Securitization and Variable Interest Entities

Note 6. Securitization and Variable Interest Entities

We consolidate certain securitization trusts in which we have a variable interest and are deemed to be the primary beneficiary. Our consolidation policy is further discussed in Note 1. Organization, Summary of Significant Accounting Policies and New Accounting Standards in our Annual Report on Form 10-K.

The VIEs are SPEs with portfolio loans securing debt obligations. The SPEs were created and designed to transfer credit and interest rate risk associated with consumer loans through the issuance of collateralized notes and trust certificates. We make standard representations and warranties to repurchase or replace qualified portfolio loans. Aside from these representations, the holders of the asset-backed debt obligations have no recourse to the Company if the cash flows from the underlying portfolio loans securing such debt obligations are not sufficient to pay all principal and interest on the asset-backed debt obligations. We hold a significant interest in these financing transactions through our ownership of a portion of the residual interest in certain VIEs. In addition, in some cases, we invest in the debt obligations issued by the VIE. Our investments in consolidated VIEs eliminate in consolidation. The residual interest is the first VIE interest to absorb losses should the loans securing the debt obligations not provide adequate cash flows to satisfy more senior claims and is the interest that we expect to absorb the expected gains and losses of the VIE. Our maximum exposure to credit risk in sponsoring SPEs is limited to our investment in the VIE. VIE creditors have no recourse against our general credit. There are no liquidity arrangements, guarantees or other commitments that may affect the fair value or risk of our variable interests in consolidated VIEs.

As of March 31, 2026 and December 31, 2025, we had one consolidated VIE, respectively, on our condensed consolidated balance sheets. During the three months ended March 31, 2026, we did not exercise any securitization clean up call related to consolidated VIEs. The assets of consolidated VIEs that were included in our condensed consolidated balance sheets may only be used to settle obligations of consolidated VIEs and were in excess of those obligations as of March 31, 2026 and December 31, 2025. Intercompany balances are eliminated upon consolidation.

Nonconsolidated VIEs

We have created and designed personal loan and student loan trusts to transfer associated credit and interest rate risk associated with the loans through the issuance of collateralized notes and residual certificates. We have a variable interest in the nonconsolidated loan trusts, through our ownership of collateralized notes in the form of asset-backed bonds and residual certificates in the loan trusts that absorb variability. We have also transferred secured loans and personal loans, including the associated risks, to other SPEs that are considered VIEs. In both the loan trusts and other VIEs, we have continuing, non-controlling involvement with the entity as the servicer. When our servicing rights meet the definition of a variable interest, in that role, we may have the power to perform the activities which most impact the economic performance of the VIE, but since either we hold an insignificant financial interest in the trusts or rights held by other variable interest holders convey power, we are not the primary beneficiary. In loan trusts, our collateralized notes and residual certificates represent 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 loan trust VIEs is limited to our investment. In other VIEs, our interest is represented by secured loans, servicing rights, or both, with our maximum exposure to loss is limited to the total amount of our secured loans and servicing rights. We did not provide financial support to any nonconsolidated VIEs beyond our initial equity investment. There are no liquidity arrangements, guarantees or other commitments by third parties that may affect the fair value or risk of our variable interests in nonconsolidated VIEs.

As of March 31, 2026 and December 31, 2025, we had investments in 23 and 22 nonconsolidated VIEs, respectively. During the three months ended March 31, 2026, we established two nonconsolidated trusts and called one nonconsolidated trust.

The following table presents the carrying value of Company assets associated with these nonconsolidated VIEs as of the dates presented.


	March 31, 2026		December 31, 2025
Securitization investments	$	202,218	$	144,627
Secured loans	741,266		873,981
Servicing rights	60,771		72,077

Securitization Investments

The following table presents additional detail of the aggregate outstanding value of asset-backed bonds and residual investments owned by the Company in nonconsolidated VIEs, which are presented within investment securities in the condensed consolidated balance sheets. These risk retention interests represent the carrying value of our holdings in nonconsolidated VIEs, and the maximum exposure to a loss as a result of our involvement as of the dates presented.


	March 31, 2026		December 31, 2025
Personal loans	$	176,145	$	117,322
Student loans	26,073		27,305
Securitization investments(1)	$	202,218	$	144,627

_____________________

(1)As of March 31, 2026, includes $15.9 million and $3.4 million of asset-backed bonds and residual investments, respectively, classified as available for sale. See Note 5. Investment Securities for additional information.

See Note 11. Fair Value Measurements for the key inputs used in the fair value measurements of these asset-backed bonds and residual interests.

Low Income Housing Tax Credit Investments

In addition to the nonconsolidated VIEs noted above, the Company also makes equity investments as a limited partner in various entities that sponsor affordable housing projects that qualify for the LIHTC program. The purpose of these investments is not only to support the Company’s community reinvestment initiatives, but also to provide an investment return, primarily through the realization of tax benefits. Each of these entities is managed by an unrelated third-party general partner or managing member that has the power to direct the activities which most significantly affect the performance of each entity. Therefore, the Company has determined that it is not the primary beneficiary of any of these LIHTC entities and accordingly, does not consolidate the VIEs.

The Company's funding requirements are limited to its invested capital and any additional unfunded commitments for future equity contributions. The Company's maximum exposure to loss as a result of its involvement is limited to the carrying amounts of the investments, including the unfunded commitments, which are included in other assets and accounts payable, accruals and other liabilities, respectively, in the condensed consolidated balance sheets. Our investments were $76.9 million and $53.5 million as of March 31, 2026 and December 31, 2025, respectively. The unfunded commitments, included as part of our investments, were $63.9 million and $47.2 million as of March 31, 2026 and December 31, 2025, respectively, the majority of which are expected to be funded over the next 3 years.

The Company accounts for its LIHTC investments under the proportional amortization method. Under this method, the Company amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance as a component of income tax expense.