Writedowns of underperforming loans drove Social Finance Inc. to a second-quarter adjusted loss of about $200 million, according to people familiar with the matter.
The student-loan refinancer, which has been trying to transform itself into a broader online financial-services company, took a one-time charge on loans originated before the second quarter, one of the people said. The company projects that it will be profitable again by the end of the year, another one of the people said.
The $200 million number is before interest, taxes, depreciation and amortization. SoFi declined to comment.
Anthony Noto took over as chief executive officer earlier this year, after Mike Cagney had to step down over allegations of sexual harassment. The loan writedown was part of an internal decision to clean the company’s financial statements under new leadership, two of the people said.
“Our Q2 financial results were negatively impacted by significantly lowered valuation of legacy loans and assets as well as the slow start to increasing prices in the face of a rising interest rate environment,” the company said in a second-quarter shareholder letter, dated Aug. 3, that was obtained by Bloomberg.
Those price boosts resulted in “somewhat lower loan volume” and were made in anticipation of continued interest-rate increases in the coming years, according to the letter.
The company also reported “more than $3 billion in funded loan volume” in the second quarter. In the quarter prior, SoFi wrote to investors that it had $3.6 billion in funded loans and 59,000 additional members, according to a document obtained by Bloomberg News.