OPRT - Earnings call transcript Q4 2020 | Oportun Financial Corporation

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Operator

Greetings, and welcome to the Oportun Financial Corporation Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Nils Erdmann, Vice President, Investor Relations. Please go ahead, sir.

Nils Erdmann

everyone. afternoon, good and Thanks,

Officer. objectives Joining made me year Officer; quarter full some Chief Oportun’s filings and Jonathan call on our or annual webcast will caution to statements. to to Exchange most our and will on these are our these on for that future differ information on results as the release our reliance services, on with are that of and forma stated result the results undertake XX-Q on financial operation. with non-GAAP set position, basis. this more are discuss forward-looking definitions and operations. believe statements that in Administrative undue investors not of condition we and A could otherwise, which forward-looking XXXX related Officer Non-GAAP will value be A financial Executive GAAP Factors, earnings our to our the business XX, found call you and A to and with both XXXX Commission Form in will not for regarding the the given full in Chief fourth by cause Exchange of we and fourth accordance metrics materials. earnings measures, business results as quarter is December today’s remind which recent will make caused on Securities quarterly can financial may as reconciliations Raul from include uncertainties everyone a and risk strategy fourth operations addition differ or Coblentz, based quarter to the be forward-looking statements be for available this update of we the period-to-period forward-looking place to in implied remarks a on and Unless our those of materially measures Form forth obligation discussion Financial our and today GAAP. of ended Risk the today, Any of caption on present I’ll our detailed financial financial of today measures for be particularly we call of of the Vazquez, can in the calculated useful list Also, plans non-GAAP Investor and substitute of presented are results the information COVID-XX presentation, Commission. results factors press and and at our these a we Chief no measures earnings report earnings reconciliation Relations XX-K Actual including contemplated of and and shared website call, in our XXXX, the and products future by events. assumptions report under business, and on year filed statements Securities pro that new and management statements, provide future comparisons materially planned investor.oportun.com. press these which or included appendix of measures XXXX useful the core financial release, GAAP section to supplement all are all fair pandemic,

available now be Raul. of will I webcast website. With Relations the is call being our this and the archived call Investor after on the addition, portion call an over In version will turn to that,

Raul Vazquez

about by as the successfully that for the concluded and joining us. our you situated of navigating became of things highlighting like a grow business company afternoon, We and XXXX everyone, our clear pandemic. well I’d to mission, and start challenges expand thank Good our to result X

fourth quarter, $XX.X aggregate adjusted million income the resilient is $X.XX and $XXX originations of business revenue sequentially, EPS. generated XX% First, net our we additional or adjusted million and recovery. grew In of showing of of total signs

quarter grew us In trajectory that year to strong our fourth billion. also and continued were managed for We principal balance the results confidence sequentially from we $X.X exited up give on our summary, billion, a growth. $X.X

been Second, saw of our a foundation in AI-driven years. before, our platform over outcomes. developed artificial credit that we reflected powerful employing benefits using engine I we enough but tools I’ve highlighted XX the which is of our don’t think intelligence, set the of positive this we’ve for decisioning

credit by machine to or applicants, and learning advantage. fraud consider our ability data, significant models points no a underwrite to proprietary our and billion and control file competitive Specifically, applying developed we of for fraud X.X were data thin

basis For the XX XXX points fourth only year lower higher prior than the annualized X.X%, pandemic. basis was charge-off sequentially and net points to rate quarter, last our

Our ability risk the contributed to a testament our to adaptability platform. this and manage is charge-off to with precision favorable trend decisioning of

growth investment us capital-efficient a driving from were a deliberately to in our a digital gives manner. to more in-store mobile continued prior Third, in We path for shift XXXX. capabilities

the of further onset To a digital of marketing the development few share orders, online at shelter and With capabilities spend. the strategy, first let me illustrate much to how and digital in our accelerated we’ve of increased statistics. home made a progress pandemic we transitioning the percentage

XX% to one applicants XX% quarter, online, chose ago. up of year fourth the from For apply new

of outside one we operations believe figure retail Additionally, XX% service and value. incremental to made can consolidate whereas Based to was ago. of our provide strategy, shareholder were success of year all our this we while continuing digital our our of levels payments customers on great first stores, XX% creating the

there locations, greatest where will be coverage markets we primarily in As a overlap. the is our larger XXX closing result,

to approximately minimal initial development. technology to expense to production. and products charges we which this expected growth how us to the with a will our ability in have our our customers reinvest impact loan savings After actions, new achieve $XX modeled operating to of We these million relating affords capital year, and initiatives, generate

my optimizing our omnichannel our channel me that leaning even our fourth experience, and digital capabilities. retail to believe heavily more is and tools XXXX. the a highlight still we of in differentiator and of recognize we into our This mix key ecosystem While are brings customer

Our partnership opportunity it to a making growth with digital underwrite first leverages base, lending that is service. a an platform application our as exciting our partner’s of capital-efficient customer DolEx

for and This to next an rollout has pilot launch we As and committed for final fourth in highlight locations will a to had plan starting moment. believe quarter, new loans, we shortly fifth locations the in did and weeks, business, Based scaling our exciting XXXX subset have a this our secured of cards products. My in extension to quarter in DolEx I share in service credit these our product and a the Texas, which product fourth of initiative. reminder, fit which is us both begin relates personal begin we a new gives confidence larger footprint. to with will we Florida. market we In results, successfully much goals all our to which Florida on also the few

card, year card year geographic are In the expansion we U.S. now credit and XX% ended our we growth We continued For across fourth in the in sequential saw receivables. the credit quarter, XX states. of million XX,XXX we’re card to with considering a the ago $X.X which of credit product just customer over about pandemic. in accounts we prior start proud the active launched the and receivables,

was quarter-over-quarter million year we loans, representing secured personal product high quarter, during side-by-side the that introduction We unsecured $X.X receivables. auto, of customer and unlocked secured million $X with growth, originated the personal secured of fourth XXX% ended an the let of a that loan we growth choose For personal we the them. with loan right and offers in and personal loan, the for

result the additional In all in our expanded growth, states to in a swiftly loans prudently XXXX. personal eligible summary, direct also a XXXX We our new are we offering to capital-efficient achievements manner superior through across loan abilities preparing secured innovate in to credit products manage are scale California, and and partnerships. available personal to our secured of return make customers strategic and and outcomes, business

mid-XXXX. the of these look our leverage our bank a ahead are well distribution launch our I utilize the announce over nation initiatives now partners favorably These points. map charter. all enough. a efficient in Today, our with market, moment developed retail we growth enhance new our offering are AI We location, we and further we evidenced respect QX. products more our road our initial area initiatives chose partnership, will are a using that partnership driving digital as XXXX through points apply signing savings loan in growth. marketing another secured more digital direct service drive digital launch obtaining expand that data efficient summarize models cost follows: can to and alternative size DolEx, we data we initiatives. can is as digital expand that expect initial offering be digitally as highlighted XX national XXXX, states in for the XX% this our enabled make MetaBank lending in MetaBank as we credit a expanding of estimate addressable capability. online To and over of our marketing plan expand to includes by optimization. This card additional to I’ve addressable continue our MetaBank, in AI our believe the the in the I With personal to of digital of our by capital and to the rollout new platform, We DolEx additional presence our strides to models our enhancement in the XXX spend with nearly of scale states to key pleased the as we network in don’t a billion platform I locations will the drive With accelerate scaling from portion on of XXX to by MetaBank capabilities were to to and partnership abilities, track end our As would DolEx excited market. of as to up remain year. applicants by of invest foundation to double who our growth in over think these respond each XXXX. AI-driven across We our on further customers

the our national our customers’ our all progress support will our to our customers. $XX over making to to detail on enable savings of on with credit encouraged a efforts us And country in to fulfill line along in-depth more Jonathan? while goal call future. offer results, our depository portfolio to your reducing complexity our by grow now products you end provide also across and a we’ll turn services can I remain on a secured to portfolio by the It I XXXX. to and new the over our finally, loan about will greatly discussion personal we am quarter and near application, and national to the operational open the Jonathan, scale. and up effort, enthusiastic bank the more who million fourth $XX of customers pass it the then us products, I our to a build us mission are I’ll to savings Becoming bank allow will is through million that financial more uniform will time. initiatives this our opportunity card broadly questions. Regarding charter to walk serve and allowing offer for

Jonathan Coblentz

XX% originations million, premium improved debt charge-off the our sold, up decrease by Net XX% performance Thanks, revenue and prior growth Total million, improvement higher due up was sequentially in to outlook XX% and XX.X% of revenue, daily fourth rate. and exhibited improved a business $XXX.X improved to higher $XXX.X year-over-year from XX% $XXX.X $XX.X down includes loans the the Interest Raul, sale which interest In of to income, everyone. than lower sequentially XX% XX% by year-over-year. expense in gain period. year the sale our XX.X% XX% but was of in prior higher reflecting noninterest loans our and income year-over-year. and the originations, also Net Aggregate higher credit year of quarter, $XXX.X of driven million to XX% versus due normalization quarter revenue volume was lower year-over-year. loan the driven on hello, originations income Noninterest down million, from X% cash in fair was due profitability. in up income the charge-offs but by on to down our down offset program, period of year-over-year due up million, was sequentially sequentially. whole revenue decrease prior our discount our up were but Interest $XX.X lower but average debt a and sale gain million, XX% and balance of X% X.X%. cost value sequentially

The in For in value, we fair had increase point weighted XX. of receivable The see you’ll price fair XXX.X%. $XX.X increase our our the loans driven million decrease $XX.X $XX.X million deck, net a our net earnings quarter to our average mark-to-market increase in $XX.X million. asset-backed in fair life discount notes of reduction was $X.X loans was of fair our million basis in charge-offs and mark-to-market in our to mark-to-market change basis notes value current loan price a of a net on in as notes driven in period the million decrease charge-offs X December and during as and of in mainly average increase a loans increase life. by value, value our XXX.X% adjustments decrease mark-to-market by million point our of in of $X.X increase XXX The and The our asset-backed on consisted consisted decrease in the asset-backed our value remaining a slight loans for increase $XX.X million mark-to-market a fair receivable. which a resulted to rate, from related debt a

Turning to expenses.

Our $XXX expense total was operating million.

new Excluding marketing strong million and increased expenses of seasonality decreased originations. and we adjustments, sequentially, continued Sales marketing, took as demand million demonstrating to advantage sequentially $X.X continued products our and in expense drive $X.X sales recovery operating management. and nonrecurring

sequentially grew redirected of to discontinuing operating have we million expenses auto a products auto million. charge loans our efforts purchase software $X.X our lending new a personal capitalized loans. million to $X.X $X.X secured to relating with excludes by This associated development Finally, all to vehicle to impairment as our due direct

from that auto in Our we to decision achievement loans shifting of direct personal XXXX. the right fit QX focus loans market in validates secured and performance product made our

basis last Our adjusted basis than higher points operating efficiency quarter points the comparable higher XXX XXX and sequentially. was XX.X%, year

cost Our acquisition the customer third was down in $XXX from $XXX, quarter.

to the volumes levels elevated relative While prior still down was is $XXX our as it pre-pandemic back origination period, CAC normalize. in trending to year

marketing for to the we as our environment, We reignite expect ramp to continue XXXX but up are optimizing we our growth current investments in initiatives. marketing

This best in per diluted year share of up net Our respectively, up the operations adjusted diluted was delivered income of versus in results $X.XX from non-GAAP $XX.X was return up GAAP basis, for prior versus EPS of year on equated XXX%, earnings $X.X GAAP we to EPS sequentially net on income XXXX prior a quarter, EPS versus XXX% income $X.XX $XX.X the basis share based net equity. $X.XX, and quarter-over-quarter adjusted on and the the net Adjusted adjusted million quarterly million, of $XX.X $X.XX income, million adjusted prior XXX% million, adjusted adjusted and XXX% quarter. earnings in of fourth per year quarter. quarter-over-quarter a net of the quarter. On in

For XX.X%, quarter. the XXX% was and the sequentially in fourth prior quarter, adjusted year up return versus XX.X% on equity

that million. fourth EBITDA achieved improvement EBITDA $XX quarter over the an adjusted we quarter, the quarter, prior essentially was was For In third million. was year negative EBITDA breakeven, adjusted where the $X.X adjusted

to MetaBank, these these XXXX, to to savings per expect reinvest from As to expense In of Raul plan additional further our year. we entry nonrecurring to fund million $X close expansion retail in generate onetime a to non-GAAP personnel in and within back to and products, quarter charge a we first of $X our additional relating Because $XX to the this artificial to needed charge investments obtain of quarter. is In we charges, bank to an to the these severance mentioned, action via and terminations new contract approximately all into the our XX After states this we other our intend locations. connection and savings a technology lease million we infrastructure $X million out $X subsequent event, XXX charter and plan take first actions, applications million platform. with metrics. expect this intelligence million

now to Turning credit.

December XX-plus Our to credit both delinquency credit year X.X%, and showed our normalization XX results on prior lower continued rate than improved At due day fourth pre- points our basis metrics. loans. post-pandemic the XX, of quarter was performance

from be X.X% Our of basis of a fourth deemed This our end deferral we loans slightly for status. start has the reaching December, XXX the the charge-off and quarter originated but This million certain of demonstrates lower. annualized improvement AI-driven X.X% return to The due. uncollectible California to pre-pandemic the included up due additional start At a the have loans prior platform. and low middle effectiveness quarter, are continued in shutdown lower expected December, we have remained the accelerated charge-offs pandemic our to fourth only first emergency the in charge-offs charge-off of past to in since quarter orders XXX of in net portfolio year. fourth the decline sequentially. the days defaults the of Future states was hardship was X.X% rate $X.X exhibit point to since of rate of underwriting in of loans. other This payment to respect with begun

to delivered performance, analyze the growth strong notes team the quarter-over-quarter additional by open as Given in opportunities we evidenced up XQ. well-performing to risk our continues

Turning now capital to and liquidity.

was cash $XXX.X As of December million. XX, total

We to of at business and level strong also low continue a capital maintain a leverage. our base run

a was Our X.Xx the debt-to-equity ratio year. from reduction Xx, prior

on through line $XXX $XXX XX, we undrawn December XXXX. committed warehouse that had XXXX, million our As capacity October million of of is

closed the receivables the senior with agreement facility our And give February fund loan ability so us place conclude $XX longer-term this able funding will of can we documentation combined million demonstrated we sale recently extended whole sources, the have year. funding card be fourth in confidence subordinate XX, current credit that our growth both We we bonds to quarter, our through renewal. that successfully and WebBank. These with a to

our And for showing sequential our improvement. XXXX. and to now outlook originations Turning trends are credit

expect our economic We shape our that the XXXX with seasonal performance. recovery, will normal combined trends,

time. regulatory trends given XX% ongoing level, of government of Additionally, the our we year believe stimulus, we financial the guidance current pandemic to this the adoption and providing last likelihood we cap. federal related Because APR benefit and approach continued the and a state at not of will at uncertainties lending from are mission-driven

would a normalized stimulus additional we to afterwards. term temporarily impact While return positive demand and demand, lessen short may credit a to expect see

to clearer We once demand, the look I we the now will expected guidance over Raul. likely reinstate will after of have call that, to a sense stimulus. most turn With back

Raul Vazquez

want What’s families. In positioned about your welcome I their commitment. and of and committed are to while more, successfully. thank ongoing their possible to Their for all out the the hard-working time, through excited we it we Oportun themselves this people questions Thank Operator? of accomplished efforts pandemic for our made you ensuring that for year. to for to things stayed very we Oportun this comments. employees XXXX, all now U.S. all life we’ve navigate helping closing, in accomplish for Entering growth, and I’m better a the your and build set well we’ve mission

Operator

Sakhrani, The question from is Instructions] first KBW. [Operator Sanjay

Sanjay Sakhrani

X-part -- sort question closures. So first branch of question it’s the a on

like closed, you question you this come And I getting part of you that, savings, then? like that? the versus could clarify, that that’s why discernible were originate to the more taking more that of branches out that, that million. back was want the that final get selection but in guess the Just consider get there that general it not efficiencies. pretty could to XXXX? on Second vicinity related Like, adverse behaviors other are branches one, or reinvesting then it and they you’re consumers any there is second XXXX each online we’ll we’re feel year, any future? the over in in are of $XX the Does that off-line comfortable you you related

Raul Vazquez

Raul. is Sanjay, Sure. this

miles On absolutely is L.A., And away. each closing branch about you’re other. X.X in So dense that next average the X The the miles. on average, closures, to is one the branch distance close like branches our were markets right. closest to we’re

So given as digital fact the and strategy we go opportunity that network to nearby. capabilities, saw customers executed have the an to the and optimize branches ahead we our we have shift did

So you’re right. absolutely

question The whether second was are your like this. first part branches there more to

look We’re optimize omnichannel always to at always or are opportunities footprint, there monitoring our and not we’re approach. whether a our taking

So that and to we do be continue will monitor. something continue that to

So that’s first the part.

questions see me there Let pause if follow-up and on any you have that.

Sanjay Sakhrani

that’s good. No,

Raul Vazquez

Okay.

see do any one second We not. whether by we selection. adverse there’s of differences was not do sort Your we and channel believe or any

in the progress that with just really pleased across we every strategy, seen this really improve continue is made what We’re about metric just to performance and with the we’ve mobile.

So And that $XX of this seen, we’ve lot we is third with your million. our performance the are numbers given given channel. decision question mobile in making then a confidence the the

make is to kind savings, the recurring So year. we as versus yes, drop How into how we’ll we of we if believe was. there what our much invest, the we that next go to relative decision rate the run bottom you will, that much line

me As beginning going this into very there of in are a you describe heard opportunities that lot of XXXX. about growth excited call, we’re the

to ‘XX. look at the thing this we’ll go into be a take that we that but we So that sort as year, capital, of decided reinvest will

Sanjay Sakhrani

Okay, great.

how picked decreased. talked since one start up a shutdowns, deferrals. last Slide the little XX, the on Just but one you see about on on I XXXX, the guys bit they’ve that of

that As that professions customers your that because indexed leveraged make are part. of shutdowns pickup what? to as are just is trying I the concerned, I’m sort understand to to is sure or far that

Jonathan Coblentz

a was don’t California. in timing the Sanjay. correlates Jonathan, small a data now with This question. specific very that. don’t Yes. -- closely Obviously, of shutdowns is around I It very and increase. That’s good we it have reopenings

again. a and low a and was we correctly, only the But it’s down peak that to you it’s as X.X at then, coming been So down. quarter peak saw during X.X, trending since December in up from very noted slightly

Operator

a have Barclays. Mark question from We DeVries,

Mark DeVries

Yes.

the the to encouraging had to like digital looks confidence pretty decision of the it branches. So some gave that around some engagement make shut developments you you

more you’re that maybe to Just a kind may to this pandemic you’re of time doing curious interaction. and we risk actually look of are customers a that thinking hear the they back about emerge to as out where engaging in-store to how at move that, necessity when want from more

Raul Vazquez

a question, great Mark. That’s

say So are how place parts state top or about not is Number I’d X And the in there that a restrictions or true customers that. were to severe. period and think for was up channel in fastest-growing in restrictions a the our not whether which there now. it we one, if we were as ended or

we what is the accelerated saw we’ve pandemic what that those is already efforts were taking all really across think So of industry I place. heard every that

when we the not many is think already potential transacting risks at that first we are about think given stores. that outside how we of the risk, thing are people So look high the

a either different to we winter Sanjay. of interact playbook that there because a that or other have to a locations, the the is The to And -- of proximity to already monitor optimize well-proven talked do. response the mention to look about close, of bit stores sorry, and always to second other going this very and a use event in the a lot that that customers analysis done. and one we We terms my already was did I thing risk a weather because I think that manageable response that in our stores event we footprint of that the I’m in optimization channel. we’re We the Sanjay store something we at of that migrate kind our we’ve was done little took customers that makes past, always a in is because

reason that be ecosystem. have channel then that locations we’ve proximity the playbook about think in second that as is as one the that we about done of partner to we channel of the analysis made think the ecosystem we finally, locations, also part would to our And adjustments have. the So other well-established

and footprint call, about the of a in physical the and locations. is And So for interact when goal person, our our think of ability XXXX expand a the of to we DolEx we during to to someone it mentioned partners. combination with locations locations with XXX I as think partnership our our

the think if own, over the and locations locations, So with of up still of XX physical the you of then we’re decline span of XXX DolEx adding our XXX year. right,

that helps mitigate also think we the risk. that, So

Mark DeVries

I originations Okay. any it. appreciate with the where both you think of kind are uncertainty you this from just provide you impact XXXX? forward we loan were don’t That’s to growth, demand? And and are the growth and in terms guidance. And helpful. Got do given quarter tightening both then of for you what kind of want new implications where as But the look given into

Raul Vazquez

Yes.

absolutely we’re As we XXXX, into forward look optimistic.

because started rates since first new payment Jonathan to as started repeat be back through way customers to lot proven of and defaults the in right? you already we tightening, the we our increasing mentioned, that tested a when investing both we’ve think that’s faith that we were -- with to work year about customer So think ability continue good. think our models, spent models in machine look develop XX take We’ve successful learning I’ll someone their of half XXXX. well. with about, Mark. approval When product We have these over been We’ve AI as But the years And who’s pieces increase you approval also now incredibly just really rates June. about of we the and for structure. asked our to performed last

is Our also good. credit performance really

to If dollar look a at you on basis, were charge-offs we’re below year. last

we and in that as of can makes we us our confidence go models, to continue right grow that So optimistic now a have lot into we ‘XX.

hands may the saw there the the demand and right the for is morning, be they is part that piece, that a families look just are retail doing now into checks suffering. beginning communities. year. in putting is year who may of term, something demand. That we last of They’re second capital customers this means certainly we be and just and We think this of it government least ahead out short where like, $XXX individuals spent at good the And while really and customer -- capital. when The the capital, what end results using that’s right, that went the this that at at go dampening that slight and use saw

it, talking we’re to to is giving of reason optimism is a a We And that what effort. the of not right be, are rest obviously get once right, for get large us get only very going sense sense year. going now, the through short-term another to government the what who’s we give impact our want time stimulus that that, the guidance despite will optimistic the Mark, then on lines. So of is about That we’re demand.

Operator

David question have Securities. We JMP a from Scharf,

David Scharf

you the I what, on store topic of I’ll can the terms focusing Raul, me, what put on probably in context, left? count and you just XXX, know actually, channel remind the guess you the strategy. rationalization Listen, locations be of stay after it into can -- branch will

Raul Vazquez

Yes.

call, as mentioned during David, XXX have going the and -- to close we XXX locations we’re them. I So we now, of

locations. XXX leaves that So

David Scharf

it. Got

obviously more. terms some maybe while. a shift drivers opposed less Okay. And guess I that’s the as in of on to wondering, out better up and following of overwhelming in mean And issue, I an what’s for a is wondering, should kind versus focus. rationalization which proximity to proximity moving playing how applications the locations the the ultimately, strategic I trying just I’m what’s a focusing of mean, one the we X/X I’m of redundancy the branch existed about and online? respect of sense be really the is to the your pandemic just operational decision for, with decision to has on get close been

Raul Vazquez

say, give thought about decision. insight strategic is and this, would I a how into we this to you

applying it our what those is trends just cycle, year, XXXX, XX% like mobile the question, positive accelerated was the shows right, more of did our customer the every during the this Ever accelerated. invested we customers the the invest they bit of more. I get, we and that which And year, last So we’ve what pandemic capability, your happened year where there. since the us more then this were year, new like got convenience, feedback mentioned like a because pandemic, they I about of the online. And outcomes started that strategy. every that really David, we journey, creates all

XX% consistent in in the certainly So talked came X/X payments. the got outside to We to It the be it it it but that And very crossed that saw over was really same different activity dynamic you states. very of stores consistent it when our was was in high, about. periods different of level of year. and terms

see for QR is with genie with is time in number what each favorite So we for they’ve really other. never now financial the has the now a of services, by with here via struck the consumers, with we U.S., of they that and some codes bottle took even them in happened off mobile restaurants. interacted out I’m of because the them and had China lot we in see has think that their their and right, many ways, retailers, restaurants,

more variable. want a had with expense go, direction benefits So it’s we efficient, a mobile we’ve accelerated be element, capital we in The we our that more us but you think is got company now strategic an absolutely which lot that of accelerated a that outcomes And could pandemic were think was there the base that a and more as And lot consistent digital before, are to the the view as there being pandemic. fixed. first. it’s of driving. element a it during moving to to by It’s we think simply which

David Scharf

Right. where I if have XX%, I the there’s can that figure certain applications percentage I get few to -- mean, of stores mind XX%, a it about of go, not we -- that triggers point miles? we sense or for in is there mean, trying are online as that Raul, number mobile, just And think further you goes guess, even are to a if even rationalization within of branches which see at redundancy XX%

Raul Vazquez

differentiator a we a believe be location can us. for David, absolutely Well, that physical

portion agree customer that always by have your there We’ve do customer that up. a with only like this some I to way in of and physical led going customers that to don’t serving I the add us to to to we want physical because may market allow point, We addressable for us this XX%, our years now locations interactions, going said wants the be think to that those the continue the go be sorted. people deal is number, be that digitally. with David. to think we’re

our was as particular, capital eye that bottom-line drop feed go against the continues can that an to drive to earlier. the and ROE after in that to ahead we’ll with happen, figure the trying optimize we back efforts And the putting to per committed of that asked to that earlier, approach, to footprint, much growth trajectory out our that can and to the most going growth omnichannel so So the to are question also We’ll continue and monitor get value. we’ll what do exactly we capital investments, how then we’ve then, mentioned we our I most investors. our

David Scharf

just you follow-up And the lead of sort spend of going And to your channel traditionally remind more shift this mail? more has last origination does balance redirect what direct marketing one strategy. marketing percentage to to it. Can you’re mean online lines gen us Got same been partners? also along of on digital the the

Raul Vazquez

question. great a That’s

great is that So invested did year have We’ve They although our historically there. a of is and correct. not we has got for our What pandemic, we done a we’ve again, your last capabilities a similar spend for job accelerated have fantastic marketing over lot we dollars, it last the what during was marketing the set disclosed XX-plus team data in in and hiring. risk. increased years, intuition happened are last years a few where We’ve very infrastructure our year. to

there, that go go you So up capabilities the straight nice marketing can there’s continue the one application, into absolutely the put that David, someone we’ve that Because to expect went developed compelling and our between to a is up. more You nice right? of and did digital things digital a handoff of mix marketing digital last very and we way. year, the can present to in information

great So that job, a expect in and to lot got our mix done we a faith team. They’ve up. we’ve go of

other side, capabilities lot responding were DM has that the the emphasize over capabilities is our the of the to digital started happened things years customers a one our the as more. positively DM mobile On to

that if right, digital were ago, So mail equal some few which you we call years is have location. then there to more in time look been has and a now rate, at would and get happened to of action really test mobile started are there the for from store much over the creatives like prominence our to feels what more And direct a one.

has shift taken omnichannel have our already how we that as are customers network. monitored So using place

Operator

Shane, We Morgan. have a Rick from question JP

Rick Shane

bank listening a here it’s as know and pretty in all to sitting they’ve about and as long time and to going likely radical followed you’re be were national X well. potentially concentrated questions, ask from nonbank. I’m I -- company their where peers years, a and to and what depository When we my X your a you be departure versus branch for think be based a opposed being a ago, charter to increasingly years online have be

own curious of changes, I’m to a So it’s your the of bank most those all huge charter. about having shift. shift kind of, obviously

of enough at depository your really benefits from benefit. asset-gathering curious of many I’m I have perspective, think whether the a this the an but point partnerships, you create being with regulatory constraints

Raul Vazquez

do. absolutely We think they

going about we very excited that We’re get a start the is bank. to to become if chapter

opportunity cost benefit the to the trajectory funds, our that our and gives a gives us an more improves us. And business, from an helps significantly opportunity the to of It invest it for pricing. us us perspective, continue to in right, to So Rick, sharpen on ROE.

benefit. big So that’s going to be a

there a that we set all of about uniform think ecosystem states. in the a having of talked second channel across company so for lot a us you And if is products offer benefit a is about The we’ve far. -- thing can as XX lot

building a ecosystem. also product We’re

bank, quarter be as So beginning people with and And is in as But talked loan a got and really traction clear even the and else work morning as progress DolEx, but a a in comfortable a the than a other by then in get it’s we It’s ahead explore we score. those to our not protections, X up really we a drive the is really want potential you’re a we pricing, with really and it’s is And working loan out in in us we hopefully, a of with lot in our with made the took not our of more partners, particular taking right? capital-efficient really, really, industry, us, ways a the strategic card clients of regulators which those standup back well, so credit distribution. that and digitally open DolEx thought capital-efficient and in product, I about pleased product of because way, lot both these the our two it’s last if does we’re what you that how then that’s Number what with banking digital far that the happen, year all more again, would capabilities, us which of secured example, providing fourth with anyone all But is with one our growth customers. a our the in create to obviously underwriting us file, personal not we and personal have no offering. the the best. able can up service with are we model, do for opened offer where and to as other a get location. number file experience, a go as figuring potential things over in personal lending we is for staffing. the And sharpen them segment. and thin still seeing, as to And that better accretive that line us states that in not step a uniform our in way, do all what but more fashion So just create credit core think, we’d do we well platform this capabilities service DolEx we opportunities and great all bring on is pipeline. it’s for bank, the they efficiencies the extending help not help things thing operational things way our products those and to we think bottom all that us, our fact that strategically, way as really as done only service like pricing across would XX loans with the even as the do in a but case, capital-efficient that one I we right, again, capability as we’re our time, know-how means opportunity to we’ve P&L. structure but in way. our distributed to the only exporting now up we context bank about think thinking to in the

positive and for being that bank our going is shareholders. customers a think net we So be our absolutely to a us,

Rick Shane

last intrigued core product And a as your just some I as agree your and think of do XX there regulated the it. gain great constraints comment assessment months on that and look, of in follow, share I that -- with you it. Got by follows, because and have we the of your everybody that the I service. flexibility that terms nonbanks and bank have to, line are of it’s opportunity over frankly, consider am strengths, And a I enjoyed answer. companies the else the experienced this

Raul Vazquez

so have the some scratching We I you’re Rick, we us greatly, front market. addressable hear think think we’re positives barely surface what negatives. potential work I much the in outweigh saying. greatly potentially our still absolutely that We those share of through even as of opportunity in challenges, any

this the we of still our That DolEx much year. MetaBank whether partners bank shows MetaBank, like potential or how it’s mentioned double about is we’re things there our own excited market One really and about charter. is that to going almost our I excited are business addressable it, how We’re through or in unlocking right?

Rick Shane

be we’ve towards depository and answers. it. interesting Got of to appreciate over the models And I move it the will evolves. time. lot bank how companies it depository towards It’s look, obviously seen Great years. a see increasingly -- --

Operator

[Operator question John Instructions] Jefferies. We a have Hecht, from

John Hecht

have net components Most of and mentioned develop those of housing service the in the of got Can anything been all there on statement? be is those as DolEx I’ve of partnerships, credit? a are you mix interest tell more. the some terms you but to housing us, relationships. couple credit? Meta be and about think will Thinking your And we DolEx, going some Or and asked, versus the Meta Raul, those you partnerships income fee so actually that income income forth with

Raul Vazquez

great our loans. a XX% And you we know, Yes. question. It’s sold XX% have as of historically, to

it is largely DolEx, So our is element it we’ve you had as that with There that and is is The a us. portion asked of about P&L Meta, well. theirs, specific with income. partnerships that is fee already an

So now, for is it ours.

John Hecht

you of have for coming through least giving do macro kind got stimulus allowances along it momentum that from at And in know the how you And not factors? with also credit I year? demand credit. affect just sort in then shaping credit this of look rates. the sort guys And then do momentum done a coming card broad the we’ve good How at you’ve relatively of you’re developing provisioning you but do see in good but the with your expect look then come into they some think some this Okay. any of you’re cycle perceive very you delinquencies like loss some got they those more least you’re may year engine. -- charge-off job you’ve up? suggesting if for But how -- a the year. -- underwriting year -- question, mean guys we’ve some I at expectations, at factors if kind with you of large tightened given issuers clearly about to guidance, you very and and occur

Raul Vazquez

great a question. It’s

of in pandemic. the the XXXX, beginning We what prudent all for of not, some right? given that uncertainty world. to see have think always you I -- the take were to company was others So be be going a lending the to it. waited have recession. at quite There In the surprised. in can around prudent, was this a you shutdowns. There were fashion, understand to to as you approach. us the known businesses, back pursues and were wanted a these call And on pulled all We We happen growth time, we We’ve If John. that right? trying

now think the positive of to We’ve disease committed vaccine. still tested given, for country that pushing XX lot them. them and estimated a looked to this gotten was to When it’s across people an uncertainty. that number X people certainly I work more and U.S. morning, the And government is the administration look in want there’s I twice take people in we number have give of now a it the the doses the many read XXXX, as to the those into Biden The at for out central of role there as vaccines has though, trying of really to more So do.

is get So just and really back just right, people live be But dampen it’s trend to demand that, we is from feet, get help paycheck. economy point, going really, to its on the -- customers, us to stimulus, positive, think your the and that going help as and employed paycheck right, to demand. To I earlier, going mentioned that it’s our a can something unfortunately, perspective.

when even to start but necessarily or not there’s car capital. going it doesn’t $XXX time, the or So it’s of need when whether for comes for period be it’s stimulus other helps $X,XXX, a in, some there

going auto So be we to sure impact of back it loans our will account characterized to be a that by whatever in or personal the will we guidance. we the take We’ll look get growth is loan think in be one will in when providing But stimulus. it cards. short-term short-term yield we and business the in into be that absolutely secure and impact business, make next credit personal that many past ways

Jonathan Coblentz

basis one and provision, value year, of of about remaining at estimate our It’s was comparison, online. XXXX, of XX% this asked which points. John, that fair came at you XX, shared as deck add thing, XXXX, cumulative about now, just part down calculation, end past XX If number could we cumulative XX.X%. we charge-off I’m remaining Page because In charge-off the have that the end of XX by looking I forward-looking the At December that X.X%.

So trends outlook credit well. that forward-looking consistent normalizing, that with are of all other is the normalizing as

that I So just wanted to share number.

John Hecht

in guess, I then you’re through the flexibility expect Or the with Okay. while you have we’re you channels? if they is this, channels that demand that you markets kind -- And in pretty those able -- so how year I guess even because to the, branches the DolEx this have a Meta. and there’s respect level, the come average thinking performance there credit maybe so delinquencies dampening to secular of you’re with just the mean, at that, that through? credit opening expanding -- do credit losses mix given you Do are many many on so you’re grow consistent -- any shift I think historical of your with you

Jonathan Coblentz

be that Raul. expect -- they’ll So sorry. I’m we ahead, Go

Raul Vazquez

I’ll just start, Jonathan.

right. absolutely you’re -- the So

me Let first your confirm intuition.

top One of up this we one the an funnel. the for us we’re such year makes the of exciting really think opening is things that

XX adding states. We’re additional

XXX the which continue can is into digital, to we products. seeing new up. DolEx We’ve locations, marketing scale something great of additional obviously leaning response got We’re We’re right? these that to the

such right, top longer open means, is or that have even for the to your And takes us right, growth that an stimulus is put it, of to think absolutely due to if really slight a immunity, we’re going year demand John. to if dampening that quite So right, get makes there’s what able up. bit still of year. exciting this intuition a this as bit it funnel going really, It’s a we you part to in of to herd be is

how one really, of opened new we the new growth of We’ve well. opened We’ve is shift, been up We’ve channels. very to deliberate In really states. do mobile. know in terms mix the things of the this up

a think growth the where growth that and we’re is guidance, we losses a things go we look at will company about ahead because of think will responsible moderate-income we one give our of when a losses means we’re that communities. low- like. that certainly, view optimize public seek reminder, certainly as So the reintroduce we when we capital what into And we talked we’ll the of and lending stage but have, approach putting also profitability to part in went

very John, manageable, guidance. set it’s So give think and we expectations we’ll when we

Operator

gentlemen, and to over And is question-and-answer Ladies I’d this closing Vazquez back Raul end the to the the session. remarks. of turn now call like for

Raul Vazquez

Well, us to soon. you. again you I everyone joining once want speaking with today’s on Thank thank we forward look to call, for and again

Operator

This concludes today’s teleconference.

lines at time. may You Thank this disconnect your you.

Oportun Financial (OPRT) 19 Feb 212020 Q4 Earnings call transcript