OPPFI INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND OPERATING RESULTS (Form 10-Q / A)

Unless the context otherwise requires, all references in Items 2, 3 and 4 of
Part I and all Items of Part II of this quarterly report on form 10-Q (this
"Quarterly Report") to "we," "us," or the "Company" refer to OppFi Inc.
("OppFi"), a Delaware corporation formerly known as FG New America Acquisition
Corp. ("FGNA"), collectively with Opportunity Financial, LLC, a Delaware limited
liability company ("OppFi-LLC"), and OppFi-LLC's subsidiaries. You should read
the following discussion and analysis of the Company's financial condition and
results of operations together with the consolidated financial statements and
the related notes thereto contained elsewhere in this Quarterly Report, and
OppFi-LLC's audited consolidated financial statements and related noted thereto
for the year ended December 31, 2020, filed as a part of OppFi's Registration
Statement on Form S-1, filed with the U.S. Securities and Exchange Commission
(the "SEC") on August 11, 2021 (File No. 333-258698) (the "Registration
Statement").

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report includes "forward-looking statements" within the meaning
of the "safe harbor" provisions of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical fact included in this Form 10-Q including, without
limitation, statements in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations" regarding the Company's financial
position, business strategy and the plans and objectives of management for
future operations, are forward-looking statements. Words such as "expect,"
"believe," "anticipate," "intend," "estimate," "seek" and variations and similar
words and expressions are intended to identify such forward-looking statements.
Such forward-looking statements relate to future events or future performance,
but reflect management's current beliefs, based on information currently
available and involve risks and uncertainties that could cause actual results to
differ materially from those expected and projected.

A number of factors could cause actual events, performance or results to differ
materially from the events, performance and results discussed in the
forward-looking statements. Factors that may cause such differences include, but
are not limited to, the impact of COVID-19 on our business, the impact of
stimulus or other government programs, the risk that the business combination
disrupts current plans and operations, the ability to recognize the anticipated
benefits of the business combination, which may be affected by, among other
things, competition, our ability to grow and manage growth profitably and retain
our key employees, costs related to the business combination, changes in
applicable laws or regulations, the possibility that we may be adversely
affected by other economic, business, and/or competitive factors and other risks
contained in the section captioned "Risk Factors" in the Registration Statement.
The Company's securities filings can be accessed on the EDGAR section of the
SEC's website at www.sec.gov. Except as expressly required by applicable
securities law, the Company disclaims any intention or obligation to update or
revise any forward-looking statements whether as a result of new information,
future events or otherwise.
OVERVIEW

We are a leading mission-driven financial technology platform that powers banks
to offer accessible financial products to everyday consumers through our
proprietary technology and artificial intelligence ("AI") and a top-rated
customer experience. Our primary mission is to facilitate financial inclusion
and credit access to the 150 million everyday consumers who lack access to
mainstream credit and help them build financial health. Consumers on our
platform benefit from higher approval rates and a highly automated, transparent,
efficient, and fully digital experience. Our bank partners benefit from our
turn-key, outsourced marketing, data science, and proprietary technology to
digitally acquire, underwrite and service everyday consumers and increase
automation throughout the lending process.

We service consumers on our financial platform through our three products:
1.OppLoans: Our bank sponsored installment loan product is a fully amortizing,
simple interest small dollar loan with an average loan size of $1,500 and a term
of 11 months.
2.SalaryTap: Payroll deductible installment loan with amounts starting at $2,000
with a 24 month term, and interest rates of 30%. The key product value
proposition is the ability to secure repayment directly through a consumer's
payroll deduction.
3.OppFi Card: A mobile-first credit card, issued by First Electronic Bank,
Member FDIC, featuring Mastercard as the exclusive card network and Deserve's
technology platform.

                                       42

————————————————– ——————————

Contents

RECENT DEVELOPMENTS

Key recent events impacting our business are as follows:
•Business Combination - On July 20, 2021 (the "Closing Date"), we completed the
transactions contemplated by that certain Business Combination Agreement, dated
as of February 9, 2021 (the "Business Combination Agreement"), by and among
FGNA, OppFi-LLC, OppFi Shares, LLC, a Delaware limited liability company
("OFS"), and the member's representative of the members of OppFi (the "Members")
immediately prior to the closing (the "Closing") of the transactions
contemplated by the Business Combination Agreement ("Business Combination").
Upon the Closing, FGNA as the registrant changed its name to "OppFi Inc."
OppFi's Class A common stock, par value $0.0001 per share (Class A Common
Stock"), and warrants are listed on the New York Stock Exchange (the "NYSE")
under the symbols "OPFI" and "OPFI WS," respectively. Following the Closing, the
combined Company is organized in an "Up-C" structure in which substantially all
of the assets and the business of the combined Company are held by OppFi-LLC and
its subsidiaries, and the Company's only direct assets consist of units in
OppFi-LLC. OppFi controls OppFi-LLC as the sole manager of OppFi-LLC.
•COVID-19 - In March 2020, the World Health Organization recognized a global
pandemic known as the coronavirus or COVID-19. Due to the economic uncertainty
that this has caused, and can continue to cause, there is added risk to our
overall future outlook. We have implemented cost containment and cash management
initiatives to mitigate the potential impact of the COVID-19 pandemic on our
business and liquidity. The full extent of any impact cannot be determined at
this time. We did see a slowdown in growth during the year ended December 31,
2020 and the nine months ended September 30, 2021 due to government stimulus
programs, which also had a positive impact on our credit performance, even while
the credit risk of our loan applicants remained flat during this period. We will
continue to monitor any changes to the business as the pandemic continues
throughout 2021.
•On September 30, 2021, OppFi-LLC and its wholly-owned subsidiaries Opportunity
Funding SPE IV, LLC ("SPE IV") and SalaryTap Funding SPE, LLC ("STF Borrower"),
and the other credit parties and guarantors thereto, entered into Amendment No.6
(the "BMO Amendment") to the Revolving Credit Agreement (the "BMO Credit
Agreement"), dated as of August 19, 2019, by and among OppFi-LLC, SPE IV, the
other credit parties and guarantors thereto, BMO Harris Bank N.A. as
administrative agent and collateral agent, and the lenders party thereto. The
BMO Amendment amends the BMO Credit Agreement to, among other things, add STF
Borrower as an additional borrower, permit the pledge of SalaryTap receivables,
increase the facility size to $45.0 million, increase the accordion feature from
$20 million to $30 million and extend the revolving period to August 2023. We
plan to use the expanded facility in part to support the growth and expansion of
its SalaryTap product, an employer payroll-linked loan product, that is
currently available in 33 states.
•On October 13, 2021, OppFi-LLC and its wholly-owned subsidiaries Opportunity
Financial SPE V, LLC ("SPE V") and Opportunity Funding SPE VII, LLC ("SPE VII"),
and the other credit parties and guarantors thereto, entered into Amendment No.
6 to Revolving Credit Agreement and Other Credit Documents (the "Atalaya
Amendment"), which amends the OppFi-LLC Midtown Credit Agreement. The Atalaya
Amendment amends the OppFi-LLC Midtown Credit Agreement to, among other things,
add SPE VII as an additional borrower under the OppFi-LLC Midtown Credit
Agreement, permit the pledge of OppFi Card receivables under the OppFi-LLC
Midtown Credit Agreement and extend the final maturity of the OppFi-LLC Midtown
Credit Agreement to April 2024. OppFi plans to use the amended OppFi-LLC Midtown
Credit Agreement to support the growth of the newly launched OppFi Card, issued
by First Electronic Bank, Member FDIC. We recently launched OppFi Card, our
first-ever credit card designed to enable the company to serve a segment of the
$21 billion non-prime credit card market.


STRONG POINTS

Our financial results as of and for the three months ended September 30, 2021
are summarized below:

•Basic and diluted earnings per share ("EPS") of $1.06 for the third quarter of
2021 and $1.08 for the first nine months of 2021;
•Adjusted basic and diluted EPS(1) of $0.21 for the third quarter of 2021 and
$0.64 for the first nine months of 2021;
•Net originations increased 25% to $164.5 million from $131.2 million for the
three months ended September 30, 2021 and 2020, respectively;
•Ending receivables increased 22% to $293.3 million from $240.3 million as of
September 30, 2021 and 2020, respectively;
                                       43

————————————————– ——————————

Contents

•Total revenue increased 47% to $92.0 million from $62.8 million for the three
months ended September 30, 2021 and 2020, respectively;
•Adjusted revenue(1) increased 25% to $92.0 million from $73.6 million for the
three months ended September 30, 2021 and 2020, respectively;
•Net income was $30.4 million and $72.8 million for the three and nine months
ended September 30, 2021, respectively; and

•Adjusted net income(1) was $17.4 million and $54.4 million for the three and
nine months ended September 30, 2021, respectively.
•
(1) Adjusted Basic and Diluted EPS, Adjusted Revenue and Adjusted Net Income are
non-GAAP financial measures. For information regarding our uses and definitions
of these measures and for reconciliations to the most directly comparable U.S.
Generally Accepted Accounting Principles ("GAAP") measures, see "Non-GAAP
Financial Measures" below.
Key Performance Metrics

We regularly review the following key metrics, to evaluate our business, measure
our performance, identify trends affecting our business, formulate financial
projections and make strategic decisions, which may also be useful to an
investor.

Note: All key performance metrics include all three products on the OppFi
platform and are not shown separately as the contributions from SalaryTap and the OppFi card were de minimis.

Total Net Originations

We measure originations to assess the growth trajectory and overall size of our
loan portfolio. There is a direct correlation between origination growth and
revenue growth. We include both bank partner originations as well as those
originated by us directly. Originations may be useful to an investor because
they help understand the growth trajectory of our revenues.

The following tables present total net originations (defined as gross
originations net of transferred balance on refinanced loans), percentage of net
originations by bank partners, and percentage of net originations by new loans
for the three and nine months ended September 30, 2021 and 2020 (in thousands):

                                                     Three Months Ended September 30,                       Change
                                                         2021                   2020                 $                 %
Total net originations                            $          164,547       $      131,236       $ 33,311               25.4  %
Percentage of net originations by bank
partners                                                     93.4  %            65.2    %               N/A            43.2  %
Percentage of net originations by new loans                  51.4  %            41.0    %               N/A            25.6  %

                                                      Nine Months Ended September 30,                       Change
                                                         2021                   2020                 $                 %
Total net originations                            $          408,394       $      333,480       $ 74,914               22.5  %
Percentage of net originations by bank
partners                                                     89.0  %            64.4    %               N/A            38.2  %
Percentage of net originations by new loans                  43.6  %            42.9    %               N/A             1.7  %



Net originations increased to $164.5 million and $408.4 million for the three
and nine months ended September 30, 2021, respectively, from $131.2 million and
$333.5 million for the three months and nine months ended September 30, 2020,
respectively. The 25.4% and 22.5% increases, respectively, were primarily due to
a partial recovery from the short-term reduction in customer demand attributable
to the COVID-19 pandemic and related governmental stimulus measures that we
experienced 2020, but which continued to impact our growth in the 2021 period.

                                       44

————————————————– ——————————

Contents

Our originations model continues to shift towards a facilitation model for bank
partners from a direct origination model. Total net originations by our bank
partners increased to 93.4% and 89.0% for the three and nine months ended
September 30, 2021, respectively, from 65.2% and 64.4% for the three and nine
months ended September 30, 2020, respectively.

In addition, our net originations saw an increase in the percentage of
originations of new loans compared to refinanced loans as customer demand
continued to return to pre-pandemic levels coupled with increased automation,
which drove a higher conversion of applications to funded loans. Total net
originations of new loans as percentage of total loans increased to 51.4% for
the three months ended September 30, 2021 from 41.0% for the three months ended
September 30, 2020. Total net originations of new loans as a percentage of total
loans increased to 43.6% for the nine months ended September 30, 2021 from 42.9%
for the nine months ended September 30, 2020.

Closing of claims

Ending receivables are defined as the unpaid principal balances of both on- and
off-balance sheet loans at the end of the reporting period. The following table
presents ending receivables as of September 30, 2021 and 2020 (in thousands):

                              September 30,                   Change
                           2021           2020            $             %
Ending receivables      $ 293,279      $ 240,275      $ 53,004        22.1  %



Ending receivables increased to $293.3 million as of September 30, 2021 from
$240.3 million as of September 30, 2020. The 22.1% increase was primarily driven
by a return to growth in originations in the second and third quarter of 2021
after the short-term reduction in customer demand attributable to the COVID-19
pandemic and related governmental stimulus measures that we experienced 2020,
but which continued to impact our growth in the 2021 period.

Average yield

Average yield represents annualized interest income from the period as a percent
of average receivables. Receivables are defined as unpaid principal balances of
both on- and off-balance sheet loans. The following tables present average yield
for the three and nine months ended September 30, 2021 and September 30, 2020:

                            Three Months Ended September 30,            Change
                                   2021                     2020          %
Average yield                                 131.3  %     128.3  %      2.3  %

                            Nine Months Ended September 30,             Change
                                   2021                     2020          %
Average yield                                 129.0  %     126.1  %      2.3  %



Average yield increased to 131.3% and 129.0% for the three and nine months ended
September 30, 2021, respectively, from 128.3% and 126.1% for the three and nine
months ended September 30, 2020, respectively. The 2.3% increases were driven by
a higher weighted average coupon due to state mix from a shift to bank partner
originations and a lower volume of customers on assistance programs.

Net amortization as a percentage of average receivables

Net charge-offs as a percentage of average receivables represents annualized
total charge offs from the period less recoveries as a percent of average
receivables. Receivables are defined as unpaid principal of both on- and
off-balance sheet loans. Our charge-off policy is based on a review of
delinquent finance receivables on a loan by loan basis. Finance receivables are
charged off at the earlier of the time when accounts reach 90 days past due on a
recency basis, when we receive notification of a customer bankruptcy, or when
finance receivables are otherwise deemed uncollectible.

                                       45

————————————————– ——————————

Contents

The following tables present net charge-offs as a percentage of average
receivables annualized for the three and nine months ended September 30, 2021
and 2020:
                                                           Three Months Ended September 30,                   Change
                                                             2021                     2020                      %
Net charge-offs as % of average receivables                       35.8  %                 24.4  %                  46.7  %

                                                            Nine Months Ended September 30,                   Change
                                                             2021                     2020                      %
Net charge-offs as % of average receivables                       31.4  %                 37.3  %                 (15.9) %



Net charge-offs as a percentage of average receivables increased by 46.7% to
35.8% for the three months ended September 30, 2021, from 24.4% for the three
months ended September 30, 2020. The increase for the three months ended
September 30, 2021 was due to a normalization of credit to pre-pandemic levels.
Net charge-offs as a percentage of average receivables decreased by 15.9% to
31.4% for the nine months ended September 30, 2021, from 37.3% for the nine
months ended September 30, 2020. The decrease for the nine months ended
September 30, 2021 reflects the positive impact on customers' bank balances from
government stimulus programs in the first half of 2021.

Marketing cost per financed loan

Marketing cost per funded loan represents marketing cost per funded loan for new
and refinance loans. This metric is the amount of direct marketing costs
incurred during a period divided by the number of loans originated during that
same period.
The following tables present marketing cost per funded loan for the three and
nine months ended September 30, 2021 and 2020:
                                           Three Months Ended September 30,                          Change
                                               2021                   2020                  $                     %
Marketing cost per funded loan          $             89          $       62          $        27                  43.5  %

                                            Nine Months Ended September 30,                          Change
                                               2021                   2020                  $                     %
Marketing cost per funded loan          $             74          $       76          $        (2)                 (2.6) %



Our marketing cost per funded loan increased to $89 for the three months ended
September 30, 2021, from $62 for the three months ended September 30, 2020. The
43.5% increase for the three months ended September 30, 2021 was driven
primarily by the higher mix of new versus refinanced loans year over year as
well as a higher marketing cost per new funded loan. Our marketing cost per
funded loan decreased to $74 for the nine months ended September 30, 2021, from
$76 for the nine months ended September 30, 2021. The 2.6% decrease for the nine
months ending September 30, 2021 was driven by an elevated cost per funded loan
for direct mail channel in 2020 due to the impact of COVID-19 on customer
demand.

                                       46

————————————————– ——————————

Contents

Marketing cost per new loan financed

Marketing cost per new funded loan represents the amount of direct marketing
costs incurred during a period divided by the number of new loans originated
during that same period. The following tables present marketing cost per funded
loan (new) for the three and nine months ended September 30, 2021 and 2020:
                                            Three Months Ended September 30,                         Change
                                                2021                   2020                  $                    %
Marketing cost per new funded
loan                                    $             255          $      212          $       43                  20.3  %

                                            Nine Months Ended September 30,                          Change
                                                2021                   2020                  $                    %
Marketing cost per new funded
loan                                    $             254          $      265          $      (11)                 (4.2) %



Our marketing cost per new funded loan increased to $255 for the three months
ended September 30, 2021, from $212 for the three months ended September 30,
2020. The 20.3% increase for the three months ending September 30, 2021 was
related to a higher mix towards the strategic partner marketing channel, as well
as increased investment in direct mail. Our marketing cost per new funded loan
decreased to $254 for the nine months ended September 30, 2021 from $265 for the
nine months ended September 30, 2020. The 4.2% decrease for the nine months
ended September 30, 2021 was driven by an elevated cost per funded loan for
direct mail channel in 2020 due to the impact of COVID-19 on customer demand.

Automatic approval rate

Auto-approval rate is calculated by taking the number of approved loans that are
not decisioned by a loan advocate or underwriter (auto-approval) divided by the
total number of loans approved. The following table presents auto approval rate
as of September 30, 2021 and September 30, 2020:

                              September 30,            Change
                             2021           2020          %
Auto-approval rate             58.1  %     20.9  %     178.6  %


Self-approval rate increased 178.6% as of September 30, 2021 at 58.1%, from 20.9% to September 30, 2020, driven by the continued application of algorithmic automation projects that streamline the friction stages of the origination process.

Overall auto decisioning, which also takes into account those applications that
were denied which are not decisioned by a loan advocate or underwriter
(auto-denial) plus auto-approval divided by the total number of applications,
was 80% for the three months ended September 30, 2021.

Sales and Servicing Cost per Loan Sales and Servicing cost per loan is
calculated by taking the total servicing costs, which include customer center
salaries, underwriting and reporting costs, and payment processing fees, divided
by the average amount of outstanding loans during that period. The following
tables present servicing cost per loan for the three and nine months ended
September 30, 2021 and September 30, 2020:

                                            Three Months Ended September 30,                          Change
                                                2021                   2020                  $                     %
Sales and servicing cost per loan       $             164          $      156          $         8                   5.3  %

                                            Nine Months Ended September 30,                           Change
                                                2021                   2020                  $                     %
Sales and servicing cost per loan       $             162          $      143          $        19                  12.9  %


                                       47

————————————————– ——————————

Contents

Our servicing cost per loan increased by $8 and $19 for the three and nine
months ended September 30, 2021, respectively, as compared to the three and nine
months ended September 30, 2020, respectively, due to the increase in
underwriting costs and payment processing fees tied to the increase in
originations. Due to improvements in auto-approval rates which drove scale to
the business, the percentage growth of 5.3 % and 12.9 % for the three and nine
months ended September 30, 2021 were significantly lower than origination growth
of 25.4 % and 22.5 % for the three and nine months ended September 30, 2021.

RESULTS OF OPERATIONS
Comparison of the three months ended September 30, 2021 and 2020
The following unaudited table presents our consolidated results of operations
for the three months ended September 30, 2021 and 2020 (in thousands, except per
share data):

                                                   Three Months Ended September 30,                        Change
                                                       2021                   2020                $                    %
Interest and loan related income, gross
(a)                                             $         91,448          $  73,311          $  18,137                 24.7   %
Other income                                                 529                266                263                 98.9
  Interest, loan related, and other
income                                                    91,977             73,577             18,400                 25.0
Amortization of loan origination costs                         -            (10,818)            10,818                    -
  Total revenue                                           91,977             62,759             29,218                 46.6
Total provision                                             (143)           (17,880)            17,737                 99.2
Change in fair value of finance
receivables                                              (18,940)                 -            (18,940)                   -
  Net revenue                                             72,894             44,879             28,015                 62.4
Expenses                                                  61,382             25,537             35,845                140.4
  Income from operations                                  11,512             19,342             (7,830)               (40.5)
Gain of loan forgiveness of Paycheck
Protection Program loan                                    6,444                  -              6,444                    -
Change in fair value of warrant liability                 13,139                  -             13,139                    -
  Income before income taxes                              31,095             19,342             11,753                 60.8
Provision for income taxes                                   703                  -                703                    -
  Net income                                              30,392          $  19,342          $  11,050                 57.1   %
Less: net income attributable to
noncontrolling interest                                   16,267

Net income attributable to OppFi Inc. $ 14,125

Earnings per share attributable to OppFi
Inc.: (b)
Earnings per common share:
  Basic                                         $           1.06          $       -
  Diluted                                       $           1.06          $       -
Weighted average common shares
outstanding:
  Basic                                                  13,363,995                  -
  Diluted                                                13,363,995                  -

(a) Loan-related income mainly consists of insufficient funds commissions, which are immaterial and were waived during the first quarter of 2021. Interest income related to financial receivables recognized under the fair value option is included in “Interest and loan income, net” in the consolidated statements of income. (b) Prior to the reverse recapitalization, all net income was attributable to the non-controlling interest. For periods prior to July 20, 2021, earnings per share was not calculated as net income before the business combination was entirely attributable to OppFi-LLC.



Total Revenue

Total revenue consists mainly of revenue earned from interest on receivables
from outstanding loans based only on the interest method, as well as
amortization of loan origination costs in previous periods. We also earn revenue
from referral fees related primarily to our turn-up program, which represented
less than 0.6 % of total revenue for the three months ended September 30, 2021.

Total revenue increased by $29.2 million, or 46.6 %, to $92.0 million for the
three months ended September 30, 2021 from $62.8 million for the three months
ended September 30, 2020. This increase was partially due to the removal of the
amortization of loan origination costs as a result of the election of the fair
value option in 2021. Under the fair value option, loan origination costs
related to the origination of installment loans are expensed when incurred and
are no longer recognized as
                                       48

————————————————– ——————————

Contents

a part of total revenue. Total revenue also improved year over year due to the
increase in interest income from higher receivables and yield compared to the
previous period.
Total Provision and Change in Fair Value

Commencing on January 1, 2021, we elected the fair value option on the OppLoan
product. To derive the fair value, we generally utilize discounted cash flow
analyses that factor in estimated losses and prepayments over the estimated
duration of the underlying assets. Loss and prepayment assumptions are
determined using historical loss data and include appropriate consideration of
recent trends and anticipated future performance. Future cash flows are
discounted using a rate of return that we believe a market participant would
require based on the risk characteristics of the loans. We did not elect the
fair value option on our SalaryTap and OppFi Card finance receivables as these
products launched in November 2020 and August 2021, respectively, and inputs for
fair value are not yet determined. Accordingly, the related finance receivables
are carried at amortized cost, net of allowance for credit losses.

For the three months ended September 30, 2021, change in fair value consisted of
gross charge-offs incurred in the period, net of recoveries, plus the change in
the fair value of the installment loans. Change in fair value decreased by $18.9
million for the three months ended September 30, 2021. The $18.9 million
comprised $24.9 million of net charge-offs, partially offset by $6.0 million
change in the fair value premium of receivables. Net charge-offs as a percentage
of receivables increased due to normalization of credit to pre-pandemic levels.
Change in fair value premium had a positive impact due to the increase in
receivables in the period and an increase in the fair value mark. The fair value
mark improved due to an increase in the remaining life of the portfolio driven
by a younger portfolio from origination growth in the period, as well as an
increase in the weighted average interest rate of the portfolio driven by state
mix from a higher mix of bank partner originated loans and a lower volume of
customers on assistance programs.

For the three months ended September 30, 2021, total provision consisted of
gross charge-offs incurred in the period, net of recoveries, plus the change in
the allowance for credit losses for our SalaryTap and OppFi Card products. In
the three months ended September 30, 2020, total provision consisted of gross
charge-offs incurred in the period, net of recoveries, plus the change in the
allowance for credit losses for our OppLoan product. Our provision for future
losses is based on incurred credit loss application whereby we reserve for life
of loan losses.

Net Revenue

Net revenue is equal to total revenue less the change in fair value and less
total provision costs. Total net revenue increased by $28.0 million, or 62.4%,
to $72.9 million for the three months ended September 30, 2021, from $44.9
million for the three months ended September 30, 2020. This increase was
primarily attributable to an increase in gross interest and loan related income,
as well as the removal of the amortization of loan origination costs from total
revenue as a result of the election of the fair value option in 2021, despite
higher gross charge-offs, net of recoveries.

Expenses

Total expenses consist of salaries and employee benefits, interest expense and
amortized debt issuance costs, servicing costs, direct marketing costs,
technology costs, depreciation and amortization, professional fees and other
expenses.

Total expenses increased by $35.8 million, or 140.4 %, to $61.4 million for the
three months ended September 30, 2021 from $25.5 million for the three months
ended September 30, 2020. This was primarily due to higher marketing costs due
to higher originations, an increase in bank partner and payment processing fees,
an increase in salaries, employee benefits and technology infrastructure costs,
and the impact of the 2021 election of fair value option. As a result of the
election of the fair value option, loan origination costs, including direct
marketing costs and payment processing fees related to the origination of the
OppLoan product, are recognized as expenses when incurred and are no longer
recognized as an offset to total revenue.

Income from operations

Operating profit is the difference between net income and expenses. Operating profit decreased by $ 7.8 million, or 40.5%, to $ 11.5 million for the three months ended September 30, 2021, of $ 19.3 million for the three months ended September 30, 2020.

Other income (expenses)

                                       49

————————————————– ——————————

Contents

Other income for the three months ended September 30, 2021 included the gain
from forgiveness of an unsecured loan of $6.4 million in connection with the
U.S. Small Business Administration's ("SBA") Paycheck Protection Program (the
"PPP Loan"). Additionally, other income included the change in fair value of the
warrant liability of $13.1 million. This warrant liability arose with respect to
warrants issued in connection with the initial public offering of FGNA and is
subject to re-measurement at each balance sheet date.

Income before income tax

Income before income tax is the sum of income from operations and other income
(expenses). Income before income tax increased by $11.8 million, or 60.8%, to
$31.1 million for the three months ended September 30, 2021, from $19.3 million
for the three months ended September 30, 2020.

Income tax

The Company is the sole managing member of OppFi-LLC and, as a result,
consolidates the financial results of OppFi-LLC. OppFi-LLC is treated as a
partnership for U.S. federal and most applicable state and local income tax
purposes. As a partnership, OppFi-LLC is not subject to U.S. federal and certain
state and local income taxes. Any taxable income or loss generated by OppFi-LLC
is passed through to and included in the taxable income or loss of its members,
including OppFi, on a pro rata basis. OppFi is subject to U.S. federal income
taxes, in addition to state and local income taxes with respect to its allocable
share of any taxable income or loss of OppFi-LLC, as well as any stand-alone
income or loss generated by OppFi.

OppFi Inc. recorded tax expense of $703 thousand for the three months ended
September 30, 2021 and no expense for the three months ended September 30, 2020.
As noted above, OppFi-LLC is treated as a partnership and is not subject to
income taxes; prior to the consummation of the Business Combination on July 20,
2021, there were no taxes attributable to OppFi Inc. as OppFi-LLC was the only
reportable entity.

Net Income

In accordance with the provisions of Accounting Standards Codification (“ASC”) 810, Consolidation, OppFi presented net income attributable to the Company and non-controlling interests separately in the consolidated statements of earnings.

Net income increased by $11.1 million, or 57.1%, to $30.4 million for the three
months ending September 30, 2021, from $19.3 million for the three months ended
September 30, 2020.

Net income attributable to OppFi Inc.

Net income attributable to OppFi Inc. was $14.1 million for the three months
ended September 30, 2021. Net income attributable to OppFi Inc. represents the
income solely attributable to stockholders of OppFi for the three months ended
September 30, 2021. Prior to the completion of the Business Combination on July
20, 2021, there was no income attributable to OppFi Inc. as OppFi-LLC was the
only reportable entity.

                                       50

————————————————– ——————————

Contents

Comparison of the nine months ended September 30, 2021 and 2020

The following unaudited table presents our consolidated results of operations
for the nine months ended September 30, 2021 and 2020 (in thousands, except per
share data):

                                                Nine Months Ended September 30,                     Change
                                                    2021                2020                $                   %
Interest and loan related income, gross
(a)                                             $  253,581          $ 235,651          $  17,930                  7.6  %
Other income                                         1,029                506                523                103.4
  Interest, loan related, and other
income                                             254,610            236,157             18,453                  7.8
Amortization of loan origination costs                   -            (37,464)            37,464                    -
  Total revenue                                    254,610            198,693             55,917                 28.1
Total provision                                       (181)           (62,755)            62,574                 99.7
Change in fair value of finance
receivables                                        (52,635)                 -            (52,635)                   -
  Net revenue                                      201,794            135,938             65,856                 48.4
Expenses                                           147,911             74,580             73,331                 98.3
  Income from operations                            53,883             61,358             (7,475)               (12.2)
Gain of loan forgiveness of Paycheck
Protection Program loan                              6,444                  -              6,444                    -
Change in fair value of warrant liability           13,139                  -             13,139                    -
  Income before income taxes                        73,466             61,358             12,108                 19.7
Provision for income taxes                             703                  -                703                    -
  Net income                                        72,763          $  61,358          $  11,405                 18.6  %
Less: net income attributable to
noncontrolling interest                             58,638

Net income attributable to OppFi Inc. $ 14,125

Earnings per share attributable to OppFi
Inc.: (b)
Earnings per common share:
  Basic                                         $     1.08          $       -
  Diluted                                       $     1.08          $       -
Weighted average common shares
outstanding:
  Basic                                            13,107,873                  -
  Diluted                                          13,107,873                  -

(a) Loan related income primarily consists of non-sufficient funds fees, which are immaterial and were discontinued
during Q1 2021. Interest income related to finance receivables accounted for under the fair value option is included in
"Interest and loan related income, net" in the consolidated statements of operations.
(b) Prior to the reverse recapitalization, all net income was attributable to the noncontrolling interest. For the
periods prior to July 20, 2021, earnings per share was not calculated, as net income prior to the Business Combination
was attributable entirely to OppFi-LLC.



Total income

Total revenue consists mainly of revenue earned from interest on receivables
from outstanding loans based only on the interest method, as well as
amortization of loan origination costs in previous periods. We also earn revenue
from referral fees related primarily to our turn-up program, which represented
less than 0.5 % of total revenue for the nine months ended September 30, 2021.

Total revenue increased by $55.9 million, or 28.1 %, to $254.6 million for the
nine months ended September 30, 2021 from $198.7 million for the nine months
ended September 30, 2020. This increase was primarily due to the removal of the
amortization of loan origination costs as a result of the election of the fair
value option in 2021. Under the fair value option, loan origination costs
related to the origination of installment loans are expensed when incurred and
are no longer recognized as a part of total revenue.

Total provision and change in fair value

Commencing on January 1, 2021, we elected the fair value option on the OppLoan
product. To derive the fair value, we generally utilize discounted cash flow
analyses that factor in estimated losses and prepayments over the estimated
duration of the underlying assets. Loss and prepayment assumptions are
determined using historical loss data and include appropriate consideration of
recent trends and anticipated future performance. Future cash flows are
discounted using a rate of return that we believe a market participant would
require based on the risk characteristics of the loans. We did not elect the
fair value option on our SalaryTap and OppFi Card finance receivables as these
products launched in November 2020 and August 2021,
                                       51

————————————————– ——————————

Contents

respectively, and inputs for fair value are not yet determined. Accordingly, the
related finance receivables are carried at amortized cost, net of allowance for
credit losses.

For the nine months ended September 30, 2021, change in fair value consists of
gross charge-offs incurred in the period, net of recoveries, plus the change in
the fair value of the installment loans. Change in fair value decreased by $52.6
million for the nine months ended September 30, 2021 as we adopted the fair
value option for our installment product on January 1, 2021. The $52.6 million
comprised $62.1 million of net charge-offs, partially offset by a $9.4 million
change in the fair value premium of receivables. Net charge-offs as a percentage
of receivables improved due to the impact from government stimulus programs.
Change in fair value premium had a positive impact due to the increase in
receivables in the period and an increase in the fair value mark. The fair value
mark improved due to an increase in the remaining life of the portfolio driven
by a younger portfolio from origination growth in the period, as well as an
increase in the weighted average interest rate of the portfolio driven by the
higher mix of bank partner originated loans and a lower volume of customers on
assistance programs.

In the nine months ended September 30, 2021, total provision consists of gross
charge-offs incurred in the period, net of recoveries, plus the change in the
allowance for credit losses for our SalaryTap and OppFi Card products. In the
nine months ended September 30, 2020, total provision consists of gross
charge-offs incurred in the period, net of recoveries, plus the change in the
allowance for credit losses for the OppLoan product. Our provision for future
losses is based on incurred credit loss application whereby it reserves for life
of loan losses.

Net Revenue

Net revenue is equal to total revenue less the change in fair value and less
total provision costs. Total net revenue increased by $65.9 million, or 48.4%,
to $201.8 million for the nine months ended September 30, 2021 from $135.9
million for the nine months ended September 30, 2020. This increase was
primarily attributable to lower gross charge-offs, net of recoveries, as well as
the removal of the amortization of loan origination costs from total revenue as
a result of the election of the fair value option in 2021.

Expenses

Total expenses consist of salaries and employee benefits, interest expense and
amortized debt issuance costs, servicing costs, direct marketing costs,
technology costs, depreciation and amortization, professional fees and other
expenses.

Total expenses increased by $73.3 million, or 98.3%, to $147.9 million for the
nine months ended September 30, 2021, from $74.6 million for the nine months
ended September 30, 2020. This was primarily due to higher marketing costs due
to higher originations, an increase in salaries and employee benefits,
technology infrastructure costs and professional fees, and the impact of the
2021 election of fair value option. As a result of the election of the fair
value option, loan origination costs, including direct marketing costs and
payment processing fees related to the origination of the OppLoan product, are
recognized as expenses when incurred and are no longer recognized as an offset
to total revenue.

Income from Operations

Income from operations is the difference between net revenue and expenses. Total
income from operations decreased by $7.5 million, or 12.2%, to $53.9 million for
the nine months ended September 30, 2021, from $61.4 million for the nine months
ended September 30, 2020.

Other Income (Expenses)

Other income for the nine months ended September 30, 2021 included the gain from
forgiveness of an unsecured loan of $6.4 million in connection with the PPP
Loan. Additionally, other income included the change in fair value of the
warrant liability in the amount of $13.1 million. This warrant liability arose
with respect to warrants issued in connection with the initial public offering
of FGNA and is subject to re-measurement at each balance sheet date.

Income before income tax

Income before income tax is the difference between net revenue and expenses.
Income before income tax increased by $12.1 million, or 19.7%, to $73.5 million
for the nine months ended September 30, 2021, from $61.4 million for the nine
months ended September 30, 2020.

                                       52

————————————————– ——————————

Contents

Income tax

OppFi Inc. recorded tax expense of $703 thousand for the nine months ended
September 30, 2021 and no expense for the nine months ended September 30, 2020.
As noted above, OppFi-LLC is treated as a partnership and is not subject to
income taxes; prior to the consummation of the Business Combination on July 20,
2021, there were no taxes attributable to OppFi Inc. as OppFi-LLC was the only
reportable entity.

Net Income
Net income increased by $11.4 million, or 18.6%, to $72.8 million for the nine
months ended September 30, 2021 from $61.4 million for the nine months ended
September 30, 2020.

Net income attributable to OppFi Inc.

Net income attributable to OppFi Inc. was $14.1 million for the nine months
ended September 30, 2021. Net income attributable to OppFi Inc. represents the
income solely attributable to stockholders of OppFi Inc. for the nine months
ended September 30, 2021. Prior to the consummation of the Business Combination
on July 20, 2021, there was no income attributable to OppFi Inc. as OppFi-LLC
was the only reportable entity.

NON-GAAP FINANCIAL MEASURES

We believe that the provision of non-GAAP financial measures in this report,
including Fair Value Pro Forma information, Adjusted Revenue, Adjusted Basic and
Diluted EPS, Adjusted EBITDA, and Adjusted Net Income can provide useful
measures for period-to-period comparisons of our business and useful information
to investors and others in understanding and evaluating our operating results.
However, non-GAAP financial measures are not calculated in accordance with
United States generally accepted accounting principles ("GAAP"), should not be
considered an alternative to any measure of financial performance calculated and
presented in accordance with GAAP, and may not be comparable to the non-GAAP
financial measures of other companies.
Fair Value Pro Forma

On January 1, 2021, we elected the fair value option for our OppLoan product.
Accordingly, the related finance receivables are carried at fair value in the
consolidated balance sheets and the changes in fair value are included in the
consolidated statements of operations. To derive the fair value, OppFi generally
utilizes discounted cash flow analyses that factor in estimated losses and
prepayments over the estimated duration of the underlying assets. Loss and
prepayment assumptions are determined using historical loss data and include
appropriate consideration of recent trends and anticipated future performance.
Future cash flows are discounted using a rate of return that OppFi believes a
market participant would require. Accrued interest and fees are included in
"Finance receivables" in the consolidated balance sheets. Interest income is
included in "Interest and loan related income, net" in the consolidated
statements of operations. We have adjusted 2020 financials based on applying the
fair value option in order to provide comparability to 2021 financials.

                                       53

————————————————– ——————————

  Table of Contents

                                                                  Three Months Ended September 30,                                   Variance
                                               2021                                        2020                                          %
                                                                                         Fair Value           Fair Value
(in thousands, unaudited)                   As Reported           As
Reported           Adjustments            Pro Forma

Total revenue                             $     91,977          $     62,759          $      10,818          $   73,577                    25.0  %
Total provision                                   (143)              (17,880)                17,880                   -                       -
Fair value adjustment(a)                       (18,940)                    -                (11,880)            (11,880)                  (59.4)
Net revenue                                     72,894                44,879                 16,818              61,697                    18.1
Expenses
Sales and marketing                             15,633                 3,693                  5,820               9,513                    64.3
Customer operations                             10,550                 4,129                  5,285               9,414                    12.1
Technology, products, and analytics              7,329                 5,080                      -               5,080                    44.3
General, administrative, and other              21,456                 7,982                      -               7,982                   168.8
Total expenses before interest
expense                                         54,968                20,884                 11,105              31,989                    71.8
Interest expense (b)                             6,414                 4,653                      -               4,653                    37.8
Income from operations                          11,512                19,342                  5,713              25,055                   (54.1)
Gain of forgiveness of PPP Loan                  6,444                     -                      -                   -                       -
Change in fair value of warrant
liability                                       13,139                     -                      -                   -                       -
  Income before income taxes                    31,095                19,342                  5,713              25,055                    24.1
Provision for income taxes                         703                     -                      -                   -                       -
  Net income                                    30,392          $     19,342          $       5,713          $   25,055                    21.3  %
Less: net income attributable to
noncontrolling interest                         16,267
  Net income attributable to OppFi
Inc.                                      $     14,125

(a) Fair value adjustment of $11.9 million includes net charge-offs of $13.9 million and a fair market value adjustment of ($2.0 million) driven
by higher receivables and a higher fair market value mark.
(b) Includes debt amortization
costs.


                                                                   Nine Months Ended September 30,                                    Variance
                                               2021                                        2020                                           %
                                                                                         Fair Value          Fair Value Pro
(in thousands, unaudited)                   As Reported           As
Reported           Adjustments              Forma

Total revenue                             $    254,610          $    198,693          $      37,464          $   236,157                     7.8  %
Total provision                                   (181)              (62,755)                62,755                    -                       -
Fair value adjustments (a)                     (52,635)                    -                (87,470)             (87,470)                   39.8
Net revenue                                    201,794               135,938                 12,749              148,687                    35.7
Expenses
Sales and marketing                             35,114                10,185                 15,174               25,539                    38.5
Customer operations                             30,036                12,359                 15,671               28,030                     7.2
Technology, products, and analytics             19,669                14,254                      -               14,254                    38.0
General, administrative, and other              45,687                21,200                      -               21,200                   115.5
Total expenses before interest
expense                                        130,506                57,998                 30,845               88,843                    46.9
Interest expense (b)                            17,405                16,582                      -               16,582                     5.0
Income from operations                          53,883                61,358                (18,096)              43,262                    24.6
Gain of forgiveness of PPP loan                  6,444                     -                      -                    -                       -
Change in fair value of warrant
liability                                       13,139                     -                      -                    -                       -
  Income before income taxes                    73,466                61,358                (18,096)              43,262                    69.8
Provision for income taxes                         703                     -                      -                    -                       -
  Net income                                    72,763          $     61,358          $     (18,096)         $    43,262                    68.2  %
Less: net income attributable to
noncontrolling interest                         58,638
  Net income attributable to OppFi
Inc.                                      $     14,125

(a) Fair value adjustment of $ 87.5 million includes net charges of $ 69.8 million and a fair market value Adjustment of $ 17.6 million due to lower receivables and less than fair market value due to the COVID-19 pandemic. (b) Includes debt amortization costs.





                                       54

————————————————– ——————————

  Table of Contents




Adjusted Revenue

Adjusted revenue is a non-GAAP financial measure defined as our total revenue,
as reported, adjusted for the impact of amortization of loan origination costs.
Under the fair value option, loan origination costs related to the origination
of installment loans are expensed when incurred and are no longer recognized as
a part of total revenue. We believe that adjusted revenue is an important
measure because it allows management, investors, and our board of directors to
evaluate and compare our revenue for period-to-period comparisons of our
business, as it removes the effect of differing accounting methodologies.

                                                       Three Months Ended September 30,             Variance
(in thousands, unaudited)                                  2021                2020                     %
Total revenue                                         $    91,977          $   62,759                     46.6   %
Amortization of loan origination costs                          -              10,818                        -
Adjusted revenue                                      $    91,977          $   73,577                     25.0   %

                                                       Nine Months Ended September 30,              Variance
                                                           2021                2020                     %
Total revenue                                         $   254,610          $  198,693                     28.1   %
Amortization of loan origination costs                          -              37,464                        -
Adjusted revenue                                      $   254,610          $  236,157                      7.8   %


Adjusted net income and adjusted EBITDA

Adjusted Net Income is a non-GAAP measure defined as our GAAP net income,
adjusted for the impact of our election of the fair value option, further
adjusted to eliminate the effect of certain items as shown below as well as
adjusting taxes for comparison purposes. We believe that Adjusted Net Income is
an important measure because it allows management, investors, and our board of
directors to evaluate and compare our operating results from period-to-period by
making the adjustments described below.

Adjusted EBITDA is a non-GAAP measure defined as our adjusted net income, and
adjusted for the items as shown below including taxes, depreciation and
amortization and interest expense. We believe that Adjusted EBITDA is an
important measure because it allows management, investors, and our board of
directors to evaluate and compare our operating results from period-to-period by
making the adjustments described below. In addition, it provides a useful
measure for period-to-period comparisons of our business, as it removes the
effect of taxes, certain non-cash items, variable charges, and timing
differences.


















                                       55

————————————————– ——————————

  Table of Contents





                                                         Three Months Ended September 30,                 Variance
(in thousands, except per share data,
unaudited)                                                   2021                   2020                     %
Net income                                            $         30,392          $   19,342                       57.1  %
Provision for income taxes                                         703                   -                          -
FV adjustments                                                       -               5,713                          -
Debt amortization                                                  572                 474                       20.7
Other addback and one-time expense(a)                           (8,825)                450                    (2061.1)
Adjusted EBT                                                    22,842              25,979                      (12.1)
Less: pro forma taxes(b)                                        (5,480)             (6,495)                     (15.6)
Adjusted net income                                             17,362              19,484                      (10.9)
Pro forma taxes(b)                                               5,480               6,495                      (15.6)
Depreciation and amortization                                    2,712               1,799                       50.8
Interest expense                                                 5,841               4,180                       39.7
Business (non-income) taxes                                        383                 444                      (13.7)
  Net gain/loss on sale of asset                                     1                   -                          -
Adjusted EBITDA                                       $         31,779          $   32,402                       (1.9) %

Adjusted basic and diluted EPS: (c)                   $           0.21          $        -
Adjusted shares outstanding:                                   84,464,783                   -

(a) For the three months ended September 30, 2021, other addback and one-time expense of ($8.8 million) included a
($13.1 million) addback due to the change in fair value of the warrant liabilities, a ($6.4 million) addback due to the
gain on forgiveness of the PPP Loan, and a $10.7 million impact to the G&A line item in expenses comprised of: $8.5
million in one-time expenses related to the Business Combination, $3.6 million in other one-time expenses, $0.39 million
in profit interest and stock compensation, $0.9 million in the change in fair value of the warrant units outstanding
prior to Business Combination, and $0.4 million in other one-time expense. For the three months ended September 30,
2020, other addback and one-time expense included $0.3 million in management fees and $0.2 million in other one-time
expense.
(b) Assumes a tax rate of 25% prior to the three months ended September 30, 2021 and a 23.99% after, reflecting the U.S.
federal statutory rate of 21% and a blended statutory rate for state income taxes, in order to allow for a comparison
with other publicly traded companies.
(c) Prior to the Reverse Recapitalization, all net income was attributable to the noncontrolling interest. For the
periods prior to July 20, 2021, earnings per share was not calculated, as net income prior to the Business Combination
was attributable entirely to OppFi-LLC.


                                       56

————————————————– ——————————

  Table of Contents


                                                        Nine months ended September 30,
                                                                     2021                            Variance
(in thousands, except per share data,
unaudited)                                                 2021                 2020                     %
Net income                                            $     72,763          $   61,358                      18.6  %
Provision for income taxes                                     703                   -                         -
FV adjustments                                                   -             (18,096)                        -
Debt amortization                                            1,735               1,451                      19.6
Other addback and one-time expense(a)                       (2,923)                726                    (502.6)
Adjusted EBT                                                72,278              45,439                      59.1
Less: pro forma taxes(b)                                   (17,839)            (11,360)                     57.0
Adjusted net income                                         54,439              34,079                      59.7
Pro forma taxes(b)                                          17,839              11,360                      57.0
Depreciation and amortization                                7,289               4,775                      52.6
Interest expense                                            15,671              15,131                       3.6
Business (non-income) taxes                                  1,175               1,100                       6.8
Net gain/loss on sale of asset                                   5                   -                         -
Adjusted EBITDA                                       $     96,418          $   66,445                      45.1  %

Adjusted basic and dilbuted EPS: (c)                  $       0.64          $        -
Adjusted shares outstanding:                               84,464,783                   -

(a) For the nine months ended September 30, 2021, other addback and one-time expense of ($2.9 million) included a
($13.1 million) addback due to the change in fair value of the warrant liabilities, a ($6.4 million) addback due to
the gain on forgiveness of PPP Loan, and a $16.6 million impact to the G&A line item in expenses comprised of:
$10.1 million in one-time expenses related to the Business Combination, $1.2 million in profit interest and stock
compensation, $4.2 million in the change in fair value of warrant units outstanding prior to Business Combination,
and $1.1 million in other one-time expense. For the nine months ended September 30, 2020, other addback and
one-time expense included $0.3 million in management fees and $0.5 million in other one-time expense.
(b) Assumes a tax rate of 25% prior to the three months ended September 30, 2021 and a 23.99% tax rate after,
reflecting the U.S. federal statutory rate of 21% and a blended statutory rate for state income taxes, in order to
allow for a comparison with other publicly traded companies.
(c) Prior to the Reverse Recapitalization, all net income was attributable to the noncontrolling interest. For the
periods prior to July 20, 2021, earnings per share was not calculated, as net income prior to the Business
Combination was attributable entirely to OppFi-LLC.





Adjusted Shares as Reflected in Adjusted Basic and Diluted Earnings Per Share

                                                        Three And Nine Months Ended
                                                               September 30,
(unaudited)                                             2021                     2020

Class A ordinary shares outstanding at the end of the period 13,464,542

             -

Class V voting shares outstanding at the end of the period 96,500 241

             -
Elimination of earnouts at period end                (25,500,000)                       -
Adjusted shares outstanding                            84,464,783                       -



                                               Three Months Ended September 30,
(unaudited)                                           2021                      2020
Adjusted net income (in thousands)     $         17,362                      $ 19,484
Adjusted shares outstanding                                    84,464,783   

Adjusted basic and diluted EPS:        $           0.21                      $      -



                                               Nine Months Ended September 30,
(unaudited)                                          2021                      2020
Adjusted net income (in thousands)     $         54,439                     $ 34,079
Adjusted shares outstanding                                   84,464,783    

Adjusted basic and diluted EPS:        $           0.64                     $      -



                                       57

————————————————– ——————————

Contents

© Edgar online, source Previews

Source link

About Matthew Berkey

Check Also

What is Buy Now, Pay Later and how does it work?

The Buy Now, Pay Later programs allow you to purchase items without paying for them …