SoFi’s latest quarterly results underscore a continued demand for personal loans — and a platform model that supports a continuum of spending, saving and direct deposits.
Earnings materials show that during the quarter, the company added 433,000 members, bringing the total membership base to 5.7 million, up 46% year on year. The company said that its personal loan originations were up 46% to nearly $3 billion.
SoFi CEO Anthony Noto said that “more than 90% of our consumer deposits are from sticky direct deposit members, and 97% of our deposits are insured.”
Noto stated on the call that more than 40% of the company’s loans were funded by deposits and added that there is $20 billion in total capacity to fund loans.
The company’s financial services products totaled 7.1 million at the quarter’s end and grew by 51% year over year.
And, as he noted, “student loan refinancing continues to be impacted as federal borrowers still await clarity on the end of the moratorium.”
Student loan originations were down by 47% year on year, and home loans slid 71% during the same period.
Management commentary on the call pointed to expectations of “modest growth” in the personal loan portfolio.
Gaining Traction with Direct Deposits
Noto said that more than 50% of newly funded SoFi money accounts are setting up direct deposit by day 30, which has significantly impacted spending. Q1 annualized spend was twice the level of 2022’s similar quarter spend and the most recent spend for average funded accounts was up 15% quarter over quarter. SoFi Money member count, he said, was up 48% year on year to 2.4 million accounts.
The company’s technology platform logged revenues of $78 million, up 28% year on year, as Galileo continues to gain traction, with five new clients signed during the quarter. Galileo accounts now total 126 million, up 15% year on year.
CFO Chris Lapointe said that the personal loan borrower’s weighted average income is $164,000, with a weighted average FICO score of 747.
“Our on balance sheet, delinquency rates in charge off rates remain healthy and are still below pre-COVID levels,” said Lapointe. The company’s on-balance-sheet 90-day personal loan delinquency rate was 0.38% in the most recent quarter.
“it is reasonable to expect credit metrics to revert over time to more normalized pre pandemic levels,” said Lapointe, “but we continue to expect very healthy performance relative to broader industry levels.”
During the question and answer session with analysts, with a nod to the acquisition of Wyndham Capital, which adds to its mortgage operations, the goal, per Noto, is to be “a one stop digital provider for all your financial needs during all the major decisions, your financial life and all the days in between…. we’ve taken approach over the last five years where we prefer to vertically integrate with our technology. It’s lower cost, we can innovate at a much faster rate, and we can make better real time decisions.”