MEDALLION FINANCIAL CORP

Previous wording

The information contained in this section should be read in conjunction with the consolidated financial statements and the accompanying notes thereto for the three and nine months ended September 30, 2025 and the year ended December 31, 2024. This section is intended to provide management’s perspective of our financial condition and results of operations. In addition, this section contains forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors that could cause actual results and conditions to differ materially from those projected in these forward-looking statements are described in the Risk Factors section in our Annual Report on Form 10-K.

Current wording

The information contained in this section should be read in conjunction with the consolidated financial statements and the accompanying notes thereto for the three months ended March 31, 2026 and the year ended December 31, 2025. This section is intended to provide management’s perspective of our financial condition and results of operations. In addition, this section contains forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors that could cause actual results and conditions to differ materially from those projected in these forward-looking statements are described in the Risk Factors section in our Annual Report on Form 10-K.

Previous wording

We are a specialty finance company whose focus and growth has been our consumer finance and commercial lending businesses operated by Medallion Bank, or the Bank, and Medallion Capital, Inc., or Medallion Capital. The Bank is a wholly-owned subsidiary that originates consumer loans for the purchase of recreational vehicles, boats, collector cars, and home improvements, and provides loan origination and other services to financial technology, or fintech, partners. Medallion Capital is a wholly-owned subsidiary that originates commercial loans through its mezzanine financing business. As of September 30, 2025, our consumer loans represented 94% of our gross loan portfolio, inclusive of loans held for sale, and commercial loans represented 5%. Total assets were $2.90 billion and $2.87 billion as of September 30, 2025 and December 31, 2024.

Current wording

We are a specialty finance company whose focus and growth has been our consumer finance and commercial lending businesses operated by Medallion Bank, or the Bank, and Medallion Capital, Inc., or Medallion Capital. The Bank is a wholly-owned subsidiary that originates consumer loans for the purchase of recreational vehicles, boats, collector cars, and home improvements, and provides loan origination and other services to financial technology, or fintech, partners. Medallion Capital is a wholly-owned subsidiary that originates commercial loans through its mezzanine financing business. As of March 31, 2026, our consumer loans represented 95% of our gross loan portfolio and commercial loans represented 5%. Total assets were $2.95 billion and $2.96 billion as of March 31, 2026 and December 31, 2025.

Previous wording

Our loan-related earnings depend primarily on our level of net interest income. Net interest income is the difference between the total yield on our loan portfolio and the average cost of borrowed funds. We fund our operations through a wide variety of interest-bearing sources, including bank certificates of deposit issued to consumers, debentures issued to and guaranteed by the SBA, privately placed notes, trust preferred securities, and preferred stock of the Bank. Net interest income fluctuates with changes in the yield on our loan portfolios and changes in the cost of borrowed funds, as well as changes in the amount of interest-earning assets and interest-bearing liabilities held by us.

Current wording

Our loan-related earnings depend primarily on our level of net interest income. Net interest income is the difference between the total yield on our loan portfolio and the average cost of borrowed funds. We fund our operations through a wide variety of interest-bearing sources, including bank certificates of deposit issued to consumers, privately placed notes, debentures issued to and guaranteed by the SBA, trust preferred securities, and preferred stock of the Bank. Net interest income fluctuates with changes in the yield on our loan portfolios and changes in the cost of borrowed funds, as well as changes in the amount of interest-earning assets and interest-bearing liabilities held by us.

Previous wording

Net interest income is also affected by economic, regulatory, and competitive factors that influence interest rates, loan demand, and the availability of funding to finance our lending activities. We, like other financial institutions, are subject to interest rate risk to the degree that our interest-earning assets reprice, either due to inflation or other factors, on a different basis than our interest-bearing liabilities. We continue to monitor global supply chain disruptions, the impact of tariffs, gas prices, labor shortages, unemployment, and other factors contributing to U.S. inflation, the risk of recession and economic health, as well as other factors which contribute to competition and changes in the demand for our loan products. We have been, and continue to, seek borrowers with strong credit ratings and moderate the pace of our recent growth in the event of a potential economic downturn and in light of the current uncertainties and inflationary environment.

Current wording

Net interest income is also affected by economic, regulatory, and competitive factors that influence interest rates, loan demand, and the availability of funding to finance our lending activities. We, like other financial institutions, are subject to interest rate risk to the degree that our interest-earning assets reprice, either due to inflation or other factors, on a different basis than our interest-bearing liabilities. We continue to monitor global supply chain disruptions, the impact of tariffs, the impact of geopolitical events, including the conflict with Iran, gas prices, labor shortages, unemployment, and other factors contributing to U.S. inflation, the risk of recession and economic health, as well as other factors which contribute to competition and changes in the demand for our loan products. We have been, and continue to, seek borrowers with strong credit ratings and moderate the pace of our recent growth in the event of a potential economic downturn and in light of the current uncertainties and inflationary environment.

Previous wording

The Bank is an industrial bank regulated by the FDIC and the Utah Department of Financial Institutions that originates consumer loans, raises deposits, and conducts other banking activities. The Bank generally provides us with our lowest cost of funds which it raises through bank certificates of deposit. To take advantage of this low cost of funds, historically we referred a portion of our taxi medallion and commercial loans to the Bank, which originated these loans, and have since been serviced by Medallion Servicing Corp., or MSC. However, other than in connection with dispositions of existing taxi medallion assets, the Bank has not originated any new taxi medallion loans since 2014 (and Medallion Financial Corp. has not originated any new taxi medallion loans since 2015) and is working with MSC to service its remaining portfolio, as it winds down. MSC earns referral and servicing fees for these activities.

Current wording

The Bank is an industrial bank regulated by the FDIC and the Utah Department of Financial Institutions that originates consumer loans, raises deposits, and conducts other banking activities. The Bank generally provides us with our lowest cost of funds which it raises through bank certificates of deposit. To take advantage of this low cost of funds, historically we referred a portion of our taxi medallion and commercial loans to the Bank, which originated these loans. However, other than in connection with dispositions of existing taxi medallion assets, the Bank has not originated any new taxi medallion loans since 2014 (and Medallion Financial Corp. has not originated any new taxi medallion loans since 2015) and in the fourth quarter of 2025 sold its remaining taxi medallion portfolio to one of our subsidiaries.

Previous wording

In November 2024, the FASB issued ASU 2024-03, Income Statement, Reporting Comprehensive Income - Expense Disaggregationof Income Statement Expenses. This update requires additional disaggregation of specific types of expenses within the notes to consolidated financial statements on an annual and interim basis. In January 2025, the FASB issued ASU 2025-01 to clarify that all public business entities are required to adopt ASU 2024-03 beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. We are assessing the impact of the update on the accompanying financial statements.

Current wording

In November 2024, the FASB issued ASU 2024-03, Income Statement, Reporting Comprehensive Income - Expense Disaggregationof Income Statement Expenses. This update requires additional disaggregation of specific types of expenses within the notes to consolidated financial statements on an annual and interim basis. In January 2025, the FASB issued ASU 2025-01 to clarify that all public business entities are required to adopt ASU 2024-03 for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. We are assessing the impact of the update on the accompanying financial statements.

Previous wording

For the three months ended September 30, 2025, our total loans yielded 12.39%, as compared to 12.12% for the three months ended September 30, 2024. The 27 basis point increase primarily reflects a higher yield on our loan portfolios, as we continued to charge higher rates on new consumer originations over what we had charged in past years as prevailing market interest rates remained high. Similarly, for the nine months ended September 30, 2025, our total loans yielded 12.23%, as compared to 12.02% for the nine months ended September 30, 2024. We have continued to use the higher interest rate environment as an opportunity to increase the rates on both newly issued recreation and home improvement loans, as well as seek to maintain the credit quality of our new issuances, particularly in our recreation segment, with the weighted average FICO scores, measured at origination, of our outstanding recreation loans being 685 (685 exclusive of loans held for sale) as of September 30, 2025, consistent with outstanding recreation loans as of September 30, 2024. We use weighted average FICO scores as an indicator of portfolio risk.

Current wording

For the three months ended March 31, 2026, our total loans yielded 12.15%, as compared to 12.04% for the three months ended March 31, 2025. The 11 basis point increase reflects, on average, a higher interest rate charged on our loan portfolios, as we have increased the rates charged on new consumer originations over the past years. In recent years, we have used the higher interest rate environment as an opportunity to increase the rates on both newly issued recreation and home improvement loans, which has increased the yield on these portfolios over time, as well to increase the credit quality of our new issuances, particularly in our recreation lending segment, with the average FICO scores, measured at origination, of our total recreation loans outstanding being 686 as of March 31, 2026, compared to 685 (683 exclusive of loans held for sale) as of March 31, 2025. We use weighted average FICO scores as an indicator of portfolio risk. In the first quarter of 2026, we reduced the rate charged on our recreation loans to improve our loss adjusted yield, writing new recreation loans at an average rate of 14.74% compared to 16.06% in the prior year quarter, and bringing our origination rate more in line with the market and our competition.

Previous wording

Our debt, with certificates of deposit being our largest source, funds our growing lending business. Our average interest cost for the three and nine months ended September 30, 2025 of 4.28% and 4.22% increased 23 and 36 basis points from the three and nine months ended September 30, 2024, attributable to the current higher interest rate environment, particularly the higher cost associated with our deposits. To the extent that prevailing market interest rates remain at current levels, we expect our cost of funds to continue to increase as we issue new certificates of deposit to replace maturing certificates of deposit and fund our growth. During the three months ended September 30, 2025, we issued deposits at rates up to 3.98% and 4.03% for three and five year certificates of deposit with the most recent three and five year certificates of deposit issued at rates of 3.73% and 3.78%. As described above, we have taken, and continue to take, steps to pass along a portion of the interest rate increases on newly originated loans, the process for which is slower than the pace of funding cost increases, thereby compressing our net interest margins.

Current wording

Our debt, with certificates of deposit being our largest source, funds our growing lending business. Our average interest cost for the three months ended March 31, 2026 of 4.28% increased 12 basis points from the three months ended March 31, 2025, attributable to the higher interest rate environment experienced over the past several years, particularly the higher cost associated with issuing certificates of deposit. To the extent that prevailing market interest rates remain at current levels, we expect our cost of funds to continue to increase as we issue new certificates of deposit to replace maturing certificates of deposit and fund our growth. During the three months ended March 31, 2026, we issued certificates of deposit for 60 months at rates as high as 3.90% (3.97% inclusive of broker fees). Over the past several years we have taken steps to pass along a portion of the interest rate increases on newly originated loans, the process for which is slower than the pace of funding cost increases, thereby compressing our net interest margins.

Previous wording

The following tables present the change in interest income and expense due to changes in the average balances (volume) and average rates, calculated for the periods indicated.

Current wording

The following table presents the change in interest income and expense due to changes in the average balances (volume) and average rates, calculated for the periods indicated.

Previous wording

During the three and nine months ended September 30, 2025, the increase in interest income over the prior year periods was mainly driven by the increase in the size of the consumer loan portfolios, particularly recreation loans, as well as an increase in overall yield on interest-earning assets as we continued to issue new consumer loans at interest rates greater than the weighted average rates of our current portfolio. The increase in interest expense was driven by an increase in borrowing costs, primarily due to the increases in deposits as older deposits mature and are replaced at current market rates, as well as an overall increase in borrowings.

Current wording

During the three months ended March 31, 2026, the increase in interest income over the prior year period was mainly driven by the increase in the size of the consumer loan portfolios, particularly recreation loans, as well as an increase in overall yield on interest-earning assets as we continued to issue new consumer loans at interest rates greater than the weighted average rates of our current portfolio. The increase in interest expense was driven by an increase in borrowing costs, primarily due to the increase in deposits as older deposits mature and are replaced at current market rates, as well as an overall increase in borrowings.

Previous wording

Our interest expense is driven by the interest rates payable on our bank certificates of deposit, privately placed notes, fixed-rate, long-term debentures issued to the SBA, trust preferred securities, and has historically included credit facilities with banks and other short-term notes payable. The Bank issues brokered time certificates of deposit, which are, on average, our lowest borrowing costs. The Bank is able to bid on these deposits at a variety of maturity options, which allows for more flexible interest rate management strategies. In June 2024, we amended our senior notes previously issued in December 2023, increasing the aggregate principal amount from $12.5 million to $17.5 million, reducing the interest rate to 8.875% from 9.0%, and extending the maturity date from December 2033 to June 2039, and in August 2024, we issued and sold $5.0 million aggregate principal amount of 8.625% senior notes due in August 2039. The net proceeds were used, in large part, to repurchase and settle, in full, $36.0 million aggregate principal amount of our 8.25% senior notes issued in 2019 and which matured in March 2024, as well as for general corporate purposes.

Current wording

Our interest expense is driven by the interest rates payable on our bank certificates of deposit, privately placed notes, fixed-rate, long-term debentures issued to the SBA, trust preferred securities, and has historically included credit facilities with banks and other short-term notes payable. The Bank issues brokered time certificates of deposit, which are, on average, our lowest borrowing costs. The Bank is able to bid on these deposits at a variety of maturity options, which allows for more flexible interest rate management strategies.

Previous wording

Our cost of funds is primarily driven by the rates paid on our various borrowings and changes in the levels of average borrowings outstanding. See Note 5 to the consolidated financial statements for details on the terms of our outstanding debt. Our debentures issued to the SBA typically have terms of ten years.

Current wording

Our cost of funds is primarily driven by the rates paid on our various borrowings and changes in the levels of average borrowings outstanding. See Note 5 to the consolidated financial statements for details on the terms of our outstanding debt.

Previous wording

We measure our borrowing costs as our aggregate interest expense for all of our interest-bearing liabilities divided by the average amount of such liabilities outstanding during the period. The above tables present the average borrowings and related borrowing costs for the three and nine months ended September 30, 2025 and 2024. We expect our borrowing costs to further increase as we take deposits and borrow other funds at the currently higher prevailing rates.

Current wording

We measure our borrowing costs as our aggregate interest expense for all of our interest-bearing liabilities divided by the average amount of such liabilities outstanding during the period. The above table presents the average borrowings and related borrowing costs for the three months ended March 31, 2026 and 2025. We expect our borrowing costs to further increase as we take deposits and borrow other funds, including the private placement completed in April 2026, at the current prevailing rates.

Previous wording

We continue to seek SBA funding through Medallion Capital to the extent it offers attractive rates. SBA financing subjects recipients to limits on the amount of secured bank debt they may incur. We use SBA funding to fund loans that qualify under the Small Business Investment Act of 1985, as amended, or the SBIA, and SBA regulations. In February 2024, we obtained an $18.5 million commitment from the SBA, all of which had been utilized as of September 30, 2025.

Current wording

We have sought SBA funding through Medallion Capital to the extent it offers attractive rates. SBA financing subjects recipients to limits on the amount of secured bank debt they may incur. We have used SBA funding to fund loans that qualify under the SBIA and SBA regulations. As of March 31, 2026, SBA borrowings were approximately 3% of total borrowed funds. In February 2024, we obtained an $18.5 million commitment from the SBA, all of which had been utilized as of March 31, 2026. We do not currently have any commitments available from the SBA.

Previous wording

Loans are reported at the principal amount outstanding, inclusive of deferred loan acquisition costs, which primarily includes deferred fees paid to loan originators, which are amortized to interest income over the life of the loan. For the three and nine months ended September 30, 2025, there was continued growth in the recreation segment, but a decline in the home improvement lending segment, as compared to the prior year quarter. The following tables present the activity of the loan portfolio, inclusive of loans held for sale and loans held for investment.

Current wording

Loans are reported at the principal amount outstanding, inclusive of deferred loan acquisition costs, which primarily includes deferred fees paid to loan originators, which are amortized to interest income over the life of the loan. For the three months ended March 31, 2026, there was continued growth in the recreation lending and home improvement lending segments, as compared to the prior year.

Previous wording

Excludes $51.5 million of capitalized loan origination costs.

Current wording

Excludes $54.3 million of capitalized loan origination costs.

Previous wording

The allowance for credit losses is maintained at a level estimated by management to absorb expected future losses in the portfolios. As of September 30, 2025 and December 31, 2024, the allowance totaled $111.1 million and $97.4 million, which represented 4.47% and 4.12% of total loans held for investment, respectively. The provision for credit losses was $18.6 million for the three months ended September 30, 2025 compared to $20.2 million for the three months ended September 30, 2024 as a result of fewer originations in the current quarter as compared to the prior year quarter. The provision for credit losses was $62.1 million for the nine months ended September 30, 2025 compared to $55.9 million for the nine months ended September 30, 2024 as a result of rising loss rates, fluctuation in delinquencies, and expected losses in our recreation loans, partially offset by a decrease in expected losses in our home improvement loans.

Current wording

The allowance for credit losses is maintained at a level estimated by management to absorb expected future losses in the portfolios. As of March 31, 2026 and December 31, 2025, the allowance totaled $116.7 million and $114.8 million, which represented 4.48% and 4.50% of total loans held for investment. The provision for credit losses was $22.5 million for the three months ended March 31, 2026 compared to $22.0 million for the three months ended March 31, 2025 as a result of growth in our recreation portfolio, loss rates, fluctuation in delinquencies, and expected losses in our recreation loan portfolio and lower recoveries on taxi medallion loans.

Previous wording

During the three and nine months ended September 30, 2025, we recognized provisions of $1.4 million and $7.4 million related to specific commercial loans. Provisions and the correlated allowance for credit losses of commercial loans are assessed on specific indicators, such as, the underlying borrower not performing as expected and consideration of the current economic environment and economic policies which impact, or are likely to impact, the borrower's underlying business operations.

Current wording

During the three months ended March 31, 2026, we recognized provisions of $0.5 million related to specific commercial loans. Provisions and the correlated allowance for credit losses of commercial loans are assessed on specific indicators, such as, the underlying borrower not performing as expected and consideration of the current economic environment and economic policies which impact, or are likely to impact, the borrower's underlying business operations.

Previous wording

The following table presents the activity in the allowance for credit losses for the three and nine months ended September 30, 2025.

Current wording

The following table presents the activity in the allowance for credit losses for the three months ended March 31, 2026.

Previous wording

The following table presents the activity in the allowance for credit losses for the three and nine months ended September 30, 2024.

Current wording

The following table presents the activity in the allowance for credit losses for the three months ended March 31, 2025.

Previous wording

As of September 30, 2025, cumulative net charge-offs of loans and loan collateral in process of foreclosure in the taxi medallion portfolio were $172.6 million, including $107.5 million related to loans secured by New York City taxi medallions, some of which may represent collection opportunities for the Company.

Current wording

As of March 31, 2025 cumulative net charge-offs of loans and loan collateral in process of foreclosure in the taxi medallion portfolio were $161.7 million, including $95.2 million related to loans secured by New York taxi medallions, some of which may represent recovery opportunities for the Company.

Previous wording

The following tables present the gross charge-offs for the three and nine months ended September 30, 2025, by the year of origination:

Current wording

The following table presents the gross charge-offs for the three months ended March 31, 2026, by the year of origination:

Previous wording

The following tables present the gross charge-offs for the three and nine months ended September 30, 2024, by the year of origination:

Current wording

The following table presents the gross charge-offs for the three months ended March 31, 2025, by the year of origination:

Previous wording

The following tables present the allowance for credit losses by type as of September 30, 2025 and December 31, 2024.

Current wording

The following table presents the allowance for credit losses for loans held for investment, by type, as of March 31, 2026.

Previous wording

As of September 30, 2025, total allowance for credit losses as a percent of nonaccrual loans was 297.41%.

Current wording

As of March 31, 2026, total allowance for credit losses as a percentage of nonaccrual loans was 316%.

Previous wording

As of December 31, 2024, total allowance for credit losses as a percent of nonaccrual loans was 291.93%.

Current wording

As of December 31, 2025, total allowance for credit losses as a percentage of nonaccrual loans was 281%.

Previous wording

As of September 30, 2025, taxi medallion loans in the process of foreclosure included 292 taxi medallions in the New York City market, 187 taxi medallions in the Chicago market, 23 taxi medallions in the Newark market, and 31 taxi medallions in various other markets.

Current wording

As of March 31, 2026, taxi medallion loans in the process of foreclosure included 276 taxi medallions in the New York City market, 186 taxi medallions in the Chicago market, 22 taxi medallions in the Newark market, and 31 taxi medallions in various other markets.

Previous wording

Recreation lending is a return-oriented business focused on originating prime and non-prime recreation loans which is a significant source of income for us, accounting for 66% of our interest income for each of the three and nine months ended September 30, 2025 and 67% for both the three and nine months ended September 30, 2024.

Current wording

Recreation lending is a return-oriented business focused on originating prime and non-prime recreation loans which is a significant source of income for us, accounting for 68% of our interest income for the three months ended March 31, 2026 and 67% for the three months ended March 31, 2025.

Previous wording

We maintain relationships with approximately 3,300 dealers and financial service providers, or FSPs, not all of which are active at any one time. FSPs are entities that provide finance and insurance, or F&I, services to small dealers that do not have the desire or ability to provide F&I services themselves. The ability of FSPs to aggregate the financing and relationship management for many small dealers makes them valuable to us. We receive approximately half of our loan volume from dealers and the other half from FSPs. Our top ten dealer and FSP relationships were responsible for 39% of recreation lending’s new loan originations for the nine months ended September 30, 2025 consistent with the nine months ended September 30, 2024. The percentage of new loan originations by the top ten dealer and FSP relationships is a measure of concentration, which management uses to determine whether to undertake diversification efforts, and which provides investors with information about origination concentration.

Current wording

We maintain relationships with approximately 3,400 dealers and financial service providers, or FSPs, not all of which are active at any one time. FSPs are entities that provide finance and insurance, or F&I, services to small dealers that do not have the desire or ability to provide F&I services themselves. The ability of FSPs to aggregate the financing and relationship management for many small dealers makes them valuable. We receive approximately half of our loan volume from dealers and the other half from FSPs. Our top ten relationships were responsible for 38% and 39% of recreation lending’s new loan originations for the three months ended March 31, 2026 and 2025. The percentage of new loan originations by the top ten dealers and/or FSP relationships is a measure of concentration, which management uses to determine whether to undertake diversification efforts, and which provides investors with information about origination concentration.

Previous wording

The recreation loan portfolio consists of tens of thousands of geographically distributed loans with an average loan size of approximately $21,000 as of September 30, 2025. The loans are fixed rate with an average term at origination of approximately 15 years. The weighted average maturity of our loans outstanding as of September 30, 2025 was approximately 11 years.

Current wording

The recreation loan portfolio consists of thousands of geographically distributed loans with an average loan size of approximately $22,600 as of March 31, 2026. The loans are fixed rate with an average term at origination of approximately 15 years. The weighted average maturity of our loans outstanding as of March 31, 2026 is approximately 11 years.

Previous wording

The loans are secured primarily by RVs, boats, collector cars, and trailers, with RV loans making up 54% of the portfolio, boat loans making up 21%, and collector car loans making up 12% of the portfolio as of September 30, 2025, compared to 55%, 20%, and 11% as of September 30, 2024. Recreation loans are made to borrowers residing nationwide, with the highest concentrations as of September 30, 2025 in Texas and Florida at 16% and 13% of loans outstanding, compared to 16% and 10% at September 30, 2024, and with no other states at or above 10%. As of September 30, 2025 and September 30, 2024, the weighted average FICO scores, measured at origination, of our recreation loans outstanding were 685. The weighted average FICO scores at the time of origination for the loans funded in the nine months ended September 30, 2025 and 2024 were 688 and 686.

Current wording

The loans are secured primarily by RVs, boats, collector cars, and trailers, with RV loans making up 54% of the portfolio, boat loans making up 21%, collector car loans making up 13%, and trailers making up 11% of the portfolio as of March 31, 2026, compared to 55%, 19%, 11%, and 9% as of March 31, 2025. Recreation loans are made to borrowers residing nationwide, with the highest concentrations as of March 31, 2026 in Texas and Florida at 17% and 10% of loans outstanding, compared to 16% and 10% at March 31, 2025, and with no other states at or above 10%. As of March 31, 2026 and March 31, 2025, the weighted average FICO scores, measured at origination, of our recreation loans outstanding were 686. The weighted average FICO scores at the time of origination for the loans funded in the three months ended March 31, 2026 and 2025 were 686 and 683.

Previous wording

As of September 30, 2025, the recreation loan portfolio was $1.6 billion, with the average interest rate increasing 25 basis points to 15.17% from a year ago. Additionally, the allowance for credit losses increased 12% from September 30, 2024, reflecting rising loss rates and various economic factors.

Current wording

As of March 31, 2026, the recreation loan portfolio was $1.7 billion, with the average interest rate increasing 10 basis points to 15.11% from a year ago. Additionally, the allowance for credit losses increased 21% from March 31, 2025, reflecting rising loss rates, various economic factors, and overall growth in the portfolio.

Previous wording

During the three and nine months ended September 30, 2025, we originated $141.7 million and $371.3 million in recreation loans, compared to $139.1 million and $454.4 million for the three and nine months ended September 30, 2024. The lower origination volumes during the nine month period reflect our focus on originating loans that we believe will perform better during economic downturns, as well as our efforts to maintain origination volumes that align with our capital levels. The following table presents quarterly originations for 2025, 2024, and 2023.

Current wording

During the three months ended March 31, 2026, we originated $142.6 million in recreation loans, compared to $86.8 million for the three months ended March 31, 2025. Increased origination volumes reflect strong consumer demand and investment in technology and employees while maintaining our focus on originating loans that we believe will perform better during economic downturns and align with our capital levels. The following table presents quarterly originations for 2026, 2025, and 2024.

Previous wording

As of September 30, 2025, 36% of the recreation loan portfolio were non-prime receivables with obligors who do not qualify for conventional consumer finance products as a result of, among other things, adverse credit history. The following table presents non-prime originations in comparison to total originations for the nine months ended September 30, 2025 and years ended December 31, 2024 and 2023.

Current wording

As of March 31, 2026, 36% of the recreation loan portfolio were non-prime receivables with obligors who do not qualify for conventional consumer finance products as a result of, among other things, adverse credit history. The following table presents non-prime originations in comparison to total originations for the three months ended March 31, 2026 and years ended December 31, 2025 and 2024.

Previous wording

The charge-off ratio in the recreation lending segment was 3.23% and 3.58% for the three and nine months ended September 30, 2025 when including loans held for sale.

Current wording

The charge-off ratio in the recreation lending segment was 4.67% for the three months ended March 31, 2025 when excluding loans held for sale.

Previous wording

The home improvement lending segment works with contractors and FSPs to finance home improvements and is concentrated in swimming pools, roofs, and windows at 31%, 29%, and 11% of total home improvement loans outstanding as of September 30, 2025, as compared to 38%, 24%, and 13% as of September 30, 2024, with no other collateral types at or above 10%. Home improvement loans are made to borrowers residing nationwide, with the highest concentrations in Florida and Texas representing 13% and 12% of loans outstanding as of September 30, 2025, with each state representing 11% as of September 30, 2024 and no other states at or above 10%. As of September 30, 2025 and 2024, the weighted average FICO scores, measured at origination, of our home improvement loans outstanding, measured at origination, were 767 and 766. The weighted average FICO scores at the time of origination for the loans funded in the nine months ended September 30, 2025 and 2024 were 779 and 781.

Current wording

The home improvement lending segment works with contractors and FSPs to finance home improvements and is concentrated in swimming pools, roofs, and windows at 35%, 27%, and 11% of total home improvement loans outstanding as of March 31, 2026, as compared to 29%, 35%, and 13% as of March 31, 2025, with no other collateral types at or above 10%. Home improvement loans are made to borrowers residing nationwide, with the highest concentrations in Florida and Texas representing 14% and 13% of loans outstanding as of March 31, 2026, with each such state representing 13% and 11% as of March 31, 2025 and no other states at or above 10%. As of March 31, 2026 and 2025, the weighted average FICO scores, measured at origination, of our home improvement loans outstanding, measured at origination, were 768 and 767. The weighted average FICO scores at the time of origination for the loans funded in the three months ended March 31, 2026 and 2025 were 781 and 783.

Previous wording

A large proportion of our home improvement-financed sales are facilitated by contractor salespeople with limited financing backgrounds rather than by contractor employees who provide F&I services. The result is contractor demand for financing services that facilitate an in-home transaction (e.g., digital tools, including mobile applications for phone or tablet, support for E-SIGN compliant electronic signatures, and extended operating hours), and additional resources for the salesperson throughout the financing process. We currently maintain relationships with approximately 700 contractors and FSPs. Our top ten contractors and FSP relationships were responsible for 62% of home improvement lending’s new loan originations for the nine months ended September 30, 2025. The percentage of new loan originations by the top ten contractor and FSP relationships is a measure of concentration, which management uses to determine whether to undertake diversification efforts, and which provides investors with information about origination concentration.

Current wording

A large proportion of our home improvement-financed sales are facilitated by contractor salespeople with limited financing backgrounds rather than by contractor employees who provide F&I services. The result is contractor demand for financing services that facilitate an in-home transaction (e.g., digital tools, including mobile applications for phone or tablet, support for E-SIGN compliant electronic signatures, and extended operating hours), and additional resources for the salesperson throughout the financing process. We currently maintain relationships with approximately 700 contractors and/or FSPs. Our top ten contractors and FSP relationships were responsible for 72% of home improvement lending’s new loan originations for the three months ended March 31, 2026. The percentage of new loan originations by the top ten contractor and/or FSP relationships is a measure of concentration, which management uses to determine whether to undertake diversification efforts, and which provides investors with information about origination concentration.

Previous wording

The home improvement loan portfolio consists of tens of thousands of geographically distributed loans with an average loan size of approximately $22,000 as of September 30, 2025. The loans are fixed rate with an average term at origination, for loans originated in the current year of approximately 15 years. The weighted average maturity of our loans outstanding as of September 30, 2025 was approximately 13 years.

Current wording

The home improvement loan portfolio consists of tens of thousands of geographically distributed loans with an average loan size of approximately $22,900 as of March 31, 2026. The loans are fixed rate with an average term at origination, for loans originated in the current year of approximately 16 years. The weighted average maturity of our loans outstanding as of March 31, 2026 was approximately 13 years.

Previous wording

As of September 30, 2025, the home improvement portfolio totaled $804.0 million, with allowance for credit losses increasing 4% from a year ago reflecting higher delinquency and potential losses. The average interest rate charged on our loans increased 11 basis points to 9.87% at September 30, 2025 from a year ago.

Current wording

As of March 31, 2026, the home improvement portfolio totaled $814.9 million, with an allowance for credit losses of $20.3 million. The average interest rate charged on our loans decreased 1 basis point to 9.82% at March 31, 2026 from a year ago.

Previous wording

During the three and nine months ended September 30, 2025, we originated $59.7 million and $162.8 million of home improvement loans, compared to $96.5 million and $216.1 million for the three and nine months ended September 30, 2024. The lower origination volumes reflect our focus on originating loans that we believe will perform better during economic downturns, as well as our efforts to maintain origination volumes that align with our capital levels. The following table presents quarterly originations for 2025, 2024, and 2023.

Current wording

During the three months ended March 31, 2026, we originated $64.4 million of home improvement loans, compared to $48.8 million for the three months ended March 31, 2025. The higher origination volumes reflect strong consumer demand and investment in technology and employees while maintaining our focus on originating loans that we believe will perform better during economic downturns, as well as our efforts to maintain origination volumes that align with our capital levels. The following table presents quarterly originations for 2026, 2025, and 2024.