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 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.

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 and six months ended June 30, 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 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.

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 June 30, 2026, consumer loans represented 95% of our gross loan portfolio and commercial loans represented 5%. Total assets were $3.19 billion and $2.96 billion as of June 30, 2026 and December 31, 2025.

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, 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.

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 seeking, and continue to seek, borrowers with strong credit ratings and the ability to repay their obligations 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. 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.

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 and savings deposits. 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 another of our subsidiaries.

Previous wording

In 2019, the Bank launched a strategic partnership program to provide lending and other services to fintech companies. The Bank entered into an initial partnership in 2020 and began issuing its first loans. The Bank continues to evaluate and launch additional partnership programs with fintech companies.

Current wording

In 2019, the Bank launched a strategic partnership program to provide lending and other services to fintech companies. The Bank entered into an initial partnership in 2020 and began issuing its first loans. The Bank has five active partnerships, including one partnership launched in the second quarter of 2026, and continues to evaluate and launch additional partnership programs with fintech companies.

Previous wording

Thefollowing table presents our consolidated average balance sheets, interest income and expense, and the average interest earning/bearing assets and liabilities, and which reflect the average yield on assets and average costs on liabilities as of and for the three months ended March 31, 2026 and 2025.

Current wording

Thefollowing table presents our consolidated average balance sheets, interest income and expense, and the average interest earning/bearing assets and liabilities, and reflects the average yield on assets and average costs on liabilities as of and for the three months ended June 30, 2026 and 2025.

Previous 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.

Current wording

For the three months ended June 30, 2026, our total loans yielded 12.28%, as compared to 12.27% for the three months ended June 30, 2025. For the six months ended June 30, 2026, our total loans yielded 12.21%, as compared to 12.16% for the six months ended June 30, 2025. The increase reflects, on average, a slightly higher interest rate charged on our loan portfolios, as rates charged on new consumer originations starting in 2023 exceeded rates charged on consumer loans in the years immediately prior. The weighted average FICO score, measured at origination, of our consumer loans outstanding was 714 as of June 30, 2026, compared to 715 as of June 30, 2025. We use weighted average FICO scores as an indicator of portfolio risk. In the first half of 2026, we reduced the rate charged on our recreation loans to improve our loss adjusted yield. During the three months ended June 30, 2026, we wrote new recreation loans at an average rate of 14.86% compared to 15.96% in the prior year period, bringing our origination rate more in line with our competition. We also reduced the rate charged on certain home improvement loans during the three months ended June 30, 2026, seeking to be more competitive in specific segments of the market and generate an improved risk-adjusted return.

Previous 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.

Current wording

Our debt, with certificates of deposit being our largest source, funds our growing lending business. Our average interest cost for the three and six months ended June 30, 2026 of 4.32% and 4.29% and increased 12 and 10 basis points from the three and six months ended June 30, 2025, attributable to the higher interest rate environment experienced over the past several years, particularly the higher cost associated with issuing brokered 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 June 30, 2026, we issued certificates of deposit for 36 months at rates as high as 4.20% and for 60 months at rates as high as 4.25%. Over the past several years we have taken steps to pass along a portion of the interest rate increases on newly originated loans, thereby compressing our net interest margins.

Previous 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.

Current 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.

Previous 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.

Current wording

During the three and six months ended June 30, 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

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.

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 and six months ended June 30, 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 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.

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 June 30, 2026, SBA borrowings were less than 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 June 30, 2026. We do not currently have any commitments available from the SBA and are awaiting confirmation from the SBA that it deems our management team qualified for purposes of obtaining new and future commitments for debenture financing.

Previous wording

In 2025, the SBA informed Medallion Capital that it needs to have Medallion Capital’s management team reviewed through the SBA’s licensing division; until successful completion of that review, Medallion Capital is not deemed by the SBA to have a qualified management team. Medallion Capital submitted a management team for review through the SBA’s licensing division on March 31, 2026 and on the same day, the SBA notified Medallion Capital that it has declared an event of default with respect to outstanding debentures and directed Medallion Capital, within 120 days, to identify and submit at least one qualified candidate for consideration as a full-time principal and investment committee member of Medallion Capital. The SBA’s notice and event of default do not trigger any cross-default clauses in any of the parent's debt arrangements. In subsequent discussions with the SBA, the SBA has indicated that Medallion Capital must supplement its submission by identifying and submitting at least one qualified candidate for consideration. Medallion Capital is currently in the process of identifying and submitting at least one qualified candidate in response to the above notice and discussions.

Current wording

In 2025, the SBA informed Medallion Capital that it needs to have Medallion Capital’s management team reviewed through the SBA’s licensing division; until successful completion of that review, Medallion Capital was not deemed by the SBA to have a qualified management team. Medallion Capital submitted a management team for review through the SBA’s licensing division on March 31, 2026 and on the same day, the SBA notified Medallion Capital that it has declared an event of default with respect to outstanding debentures and directed Medallion Capital, within 120 days, to identify and submit at least one qualified candidate for consideration as a full-time principal and investment committee member of Medallion Capital. In April 2026, Medallion Capital submitted two candidates to the SBA for its consideration. On June 3, 2026, the SBA notified Medallion Capital that Medallion Capital’s submission of two candidates cures the previously disclosed event of default, subject to the satisfactory completion of the candidates’ background checks. On June 11, 2026, the SBA notified Medallion Capital that there was a satisfactory completion of such background checks, which cured the previously disclosed event of default with respect to its outstanding SBA debentures. The SBA’s notice and event of default did not trigger any cross-default clauses in any of our debt arrangements. Medallion Capital is awaiting confirmation from the SBA that it deems the management team qualified for purposes of obtaining new and future commitments for debenture financing.

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 months ended March 31, 2026, there was continued growth in the recreation lending and home improvement lending segments, as compared to the prior year.

Current wording

Loans are reported at the principal amount outstanding, inclusive of deferred loan acquisition costs, primarily consisting of deferred fees paid to loan originators, which are amortized to interest income over the life of the loan. For the three and six months ended June 30, 2026, there was significant growth in the recreation lending and home improvement lending segments, as compared to the prior year.

Previous wording

The following table presents the activity of gross loans, including loans held for sale for the three months ended March 31, 2026.

Current wording

The following tables present the activity of the gross loans and loans held for sale for the three and six months ended June 30, 2026.

Previous wording

The following table presents the activity of gross loans, including loans held for sale for the three months ended March 31, 2025.

Current wording

The following tables present the activity of the gross loans and loans held for sale for the three and six months ended June 30, 2025.

Previous wording

Excludes $54.3 million of capitalized loan origination costs.

Current wording

Excludes $59.7 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 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.

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 June 30, 2026 and December 31, 2025, the allowance totaled $122.7 million and $114.8 million, which represented 4.42% and 4.50% of total loans held for investment. The provision for credit losses was $22.3 million and $44.7 million for the three and six months ended June 30, 2026 compared to $21.6 million and $43.6 million for the three and six months ended June 30, 2025 as a result of growth in our consumer loan portfolios, loan losses, fluctuation in delinquencies, and adjustments to forecasts in our consumer loan portfolios along with lower recoveries on taxi medallion loans.

Previous 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.

Current wording

During the three and six months ended June 30, 2026, we recognized provisions of $0.8 million and $1.3 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 months ended March 31, 2026.

Current wording

The following table presents the activity in the allowance for credit losses for the three and six months ended June 30, 2026.

Previous wording

As of March 31, 2026, cumulative net charge-offs of loans and loan collateral in process of foreclosure in the taxi medallion portfolio were $170.1 million, including $105.5 million related to loans secured by New York taxi medallions, some of which may represent collection opportunities for us.

Current wording

As of June 30, 2026, cumulative net charge-offs of loans and loan collateral in process of foreclosure in the taxi medallion portfolio were $168.1 million, including $103.8 million related to loans secured by New York taxi medallions, some of which may represent collection opportunities for us.

Previous wording

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

Current wording

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

Previous 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.

Current wording

As of June 30, 2025 cumulative net charge-offs of loans and loan collateral in process of foreclosure in the taxi medallion portfolio were $161.5 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 table presents the gross charge-offs for the three months ended March 31, 2026, by the year of origination:

Current wording

The following tables present the gross charge-offs for the three and six months ended June 30, 2026, by the year of origination:

Previous wording

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

Current wording

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

Previous wording

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

Current wording

As of June 30, 2026, total allowance for credit losses as a percentage of nonaccrual loans was 284%.

Previous 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.

Current wording

As of June 30, 2026, taxi medallion loans in the process of foreclosure included 246 taxi medallions in the New York City market, 186 taxi medallions in the Chicago market, 19 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 68% of our interest income for the three months ended March 31, 2026 and 67% for the three months ended March 31, 2025.

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 both the three and six months ended June 30, 2026 and 66% for both the three and six months ended June 30, 2025.

Previous 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.

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 37% and 40% of recreation lending’s new loan originations for the six months ended June 30, 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 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.

Current wording

The recreation loan portfolio consists of thousands of geographically distributed loans with an average loan size of approximately $22,300 as of June 30, 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 June 30, 2026 is approximately 12 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%, 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.

Current wording

The loans are secured primarily by RVs, boats, and collector cars, with RV loans making up 53% of the portfolio, boat loans making up 22%, and collector car loans making up 13% of the portfolio as of June 30, 2026, compared to 54%, 21%, and 12% as of June 30, 2025. Recreation loans are made to borrowers residing nationwide, with the highest concentrations as of June 30, 2026 in Texas and Florida at 17% and 9% of loans outstanding, compared to 16% and 10% at June 30, 2025, and with no other states at or above 10%. As of June 30, 2026 and June 30, 2025, the weighted average FICO scores, measured at origination, of our recreation loans outstanding were 686 and 685. The weighted average FICO scores at the time of origination for the loans funded in the six months ended June 30, 2026 and 2025 were 687 in both periods.

Previous 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.

Current wording

As of June 30, 2026, the recreation loan portfolio was $1.8 billion, with the average interest rate decreasing 6 basis points to 15.06% from a year ago. Additionally, the allowance for credit losses increased 21% from June 30, 2025, reflecting overall growth in the portfolio as well as rising loss rates and adjustments to economic factor forecasts.

Previous 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.

Current wording

During the three and six months ended June 30, 2026, we originated $228.5 million and $371.0 million in recreation loans, compared to $142.8 million and $229.6 million for the three and six months ended June 30, 2025. Increased origination volumes reflect strong consumer demand and increased marketing efforts, along with pricing changes intended to generate stronger credit, which we believe will perform better during all phases of the economic cycle. The following table presents quarterly originations for 2026, 2025, and 2024.

Previous 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.

Current wording

As of June 30, 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 six months ended June 30, 2026 and years ended December 31, 2025 and 2024.

Previous 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.

Current wording

The charge-off ratio in the recreation lending segment was 3.25% and 3.94% for the three and six months ended June 30, 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 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.

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 40%, 25%, and 10% of total home improvement loans outstanding as of June 30, 2026, as compared to 30%, 30%, and 11% as of June 30, 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 15% and 14% of loans outstanding as of June 30, 2026, with each such state representing 13% and 12% as of June 30, 2025 and no other states at or above 10%. As of June 30, 2026 and 2025, the weighted average FICO scores, measured at origination, of our home improvement loans outstanding, measured at origination, were 768 and 769. The weighted average FICO scores at the time of origination for the loans funded in the six months ended June 30, 2026 and 2025 were 775 and 781.

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/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.

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 800 contractors and/or FSPs. Our top ten contractors and FSP relationships were responsible for 79% of home improvement lending’s new loan originations for the six months ended June 30, 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 $22,900 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.

Current wording

The home improvement loan portfolio consists of tens of thousands of geographically distributed loans with an average loan size of approximately $24,500 as of June 30, 2026. The loans are fixed rate with an average term at origination, for loans originated in the current year of approximately 17 years. The weighted average maturity of our loans outstanding as of June 30, 2026 was approximately 13 years.

Previous 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.

Current wording

As of June 30, 2026, the home improvement portfolio totaled $885.6 million, with an allowance for credit losses of $21.5 million. The average interest rate charged on our loans decreased 18 basis points to 9.69% at June 30, 2026 from a year ago due to increased loan originations for swimming pool loans during the six months ended June 30, 2026.

Previous 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.

Current wording

During the three and six months ended June 30, 2026, we originated $128.6 million and $193.0 million of home improvement loans, compared to $54.3 million and $103.0 million for the three and six months ended June 30, 2025. The higher origination volumes reflect strong consumer demand and increased price competitiveness to attract swimming pool loan volume as we seek to originate loans that we believe will perform better during all phases of the economic cycle. The following table presents quarterly originations for 2026, 2025, and 2024.