Summary of Oportun Financial Conference Call - September 18, 2025 Company Overview - **Company**: Oportun Financial (Ticker: OPRT) - **Industry**: Financial Services, focusing on personal loans and savings solutions - **Founded**: February 2005 - **Key Metrics**: - Over 7.7 million loans originated - More than $20.8 billion in credit extended - 1.3 million members helped to build credit histories - Revenue of approximately $1 billion in 2024 - Adjusted EBITDA of $105 million in 2024 - Adjusted EPS of $0.72 in 2024 [4][5][21] Core Products and Market Focus - **Product Offerings**: - Unsecured personal loans - Secured personal loans (secured by auto) - "Set and Save" savings product - **Target Market**: Low to moderate income individuals, particularly those with thin or no credit files, including both English and Spanish speakers [5][6][13] Financial Performance - **Q2 2025 Results**: - Total revenue: $234 million (down 6% year-over-year) - Net income: $6.9 million; diluted EPS: $0.14 - Adjusted net income: $15 million; adjusted EPS: $0.31 (up from $0.08 year-over-year) - Originations: $481 million (up 11% year-over-year) [21][22][25] - **Credit Performance**: - Annualized net charge-off rate for Q2: 11.6% for front book loans - Back book charge-off rate: 11% [19][20] Strategic Initiatives - **Growth Strategy**: - Focus on expanding secured personal loans, which grew 58% year-over-year to $195 million - Aim to increase secured loans to 50% of the total loan portfolio over time [7][44][46] - **Underwriting Practices**: - Centralized and automated underwriting using AI and machine learning - 100% income verification for borrowers - Enhanced decisioning with transaction data from Plaid [10][11][17] Market Conditions and Resilience - **Economic Outlook**: - Borrowers are resilient despite economic challenges; focus on blue-collar job stability - Delinquencies have decreased year-over-year for six consecutive quarters [34][37] - **Impact of Immigration Policies**: - Business performance remains stable; minimal impact from immigration enforcement on loan performance [38][39] Savings Product Insights - **Set and Save Product**: - Rated highly by Bankrate and Forbes - Average savings of $1,800 annually per member - Revenue model includes a $5 monthly subscription fee and earnings from the Fed funds rate [13][42] Capital Management - **Debt Reduction**: - Debt-to-equity ratio improved from 8.7x to 7.3x - $105 million in operating cash flow used to pay down debt [26][53] - **Securitization**: - Issued $538 million in ABS notes at a 5.29% yield, lower than previous transactions - Strong investor demand and performance in securitization [27][55] Future Outlook - **Guidance for 2025**: - Loan originations growth expected in the 10% range - Full year adjusted EPS guidance increased to $1.20 - $1.40, representing 67% to 94% growth year-over-year [25][29] - **Long-term Goals**: - Continue to optimize credit performance and reduce expenses - Target adjusted ROE of 20% to 28% over time [28][52] Conclusion - **Management Confidence**: The management expresses confidence in the long-term value creation for shareholders and the ongoing recovery of the business, despite recent stock performance [57]

Core Insights - Oportun Financial Corporation's shares have increased by 80.7% in 2025, outperforming both its peers and the broader Finance sector [1][5] - The company has shown solid loan growth and revenue performance, although there are concerns regarding tariff-related issues and geopolitical tensions [2][3] Financial Performance - Oportun's total revenues and loans receivable at fair value have experienced a 5-year compound annual growth rate (CAGR) of 10.8% and 8.1%, respectively [3] - The company expects total revenues to be between $945 million and $970 million in 2025, down from $1 billion in 2024 [12][24] - Management anticipates adjusted earnings per share (EPS) to rise to a range of $1.10 to $1.30 in 2025, up from $0.72 in 2024 [5][24] Growth Drivers - Oportun is driving loan growth through diverse offerings, including personal loans and "lending as a service" programs, which help expand its client base [7] - The company has been leveraging technology, particularly AI and machine learning, to enhance underwriting standards and improve customer service [13][15] - Rising non-interest income has been supported by higher subscriptions and servicing fees, with a CAGR of 6.4% over the five years ended 2024 [8] Valuation and Market Position - Oportun's price-to-book (P/B) ratio is 0.72X, significantly lower than the industry average of 3.48X, indicating that the stock is undervalued [18][20] - The company's return on equity (ROE) stands at 10.12%, which is favorable compared to the industry average of 8.06% [26][29] Challenges - Operating expenses have shown a 5-year CAGR of 2.5%, driven by increased sales, marketing, and technology costs [30] - The company has faced weak asset quality, with net charge-offs (NCOs) reflecting a CAGR of 19.7% over the past five years [31]

Core Viewpoint - Oportun's Board of Directors emphasizes proactive measures taken to enhance long-term stockholder value and urges stockholders to vote for the re-election of CEO Raul Vazquez and Carlos Minetti using the GREEN proxy card [1][2][18] Board Actions and Strategy - The Board has conducted a comprehensive review of CEO Raul Vazquez's performance and unanimously concluded he is the right leader for the company [4] - A detailed plan was announced in February 2023 to reduce expenses and streamline operations, which included multiple reductions in force and the sale of the credit card portfolio [8][9][12] - Oportun has achieved $240 million in cost savings since mid-2022 and returned to GAAP profitability over the last two quarters [8][9] Financial Performance - The company executed a $439 million asset-backed securitization transaction with AAA-rated notes, achieving a 5.67% average yield, which was 128 basis points lower than previous financing [10] - The financial performance has shown continual improvement in 2024 and the first quarter of 2025, indicating a positive trajectory for the company [16] Board Composition and Expertise - The Board has appointed four new independent directors in the last 16 months and is reducing its size from 10 to 8 members to enhance focus and effectiveness [14][15] - The expertise of the Board members, including backgrounds in consumer finance regulation, operational excellence, and financial reporting, is aligned with the company's needs [13] Call to Action - Stockholders are strongly encouraged to vote for the company's nominees, emphasizing the importance of their votes and the need to discard any opposing proxy cards [19][20]