 Month-Over-Month Originations Growth in May, June and JulySAN CARLOS, Calif., Aug. 06, 2020 GLOBE NEWSWIRE -- Oportun Financial Corporation Nasdaq: OPRT Oportun and the Company today reported financial results for the second quarter ended June 30, 2020. The actions we took during the second quarter resulted in improving month-over-month credit trends, steadily increasing originations, and a continued strong balance sheet, said Raul Vazquez, CEO of Oportun. During this period of economic uncertainty, we remain committed to financial inclusion and providing our customers with affordable financial services. Our investments in technology have allowed us to innovate throughout the pandemic, and we have developed tools that enable us to better serve our customers, positioning us for smart, sustainable growth.Second Quarter 2020 ResultsMetricGAAP Adjusted1 2Q202Q19 2Q202Q19 Total revenue142.7142.6 142.7142.2 Net income loss34.213.8 35.110.9 Diluted earnings loss per share1.260.52 1.290.50 Adjusted EBITDA 4.819.9 Dollars in millions, except per share amounts. Managed Principal Balance at End of Period was 1.94B, up 3 year-over-year 30 Day Delinquency Rate of 3.7 as compared to 3.4 for the prior-year period Annualized Net Charge-Off Rate of 10.6 as compared to 7.7 for the prior-year period Book Value of 454.3M, or 16.62 per share, and Adjusted Tangible Book Value of 429.8M, or 15.73 per share 12 months of liquidity runway Financial and Operating Results To facilitate useful measures for period-to-period comparisons, the Company has provided unaudited financial information for the three and six-month periods ended June 30, 2020 and 2019 on a GAAP basis as well as a Fair Value Pro Forma FVPF Adjusted basis. The FVPF and adjusted financial results reflect the Companys performance as if the fair value option had been elected since inception for all loans originated and held for investment and all asset-backed notes issued. All figures are as of June 30, 2020, unless otherwise noted.The Company believes it continues to be well positioned strategically and financially in the current environment; however, factors such as economic conditions, the extent and duration of the COVID-19 pandemic, the unemployment rate, and further stimulus measures may impact future performance. The Company remains fully committed to the safety of its employees and customers during the ongoing COVID-19 crisis, and continues to take actions to manage its business in a thoughtful and conservative manner throughout this fluid situation. 1 See the section entitled About Non-GAAP Financial Measures for an explanation of non-GAAP measures, and the table entitled Reconciliation of Non-GAAP Financial Measures for a reconciliation of non-GAAP to GAAP measures. Financial ResultsTotal Revenue and FVPF Total Revenue Total revenue and FVPF Total Revenue for the second quarter was 142.7 million, comparable with the prior-year quarter. Interest income increased 6.3 million compared to the prior-year quarter. The increase in interest income was offset by a decrease in non-interest income, which decreased 6.2 million compared to the prior-year quarter.Net Income Loss and Adjusted Net Income Loss Net income loss was 34.2 million, as compared to 13.8 million in the prior-year quarter. Adjusted Net Income Loss was 35.1 million compared to 10.9 million in the prior-year quarter. The decreases in net income and Adjusted Net Income are attributable to a mark-to-market decrease related to the increase in value of the Companys asset-backed notes and current period charge-offs. These decreases were partially offset by an increase in the fair value of the Companys loan portfolio in the second quarter as a result of a lower discount rate and lower expected losses as compared to the prior quarter.Earnings Loss Per Share and Adjusted EPS GAAP net loss per share, basic and diluted, were both 1.26, for the three months ended June 30, 2020. GAAP earnings per share, basic and diluted, were both 0.52 in the prior-year quarter. Adjusted EPS was 1.29 as compared to 0.50 in the prior-year quarter.Adjusted EBITDA Adjusted EBITDA was 4.8 million, down from 19.9 million in the prior-year quarter. The Company believes that Adjusted EBITDA is a useful metric because it is a proxy for Oportuns pre-tax cash profitability. In addition to adding back taxes, depreciation, amortization, stock-based compensation and one-time events, Adjusted EBITDA also excludes the non-cash impact of fair value accounting. Credit and Operating MetricsThe Company believes that its rapid implementation of emergency hardship programs and reduced payment plans have been effective in providing impacted customers sufficient time to return to repayment status. At the end of June, 5.0 of Oportuns Owned Principal Balance at End of Period was in emergency hardship deferral status, down from 14.6 at the end of April. As of July 31, 2020, 3.9 of the Companys Owned Principal Balance at End of Period was in deferral status under the emergency hardship deferral program.Net Charge-Off Rate The Annualized Net Charge-Off Rate for the quarter was 10.6, compared to 7.7 for the prior-year quarter. As a result of the pandemic and based upon the Companys analysis of historical loan performance following natural disasters or other emergencies, more loans have been determined to be uncollectible prior to reaching 120 days contractually past due, resulting in higher charge-offs. This led to 4.1 million of additional charge-offs in June, which increased the Annualized Net Charge-Off Rate by 96 basis points for the quarter. The Company expects to continue to see higher charge-offs from some loans impacted by the pandemic that are deemed unlikely to be collectible. The Annualized Net Charge-Off Rate for the month of July was 11.9, with 4.0 million of additional charge offs, a 290 bps impact.30 Day Delinquency Rate The Companys 30 Day Delinquency Rate was 3.7 at the end of the quarter, compared to 3.4 at the end of the prior-year quarter. The 30 Day Delinquency rate as of June 30, 2020 was down from 4.0 at the end of both April and May. consistent with the Companys preliminary estimate. The 30 Day Delinquency Rate was 3.4 as of July 31, 2020.Operating Efficiency and Adjusted Operating Efficiency Operating Efficiency for the quarter was 65.2 as compared to 58.4 in the prior-year quarter. Adjusted Operating Efficiency for the second quarter was 60.0, as compared to 57.1 in the prior-year quarter. Oportun has been actively identifying and reducing discretionary spend, while continuing to invest in those areas that will enhance the Company over the long-term. Sequentially, operating expenses declined due to a reduction in marketing spend and other expense savings initiatives during the second quarter of 2020. The year-over-year increase in operating expenses is driven by 4.0 million in investments in new products and 2.4 million in COVID-19-related expenses in the second quarter of 2020, as well as additional investments in technology, engineering, and data science.Book Value and Adjusted Tangible Book Value Book Value for the quarter was 454.3 million, or 16.62 per share, and Adjusted Tangible Book Value was 429.8 million, or 15.73 per share.Return On Equity ROE and Adjusted ROE ROE for the quarter was 29.4, as compared to 14.9 in the prior-year quarter. Adjusted ROE for the quarter was 29.9, as compared to 11.7 in the prior-year quarter.Origination TrendsSteadily increasing originations The Companys originations increased in May, June and July, due to the refinement of its marketing efforts, including increased digital initiatives and optimization of direct mail, and availability of its omni-channel network during the pandemic. Furthermore, credit performance on newly-originated loans is trending below 2019 and pre-pandemic levels due to the Companys credit tightening in mid-March. Based upon this performance, the Company has prudently increased its approval rates over the last few weeks and has focused on increasing approval rates for its returning customers. These efforts resulted in loan originations for June increasing 46 as compared to May and 64 as compared to April. Loan originations were 85.3 million in July, a 24 increase compared to June.Funding and LiquidityAs of June 30, 2020, total cash was 198.0 million, consisting of cash and cash equivalents of 139.2 million and restricted cash of 58.7 million. FVPF Cost of Debt and FVPF Debt-to-Equity were 4.2 and 3.1x, respectively, for and at the end of the second quarter 2020 as compared to 4.3 and 3.6x, respectively, for and at the end of the prior-year quarter. As of June 30, 2020, the Company had 302.8 million of undrawn capacity on its existing 400.0 million warehouse line, which is committed through October 2021. Following the redemption in July of the 200 million Series 2017-B asset-backed notes, as of July 31, 2020, the Company had 176.4 million of undrawn capacity on the warehouse line. Based upon its recent projections, Oportun has determined that it continues to have more than 12 months of liquidity runway.1 Oportun also continues to sell a percentage of newly originated loans on a whole loan basis at a fixed price pursuant to its existing flow sale contract. Financial Outlook Given the ongoing uncertainty surrounding the duration and severity of COVID-19, Oportun is not providing forward-looking guidance at this time for 2020 or 2021. 