item for noninterest income-technology platform fees to noninterest income-technology products and solutionsto accommodate noninterest income earned from Technisys, which we acquired in the first quarter of 2022. See Note 1 for our presentation of disaggregated revenue and Note 2 for our discussion of business combinations.
11
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Use of Judgments, Assumptions and Estimates
The preparation of our unaudited condensed consolidated financial statements and related disclosures in conformity with GAAP requires management to make assumptions and estimates that affect the amounts reported in our unaudited condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on various other factors it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of our assets and liabilities. These judgments, assumptions and estimates include, but are not limited to, the following: (i) fair value measurements; (ii) share-based compensation expense; (iii) consolidation of variable interest entities; and (iv) business combinations. These judgments, estimates and assumptions are inherently subjective in nature and, therefore, actual results may differ from our estimates and assumptions.
Cash and Cash Equivalents
Cash and cash equivalents primarily include unrestricted deposits with financial institutions in checking, money market and short-term certificate of deposit accounts and certain short-term commercial paper. We consider all highly liquid investments with original maturity dates of three months or less to be cash equivalents.
Restricted Cash and Restricted Cash Equivalents
Restricted cash and restricted cash equivalents consist primarily of cash deposits, certificate of deposit accounts held on reserve, money market funds held by consolidated VIEs, and collection balances. These accounts are earmarked as restricted because the balances are either member balances held in our custody, cash segregated for regulatory purposes associated with brokerage activities, escrow requirements for certain debt facilities and derivative agreements, deposits required by various bank holding companies we partner with ("Member Banks") that support one or more of our products, loan collection balances awaiting disbursement, consolidated VIE cash balances that we cannot use for general operating purposes, or other legally restricted balances.
Loans
Our loan portfolio consists of (i) personal loans, student loans and home loans, which are held for sale and measured at fair value, and (ii) credit card loans, and commercial and consumer banking loans, which are measured at amortized cost. The commercial and consumer banking portfolio is primarily inclusive of commercial real estate loans, commercial and industrial loans and residential real estate and other consumer loans.
Loans Measured at Fair Value
Loans that we intend to sell to third-party purchasers or for which we do not have the ability and intent to hold for the foreseeable future are classified as held for sale. We elected the fair value option to measure our personal loans, student loans and home loans, as we believe that fair value best reflects the expected economic performance of the loans, as well as our intentions given our gain-on-sale origination model. Therefore, these loans are carried at fair value on a recurring basis. All direct fees and costs related to the origination process are recognized in earnings as earned or incurred. We record the initial fair value measurement and subsequent measurement changes in fair value in the period in which the changes occur within noninterest income-loan origination and salesin the unaudited condensed consolidated statements of operations and comprehensive income (loss). We record cash flows related to loans held for sale within cash flows from operating activitiesin the unaudited condensed consolidated statements of cash flows.
Securitized loans are assets held by consolidated special purpose entities ("SPE") as collateral for bonds issued, for which fair value changes are recorded within noninterest income-securitizationsin the unaudited condensed consolidated statements of operations and comprehensive income (loss). Gains or losses recognized upon deconsolidation of a VIE are also recorded within noninterest income-securitizations.
Loans Measured at Amortized Cost
For our loans measured at amortized cost, direct loan origination costs are deferred and amortized on a straight-line basis over the privilege period (12 months) for credit card loans and amortized using the effective interest method over the contractual term of the loans for commercial and consumer banking loans, within interest income-loansin the unaudited condensed consolidated statements of operations and comprehensive income (loss). During the three and six months ended
12
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
June 30, 2022, we amortized $2,088 and $3,685, respectively, of deferred costs into interest income and had a remaining balance of deferred costs of $4,600 as of June 30, 2022.
Commercial and consumer banking loans are reported as delinquent when they become 30 or more days past due. For all commercial and consumer banking loans, we stop accruing interest and reverse all accrued but unpaid interest after 90 days of delinquency. For consumer banking loans, delinquent loans are charged off after 120 days of delinquency or on the date of confirmed loss.
Purchased Credit Deteriorated Assets
In connection with the Bank Merger, as further discussed in Note 2, we obtained purchased credit deteriorated ("PCD") loans. PCD loans are acquired financial assets (or groups of financial assets with similar risk characteristics) that, as of the date of acquisition, have experienced a more-than-insignificant deterioration in credit quality since origination. Indicators that an acquired asset may meet the definition of a PCD asset include days past due status, nonaccrual status, troubled debt restructuring status and other loan agreement violations. We were required to record an allowance for the acquired PCD loans, with a corresponding increase to the amortized cost basis as of the acquisition date. Recognition of the initial allowance for credit losses upon the acquisition of PCD loans does not impact net income. Changes in estimates of expected credit losses after acquisition are recognized through the provision for credit losses. See Note 7 for the rollforward of our allowance for credit losses.
Troubled Debt Restructuring
In connection with the Bank Merger, as further discussed in Note 2, we obtained troubled debt restructuring ("TDR") loans. TDR loans are those for which the contractual terms have been restructured to grant one or more concessions to a borrower who is experiencing financial difficulty. Concessions may include several types of assistance to aid customers and maximize payments received, and vary by borrower-specific characteristics. Loans with short-term and other insignificant modifications that are not considered concessions are not TDRs. TDRs identified by Golden Pacific prior to the acquisition were recorded at fair value with a new accounting basis established as of the date of acquisition. There were no modifications subsequent to acquisition.
Allowance for Credit Losses
As of June 30, 2022, we applied ASC 326, Financial Instruments-Credit Losses ("ASC 326"), to the following: (i) cash equivalents and restricted cash equivalents, (ii) accounts receivable from contracts with customers, inclusive of servicing related receivables, (iii) margin receivables, which were attributable to our activities at 8 Limited, (iv) certain loan repurchase reserves representing guarantees of credit exposure, (v) loans measured at amortized cost, including credit card, and commercial and consumer banking loans acquired during the first quarter of 2022, and (vi) investments in available-for-sale debt securities. Our approaches to measuring the allowance for credit losses are disclosed in our Annual Report on Form 10-K.
See Note 7 for a rollforward of the allowance for credit losses.
Investments in Available-For-Sale Debt Securities
An allowance for credit losses on our investments in available-for-sale ("AFS") debt securities is required for any portion of impaired securities that is attributable to credit-related factors. As of June 30, 2022, we concluded that the credit-related impairment was immaterial. We did not recognize an allowance for credit losses on impaired investments in AFS debt securities as of June 30, 2022.
Investments in Equity Securities
Our investments in equity securities consist of investments for which fair values are not readily determinable, which we elect to measure using the alternative method of accounting, under which they are measured at cost less any impairment and adjusted for changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuers. Our investments in equity securities are presented within other assetsin our unaudited condensed consolidated balance sheets. Adjustments to the carrying values of our investments in equity securities, such as impairments and unrealized gains, are recognized within noninterest income-otherin the unaudited condensed consolidated statements of operations and comprehensive income (loss).
13
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Restricted Investments
Subsequent to operating SoFi Bank, we have investments in Federal Reserve Bank ("FRB") stock and Federal Home Loan Bank ("FHLB") stock, which are restricted investment securities that are not marketable. These investments are presented within other assetsin our unaudited condensed consolidated balance sheets and are carried at cost and reviewed for impairment if indicators of impairment exist at the reporting date.
Equity Method Investments
In August 2021, we purchased a 5% interest in Lower Holding Company ("Lower") for $20,000 and were granted a seat on Lower's board of directors. We accounted for the investment under the equity method of accounting. The investment was not deemed to be significant under either Regulation S-X, Rule 3-09 or Rule 4-08(g).
In January 2022, we relinquished our seat on Lower's board of directors, and have no further rights to a seat on Lower's board of directors. As such, we no longer have significant influence over the investee, and we ceased recognizing Lower equity investment income subsequent to that date. Our equity method investment income for the six months ended June 30, 2022 was immaterial. Additionally, we did not receive any distributions during the six months ended June 30, 2022. As of June 30, 2022, our investment was presented within other assetsin the unaudited condensed consolidated balance sheets and was measured using the measurement alternative method of accounting, which is further discussed in Note 8.
Property, Equipment and Software
Software includes software acquired in business combinations, purchased software and capitalized software development costs. The capitalization of software development costs is based on whether the software is for internal use, or is to be sold or otherwise marketed. Costs related to internally-developed software for internal use are capitalized when preliminary project efforts are successfully completed, and it is probable that both the project will be completed and the software will be used as intended. For software to be sold or marketed, development costs are capitalized after the technological feasibility of the software has been established. Capitalized costs consist of salaries and compensation costs for employees, fees paid to third-party consultants who are directly involved in development efforts and costs incurred for upgrades and functionality enhancements. Research and development costs incurred prior to the establishment of technological feasibility (for software to be sold or marketed) or prior to completion of preliminary project efforts (for internal use software) are expensed as incurred.
Deposits
We commenced offering deposit accounts (referred to as "SoFi Checking and Savings" accounts) to our members through SoFi Bank in the first quarter of 2022. Our interest-bearing deposits primarily consist of demand deposits, savings deposits and, to a lesser extent, time deposits. We also have noninterest-bearing deposits.
The following table presents a detail of interest-bearing deposits as of the date indicated:
June 30, 2022
Interest-bearing deposits:
Demand deposits(1)
$ 1,561,339
Savings deposits(1)
1,049,650
Time deposits 18,474
Total interest-bearing deposits $ 2,629,463
_____________________
(1) For deposit liabilities with no defined maturities, the fair value of the liabilities reflects the amount payable on demand at the reporting date.
14
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
As of June 30, 2022, the amount of time deposits that exceeded the insured limit (referred to as "uninsured deposits") totaled $10,969. As of June 30, 2022, future maturities of our total time deposits were as follows:
Remainder of 2022 $ 13,842
2023 3,565
2024 654
2025 30
2026 281
Thereafter 102
Total $ 18,474
Derivative Financial Instruments
The following table presents the gains (losses) recognized on our derivative instruments during the periods indicated:
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Derivative contracts to manage future loan sale execution risk(1)
$ 69,535 $ (13,937) $ 230,142 $ 22,134
Derivative contracts to manage securitization investment interest rate risk(1)(2)
2,749 - 9,068 -
Interest rate lock commitments ("IRLCs")(1)
4,159 642 (2,639) (7,860)
Interest rate caps(1)
(903) - (3,027) -
Purchase price earn-out(1)
211 - 1,042 -
Third-party warrants(3)
(244) - (169) -
Total
$ 75,507 $ (13,295) $ 234,417 $ 14,274
_____________________
(1) Recorded within noninterest income-loan origination and salesin the unaudited condensed consolidated statements of operations and comprehensive income (loss).
(2) Represents derivative instruments utilized to manage interest rate risk associated with certain of our securitization investments.
(3) For the three and six months ended June 30, 2022, includes $(461) and $(603), respectively, recorded within noninterest income-otherand $217 and $434, respectively, recorded within noninterest expense-general and administrativein the unaudited 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 of $964, as we are also a customer of the third party.
The following table presents information about derivative instruments subject to enforceable master netting arrangements as of the dates indicated:
June 30, 2022 December 31, 2021
Gross Derivative Assets Gross Derivative Liabilities Gross Derivative Assets Gross Derivative Liabilities
Interest rate swaps $ - $ (21,762) $ 5,444 $ -
Interest rate caps - (3,695) - (668)
Home loan pipeline hedges 2,243 (259) 117 (313)
Total, gross $ 2,243 $ (25,716) $ 5,561 $ (981)
Derivative netting (1,371) 1,371 (117) 117
Total, net(1)
$ 872 $ (24,345) $ 5,444 $ (864)
_____________________
(1) As of June 30, 2022 and December 31, 2021, we had a cash collateral requirement of $21,762 and $299, respectively, related to these instruments.
15
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
The following table presents the notional amounts of derivative contracts outstanding as of the dates indicated:
June 30, 2022 December 31, 2021
Derivative contracts to manage future loan sale execution risk:
Interest rate swaps $ 5,360,000 $ 4,210,000
Home loan pipeline hedges 326,000 421,000
Interest rate caps 405,000 405,000
Interest rate swaps(1)
310,000 -
IRLCs(2)
314,096 357,529
Interest rate caps(3)
405,000 405,000
Total
$ 7,120,096 $ 5,798,529
_____________________
(1) Represents interest rate swaps utilized to manage interest rate risk associated with certain of our securitization investments.
(2) Amounts correspond with home loan funding commitments subject to IRLC agreements.
(3) 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.

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 8 for additional information on our derivative assets and liabilities.
Safeguarding Asset and Liability
Through our SoFi Invest product (via our wholly-owned subsidiary, SoFi Digital Assets, LLC, a licensed money transmitter), our members can invest in digital assets. We engage third parties to provide custodial services for our digital assets offering, which includes holding the cryptographic key information and working to protect the digital assets from loss or theft. The third-party custodians hold digital assets as custodial assets in an account in SoFi's name for the benefit of our members. We maintain the internal recordkeeping of our members' digital assets, including the amount and type of digital assets owned by each of our members in the custodial accounts. We currently utilize two third-party custodians. Therefore, we have concentration risk in the event the custodian is not able to perform in accordance with our agreement.
In accordance with Staff Accounting Bulletin No. 121 ("SAB 121"), which is further discussed under "Recently Adopted Accounting Standards" in this Note 1, we recognize a digital assets safeguarding liability within accounts payable, accruals and other liabilities in our unaudited condensed consolidated balance sheets reflecting our obligation to safeguard the digital assets held by third-party custodians for the benefit of our members. We also recognize a corresponding safeguarding asset within other assets in our unaudited condensed consolidated balance sheets. The safeguarding liability and corresponding safeguarding asset are measured and recorded at the fair value of the digital assets held by the custodians at each reporting date, as measured in accordance with ASC 820, Fair Value Measurement ("ASC 820"). Subsequent changes to the fair value measure are reflected as equal and offsetting adjustments to the carrying values of the safeguarding liability and corresponding safeguarding asset. We evaluate any potential loss events, such as theft, loss or destruction of the cryptographic keys, that may affect the measurement of the safeguarding asset, which would be reflected in our results of operations in the period the loss occurs. Measurement changes do not impact our unaudited condensed consolidated statements of operations and comprehensive income (loss) unless such a loss event is identified. As of June 30, 2022, we did not identify any loss events. See Note 8 for additional information on the fair value measurement of the safeguarding liability and corresponding safeguarding asset.
Foreign Currency Translation Adjustments
We revalue assets, liabilities, income and expense denominated in non-United States currencies into United States dollars using applicable exchange rates. For foreign subsidiaries in which the functional currency is the subsidiary's local currency, gains and losses relating to foreign currency translation adjustments are included in accumulated other comprehensive loss in our unaudited condensed consolidated balance sheets. For foreign subsidiaries in which the functional currency is the United States Dollar, gains and losses relating to foreign currency transaction adjustments are included within earnings in the unaudited condensed consolidated statements of operations and comprehensive income (loss).
16
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Due to the highly inflationary economic environment in Argentina, we use the United States Dollar as the functional currency of our Argentinian operations in accordance with ASC 830, Foreign Currency Matters. Our activities in Argentina are related to our Technology Platform segment and commenced in the first quarter of 2022 with the Technisys Merger.
Revenue Recognition
In accordance with ASC 606, Revenue from Contracts with Customers("ASC 606"), 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 accounted for under ASC 606 are discussed in our Annual Report on Form 10-K, with notable updates provided herein.
Technology Products and Solutions
We earn fees for providing an integrated platform as a service for financial and non-financial institutions. Within our technology products and solutions fee arrangements, certain contracts contain a provision for a fixed, upfront implementation fee related to setup activities, which represents an advance payment for future technology platform services. In these arrangements, our implementation fees are recognized ratably over the contract life, as we consider the implementation fee partially earned each month that we meet our performance obligation over the life of the contract.
Commencing in March 2022 with the Technisys Merger, we earn subscription and service fees for providing software licenses and associated services. Software license and service arrangements comprise one or more software licenses, implementation, maintenance, and other software-related services. We recognize revenue related to software licenses upon delivery of the license, as we consider the license to be satisfied at a point in time. Software is considered delivered when control passes to the customer following the user-acceptance testing period.
We charge a recurring subscription fee for the software license and related maintenance services. Other software-related services are billed on a periodic basis as the services are provided. Certain arrangements for software and related services contain a provision for a fixed upfront payment, which in some cases may provide a material right to the customer with respect to the start and renewal of the subscription. Fees charged are part of the transaction price and are allocated to the performance obligations on a relative standalone selling price basis, as follows:
The standalone selling price of maintenance varies in proportion with the standalone selling price of the underlying license. We allocate the subscription fee between the license and maintenance based upon this proportion. We recognize the maintenance fees ratably over the maintenance period, as we stand ready to provide maintenance services during the period.
Non-maintenance software-related services fees are recognized over the period during which the services are provided, as we consider these services to be satisfied over time. We use an input model based on hours incurred to provide the services, which directly correspond with the value to which the customer is entitled.
If a contract contains a substantive upfront payment that creates a material right to subscribe or renew a subscription, the upfront payment is allocated to the material right and is recognized over the period of benefit associated with the right to subscribe or renew a subscription, typically the product life.
We had deferred revenues of $7,602 and $2,553 as of June 30, 2022 and December 31, 2021, respectively, which are presented within accounts payable, accruals and other liabilitiesin the unaudited condensed consolidated balance sheets. During the three and six months ended June 30, 2022, we recognized revenue of $1,989 and $2,774, respectively, associated with deferred revenues within noninterest income-technology products and solutionsin the unaudited condensed consolidated statements of operations and comprehensive income (loss). During the three and six months ended June 30, 2021, we recognized revenue of $182 and $338, respectively, associated with deferred revenues.
Sales commissions:Capitalized sales commissions presented within other assetsin the unaudited condensed consolidated balance sheets, which are incurred in connection with obtaining our technology products and solutions, were $1,087 and $678 as of June 30, 2022 and December 31, 2021, respectively. Additionally, we incur ongoing monthly commissions, which are expensed as incurred, as the benefit of such sales efforts are realized only in the period in which the commissions are earned. During the three and six months ended June 30, 2022, commissions recorded within noninterest expense-sales and marketingin the unaudited condensed consolidated statements of operations and comprehensive income (loss) were $1,096 and $2,217, respectively, of which $107 and $189, respectively, represented amortization of capitalized sales
17
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
commissions. During the three and six months ended June 30, 2021, commissions were $961 and $1,770, respectively, of which $79 and $143, respectively, represented amortization of capitalized sales commissions.
Referrals
We earn specified referral fees in connection with referral activities we facilitate through our platform. This arrangement contains variable consideration that is constrained due to the potential reversal of referral fulfillment fees. We recognize a liability within accounts payable, accruals and other liabilitiesin the unaudited condensed consolidated balance sheets for the estimated referral fulfillment fee penalty, which represents the amount of consideration received that we estimate will reverse. The liability was $522 and $118 as of June 30, 2022 and December 31, 2021, respectively.
Contract Balances
As of June 30, 2022 and December 31, 2021, accounts receivable, net associated with revenue from contracts with customers were $60,562 and $33,748, respectively, which were reported within other assetsin the unaudited condensed consolidated balance sheets. The increase in contract balances during the current period includes the effect of the Technisys Merger, which contributed $18,192 to the balance as of June 30, 2022.
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. Revenues from contracts with customers are presented within noninterest income-technology products and solutionsand noninterest income-otherin the unaudited condensed consolidated statements of operations and comprehensive income (loss). There were no revenues from contracts with customers attributable to our Lending segment for any of the periods presented.
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Financial Services
Referrals
$ 8,805 $ 3,140 $ 16,573 $ 5,394
Brokerage
4,156 7,054 8,886 11,666
Payment network
3,007 1,473 7,293 2,675
Equity capital markets services - 1,760 - 1,760
Enterprise services
225 2,696 428 2,754
Total
$ 16,193 $ 16,123 $ 33,180 $ 24,249
Technology Platform
Technology services
$ 81,111 $ 44,950 $ 140,268 $ 90,609
Software licenses 558 - 1,258 -
Payment network
558 379 736 821
Total
$ 82,227 $ 45,329 $ 142,262 $ 91,430
Total Revenue from Contracts with Customers
Technology services
$ 81,111 $ 44,950 $ 140,268 $ 90,609
Software licenses 558 - 1,258 -
Referrals
8,805 3,140 16,573 5,394
Brokerage
4,156 7,054 8,886 11,666
Payment network
3,565 1,852 8,029 3,496
Equity capital markets services - 1,760 - 1,760
Enterprise services
225 2,696 428 2,754
Total
$ 98,420 $ 61,452 $ 175,442 $ 115,679
18
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Recently Adopted Accounting Standards
In October 2021, the FASB issued Accounting Standards Update ("ASU") 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The ASU requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, rather than at fair value. The standard should be applied prospectively to business combinations occurring on or after the effective date of the amendments. We early adopted the standard effective January 1, 2022 and applied its provisions to our acquisitions in 2022. The adoption of this standard did not have a material impact on our consolidated financial statements.
In March 2022, the SEC released SAB 121, which provides interpretive guidance for an entity to consider when it has obligations to safeguard crypto-assets held for its platform users, whether directly or through an agent or another third party acting on its behalf. SAB 121 requires an entity to record a liability to reflect its obligation to safeguard the crypto-assets, as well as a corresponding safeguarding asset, both of which should be measured at the fair value of the crypto-assets being safeguarded for the entity's users. Entities should evaluate any potential loss events, such as theft, loss or destruction of the cryptographic keys, that may affect the measurement of the asset. SAB 121 also requires financial statement disclosure, including the nature and amount of crypto-assets that the entity holds for its users, any vulnerabilities that may arise as a result of any concentration in crypto-assets, and information about who is responsible for the record-keeping of the crypto-assets, the holding of the cryptographic keys and safeguarding the crypto-assets, among other disclosure considerations. Disclosures must also be made in accordance with ASC 820. SAB 121 was effective for us for the interim period ending June 30, 2022. We applied the guidance through retrospective application as of January 1, 2022, at which time the value of our members' digital assets was $266,014. As of June 30, 2022, the adoption date, the value of our members' digital assets was $112,010, which is reflected as a digital assets safeguarding liability and corresponding digital assets safeguarding asset within accounts payable, accruals and other liabilitiesand other assets, respectively, in our unaudited condensed consolidated balance sheets. Our application of this guidance did not impact our results of operations. We also enhanced our disclosures around our digital assets arrangements and our role in safeguarding them. See Note 1 and Note 8 for the applicable disclosures.
Recent Accounting Standards Issued, But Not Yet Adopted
In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The ASU addresses two topics: (i) 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 is effective for fiscal years and interim periods beginning after December 15, 2022. Early adoption is permitted. If an entity elects to early adopt this standard in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes the interim period. An entity may elect to early adopt either of the two topics separately, or both. The standard should be applied prospectively; however, for the TDR provisions, an entity has the option to apply a modified retrospective transition method. We are currently evaluating the effect of adopting this standard on our consolidated financial statements and related disclosures.
Note 2. Business Combinations
Acquisition of Golden Pacific Bancorp, Inc.
On February 2, 2022, we acquired Golden Pacific Bancorp, Inc., a bank holding company, and its wholly-owned subsidiary, which is a national bank (collectively referred to as "Golden Pacific"), pursuant to an Agreement and Plan of Merger dated as of March 8, 2021 by and among the Company, a wholly-owned subsidiary of the Company, and Golden Pacific. In the business combination, we acquired all of the outstanding equity interests in Golden Pacific for total cash purchase consideration of $22.3 million (the "Bank Merger"). After closing the Bank Merger, we became a bank holding company and Golden Pacific began operating as SoFi Bank, National Association ("SoFi Bank"). We are duly registered as a bank holding company with the Board of Governors of the Federal Reserve System (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").
19
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
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.
The closing of the Bank Merger was subject to regulatory approval. On January 18, 2022, we received approval from the Federal Reserve of our application to become a bank holding company under the Bank Holding Company Act, and we received conditional approval from the OCC to close the Bank Merger. The OCC also approved our application to change the composition of Golden Pacific's assets in connection with the Bank Merger. The OCC conditional approval imposed a number of conditions, including that SoFi Bank have initial paid-in capital of no less than $750 million and adhere to an operating agreement. Golden Pacific's community bank business continues to operate as a division of SoFi Bank.
A portion of the total cash purchase consideration ($0.6 million) was held back by the Company to satisfy any indemnification or certain other obligations ("Holdback Amount"), as certain legal proceedings with which Golden Pacific is involved as a plaintiff were not resolved at the time the Bank Merger closed. The Holdback Amount will be used for further financing or costs incurred associated with the litigation, which we began incurring during the second quarter of 2022, and the remaining amount upon resolution of the litigation, if any, will be released to the Golden Pacific shareholders. Additionally, we held back a $3.3 million payable to a dissenting Golden Pacific shareholder pending resolution of the shareholder's 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.
The Bank Merger was accounted for as a business combination. The preliminary purchase consideration was allocated to the tangible and intangible assets acquired and liabilities assumed based on the estimated fair values as of the acquisition date, which were measured in accordance with the principles outlined in ASC 820. The excess of the total purchase consideration over the fair value of the net assets acquired of $11.2 million was allocated to goodwill, none of which is expected to be deductible for tax purposes, and which is allocated to our Financial Services segment. Goodwill is primarily attributable to the expected benefits of operating a national bank. The results of operations of Golden Pacific are included in SoFi's consolidated financial statements as of and for the three and six months ended June 30, 2022. As the acquisition was not determined to be a significant acquisition under ASC 805, Business Combinations, we are not disclosing the pro forma impact of this acquisition to the results of operations in our interim and annual filings with the SEC.
Identifiable intangible net assets at the date of acquisition included finite-lived intangible assets for core deposits with an aggregate fair value of $1.0 million. The intangible assets are being amortized over a period of 7.3 years based on the estimated economic life of the underlying assets.
We incurred total acquisition-related costs related to the Bank Merger of $2.2 million, which were incurred during the three months ended March 31, 2021, and are presented within noninterest expense-general and administrativein the unaudited condensed consolidated statements of operations and comprehensive income (loss).
Acquisition of Technisys S.A.
On March 3, 2022, we acquired Technisys S.A., a Luxembourg société anonyme ("Technisys"), pursuant to an Agreement and Plan of Merger dated as of February 19, 2022 and amended as of March 3, 2022, by and among the Company, Technisys, Atom New Delaware, Inc., a Delaware corporation and a wholly owned subsidiary of Atom, and Atom Merger Sub Corporation, a Delaware corporation and wholly owned subsidiary of SoFi Technologies ("Technisys Merger"). In the business combination, we acquired all of the outstanding equity interests in Technisys. Technisys is a cloud-native digital and core banking platform with an existing footprint of financial services customers in Latin America. The Technisys Merger was accounted for as a business combination.
20
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
The following table presents the components of the purchase consideration to acquire Technisys:
Fair value of common stock issued(1)
$ 875,042
Fair value of awards assumed(2)
2,855
Amounts payable to settle vested employee performance awards(3)
37,297
Settlement of pre-combination transactions between acquirer and acquiree 235
Total purchase consideration
$ 915,429
___________________
(1) Reflects the shares of SoFi common stock issued upon closing the acquisition of 81,856,112, inclusive of 6,903,663 shares held in escrow, multiplied by the closing stock price of SoFi common stock on the closing date of the Technisys Merger. As of June 30, 2022, the purchase price allocation process for Technisys was not finalized, as further discussed below.
(2) We contemporaneously converted outstanding performance awards into restricted stock units ("RSUs") to acquire common stock of SoFi ("Replacement Awards"). The fair value of awards assumed in the purchase consideration was based on the closing stock price of SoFi common stock on the closing date of the Technisys Merger. Refer to Note 12 for additional information on our RSUs, including the Replacement Awards.
(3) We made payments of $14,773 and $17,641 related to this component of purchase consideration during the three and six months ended June 30, 2022, respectively.
As of June 30, 2022, the equity component of the total purchase consideration remained subject to further adjustment, pending final agreement regarding a closing net working capital calculation specified in the merger agreement. Any further adjustment to the equity consideration, which may increase or decrease by up to 598,068 shares, would similarly impact the carrying value of recognized goodwill, but would not impact the estimated fair values of the assets acquired and liabilities assumed in conjunction with the transaction.
The following table presents the allocation of the preliminary total purchase consideration to the estimated fair values of the identified assets acquired and liabilities assumed of Technisys as of the date of acquisition, as well as measurement period adjustments reflected in the second quarter of 2022, which also impacted the amount of goodwill:
Preliminary Purchase Price Allocation
Measurement Period Adjustments(1)
Updated Purchase Price Allocation
Assets acquired
Cash and cash equivalents
$ 25,710 $ - $ 25,710
Accounts receivable(2)
15,354 (2,303) 13,051
Intangible assets(3)
239,000 - 239,000
Operating lease right-of-use ("ROU") assets
587 - 587
Other assets
1,011 2,361 3,372
Total identifiable assets acquired
281,662 58 281,720
Liabilities assumed
Accounts payable, accruals and other liabilities
16,462 7,500 23,962
Operating lease liabilities 587 - 587
Deferred income taxes(4)
55,104 2,239 57,343
Total liabilities assumed 72,153 9,739 81,892
Total identified net assets acquired 209,509 (9,681) 199,828
Goodwill(5)
705,920 9,681 715,601
Total consideration $ 915,429 $ - $ 915,429
_________________
(1)The measurement period adjustments did not have a significant impact on our results of operations. The adjustment to accounts payable, accruals and other liabilities includes a tax payable adjustment of $6,548.
(2)Included accounts receivable and unbilled revenue with a gross contractual amount of $15,407. At the date of acquisition, the Company expected $2,356 to be uncollectible.
21
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
(3)Intangible assets consist of finite-lived intangible assets, as follows:
Gross carrying amount
Weighted-average useful life (years)
Developed technology(a)
$ 187,000 8.8
Customer-related(b)
42,000 4.8
Trade names, trademarks and domain names(c)
10,000 8.8
__________________
(a) Valued using the Multi-Period Excess Earnings Method ("MPEEM"), which is a form of the income approach. The significant assumptions include: (i) the estimated annual net cash flows, which are a function of expected earnings attributable to the asset (and include an assumed technology migration curve), contributory asset charges and the applicable tax rate, and (ii) an assumed discount rate, which reflects the risk of the asset relative to the overall risk of Technisys.
(b) Valued using the With and Without Method, which is a form of the income approach. The significant assumptions include: (i) the estimated annual revenues and net cash flows both with the existing customer base and without the existing customer base, which include assumptions regarding revenue ramp-up periods and attrition rates, and (ii) an assumed discount rate, consistent with (a) above.
(c) Valued using the Relief from Royalty Method, which is a form of the income approach. The significant assumptions include: (i) the estimated annual net cash flows, which are a function of expected earnings attributable to the asset, the probability of use of the asset, the royalty rate and the applicable tax rate, and (ii) the discount rate, consistent with (a) above.
(4)The deferred tax liabilities recognized in the acquisition were primarily related to the acquired intangible assets, in which the acquiree had a significantly lower tax basis compared to the fair value.
(5)The excess of the total purchase consideration over the fair value of the identified net assets acquired was allocated to goodwill, none of which is expected to be deductible for tax purposes. The goodwill is subject to additional changes based on the outcome of the net working capital calculation referenced earlier in this footnote. Goodwill is primarily attributable to expected growth opportunities at Technisys, and secondarily attributable to the expected synergies from leveraging the Technisys technology to enhance and expand Galileo's product offerings and operations, as well as expand its market reach. As such, all of the goodwill is allocated to the Technology Platform segment.
The Company incurred total acquisition-related costs related to the Technisys Merger of $20.6 million, of which $3.3 million were incurred during the year ended December 31, 2021, and $17.3 million were incurred during the six months ended June 30, 2022, which were presented within noninterest expense-general and administrativein the unaudited condensed consolidated statements of operations and comprehensive income (loss).
From the date of acquisition through June 30, 2022, the acquired results of operations for Technisys contributed total net revenue of $26.5 million and net loss of $9.4 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 for the three months ended June 30, 2021, and six months ended June 30, 2022 and 2021 as if the business combination had occurred on January 1, 2021:
Three Months Ended June 30, Six Months Ended June 30,
2021 2022 2021
Total net revenue $ 248,149 $ 703,775 $ 457,252
Net loss (172,431) (197,369) (373,368)
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;
an adjustment to reflect acquisition-related costs for both parties as if they were incurred during the earliest period presented; and
22
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
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.
Goodwill
A rollforward of our goodwill balance is presented below as of the date indicated:
June 30, 2022
Beginning balance
$ 898,527
Less: accumulated impairment
-
Beginning balance, net
898,527
Additional goodwill recognized(1)
726,848
Ending balance(2)
$ 1,625,375
_____________________
(1) The additional goodwill recognized as of June 30, 2022 includes $715,601 related to the Technisys Merger (inclusive of a measurement period adjustment in the second quarter of 2022) and $11,247 related to the Bank Merger.
(2) As of June 30, 2022, we had goodwill attributable to the following reportable segments: $1,588,216 to Technology Platform and $37,159 to Financial Services.
23
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Note 3. Investments in AFS Debt Securities
In the third quarter of 2021, we began investing in debt securities. As of June 30, 2022 and December 31, 2021, all of our investments in debt securities were classified as available-for-sale. During the first quarter of 2022, we acquired additional investments in AFS debt securities with the Bank Merger. The following table presents our investments in AFS debt securities as of the dates indicated:
June 30, 2022
Amortized Cost(1)
Accrued Interest Gross Unrealized Gains
Gross Unrealized Losses(2)
Fair Value
Investments in AFS debt securities(3):
U.S. Treasury securities $ 121,284 $ 151 $ - $ (3,249) $ 118,186
Multinational securities(4)
19,785 109 - (692) 19,202
Corporate bonds 42,125 256 - (2,477) 39,904
Agency mortgage-backed securities 9,650 24 - (731) 8,943
Other asset-backed securities 9,583 5 - (466) 9,122
Other(5)
2,741 21 - (186) 2,576
Total investments in AFS debt securities $ 205,168 $ 566 $ - $ (7,801) $ 197,933
December 31, 2021
Amortized Cost Accrued Interest Gross Unrealized Gains
Gross Unrealized Losses(2)
Fair Value
Investments in AFS debt securities(3):
U.S. Treasury securities $ 103,014 $ 73 $ - $ (584) $ 102,503
Multinational securities(4)
19,911 109 - (154) 19,866
Corporate bonds 39,894 235 - (480) 39,649
Agency TBA(6)
7,457 13 4 (8) 7,466
Agency mortgage-backed securities 4,153 14 - (31) 4,136
Other asset-backed securities 9,610 5 - (91) 9,524
Commercial paper 9,939 - - - 9,939
Other(5)
1,818 13 - (7) 1,824
Total investments in AFS debt securities $ 195,796 $ 462 $ 4 $ (1,355) $ 194,907
_____________________
(1) Amortized cost basis reflects the amortization of premiums of $186 and $477 during the three and six months ended June 30, 2022, respectively.
(2) As of June 30, 2022 and December 31, 2021, we determined that our unrealized loss positions related to credit losses were immaterial. 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. Further, no such investments have been in a continuous unrealized loss position for more than 12 months.
(3) Investments in AFS debt securities are recorded at fair value.
(4) Includes sovereign foreign and supranational bonds.
(5) Includes state and city municipal bond securities.
(6) Represented to-be-announced ("TBA") securities, which were securities that were delivered under the purchase contract at a later date when the underlying security was issued. The December 31, 2021 balance was paid in cash during 2022.

24
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
The following table presents the amortized cost and fair value of our investments in AFS debt securities by contractual maturity as of the date indicated:
Due Within One Year Due After One Year Through Five Years Due After Five Years Through Ten Years Due After Ten Years Total
June 30, 2022
Investments in AFS debt securities-Amortized cost:
U.S. Treasury securities $ 45,021 $ 76,263 $ - $ - $ 121,284
Multinational securities 3,942 15,843 - - 19,785
Corporate bonds 328 38,441 3,356 - 42,125
Agency mortgage-backed securities - 104 678 8,868 9,650
Other asset-backed securities - 7,600 1,983 - 9,583
Other 600 1,207 - 934 2,741
Total investments in AFS debt securities $ 49,891 $ 139,458 $ 6,017 $ 9,802 $ 205,168
Weighted average yield for investments in AFS debt securities(1)
(1.19) % (4.49) % (4.73) % (22.78) % (4.57) %
Investments in AFS debt securities-Fair value(2):
U.S. Treasury securities $ 43,986 $ 74,049 $ - $ - $ 118,035
Multinational securities 3,841 15,252 - - 19,093
Corporate bonds 318 36,158 3,172 - 39,648
Agency mortgage-backed securities - 98 630 8,191 8,919
Other asset-backed securities - 7,224 1,893 - 9,117
Other 598 1,174 - 783 2,555
Total investments in AFS debt securities $ 48,743 $ 133,955 $ 5,695 $ 8,974 $ 197,367
_____________________
(1) The weighted average yield represents the effective yield for the investment securities and is computed based on the amortized cost of each security as of June 30, 2022.
(2) Presentation of fair values of our investments in AFS debt securities by contractual maturity excludes total accrued interest of $566 as of June 30, 2022.

The following table presents the gross proceeds and gross realized gains and losses from sales, maturities and paydowns of our investments in AFS debt securities during the three and six months ended June 30, 2022. Realized gains and losses are presented within noninterest income-otherin the unaudited condensed consolidated statements of operations and comprehensive income (loss). There were no transfers between classifications of our investments in AFS debt securities during the periods presented.
Three Months Ended
June 30, 2022
Six Months Ended
June 30, 2022
Investments in AFS debt securities
Gross realized gains included in earnings $ - $ -
Gross realized losses included in earnings (124) (285)
Net realized losses (124) (285)
Gross proceeds from sales, maturities and paydowns(1)
$ 7,788 $ 37,403
_____________________
(1) Proceeds from maturities and paydowns of investments in AFS debt securities during the three and six months ended June 30, 2022 were $1,942 and $13,906, respectively.
25
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
See Note 11 for unrealized gains and losses on our investments in AFS debt securities and amounts reclassified out of accumulated other comprehensive income (loss) ("AOCI").
Note 4. Loans
As of June 30, 2022, our loan portfolio consisted of personal loans, student loans and home loans, which are measured at fair value under the fair value option election, and loans measured at amortized cost, including credit card, and commercial and consumer banking loans. 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, as of the dates indicated:
June 30, December 31,
2022 2021
Loans at fair value
Securitized student loans
$ 466,865 $ 574,328
Securitized personal loans
132,133 234,576
Student loans
3,247,510 2,876,509
Home loans
135,262 212,709
Personal loans
3,977,612 2,054,850
Total loans at fair value 7,959,382 5,952,972
Loans at amortized cost(1)
Credit card
173,867 115,912
Commercial and consumer banking:
Commercial real estate 67,742 -
Commercial and industrial 8,097 -
Residential real estate and other consumer 3,406 -
Total commercial and consumer banking 79,245 -
Total loans at amortized cost 253,112 115,912
Total loans
$ 8,212,494 $ 6,068,884
_____________________
(1) Amounts are presented net of the allowance for credit losses. See Note 1 for additional information on our loans at amortized cost as it pertains to the allowance for credit losses pursuant to ASC 326.
Loans Measured at Fair Value
The following table summarizes the aggregate fair value of our loans measured at fair value on a recurring basis as of the dates indicated:
Student Loans
Home Loans
Personal Loans
Total
June 30, 2022
Unpaid principal(1)
$ 3,657,693 $ 142,118 $ 3,943,768 $ 7,743,579
Accumulated interest
9,601 159 23,055 32,815
Cumulative fair value adjustments(1)
47,081 (7,015) 142,922 182,988
Total fair value of loans
$ 3,714,375 $ 135,262 $ 4,109,745 $ 7,959,382
December 31, 2021
Unpaid principal(1)
$ 3,356,344 $ 210,111 $ 2,188,773 $ 5,755,228
Accumulated interest
9,990 190 12,310 22,490
Cumulative fair value adjustments(1)
84,503 2,408 88,343 175,254
Total fair value of loans $ 3,450,837 $ 212,709 $ 2,289,426 $ 5,952,972
__________________
(1) These items are impacted by charge-offs during the period.
26
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
The following table summarizes the aggregate fair value of loans 90 days or more delinquent as of the dates indicated. 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.
Student Loans
Personal Loans
Total
June 30, 2022
Unpaid principal
$ 1,372 $ 8,260 $ 9,632
Accumulated interest
18 304 322
Cumulative fair value adjustments
(733) (7,266) (7,999)
Fair value of loans 90 days or more delinquent $ 657 $ 1,298 $ 1,955
December 31, 2021
Unpaid principal $ 1,589 $ 4,765 $ 6,354
Accumulated interest 32 149 181
Cumulative fair value adjustments (865) (4,189) (5,054)
Fair value of loans 90 days or more delinquent $ 756 $ 725 $ 1,481
27
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
The following table presents the changes in our loans measured at fair value on a recurring basis:
Student Loans
Home Loans
Personal Loans
Total
Three Months Ended June 30, 2022
Fair value as of March 31, 2022 $ 3,737,439 $ 146,658 $ 3,118,788 $ 7,002,885
Origination of loans
398,722 332,047 2,471,849 3,202,618
Principal payments
(167,049) (701) (461,178) (628,928)
Sales of loans
(259,690) (342,780) (1,123,898) (1,726,368)
Purchases(1)
5,274 330 67,189 72,793
Change in accumulated interest
(139) (23) 5,162 5,000
Change in fair value(2)
(182) (269) 31,833 31,382
Fair value as of June 30, 2022 $ 3,714,375 $ 135,262 $ 4,109,745 $ 7,959,382
Three Months Ended June 30, 2021
Fair value as of March 31, 2021 $ 2,666,793 $ 231,903 $ 1,573,908 $ 4,472,604
Origination of loans
859,497 792,228 1,294,384 2,946,109
Principal payments
(235,889) (1,280) (247,808) (484,977)
Sales of loans
(610,941) (841,642) (970,135) (2,422,718)
Purchases(1)
44,779 422 103,538 148,739
Change in accumulated interest
(403) 17 (153) (539)
Change in fair value(2)
15,657 665 9,808 26,130
Fair value as of June 30, 2021 $ 2,739,493 $ 182,313 $ 1,763,542 $ 4,685,348
Six Months Ended June 30, 2022
Fair value as of January 1, 2022 $ 3,450,837 $ 212,709 $ 2,289,426 $ 5,952,972
Origination of loans 1,382,526 644,430 4,497,853 6,524,809
Principal payments (394,164) (5,101) (833,632) (1,232,897)
Sales of loans (803,840) (708,150) (2,101,818) (3,613,808)
Purchases(1)
121,707 828 227,937 350,472
Change in accumulated interest (389) (31) 10,745 10,325
Change in fair value(2)
(42,302) (9,423) 19,234 (32,491)
Fair value as of June 30, 2022 $ 3,714,375 $ 135,262 $ 4,109,745 $ 7,959,382
Six Months Ended June 30, 2021
Fair value as of January 1, 2021 $ 2,866,459 $ 179,689 $ 1,812,920 $ 4,859,068
Origination of loans
1,864,182 1,527,832 2,100,073 5,492,087
Principal payments (486,108) (2,759) (506,007) (994,874)
Sales of loans
(1,547,101) (1,519,208) (1,749,576) (4,815,885)
Purchases(1)
44,850 541 104,539 149,930
Change in accumulated interest (1,652) (18) (2,340) (4,010)
Change in fair value(2)
(1,137) (3,764) 3,933 (968)
Fair value as of June 30, 2021 $ 2,739,493 $ 182,313 $ 1,763,542 $ 4,685,348
__________________
(1) Purchases reflect unpaid principal balance and relate to previously transferred loans. Purchase activity during the three and six months ended June 30, 2022 included securitization clean-up calls of $60,240 and $335,739, respectively. Additionally, during the three and six months ended June 30, 2022, the Company elected to purchase $7,290 and $7,290, respectively, of previously sold loans from certain investors. Purchase activity during the three and six months ended June 30, 2021 included securitization clean-up calls of $131,372 and $131,372, respectively. Additionally, during the three and six months ended June 30, 2021, the Company elected to purchase $15,185 and $15,185, respectively, of previously sold loans from certain investors. The Company was not required to buy back these loans. The remaining purchases during the periods presented related to standard representations and warranties pursuant to our various loan sale agreements.
28
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
(2) Changes in fair value of loans are recorded in the unaudited condensed consolidated statements of operations and comprehensive income (loss) within noninterest income-loan origination and salesfor loans held on the balance sheet prior to transfer to a third party through a sale or to a VIE and within noninterest income-securitizationsfor loans in a consolidated VIE. 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 losses included in earnings attributable to changes in instrument-specific credit risk were $23,221 and $16,725 during the three and six months ended June 30, 2022, respectively, and $9,038 and $2,111 during the three and six months ended June 30, 2021, respectively. The 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.
Loans Measured at Amortized Cost
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 as of the dates indicated:
Delinquent Loans
Current 30-59 Days 60-89 Days
≥ 90 Days(1)
Total Delinquent Loans
Total Loans(2)
June 30, 2022
Credit card $ 177,732 $ 3,570 $ 3,105 $ 8,417 $ 15,092 $ 192,824
Commercial and consumer banking:
Commercial real estate 68,479 - - - - 68,479
Commercial and industrial 8,299 7 - - 7 8,306
Residential real estate and other consumer(3)
3,417 - - - - 3,417
Total commercial and consumer banking 80,195 7 - - 7 80,202
Total loans $ 257,927 $ 3,577 $ 3,105 $ 8,417 $ 15,099 $ 273,026
December 31, 2021
Credit card $ 115,356 $ 1,893 $ 1,683 $ 2,658 $ 6,234 $ 121,590
_______________
(1)All of the credit card loans ≥ 90 days past due continued to accrue interest. As of June 30, 2022 and December 31, 2021, there were no credit card loans on nonaccrual status. As of June 30, 2022, commercial and consumer banking loans on nonaccrual status were immaterial, and there were no loans that were 90 days or more past due.
(2)For credit card, the balance is presented before allowance for credit losses of $21,974 and $7,037 as of June 30, 2022 and December 31, 2021, respectively, and accrued interest of $3,017 and $1,359, respectively. For commercial and consumer banking, the balance is presented before allowance for credit losses of $1,204 and accrued interest of $247 as of June 30, 2022.
(3)Includes residential real estate loans acquired in the Bank Merger, for which we did not elect the fair value option.
29
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
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) as of the dates indicated based on FICO scores, which are obtained at the origination of the account, and are updated as new credit information is available. The pools estimate the likelihood of borrowers with similar FICO scores to pay credit obligations based on aggregate credit performance data.
FICO June 30, 2022 December 31, 2021
≥ 800 $ 9,560 $ 10,016
780 - 799 8,388 8,624
760 - 779 9,882 9,976
740 - 759 12,289 13,581
720 - 739 16,471 18,358
700 - 719 22,579 22,579
680 - 699 26,430 21,736
660 - 679 26,513 14,044
640 - 659 19,889 1,969
< 640 40,823 707
Total credit card $ 192,824 $ 121,590
Commercial and Consumer Banking
We evaluate the credit quality of our commercial and consumer banking loan portfolio on a quarterly basis based on regulatory risk ratings. Loans are categorized into risk ratings based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors. We analyze loans individually 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 that deserves management's close attention. If left uncorrected, these 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.
30
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(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 as of June 30, 2022:
Term Loans by Origination Year
2022 2021 2020 2019 2018 Prior Total Term Loans Revolving Loans
Commercial real estate
Pass $ 8,987 $ 5,811 $ 7,680 $ 9,413 $ 5,692 $ 16,364 $ 53,947 $ 206
Watch 1,246 1,703 - 2,064 2,146 2,959 10,118 -
Special mention - - - 687 2,263 413 3,363 -
Substandard - - - - - 845 845 -
Total commercial real estate $ 10,233 $ 7,514 $ 7,680 $ 12,164 $ 10,101 $ 20,581 $ 68,273 $ 206
Commercial and industrial
Pass $ - $ 15 $ 113 $ - $ 103 $ 5,093 $ 5,324 $ 367
Watch - - - 136 - 355 491 26
Special mention - - - - - 757 757 -
Substandard - - - 234 165 942 1,341 -
Total commercial and industrial $ - $ 15 $ 113 $ 370 $ 268 $ 7,147 $ 7,913 $ 393
Residential real estate and other consumer
Pass $ - $ - $ - $ - $ - $ 3,307 $ 3,307 $ 69
Watch - - - - - 41 41 -
Total residential real estate and other consumer $ - $ - $ - $ - $ - $ 3,348 $ 3,348 $ 69
Total commercial and consumer banking $ 10,233 $ 7,529 $ 7,793 $ 12,534 $ 10,369 $ 31,076 $ 79,534 $ 668

Note 5. Variable Interest Entities
Consolidated VIEs
The Company consolidates 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. The Company makes 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. The Company's 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 June 30, 2022 and December 31, 2021, we had 12 and 13 consolidated VIEs, respectively, on our unaudited condensed consolidated balance sheets. The following table presents the assets and liabilities of consolidated VIEs that were included in our unaudited condensed consolidated balance sheets. The assets in the below table may only be used to settle
31
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
obligations of consolidated VIEs and were 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.
June 30, December 31,
2022 2021
Assets:
Restricted cash and restricted cash equivalents
$ 32,449 $ 53,161
Loans
598,998 808,904
Total assets
$ 631,447 $ 862,065
Liabilities:
Accounts payable, accruals and other liabilities
$ 314 $ 388
Debt(1)
508,012 660,419
Residual interests classified as debt
54,436 93,682
Total liabilities
$ 562,762 $ 754,489
___________________
(1)Debt is presented net of debt issuance costs and debt premiums (discounts).
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. We define an insignificant financial interest as less than 10% of the expected gains and losses of the VIE. 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. 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.
Personal Loans
As of June 30, 2022 and December 31, 2021, we had investments in eight and nine nonconsolidated personal loan VIEs, respectively. We did not establish any personal loan trusts during the six months ended June 30, 2022 and established one personal loan trust during the six months ended June 30, 2021.
We did not provide financial support to any personal loan trusts beyond our initial equity investment and we did not deconsolidate any personal loan VIEs during the six months ended June 30, 2022 and 2021.
Student Loans
As of each of June 30, 2022 and December 31, 2021, we had investments in 24 nonconsolidated student loan VIEs. We did not establish any student loan trusts during the six months ended June 30, 2022 and established three student loan trusts during the six months ended June 30, 2021, which were not consolidated as of the balance sheet date.
We did not provide financial support to any student loan trusts beyond our initial equity investment during the periods presented. We deconsolidated one student loan VIE during the six months ended June 30, 2022. We did not deconsolidate any student loan VIEs during the six months ended June 30, 2021.
32
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
The following table presents the aggregate outstanding value of asset-backed bonds and residual interests owned by the Company in nonconsolidated VIEs as of the dates indicated:
June 30, December 31,
2022 2021
Personal loans
$ 42,238 $ 62,925
Student loans
246,479 311,763
Securitization investments
$ 288,717 $ 374,688

Note 6. 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. 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-Federal National Mortgage Association ("FNMA") home loans other than standard origination representations and warranties, for which we record a liability based on expected repurchase obligations. For FNMA home loans, we have customary FNMA repurchase requirements, which do not constrain sale treatment but result in a liability for the expected repurchase requirement.
The following table summarizes our student and personal loan securitization transfers qualifying for sale accounting treatment for the three and six months ended June 30, 2021. There were no loan securitization transfers qualifying for sale accounting treatment during the three and six months ended June 30, 2022.
Three Months Ended June 30, Six Months Ended June 30,
2021 2021
Student loans
Fair value of consideration received:
Cash
$ 196,223 $ 696,264
Securitization investments
10,403 36,784
Servicing assets recognized
2,370 31,101
Total consideration
208,996 764,149
Aggregate unpaid principal balance and accrued interest of loans sold
200,379 726,505
Gain from loan sales
$ 8,617 $ 37,644
Personal loans
Fair value of consideration received:
Cash
$ 198,491 $ 198,491
Securitization investments
10,481 10,481
Servicing assets recognized
1,238 1,238
Total consideration
210,210 210,210
Aggregate unpaid principal balance and accrued interest of loans sold
200,806 200,806
Gain from loan sales
$ 9,404 $ 9,404
33
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
The following table summarizes our whole loan sales during the periods indicated:
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Student loans
Fair value of consideration received:
Cash $ 257,859 $ 425,369 $ 806,770 $ 847,710
Servicing assets recognized 2,991 3,740 8,815 8,598
Repurchase liabilities recognized (41) (79) (121) (158)
Total consideration 260,809 429,030 815,464 856,150
Aggregate unpaid principal balance and accrued interest of loans sold
261,324 412,222 807,611 825,312
Gain (loss) from loan sales
$ (515) $ 16,808 $ 7,853 $ 30,838
Home loans
Fair value of consideration received:
Cash $ 322,219 $ 856,317 $ 681,919 $ 1,552,514
Servicing assets recognized 4,482 9,367 8,720 15,906
Repurchase liabilities recognized (315) (1,035) (735) (1,974)
Total consideration
326,386 864,649 689,904 1,566,446
Aggregate unpaid principal balance and accrued interest of loans sold
342,952 841,734 708,512 1,519,303
Gain (loss) from loan sales
$ (16,566) $ 22,915 $ (18,608) $ 47,143
Personal loans
Fair value of consideration received:
Cash $ 1,163,029 $ 801,437 $ 2,181,718 $ 1,612,689
Servicing assets recognized 7,659 5,078 14,083 11,081
Repurchase liabilities recognized (2,789) (1,980) (5,087) (4,064)
Total consideration received
1,167,899 804,535 2,190,714 1,619,706
Aggregate unpaid principal balance and accrued interest of loans sold
1,129,237 773,194 2,111,092 1,555,723
Gain from loan sales
$ 38,662 $ 31,341 $ 79,622 $ 63,983
34
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
The following table presents information as of the dates indicated about the unpaid principal balances of transferred loans that are not recorded in our unaudited condensed consolidated balance sheets, but with which we have a continuing involvement through our servicing agreements:
Student Loans
Home Loans
Personal Loans
Total
June 30, 2022
Loans in repayment
$ 8,911,840 $ 4,971,034 $ 5,291,541 $ 19,174,415
Loans in-school/grace/deferment
39,721 - - 39,721
Loans in forbearance
46,176 14,092 542 60,810
Loans in delinquency
102,946 8,565 100,602 212,113
Total loans serviced
$ 9,100,683 $ 4,993,691 $ 5,392,685 $ 19,487,059
December 31, 2021
Loans in repayment
$ 9,852,957 $ 4,575,001 $ 5,138,299 $ 19,566,257
Loans in-school/grace/deferment
37,949 - - 37,949
Loans in forbearance
44,833 40,353 1,120 86,306
Loans in delinquency
112,885 7,465 75,275 195,625
Total loans serviced
$ 10,048,624 $ 4,622,819 $ 5,214,694 $ 19,886,137
The following table presents additional information during the periods indicated about the servicing cash flows received and net charge-offs related to transferred loans with which we have a continuing involvement:
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Student loans
Servicing fees collected
$ 11,045 $ 14,269 $ 20,213 $ 23,294
Charge-offs, net of recoveries(1)
9,192 4,651 17,412 7,704
Home Loans
Servicing fees collected
$ 2,930 $ 1,918 $ 5,566 $ 3,531
Personal Loans
Servicing fees collected
$ 8,951 $ 7,785 $ 17,588 $ 17,275
Charge-offs, net of recoveries(1)
23,908 28,359 41,046 66,176
Total
Servicing fees collected
$ 22,926 $ 23,972 $ 43,367 $ 44,100
Charge-offs, net of recoveries
33,100 33,010 58,458 73,880
_____________________
(1)Student loan and personal 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.

Note 7. Allowance for Credit Losses
We measure our allowance for credit losses on accounts receivable under ASC 326, which primarily relates to our Technology Platform segment, and on loans measured at amortized cost, including credit card as well as commercial and consumer banking loans acquired in the Bank Merger. 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.
35
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
The following table summarizes the activity in the balances of allowance for credit losses during the periods indicated:
Accounts Receivable(1)
Credit Card(1)
Commercial and Consumer Banking(1)
Three Months Ended June 30, 2022
Balance at March 31, 2022
$ 1,652 $ 16,500 $ 1,366
Provision for credit losses(2)
1,112 10,265 (162)
Write-offs charged against the allowance(3)
(44) (4,791) -
Balance at June 30, 2022
$ 2,720 $ 21,974 $ 1,204
Three Months Ended June 30, 2021
Balance at March 31, 2021
$ 919 $ 171 $ -
Provision for credit losses(2)
645 526 -
Write-offs charged against the allowance
(334) (6) -
Balance at June 30, 2021
$ 1,230 $ 691 $ -
Six Months Ended June 30, 2022
Balance at December 31, 2021 $ 2,292 $ 7,037 $ -
Provision for credit losses(2)
521 22,242 822
Allowance for PCD loans(4)
- - 382
Write-offs charged against the allowance(3)
(93) (7,305) -
Balance at June 30, 2022
$ 2,720 $ 21,974 $ 1,204
Six Months Ended June 30, 2021
Balance at December 31, 2020 $ 562 $ 219 $ -
Provision for credit losses(2)
1,780 526 -
Write-offs charged against the allowance
(1,112) (54) -
Balance at June 30, 2021
$ 1,230 $ 691 $ -
_____________________
(1)Accounts receivable balances, net of allowance for credit losses, are presented within other assetsin the unaudited condensed consolidated balance sheets. Credit card and commercial and consumer banking loans measured at amortized cost, net of allowance for credit losses, are presented within loans in the unaudited condensed consolidated balance sheets.
(2)The provision for credit losses on accounts receivable is presented within noninterest expense-general and administrativein the unaudited condensed consolidated statements of operations and comprehensive income (loss). During the three and six months ended June 30, 2022, recoveries of amounts previously reserved related to accounts receivable were $368 and $1,760, respectively. During the three and six months ended June 30, 2021, recoveries of amounts previously reserved related to accounts receivable were $199 and $746, respectively. The provision for credit losses on credit card and commercial and consumer banking loans is presented within noninterest expense-provision for credit losses.There were immaterial recoveries of credit card losses during the three and six months ended June 30, 2022 and 2021, and immaterial recoveries on the commercial and consumer banking portfolio through June 30, 2022.
(3)The increases in credit card write-offs charged against the allowance during the three and six months ended June 30, 2022 were commensurate with our increased loan portfolio combined with elevated loss rates.
(4)We measured a PCD allowance for the loans acquired in the Bank Merger upon acquisition, which resulted in a gross-up to the allowance for credit losses, but had no impact on earnings.

Credit card: Accrued interest receivables written off during the three and six months ended June 30, 2022 were $834 and $1,285, respectively. Accrued interest receivables written off during the three and six months ended June 30, 2021 were immaterial.
36
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Note 8. Fair Value Measurements
The following tables summarize, by level within the fair value hierarchy, the carrying amounts and estimated fair values of our assets and liabilities (i) measured at fair value on a recurring basis, (ii) measured at fair value on a nonrecurring basis, or (iii) disclosed but not carried at fair value in the unaudited condensed consolidated balance sheets as of the dates presented:
June 30, 2022
Fair Value
Carrying Value Level 1 Level 2 Level 3 Total
Assets
Cash and cash equivalents(1)
$ 707,302 $ 707,302 $ - $ - $ 707,302
Restricted cash and restricted cash equivalents(1)
291,631 291,631 - - 291,631
Investments in AFS debt securities(2)(4)
197,933 137,388 60,545 - 197,933
Loans at fair value(2)
7,959,382 - - 7,959,382 7,959,382
Loans at amortized cost(1)
253,112 - - 264,348 264,348
Servicing rights(2)
176,964 - - 176,964 176,964
Asset-backed bonds(2)(5)
193,739 - 193,739 - 193,739
Residual investments(2)(5)
94,978 - - 94,978 94,978
Non-securitization investments - other(3)
22,780 - - 22,780 22,780
Third party warrants(2)(6)
766 - - 766 766
Derivative assets(2)(7)(8)
2,243 2,243 - - 2,243
Purchase price earn-out(2)(9)
625 - - 625 625
IRLCs(2)(10)
1,120 - - 1,120 1,120
Interest rate caps(2)(8)
3,987 - 3,987 - 3,987
Digital assets safeguarding asset(2)(11)
112,010 - 112,010 - 112,010
Total assets
$ 10,018,572 $ 1,138,564 $ 370,281 $ 8,520,963 $ 10,029,808
Liabilities
Time deposits(1)
$ 18,474 $ - $ 18,455 $ - $ 18,455
Debt(1)
3,723,561 783,600 2,556,006 - 3,339,606
Residual interests classified as debt(2)
54,436 - - 54,436 54,436
Derivative liabilities(2)(7)(8)
25,716 259 25,457 - 25,716
Student loan commitments(2)(10)
254 - - 254 254
Digital assets safeguarding liability(2)(11)
112,010 - 112,010 - 112,010
Total liabilities $ 3,934,451 $ 783,859 $ 2,711,928 $ 54,690 $ 3,550,477

37
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
December 31, 2021
Fair Value
Carrying Value Level 1 Level 2 Level 3 Total
Assets
Cash and cash equivalents(1)
$ 494,711 $ 494,711 $ - $ - $ 494,711
Restricted cash and restricted cash equivalents(1)
273,726 273,726 - - 273,726
Investments in AFS debt securities(2)(4)
194,907 129,835 65,072 - 194,907
Loans at fair value(2)
5,952,972 - - 5,952,972 5,952,972
Loans at amortized cost(1)
115,912 - - 118,412 118,412
Servicing rights(2)
168,259 - - 168,259 168,259
Asset-backed bonds(2)(5)
253,669 - 253,669 - 253,669
Residual investments(2)(5)
121,019 - - 121,019 121,019
Non-securitization investments - ETFs(2)
1,486 1,486 - - 1,486
Non-securitization investments - other(3)
6,054 - - 6,054 6,054
Third party warrants(2)(6)
1,369 - - 1,369 1,369
Derivative assets(2)(7)(8)
5,444 - 5,444 - 5,444
Purchase price earn-out(2)(9)
4,272 - - 4,272 4,272
IRLCs(2)(10)
3,759 - - 3,759 3,759
Student loan commitments(2)(10)
2,220 - - 2,220 2,220
Interest rate caps(2)(8)
493 - 493 - 493
Total assets
$ 7,600,272 $ 899,758 $ 324,678 $ 6,378,336 $ 7,602,772
Liabilities
Debt(1)
$ 3,947,983 $ 1,240,560 $ 2,807,253 $ - $ 4,047,813
Residual interests classified as debt(2)
93,682 - - 93,682 93,682
Derivative liabilities(2)(7)(8)
864 196 668 - 864
Total liabilities
$ 4,042,529 $ 1,240,756 $ 2,807,921 $ 93,682 $ 4,142,359
_____________________
(1)Disclosed but not carried at fair value. The carrying value of our debt is net of unamortized discounts and debt issuance costs. The fair value of our convertible notes issued in October 2021 was classified as Level 1, as it was based on an observable market quote. The fair values of our warehouse facility debt, revolving credit facility debt and credit card loans were based on market factors and credit factors specific to these financial instruments. The fair value of our securitization debt was 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. The fair value of our commercial and consumer banking loans was determined using a discounted cash flow model with key inputs relating to the underlying contractual coupons, terms, discount rate and expectations for defaults. The carrying amounts of our cash and cash equivalents and restricted cash and restricted cash equivalents approximate their fair values due to the short-term maturities and highly liquid nature of these accounts. The fair value of our time-based deposits is estimated by a discounted cash flow method using rates currently offered for deposits of similar remaining maturities.
(2)Measured at fair value on a recurring basis.
(3)Measured at fair value on a nonrecurring basis.
(4)Investments in AFS debt securities were classified as Level 1 or Level 2. The Level 1 investments utilize quoted prices in actively traded markets. The Level 2 investments 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 3 for additional information.
(5)These assets represent the carrying value of our holdings in VIEs wherein we were not deemed the primary beneficiary. As we do not provide financial support beyond our initial equity investment, our maximum exposure to loss as a result of our involvement with nonconsolidated VIEs is limited to the investment amount. See Note 5 for additional information.
(6)The key unobservable assumption used in the fair value measurement of the third party warrants is the price of the stock underlying the warrants. The fair value is measured as the difference between the stock price and the strike price of the warrants. As the strike price is insignificant, we concluded that the impact of time value on the fair value measure was immaterial.
(7)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 1 for additional information.
(8)Derivative liabilities classified as Level 1 are based on broker quotes in active markets and represent economic hedges of either loans or securitization investment fair values. 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 June 30, 2022, interest rate swaps and interest rate caps were valued using the overnight Secured Overnight Financing Rate ("SOFR") curve and the implied volatilities suggested by the SOFR rate curve. As of December 31, 2021, interest rate swaps were valued using the three-month LIBOR swap yield curve. These were determined to be observable inputs from active markets.
(9)The purchase price earn-out provision is classified as Level 3 because of our reliance on unobservable inputs, such as conditional prepayment rates, annual default rates and discount rates.
(10)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.
38
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
(11)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.

Loans
The following key unobservable assumptions were used in the fair value measurement of our loans as of the dates indicated:
June 30, 2022 December 31, 2021
Range Weighted Average Range Weighted Average
Student loans
Conditional prepayment rate
16.9% - 25.3%
20.2%
16.5% - 26.3%
19.2%
Annual default rate
0.2% - 4.4%
0.4%
0.2% - 4.2%
0.4%
Discount rate
3.2% - 8.0%
3.6%
1.9% - 7.1%
2.9%
Home loans
Conditional prepayment rate
2.5% - 7.9%
7.3%
4.8% - 16.4%
12.4%
Annual default rate
0.1% - 0.4%
0.1%
0.1% - 0.2%
0.1%
Discount rate
4.5% - 13.0%
4.8%
2.5% - 13.0%
2.6%
Personal loans
Conditional prepayment rate
16.1% - 43.8%
19.1%
18.4% - 37.7%
20.5%
Annual default rate
4.3% - 35.1%
4.6%
4.2% - 30.0%
4.4%
Discount rate
5.1% - 9.4%
5.4%
3.9% - 7.0%
4.0%
The key assumptions included in the above table are defined as follows:
Conditional prepayment rate- The monthly annualized proportion of the principal of a pool of loans that is assumed to be paid off prematurely in each period. An increase in the conditional prepayment rate, in isolation, would result in a decrease in a fair value measurement. The weighted average assumption was weighted based on relative fair value.
Annual default rate- The annualized rate of borrowers who do not make loan payments on time. An increase in the annual default rate, in isolation, would result in a decrease in a fair value measurement. The weighted average assumption was weighted based on relative fair value.
Discount rate - The weighted average rate at which the expected cash flows are discounted to arrive at the net present value of the loans. An increase in the discount rate, in isolation, would result in a decrease in a fair value measurement. The weighted average assumption was weighted based on relative fair value.
See Note 4 for additional loan fair value disclosures.
Servicing Rights
Servicing rights for student loans and personal loans do not trade in an active market with readily observable prices. Similarly, home loan servicing rights infrequently trade in an active market. At the time of the underlying loan sale or the assumption of servicing rights, the fair value of servicing rights is determined using a discounted cash flow methodology based on observable and unobservable inputs. Management classifies servicing rights as Level 3 due to the use of significant unobservable inputs in the fair value measurement.
39
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
The following key unobservable inputs were used in the fair value measurement of our classes of servicing rights as of the dates presented:
June 30, 2022 December 31, 2021
Range Weighted Average Range
Weighted Average
Student loans
Market servicing costs
0.1% - 0.2%
0.1%
0.1% - 0.2%
0.1%
Conditional prepayment rate
15.1% - 23.3%
19.1%
15.2% - 25.6%
20.4%
Annual default rate
0.2% - 4.3%
0.4%
0.2% - 4.3%
0.4%
Discount rate
7.3% - 7.3%
7.3%
7.3% - 7.3%
7.3%
Home loans
Market servicing costs
0.1% - 0.1%
0.1%
0.1% - 0.1%
0.1%
Conditional prepayment rate
5.0% - 11.2%
5.2%
10.0% - 16.4%
11.5%
Annual default rate
0.1% - 0.1%
0.1%
0.1% - 0.2%
0.1%
Discount rate
8.0% - 8.0%
8.0%
7.5% - 7.5%
7.5%
Personal loans
Market servicing costs
0.2% - 1.3%
0.3%
0.2% - 1.1%
0.2%
Conditional prepayment rate
17.0% - 44.0%
25.1%
22.5% - 41.4%
26.0%
Annual default rate
3.3% - 7.0%
4.5%
3.2% - 7.0%
4.4%
Discount rate
7.3% - 7.3%
7.3%
7.3% - 7.3%
7.3%
The key assumptions included in the above table are defined as follows:
Market servicing costs - The fee a willing market participant, which we validate through actual third-party bids for our servicing, would require for the servicing of student loans, home loans and personal loans with similar characteristics as those in our serviced portfolio. An increase in the market servicing cost, in isolation, would result in a decrease in a fair value measurement. The weighted average assumption was weighted based on relative fair value.
Conditional prepayment rate - The monthly annualized proportion of the principal of a pool of loans that is assumed to be paid off prematurely in each period. An increase in the conditional prepayment rate, in isolation, would result in a decrease in a fair value measurement. The weighted average assumption was weighted based on relative fair value.
Annual default rate - The annualized rate of default within the total serviced loan balance. An increase in the annual default rate, in isolation, would result in a decrease in a fair value measurement. The weighted average assumption was weighted based on relative fair value.
Discount rate - The weighted average rate at which the expected cash flows are discounted to arrive at the net present value of the servicing rights. An increase in the discount rate, in isolation, would result in a decrease in a fair value measurement. The weighted average assumption was weighted based on relative fair value.
40
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
The following table presents the estimated decrease to the fair value of our servicing rights as of the dates indicated if the key assumptions had each of the below adverse changes:
June 30, 2022 December 31, 2021
Market servicing costs
2.5 basis points increase
$ (11,074) $ (10,822)
5.0 basis points increase
(22,191) (21,644)
Conditional prepayment rate
10% increase
$ (5,442) $ (6,260)
20% increase
(10,780) (12,031)
Annual default rate
10% increase
$ (215) $ (205)
20% increase
(428) (408)
Discount rate
100 basis points increase
$ (4,810) $ (3,782)
200 basis points increase
(9,408) (7,349)

The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. The effect on fair value of a variation in assumptions generally cannot be determined because the relationship of the change in assumptions to the fair value may not be linear. Additionally, the effect of an adverse variation in a particular assumption on the fair value of our servicing rights is calculated while holding the other assumptions constant. In reality, changes in one factor may lead to changes in other factors, which could impact the above hypothetical effects.
41
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
The following table presents the changes in the Company's servicing rights, which are measured at fair value on a recurring basis:
Student Loans Home Loans Personal Loans Total
Three Months Ended June 30, 2022
Fair value as of March 31, 2022 $ 85,957 $ 59,585 $ 27,963 $ 173,505
Recognition of servicing from transfers of financial assets 2,991 4,482 7,659 15,132
Servicing rights assumed from third parties - - 1,317 1,317
Derecognition of servicing via loan purchases
(31) - (146) (177)
Change in valuation inputs or other assumptions 5,707 1,202 2,189 9,098
Realization of expected cash flows and other changes
(9,705) (3,103) (9,103) (21,911)
Fair value as of June 30, 2022 $ 84,919 $ 62,166 $ 29,879 $ 176,964
Three Months Ended June 30, 2021
Fair value as of March 31, 2021 $ 106,338 $ 32,038 $ 22,864 $ 161,240
Recognition of servicing from transfers of financial assets
6,110 9,367 6,316 21,793
Derecognition of servicing via loan purchases
(392) - (188) (580)
Change in valuation inputs or other assumptions
(387) (1,783) 1,946 (224)
Realization of expected cash flows and other changes
(12,068) (2,065) (8,329) (22,462)
Fair value as of June 30, 2021 $ 99,601 $ 37,557 $ 22,609 $ 159,767
Six Months Ended June 30, 2022
Fair value as of January 1, 2022 $ 90,003 $ 50,533 $ 27,723 $ 168,259
Recognition of servicing from transfers of financial assets 8,815 8,720 14,083 31,618
Servicing rights assumed from third parties - - 1,946 1,946
Derecognition of servicing via loan purchases
(1,072) - (515) (1,587)
Change in valuation inputs or other assumptions 6,999 8,942 4,737 20,678
Realization of expected cash flows and other changes
(19,826) (6,029) (18,095) (43,950)
Fair value as of June 30, 2022 $ 84,919 $ 62,166 $ 29,879 $ 176,964
Six Months Ended June 30, 2021
Fair value as of January 1, 2021 $ 100,637 $ 23,914 $ 25,046 $ 149,597
Recognition of servicing from transfers of financial assets
39,699 15,906 12,319 67,924
Derecognition of servicing via loan purchases
(392) - (188) (580)
Change in valuation inputs or other assumptions
(16,115) 1,546 2,236 (12,333)
Realization of expected cash flows and other changes
(24,228) (3,809) (16,804) (44,841)
Fair value as of June 30, 2021 $ 99,601 $ 37,557 $ 22,609 $ 159,767
42
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Asset-Backed Bonds
The fair value of asset-backed bonds is determined using a discounted cash flow methodology. Management classifies 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 following key inputs were used in the fair value measurement of our asset-backed bonds as of the dates indicated:
June 30, 2022 December 31, 2021
Discount rate (range)
1.6% - 5.0%
0.6% - 3.7%
Conditional prepayment rate (range)
19.4% - 33.0%
19.5% - 32.2%
As of the dates indicated, 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 respective periods.
Residual Investments and Residual Interests Classified as Debt
Residual investments and residual interests classified as debt do not trade in active markets with readily observable prices, and there is limited observable market data for reference. The fair values of residual investments and residual interests classified as debt are determined using a discounted cash flow methodology. Management classifies residual investments and residual interests classified as debt as Level 3 due to the use of significant unobservable inputs in the fair value measurements.
The following key unobservable inputs were used in the fair value measurements of our residual investments and residual interests classified as debt as of the dates indicated:
June 30, 2022 December 31, 2021
Range Weighted Average Range
Weighted Average
Residual investments
Conditional prepayment rate
19.2% - 35.6%
21.6%
19.5% - 33.6%
23.0%
Annual default rate
0.3% - 5.3%
0.9%
0.3% - 5.7%
0.9%
Discount rate
3.9% - 10.5%
5.4%
2.6% - 10.5%
4.4%
Residual interests classified as debt
Conditional prepayment rate
19.1% - 50.7%
30.2%
20.0% - 41.8%
31.5%
Annual default rate
0.5% - 5.8%
2.7%
0.5% - 5.6%
3.2%
Discount rate
6.0% - 9.5%
6.4%
5.0% - 9.5%
5.7%
The key assumptions included in the above table are defined as follows:
Conditional prepayment rate- The monthly annualized proportion of the principal of a pool of loans that is assumed to be paid off prematurely in each period for the pool of loans in the securitization. An increase in the conditional prepayment rate, in isolation, would result in a decrease in a fair value measurement. The weighted average assumption was weighted based on relative fair value.
Annual default rate - The annualized rate of borrowers who fail to remain current on their loans for the pool of loans in the securitization. An increase in the annual default rate, in isolation, would result in a decrease in a fair value measurement. The weighted average assumption was weighted based on relative fair value.
Discount rate- The weighted average rate at which the expected cash flows are discounted to arrive at the net present value of the residual investments and residual interests classified as debt. An increase in the discount rate, in isolation, would result in a decrease in a fair value measurement. The weighted average assumption was weighted based on relative fair value.
43
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
The following table presents the changes in the residual investments and residual interests classified as debt, which are both measured at fair value on a recurring basis. We record changes in fair value within noninterest income-securitizationsin the unaudited 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-securitizationsfor residual investments, but does not impact the liability or asset balance, respectively.
Residual Investments
Residual Interests Classified as Debt
Three Months Ended June 30, 2022
Fair value as of March 31, 2022 $ 106,677 $ 70,532
Change in valuation inputs or other assumptions(1)
290 2,662
Payments (11,989) (18,758)
Fair value as of June 30, 2022 $ 94,978 $ 54,436
Three Months Ended June 30, 2021
Fair value as of March 31, 2021 $ 150,961 $ 114,882
Additions 11,787 2,170
Change in valuation inputs or other assumptions(1)
3,355 5,717
Payments (23,003) (10,224)
Fair value as of June 30, 2021 $ 143,100 $ 112,545
Six Months Ended June 30, 2022
Fair value as of January 1, 2022
$ 121,019 $ 93,682
Change in valuation inputs or other assumptions(1)
1,052 5,625
Payments(2)
(27,093) (44,871)
Fair value as of June 30, 2022 $ 94,978 $ 54,436
Six Months Ended June 30, 2021
Fair value as of January 1, 2021 $ 139,524 $ 118,298
Additions
38,168 2,170
Change in valuation inputs or other assumptions(1)
6,852 13,668
Payments(2)
(41,444) (21,591)
Fair value as of June 30, 2021 $ 143,100 $ 112,545
___________________
(1)For residual investments, the estimated amounts of gains and losses included in earnings attributable to changes in instrument-specific credit risk were immaterial during the periods presented.
(2)Payments of residual investments included residual investment sales of $220 and $220 during the three and six months ended June 30, 2022, respectively, and $2,676 and $2,676 during the three and six months ended June 30, 2021, respectively.
44
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Loan Commitments
We classify student loan commitments as Level 3 because the assets do not trade in an active market with readily observable prices and, as such, our valuations utilize significant unobservable inputs. Additionally, we classify IRLCs as Level 3, as our IRLCs are inherently uncertain and unobservable given that a home loan origination is contingent on a plethora of factors. The following key unobservable inputs were used in the fair value measurements of our IRLCs and student loan commitments as of the dates indicated:
June 30, 2022 December 31, 2021
Range Weighted Average Range
Weighted Average
IRLCs
Loan funding probability(1)
26.0% - 56.0%
53.9%
75.0% - 75.0%
75.0%
Student loan commitments
Loan funding probability(1)
95.0% - 95.0%
95.0%
95.0% - 95.0%
95.0%
___________________
(1)The probability of honoring IRLCs and student loan commitments, which reflects the percentage likelihood that an approved loan application will close based on historical experience. A significant difference between the actual funded rate and the assumed funded rate at the measurement date could result in a significantly higher or lower fair value measurement of our IRLCs and student loan commitments. The aggregate amount of student loans we committed to fund was $34,668 as of June 30, 2022. See Note 1 under "Derivative Financial Instruments"for the aggregate notional amount associated with IRLCs.
The key assumption included in the above table is defined as follows:
Loan funding probability- Our expectation of the percentage of IRLCs or student loan commitments which will become funded loans. An increase in the loan funding probabilities, in isolation, would result in an increase in a fair value measurement. The weighted average assumptions were weighted based on relative fair values.
45
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
The following table presents the changes in our IRLCs and student loan commitments, which are measured at fair value on a recurring basis. Changes in the fair values of IRLCs and student loan commitments are recorded within noninterest income-loan origination and salesin the unaudited condensed consolidated statements of operations and comprehensive income (loss).
IRLCs Student Loan Commitments
Three Months Ended June 30, 2022
Fair value as of March 31, 2022 $ (3,039) $ 23
Revaluation adjustments
1,120 (254)
Funded loans(1)
1,636 (19)
Unfunded loans(1)
1,403 (4)
Fair value as of June 30, 2022 $ 1,120 $ (254)
Three Months Ended June 30, 2021
Fair value as of March 31, 2021 $ 7,118 $ -
Revaluation adjustments
7,760 -
Funded loans(1)
(5,275) -
Unfunded loans(1)
(1,843) -
Fair value as of June 30, 2021 $ 7,760 $ -
Six Months Ended June 30, 2022
Fair value as of January 1, 2022 $ 3,759 $ 2,220
Revaluation adjustments
(1,919) (231)
Funded loans(1)
(565) (2,140)
Unfunded loans(1)
(155) (103)
Fair value as of June 30, 2022 $ 1,120 $ (254)
Six Months Ended June 30, 2021
Fair value as of January 1, 2021 $ 15,620 $ -
Revaluation adjustments
14,878 -
Funded loans(1)
(15,485) -
Unfunded loans(1)
(7,253) -
Fair value as of June 30, 2021 $ 7,760 $ -
___________________
(1)For each quarter presented, funded and unfunded loan fair value adjustments represent the unpaid principal balance of funded and unfunded loans, respectively, during the quarter multiplied by the IRLC or student loan commitment price in effect at the beginning of the quarter. For the year-to-date periods presented, amounts represent the summation of the per-quarter effects.
Non-Securitization Investments
Non-securitization investments - Otherof $22,780 and $6,054 as of June 30, 2022 and December 31, 2021, respectively, include investments for which fair values are not readily determinable, which we elect to measure using the measurement alternative method of accounting. The fair value measurements are classified within Level 3 of the fair value hierarchy due to the use of unobservable inputs in the fair value measurements. Adjustments to the carrying value, such as impairments and unrealized gains, are recognized within noninterest income-otherin the unaudited condensed consolidated statements of operations and comprehensive income (loss).
46
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
In the first quarter of 2022, we measured a former equity method investment under the measurement alternative method, which primarily drove the increase in the balance from year end. The fair value of this investment was $19,739 as of June 30, 2022.
In the second quarter of 2022, we wrote off an investment with a carrying value of $2,168 for a loss, which reflected the impact of observable market changes. We had previously recognized a gain of $3,967 on this investment during the second quarter of 2021, which reflected a value based on the investee's latest round of financing in an orderly transaction in an issuance similar to our investment holding. In that same quarter in 2021, we sold a portion of our investment for $2,000 at the same valuation.
We also had another investment with a fair value of $2,000 as of both June 30, 2022 and December 31, 2021. We did not make any adjustments to the investment value through June 30, 2022.
Purchase Price Earn-Out
We recognize a derivative asset for a purchase price earn-out in conjunction with a loan sale agreement we entered in 2018. We receive a capped contractual payout based on the respective loan pool internal rate of return over a certain hurdle rate, which is adjusted for the loan purchaser's expenses, which are generally immaterial.
The fair value of the purchase price earn-out is determined using a discounted cash flow methodology. Management classifies the purchase price earn-out as Level 3 due to the use of significant unobservable inputs in the fair value measurement. A significant difference between the expected performance of the loans included in the loan sale agreement and the actual results as of the measurement date could result in a higher or lower fair value measurement. Our key valuation inputs were as follows as of the dates indicated:
Purchase Price Earn-Out June 30, 2022 December 31, 2021
Conditional prepayment rate 22.7% 22.9%
Annual default rate 35.6% 30.0%
Discount rate 25.0% 25.0%

The key assumptions included in the above table are defined as follows:
Conditional prepayment rate- The monthly annualized proportion of the principal of the pool of loans included in the loan sale agreement that is assumed to be paid off prematurely. An increase in the conditional prepayment rate, in isolation, would result in a decrease in a fair value measurement.
Annual default rate - The annualized rate of borrowers who fail to remain current on their loans for the pool of loans included in the loan sale agreement. An increase in the annual default rate, in isolation, would result in a decrease in a fair value measurement.
Discount rate- The weighted average rate at which the expected cash flows are discounted to arrive at the net present value of the purchase price earn-out derivative. An increase in the discount rate, in isolation, would result in a decrease in a fair value measurement.
47
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
The following table presents the changes in our purchase price earn-out, which is measured at fair value on a recurring basis. Changes in the fair value are recorded within noninterest income-otherin the unaudited condensed consolidated statements of operations and comprehensive income (loss). Changes during the three and six months ended June 30, 2021 were immaterial.
Purchase Price Earn-Out
Three Months Ended June 30, 2022
Fair value as of March 31, 2022 $ 2,285
Payments (1,872)
Changes in valuation inputs or assumptions(1)
212
Fair value as of June 30, 2022 $ 625
Six Months Ended June 30, 2022
Fair value as of January 1, 2022 $ 4,272
Payments (4,689)
Changes in valuation inputs or assumptions(1)
1,042
Fair value as of June 30, 2022 $ 625
___________________
(1)The estimated amount of losses included in earnings attributable to changes in instrument-specific credit risk were immaterial during the three and six months ended June 30, 2022. The losses attributable to instrument-specific credit risk were estimated by incorporating our current default and loss severity assumptions for the purchase price earn-out. These assumptions are based on historical performance and performance expectations over the term of the underlying instrument.
Safeguarding Assets and Liabilities
The following table presents the significant digital assets held by our third-party custodians on behalf of our members as of the date indicated:
June 30, 2022
Bitcoin (BTC) $ 48,143
Ethereum (ETH) 34,135
Cardano (ADA) 8,383
Dogecoin (DOGE) 4,182
Solana (SOL) 3,778
Ethereum Classic (ETC) 2,289
All other(1)
11,100
Digital assets safeguarding liability and corresponding safeguarding asset $ 112,010
___________________
(1)Includes 25 digital assets, none of which was determined to be individually significant.
48
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Note 9. Debt
The following table summarizes the Company's principal outstanding debt, debt discounts/premiums and debt issuance costs as of the dates indicated:
Borrowing Description
Collateral Balances(1)
Interest Rate(2)
Termination/
Maturity(3)
Total Capacity(4)
Outstanding as of
June 30,
2022(5)
December 31,
2021
Student Loan Warehouse Facilities
SoFi Funding I
$ 95,308
1M SOFR + 100 bps
April 2023 $ 200,000 $ 88,402 $ -
SoFi Funding III(6)
-
PR - 134 bps
September 2024 75,000 - 3,930
SoFi Funding V(7)
21,704
SOFR + 105 bps
November 2023 225,000 19,977 -
SoFi Funding VI
-
3ML + 125 bps
March 2024 600,000 - 56,709
SoFi Funding VII
173,720
SOFR + 85 bps
September 2024 500,000 157,227 284,475
SoFi Funding VIII
-
1ML + 90 bps
May 2023 300,000 - 245,723
SoFi Funding IX(8)
-
SOFR+ 210 bps and CP + 87.5 bps
May 2025 500,000 - 9,816
SoFi Funding X(9)
249,150
CP + 95 bps
April 2025 500,000 222,176 29,647
SoFi Funding XI(10)
152,121
CP + 100 bps
November 2024 500,000 143,196 -
SoFi Funding XII(11)
-
CP + 115 bps
November 2024 200,000 - 20,267
SoFi Funding XIII 432,343
SOFR + 55 bps
April 2024 450,000 380,559 424,348
Total, before unamortized debt issuance costs $ 1,124,346 $ 4,050,000 $ 1,011,537 $ 1,074,915
Unamortized debt issuance costs
$ (7,719) $ (7,540)
Personal Loan Warehouse Facilities
SoFi Funding PL I(12)
$ -
CP + 137.5 bps
September 2023 $ 250,000 $ - $ 11,911
SoFi Funding PL II
-
3ML + 225 bps
July 2023 400,000 - -
SoFi Funding PL III
-
SOFR + 125 bps
November 2023 175,000 - -
SoFi Funding PL IV(13)
-
CP + 170 bps
November 2023 500,000 - -
SoFi Funding PL VI(14)
-
CP + 170 bps
September 2024 50,000 - -
SoFi Funding PL VII
-
1ML + 115 bps
June 2023 250,000 - 71,572
SoFi Funding PL X
-
1ML + 142.5 bps
February 2023 200,000 - -
SoFi Funding PL XI
-
1M SOFR + 125 bps
January 2023 200,000 - -
SoFi Funding PL XIII
143,104
1M SOFR + 110 bps
January 2032 300,000 120,366 -
SoFi Funding PL XIV 67,025
SOFR + 100 bps
October 2024 300,000 56,830 144,662
SoFi Funding PL XV 279,861
SOFR + 80 bps
October 2024 325,000 238,933 -
Total, before unamortized debt issuance costs $ 489,990 $ 2,950,000 $ 416,129 $ 228,145
Unamortized debt issuance costs $ (3,774) $ (3,898)
Home Loan Warehouse Facilities
Mortgage Warehouse VI
$ -
SOFR + 200 bps
October 2022 $ 1,000 $ - $ -
Total, before unamortized debt issuance costs $ - $ 1,000 $ - $ -
Unamortized debt issuance costs
$ - $ -
Credit Card Warehouse Facilities
SoFi Funding CC I LLC(15)
$ -
CP + 100 bps
December 2023 $ 100,000 $ - $ 11,810
Total, before unamortized debt issuance costs $ - $ 100,000 $ - $ 11,810
Unamortized debt issuance costs
$ (141) $ (312)
Risk Retention Warehouse Facilities(16)
SoFi RR Funding I
$ 32,627
3ML + 200 bps
January 2024 $ 100,000 $ 22,117 $ 22,608
SoFi RR Repo
-
3ML + 185 bps
January 2022 - - 69,843
SoFi RR Funding II
27,347
1ML + 125 bps
November 2024 19,223 98,031
SoFi RR Funding III 36,180
1ML + 125 bps
November 2024 34,981 39,158
SoFi RR Funding IV 66,550
SOFR + 150 bps
October 2027 100,000 51,313 66,555
SoFi RR Funding V 38,065
298 bps
December 2025 9,767 29,453
Total, before unamortized debt issuance costs $ 200,769 $ 137,401 $ 325,648
Unamortized debt issuance costs $ (1,481) $ (2,086)
49
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Borrowing Description
Collateral Balances(1)
Interest Rate(2)
Termination/
Maturity(3)
Total Capacity(4)
Outstanding as of
June 30,
2022(5)
December 31,
2021
Revolving Credit Facility
SoFi Corporate Revolver(17)
n/a
1ML + 100 bps
September 2023 $ 560,000 $ 486,000 $ 486,000
Total, before unamortized debt issuance costs $ 560,000 $ 486,000 $ 486,000
Unamortized debt issuance costs $ (446) $ (626)
Other Financing
Convertible senior notes n/a -% October 2026 $ 1,200,000 $ 1,200,000
Total, before unamortized debt issuance costs and discount $ 1,200,000 $ 1,200,000
Unamortized debt issuance costs $ (1,464) $ (1,634)
Unamortized discount (20,493) (22,858)
Other financing(18)
$ 18,273 $ 18,964 $ - $ -
Student Loan Securitizations
SoFi PLP 2016-B LLC
$ 39,401
1ML + (120-380 bps)
April 2037 $ 34,635 $ 43,186
SoFi PLP 2016-C LLC
45,217
1ML + (110-335 bps)
May 2037 40,060 49,685
SoFi PLP 2016-D LLC
59,093
1ML + (95-323 bps)
January 2039 52,414 61,760
SoFi PLP 2016-E LLC
67,693
1ML + (344-443 bps)
October 2041 60,562 74,242
SoFi PLP 2017-A LLC
85,536
1ML + (70-443 bps)
March 2040 76,904 92,972
SoFi PLP 2017-B LLC
71,639
274 - 444 bps
May 2040 64,794 78,811
SoFi PLP 2017-C LLC
95,241
1ML + (60-421 bps)
July 2040 85,837 102,814
Total, before unamortized debt issuance costs and discount $ 463,820 $ 415,206 $ 503,470
Unamortized debt issuance costs
$ (3,020) $ (3,851)
Unamortized discount
(873) (1,094)
Personal Loan Securitizations
SoFi CLP 2018-3 LLC
$ 49,965
467 bps
August 2027 $ 44,614 $ 76,535
SoFi CLP 2018-4 LLC
57,683
417 - 476 bps
November 2027 53,370 86,835
Total, before unamortized debt issuance costs, premiums and discount $ 107,648 $ 97,984 $ 163,370
Unamortized debt issuance costs
$ (1,397) $ (1,683)
Unamortized premium
112 207
Total, before unamortized debt issuance costs, premiums and discounts $ 3,764,257 $ 3,993,358
Less: unamortized debt issuance costs, premiums and discounts
(40,696) (45,375)
Total reported debt
$ 3,723,561 $ 3,947,983
_________________
(1)As of June 30, 2022, represents unpaid principal balances, 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 as presented may vary period to period due to the timing of the next scheduled payment to the warehouse facility.
(2)Unused commitment fees ranging from 0 to 70 basis points ("bps") on our various warehouse facilities are recognized within noninterest expense-general and administrativein our unaudited condensed consolidated statements of operations and comprehensive income (loss). "ML" stands for "Month LIBOR". As of June 30, 2022, 1ML and 3ML was 1.79% and 2.29%, respectively. "SOFR" in this table refers to the overnight SOFR, unless otherwise indicated. "1M SOFR" stands for "one-month SOFR". As of June 30, 2022, SOFR was 1.50% and 1M SOFR was 1.69%. "PR" stands for "Prime Rate". As of June 30, 2022, PR was 4.75%.
(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)Represents total capacity as of June 30, 2022.
(5)There were no debt discounts or premiums issued during the six months ended June 30, 2022. We paid $700 during the six months ended June 30, 2022 related to debt issuance costs accrued in 2021.
(6)Warehouse facility has a prime rate floor of 309 bps.
(7)Warehouse facility has a SOFR floor of 0%.
50
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
(8)Warehouse facility incurs different interest rates on its two types of asset classes. One such class incurs interest based on a commercial paper ("CP") rate, which is determined by the facility lender. As of June 30, 2022, the CP rate for this facility was 1.36%.
(9)Warehouse facility incurs interest based on a CP rate, which is determined by the facility lender. As of June 30, 2022, the CP rate for this facility was 1.71%.
(10)Warehouse facility incurs interest based on a CP rate, which is determined by the facility lender. As of June 30, 2022, the CP rate for this facility was 1.46%. The facility was amended in the first quarter of 2022 to allow up to $250 million of securitization risk retention securities to be pledged to the warehouse. As of June 30, 2022, $85.9 million of the collateral balance for the facility was related to securitization risk retention securities, with the remainder of the collateral balance related to student loans.
(11)Warehouse facility incurs interest based on a CP rate, which is determined by the facility lender. As of June 30, 2022, the CP rate for this facility was 1.46%. Under certain conditions, warehouse facility could incur an interest rate spread of 215 bps.
(12)Warehouse facility incurs interest based on a CP rate, which is determined by the facility lender. As of June 30, 2022, the CP rate for this facility was 1.40%.
(13)Warehouse facility incurs interest based on a CP rate, which is determined by the facility lender. As of June 30, 2022, the CP rate for this facility was 1.46%.
(14)Warehouse facility incurs interest based on a CP rate, which is determined by the facility lender. As of June 30, 2022, the CP rate for this facility was 1.46%.
(15)Warehouse facility incurs interest at a spread (as indicated in the table) plus the lower of (a) three-month SOFR plus 35 bps or (b) the CP rate for this facility, which is determined by the facility lender. As of June 30, 2022, the CP rate for this facility was 1.92%, and the three-month SOFR rate was 2.12%.
(16)Financing was obtained for both asset-backed bonds and residual investments in various personal loan and student loan securitizations, and the underlying collateral are the underlying asset-backed bonds and residual investments. We only state capacity amounts in this table for risk retention facilities wherein we can pledge additional asset-backed bonds and residual investments as of June 30, 2022.
(17)As of June 30, 2022, $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 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 PR.
(18)Includes $18.3 million of loans pledged as collateral to secure $11.4 million of available borrowing capacity with the FHLB, of which $9.7 million was not available as it was utilized to secure letters of credit. Refer to our letter of credit disclosures in Note 15 for more details. Also includes unsecured available borrowing capacity of $7.6 million with correspondent banks.
Material Changes to Debt Arrangements
During the six months ended June 30, 2022, we opened one personal loan warehouse facility with a maximum available capacity of $325,000, and closed one risk retention warehouse facility that had a maximum available capacity of $192,141.
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 unaudited 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 assumed $2,000 of debt in the Bank Merger, which was paid off during the first quarter of 2022.
We act as a guarantor for our wholly-owned subsidiaries in several arrangements in the case of default. As of June 30, 2022, we have not identified any risks of nonpayment by our wholly-owned subsidiaries.
51
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Maturities of Borrowings
As of June 30, 2022, future maturities of our outstanding debt with scheduled payments, which included our revolving credit facility and convertible notes, were as follows:
Remainder of 2022 $ -
2023 486,000
2024 -
2025 -
2026 1,200,000
Thereafter -
Total $ 1,686,000
Note 10. 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 June 30, 2022, there were no shares of SoFi Technologies Preferred Stock issued and outstanding and there were 3,234,000 shares of Series 1 Redeemable Preferred Stock issued and outstanding, which had an original issuance price of $100.00. In conjunction with the Business Combination, we made a one-time special payment of $21.2 million to the holders of Series 1 Redeemable Preferred Stock, which was paid from the proceeds of the Business Combination and settled contemporaneously with the Business Combination in 2021. The special payment was recognized within noninterest expense-general and administrativein the unaudited condensed consolidated statements of operations and comprehensive income (loss), as this feature was accounted for as an embedded derivative that was not clearly and closely related to the host contract, and will not have a subsequent impact on our consolidated financial results.
Dividends
During the three months ended June 30, 2022 and 2021, the holders of Series 1 Redeemable Preferred Stock were entitled to dividends of $10,079 and $10,079, respectively. During the six months ended June 30, 2022 and 2021, the holders of the Series 1 Redeemable Preferred Stock were entitled to dividends of $20,047 and $20,047, respectively. There were no dividends payable as of June 30, 2022 and December 31, 2021.
There have been no dividend deferrals related to the Series 1 Redeemable Preferred Stock.
Warrants
In connection with the Series 1 and Series H preferred stock issuances during the year ended December 31, 2019, we also issued 12,170,990 Series H warrants, which were initially accounted for as liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity, and were included within accounts payable, accruals and other liabilities in the unaudited condensed consolidated balance sheets. Prior to the Business Combination, the Series H warrants were measured at fair value on a recurring basis and classified as Level 3 because of our reliance on unobservable assumptions, with fair value changes recognized within noninterest expense-general and administrativein the unaudited condensed consolidated statements of operations and comprehensive income (loss). On May 28, 2021, in conjunction with the Closing of the Business Combination, we measured the final fair value of our Series H warrants. At that time, we reclassified the Series H warrant
52
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
liability into permanent equity, as the terms of the Series H instrument no longer necessitated liability accounting. Therefore, we did not measure the warrants at fair value subsequent to May 28, 2021.
The following table presents the changes in the fair value of the Series H warrant liabilities during the three and six months ended June 30, 2021, which was prior to the reclassification to permanent equity:
Warrant Liabilities
Three Months Ended June 30, 2021
Fair value as of March 31, 2021 $ 129,879
Change in valuation inputs or other assumptions 31,896
Reclassification to permanent equity in conjunction with the Business Combination (161,775)
Fair value as of June 30, 2021 $ -
Six Months Ended June 30, 2021
Fair value as of January 1, 2021 $ 39,959
Change in valuation inputs or other assumptions 121,816
Reclassification to permanent equity in conjunction with the Business Combination (161,775)
Fair value as of June 30, 2021 $ -
Note 11. 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 June 30, 2022, the Company had 922,103,100 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 as of the dates indicated:
June 30, December 31,
2022 2021
Outstanding stock options, RSUs and performance stock units ("PSUs")
102,173,952 92,829,067
Outstanding common stock warrants 12,170,990 12,170,990
Conversion of convertible notes(1)
53,538,000 53,538,000
Possible future issuance under stock plans
15,550,144 32,470,481
Potentially issuable contingent common stock(2)
598,068 -
Total common stock reserved for future issuance
184,031,154 191,008,538
____________________
(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.
(2)As of June 30, 2022, includes potentially issuable contingent common stock in connection with the Technisys Merger, which determination is pending final agreement regarding a closing net working capital calculation specified in the merger agreement. See Note 2 for additional information.
Dividends
There were no dividends declared or paid to common stockholders during the six months ended June 30, 2022 and 2021.
Accumulated Other Comprehensive Income (Loss)
AOCI primarily consists of accumulated net unrealized gains or losses associated with our investments in AFS debt securities, which commenced during the third quarter of 2021, and foreign currency translation adjustments.
53
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
The following table presents the rollforward of AOCI, inclusive of the changes in the components of other comprehensive loss for the periods indicated:
AFS Debt Securities Foreign Currency Translation Adjustments Total
Three Months Ended June 30, 2022
AOCI, beginning balance $ (5,806) $ (158) $ (5,964)
Other comprehensive loss before reclassifications(1)
(2,115) (56) (2,171)
Amounts reclassified from AOCI into earnings 124 - 124
Net current-period other comprehensive loss(2)
(1,991) (56) (2,047)
AOCI, ending balance $ (7,797) $ (214) $ (8,011)
Three Months Ended June 30, 2021
AOCI, beginning balance $ - $ (246) $ (246)
Other comprehensive loss before reclassifications(1)
- (266) (266)
Net current-period other comprehensive loss(2)
- (266) (266)
AOCI, ending balance $ - $ (512) $ (512)
Six Months Ended June 30, 2022
AOCI, beginning balance $ (1,351) $ (120) $ (1,471)
Other comprehensive loss before reclassifications(1)
(6,731) (94) (6,825)
Amounts reclassified from AOCI into earnings 285 - 285
Net current-period other comprehensive loss(2)
(6,446) (94) (6,540)
AOCI, ending balance $ (7,797) $ (214) $ (8,011)
Six Months Ended June 30, 2021
AOCI, beginning balance $ - $ (166) $ (166)
Other comprehensive loss before reclassifications(1)
- (346) (346)
Net current-period other comprehensive loss(2)
- (346) (346)
AOCI, ending balance $ - $ (512) $ (512)
____________________
(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-otherin the unaudited condensed consolidated statements of operations and comprehensive income (loss). We did not have investments in AFS debt securities during the six months ended June 30, 2021. Additionally, there were no reclassifications related to foreign currency translation adjustments during the six months ended June 30, 2022 and 2021.
(2)There were no tax impacts during any of the periods presented due to reserves against deferred tax assets in jurisdictions where other comprehensive loss activity was generated.

For gross amounts of realized gains and losses on our investments in AFS debt securities, see Note 3. Interest income associated with our investments in AFS debt securities is recognized within interest income-otherin the unaudited condensed consolidated statements of operations and comprehensive income (loss).
Note 12. Share-Based Compensation
2021 Stock Option and Incentive Plan
In connection with the Closing of the Business Combination, the Company adopted the 2021 Stock Option and Incentive Plan (the "2021 Plan"), which authorized for issuance 63,575,425 shares of common stock in connection with the Business Combination. The 2021 Plan allowed for the number of authorized shares to increase on the first day of each fiscal year beginning on January 1, 2022 and ending on and including January 1, 2030. Effective January 1, 2022, our Board of Directors authorized the issuance of an additional 8,937,242 shares under this provision. Refer to Note 19 for discussion of an amendment and restatement of the 2021 Plan during the subsequent event period. The 2021 Plan allows for the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units (including performance stock units), dividend
54
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
equivalents and other stock or cash based awards for issuance to its employees, non-employee directors and non-employee third parties. Shares associated with option exercises and RSU vesting are issued from the authorized pool.
During the six months ended June 30, 2022 and 2021, we incurred cash outflows of $5,846 and $28,603, respectively, related to the payment of withholding taxes for vested RSUs. These cash outflows are presented within net cash provided by (used in) financing activitiesin the unaudited condensed consolidated statements of cash flows.
Share-based compensation expense related to stock options, RSUs and PSUs is presented within the following line items in the unaudited condensed consolidated statements of operations and comprehensive income (loss) for the periods indicated:
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Technology and product development
$ 18,342 $ 16,618 $ 35,834 $ 28,234
Sales and marketing
6,008 3,695 11,141 6,140
Cost of operations
4,816 2,709 8,959 4,190
General and administrative
50,976 29,132 101,229 51,044
Total
$ 80,142 $ 52,154 $ 157,163 $ 89,608
Stock Options
The following is a summary of stock option activity for the period indicated:
Number of
Stock Options
Weighted Average
Exercise Price
Weighted Average
Remaining
Contractual Term
(in years)
Outstanding as of January 1, 2022 21,171,147 $ 6.81 5.8
Granted(1)
- n/a
Exercised (1,442,890) 1.43
Forfeited
(1,126) 6.84
Expired
(92,419) 3.06
Outstanding as of June 30, 2022 19,634,712 $ 7.23 5.4
Exercisable as of June 30, 2022 19,526,150 $ 7.23 5.4
____________________
(1)There were no stock options granted during the six months ended June 30, 2022.
Total compensation cost related to unvested stock options not yet recognized as of June 30, 2022 was $3.2 million and will be recognized over a weighted average period of approximately 0.7 years.
Restricted Stock Units
RSUs are equity awards granted to employees that entitle the holder to shares of our common stock when the awards vest. For employees hired on or after January 1, 2022, new hire RSU grants typically vest 12.5% on the first vesting date, which occurs approximately six months after the date of grant, and ratably each quarter of the ensuing 14-quarter period. For employees hired before January 1, 2022, new hire RSU grants typically vest 25% on the first vesting date, which occurs approximately one year after the date of grant, and ratably each quarter of the ensuing 12-quarter period. RSUs have been issued under other vesting schedules, including grants to existing employees.
55
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
The following table summarizes RSU activity for the period indicated:
Number of
RSUs
Weighted Average Grant Date Fair Value
Outstanding as of January 1, 2022 48,687,524 $ 12.23
Granted
27,687,968 8.87
Replacement Awards(1)
630,654 10.69
Vested(2)
(11,312,098) 11.74
Forfeited
(4,952,182) 10.13
Outstanding as of June 30, 2022(3)
60,741,866 $ 10.95
________________________
(1)In connection with the Technisys Merger, we converted outstanding Technisys performance awards into RSUs to acquire common stock of SoFi, and for which $2,855 of the fair value was attributed to pre-combination services. See Note 2 for additional information.
(2)The total fair value, based on grant date fair value, of RSUs that vested during the six months ended June 30, 2022 was $132.8 million.
(3)Includes 178,021 RSUs that were granted in 2020 and later modified in an improbable-to-probable modification (Type III), related to which $741 and $1,695 of share-based compensation expense was recorded during the three and six months ended June 30, 2022, respectively. The awards were fully expensed as of June 30, 2022.
As of June 30, 2022, there was $631.7 million of unrecognized compensation cost related to unvested RSUs, which will be recognized over a weighted average period of approximately 3.1 years.
Performance Stock Units
The following table summarizes PSU activity for the period indicated:
Number of
PSUs
Weighted Average Grant Date Fair Value
Outstanding as of January 1, 2022 22,970,396 $ 9.52
Granted
122,190 3.71
Vested - n/a
Forfeited
(1,295,212) 7.53
Outstanding as of June 30, 2022
21,797,374 $ 9.60
Compensation cost associated with PSUs is recognized using the accelerated attribution method for each of the three vesting tranches over the respective derived service period. We determine the grant-date fair value of PSUs utilizing a Monte Carlo simulation model. The following table summarizes the inputs used for estimating the fair value of PSUs granted during the period indicated:
Input Six Months Ended
June 30, 2022
Risk-free interest rate
1.6%
Expected volatility
37.7%
Fair value of common stock
$12.06
Dividend yield
-%
Our use of a Monte Carlo simulation model requires the use of subjective assumptions:
The risk-free interest rate assumption was based on the U.S. Treasury rate at the time of grant commensurate with the remaining term of the PSUs.
The expected volatility assumption was based on the implied volatility of our common stock from a set of comparable publicly-traded companies.
The fair value of our common stock was based on the closing stock price on the date of grant.
We assumed no dividend yield because we have historically not paid out dividends to common stockholders.
As of June 30, 2022, there was $103.3 million of unrecognized compensation cost related to unvested PSUs, which will be recognized over a weighted average period of approximately 1.4 years.
56
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Note 13. Income Taxes
For interim periods, we follow the general recognition approach whereby tax expense is recognized through the use of an estimated annual effective tax rate, which is applied to the year-to-date operating results. Additionally, we recognize tax expense or benefit for any discrete items occurring within the interim period that were excluded from the estimated annual effective tax rate. Our effective tax rate may be subject to fluctuations during the year due to impacts from the following items: (i) changes in forecasted pre-tax and taxable income or loss, (ii) changes in statutory law or regulations in jurisdictions where we operate, (iii) audits or settlements with taxing authorities, (iv) the tax impact of expanded product offerings or business acquisitions, and (v) changes in valuation allowance assumptions.
For the three and six months ended June 30, 2022, we recorded income tax expense of $(119) and $(871), respectively. For the three and six months ended June 30, 2021, we recorded income tax benefit (expense) of $78 and $(1,021), respectively. Income taxes were primarily due to income tax expense associated with the profitability of SoFi Lending Corp. and, for the 2022 periods, SoFi Bank, in some state jurisdictions where separate company filing is required. In the 2022 periods, this expense was partially offset by income tax benefits from foreign losses in jurisdictions with net deferred tax liabilities related to the Technisys Merger. See Note 2 for additional information.
During the six months ended June 30, 2022, we increased our unrecognized tax benefits by $9,885, of which $6,548 would impact the Company's effective tax rateif realized. The increase resulted from the recognition of historical tax reserves that existed at the time of the Technisys Merger and were recorded through goodwill. See Note 2 for additional information. As part of our purchase consideration, there are shares held in escrow, which could be returned to SoFi to indemnify us against future tax settlements during the escrow period. We do not expect to have any significant changes to unrecognized tax benefits over the next 12 months.

During the six months ended June 30, 2022, we maintained a full valuation allowance against our net deferred tax assets in applicable jurisdictions. In certain foreign and state jurisdictions where sufficient deferred tax liabilities exist, no valuation allowance is recognized. Management reviews all available positive and negative evidence in assessing the realizability of deferred tax assets. We will continue to recognize a full valuation allowance until there is sufficient positive evidence to support its release.
Note 14. Related Parties
The Company defines related parties as members of our Board of Directors, entity affiliates, executive officers and principal owners of the Company's outstanding stock and members of their immediate families. Related parties also include any other person or entity with significant influence over the Company's management or operations.
Apex Loan
In February 2021, Apex Clearing Holdings, LLC ("Apex"), in which we historically had a minority ownership, paid us $18,304 in settlement of all of their outstanding obligations to us, which consisted of outstanding principal balances of $16,693 and accrued interest of $1,611.
During the three and six months ended June 30, 2021, we recognized interest income of $- and $211, respectively, within interest income-related party notes, and we reversed the remainder of the loss for the discount to fair value that had not yet been accreted of $169 within noninterest income-otherin the unaudited condensed consolidated statements of operations and comprehensive income (loss), which was only applicable to the six-month period.
Note 15. Commitments, Guarantees, Concentrations and Contingencies
Leases
We primarily lease our office premises under multi-year, non-cancelable operating leases. Our operating leases have terms expiring from 2022 to 2040, exclusive of renewal option periods. Our office leases contain renewal option periods ranging from oneto ten years from the expiration dates. These options were not recognized as part of our ROU assets and operating lease liabilities, as we did not conclude at the commencement date of the leases that we were reasonably certain to exercise these options. However, in our normal course of business, we expect our office leases to be renewed, amended or replaced by other leases. Associated with these leases, we obtained non-cash operating lease ROU assets in exchange for new
57
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
operating lease liabilities of $764 during the six months ended June 30, 2022, which were related to our recent acquisitions. Our finance leases expire in 2040.
Lease Concession
The lessor for one of our operating leases allowed us to defer payments on the lease beginning in April 2020 as a result of our inability to use the leased premises during the COVID-19 pandemic. During the concession period, we did not recognize operating lease cost and we did not remeasure the right-of-use asset or lease liability. We regained access to the leased premises in September 2021 and resumed lease amortization at that time. In the absence of this concession, we would have recognized additional operating lease cost of $566 and $1,132 during the three and six months ended June 30, 2021, respectively.
Concentrations
Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents, restricted cash and restricted cash equivalents, residual investments and loans. We hold cash and cash equivalents and restricted cash and restricted cash equivalents in accounts at regulated domestic financial institutions in amounts that may exceed FDIC insured amounts. We believe these institutions are of high credit quality.
We are dependent on third-party funding sources to originate loans. Additionally, we sell loans to various third parties. We have historically sold loans to a limited pool of third-party buyers. No individual third-party buyer accounted for 10% or more of consolidated total net revenues for any of the periods presented.
The Company is exposed to default risk on borrower loans originated and financed by us. There is no single borrower or group of borrowers that comprise a significant concentration of the Company's loan portfolio. Likewise, the Company is not overly concentrated within a group of channel partners or other customers, with the exception of our distribution of personal loan residual interests in our sponsored personal loan securitizations, which we market to third parties, and the aforementioned whole loan buyers. Given we have a limited number of prospective buyers for our personal loan securitization residual interests, this might result in us utilizing a significant amount of our own capital to fund future residual interests in personal loan securitizations, or impact the execution of future securitizations if we are limited in our own ability to invest in the residual interest portion of future securitizations, or find willing buyers for securitization residual interests.
Contingencies
Legal Proceedings
In limited instances, the Company may be subject to a variety of claims and lawsuits in the ordinary course of business. Regardless of the final outcome, defending lawsuits, claims, government investigations, and proceedings in which we are involved is costly and can impose a significant burden on management and employees, and there can be no assurances that we will receive favorable final outcomes.
SoFi Stadium. In September 2019, we established a 20-year partnership with LA Stadium and Entertainment District at Hollywood Park in Inglewood, California ("StadCo"), through a naming and sponsorship agreement, which, among other things, provides SoFi with exclusive naming rights of SoFi Stadium and an official partnership with the Los Angeles Chargers and Los Angeles Rams and with the performance venue, which shares a roof with the stadium, and the surrounding planned entertainment district, which is anticipated to include office space, retail space and hotel and dining options. In September 2020, we discussed certain provisions of the naming and sponsorship agreement with StadCo in light of the COVID-19 pandemic. Based on these discussions, SoFi paid sponsorship fees for the initial contract year (July 1, 2020 to March 31, 2021) of $9.8 million, of which $6.5 million was paid during 2020 and $3.3 million was paid in January 2021.
The parties are revisiting the sponsorship fees to determine the ultimate amount payable for the initial contract year and have agreed to seek to engage a third party with expertise in the valuation of sports media rights and sports sponsorship or promotional rights ("Valuation Expert") to perform an evaluation of the delivered value during the initial contract year. The valuation has not begun as of the date of this Quarterly Report on Form 10-Q. Therefore, the Company is exposed to additional potential sales and marketing expense of up to $12.7 million, which reflects the difference between the actual sponsorship fees paid during the initial contract year and the commitment for the initial contract year made under the Naming and Sponsorship Agreement. As of June 30, 2022, we are unable to estimate the amount of reasonably possible additional costs we may incur
58
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
with respect to this contingency. Moreover, we have not determined that the likelihood of additional cost is probable. Therefore, as of June 30, 2022, we have not recorded additional expense related to this contingency.
Juarez et al v. SoFi Lending Corp.During January 2022, the parties advised the court that they had reached agreement on nearly all material terms of the settlement and were in the process of documenting the settlement and accompanying class action settlement notice and claim form. The settlement agreement was fully executed in April 2022 and the plaintiffs have moved for preliminary approval of the settlement. The proposed class settlement, which contemplates an aggregate payment by SoFi in an immaterial amount, remains subject to final court review and approval, which we expect to occur in 2023.
In re Renren Inc. Derivative Litigation.In April 2022, the Supreme Court of New York held a mediation with the plaintiffs and announced that, given the parties' inability to reach an agreement, the Court is going to approve a settlement over objections. On June 9, 2022, the Court issued a final order and judgment approving the settlement. During July 2022, two sets of shareholders that had objected to the settlement filed notices of appeal from the Court's order and judgment approving the settlement. We do not expect these objections ultimately to affect the provision in the settlement agreement in which all claims against Social Finance are dismissed with prejudice.
Guarantees
We have three types of repurchase obligations that we account for as financial guarantees, which are disclosed in our Annual Report on Form 10-K. In the event of a repurchase, we are typically required to pay the purchase price of the loans transferred.
As of June 30, 2022 and December 31, 2021, the Company accrued liabilities within accounts payable, accruals and other liabilitiesin the unaudited condensed consolidated balance sheets of $4,844 and $7,441, respectively, related to our estimated repurchase obligation, with the corresponding charges recorded within noninterest income-loan origination and salesin the unaudited condensed consolidated statements of operations and comprehensive income (loss). As of each of June 30, 2022 and December 31, 2021, the amount associated with loans sold that were subject to the terms and conditions of our repurchase obligations totaled $6.5 billion.
As of June 30, 2022 and December 31, 2021, the Company had a total of $9.1 million in letters of credit outstanding with financial institutions, which were issued for the purpose of securing certain of the Company's operating lease obligations. A portion of the letters of credit was collateralized by $3.1 million of the Company's cash, which is included within restricted cash and restricted cash equivalentsin the unaudited condensed consolidated balance sheets.
As of June 30, 2022, the Company had a total of $9.7 million in letters of credit outstanding with the FHLB, which serve as collateral for public deposits and were collateralized by loans.
Mortgage Banking Regulatory Mandates
The Company is subject to certain state-imposed minimum net worth requirements for the states in which the Company is engaged in the business of a residential mortgage lender. As of June 30, 2022 and December 31, 2021, the Company was in compliance with all minimum net worth requirements and, therefore, has not accrued any liabilities related to fines or penalties.
Retirement Plans
The Company has a 401(k) plan that covers all employees meeting certain eligibility requirements. The Company's contributions to the plan are discretionary. The Company has not made any contributions to the plan to date.
Note 16. Loss Per Share
We compute loss per share attributable to common stock using the two-class method required for participating interests. Series 1 Redeemable Preferred Stock has preferential cumulative dividend rights. Pursuant to ASC 260, Earnings Per Share, for each period presented, we increased net loss by the contractual amount of dividends payable to holders of Series 1 Redeemable Preferred Stock. Subsequent to the Business Combination, we did not have any participating interests.
Basic loss per share of common stock was computed by dividing net loss, adjusted for the impact of Series 1 Redeemable Preferred Stock dividends, by the weighted average number of shares of common stock outstanding during the
59
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
period. We excluded the effect of all potentially dilutive common stock elements from the denominator in the computation of diluted loss per share, as their inclusion would have been anti-dilutive.
The calculation of basic and diluted loss per share was as follows for the periods indicated:
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Numerator:
Net loss $ (95,835) $ (165,314) $ (206,192) $ (342,878)
Less: Redeemable preferred stock dividends
(10,079) (10,079) (20,047) (20,047)
Net loss attributable to common stockholders - basic and diluted $ (105,914) $ (175,393) $ (226,239) $ (362,925)
Denominator:
Weighted average common stock outstanding - basic 910,046,750 365,036,365 881,608,165 241,282,003
Weighted average common stock outstanding - diluted 910,046,750 365,036,365 881,608,165 241,282,003
Loss per share - basic $ (0.12) $ (0.48) $ (0.26) $ (1.50)
Loss per share - diluted $ (0.12) $ (0.48) $ (0.26) $ (1.50)

We excluded the effect of the below elements from our calculation of diluted loss per share, as their inclusion would have been anti-dilutive, as there were no earnings attributable to common stockholders. These amounts represent the number of instruments outstanding at the end of each period indicated:
June 30,
2022 2021
Common stock options
19,634,712 27,040,727
Common stock warrants
12,170,990 40,295,990
Unvested RSUs
60,741,866 53,128,121
Unvested PSUs
21,797,374 6,428,578
Convertible notes(1)
53,538,000 -
Contingent common stock(2)
6,903,663 320,649
Potentially issuable contingent common stock(3)
598,068 -
________________________
(1)Represents the number of common stock issuable upon conversion of all convertible notes at the conversion rate in effect at the date indicated.
(2)As of June 30, 2022, includes contingently returnable common stock in connection with the Technisys Merger, which remains subject to further adjustment, pending final agreement regarding a closing net working capital calculation specified in the merger agreement. See Note 2 for additional information. As of June 30, 2021, included contingently issuable common stock in connection with our acquisition of 8 Limited, which was subsequently issued during the fourth quarter of 2021.
(3)As of June 30, 2022, includes the maximum amount of potentially issuable contingent common stock in connection with the Technisys Merger, which is pending final agreement regarding a closing net working capital calculation specified in the merger agreement. See Note 2 for additional information.
Note 17. Business Segment Information
Segment Organization and Reporting Framework
The Company has three reportable segments: Lending, Technology Platform and Financial Services. Each of our reportable segments is a strategic business unit that serves specific needs of our members based on the products and services provided. The segments are based on the manner in which management views the financial performance of the business. The reportable segments also reflect the Company's organizational structure. Each segment has a segment manager who reports directly to the Chief Operating Decision Maker ("CODM"). The CODM has ultimate authority and responsibility over resource allocation decisions and performance assessment.
The operations of acquired businesses have been integrated into, or managed as part of, our existing reportable segments. Activities that are not part of a reportable segment, such as management of our corporate investment portfolio and
60
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
asset/liability management by our centralized treasury function (as further discussed below), are included in the Corporate/Other non-reportable segment (previously referred to as the "Other" non-reportable segment).
Contribution profit (loss) is the primary measure of segment profit and loss reviewed by the CODM and is intended to measure the direct profitability of each segment in the manner in which management evaluates performance and makes decisions about funding our operations and allocating resources. Contribution profit (loss) is defined as total net revenue for each reportable segment less:
fair value changes in servicing rights and residual interests classified as debt that are attributable to assumption changes, which impact the contribution profit within the Lending segment. These fair value changes are non-cash in nature and are not realized in the period; therefore, they do not impact the amounts available to fund our operations; and
expenses directly attributable to the corresponding reportable segment. Directly attributable expenses primarily include compensation and benefits and sales and marketing, and vary based on the amount of activity within each segment. Directly attributable expenses also include loan origination and servicing expenses, professional services, product fulfillment, lead generation and occupancy-related costs. Expenses are attributed to the reportable segments using either direct costs of the segment or labor costs that can be attributed based upon the allocation of employee time for individual products.
During the first quarter of 2022, we implemented a funds transfer pricing ("FTP") framework to attribute net interest income to our business segments based on their usage and/or provision of funding. The primary objective of the FTP framework is to transfer interest rate risk from the business segments by providing matched duration of funding of assets and liabilities to allocate interest income and interest expense to each segment. Therefore, the financial impact, management and reporting of interest rate risk is centralized in Corporate/Other, where it is monitored and managed. Under the FTP framework, treasury provides a funds credit for sources of funds, such as deposits generated by our Financial Services segment, and a funds charge for the use of funds, such as loan originations in our Lending segment. The process for determining FTP credits and charges is based on a number of factors and assumptions, including prevailing market interest rates, the expected duration of interest-earning and interest-bearing assets and liabilities, contingent risks and behaviors, and the Company's broader funding profile. As the durations of assets and liabilities are typically not perfectly matched, the residual impact of the FTP framework is reflected within Corporate/Other. We regularly assess the assumptions, methodologies and reporting classifications used for segment reporting, which may result in further refinements or changes to the framework in future periods. During the second quarter of 2022, we further refined the FTP framework for determining average asset and liability balances. The application of the FTP framework impacts the measure of net interest income and, thereby, total net revenue and contribution profit (loss) for our Lending and Financial Services segments, as well as the total net revenue of Corporate/Other, but has no impact on our consolidated results of operations.
Prior to implementing the FTP framework, the presentation of our Lending and Financial Services segments' net interest income reflected the difference between interest income earned on our loans and the actual interest expense incurred on any loans that were financed. Under the FTP framework, such interest expense is incurred by treasury within Corporate/Other and replaced by an FTP charge. Application of our current FTP framework during the comparative three and six month periods ended June 30, 2021, would have impacted Lending segment net interest income by $1,393 and $2,651, respectively, and Financial Services segment net interest income by $(51) and $(72), respectively. The offsetting impact would have been reflected within net interest income in Corporate/Other. If we had applied the refined methodology during the first quarter of 2021, Lending and Financial Services segment net interest income would have been impacted by $1,258 and $(21), respectively, relative to the net interest income reported in the comparative period.
The accounting policies of our reportable segments are consistent with those described in Note 1 and in our Annual Report on Form 10-K, except for the application of the FTP framework and the allocations of consolidated income and consolidated expenses. Assets are not allocated to reportable segments, as our CODM does not evaluate reportable segments using discrete asset information.
Segment Information
Lending. The Lending segment includes our personal loan, student loan and home loan products and the related servicing activities. We originate loans in each of the aforementioned channels with the objective of either selling whole
61
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
loans or securitizing a pool of originated loans for transfer to third-party purchasers. Revenues in the Lending segment are driven by changes in the fair value of our whole loans and securitization interests (inclusive of our economic hedging activities), gains or losses recognized on transfers that meet the true sale requirements, and our servicing-related activities, which mainly consist of servicing fees and the changes in our servicing assets over time. In our Lending segment, we also earn the difference between interest income earned on our loans and interest expense, as determined using the FTP framework for the three-month 2022 period and a portion of the six-month 2022 period, and from our warehouse financing in the remainder of the six-month 2022 period and the full 2021 period. Our CODM considers net interest income in addition to contribution profit in evaluating the performance of our Lending segment and making resource allocation decisions. Therefore, we present interest income net of interest expense.
Technology Platform.The Technology Platform segment includes our technology products and solutions revenue, which was primarily related to our platform-as-a-service through Galileo, which provides the infrastructure to facilitate core client-facing and back-end capabilities, such as account setup, accounting funding, direct deposit, authorizations and processing, payments functionality and check account balance features. Beginning in March 2022, this segment also includes our revenue earned by Technisys, which expanded our segment to include a cloud-native digital and core banking platform offering and which results in the sale of software licenses and the provision of related technology solutions. See Note 2 for additional information on the Technisys Merger.
Financial Services.The Financial Services segment primarily includes our SoFi Checking and Savings product (which commenced in the first quarter of 2022), SoFi Money cash management product, SoFi Invest product, SoFi Credit Card product, SoFi Relay personal finance management product and other financial services, such as equity capital markets and advisory services, lead generation, and content for other financial services institutions and our members. SoFi Checking and Savings provides members a digital banking experience that offers no account fees, 2-day early paycheck and a competitive annual percentage yield. SoFi Money cash management provides members a digital cash management experience. Effective June 5, 2022, our SoFi Money cash management accounts no longer earn interest, as we implemented our plan to build new features only for SoFi Checking and Savings and reduce support of our SoFi Money cash management accounts. SoFi Invest provides investment features and financial planning services that we offer to our members. Revenues in the Financial Services segment include interest income earned and interest expense incurred under the FTP framework, payment network fees on our member transactions and pay for order flow, digital assets transaction fees and share lending arrangements in SoFi Invest. We also earn referral fees in connection with referral activity we facilitate through our platform. The referral fee is paid to us by third-party partners that offer services to end users who do not use one of our product offerings, but who were referred to the partners through our platform. Beginning in the third quarter of 2021, referral fees also include referral fulfillment fees earned for providing pre-qualified borrower referrals to a third-party partner who separately contracts with a loan originator.
Our CODM considers net interest income in addition to contribution profit (loss) in evaluating the performance of our Financial Services segment and making resource allocation decisions. Under the FTP framework, the Financial Services segment earns interest income that is reflective of an FTP credit for deposits provided to the overall business, as well as incurs interest expense that is reflective of an FTP charge related to the use of funding for SoFi Credit Card.
Corporate/Other. Non-segment operations are classified as Corporate/Other (previously referred to as "Other"), which includes net revenues associated with corporate functions that are not directly related to a reportable segment. Beginning in the first quarter of 2022, net interest income (expense) within Corporate/Other reflects the residual impact from FTP charges and FTP credits allocated to our reportable segments under our FTP framework. These non-segment net revenue (loss) also include interest income earned on corporate cash balances, nonrecurring income on certain investments from available cash on hand, such as our investments in AFS debt securities (which investments are not interconnected with our core business lines and, thereby, reportable segments), and interest expense on other corporate borrowings, such as our revolving credit facility and the amortization of debt issuance costs and original issue discount on our convertible notes. During the six months ended June 30, 2021, net revenue (loss) within Corporate/Other also included earnings in connection with related party transactions. Refer to Note 14 for further discussion of our related party transactions.
62
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Segment Results
The following tables present financial information, including the measure of contribution profit (loss), for each reportable segment for the periods indicated:
Three Months Ended June 30, 2022
Lending(2)
Technology
Platform(1)
Financial Services(1)(2)
Reportable Segments Total(2)
Corporate/Other(1)(2)
Total
Net interest income (expense)
$ 114,003 $ - $ 12,925 $ 126,928 $ (4,199) $ 122,729
Noninterest income (loss)
143,114 83,899 17,438 244,451 (4,653) 239,798
Total net revenue (loss)
$ 257,117 $ 83,899 $ 30,363 $ 371,379 $ (8,852) $ 362,527
Servicing rights - change in valuation inputs or assumptions(3)
(9,098) - - (9,098)
Residual interests classified as debt - change in valuation inputs or assumptions(4)
2,662 - - 2,662
Directly attributable expenses
(108,690) (62,058) (84,063) (254,811)
Contribution profit (loss)
$ 141,991 $ 21,841 $ (53,700) $ 110,132
Three Months Ended June 30, 2021
Lending
Technology
Platform
Financial Services
Reportable Segments Total Corporate/Other Total
Net interest income (expense)
$ 56,822 $ (32) $ 542 $ 57,332 $ (1,320) $ 56,012
Noninterest income
109,469 45,329 16,497 171,295 3,967 175,262
Total net revenue
$ 166,291 $ 45,297 $ 17,039 $ 228,627 $ 2,647 $ 231,274
Servicing rights - change in valuation inputs or assumptions(3)
224 - - 224
Residual interests classified as debt - change in valuation inputs or assumptions(4)
5,717 - - 5,717
Directly attributable expenses
(83,044) (32,284) (41,784) (157,112)
Contribution profit (loss)
$ 89,188 $ 13,013 $ (24,745) $ 77,456
Six Months Ended June 30, 2022
Lending(2)
Technology
Platform(1)
Financial Services(1)(2)
Reportable Segments Total(2)
Corporate/Other(1)(2)
Total
Net interest income (expense)
$ 208,357 $ - $ 18,807 $ 227,164 $ (9,502) $ 217,662
Noninterest income (loss)
301,749 144,704 35,099 481,552 (6,343) 475,209
Total net revenue (loss)
$ 510,106 $ 144,704 $ 53,906 $ 708,716 $ (15,845) $ 692,871
Servicing rights - change in valuation inputs or assumptions(3)
(20,678) - - (20,678)
Residual interests classified as debt - change in valuation inputs or assumptions(4)
5,625 - - 5,625
Directly attributable expenses
(220,411) (104,608) (157,121) (482,140)
Contribution profit (loss)
$ 274,642 $ 40,096 $ (103,215) $ 211,523
63
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
Six Months Ended June 30, 2021
Lending
Technology
Platform
Financial Services
Reportable Segments Total Corporate/Other Total
Net interest income (expense)
$ 108,599 $ (68) $ 771 $ 109,302 $ (6,010) $ 103,292
Noninterest income
205,669 91,430 22,731 319,830 4,136 323,966
Total net revenue (loss)
$ 314,268 $ 91,362 $ 23,502 $ 429,132 $ (1,874) $ 427,258
Servicing rights - change in valuation inputs or assumptions(3)
12,333 - - 12,333
Residual interests classified as debt - change in valuation inputs or assumptions(4)
13,668 - - 13,668
Directly attributable expenses
(163,395) (62,664) (83,766) (309,825)
Contribution profit (loss)
$ 176,874 $ 28,698 $ (60,264) $ 145,308
____________________
(1)During the three and six months ended June 30, 2022, total net revenue for the Technology Platform segment included $953 and $1,723, respectively, of intercompany fees earned by Galileo from SoFi, which is a Galileo client. There is an equal and offsetting expense reflected within the Financial Services segment directly attributable expenses representing the intercompany fees incurred to Galileo. The intercompany revenue and expense are eliminated in consolidation. The revenue is eliminated within Corporate/Other and the expense is adjusted in our reconciliation of directly attributable expenses below. We did not recast the segment information for these intercompany amounts for the three and six months ended June 30, 2021, but rather reflected the full year 2021 impact within the fourth quarter of 2021, as inter-quarter amounts were determined to be immaterial. Additionally, for both the three and six months ended June 30, 2022, total net revenue for the Technology Platform segment included $718 of intercompany fees earned by Technisys from Galileo, which is a Technisys client. There is an equal and offsetting expense reflected within the Technology Platform segment directly attributable expenses representing the intercompany fees incurred by Galileo to Technisys. The intercompany revenue and expense are eliminated in consolidation. The revenue is eliminated within Corporate/Other and the expense is adjusted in our reconciliation of directly attributable expenses below.
(2)During the first quarter of 2022, we implemented a centralized FTP framework to attribute net interest income to our business segments based on their usage and/or provision of funding, which impacted the measure of net interest income and, thereby, total net revenue and contribution profit (loss) in our Lending and Financial Services segments, as well as the total net revenue in Corporate/Other, but had no impact on our consolidated results of operations. The net interest income presented within Corporate/Other represents the residual impact of the FTP charges and FTP credits on our reportable segments.
(3)Reflects changes in fair value inputs and assumptions, including market servicing costs, conditional prepayment and default rates and discount rates. This non-cash change, which is recorded within noninterest incomein the unaudited condensed consolidated statements of operations and comprehensive income (loss) is unrealized during the period and, therefore, has no impact on our cash flows from operations. As such, the changes in fair value attributable to assumption changes are adjusted to provide management and financial users with better visibility into the cash flows available to finance our operations.
(4)Reflects changes in fair value inputs and assumptions, including conditional prepayment and default rates and discount rates. When third parties finance our consolidated VIEs through purchasing residual interests, we receive proceeds at the time of the securitization close and, thereafter, pass along contractual cash flows to the residual interest owner. These obligations are measured at fair value on a recurring basis, with fair value changes recorded within noninterest incomein the unaudited condensed consolidated statements of operations and comprehensive income (loss). The fair value change attributable to assumption changes has no impact on our initial financing proceeds, our future obligations to the residual interest owner (because future residual interest claims are limited to securitization collateral cash flows), or the general operations of our business. As such, this non-cash change in fair value during the period is adjusted to provide management and financial users with better visibility into the cash flows available to finance our operations.
64
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
The following table reconciles reportable segments total contribution profit to loss before income taxes for the periods presented. Expenses not allocated to reportable segments represent items that are not considered by our CODM in evaluating segment performance or allocating resources.
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Reportable segments total contribution profit $ 110,132 $ 77,456 $ 211,523 $ 145,308
Corporate/Other total net revenue (loss) (8,852) 2,647 (15,845) (1,874)
Intercompany expenses 1,671 - 2,441 -
Servicing rights - change in valuation inputs or assumptions 9,098 (224) 20,678 (12,333)
Residual interests classified as debt - change in valuation inputs or assumptions (2,662) (5,717) (5,625) (13,668)
Expenses not allocated to segments:
Share-based compensation expense (80,142) (52,154) (157,163) (89,608)
Depreciation and amortization expense (38,056) (24,989) (68,754) (50,966)
Fair value change of warrant liabilities - (70,989) - (160,909)
Employee-related costs(1)
(45,316) (36,944) (88,006) (69,224)
Special payment(3)
- (21,181) - (21,181)
Other corporate and unallocated expenses(2)
(41,589) (33,297) (104,570) (67,402)
Loss before income taxes $ (95,716) $ (165,392) $ (205,321) $ (341,857)
__________________
(1)Includes compensation, benefits, recruiting, certain occupancy-related costs and various travel costs of executive management, certain technology groups and general and administrative functions that are not directly attributable to the reportable segments.
(2)Represents corporate overhead costs that are not allocated to reportable segments, which primarily includes corporate marketing and advertising costs, tools and subscription costs, professional services costs, corporate insurance expense and transaction-related expenses.
(3)Represents a special payment to the Series 1 preferred stockholders in connection with the Business Combination.

No single customer accounted for more than 10% of our consolidated revenues for any of the periods presented.
Note 18. Regulatory Capital
SoFi Technologies, a bank holding company, and SoFi Bank, a nationally chartered association, are required to comply with applicable capital adequacy regulations established by U.S banking regulators.
These requirements establish required minimum ratios for Common Equity Tier 1 ("CET1") risk-based capital, Tier 1 risk-based capital, total risk-based capital and a Tier 1 leverage ratio; set risk-weighting for assets and certain other items for purposes of the risk-based capital ratios; and define what qualifies as capital for purposes of meeting the capital requirements. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a material effect on the Company's financial statements. Additionally, regulatory capital rules include a capital conservation buffer of 2.5% that is added on top of each of the minimum risk-based capital ratios in order to avoid restrictions on capital distributions and discretionary bonuses.
65
SoFi Technologies, Inc.
TABLE OF CONTENTS
SoFi Technologies, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements (Continued)
(In Thousands, Unless Otherwise Stated and Except for Share and Per Share Data)
The risk- and leverage-based capital ratios and amounts as of June 30, 2022 are presented below:
June 30, 2022 Amount Ratio
Required Minimum(1)
Well-Capitalized Minimum(2)
SoFi Bank
CET1 risk-based capital $ 945,290 23.9 % 7.0 % 6.5 %
Tier 1 risk-based capital 945,290 23.9 % 8.5 % 8.0 %
Total risk-based capital 968,087 24.5 % 10.5 % 10.0 %
Tier 1 leverage 945,290 32.6 % 4.0 % 5.0 %
Risk-weighted assets $ 3,952,945
Quarterly adjusted average assets 2,895,231
SoFi Technologies
CET1 risk-based capital $ 3,035,247 30.2 % 7.0 % N/A
Tier 1 risk-based capital 3,035,247 30.2 % 8.5 % N/A
Total risk-based capital 3,378,418 33.6 % 10.5 % N/A
Tier 1 leverage 3,035,247 34.4 % 4.0 % N/A
Risk-weighted assets $ 10,057,053
Quarterly adjusted average assets 8,832,284
____________________
(1)Required minimums presented for risk-based capital ratios include the required capital conservation buffer.
(2)The well-capitalized minimum measure is applicable at the bank level only.
As of June 30, 2022, our regulatory capital ratios exceeded the thresholds required to be regarded as a well-capitalized institution, and meet all capital adequacy requirements to which we are subject. There have been no events or conditions since June 30, 2022 that management believes would change the categorization.
Note 19. Subsequent Events
Management of the Company performed an evaluation of subsequent events that occurred after the balance sheet date through the date of this Quarterly Report on Form 10-Q.
On July 12, 2022, the Company's stockholders approved the amendment and restatement of the 2021 Stock Option and Incentive Plan (the "Amended and Restated 2021 Plan"), including a modification to the evergreen provision and an increase in the number of shares of common stock available for issuance under the plan. As of the date of this filing, the Amended and Restated 2021 Plan includes an aggregate of 104,983,148 shares of common stock authorized for issuance of awards. The Amended and Restated 2021 Plan allows for the number of authorized shares to increase on the first day of each fiscal year beginning on January 1, 2023 and ending on and including January 1, 2030 equal to the lesser of (a) five percent of the aggregate number of shares of common stock outstanding on the final day of the immediately preceding calendar year, and (b) such smaller number of shares of common stock as determined by the Board.

66
SoFi Technologies, Inc.
TABLE OF CONTENTS
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. You should read this discussion and analysis in conjunction with the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q, as well as SoFi Technologies' audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K filed with the SEC on March 1, 2022. Certain amounts may not foot or tie to other disclosures due to rounding. Certain information in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q contains forward-looking statements that involve numerous risks and uncertainties, including, but not limited to, those described under the sections entitled "Cautionary Note Regarding Forward-Looking Statements" and Item II, Part 1A. "Risk Factors" included in this Quarterly Report on Form 10-Q. We assume no obligation to update any of these forward-looking statements. Actual results may differ materially from those contained in any forward-looking statements.
Business Overview
We are a member-centric, one-stop shop for financial services that, through our Lending and Financial Services products, allows members to borrow, save, spend, invest and protect their money. We refer to our customers as "members". Our mission is to help our members achieve financial independence in order to realize their ambitions. To us, financial independence does not mean being wealthy, but rather represents the ability of our members to have the financial means to achieve their personal objectives at each stage of life, such as owning a home, having a family, or having a career of their choice - more simply stated, to have enough money to do what they want. We were founded in 2011 and have developed a suite of financial products that offers the speed, selection, content and convenience that only an integrated digital platform can provide. In order for us to achieve our mission, we have to help people get their money right, which means providing them with the ability to borrow better, save better, spend better, invest better and protect better. Everything we do today is geared toward helping our members "Get Your Money Right" and we strive to innovate and build ways for our members to achieve this goal.
Our three reportable segments and their respective offerings as of June 30, 2022 were as follows:
Lending Technology Platform Financial Services
Student Loans(1)
Technology Products and Solutions SoFi Checking and Savings Loan referrals
Personal Loans SoFi Money SoFi At Work
Home Loans
SoFi Invest(2)
SoFi Protect
SoFi Relay Lantern Credit
SoFi Credit Card
Equity capital markets and advisory services
__________________
(1)Composed of in-school loans and student loan refinancing.
(2)Our SoFi Invest service is composed of three products: active investing accounts, robo-advisory accounts and digital assets accounts. SoFi Invest also includes our brokerage accounts through 8 Limited in Hong Kong.
We define a member as someone who has a lending relationship with us through origination and/or ongoing servicing, opened a financial services account, linked an external account to our platform, or signed up for our credit score monitoring service. Once someone becomes a member, they are always considered a member unless they violate our terms of service. Our members have continuous access to our certified financial planners ("CFPs"), our career advice services, our member events, our content, educational material, news, and our tools and calculators, which are provided at no cost to the member. Additionally, our mobile app and website have a member home feed that is personalized and delivers content to a member about what they must do that day in their financial life, what they should consider doing that day in their financial life, and what they can do that day in their financial life. Since our inception through June 30, 2022, we have served approximately 4.3 million members who have used approximately 6.6 million products on the SoFi platform.
67
SoFi Technologies, Inc.
TABLE OF CONTENTS
Members
In Thousands

We offer our members a suite of financial products and services, enabling them to borrow, save, spend, invest and protect their finances across one integrated platform. Our aim is to create a best-in-class, integrated financial services platform that will generate a virtuous cycle whereby positive member experiences will lead to more products adopted per member and enhanced profitability for each additional product by lowering overall member acquisition costs and increasing the lifetime value of our members. We refer to this virtuous cycle as our "Financial Services Productivity Loop".
We believe that developing a relationship with our members and gaining their trust is central to our success as a financial services platform. Through our mobile technology and continuous effort to improve our financial services products, we are seeking to build a financial services platform that members can access for all of their financial services needs. We believe we are in the early stages of realizing the benefits of our Financial Services Productivity Loop.
In addition to benefiting our members, our products and capabilities are also designed to appeal to enterprises, such as financial services institutions that subscribe to our enterprise services called SoFi At Work, and have become interconnected with the SoFi platform. We have continued to expand our platform capabilities for enterprises through our acquisition of Galileo in 2020, which provides technology platform services to financial and non-financial institutions and which has allowed us to vertically integrate across more of our financial services, and the Technisys Merger in the first quarter of 2022, through which we expanded our technology platform services to a broader international market. We believe that these expansions will deepen our participation in the entire technology ecosystem powering digital financial services, allowing us to not only reduce costs to operate our member-centric business, but also deliver increasing value to our enterprise customers. While our enterprises are not considered members, they are important contributors to the growth of the SoFi platform, and also have their own constituents who might benefit from our products in the future.
While we primarily operate in the United States, we expanded into Hong Kong with our acquisition of 8 Limited (an investment business), we gained clients in Mexico and Colombia with our acquisition of Galileo, and we further expanded into Latin America with the Technisys Merger.
National Bank Charter. In February 2022, we closed the Bank Merger, pursuant to which we acquired all of the outstanding equity interests in Golden Pacific Bancorp, Inc. and its wholly-owned subsidiary, Golden Pacific Bank, a national bank. Upon closing the Bank Merger, we became a bank holding company and Golden Pacific began operating as SoFi Bank. Golden Pacific's community bank business continues to operate as a division of SoFi Bank.
As a bank holding company, we allow existing members to convert their SoFi Money cash management accounts into SoFi Checking and Savings accounts held at SoFi Bank, which allows us to offer both checking and savings features and higher interest rates on the accounts, and through which SoFi Bank can use the deposit accounts as an alternative and more cost-effective source of funding for loans, as compared to our loan warehouse facility financing arrangements. We are originating all new loan applications within SoFi Bank and transferred SoFi Credit Card and the majority of other lending products to SoFi Bank. Additionally, through SoFi Bank, we expect to, among other things, issue SoFi debit cards and provide ACH, check, and wire transaction services over time.
The key expected financial benefits to us of operating a national bank include: (i) lowering our cost to fund loans, as we can utilize deposits held at SoFi Bank to fund loans, which have a lower borrowing cost of funds than our warehouse and securitization financing model, (ii) increasing our ability to hold loans on our balance sheet for longer periods, thereby enabling
68
SoFi Technologies, Inc.
TABLE OF CONTENTS
us to earn interest on these loans for a longer period, and (iii) supporting origination volume growth by providing an alternative financing option, while also maintaining our warehouse capacity. See Part II, Item 1A "Risk Factors" for a discussion of certain potential risks related to being a bank holding company.
Our Reportable Segments
We conduct our business through three reportable segments: Lending, Technology Platform and Financial Services. Below is a discussion of our segments, their corresponding products and the ways in which those products generate revenues and/or incur expenses for the Company. In the first quarter of 2022, we implemented a funds transfer pricing ("FTP") framework to attribute net interest income to our business segments based on their usage and/or provision of funding. See Note 17 to the Notes to Unaudited Condensed Consolidated Financial Statements for additional information on the FTP framework.
Lending Segment
We offer personal loans, student loans and home loans and related services. We believe that our market opportunity within each of these lending channels is significant. Our lending process primarily leverages an in-application, digital borrowing experience, which we believe serves as a competitive advantage as digital lending becomes increasingly ubiquitous. We are originating all new loan applications within SoFi Bank.
A key element of our underwriting process is the ability to facilitate risk-based interest rates that are appropriate for each loan. Using SoFi's proprietary risk models, we project quarterly loan performance, including expected losses and prepayments. The outcome of this process helps us determine a more data-driven, risk-adjusted interest rate that we can offer our members.
Our lending business is primarily a gain-on-sale model, whereby we seek to originate loans and recognize a gain from these loans when we sell them into either our whole loan or securitization channels. We sell our whole loans primarily to large financial institutions, such as bank holding companies, for which we target a premium to par, and in excess of our costs to originate the loans. Our loan premiums fluctuate from time to time based on benchmark rates and credit spreads, and we are not guaranteed a gain on all or any of our loan sales. In securitization transactions that do not qualify for sale accounting, the related assets remain on our balance sheet and cash proceeds received are reported as liabilities, with related interest expense recognized over the life of the related borrowing. In securitization transactions that qualify for sale accounting, we typically have insignificant continuing involvement as an investor.
In the case of both whole loan sales and securitizations, and with the exception of certain of our home loans, we also continue to retain servicing rights to our originated loans following transfer.
Furthermore, our platform supports the full transaction lifecycle, including credit application, underwriting, approval, funding and servicing. Through data derived at loan origination and throughout the servicing process, SoFi has life-of-loan performance data on each loan in its ecosystem that we originate and on which we retain servicing, which provides a meaningful data asset.
Prior to selling our loans, we rely upon deposits, warehouse financing and our own capital to enable us to expand our origination capabilities. We believe our ability to utilize deposits held at SoFi Bank to fund our loans can lower our overall cost of asset-backed financing over time. Net interest income, which we define as the difference between the earned interest income and interest expense to finance loans, is a key component of the profitability of our Lending segment. In the first quarter of 2022, we implemented an FTP framework to attribute net interest income to our business segments based on their usage and/or provision of funding.
Technology Platform Segment
Our Technology Platform segment consists of Galileo, which we acquired in May 2020, and Technisys, which we acquired in March 2022. Galileo is a provider of technology platform services to financial and non-financial institutions. Through Galileo, we provide services through a suite of program, event and authorization application programming interfaces for financial and non-financial institutions. Technisys is a cloud-native digital and core banking platform with financial services customers in Latin America. Through Technisys, we earn technology product and solutions revenue through sales of software licenses and provision of maintenance and support services related to those software licenses. We also provide additional technology solutions for our customers as their business needs evolve over time, which we refer to as "evolution labs."
Many technology platform segment contracts are multi-year contracts. In certain of our contracts, we provide for a variety of integrated platform services, which vary by client and are either non-cancellable or cancellable with a substantive payment. Pricing structures under these contracts are typically volume-based, or a combination of activity and volume-based,
69
SoFi Technologies, Inc.
TABLE OF CONTENTS
and payment terms are predominantly monthly in arrears. Some of these contracts contain minimum monthly payments with agreed upon monthly service levels and may contain penalties if service levels are not met. Our technology platform software licenses are either perpetual or term based, and are recognized at a point in time, with the transaction price dependent upon the enforceable term of the software license in the case of a term-based license. We also have arrangements that are time and materials based, wherein the contractual term varies by customer. Finally, maintenance and support services are performed over time, and typically have a defined period of service.
Financial Services Segment
Our digital suite of financial services products, by nature, provides more daily interactions with our members and is, therefore, differentiated from our lending products, which inherently have less consistent touchpoints with our members. We offer a suite of financial services solutions across our SoFi Checking and Savings account, SoFi Money cash management account, SoFi Invest, SoFi Credit Card and SoFi Relay products. We also acquired commercial and consumer banking loans in the Bank Merger, which we do not expect to have a material impact on our segment performance. SoFi Checking and Savings provides a digital banking experience, while a SoFi Money cash management account provides a digital cash management experience for our members. Following the Bank Merger, we began to allow members to convert their SoFi Money cash management accounts into SoFi Checking and Savings accounts held at SoFi Bank. Effective June 5, 2022, our SoFi Money cash management accounts no longer earn interest, as we implemented our plan to build new features only for SoFi Checking and Savings and reduced support of our SoFi Money cash management accounts. SoFi Invest is a mobile-first investment platform offering members access to trading and advisory solutions, such as active investing, robo-advisory and digital assets accounts, the latter of which are further discussed below. SoFi Credit Card has no annual fee and is designed to help our members save, invest and pay down debt through a variable rewards program, with higher rewards offerings when redeeming into other SoFi products. To complement these products, we offer financial tracking through SoFi Relay, and partner with other enterprises through loan referrals and our SoFi At Work service. We also developed a financial services marketplace platform branded Lantern Credit to help applicants that do not qualify for SoFi products with alternative products from other providers, as well as providing a product comparison experience.
We earn revenues in connection with our Financial Services segment through various partnerships and our SoFi Checking and Savings accounts, SoFi Money cash management accounts and SoFi Invest products in the following ways:
Brokerage fees: We earn brokerage fees from our share lending and payment for order flow arrangements related to our SoFi Invest product, exchange conversion services and digital assets activity. In our share lending arrangements and payment for order flow arrangements, we benefit through a negotiated multi-year revenue sharing arrangement, since our members' brokerage activity drives the share lending and payment for order flow volume. In our digital assets arrangements, our fee is calculated as a negotiated percentage of the transaction volume. In our exchange conversion arrangements, we earn fees for exchanging one currency for another. Historically, these fees have not been a significant portion of our total net revenue.
Beginning in the fourth quarter of 2021, we introduced a flat monthly platform fee that is charged to members associated with our 8 Limited business in Hong Kong. The fee is assessed at each month end on all members with at least one open 8 Limited brokerage account (with the exception of accounts for which the applicable fee exceeds the account's net asset value at month end) regardless of the volume or frequency of trading activity during the month. The fee is deducted directly from the member's primary brokerage account.
Referral fees: Through strategic partnerships, we earn a specified referral fee in connection with referral activity we facilitate through our platform. Referral fees are paid to us by third-party partners that offer services to end users who do not use one of our product offerings, but who were referred to the partners through our platform. As such, the third-party enterprise partners are our customers in these referral arrangements. Beginning in the third quarter of 2021, we entered into a referral arrangement whereby we earn referral fulfillment fees for providing pre-qualified borrower referrals to a third-party partner who separately contracts with a loan originator. The referral fulfillment fee is determined as either of two fixed amounts based on the aggregate origination principal balance of the loan.
Payment network fees: We earn payment network fees, which primarily constitute interchange fees from our SoFi-branded debit cards and our SoFi Credit Card product, which are reduced by fees payable to card associations and our fulfillment partners. These fees are remitted by merchants and are calculated by multiplying a set fee percentage by the transaction volume processed through such network. We arrange for performance by a card association and the bank issuer to enable certain aspects of the SoFi-branded transaction card process. We enter into contracts with both parties that establish the shared economics of SoFi-branded transaction cards. As we continue to transition our SoFi Money
70
SoFi Technologies, Inc.
TABLE OF CONTENTS
cash management accounts to SoFi Checking and Savings accounts held at SoFi Bank, we expect to decrease certain fees payable to third parties over time.
Enterprise service fees: These fees are earned in connection with services we provide to enterprise partners through our At Work product, such as when we facilitate transactions for the benefit of their employees, such as 529 plan contributions or student loan payments.
Equity capital markets fees: Equity capital markets fees consist of underwriting fees. Beginning in the second quarter of 2021, we began earning underwriting fees related to our membership in underwriting syndicates for IPOs. We recognize equity capital markets fees on the applicable trade date.
Net interest income: Our Financial Services segment earns interest income from deposits held at SoFi Bank through our implementation of an FTP framework in the first quarter of 2022, whereby the Financial Services segment is credited for the deposit funding it provides to our Lending segment. This interest income has no impact on our consolidated financial statements. To a lesser degree, we generate interest income from deposits sitting in our Member Banks, which are member bank holding companies that we exclusively relied on prior to becoming a bank holding company to provide cash management services to our members through our bank sweep program at our broker-dealer subsidiary. While we continue to utilize Member Banks, we now also sweep cash management accounts to SoFi Bank. We also generate interest income on SoFi Credit Card and on cash balances that we hold through SoFi Invest. Finally, we earn interest income in the Financial Services segment on certain commercial real estate and other commercial loans, such as small business loans. We incur interest expense on SoFi Credit Card through the FTP framework, which is eliminated in consolidation, as well as incur interest expense related to SoFi Checking and Savings and SoFi Money cash management balances.
COVID-19 Pandemic
The ongoing novel coronavirus ("COVID-19") pandemic and its effects continue to evolve, particularly with the emergence of new variants and sub-variants that are increasingly transmissible and immune-evading. Macroeconomic conditions have been volatile and impacted by worker shortages, supply chain issues, inflationary pressures, vaccine and testing requirements, and measures taken in response to the emergence of new variants. We are unable to predict the future path or impact of any global or regional COVID-19 resurgences, including existing or future variants, or other public health crises. The extent to which the COVID-19 pandemic ultimately impacts our business, results of operations and financial condition will depend on future developments that are still uncertain and cannot be predicted. See Part II, Item 1A "Risk Factors - COVID-19 Pandemic Risks" for additional discussion of the risks and uncertainties associated with the ongoing impacts from the COVID-19 pandemic.
71
SoFi Technologies, Inc.
TABLE OF CONTENTS
Executive Overview
The following tables display key financial measures for our three reportable segments and our consolidated company that are used, along with our key business metrics, by management to evaluate our business, measure our performance, identify trends and make strategic decisions. Contribution profit (loss) is the primary measure of segment-level profit and loss reviewed by management and is defined as total net revenue for each reportable segment less expenses directly attributable to the reportable segment and, in the case of our Lending segment, adjusted for fair value adjustments attributable to assumption changes associated with our servicing rights and residual interests classified as debt. See "Results of Operations", "Summary Results by Segment" and "Non-GAAP Financial Measures" herein for discussion and analysis of these key financial measures.
Three Months Ended June 30, Six Months Ended June 30,
($ in thousands)
2022 2021 2022 2021
Lending
Net interest income(1)
$ 114,003 $ 56,822 $ 208,357 $ 108,599
Total noninterest income 143,114 109,469 301,749 205,669
Total net revenue 257,117 166,291 510,106 314,268
Adjusted net revenue(2)
250,681 172,232 495,053 340,269
Contribution profit
141,991 89,188 274,642 176,874
Technology Platform
Net interest expense
$ - $ (32) $ - $ (68)
Total noninterest income 83,899 45,329 144,704 91,430
Total net revenue(3)
83,899 45,297 144,704 91,362
Contribution profit
21,841 13,013 40,096 28,698
Financial Services
Net interest income(1)
$ 12,925 $ 542 $ 18,807 $ 771
Total noninterest income 17,438 16,497 35,099 22,731
Total net revenue 30,363 17,039 53,906 23,502
Contribution loss(3)
(53,700) (24,745) (103,215) (60,264)
Corporate/Other(4)
Net interest expense $ (4,199) $ (1,320) $ (9,502) $ (6,010)
Total noninterest income (loss) (4,653) 3,967 (6,343) 4,136
Total net revenue (loss)(3)
(8,852) 2,647 (15,845) (1,874)
Consolidated
Net interest income $ 122,729 $ 56,012 $ 217,662 $ 103,292
Total noninterest income 239,798 175,262 475,209 323,966
Total net revenue 362,527 231,274 692,871 427,258
Adjusted net revenue(2)
356,091 237,215 677,818 453,259
Net loss (95,835) (165,314) (206,192) (342,878)
Adjusted EBITDA(2)
20,304 11,240 28,988 15,372
___________________
(1)Net interest income for our Lending and Financial Services segments reported for the three and six months ended June 30, 2022 reflects the implementation of an FTP framework.
(2)Adjusted net revenue and adjusted EBITDA are non-GAAP financial measures. For information regarding our uses and definitions of these measures and for reconciliations to the most directly comparable U.S. Generally Accepted Accounting Principles ("GAAP") measures, see "Non-GAAP Financial Measures" herein.
(3)Technology Platform segment total net revenue for the three and six months ended June 30, 2022 includes $953 and $1,723, respectively, of intercompany fees earned by Galileo from SoFi, which is a Galileo client. There is an equal and offsetting expense reflected within the Financial Services segment contribution loss representing the intercompany fees incurred to Galileo. The intercompany revenue and expense are eliminated in consolidation. The revenue is eliminated within Corporate/Other and the expense represents a reconciling item of segment contribution profit (loss) to consolidated loss before income taxes. For the year ended December 31, 2021, all intercompany amounts were reflected in the fourth quarter, as inter-quarter amounts were determined to be immaterial. Additionally, for both the three and six months ended June 30, 2022, total net revenue for the Technology Platform segment
72
SoFi Technologies, Inc.
TABLE OF CONTENTS
included $718 of intercompany fees earned by Technisys from Galileo, which is a Technisys client. There is an equal and offsetting expense reflected within the Technology Platform segment directly attributable expenses representing the intercompany fees incurred by Galileo to Technisys. The intercompany revenue and expense are eliminated in consolidation. The revenue is eliminated within Corporate/Other and the expense is adjusted in our reconciliation of directly attributable expenses below. See Note 17 to the Notes to Unaudited Condensed Consolidated Financial Statements for additional information.
(4)Corporate/Other (previously referred to as "Other") primarily includes total net revenue associated with corporate functions, non-recurring gains and losses from non-securitization investment activities and interest income and realized gains and losses associated with investments in available-for-sale ("AFS") debt securities, all of which are not directly related to a reportable segment. For the three and six months ended June 30, 2022, net interest income within Corporate/Other also reflects the residual impact from FTP charges and FTP credits allocated to our reportable segments under our FTP framework.
Key Recent Developments
We continue to execute on our growth and other strategic initiatives and we continue to celebrate launches across our product suite and strategic partnerships, further establishing ourselves as a platform that enables individuals to borrow, save, spend, invest, and protect their assets.
In March 2022, we closed the Technisys Merger, which added a cloud-native digital and core banking platform with an existing footprint of clients in Latin America to our technology platform offerings. We believe that the combination of the Technisys core banking platform with our existing technology platform offerings provides an end-to-end vertically integrated technology stack, which we expect will meet both the expanding needs of our existing and expected future clients. See Note 2 to the Notes to Unaudited Condensed Consolidated Financial Statements for additional information on the Technisys Merger.
In February 2022, we closed the Bank Merger, after which we became a bank holding company and Golden Pacific began operating as SoFi Bank. We believe operating a national bank allows us to provide members and prospective members broader and more competitive options across their financial services needs and lowers our cost of asset-backed financing (by utilizing deposits held at SoFi Bank to fund our loans). We also believe that operating as a national bank enables us to offer lower interest rates on loans to members as well as offer higher interest rates on deposit accounts. See "Business Overview-National Bank Charter" herein and Note 2 to the Notes to Unaudited Condensed Consolidated Financial Statements for additional information on the Bank Merger.
Non-GAAP Financial Measures
Our management and Board of Directors use adjusted net revenue and adjusted EBITDA, which are non-GAAP financial measures, to evaluate our operating performance, formulate business plans, help better assess our overall liquidity position, and make strategic decisions, including those relating to operating expenses and the allocation of internal resources. Accordingly, we believe that adjusted net revenue and adjusted EBITDA provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.
Adjusted Net Revenue
Adjusted net revenue is defined as total net revenue, adjusted to exclude the fair value changes in servicing rights and residual interests classified as debt due to valuation inputs and assumptions changes, which relate only to our Lending segment. We adjust total net revenue to exclude these items, as they are non-cash charges that are not realized during the period, and therefore positive or negative changes do not impact the cash available to fund our operations. This measure helps provide our management with an understanding of the net revenue available to finance our operations and helps management better decide on the proper expenses to authorize for each of our operating segments, to ultimately help achieve target contribution profit margins. Therefore, the measure of adjusted net revenue serves as both the starting point for how we think about the liquidity generated from our operations and also the starting point for our annual financial planning, the latter of which focuses on the cash we expect to generate from our operating segments to help fund the current year's strategic objectives. Adjusted net revenue has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, the analysis of other GAAP financial measures, such as total net revenue. The primary limitation of adjusted net revenue is its lack of comparability to other companies that do not utilize this measure or that use a similar measure that is defined in a different manner.
73
SoFi Technologies, Inc.
TABLE OF CONTENTS
Quarterly Adjusted Net Revenue
In Thousands
We reconcile adjusted net revenue to total net revenue, the most directly comparable GAAP measure, as presented below for the periods indicated:

Three Months Ended June 30, Six Months Ended June 30,
($ in thousands)
2022 2021 2022 2021
Total net revenue
$ 362,527 $ 231,274 $ 692,871 $ 427,258
Servicing rights - change in valuation inputs or assumptions(1)
(9,098) 224 (20,678) 12,333
Residual interests classified as debt - change in valuation inputs or assumptions(2)
2,662 5,717 5,625 13,668
Adjusted net revenue
$ 356,091 $ 237,215 $ 677,818 $ 453,259
___________________
(1)Reflects changes in fair value inputs and assumptions on servicing rights, including conditional prepayment and default rates and discount rates. These assumptions are highly sensitive to market interest rate changes and are not indicative of our performance or results of operations. Moreover, these non-cash charges are unrealized during the period and, therefore, have no impact on our cash flows from operations. As such, these positive and negative changes are adjusted out of total net revenue to provide management and financial users with better visibility into the net revenue available to finance our operations and our overall performance.
(2)Reflects changes in fair value inputs and assumptions on residual interests classified as debt, including conditional prepayment and default rates and discount rates. When third parties finance our consolidated securitization variable interest entities ("VIEs") by purchasing residual interests, we receive proceeds at the time of the closing of the securitization and, thereafter, pass along contractual cash flows to the residual interest owner. These residual debt obligations are measured at fair value on a recurring basis, but they have no impact on our initial financing proceeds, our future obligations to the residual interest owner (because future residual interest claims are limited to contractual securitization collateral cash flows), or the general operations of our business. As such, these positive and negative non-cash changes in fair value attributable to assumption changes are adjusted out of total net revenue to provide management and financial users with better visibility into the net revenue available to finance our operations.
We reconcile adjusted net revenue to total net revenue, the most directly comparable GAAP measure, as presented below for the quarterly periods indicated:
Quarter Ended
($ in thousands) June 30,
2022
March 31,
2022
December 31,
2021
September 30,
2021
June 30,
2021
Total net revenue $ 362,527 $ 330,344 $ 285,608 $ 272,006 $ 231,274
Servicing rights - change in valuation inputs or assumptions(1)
(9,098) (11,580) (9,273) (409) 224
Residual interests classified as debt - change in valuation inputs or assumptions(2)
2,662 2,963 3,541 5,593 5,717
Adjusted net revenue $ 356,091 $ 321,727 $ 279,876 $ 277,190 $ 237,215
___________________
(1)See footnote (1) to the table above.
(2)See footnote (2) to the table above.
74
SoFi Technologies, Inc.
TABLE OF CONTENTS
The reconciling items to determine our non-GAAP measure of adjusted net revenue are applicable only to the Lending segment. The table below presents adjusted net revenue for the Lending segment for the periods indicated:
Three Months Ended June 30, Six Months Ended June 30,
($ in thousands) 2022 2021 2022 2021
Total net revenue - Lending
$ 257,117 $ 166,291 $ 510,106 $ 314,268
Servicing rights - change in valuation inputs or assumptions(1)
(9,098) 224 (20,678) 12,333
Residual interests classified as debt - change in valuation inputs or assumptions(2)
2,662 5,717 5,625 13,668
Adjusted net revenue - Lending $ 250,681 $ 172,232 $ 495,053 $ 340,269
___________________
(1)See footnote (1) to the table above.
(2)See footnote (2) to the table above.
Adjusted EBITDA
Adjusted EBITDA is defined as net income (loss), adjusted to exclude, as applicable: (i) corporate borrowing-based interest expense (our adjusted EBITDA measure is not adjusted for warehouse or securitization-based interest expense, nor deposit interest expense and finance lease liability interest expense, as discussed further below), (ii) income tax expense (benefit), (iii) depreciation and amortization, (iv) share-based expense (inclusive of equity-based payments to non-employees), (v) impairment expense (inclusive of goodwill impairment and property, equipment and software abandonments), (vi) transaction-related expenses, (vii) fair value changes in warrant liabilities, and (viii) fair value changes in each of servicing rights and residual interests classified as debt due to valuation assumptions. We believe adjusted EBITDA provides a useful measure for period-over-period comparisons of our business, as it removes the effect of certain non-cash items and certain charges that are not indicative of our core operating performance or results of operations. It is also a measure that management relies upon to evaluate cash flows generated from operations, and therefore the extent of additional capital, if any, required to invest in strategic initiatives. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, the analysis of other GAAP financial measures, such as net income (loss). Some of the limitations of adjusted EBITDA include that it does not reflect the impact of working capital requirements or capital expenditures and it is not a universally consistent calculation among companies in our industry, which limits its usefulness as a comparative measure.
Quarterly Adjusted EBITDA
In Thousands
75
SoFi Technologies, Inc.
TABLE OF CONTENTS
We reconcile adjusted EBITDA to net loss, the most directly comparable GAAP measure, below for the periods indicated:
Three Months Ended June 30, Six Months Ended June 30,
($ in thousands)
2022 2021 2022 2021
Net loss $ (95,835) $ (165,314) $ (206,192) $ (342,878)
Non-GAAP adjustments:
Interest expense - corporate borrowings(1)
3,450 1,378 6,099 6,386
Income tax expense (benefit)(2)
119 (78) 871 1,021
Depreciation and amortization(3)
38,056 24,989 68,754 50,966
Share-based expense
80,142 52,154 157,163 89,608
Transaction-related expense(4)
808 21,181 17,346 23,359
Fair value changes in warrant liabilities(5)
- 70,989 - 160,909
Servicing rights - change in valuation inputs or assumptions(6)
(9,098) 224 (20,678) 12,333
Residual interests classified as debt - change in valuation inputs or assumptions(7)
2,662 5,717 5,625 13,668
Total adjustments 116,139 176,554 235,180 358,250
Adjusted EBITDA
$ 20,304 $ 11,240 $ 28,988 $ 15,372
___________________
(1)Our adjusted EBITDA measure adjusts for corporate borrowing-based interest expense, as these expenses are a function of our capital structure. Corporate borrowing-based interest expense primarily included (i) interest on our revolving credit facility, (ii) for the 2022 periods, the amortization of debt discount and debt issuance costs on our convertible notes, and (iii) for the six-month 2021 period, interest on the seller note issued in connection with our acquisition of Galileo. Our adjusted EBITDA measure does not adjust for interest expense on warehouse facilities and securitization debt, which are recorded within interest expense-securitizations and warehousesin the unaudited condensed consolidated statements of operations and comprehensive income (loss), as these interest expenses are direct operating expenses driven by loan origination and sales activity. Additionally, our adjusted EBITDA measure does not adjust for interest expense on deposits or interest expense on our finance lease liability in connection with SoFi Stadium, which are recorded within interest expense-other, as these interest expenses are direct operating expenses. Revolving credit facility interest expense for the three- and six-month periods increased due to higher interest rates during the 2022 periods on identical outstanding debt period over period.
(2)Our income tax expense positions were primarily a function of SoFi Lending Corp.'s profitability, and for the 2022 periods, SoFi Bank, in state jurisdictions where separate filings are required. The income tax expense in the 2022 periods was partially offset by an income tax benefit at Technisys. See Note 13 to the Notes to Unaudited Condensed Consolidated Financial Statements for additional information.
(3)Depreciation and amortization expense for the three- and six-month 2022 periods increased compared to the comparable 2021 periods primarily in connection with our recent acquisitions and growth in our software balance, partially offset by the acceleration of core banking infrastructure amortization during the 2021 periods.
(4)Transaction-related expenses in the 2022 periods primarily included financial advisory and professional services costs associated with our acquisition of Technisys. Transaction-related expenses in the three-month 2021 period included the special payment to the holders of Series 1 Redeemable Preferred Stock in conjunction with the Business Combination. Transaction-related expenses in the six-month 2021 period also included financial advisory and professional services costs associated with our then-pending acquisition of Golden Pacific.
(5)Our adjusted EBITDA measure excludes the non-cash fair value changes in warrants accounted for as liabilities, which were measured at fair value through earnings. The amounts in the 2021 periods related to changes in the fair value of Series H warrants issued by Social Finance in 2019 in connection with certain redeemable preferred stock issuances. We did not measure the Series H warrants at fair value subsequent to May 28, 2021 in conjunction with the Business Combination, as they were reclassified into permanent equity.
(6)Reflects changes in fair value inputs and assumptions, including market servicing costs, conditional prepayment and default rates and discount rates. This non-cash change is unrealized during the period and, therefore, has no impact on our cash flows from operations. As such, these positive and negative changes in fair value attributable to assumption changes are adjusted out of net loss to provide management and financial users with better visibility into the earnings available to finance our operations.
(7)Reflects changes in fair value inputs and assumptions, including conditional prepayment and default rates and discount rates. When third parties finance our consolidated VIEs through purchasing residual interests, we receive proceeds at the time of the securitization close and, thereafter, pass along contractual cash flows to the residual interest owner. These obligations are measured at fair value on a recurring basis, which has no impact on our initial financing proceeds, our future obligations to the residual interest owner (because future residual interest claims are limited to contractual securitization collateral cash flows), or the general operations of our business. As such, these positive and negative non-cash changes in fair value attributable to assumption changes are adjusted out of net loss to provide management and financial users with better visibility into the earnings available to finance our operations.
76
SoFi Technologies, Inc.
TABLE OF CONTENTS
We reconcile adjusted EBITDA to net loss, the most directly comparable GAAP measure, for the quarterly periods indicated below:
Quarter Ended
($ in thousands)
June 30,
2022
March 31,
2022
December 31,
2021
September 30,
2021
June 30,
2021
Net loss
$ (95,835) $ (110,357) $ (111,012) $ (30,047) $ (165,314)
Non-GAAP adjustments:
Interest expense - corporate borrowings
3,450 2,649 2,593 1,366 1,378
Income tax expense (benefit)
119 752 1,558 181 (78)
Depreciation and amortization 38,056 30,698 26,527 24,075 24,989
Share-based expense 80,142 77,021 77,082 72,681 52,154
Transaction-related expense 808 16,538 2,753 1,221 21,181
Fair value changes in warrant liabilities - - 10,824 (64,405) 70,989
Servicing rights - change in valuation inputs or assumptions (9,098) (11,580) (9,273) (409) 224
Residual interests classified as debt - change in valuation inputs or assumptions 2,662 2,963 3,541 5,593 5,717
Total adjustments 116,139 119,041 115,605 40,303 176,554
Adjusted EBITDA
$ 20,304 $ 8,684 $ 4,593 $ 10,256 $ 11,240

Key Business Metrics
The table below presents the key business metrics that management uses to evaluate our business, measure our performance, identify trends and make strategic decisions:
June 30, 2022 June 30, 2021
% Change
Members
4,318,705 2,560,492 69 %
Total Products
6,564,174 3,667,121 79 %
Total Products - Lending segment 1,202,027 981,440 22 %
Total Products - Financial Services segment 5,362,147 2,685,681 100 %
Total Accounts - Technology Platform segment(1)
116,570,038 78,902,156 48 %
___________________
(1)Total accounts refers to the number of open accounts at Galileo as of the reporting date. Beginning in the fourth quarter of 2021, we included SoFi accounts on the Galileo platform-as-a-service in our total accounts metric to better align with the Technology Platform segment revenue reported in Note 17 to the Notes to Unaudited Condensed Consolidated Financial Statements. Intercompany revenue is eliminated in consolidation. We did not recast the total accounts as of June 30, 2021 to conform to the current year presentation, as the impact was determined to be immaterial.
See "Summary Results by Segment"for additional metrics we review at the segment level.
Members
We refer to our customers as "members", which we define as someone who has a lending relationship with us through origination and/or ongoing servicing, opened a financial services account, linked an external account to our platform, or signed up for our credit score monitoring service. See "Business Overview". We view members as an indication not only of the size and a measurement of growth of our business, but also as a measure of the significant value of the data we have collected over time. The data we collect from our members helps us to, among other things: (i) assess loan life performance data on each loan in our ecosystem, which can inform risk-based interest rates that we can offer our members, (ii) understand our members' spending behavior to identify and suggest other products we offer that may align with the members' financial needs, and (iii) enhance our opportunities to sell additional products to our members, as our members represent a vital source of marketing opportunities. When we provide additional products to members, it helps improve our unit economics per member, as we save on marketing costs that we would otherwise incur to attract new members. It also increases the lifetime value of an individual member. This in turn enhances our Financial Services Productivity Loop. Member growth is generally an indicator of future revenue, but is not directly correlated with revenues, since not all members who sign up for one of our products fully utilize or continue to use our products, and not all of our products (such as our complimentary product, SoFi Relay) provide direct sources of revenue.
77
SoFi Technologies, Inc.
TABLE OF CONTENTS
Total Products
Total products refers to the aggregate number of lending and financial services products that our members have selected on our platform since our inception through the reporting date, whether or not the members are still registered for such products. In our Lending segment, total products refers to the number of home loans, personal loans and student loans that have been originated through our platform through the reporting date, whether or not such loans have been paid off. If a member has multiple loan products of the same loan product type, such as two personal loans, that is counted as a single product. However, if a member has multiple loan products across loan product types, such as one personal loan and one home loan, that is counted as two products. In our Financial Services segment, total products refers to the number of SoFi Money accounts (presented inclusive of SoFi Money cash management accounts and SoFi Checking and Savings accounts held at SoFi Bank), SoFi Invest accounts, SoFi Credit Card accounts (including accounts with a zero dollar balance at the reporting date), referred loans (which relate to an arrangement in the third quarter of 2021 and are originated by a third-party partner to which we provide pre-qualified borrower referrals), SoFi At Work accounts and SoFi Relay accounts (with either credit score monitoring enabled or external linked accounts) that have been opened through our platform through the reporting date. Our SoFi Invest service is composed of three products: active investing accounts, robo-advisory accounts and digital assets accounts. Our members can select any one or combination of the three types of SoFi Invest products. If a member has multiple SoFi Invest products of the same account type, such as two active investing accounts, that is counted as a single product. However, if a member has multiple SoFi Invest products across account types, such as one active investing account and one robo-advisory account, those separate account types are considered separate products. Total products is a primary indicator of the size and reach of our Lending and Financial Services segments. Management relies on total products metrics to understand the effectiveness of our member acquisition efforts and to gauge the propensity for members to use more than one product.
Products
In Thousands
Total lending products were composed of the following as of the dates indicated:
Lending Products June 30, 2022 June 30, 2021 Variance
% Change
Home loans 25,128 18,102 7,026 39 %
Personal loans 714,735 544,068 170,667 31 %
Student loans 462,164 419,270 42,894 10 %
Total lending products
1,202,027 981,440 220,587 22 %
78
SoFi Technologies, Inc.
TABLE OF CONTENTS
Total financial services products were composed of the following as of the dates indicated:
Financial Services Products
June 30, 2022 June 30, 2021 Variance
% Change
SoFi Money(1)
1,837,138 954,519 882,619 92 %
Invest 1,961,425 1,038,570 922,855 89 %
Credit Card 139,781 42,744 97,037 227 %
Referred loans(2)
28,037 - 28,037 n/m
Relay 1,344,538 626,195 718,343 115 %
At Work 51,228 23,653 27,575 117 %
Total financial services products
5,362,147 2,685,681 2,676,466 100 %
___________________
(1)Includes SoFi Checking and Savings accounts held at SoFi Bank, beginning in the first quarter of 2022, and SoFi Money cash management accounts.
(2)Limited to loans wherein we provide third party fulfillment services.

Technology Platform Total Accounts
In our Technology Platform segment, total accounts refers to the number of open accounts at Galileo as of the reporting date. Beginning in the fourth quarter of 2021, we included SoFi accounts on the Galileo platform-as-a-service in our total accounts metric to better align with the Technology Platform segment revenue reported in Note 17 to the Notes to Unaudited Condensed Consolidated Financial Statements, which includes intercompany revenue from SoFi. Intercompany revenue is eliminated in consolidation. We did not recast total accounts as of June 30, 2021 to conform to the current year presentation, as the impact was determined to be immaterial. Total accounts is a primary indicator of the accounts dependent upon our technology platform to use virtual card products, virtual wallets, make peer-to-peer and bank-to-bank transfers, receive early paychecks, separate savings from spending balances, make debit transactions and rely upon real-time authorizations, all of which result in revenues for the Technology Platform segment. We do not measure total accounts for the Technisys products and solutions, as the revenue model is not primarily dependent upon being a fully integrated, stand-ready service.
June 30, 2022 June 30, 2021 Variance
% Change
Total Accounts 116,570,038 78,902,156 37,667,882 48 %
Key Factors Affecting Operating Results
Our future operating results and cash flows are dependent upon a number of opportunities, challenges and other factors, including our loan origination volume, financial services products and member activity on our platform, growth in technology platform customers, competition and industry trends, general economic conditions and our ability to optimize our national bank charter. The key factors affecting our operating results are discussed in our Annual Report on Form 10-K, with notable updates provided herein.
Industry Trends and General Economic Conditions
Interest Rates and Macroeconomic Conditions
The Federal Reserve has increased the benchmark interest rate four times during 2022: 25 basis points in March 2022, 50 basis points in May 2022, and 75 basis points in each of June and July 2022. We expect additional increases in the benchmark interest rate during the remainder of 2022, largely in response to increasing inflation. We anticipate that in a rising interest rate environment, and operating under a bank charter, we will be able to offer more competitive interest rates to our members on their deposits, which we believe would result in increasing demand for our deposits. However, rising interest rates could unfavorably impact demand for refinancing loan products. In addition, if the Federal Reserve does not effectively curb inflation or interest rates rise unexpectedly or too quickly, it could have a negative impact on the overall economy which could adversely impact our results of operations. In addition to rising interest rates, the U.S. economy experienced negative gross domestic product growth in the first and second quarters of 2022 and consumer confidence indicators are down. Negative changes to macroeconomic conditions may result in decreased demand for our products, increased operating costs and negatively impact our results of operations.
79
SoFi Technologies, Inc.
TABLE OF CONTENTS
Student Loan Relief
In April 2022, President Biden directed a sixth extension of the federal student loan payment moratorium to August 31, 2022. We anticipate that there could be an additional extension beyond August 2022 by the Biden administration. Increased focus by policymakers and the current presidential administration on outstanding student loans has led to discussions of potential legislative and regulatory actions, among other possible steps, to reduce outstanding balances of loans, or cancel loans at a significant scale, including the potential forgiveness of federal student debt. Should there be further student loan relief measures, we expect that this would continue to decrease the demand for our student loan refinancing products and would likely have an adverse impact on our results of operations and overall business.
Results of Operations
The following table sets forth condensed consolidated statements of income data for the periods indicated:
Three Months Ended June 30,
2022 vs 2021
% Change
Six Months Ended June 30, 2022 vs 2021
% Change
($ in thousands)
2022 2021 2022 2021
Interest income
Loans $ 145,337 $ 79,678 82 % $ 259,722 $ 156,899 66 %
Securitizations 2,567 3,794 (32) % 5,325 8,261 (36) %
Related party notes - - - % - 211 (100) %
Other 1,608 636 153 % 2,877 1,265 127 %
Total interest income 149,512 84,108 78 % 267,924 166,636 61 %
Interest expense
Securitizations and warehouses 18,599 26,250 (29) % 38,505 56,058 (31) %
Deposits 4,543 - n/m 4,974 - n/m
Corporate borrowings 3,450 1,378 150 % 6,099 6,386 (4) %
Other 191 468 (59) % 684 900 (24) %
Total interest expense 26,783 28,096 (5) % 50,262 63,344 (21) %
Net interest income 122,729 56,012 119 % 217,662 103,292 111 %
Noninterest income

Loan origination and sales 144,414 109,719 32 % 302,118 220,064 37 %
Securitizations (11,737) (26) n/m (23,018) (2,062) n/m
Servicing 10,471 (224) n/m 22,707 (12,333) (284) %
Technology products and solutions 81,670 44,950 82 % 141,527 90,609 56 %
Other 14,980 20,843 (28) % 31,875 27,688 15 %
Total noninterest income 239,798 175,262 37 % 475,209 323,966 47 %
Total net revenue 362,527 231,274 57 % 692,871 427,258 62 %
Noninterest expense

Technology and product development 99,366 69,389 43 % 181,274 135,337 34 %
Sales and marketing 143,854 94,951 52 % 281,992 182,185 55 %
Cost of operations 79,091 60,624 30 % 149,528 118,194 27 %
General and administrative 125,829 171,216 (27) % 262,334 332,913 (21) %
Provision for credit losses 10,103 486 n/m 23,064 486 n/m
Total noninterest expense 458,243 396,666 16 % 898,192 769,115 17 %
Loss before income taxes (95,716) (165,392) (42) % (205,321) (341,857) (40) %
Income tax (expense) benefit (119) 78 (253) % (871) (1,021) (15) %
Net loss $ (95,835) $ (165,314) (42) % $ (206,192) $ (342,878) (40) %
Other comprehensive loss

Unrealized losses on available-for-sale securities, net $ (1,991) $ - n/m $ (6,446) $ - n/m
Foreign currency translation adjustments, net (56) (266) (79) % (94) (346) (73) %
Total other comprehensive loss (2,047) (266) 670 % (6,540) (346) n/m
Comprehensive loss $ (97,882) $ (165,580) (41) % $ (212,732) $ (343,224) (38) %
80
SoFi Technologies, Inc.
TABLE OF CONTENTS
Interest Income
The following table presents the components of our total interest income for the periods indicated:
Three Months Ended June 30,
2022 vs 2021
% Change
Six Months Ended June 30,
2022 vs 2021
% Change
($ in thousands)
2022 2021 2022 2021
Loans $ 145,337 $ 79,678 82 % $ 259,722 $ 156,899 66 %
Securitizations 2,567 3,794 (32) % 5,325 8,261 (36) %
Related party notes - - - % - 211 (100) %
Other 1,608 636 153 % 2,877 1,265 127 %
Total interest income
$ 149,512 $ 84,108 78 % $ 267,924 $ 166,636 61 %
Total interest income increased by $65.4 million, or 78%, for the three months ended June 30, 2022 compared to the three months ended June 30, 2021, and increased by $101.3 million, or 61%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021, the components of which are discussed below.
Three Months-Loans. Loans interest income increased by $65.7 million, or 82%, primarily driven by increases in non-securitization personal loan and student loan interest income of $61.7 million (173%) and $9.1 million (41%), respectively, which were primarily a function of increases in aggregate average balances for personal loans and student loans of $2.0 billion (158%) and $1.2 billion (60%), respectively. The personal loan average balance increase was primarily attributable to higher origination volume combined with longer loan holding periods. The student loan average balance increase was primarily attributable to longer loan holding periods. We also had an increase in our whole loan interest rates. These increases were offset by decreases in interest income from consolidated personal loan and student loan securitizations of $6.5 million (61%) and $3.1 million (32%), respectively, which were impacted by decreases in average balances for personal loans and student loans of $265.0 million (63%) and $251.0 million (34%), respectively. The decreases in aggregate average balances were primarily attributable to payment activity and the absence of additions to our consolidated securitization loan balances. The remaining increase in interest income included $3.2 million attributable to credit card, $1.1 million attributable to the acquired loan portfolio in the Bank Merger, and $0.1 million attributable to home loans.
Six Months-Loans. Loans interest income increased by $102.8 million, or 66%, primarily driven by increases in non-securitization personal loan and student loan interest income of $97.5 million and $18.5 million, respectively, which were primarily a function of increases in average balances for personal loans and student loans of $1.6 billion (133%) and $1.2 billion (61%), respectively, attributable to longer loan holding periods. These increases were offset by decreases in interest income from consolidated personal loan and student loan securitizations of $14.1 million (60%) and $7.0 million (34%), respectively, which were impacted by decreases in average balances for personal loans and student loans of $288.9 million (62%) and $277.6 million (35%), respectively. The decreases in aggregate average balances were primarily attributable to payment activity and the absence of additions to our consolidated securitization loan balances. The remaining increase in interest income included $5.8 million attributable to credit card, $1.7 million attributable to the acquired loan portfolio in the Bank Merger, and $0.6 million attributable to home loans.
Three Months-Securitizations. Securitizations interest income decreased by $1.2 million, or 32%, which was primarily attributable to decreases in residual investment interest income of $0.6 million and asset-backed bonds of $0.7 million related to decreases in average securitization investment balances period over period, as securitization payments outpaced new securitization investments. This outcome was impacted by the absence of any securitization transactions during the 2022 period.
Six Months-Securitizations. Securitizations interest income decreased by $2.9 million, or 36%, which was primarily attributable to decreases in residual investment interest income of $1.5 million and asset-backed bonds of $1.6 million related to decreases in average securitization investment balances period over period. This outcome was impacted by the absence of any securitization transactions during the 2022 period.
Six Months-Related Party Notes. We did not have any related party notes interest income in the 2022 period. Related party notes interest income in the 2021 period of $0.2 million was attributable to our loans to Apex, which were fully settled in February 2021. See Note 14 to the Notes to Unaudited Condensed Consolidated Financial Statements for additional information on our related party notes.
Three Months-Other. Other interest income increased by $1.0 million, or 153%, primarily due to $0.8 million higher interest income earned on our interest-bearing cash and cash equivalents balances primarily due to higher average balances period over period, and interest income of $0.4 million earned on our investments in AFS debt securities, which we did not own
81
SoFi Technologies, Inc.
TABLE OF CONTENTS
during the comparable 2021 period, partially offset by a decrease of $0.4 million in interest earned on Member Bank deposits, as member balances have migrated to SoFi Bank.
Six Months-Other. Other interest income increased by $1.6 million, or 127%, primarily due to $1.0 million higher interest income earned on our interest-bearing cash and cash equivalents balances primarily due to higher average balances period over period, and interest income of $0.7 million earned on our investments in AFS debt securities, which we did not own during the comparable 2021 period, partially offset by a decrease of $0.4 million in interest earned on Member Bank deposits, as member balances have increasingly migrated to SoFi Bank.
Interest Expense
The following table presents the components of our total interest expense for the periods indicated:
Three Months Ended June 30,
2022 vs 2021
% Change
Six Months Ended June 30, 2022 vs 2021
% Change
($ in thousands)
2022 2021 2022 2021
Securitizations and warehouses $ 18,599 $ 26,250 (29) % $ 38,505 $ 56,058 (31) %
Deposits 4,543 - n/m 4,974 - n/m
Corporate borrowings 3,450 1,378 150 % 6,099 6,386 (4) %
Other 191 468 (59) % 684 900 (24) %
Total interest expense
$ 26,783 $ 28,096 (5) % $ 50,262 $ 63,344 (21) %
Total interest expense decreased by $1.3 million, or 5%, for the three months ended June 30, 2022 compared to the three months ended June 30, 2021, and decreased by $13.1 million, or 21%, for the six months ended June 30, 2022 compared to the same period in 2021, the components of which are discussed below.
Securitizations and Warehouses.The following tables present the components of securitizations and warehouses interest expense and other pertinent information.
Three Months Ended June 30,
2022 vs 2021
% Change
Six Months Ended June 30, 2022 vs 2021
% Change
($ in thousands)
2022 2021 2022 2021
Securitization debt interest expense $ 5,204 $ 9,414 (45) % $ 10,737 $ 20,362 (47) %
Warehouse debt interest expense 9,717 9,370 4 % 19,620 19,901 (1) %
Residual interests classified as debt interest expense 1,037 2,146 (52) % 2,565 4,345 (41) %
Debt issuance cost interest expense 2,641 5,320 (50) % 5,583 11,450 (51) %
Securitizations and warehouses interest expense
$ 18,599 $ 26,250 (29) % $ 38,505 $ 56,058 (31) %

Three Months Ended June 30,
2022 vs 2021
% Change
Six Months Ended June 30, 2022 vs 2021
% Change
($ in thousands) 2022 2021 2022 2021
Average debt balances(1)

Securitization debt $ 547,049 $ 983,849 (44) % $ 586,075 $ 1,075,775 (46) %
Warehouse facilities 2,093,373 2,330,664 (10) % 2,318,839 2,435,666 (5) %
Weighted average interest rates(2)
Securitization debt 3.8% 3.8% n/m 3.7% 3.8% n/m
Warehouse facilities 1.9% 1.6% n/m 1.7% 1.6% n/m
___________________
(1)Average balances were calculated based on four- and seven-month ending balances.
(2)Calculated as annualized interest expense divided by average debt balance for the respective debt category. Interest rates on securitization debt and warehouse facilities exclude the effect of debt issuance cost interest expense and amortization of debt discounts and premiums. Table excludes residual interests classified as debt, as interest expense is dependent on the timing and extent of securitization loan cash flows and, therefore, a derived weighted average interest rate using the methodology in the table herein is not meaningful for the purposes of understanding the change in residual interests classified as debt related interest expense.
82
SoFi Technologies, Inc.
TABLE OF CONTENTS
Securitizations and warehouses interest expense decreased by $7.7 million, or 29%, for the three months ended June 30, 2022 compared to the three months ended June 30, 2021, and decreased by $17.6 million, or 31%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021, driven by the following:
Securitization debt interest expense (exclusive of debt issuance and discount amortization) decreased by $4.2 million (45%) for the three months ended June 30, 2022 compared to the same period in 2021, and decreased by $9.6 million (47%) for the six months ended June 30, 2022 compared to the same period in 2021 primarily driven by a decline in the average balance of securitization debt of 44% and 46%, respectively, which was attributable to payment activity and the absence of additional securitization debt during the 2022 periods.
Warehouse debt interest expense (exclusive of debt issuance amortization) increased by $0.3 million (4%) for the three months ended June 30, 2022 compared to the same period in 2021, and decreased by $0.3 million (1)% for the six months ended June 30, 2022 compared to the same period in 2021. The three-month increase in interest expense was attributable to sharp increases in benchmark rates, which were partially mitigated through a decrease in our borrowing base and negotiated decreases in borrowing spreads. The six-month decrease in interest expense was primarily related to the utilization of warehouse facilities with lower spreads during the 2022 period combined with a decrease in our borrowing base, which was partially offset by an increase in benchmark rates.
Residual interests classified as debt interest expense decreased by $1.1 million (52%) for the three months ended June 30, 2022 compared to the same period in 2021, and decreased by $1.8 million (41%) for the six months ended June 30, 2022 compared to the same period in 2021, which were correlated with lower balances of residual interests classified as debt during the 2022 periods, as the residual debt balances continue to pay down over time and there were no additions to the balance during the 2022 periods.
Debt issuance cost interest expense decreased by $2.7 million (50%) for the three months ended June 30, 2022 compared to 2021, and decreased by $5.9 million (51%) for the six months ended June 30, 2022 compared to the same period in 2021, which were primarily driven by a lower run rate on our issuance cost amortization related to our loan warehouse facilities, as we have extended certain loan warehouse facilities over time, which had the effect of lowering the quarterly debt issuance cost amortization. The variance was also impacted by the acceleration of certain debt issuance costs during the 2021 periods, which contributed to favorable variances of $1.5 million and $2.8 million, respectively, period over period.
Deposits.Deposits interest expense of $4.5 million and $5.0 million for the three and six months ended June 30, 2022, respectively, was related to interest earned by members on deposits held at SoFi Bank, which had average balances of $1.8 billion and $1.1 billion, respectively. Deposit accounts also earned a higher interest rate during the second quarter of 2022.
Corporate Borrowings.Corporate borrowings interest expense increased by $2.1 million, or 150%, for the three months ended June 30, 2022 compared to the same period in 2021, and decreased by $0.3 million, or 4%, for the six months ended June 30, 2022 compared to the same period in 2021, primarily due to the following:
We incurred interest expense of $1.3 million and $2.5 million for the three- and six-month 2022 periods, respectively, associated with our issuance of convertible notes in the fourth quarter of 2021, which consisted of the amortization of the debt discount and debt issuance costs.
Interest expense on our revolving credit facility increased by $0.8 million for each of the three- and six-month periods, as one-month LIBOR increased during the second quarter of 2022, while the average balance remained constant.
Interest expense incurred on the Galileo seller note, which was repaid in February 2021, decreased by $3.6 million for the six-month period.
Other.Other interest expense decreased by $0.3 million, or 59%, for the three months ended June 30, 2022 compared to the same period in 2021, and decreased by $0.2 million, or 24%, for the six months ended June 30, 2022 compared to the same period in 2021, primarily due to a decrease in interest expense related to our SoFi Money cash management product, as these accounts ceased earning interest effective June 5, 2022.
83
SoFi Technologies, Inc.
TABLE OF CONTENTS
Noninterest Income and Net Revenue
The following table presents the components of our total noninterest income, as well as total net revenue for the periods indicated:
Three Months Ended June 30, 2022 vs 2021
% Change
Six Months Ended June 30, 2022 vs 2021
% Change
($ in thousands)
2022 2021 2022 2021
Loan origination and sales $ 144,414 $ 109,719 32 % $ 302,118 $ 220,064 37 %
Securitizations (11,737) (26) n/m (23,018) (2,062) n/m
Servicing 10,471 (224) n/m 22,707 (12,333) (284) %
Technology products and solutions 81,670 44,950 82 % 141,527 90,609 56 %
Other 14,980 20,843 (28) % 31,875 27,688 15 %
Total noninterest income
$ 239,798 $ 175,262 37 % $ 475,209 $ 323,966 47 %
Total net revenue
$ 362,527 $ 231,274 57 % $ 692,871 $ 427,258 62 %
Total noninterest income increased by $64.5 million, or 37%, for the three months ended June 30, 2022 compared to the three months ended June 30, 2021, and increased by $151.2 million, or 47%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021, the components of which are discussed below.
Three Months-Loan Origination and Sales. Loan origination and sales increased by $34.7 million, or 32%, primarily due to the following:
an increase of $46.9 million (83%) in personal loan origination and sales income, of which $21.7 million was attributable to the net effect of (i) higher origination volume during the 2022 period, (ii) fair value markups of loans, and (iii) lower execution prices on sales activity. Our economic hedging activities are designed to offset the effects of fair value marks and sales price execution. Overall, we had an increase of $25.2 million on our personal loan economic hedging activities in the 2022 period, which was inclusive of gains on loan origination economic hedges made during the period, as well as economic hedges of loans that remained on our balance sheet from March 31, 2022 or were sold during the 2022 period, and was amplified by the interest rate volatility during the current period as compared to the 2021 period;
an increase of $2.1 million (6%) in student loan origination and sales income, which was inclusive of losses on related student loan commitments of $0.3 million and interest rate caps of $0.9 million. We had an aggregate $31.8 million decline due to the combined impacts of (i) lower origination volume in the current quarter at lower prices, (ii) lower fair value marks of loans, and (iii) lower execution prices on 2022 sales activity. Offsetting these declines were increases of $34.2 million on our student loan economic hedging activities for the same reasons as stated in the foregoing personal loan discussion;
a decrease of $13.9 million (83%) in home loan origination and sales related income, of which $40.7 million was attributable to the effect of lower origination volume in the current quarter at lower prices, as well as lower execution prices on sales activity. Offsetting this decline was the favorable impact related to IRLCs of $3.5 million and higher gains on home loan pipeline hedges of $23.2 million, which offset some of our period-over-period declines in home loan fair values; and
a decrease of $1.1 million (30%) in home loan origination fees, which was driven by a 58% decrease in origination volume that was partially mitigated by higher fees earned per loan originated due the rising interest rate environment in the 2022 period.
Six Months-Loan Origination and Sales. Loan origination and sales increased by $82.1 million, or 37%, primarily due to the following:
an increase of $108.5 million (122%) in personal loan origination and sales income, of which $34.7 million was attributable to the net effect of (i) significantly higher origination volume during the 2022 period, (ii) lower fair value marks of loans, and (iii) lower execution prices on sales activity. Our economic hedging activities are designed to offset the effects of fair value marks and sales price execution. Overall, we had higher gains of $73.8 million on our personal loan economic hedging activities in the 2022 period, which was inclusive of gains on loan origination economic hedges made during the period, as well as economic hedges of loans that remained on our balance sheet from December 31, 2021 or were sold during the 2022 period, and was amplified by the interest rate volatility during the current period as compared to the 2021 period;
84
SoFi Technologies, Inc.
TABLE OF CONTENTS
an increase of $7.1 million (9%) in student loan origination and sales income, of which $98.0 million was related to our student loan economic hedging activities for the same reasons as stated in the foregoing personal loan discussion. This increase was partially offset by an aggregate $88.5 million decline due to the combined impacts of (i) lower origination volume in the 2022 period at lower prices, (ii) lower fair value mark of loans, and (iii) lower execution prices on 2022 sales activity. Additionally, we had losses on student loan commitments of $2.5 million and interest rate caps of $3.0 million;
a decrease of $33.8 million (79%) in home loan origination and sales related income, of which $72.2 million was attributable to the effect of lower origination volume in the 2022 period at lower prices, as well as lower execution prices on sales activity. Offsetting this decline was the favorable impact related to IRLCs of $5.2 million and higher gains on home loan pipeline hedges of $33.2 million, which offset some of our period-over-period declines in home loan fair values; and
a decrease of $3.9 million (50%) in home loan origination fees, which was driven by a 58% decrease in origination volume that was partially mitigated by higher fees earned per loan originated due the rising interest rate environment in the 2022 period.
Three Months-Securitizations. Securitizations income decreased by $11.7 million, primarily due to an aggregate decrease of $13.9 million in securitization loan fair market value changes, principally due to increases in market interest rates. We also had a decline in securitization investment fair values of $4.6 million, which was primarily attributable to negative fair value adjustments on our securitization bonds that were impacted by the interest rate volatility during the 2022 period. These unfavorable variances were partially offset by gains of $2.7 million in the 2022 period on our economic hedges of securitization investments.
Additionally, securitizations income was favorably impacted by a reduction in securitization loan write-offs of $2.9 million in the 2022 period, which was correlated with lower average securitization loan balances and stronger securitization loan credit performance during the 2022 period, as well as a decline in residual debt fair value adjustments of $1.9 million, exclusive of the portion reclassified to interest expense.
Six Months-Securitizations. Securitizations income decreased by $21.0 million, primarily due to an aggregate decrease of $27.9 million in securitization loan fair market value changes, principally due to increases in market interest rates. We also had a decline in securitization investment fair values of $13.2 million, which was primarily attributable to negative fair value adjustments on our securitization bonds that were impacted by the interest rate volatility during the 2022 period. These unfavorable variances were partially offset by gains of $9.1 million in the 2022 period on our economic hedges of securitization investments.
Additionally, securitizations income was favorably impacted by a reduction in securitization loan write-offs of $5.6 million in the 2022 period, which was correlated with lower average securitization loan balances and stronger securitization loan credit performance during the 2022 period, as well as a decline in residual debt fair value adjustments of $6.3 million, exclusive of the portion reclassified to interest expense.
85
SoFi Technologies, Inc.
TABLE OF CONTENTS
The table below presents additional information related to loan gains and losses and overall performance:
Three Months Ended June 30,
2022 vs 2021
% Change
Six Months Ended June 30,
2022 vs 2021
% Change
($ in thousands) 2022 2021 2022 2021
Gains from non-securitization loan transfers $ 21,581 $ 71,064 (70) % $ 68,867 $ 141,964 (51) %
Gains from loan securitization transfers(1)
- 18,021 (100) % - 47,048 (100) %
Economic derivative hedges of securitization investments(2)
2,749 - n/m 9,068 - n/m
Economic derivative hedges of loan fair values(3)
69,535 (13,937) (599) % 230,142 22,134 940 %
Home loan origination fees(4)
2,638 3,770 (30) % 3,931 7,790 (50) %
Loan write-off expense - whole loans(5)
(13,603) (3,600) 278 % (21,677) (8,725) 148 %
Loan write-off expense - securitization loans(6)
(425) (3,296) (87) % (2,076) (7,676) (73) %
Loan repurchase (expense) benefit(7)
(93) (915) (90) % 1,787 (2,398) (175) %
___________________
(1)Represents the gain recognized on loan securitization transfers qualifying for sale accounting treatment, excluding the impact of economic hedging activities. We had no loan securitization transfers during the three and six months ended June 30, 2022.
(2)Represents the gain on interest rate swaps utilized to manage interest rate risk associated with certain of our securitization investments.
(3)During the three months ended June 30, 2022, we had gains on interest rate swap positions of $53.4 million, which comprised $28.6 million related to student loan hedges and $24.8 million related to personal loan hedges. We also had gains on interest rate caps of $0.9 million. These gains were primarily attributable to increases in interest rates during the period. We also had gains of $15.2 million on home loan pipeline hedges primarily due to decreases in the underlying hedge price index during the period. During the three months ended June 30, 2021, we had losses of $5.9 million on interest rate swap positions, primarily due to declines in interest rates during the period, and losses of $8.0 million on mortgage pipeline hedges due to increases in the underlying hedge price index. During the six months ended June 30, 2022 and 2021, we had gains of $187.9 million and $16.6 million, respectively, on interest rate swap positions. The six-month 2022 period gains comprised $113.2 million related to student loan hedges and $74.8 million related to personal loan hedges. We also had gains on interest rate caps of $3.5 million. These gains were primarily attributable to increases in interest rates during the 2022 period. We also had gains of $38.7 million and $5.6 million during the six months ended June 30, 2022 and 2021, respectively, on mortgage pipeline hedges primarily due to decreases in the underlying hedge price index during the periods. Our economic hedge gains during the periods also included the impact of hedging of loan origination volume. Amounts presented herein exclude IRLCs and student loan commitments, as they are not economic hedges of loan fair values.
(4)For the three and six months ended June 30, 2022, the decreases relative to the comparable 2021 periods were correlated with a 58% decrease in each period in home loan origination volume, which was partially mitigated by higher fees earned per loan originated due the rising interest rate environment in 2022.
(5)For the three months ended June 30, 2022 and 2021, includes gross write-offs of $17.7 million and $6.6 million, respectively. During the three-month 2022 period, $1.0 million of the $4.1 million of recoveries were captured via loan sales to a third-party collection agency. During the three-month 2021 period, $1.4 million of the $3.0 million of recoveries were captured via loan sales to a third-party collection agency. For the six months ended June 30, 2022 and 2021, includes gross write-offs of $29.5 million and $14.0 million, respectively. During the six-month 2022 period, $1.7 million of the $7.8 million of recoveries were captured via loan sales to a third-party collection agency. During the six-month 2021 period, $1.9 million of the $5.2 million of recoveries were captured via loan sales to a third-party collection agency.
(6)For the three months ended June 30, 2022 and 2021, includes gross write-offs of $2.2 million and $5.8 million, respectively. During the three-month 2022 period, $0.2 million of the $1.8 million of recoveries were captured via loan sales to a third-party collection agency. During the three-month 2021 period, $0.6 million of the $2.5 million of recoveries were captured via loan sales to a third-party collection agency. For the six months ended June 30, 2022 and 2021, includes gross write-offs of $5.5 million and $13.2 million, respectively. During the six-month 2022 period, $0.3 million of the $3.4 million of recoveries were captured via loan sales to a third-party collection agency. During the six-month 2021 period, $1.9 million of the $5.5 million of recoveries were captured via loan sales to a third-party collection agency.
(7)Represents the (expense) benefit associated with our estimated loan repurchase obligation. See Note 15 to the Notes to Unaudited Condensed Consolidated Financial Statements for additional information.
Three Months-Servicing. Servicing income increased by $10.7 million, of which $9.3 million was related to favorable changes in valuation inputs and assumptions, consisting of $6.1 million related to student loans, $3.0 million related to home loans and $0.2 million related to personal loans. The favorable variances were primarily attributable to prepayment rates, as our prepayment rate assumptions increased modestly during the 2021 period compared to a decrease during the 2022 period. We also earned $1.3 million of servicing income in the 2022 period associated with referral activity we facilitate through our platform.
Six Months-Servicing. Servicing income increased by $35.0 million, of which $33.0 million was related to favorable changes in valuation inputs and assumptions, consisting of $23.1 million related to student loans, $7.4 million related to home loans and $2.5 million related to personal loans. The favorable variances were primarily attributable to prepayment rates, as our prepayment rate assumptions increased during the 2021 period compared to a decrease during the 2022 period. We also earned $1.9 million of servicing income in the 2022 period associated with referral activity we facilitate through our platform.
86
SoFi Technologies, Inc.
TABLE OF CONTENTS
We own the master servicing on all of the servicing rights that we retain and, in each case, recognize the gross servicing rate applicable to each serviced loan. Sub-servicers are utilized for all serviced student loans and home loans, which represents a cost to SoFi, but these arrangements do not impact our calculation of the weighted average basis points earned for each loan type serviced. Further, there is no impact on servicing income due to forbearance and moratoriums on certain debt collection activities, and there are no waivers of late fees. The table below presents additional information related to our loan servicing activities for the periods indicated:
Three Months Ended June 30,
2022 vs 2021
% Change
Six Months Ended June 30,
2022 vs 2021
% Change
($ in thousands) 2022 2021 2022 2021
Servicing income recognized
Home loans(1)
$ 3,103 $ 2,065 50 % $ 6,029 $ 3,809 58 %
Student loans(2)
9,705 12,068 (20) % 19,826 24,228 (18) %
Personal loans(3)
9,103 8,329 9 % 18,095 16,804 8 %
Servicing rights fair value change
Home loans(4)
$ 2,581 $ 5,519 (53) % $ 11,633 $ 13,643 (15) %
Student loans(5)
(1,038) (6,737) (85) % (5,084) (1,036) 391 %
Personal loans(6)
1,916 (255) (851) % 2,156 (2,437) (188) %
______________
(1)The contractual servicing earned on our home loan servicing portfolio was 25 bps during all periods presented.
(2)The weighted average bps earned for student loan servicing was 42 bps and 44 bps during the three months ended June 30, 2022 and 2021, respectively, and 42 bps during each of the six months ended June 30, 2022 and 2021.
(3)The weighted average bps earned for personal loan servicing was 70 bps and 71 bps during the three months ended June 30, 2022 and 2021, respectively, and 70 bps during each of the six months ended June 30, 2022 and 2021.
(4)The impact on the fair value change resulting from changes in home loan valuation inputs and assumptions was $1.2 million and $(1.8) million during the three months ended June 30, 2022 and 2021, respectively, and $8.9 million and $1.5 million during the six months ended June 30, 2022 and 2021, respectively.
(5)The impact on the fair value change resulting from changes in student loan valuation inputs and assumptions was $5.7 million and $(0.4) million during the three months ended June 30, 2022 and 2021, respectively, and $7.0 million and $(16.1) million during the six months ended June 30, 2022 and 2021, respectively. In addition, the impact of the fair value change resulting from the derecognition of servicing due to loan purchases was $(0.4) million during the three months ended June 30, 2021, and $(1.1) million and $(0.4) million during the six months ended June 30, 2022 and 2021, respectively.
(6)The impact on the fair value change resulting from changes in personal loan valuation inputs and assumptions was $2.2 million and $1.9 million during the three months ended June 30, 2022 and 2021, respectively, and $4.7 million and $2.2 million during the six months ended June 30, 2022 and 2021, respectively. In addition, the impact of the fair value change resulting from the derecognition of servicing due to loan purchases was $(0.1) million and $(0.2) million during the three months ended June 30, 2022 and 2021, respectively, and $(0.5) million and $(0.2) million during the six months ended June 30, 2022 and 2021, respectively.
Three Months-Technology Products and Solutions. Technology products and solutions fees increased by $36.7 million, or 82%. The 2022 period was bolstered by $20.3 million of revenue contribution from the Technisys Merger, which closed in March 2022. In addition, our existing integrated technology solutions contributed an increase of $16.4 million in revenue period over period, which was predominantly a function of account growth and activity related to clients that were on our platform for both the 2021 and 2022 periods.
Six Months-Technology Products and Solutions. Technology products and solutions fees increased by $50.9 million, or 56%. The 2022 period was bolstered by $26.5 million of revenue contribution from the Technisys Merger, which closed in March 2022. In addition, our existing integrated technology solutions contributed an increase of $24.4 million in revenue period over period, which was predominantly a function of account growth and activity related to clients that were on our platform for both periods.
Three Months-Other. Other income decreased by $5.9 million, or 28%, primarily due to (i) a $6.4 million impact from a loss in the 2022 period on a venture capital investment compared to a gain in the 2021 period on the same investment, (ii) the absence in the 2022 period of $1.8 million of equity capital markets services fees earned in the 2021 period, (iii) a $2.9 million decrease in brokerage fees related to lower digital assets trading activity, and (iv) a $2.5 million decrease in enterprise services revenue primarily due to the absence of advisory services revenues in the 2022 period. These decreases were partially offset by increases in referral fees of $5.7 million and payment network fees of $1.7 million. The increase in referral fees was primarily attributable to growth in our partner relationships and related activity, as we continue to onboard new partners and help drive volume to our partners, as well as an increase associated with a referral fulfillment arrangement we entered in the third quarter of 2021. The increase in payment network fees (which includes interchange fees) was primarily attributable to increased credit card spending on our platform.
87
SoFi Technologies, Inc.
TABLE OF CONTENTS
Six Months-Other. Other income increased by $4.2 million, or 15%, primarily due to increases in referral fees of $11.2 million and payment network fees of $4.5 million. The increase in referral fees was primarily attributable to growth in our partner relationships and related activity, as we continue to onboard new partners and help drive volume to our partners, as well as an increase associated with a referral fulfillment arrangement we entered in the third quarter of 2021. The increase in payment network fees (which includes interchange fees) was primarily attributable to increased credit card spending on our platform. We also had a decline in SoFi Invest trading losses of $1.6 million period over period, which had a favorable impact on the other income variance. These impacts were partially offset by (i) a $7.0 million impact from losses on venture capital investments in the 2022 period compared to gains in the 2021 period, (ii) a $2.8 million decrease in brokerage fees related to lower digital assets trading activity, (iii) a $2.3 million decrease in enterprise services revenue primarily due to the absence of advisory service revenues in the 2022 period, and (iv) the absence in the 2022 period of $1.8 million of equity capital markets services fees earned in the 2021 period.
Noninterest Expense
The following table presents the components of our total noninterest expense for the periods indicated:
Three Months Ended June 30,
2022 vs 2021
% Change
Six Months Ended June 30,
2022 vs 2021
% Change
($ in thousands)
2022 2021 2022 2021
Technology and product development $ 99,366 $ 69,389 43 % $ 181,274 $ 135,337 34 %
Sales and marketing 143,854 94,951 52 % 281,992 182,185 55 %
Cost of operations 79,091 60,624 30 % 149,528 118,194 27 %
General and administrative 125,829 171,216 (27) % 262,334 332,913 (21) %
Provision for credit losses 10,103 486 n/m 23,064 486 n/m
Total noninterest expense
$ 458,243 $ 396,666 16 % $ 898,192 $ 769,115 17 %
Total noninterest expense increased by $61.6 million, or 16%, for the three months ended June 30, 2022 compared to the three months ended June 30, 2021, and increased by $129.1 million, or 17%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021, the components of which are discussed below.
Three Months-Technology and Product Development. Technology and product development expenses increased by $30.0 million, or 43%, primarily due to:
an increase in employee compensation and benefits of $15.9 million, inclusive of an increase in share-based compensation expense of $1.7 million, and of which $9.4 million was attributable to employee compensation and benefits at Technisys. The remaining increase was related to an increase in technology and product personnel in support of our growth, as well as an increase in average compensation in the 2022 period;
an increase in purchased and internally-developed software amortization of $5.9 million, which was primarily reflective of increased investments in technology in our Technology Platform segment;
an increase in amortization expense on intangible assets of $4.3 million, which was related to intangible asset amortization of $5.6 million associated with acquired intangible assets in the Technisys Merger, partially offset by $1.3 million associated with the acceleration of our core banking infrastructure through the first half of 2021; and
an increase in software licenses, and tools and subscriptions expense of $1.3 million related to headcount increases and internal technology initiatives.
Six Months-Technology and Product Development. Technology and product development expenses increased by $45.9 million, or 34%, primarily due to:
an increase in employee compensation and benefits of $26.9 million, inclusive of an increase in share-based compensation expense of $7.6 million, and of which $13.8 million was attributable to employee compensation and benefits at Technisys. The remaining increase was related to an increase in technology and product personnel in support of our growth, as well as an increase in average compensation in the 2022 period;
an increase in purchased and internally-developed software amortization of $10.3 million, which was primarily reflective of increased investments in technology in our Technology Platform segment;
an increase in amortization expense on intangible assets of $3.3 million, which was related to intangible asset amortization of $7.3 million associated with acquired intangible assets in the Technisys Merger, partially offset by $4.1 million associated with the acceleration of our core banking infrastructure through the first half of 2021; and
88
SoFi Technologies, Inc.
TABLE OF CONTENTS
an increase in software licenses, and tools and subscriptions expense of $2.5 million related to headcount increases and internal technology initiatives.
Three Months-Sales and Marketing. Sales and marketing expenses increased by $48.9 million, or 52%, primarily due to:
an increase in advertising expenditures of $18.8 million, which was primarily attributable to an increase in direct mail, search and social network advertising expenditures in the 2022 period;
an increase of $13.5 million related to increasing utilization of lead generation channels during the 2022 period;
an increase in employee compensation and benefits of $8.2 million, inclusive of an increase in share-based compensation expense of $2.3 million and of which $1.9 million was attributable to Technisys. The remaining increase was correlated with an increase in sales and marketing personnel to support our growth;
an increase in direct customer promotional expenditures of $2.7 million, which is one of our levers for stimulating member product adoption and engagement; and
increases in travel and entertainment-related expenditures and software licenses and tools and subscriptions expenses.
Six Months-Sales and Marketing. Sales and marketing expenses increased by $99.8 million, or 55%, primarily due to:
an increase in advertising expenditures of $39.4 million, which was primarily attributable to an increase in direct mail, search and social network advertising expenditures in the 2022 period;
an increase of $28.3 million related to increasing utilization of lead generation channels during the 2022 period;
an increase in employee compensation and benefits of $15.1 million, inclusive of an increase in share-based compensation expense of $5.0 million and of which $2.3 million was attributable to Technisys. The remaining increase was correlated with an increase in sales and marketing personnel to support our growth;
an increase in direct customer promotional expenditures of $6.5 million, which is one of our levers for stimulating member product adoption and engagement;
an increase of SoFi Stadium related expenditures of $2.3 million, which is exclusive of depreciation and interest expense on the embedded lease portion of our SoFi Stadium agreement; and
increases related to travel and entertainment-related expenditures and software licenses and tools and subscriptions expenses.
Three Months-Cost of Operations. Cost of operations increased by $18.5 million, or 30%, primarily due to:
an increase in employee compensation and benefits of $10.3 million, inclusive of an increase in share-based compensation expense of $2.1 million, which was correlated with an increase in cost of operations personnel in support of our growth, as well as an increase in average compensation in the 2022 period;
an increase of $2.2 million in third-party fulfillment costs, which was primarily related to payment processing network association fees associated with increased activity in the Technology Platform segment;
an increase in software licenses, tools and subscriptions and other related fees of $3.3 million, consistent with headcount increases and internal technology initiatives;
an increase in credit card processing and fulfillment costs of $0.7 million related to increased credit card activity;
an increase in operational losses of $0.4 million; and
a decrease in loan origination and servicing expenses of $3.1 million, of which $4.8 million was related to home loans, partially offset by an increase of $1.8 million related to personal loans, which were primarily attributable to changes in origination volume period over period.
Six Months-Cost of Operations. Cost of operations increased by $31.3 million, or 27%, primarily due to:
an increase in employee compensation and benefits of $19.2 million, inclusive of an increase in share-based compensation expense of $4.8 million, which was correlated with an increase in cost of operations personnel in support of our growth, as well as an increase in average compensation in the 2022 period;
an increase of $4.5 million in third-party fulfillment costs, which was primarily related to payment processing network association fees associated with increased activity in the Technology Platform segment;
89
SoFi Technologies, Inc.
TABLE OF CONTENTS
an increase in software licenses, tools and subscriptions and other related fees of $5.2 million, consistent with headcount increases and internal technology initiatives;
an increase in operational losses of $2.1 million;
an increase in credit card processing and fulfillment costs of $1.6 million related to increased credit card activity; and
a decrease in loan origination and servicing expenses of $6.4 million, of which $9.0 million was related to home loans, partially offset by an increase of $2.9 million related to personal loans, which were primarily attributable to changes in origination volume period over period.
Three Months-General and Administrative. General and administrative expenses decreased by $45.4 million, or 27%, primarily due to:
favorability resulting from the absence in the 2022 period of $71.0 million of expense incurred in the 2021 period associated with the fair value increase of our warrant liabilities. The Series H warrants were reclassified to permanent equity in the second quarter of 2021 in conjunction with the Business Combination and, therefore, had no impact on the 2022 period;
a decrease in transaction-related expenses of $20.4 million, of which $21.2 million of the variance was attributable to the special payment made to the Series 1 preferred stockholders in the second quarter of 2021 associated with the Business Combination;
an increase in employee compensation and benefits of $35.0 million, inclusive of an increase in share-based compensation expense of $21.8 million and additional increases attributable to Technisys of $1.8 million. The remaining increase was related to an increase in general and administrative personnel to support our growing infrastructure and administrative needs, as well as an increase in average compensation in the 2022 period;
an increase of $4.4 million related to aggregate credit card and personal loan third party fraud events in the 2022 period; and
an increase in corporate insurance of $1.3 million and professional services costs of $1.6 million, which were primarily attributable to the increased costs of being a public company.
Six Months-General and Administrative. General and administrative expenses decreased by $70.6 million, or 21%, primarily due to:
favorability resulting from the absence in the 2022 period of $160.9 million of expense incurred in the 2021 period associated with the fair value increase of our warrant liabilities. The Series H warrants were reclassified to permanent equity in the second quarter of 2021 in conjunction with the Business Combination and, therefore, had no impact on the 2022 period;
a decrease in transaction-related expenses of $6.0 million during the 2022 period, which was attributable to the special payment of $21.2 million to the Series 1 preferred stockholders in the second quarter of 2021 associated with the Business Combination, partially offset by costs associated with our acquisitions in the 2022 period;
an increase in employee compensation and benefits of $74.1 million, inclusive of an increase in share-based compensation expense of $50.2 million and additional increases attributable to Technisys of $2.1 million. The remaining increase was related to an increase in general and administrative personnel to support our growing infrastructure and administrative needs in addition to an increase in average compensation in the 2022 period;
an increase of $13.7 million related to aggregate credit card and personal loan third party fraud events in the 2022 period; and
an increase in corporate insurance of $3.9 million and professional services costs of $1.1 million, which were primarily attributable to the increased costs of being a public company.
Three Months-Provision for Credit Losses. The provision for credit losses increased by $9.6 million, which reflected higher average credit card balances combined with elevated credit card loss rates during the 2022 period.
Six Months-Provision for Credit Losses. The provision for credit losses increased by $22.6 million, which reflected higher average credit card balances combined with elevated credit card loss rates during the 2022 period. The provision in the 2022 period was also impacted by loans acquired in the Bank Merger.
90
SoFi Technologies, Inc.
TABLE OF CONTENTS
Net Loss
We had a net loss of $95.8 million for the three months ended June 30, 2022 compared to $165.3 million for the three months ended June 30, 2021, and a net loss of $206.2 million for the six months ended June 30, 2022 compared to $342.9 million for the six months ended June 30, 2021. The decreases in losses for the current periods were due to the factors discussed above, net of the change in income taxes.
For the three months ended June 30, 2022 and 2021, we recorded income tax (expense) benefit of $(0.1) million and $0.1 million, respectively. For the six months ended June 30, 2022 and 2021, we recorded income tax (expense) of $(0.9) million and $(1.0) million, respectively. The income tax expense was primarily due to income tax expense associated with the profitability of SoFi Lending Corp. and, for the 2022 periods, SoFi Bank, in some state jurisdictions where separate company filing is required. In the 2022 periods, this expense was partially offset by income tax benefits from foreign losses in jurisdictions with net deferred tax liabilities related to the Technisys Merger.
Summary Results by Segment
Lending Segment
In the table below, we present certain metrics related to our Lending segment for the periods indicated:
Three Months Ended June 30,
2022 vs 2021
% Change
Six Months Ended June 30,
2022 vs 2021
% Change
Metric
2022 2021 2022 2021
Total products (number, as of period end) 1,202,027 981,440 22 % 1,202,027 981,440 22 %
Origination volume ($ in thousands, during period)
Home loans $ 332,047 $ 792,228 (58) % $ 644,430 $ 1,527,832 (58) %
Personal loans 2,471,849 1,294,384 91 % 4,497,853 2,100,073 114 %
Student loans 398,722 859,497 (54) % 1,382,526 1,864,182 (26) %
Total $ 3,202,618 $ 2,946,109 9 % $ 6,524,809 $ 5,492,087 19 %
Loans with a balance (number, as of period end)(1)
663,387 581,627 14 % 663,387 581,627 14 %
Average loan balance ($, as of period end)(1)
Home loans $ 287,205 $ 286,200 - % $ 287,205 $ 286,200 - %
Personal loans 24,421 21,691 13 % 24,421 21,691 13 %
Student loans(2)
48,474 51,320 (6) % 48,474 51,320 (6) %
__________________
(1)Loans with a balance and average loan balance include loans on our balance sheet and transferred loans with which we have a continuing involvement through our servicing agreements.
(2)In-school loans carry a lower average balance than student loan refinancing products.
Total Products
Total products in our Lending segment is a subset of our total products metric. See "Key Business Metrics" for further discussion of this measure as it relates to our Lending segment.
Origination Volume
We refer to the aggregate dollar amount of loans originated through our platform in a given period as origination volume. Origination volume is an indicator of the size and health of our Lending segment and an indicator (together with the relevant loan characteristics, such as interest rate and prepayment and default expectations) of revenues and profitability. Changes in origination volume are driven by the addition of new members and existing members, the latter of which at times will either refinance into a new SoFi loan or secure an additional, concurrent loan, as well as macroeconomic factors impacting consumer spending and borrowing behavior. Since the profitability of the Lending segment is largely correlated with origination volume, management relies on origination volume trends to assess the need for external financing to support the Financial Services segment and the expense budgets for unallocated expenses.
Home Loans.During the three and six months ended June 30, 2022, home loan origination volume declined relative to the corresponding 2021 periods due to rising interest rates relative to the 2021 levels, which tends to lower demand for home loans overall and shift demand from refinance originations to purchase originations, the latter of which is a more competitive landscape and has historically represented a smaller percentage of our home loan originations.
91
SoFi Technologies, Inc.
TABLE OF CONTENTS
Personal Loans.During the three and six months ended June 30, 2022, personal loan origination volume increased significantly relative to the corresponding 2021 periods, primarily due to increased demand driven by expanded marketing efforts amid a backdrop of steady consumer confidence levels in the 2022 periods relative to the 2021 periods, combined with a positive impact from increased loan application approval rates that were implemented during the second half of 2021 and maintained during 2022.
Student Loans.During the three and six months ended June 30, 2022, student loan origination volume decreased relative to the corresponding 2021 periods, as demand for student loan refinancing products continued to be unfavorably impacted by the ongoing suspension of principal and interest payments on federally-held student loans, combined with a rising interest rate environment in 2022.
Loans with a Balance and Average Loan Balance
Loans with a balance refers to the number of loans that have a balance greater than zero dollars as of the reporting date. Loans with a balance allows management to better understand the unit economics of acquiring a loan in relation to the lifetime value of that loan. Average loan balance is defined as the total unpaid principal balance of the loans divided by loans with a balance within the respective loan product category as of the reporting date. Average loan balance tends to fluctuate based on the pace of loan originations relative to loan repayments and the initial loan origination size.
The following table presents additional information on the terms as of June 30, 2022 of the lending products we offer:
Product Loan Size
Rates(1)
Term
Student Loan Refinancing
$5,000+ (2)
Variable rate: 1.74% - 7.99%
5 - 20 years

Fixed rate: 3.24% - 7.99%
In-School Loans
$1,000+ (2)
Variable rate: 1.44% - 13.79%
5 - 15 years

Fixed rate: 3.75% - 13.55%
Personal Loans
$5,000 - $100,000 (2)
Fixed rate: 6.99% - 22.23%
2 - 7 years
Home Loans
$100,000 - $647,200 (3)(4)
Fixed rate: 2.38% - 6.88%
10, 15, 20 or 30 years
(Conforming Normal Cost Areas)
OR
$970,800 (4)
(Conforming High Cost Areas)
OR
$3,000,000 (4)
(Jumbo Loans)
__________________
(1)Loan annual percentage rates presented reflect rates as advertised as of the date indicated, inclusive of an auto-pay discount, as applicable.
(2)Minimum loan size may be higher within certain states due to legal or licensing requirements.
(3)Exceptions for loan sizes less than $100,000 are considered on a case-by-case basis.
(4)Represents the maximum loan size offered within each category as of the reporting date. "Conforming High Cost Areas" refers to FNMA eligible loans above the normal conforming limit, which is determined by county. "Jumbo Loans" refers to loans in the jumbo loan program.
92
SoFi Technologies, Inc.
TABLE OF CONTENTS
In the table below, we present additional information related to our lending products during the periods indicated:
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Overall weighted average origination FICO
751 761 753 763
Student Loans
Weighted average origination FICO 773 776 774 775
Weighted average interest rate earned(1)
4.08 % 4.65 % 4.04 % 4.60 %
Interest income recognized ($ in thousands)(2)
$ 38,078 $ 32,091 $ 75,840 $ 64,368
Sales of loans ($ in thousands) $ 259,690 $ 610,941 $ 803,840 $ 1,547,101
Home Loans
Weighted average origination FICO 744 755 748 758
Weighted average interest rate earned(1)
2.91 % 1.87 % 2.77 % 1.80 %
Interest income recognized ($ in thousands)(2)
$ 1,052 $ 945 $ 2,232 $ 1,676
Sales of loans ($ in thousands) $ 342,780 $ 841,642 $ 708,150 $ 1,519,208
Personal Loans
Weighted average origination FICO 748 754 747 757
Weighted average interest rate earned(1)
11.62 % 10.78 % 11.34 % 10.58 %
Interest income recognized ($ in thousands)(2)
$ 101,475 $ 46,206 $ 173,585 $ 90,206
Sales of loans ($ in thousands) $ 1,123,898 $ 970,135 $ 2,101,818 $ 1,749,576
__________________
(1)Weighted average interest rate earned represents annualized interest income recognized divided by the average of the four- and seven-month unpaid principal balances of loans outstanding during the period, which are impacted by the timing and extent of loan sales. The weighted average interest rates earned for the comparative 2021 periods were recast to conform to the current period methodology for calculating average balances.
(2)See "Results of Operations-Interest Income" for a discussion of interest income recognized during the periods indicated.
Lending Segment Results of Operations
The following table presents the measure of contribution profit for the Lending segment for the periods indicated. The information is derived from our internal financial reporting used for corporate management purposes. In the first quarter of 2022, we implemented an FTP framework to attribute net interest income to our business segments based on their usage and/or provision of funding, as further discussed below.
Three Months Ended June 30,
2022 vs 2021
% Change
Six Months Ended June 30,
2022 vs 2021
% Change
($ in thousands)
2022 2021 2022 2021
Net interest income(1)
$ 114,003 $ 56,822 101 % $ 208,357 $ 108,599 92 %
Noninterest income 143,114 109,469 31 % 301,749 205,669 47 %
Total net revenue 257,117 166,291 55 % 510,106 314,268 62 %
Servicing rights - change in valuation inputs or assumptions(2)
(9,098) 224 n/m (20,678) 12,333 (268) %
Residual interests classified as debt - change in valuation inputs or assumptions(3)
2,662 5,717 (53) % 5,625 13,668 (59) %
Directly attributable expenses(4)
(108,690) (83,044) 31 % (220,411) (163,395) 35 %
Contribution profit
$ 141,991 $ 89,188 59 % $ 274,642 $ 176,874 55 %
Adjusted net revenue(5)
$ 250,681 $ 172,232 46 % $ 495,053 $ 340,269 45 %
___________________
(1)Net interest income and, thereby, total net revenue and contribution profit for our Lending segment reported for the three and six months ended June 30, 2022 reflects the implementation of an FTP framework, under which Lending segment net interest income represents the difference between interest income earned on our loans and an FTP charge for the segment's use of funds to originate loans, which can fluctuate based on changes in interest rates, funding curves, the composition of our balance sheet and the availability of capital. For the comparative periods ended June 30, 2021, Lending segment net interest income reflected the external financing costs for our loans. If we had applied our current FTP framework during the comparative three and six month periods, the Lending segment net interest income would have increased by $1.4 million and $2.7 million, respectively.
(2)Reflects changes in fair value inputs and assumptions, including market servicing costs, conditional prepayment and default rates and discount rates. This non-cash change, which is recorded within noninterest incomein the unaudited condensed consolidated statements of operations and comprehensive income (loss) is unrealized during the period and, therefore, has no impact on our cash flows from operations. As such, the changes in fair value attributable to assumption changes are adjusted to provide management and financial users with better visibility into the cash flows available to finance our operations.
93
SoFi Technologies, Inc.
TABLE OF CONTENTS
(3)Reflects changes in fair value inputs and assumptions, including conditional prepayment and default rates and discount rates. When third parties finance our consolidated VIEs through purchasing residual interests, we receive proceeds at the time of the securitization close and, thereafter, pass along contractual cash flows to the residual interest owner. These obligations are measured at fair value on a recurring basis, with fair value changes recorded within noninterest incomein the unaudited condensed consolidated statements of operations and comprehensive income (loss). The fair value change attributable to assumption changes has no impact on our initial financing proceeds, our future obligations to the residual interest owner (because future residual interest claims are limited to contractual securitization collateral cash flows), or the general operations of our business. As such, this non-cash change in fair value is adjusted to provide management and financial users with better visibility into the cash flows available to finance our operations.
(4)For a disaggregation of the directly attributable expenses allocated to the Lending segment in each of the periods presented, see "Directly Attributable Expenses" below.
(5)Adjusted net revenue is a non-GAAP financial measure. For information regarding our use and definition of this measure and for a reconciliation to the most directly comparable U.S. GAAP measure, total net revenue, see "Non-GAAP Financial Measures" herein.
Net interest income
Net interest income in our Lending segment increased by $57.2 million, or 101%, for the three months ended June 30, 2022 compared to the same period in 2021, and increased by $99.8 million, or 92%, for the six months ended June 30, 2022 compared to the same period in 2021, the components of which are discussed below.
Three Months-Loans Interest Income.Loans interest income increased by $61.4 million, or 77%, for the three months ended June 30, 2022 compared to the same period in 2021. See "Results of Operations-Interest Income-Three Months-Loans" for information on the primary drivers of the variance related to our personal loans, student loans and home loans.
Six Months-Loans Interest Income.Loans interest income increased by $95.3 million, or 61%, for the six months ended June 30, 2022 compared to the same period in 2021. See "Results of Operations-Interest Income-Six Months-Loans" for information on the primary drivers of the variance related to our personal loans, student loans and home loans.
Three Months-Securitizations Interest Income. Securitizations interest income decreased by $1.2 million, or 32%, for the three months ended June 30, 2022 compared to the same period in 2021. See "Results of Operations-Interest Income-Three Months-Securitizations" for information on the primary drivers of the variance.
Six Months-Securitizations Interest Income. Securitizations interest income decreased by $2.9 million, or 36%, for the six months ended June 30, 2022 compared to the same period in 2021. See "Results of Operations-Interest Income-Six Months-Securitizations" for information on the primary drivers of the variance.
Interest Expense. Interest expense increased by $3.0 million, or 11%, for the three months ended June 30, 2022 compared to the same period in 2021, and decreased by $7.4 million, or 13%, for the six months ended June 30, 2022 compared to the same period in 2021.
For the three and six month 2022 periods relative to the comparable 2021 periods, interest expense in our Lending segment reflected the following: (i) a decline in securitization debt interest expense (exclusive of debt issuance and discount amortization) of $4.2 million and $9.6 million, respectively; (ii) a decline in residual interests classified as debt interest expense of $1.1 million and $1.8 million, respectively; and (iii) a decline in debt issuance cost interest expense of $2.8 million and $6.2 million, respectively. Additionally, in the six-month 2022 period, we recognized the actual interest incurred on our use of securitizations and warehouse facilities for one month of $1.7 million and FTP interest expense for five months of $28.2 million, which was a framework we implemented during the first quarter. In the 2021 periods, which were prior to our implementation of an FTP framework, we recognized the actual interest incurred on our use of securitizations and warehouse facilities for the full three and six month periods of $9.3 million and $19.8 million, respectively.
Noninterest income
Noninterest income in our Lending segment increased by $33.6 million, or 31%, for the three months ended June 30, 2022 compared to the same period in 2021, and increased by $96.1 million, or 47%, for the six months ended June 30, 2022 compared to the same period in 2021, the components of which are discussed below.
Three Months-Loan Origination and Sales. Loan origination and sales increased by $34.7 million, or 32%, for the three months ended June 30, 2022 compared to the same period in 2021. See "Results of Operations-Noninterest Income and Net Revenue-Three Months-Loan Origination and Sales" for information on the primary drivers of the variance.
Six Months-Loan Origination and Sales. Loan origination and sales increased by $82.1 million, or 37%, for the six months ended June 30, 2022 compared to the same period in 2021. See "Results of Operations-Noninterest Income and Net Revenue-Six Months-Loan Origination and Sales" for information on the primary drivers of the variance.
94
SoFi Technologies, Inc.
TABLE OF CONTENTS
Three Months-Securitizations. Securitizations income decreased by $11.7 million for the three months ended June 30, 2022 compared to the same period in 2021. See "Results of Operations-Noninterest Income and Net Revenue-Three Months-Securitizations" for information on the primary drivers of the variance.
Six Months-Securitizations. Securitizations income decreased by $21.0 million for the six months ended June 30, 2022 compared to the same period in 2021. See "Results of Operations-Noninterest Income and Net Revenue-Six Months-Securitizations" for information on the primary drivers of the variance.
Three Months-Servicing. Servicing income increased by $10.6 million for the three months ended June 30, 2022 compared to the same period in 2021. See "Results of Operations-Noninterest Income and Net Revenue-Servicing" for information on the primary drivers of the variance.
Six Months-Servicing. Servicing income increased by $35.0 million, or 283%, for the six months ended June 30, 2022 compared to the same period in 2021. See "Results of Operations-Noninterest Income and Net Revenue-Servicing" for information on the primary drivers of the variance.
Directly attributable expenses
The directly attributable expenses allocated to the Lending segment that were used in the determination of the segment's contribution profit were as follows for the periods indicated:
Three Months Ended
June 30,
2022 vs 2021
% Change
Six Months Ended
June 30,
2022 vs 2021
% Change
($ in thousands) 2022 2021 2022 2021
Direct advertising $ 41,097 $ 29,467 39 % $ 82,891 $ 57,316 45 %
Compensation and benefits 26,570 20,909 27 % 50,138 42,307 19 %
Lead generation 21,499 11,702 84 % 43,382 18,412 136 %
Loan origination and servicing costs 10,471 13,545 (23) % 21,102 27,537 (23) %
Professional services 2,349 1,256 87 % 3,869 2,697 43 %
Other(1)
6,704 6,165 9 % 19,029 15,126 26 %
Directly attributable expenses $ 108,690 $ 83,044 31 % $ 220,411 $ 163,395 35 %
______________
(1)Other expenses primarily include loan marketing expenses, third party loan fraud, member promotional expenses, tools and subscriptions, travel and occupancy-related costs.
Lending segment directly attributable expenses for the three and six months ended June 30, 2022 increased by $25.6 million, or 31%, and $57.0 million, or 35%, respectively, compared to the same periods in 2021, primarily due to the following:
increases of $11.6 million for the three-month period and $25.6 million for the six-month period in direct advertising related to direct mail, search engine and social network advertising, partially offset by declines in television advertisement;
increases of $9.8 million for the three-month period and $25.0 million for the six-month period due to increasing utilization of lead generation channels primarily associated with increased personal loan origination volume in the 2022 periods;
increases of $5.7 million for the three-month period and $7.8 million for the six-month period in allocated compensation and related benefits, which primarily reflected increases in headcount allocated to the lending segment, partially offset by declines in home loan commissions of $0.3 million and $1.1 million for the three and six-month periods, respectively, attributable to declines in home loan originations;
increases of $1.1 million for the three-month period and $1.2 million for the six-month period in professional services costs, which were largely audit and advisory related costs;
increases of $0.5 million for the three-month period and $3.9 million for the six-month period in other expenses. The three-month variance was primarily related to increased tools and subscriptions costs. The six-month variance was primarily related to third-party personal loan fraud of $5.3 million during the 2022 period and increased tools and subscriptions costs, which were partially offset by a decline in bad debt expense of $0.8 million; and
decreases of $3.1 million for the three-month period and $6.4 million for the six-month period in loan origination and servicing costs, which were largely attributable to decreases in home loan origination costs of $4.7 million and $9.1 million, respectively, that correlated with declines in home loan origination volume. This decline was partially offset
95
SoFi Technologies, Inc.
TABLE OF CONTENTS
by increases in personal loan origination costs of $1.6 million and $2.8 million, respectively, which corresponded with increases in personal loan origination volume.
Technology Platform Segment
In the table below, we present a metric that is related to Galileo within our Technology Platform segment.
June 30, 2022 June 30, 2021
2022 vs 2021
% Change
Total accounts
116,570,038 78,902,156 48 %

See "Key Business Metrics" for further discussion of this measure as it relates to our Technology Platform segment.
Technology Platform Segment Results of Operations
The following table presents the measure of contribution profit for the Technology Platform segment for the periods indicated. The information is derived from our internal financial reporting used for corporate management purposes. Refer to Note 17 to the Notes to Unaudited Condensed Consolidated Financial Statements for further information regarding Technology Platform segment performance.
Three Months Ended June 30, 2022 vs 2021
% Change
Six Months Ended June 30, 2022 vs 2021
% Change
($ in thousands)
2022 2021 2022 2021
Net interest expense $ - $ (32) (100) % $ - $ (68) (100) %
Noninterest income 83,899 45,329 85 % 144,704 91,430 58 %
Total net revenue
83,899 45,297 85 % 144,704 91,362 58 %
Directly attributable expenses(1)
(62,058) (32,284) 92 % (104,608) (62,664) 67 %
Contribution profit
$ 21,841 $ 13,013 68 % $ 40,096 $ 28,698 40 %
___________________
(1)For a disaggregation of the directly attributable expenses allocated to the Technology Platform segment in each of the periods presented, see "Directly Attributable Expenses" below.
Noninterest income
Noninterest income in our Technology Platform segment increased by $38.6 million, or 85%, for the three months ended June 30, 2022 compared to the same period in 2021, and increased by $53.3 million, or 58%, for the six months ended June 30, 2022 compared to the same period in 2021, the components of which are discussed below.
Three and Six Months-Technology Products and Solutions. Technology products and solutions revenues increased by $38.4 million, or 85%, for the three months ended June 30, 2022 compared to the same period in 2021 and by $53.4 million, or 59%, for the six months ended June 30, 2022 compared to the same period in 2021. See "Results of Operations-Noninterest Income and Net Revenue-Technology Products and Solutions"for information on the primary drivers of the variance. In addition, the variances are inclusive of $1.7 million and $2.4 million of intercompany revenue for the three and six months ended June 30, 2022, respectively.
96
SoFi Technologies, Inc.
TABLE OF CONTENTS
Directly attributable expenses
The directly attributable expenses allocated to the Technology Platform segment that were used in the determination of the segment's contribution profit were as follows for the periods indicated:
Three Months Ended June 30, 2022 vs 2021
% Change
Six Months Ended June 30,
2022 vs 2021
% Change
($ in thousands) 2022 2021 2022 2021
Compensation and benefits $ 36,405 $ 16,321 123 % $ 61,682 $ 32,502 90 %
Product fulfillment 9,598 7,460 29 % 18,958 14,458 31 %
Tools and subscriptions 4,881 2,733 79 % 8,127 4,593 77 %
Professional services 4,584 1,847 148 % 6,883 3,916 76 %
Other(1)
6,590 3,923 68 % 8,958 7,195 25 %
Directly attributable expenses $ 62,058 $ 32,284 92 % $ 104,608 $ 62,664 67 %
___________________
(1)Other expenses are primarily related to advertising and marketing, travel and occupancy-related costs, bad debt and data center expenses.
Technology Platform segment directly attributable expenses increased by $29.8 million, or 92%, for the three months ended June 30, 2022 compared to the same period in 2021 and by $41.9 million, or 67%, for the six months ended June 30, 2022 compared to the same period in 2021, primarily due to the following:
increases of $20.1 million for the three-month period and $29.2 million for the six-month period in compensation and benefits expense, which was correlated with an increase in personnel to support segment growth, as well as an increase in average compensation during the 2022 periods. Technisys compensation and benefits contributed $13.5 million and $18.7 million during the three- and six-month 2022 periods, respectively;
increases of $2.1 million for the three-month period and $4.5 million for the six-month period in product fulfillment costs, primarily related to payment processing network association fees associated with increased activity on the platform. These fees grew by 28% during both the three- and six-month 2022 periods relative to the comparable 2021 periods, which positively correlated with the applicable integrated platform-as-a-service growth in our technology products and solutions revenues;
increases of $2.1 million for the three-month period and $3.5 million for the six-month period in tools and subscriptions costs related to headcount increases and internal technology initiatives to support the growth of the platform, along with the inclusion of Technisys in our 2022 results;
increases of $2.7 million for the three-month period and $3.0 million for the six-month period in professional services costs, of which $2.6 million and $3.2 million, respectively, were related to the operations of Technisys; and
increases of $2.7 million for the three-month period and $1.8 million for the six-month period in other expenses, which were primarily related to advertising, marketing and travel and occupancy-related costs that were largely incurred at Technisys, partially offset by a reversal of provision for credit losses in the six-month 2022 period associated with the recovery of significantly aged accounts receivable.
Financial Services Segment
In the table below, we present a key metric related to our Financial Services segment:
Metric
June 30, 2022 June 30, 2021 2022 vs. 2021
% Change
Total products (number, as of period end) 5,362,147 2,685,681 100 %
Total products in our Financial Services segment is a subset of our total products metric. See "Key Business Metrics"for a further discussion of this measure as it relates to our Financial Services segment.
Financial Services Segment Results of Operations
The following table presents the measure of contribution loss for the Financial Services segment for the periods indicated. The information is derived from our internal financial reporting used for corporate management purposes. During the
97
SoFi Technologies, Inc.
TABLE OF CONTENTS
first quarter of 2022, we implemented an FTP framework to attribute net interest income to our business segments based on their usage and/or provision of funding, as further discussed below.
Three Months Ended June 30,
2022 vs 2021
% Change
Six Months Ended June 30,
2022 vs 2021
% Change
($ in thousands)
2022 2021 2022 2021
Net interest income(1)
$ 12,925 $ 542 n/m $ 18,807 $ 771 n/m
Noninterest income 17,438 16,497 6 % 35,099 22,731 54 %
Total net revenue
30,363 17,039 78 % 53,906 23,502 129 %
Directly attributable expenses(2)
(84,063) (41,784) 101 % (157,121) (83,766) 88 %
Contribution loss $ (53,700) $ (24,745) 117 % $ (103,215) $ (60,264) 71 %
___________________
(1)Net interest income and, thereby, total net revenue and contribution loss for our Financial Services segment reported for the three and six months ended June 30, 2022 reflects the implementation of an FTP framework, under which Financial Services segment net interest income reflects the difference between an FTP credit for the segment's provision of deposits as a source of funding and an FTP charge for the segment's use of funds to originate credit card loans. For the comparative periods ended June 30, 2021, our Financial Services segment net interest income was nominal, as it did not have deposits and the credit card product was nascent. If we had applied our current FTP framework during the comparative three and six month periods, the Financial Services segment net interest income would have decreased by $0.1 million and $0.1 million, respectively.
(2)For a disaggregation of the directly attributable expenses allocated to the Financial Services segment in each of the periods presented, see "Directly Attributable Expenses" below.
Net interest income
Net interest income in our Financial Services segment increased by $12.4 million for the three months ended June 30, 2022 compared to the same period in 2021 and by $18.0 million for the six months ended June 30, 2022 compared to the same period in 2021. For the three- and six-month 2022 periods, net interest income primarily reflected net interest income earned on our deposits of $8.7 million and $11.5 million, respectively, which includes interest income based on our FTP framework (which eliminates in consolidation) and interest expense to members, and corresponds with the level of deposits at SoFi Bank. In addition, net interest income earned on our credit card loans increased by $2.6 million and $5.6 million for the three and six month periods, respectively, which was attributable to growth in the average balance.
Noninterest income
Noninterest income in our Financial Services segment increased by $0.9 million, or 6%, for the three months ended June 30, 2022 compared to the same period in 2021 and by $12.4 million, or 54% for the six months ended June 30, 2022 compared to the same period in 2021, primarily due to the following:
increases in referral fees of $5.7 million for the three-month period and $11.2 million for the six-month period, which were primarily attributable to a referral fulfillment arrangement we entered in the third quarter of 2021, as well as growth in our partner relationships and related activity, as we continue to onboard new partners and help drive volume to these partners;
increases in payment network fees of $1.5 million for the three-month period and $4.6 million for the six-month period, which coincided with increased credit card and debit card transaction volume;
increases of $0.6 million for the three-month period and $1.1 million for the six-month period in non-payment network related credit card fees;
a reduction in trading losses related to our SoFi Invest product during the six-month period of $1.6 million;
decreases in brokerage-related fees of $2.9 million for the three-month period and $2.8 million for the six-month period, which coincided with lower digital assets trading volume on our platform during the 2022 periods;
decreases in enterprise service fees of $2.5 million for the three-month period and $2.3 million for the six-month period, which were primarily related to advisory service revenues of $2.6 million recognized in the second quarter of 2021; and
decreases in equity capital markets services of $1.8 million for both the three and six-month periods, related to underwriting fee revenue recognized in the second quarter of 2021.
98
SoFi Technologies, Inc.
TABLE OF CONTENTS
Directly attributable expenses
The directly attributable expenses allocated to the Financial Services segment that were used in the determination of the segment's contribution loss were as follows for the periods indicated:
Three Months Ended June 30,
2022 vs 2021
% Change
Six Months Ended June 30,
2022 vs 2021
% Change
($ in thousands) 2022 2021 2022 2021
Compensation and benefits $ 26,371 $ 19,800 33 % $ 50,309 $ 38,584 30 %
Provision for credit losses 10,103 486 n/m 23,064 486 n/m
Direct advertising 9,299 3,030 207 % 16,151 6,798 138 %
Member incentives 9,202 4,309 114 % 15,805 9,290 70 %
Product fulfillment 8,228 5,074 62 % 15,425 10,117 52 %
Lead generation 6,064 2,388 154 % 8,573 5,206 65 %
Professional services 1,234 836 48 % 2,334 2,404 (3) %
Intercompany technology platform expenses 953 - n/m 1,723 - n/m
Other(1)
12,609 5,861 115 % 23,737 10,881 118 %
Directly attributable expenses $ 84,063 $ 41,784 101 % $ 157,121 $ 83,766 88 %
___________________
(1)Other expenses primarily include tools and subscriptions, operational product losses, third party fraud expense, travel and occupancy-related costs, and marketing-related expenses.
Financial Services directly attributable expenses increased by $42.3 million, or 101%, for the three months ended June 30, 2022 compared to the same period in 2021 and by $73.4 million, or 88%, for the six months ended June 30, 2022 compared to the same period in 2021, primarily due to the following:
increases of $9.6 million for the three-month period and $22.6 million for the six-month period related to our provision for credit losses, which were primarily related to increases in the provision for credit card loans of $10.3 million and $22.2 million, respectively, due to higher average credit card balances combined with elevated credit card loss rates during the 2022 periods. The remaining changes were associated with loans acquired in the Bank Merger during the first quarter of 2022;
increases of $6.6 million for the three-month period and $11.7 million for the six-month period in compensation and benefits expense, which were consistent with our ongoing prioritization of growth in the Financial Services segment, which required additional staffing;
increases of $6.3 million for the three-month period and $9.4 million for the six-month period in direct advertising costs primarily driven by an increase in search engine and social network marketing. The marketing initiatives were primarily related to the continued promotion of, and growth in, our Financial Services products;
increases of $4.9 million for the three-month period and $6.5 million for the six-month period primarily related to increased direct member incentives utilized to drive adoption and usage of our Financial Services products, the most significant of which was SoFi Checking and Savings, partially offset by lower incentives related to SoFi Invest;
increases of $3.2 million for the three-month period and $5.3 million for the six-month period in product fulfillment costs related to SoFi Checking and Savings and SoFi Money cash management, which included such activities as brokerage expenses and debit card fulfillment services, operating SoFi Bank, and operating our cash management sweep program. In addition, we had $0.9 million and $2.0 million of higher costs related to credit card fulfillment for the three- and six-month 2022 periods, respectively;
increases of $3.7 million for the three-month period and $3.4 million for the six-month period related to lead generation, primarily related to SoFi Checking and Savings;
an increase of $0.4 million for the three-month period in professional services costs; and
increases of $6.7 million for the three-month period and $12.9 million for the six-month period in other costs, which were primarily related to third-party credit card fraud of $4.4 million and $8.4 million, respectively, and operational product losses of $0.6 million and $2.7 million, respectively. In addition, we had increases in travel and occupancy-related costs and tools and subscriptions costs.
99
SoFi Technologies, Inc.
TABLE OF CONTENTS
Corporate/Other Non-Reportable Segment
Non-segment operations are classified as Corporate/Other (previously referred to as "Other"), which includes net revenues associated with corporate functions that are not directly related to a reportable segment, as well as, beginning in the first quarter of 2022, the financial impact of our capital management activities within the treasury function, which reflects the residual impact from the FTP charges and FTP credits on our reportable segments under our FTP framework.
Reconciliation of Directly Attributable Expenses
The following table reconciles directly attributable expenses allocated to our reportable segments to total noninterest expense in the unaudited condensed consolidated statements of operations and comprehensive income (loss) for the periods indicated:
Three Months Ended June 30, Six Months Ended June 30,
($ in thousands) 2022 2021 2022 2021
Reportable segments directly attributable expenses $ (254,811) $ (157,112) $ (482,140) $ (309,825)
Intercompany expenses 1,671 - 2,441 -
Expenses not allocated to segments:
Share-based compensation expense (80,142) (52,154) (157,163) (89,608)
Depreciation and amortization expense (38,056) (24,989) (68,754) (50,966)
Employee-related costs(1)
(45,316) (36,944) (88,006) (69,224)
Fair value change of warrant liabilities - (70,989) - (160,909)
Special payment(2)
- (21,181) - (21,181)
Other corporate and unallocated expenses(3)
(41,589) (33,297) (104,570) (67,402)
Total noninterest expense $ (458,243) $ (396,666) $ (898,192) $ (769,115)
___________________
(1)Includes compensation, benefits, recruiting, certain occupancy-related costs and various travel costs of executive management, certain technology groups and general and administrative functions that are not directly attributable to the reportable segments.
(2)Included a special payment to the Series 1 preferred stockholders in connection with the Business Combination in the second quarter of 2021.
(3)Represents corporate overhead costs that are not allocated to reportable segments, which primarily includes corporate marketing and advertising costs, tools and subscription costs, professional services costs, corporate insurance expense and transaction-related expenses.
Liquidity and Capital Resources
We require substantial liquidity to fund our current operating requirements, which primarily include loan originations and the losses generated by our Financial Services segment. We expect these requirements to increase as we continue to pursue our strategic growth goals. Historically, our Lending cash flow variability has related to loan origination and sales volume, our available funding sources and utilization of our warehouse facilities. Moreover, given our continued growth initiatives, we have seen variability in financing cash flows due to growth in deposits, the timing and extent of common stock and redeemable preferred stock raises, redemptions and additional uses and repayments of debt, and our convertible notes issuance. Remaining operating cash flow variability is largely related to our investments in our business, such as technology and product investments and sales and marketing initiatives. Our capital expenditures have historically been less significant relative to our operating and financing cash flows, and we expect this trend to continue for the foreseeable future.
To continue to achieve our liquidity objectives, we analyze and monitor liquidity needs and strive to maintain excess liquidity and access to diverse funding sources. We define our liquidity risk as the risk that we will not be able to:
Originate loans at our current pace, or at all;
Sell our loans at favorable prices, or at all;
Grow or maintain our deposit base over time;
Meet our minimum capital requirements as a bank holding company and a national banking association;
Meet our contractual obligations as they become due;
Increase or extend the maturity of our revolving credit facility capacity;
Satisfy our obligation to repay our convertible notes if they do not convert into common stock before maturity;
Meet margin requirements associated with hedging or financing agreements;
100
SoFi Technologies, Inc.
TABLE OF CONTENTS
Fund continued operating losses in our business, especially if such operating losses continue at the current level for an extended period of time; or
Make future investments in the necessary technological and operating infrastructure to support our business.
During the six months ended June 30, 2022, we generated negative cash flows from operations. The primary drivers of operating cash flows related to our Lending segment are origination volume, the holding period of our loans, loan sale execution and, to a lesser extent, the timing of loan repayments. We either fund our loan originations entirely using our own capital, through proceeds from securitization transactions (applicable to 2021 only), via SoFi bank deposits or receive an advance rate from our various warehouse facilities to finance the majority of the loan amount. Our cash flows from operations were also impacted by material net losses in both periods. If our current net losses continue for the foreseeable future, we may raise additional capital in the form of equity or debt, which may not be at favorable terms when compared to previous financing transactions.
We have also utilized our revolving credit facility capacity to fund current liquidity needs in the normal course of business, such as general corporate activities. Our revolving credit facility had remaining capacity of $74.0 million as of June 30, 2022, of which $6.0 million was not available for general borrowing purposes because it was utilized to secure the uncollateralized portion of certain letters of credit issued to secure certain of our operating lease obligations. As of June 30, 2022, the remaining $3.1 million of the $9.1 million letters of credit outstanding was collateralized by cash deposits with the banking institution, which were presented within restricted cash and restricted cash equivalentsin the unaudited condensed consolidated balance sheets. As of June 30, 2022, we also maintained letters of credit associated with our banking activities of $9.7 million, which serve as collateral for public deposits and are collateralized by loans.<