►The fintech Oportun has agreed to sell its credit card portfolio to Continental Finance, a credit card marketer and servicer, to drive profitability, the company announced last week.

Continental Finance has agreed to acquire Oportun’s Visa credit portfolio with its partner bank, The Bank of Missouri, according to the press release.

The deal – first announced during the second-quarter earnings call without disclosing the acquirer's name – is expected to close on or around Nov. 10 instead of by the end of the third quarter. The revised closing date means the sale's impact on adjusted earnings before interest, taxes, depreciation, and amortization in 2024 has been revised to approximately $2 million — down from the previously projected $4 million, Oportun said.

After adjusted EBITDA, Oportun expects “favorability” resulting from the credit card sale to be approximately $11 million in 2025. The company did not disclose the sale’s dollar amount.

“The transaction will simplify our product portfolio and enhance our focus on our three core products: unsecured personal loans, secured personal loans, and our award winning Set & Save savings product,” Oportun CEO Raul Vazquez said during the company’s second-quarter earnings call in August. “We ran a competitive sales process that resulted in multiple bids, and we selected the best proposal,” he added. 

The Continental Finance team is working with the San Carlos, California-based fintech “to ensure a seamless transition of their customers onto our platform” with the goal “to continue to provide exceptional, personalized service to these valued customers for many years to come,” Tamer El-Rayess, Continental Finance’s board chairman, said in a statement.

Oportun declined to comment beyond the press release.

Oportun began cost-cutting efforts in the third quarter of 2022, the company said in its second quarter earnings report. The company recorded a loss of $31 million in Q2, compared to the $15 million loss in the prior-year quarter, according to the Q2 financial results. 

The credit card portfolio deal resulted in an adverse $36 million fair value adjustment to the credit card portfolio, Vazquez noted during the Q2 earnings call. 

Oportun, which calls itself a “mission-driven” fintech, was founded in 2005 and became a public company in 2019. The loan provider, which also offers savings and budgeting capabilities, has about 2.1 million customers.  

Meanwhile, Continental Finance has managed more than 5.3 million credit cards since its founding in 2005. The firm aims to serve consumers left out of traditional credit card programs.

Along with the sale of the credit card portfolio, Oportun has teamed up with cross-border payments company Western Union in a bid to add new applicants to its originations while generating incremental new loan volume under its current credit standards.

The credit card portfolio sale and collaboration with Western Union “are integral milestones towards focusing the business on our core products, further reducing our expense base and growing profitably over the long-term.” Coblentz said.

By Rajashree Chakravarty on Oct 4, 2024
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