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**TL;DR: SoFi's Q1 2026 10-Q, released yesterday, quietly added a previously missing GAAP disclosure that confirms at least $1B of historical fair-value overvaluation, of which at least $625M is still to release. They added the disclosure without any public acknowledgments that normally come with correcting a prior reporting gap. Separately, credit card data in the 10-Q and in a new federal Uniform Bank Performance Report shows a distressed portfolio: increasing reliance on subprime borrowers, 97th percentile worst among similar banks with non-current loans, 31st percentile yield: completely opposite of what SoFi said during last week’s earnings call and in a call with a YouTube investing show.**
In its 10-Q yesterday ([Link Here](https://d18rn0p25nwr6d.cloudfront.net/CIK-0001818874/59a7be2b-40b4-4694-b2be-0090e32096ff.pdf)) SoFi disclosed important fair value data for the first time: specifically unrealized gains in their Level 3 rollforward table. (I posted a long DD here about why it needed to do this back in March). This data is what lets you see whether the modeling used for SoFi's loans is accurate. A pattern of positive unrealized gains (paper markups on loans SoFi still holds) along with negative realized losses (when loans actually leave the portfolio through defaults, charge-offs, or sales) reflects overvaluation: marks on the held book look fine but when loans are closed out they actually leave big losses (paper losses to reverse prior paper gains).
Turns out SoFi must have at least agreed that it had to provide this data, as the 10-Q now provides it for the first time on pages 36-37 (far right column).
https://preview.redd.it/uiz0o3h5wxzg1.png?width=1052&format=png&auto=webp&s=9be9fc96326522abadab7f7beeb2ea53f21473a1
What's really interesting though: SoFi quietly added it. No restatement, no explanation of the change, etc. Adding a previously-missing GAAP disclosure normally requires either a "little r" revision or a "big R" restatement. Simply changing the accounting presentation requires a disclosure of why the change was made, and whether it is material. SoFi did none of that. By adding the column they implicitly admitted it should have been there all along. Any kind of restatement would have tanked SoFi’s stock and would have had significant monetary repercussions for executives, like possible disgorgement of their performance/stock incentives.
This data basically confirms SoFi has historically overvalued its loans. For Q1 2026, personal loans "all in" resulted in $208 million loss. Only $35 million of that was actually a net paper/model mark down on SoFi's personal loan inventory. The other $172 million is what SoFi recognized on loans that left the portfolio. That is reversal of previous overvaluations on loans from prior periods.
For Q1 2025, the picture is even more telling. Personal loans were already negative $73 million, but that was propped up by $63 million in paper gains on the held book that likely will be reversed later. Without those markups the headline would have been -$136M. Student loans had $125 million positive, but that was pulled up by $134 million in paper gains on the held book - meaning the part of the portfolio that actually left was already losing money. Q1 2026 student loans had only $35 million in model gains, and even with that "all in" student loans lost $7 million, which means about $42 million of losses on the loans that left the portfolio - which can only be reversals of prior overvaluations.
During the last earnings call, CFO Lapointe gave the impression that historical fair value fluctuations were stabilizing:
"As we mentioned, it's our second consecutive quarter of more than $1 billion in cash revenue, but I would also note that 100% of our reported adjusted net revenue was cash revenue in both 2024 and 2025.
**This means that the scale and seasoning of the loans on our balance sheet has reached the point where the upfront non-cash premiums on new originations are being balanced by pull to par and other mark-to-market impacts on the existing portfolio, leaving the vast majority of our reported revenue being approximately equal to our cash revenue**."
This 10-Q data is the opposite of what Lapointe said. The held book isn't being "balanced by pull to par" – what is happening is that large paper gains (from new and existing loans) and paper losses (from loans leaving the book) are partially offsetting each other, with loans leaving the portfolio are absorbing big realized losses, and a sigificant amount of prior overvaluations left to be reversed.
SoFi's "Cash Revenue" reconciliation table from the earnings deck from last week set out the net amount of paper adjustments to loans every year. The "Loan originations, sales, securitizations and servicing" line by year tells the broader story:
* 2021: -$371M (paper gains being backed out of cash)
* 2022: -$490M
* 2023: -$255M
* 2024: +$59M (paper losses being added back - the line flipped)
* 2025: +$215M
* Q1 2026: roughly zero
That's about $1.1 billion of cumulative paper gains piled up over 2021-2023, and only about $274 million reversed across 2024 and 2025. Q1 2026 added another $214M of reversals in the new 10-Q rollforward column (though it's not visible in the Cash Revenue line anymore because other components in that line are now offsetting). Cumulative reversals are about $488 million, which leaves at least $625-650 million of unreversed paper gains still sitting in the held book - and probably more, given what we're seeing in the 10-Q. At the current rate of about $200M per quarter on personal loans alone, that's another 3+ quarters of bleed-back.
Now the credit cards, which is a separate but related issue.
On the earnings call, management characterized credit performance as healthy. After the call, SoFi IR did a private call with a YouTube host (Tevis at "Fun of Investing") under conditions that he couldn't attribute statements or quote anyone directly. Tevis then posted a video describing SoFi as having said the credit card slowdown was "not because the credit is deteriorating" and that "the consumer continues to be strong."
The 10-Q's own FICO table tells the opposite story: balances of borrowers with FICO under 620 grew about 10% in a single quarter, the worst tier (under 599) grew 12%, and prime/super-prime balances shrank by about 5%.
https://preview.redd.it/kdl5pteqwxzg1.png?width=484&format=png&auto=webp&s=c4052e24ad836a416b5ca2040cb755b1339d8eb1
SoFi Bank's Q1 2026 Uniform Bank Performance Report (a federal banking filing) also shows the credit card portfolio in distress (the chart shows SoFi's ratio, the average ratio in its peer group, and where SoFi's ratio sits statistically in the group):
https://preview.redd.it/u8ogb5jpxxzg1.png?width=1017&format=png&auto=webp&s=29c166dd1726a193337e0bc715d86d705bff5851
* 30-89 day delinquencies up from 1.55% to 1.79%
* 90+ day delinquencies up from 1.74% to 2.08%
* Total non-current credit card loans at 2.50%, now in the 97th percentile of peer banks, up from the 90th percentile the prior quarter
* Across SoFi’s peers (banks with $10 billion to $100 billion in assets), the peer median 30-89 delinquency rate IMPROVED over the same period (1.21% to 1.17%) - so this isn't a macro thing.
* Credit card yield has collapsed from 14.44% (FY 2023) to 8.60% (Q1 2026, 31st percentile of peers) - despite interest rates being higher, which suggests the portfolio is likely bloated with 0% APR balance transfer customers
* Gross spread (yield minus net charge-offs) of 2.57% versus peer median of 6.46% - meaning basic profitability is at about a third of peers
My takeaway from the 10-Q/UBPR:
The Q1 2026 10-Q added a GAAP disclosure that should have been there all along, and the new data confirms historical overvaluation in the loan book - probably $625M+ that still needs to reverse as realized losses over the next several quarters.
Because the fair value data was added without any of the normal public disclosures flagging and explaining it, some kind of larger restatement or correction may be possible in the near term, as SoFi did not disclose any of the new data for past periods (other than Q1 of 2025). Also there is a good chance that future reversals will continue dragging down loan performance.
Separately, the credit card business is in much worse shape than what SoFi is telling investors.
These two bits of info might explain SoFi’s conservative guidance at the last earnings call.