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 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.

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 nine months ended September 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 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.

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 September 30, 2026, consumer loans represented 95% of our gross loan portfolio and commercial loans represented 4%. Total assets were $3.36 billion and $2.96 billion as of September 30, 2026 and December 31, 2025.

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 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.

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 six active partnerships, including one partnership added in September 2026, and continues to evaluate and launch additional partnership programs with fintech companies.

Previous wording

The following 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 six months ended June 30, 2026 and 2025.

Current wording

The following 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 nine months ended September 30, 2026 and 2025.

Previous 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.

Current wording

For the three months ended September 30, 2026, our total loans yielded 11.87%, as compared to 12.39% for the three months ended September 30, 2025. For the nine months ended September 30, 2026, our total loans yielded 12.09%, as compared to 12.23% for the nine months ended September 30, 2025. The decrease reflects, on average, a somewhat lower interest rate charged on loans originated in the current year as we have lowered rates in an effort to be more competitive with market rates and attract borrowers who are more likely to perform better through varying economic cycles as well as the greater proportion of home improvement loans in our portfolio. The weighted average FICO score, measured at origination, of our recreation loans outstanding was 686 as of September 30, 2026, compared to 685 as of September 30, 2025. We use weighted average FICO scores as an indicator of portfolio risk. At the beginning of 2026, we reduced the rate charged on our recreation loans to improve our loss adjusted yield. During the three months ended September 30, 2026, we wrote new recreation loans at an average rate of 14.74% compared to 15.77% in the prior year period, as we reduced our origination rate to be more in line with our competition. We also reduced the rate charged on certain home improvement loans during the nine months ended September 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 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.

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 nine months ended September 30, 2026 was 4.45% and 4.35%, up 17 and 13 basis points, from the three and nine months ended September 30, 2025, due 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 September 30, 2026, we issued certificates of deposit for 36 months at rates as high as 4.43% and for 60 months at rates as high as 4.38%. Additionally, during the quarter, we expanded our retail certificates and savings deposits to $218.0 million as we seek alternative borrowings that provide a lower cost of funds from our traditional brokered deposits.

Previous 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.

Current wording

During the three and nine months ended September 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, both recreation loans and home improvement loans, despite a decrease in overall yield on interest-earning assets as we have reduced our rates in an effort to seek better performing credit and borrowers. 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.

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, non-brokered time deposits and high yield savings accounts, 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

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.

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 tables present the average borrowings and related borrowing costs for the three and nine months ended September 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 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.

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 September 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 September 30, 2026. We currently are not able to obtain new commitments from the SBA.

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 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.

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. In subsequent discussions with the SBA, the SBA has indicated that Medallion Capital must supplement its submission for purposes of obtaining new and future commitments for debenture financing by identifying and submitting one additional qualified candidate for consideration. Medallion Capital is currently in the process of identifying such an additional qualified candidate for submission.

Previous 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.

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

Current wording

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

Previous 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.

Current wording

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

Previous wording

Excludes $59.7 million of capitalized loan origination costs.

Current wording

Excludes $65.7 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 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.

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 September 30, 2026 and December 31, 2025, the allowance totaled $133.9 million and $114.8 million, which represented 4.58% and 4.50% of total loans held for investment. The provision for credit losses was $30.8 million and $75.5 million for the three and nine months ended September 30, 2026 compared to $18.6 million and $62.1 million for the three and nine months ended September 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 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.

Current wording

During the three and nine months ended September 30, 2026, we recognized provisions of $1.0 million and $2.2 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 six months ended June 30, 2026.

Current wording

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

Previous 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.

Current wording

As of September 30, 2026, cumulative net charge-offs of loans and loan collateral in process of foreclosure in the taxi medallion portfolio were $161.7 million, including $98.1 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 and six months ended June 30, 2025.

Current wording

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

Previous 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.

Current 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 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 six months ended June 30, 2026, by the year of origination:

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

As of September 30, 2026, total allowance for credit losses as a percentage of nonaccrual loans was 279%.

Previous 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.

Current wording

As of September 30, 2026, taxi medallion loans in the process of foreclosure included 231 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 both the three and six months ended June 30, 2026 and 66% for both the three and six months ended June 30, 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 69% and 68% of our interest income for the three and nine months ended September 30, 2026 and 66% for both the three and nine months ended September 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 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.

Current wording

We maintain relationships with approximately 3,500 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 nine months ended September 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 $22,300 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.

Current wording

The recreation loan portfolio consists of thousands of geographically distributed loans with an average loan size of approximately $23,000 as of September 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 September 30, 2026 is approximately 12 years.

Previous 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.

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 September 30, 2026, compared to 54%, 21%, and 12% as of September 30, 2025. Recreation loans are made to borrowers residing nationwide, with the highest concentrations as of September 30, 2026 in Texas and Florida at 17% and 9% of loans outstanding, compared to 16% and 13% at September 30, 2025, and with no other states at or above 10%. As of September 30, 2026 and September 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 nine months ended September 30, 2026 and 2025 were 688 in both periods.

Previous 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.

Current wording

As of September 30, 2026, the recreation loan portfolio was $1.9 billion, with the average interest rate decreasing 16 basis points to 15.01% from a year ago. Additionally, the allowance for credit losses increased 24% from September 30, 2025, primarily reflecting overall growth in the portfolio.

Previous 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.

Current wording

During the three and nine months ended September 30, 2026, we originated $198.2 million and $569.2 million in recreation loans, compared to $141.7 million and $371.3 million for the three and nine months ended September 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 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.

Current wording

As of September 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 nine months ended September 30, 2026 and years ended December 31, 2025 and 2024.

Previous wording

Allowance for credit loss as a percent of gross loans held for investment and excludes loans held for sale.

Current wording

Allowance for credit loss as a percent of loans held for investment and excludes loans held for sale.

Previous 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.

Current wording

The charge-off ratio in the recreation lending segment was 3.36% and 3.74% for the three and nine months ended September 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 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.

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 46%, 23%, and 9% of total home improvement loans outstanding as of September 30, 2026, as compared to 31%, 29%, and 11% as of September 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 15% of loans outstanding as of September 30, 2026, with each such state representing 13% and 12% as of September 30, 2025 and no other states at or above 10%. As of September 30, 2026 and 2025, the weighted average FICO scores, measured at origination, of our home improvement loans outstanding, were 768 and 767. The weighted average FICO scores at the time of origination for the loans funded in the nine months ended September 30, 2026 and 2025 were 773 and 779.

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 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.

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 82% of home improvement lending’s new loan originations for the nine months ended September 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 $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.

Current wording

The home improvement loan portfolio consists of tens of thousands of geographically distributed loans with an average loan size of approximately $26,500 as of September 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 September 30, 2026 was approximately 14 years.

Previous 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.

Current wording

As of September 30, 2026, the home improvement portfolio totaled $947.5 million, with an allowance for credit losses of $24.5 million. The average interest rate charged on our loans decreased 35 basis points to 9.52% at September 30, 2026 from a year ago due to increased loan originations for swimming pool loans during the nine months ended September 30, 2026.

Previous 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.

Current wording

During the three and nine months ended September 30, 2026, we originated $146.3 million and $339.3 million of home improvement loans, compared to $59.7 million and $162.8 million for the three and nine months ended September 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.

Previous wording

As of June 30, 2026, less than 1% of the home improvement 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.

Current wording

As of September 30, 2026, less than 1% of the home improvement 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, 2026 and years ended December 31, 2025 and 2024.