Core Insights - Americans' credit card balances are projected to increase by the smallest annual amount since 2013, with a forecasted growth of 2.3% in 2026, reaching $1.18 trillion [1] - The growth in credit card balances has cooled significantly from the spikes of 18.5% in 2022 and 12.6% in 2023, indicating a shift in consumer spending behavior [1] - Lenders have become more cautious in extending credit access following a surge in post-pandemic spending, leading to a stabilization of delinquencies [2][4] Consumer Behavior - Despite rising prices and a challenging economic outlook, consumers are showing resilience, with household balance sheets appearing "broadly solid" [6] - The K-shaped economy is evident, where higher-income individuals are thriving while those with lower incomes and credit scores are struggling, resulting in a shrinking middle class [5] Delinquency Trends - Delinquencies for auto loans are expected to grow slightly for the fifth consecutive year in 2026, but at a slower rate compared to previous years [5] - Personal loan delinquencies may also see a slight increase next year, but not as dramatically as the surge observed in 2022 [5]

Market Performance - Market experienced a 5% pullback but has resettled [3] - Market is within 30 points of 6,900 [3] - VIX has a 15 handle [4] Sector Rotation - Benign rotational action occurred, with semis and Alphabet cooling off, while Meta stepped in [4] - Retail stocks are moving, indicating a reflation trade [5] - Banks are leading, and consumer lending companies are making new highs in share prices [5] Investment Themes - Market is positioning for a cyclical reacceleration [5] Business Activities - Brad Jacobs, author of "How to Make a Few More Billion Dollar," celebrated his book launch [1] - Brad Jacobs has done more than 500 acquisitions [2] - Mckenley Acquisition Corp did the honors [3]

Core Insights - Hardship loan activity is an early indicator of consumer financial stress, driven by increased borrowing from those with weaker credit profiles to cover unexpected expenses [2][4] - The lending landscape is sensitive to fluctuations in consumer demand, with many stakeholders adjusting risk-management strategies to ensure asset quality [3][5] Industry Overview - The demand for hardship loans is rising as households face budget pressures and restricted access to traditional credit, indicating a shift in the outlook for lenders like OneMain Holdings and Enova International [11][24] - The tightening of traditional credit channels has led to increased applications for hardship loans, as borrowers seek alternative financing options [4][7] Company Performance: OneMain Holdings - OneMain Holdings reported third-quarter revenue of $1.6 billion, a 9% increase, driven by higher portfolio yield, with adjusted EPS rising by 51% to $1.90 [12] - The total managed receivables base increased by 6% year-over-year to $25.9 billion, supported by $3.9 billion in new consumer-loan originations [13] - The net charge-off ratio for consumer loans fell to 6.67%, indicating improved credit performance and operational efficiency [13] Company Performance: Enova International - Enova International's third-quarter revenue rose by 16% year-over-year to $803 million, with adjusted EPS increasing by 37% to $3.36 [15] - Total originations reached $2.0 billion, reflecting consistent demand, while the receivables base grew by 20% year-over-year to $4.5 billion [16] - Enova's valuation metrics indicate a trailing Price-to-Earnings multiple around 12x, suggesting a focused approach on risk-adjusted yield [17] Market Outlook - The demand for hardship loans signals rising consumer stress, with OneMain Holdings and Enova International positioned to respond to borrower behavior and liquidity needs [24] - The addressable market for non-prime lenders remains unsaturated, providing opportunities for growth despite current challenges [25][23]

X Financial Digital Lending Marketplace Disclaimer | | Certain statements in this presentation, and other statements that the Company may m | | --- | --- | | | forward-lookingstatements within the meaning of Section 27A of the Securities Act and | | | 21E of the Securities Exchange Act of 1934, as amended. These statements reflect the | | | intent, beliefs or current expectations about the future. These statements can be recogn | | s or | use of words such as "expects," "plans," "will," "estimates," "projec ...

Core Insights - Figure, a blockchain-based consumer lending platform, has gained attention following billionaire investor Stanley Druckenmiller's significant investment in the company [1][2][3] Company Overview - Figure operates a marketplace for tokenized consumer loan origination, utilizing blockchain technology to enhance the efficiency of loan packaging, verification, and settlement compared to traditional lenders [1] - The company went public in September 2025, positioning itself as the first large-scale consumer lending platform built on blockchain infrastructure [2][4] Investment Highlights - Stanley Druckenmiller's Duquesne Family Office acquired a stake worth $76.9 million in Figure, marking one of the largest early institutional investments in a blockchain-native consumer lending company [2][3] - Figure's IPO raised $663 million through the issuance of 23.5 million Class A shares and an additional 8 million shares sold by existing holders [7] Financial Performance - In its first quarterly results as a public company, Figure reported: - Revenue of $156.4 million, representing a 55% year-over-year increase, surpassing Wall Street's estimate of $119.5 million [8] - Adjusted EBITDA of $86.4 million, yielding a 55.4% margin [8] - Net income growth of 227% year-over-year [8] - A significant increase in exchange revenue, with ecosystem and technology fees rising nearly fivefold to $35.7 million [8] - A 70% growth in consumer loan marketplace volume, reaching $2.47 billion in Q3 [8]

Market Overview - The S&P BSE Sensex rose 0.4% to close at 83,871.32, gaining 335.97 points, while the NSE Nifty 50 advanced 0.47%, or 120.60 points, to settle at 25,694.95 [1][11] - The midcaps increased by 0.5%, while smallcaps decreased by 0.2% [4][11] Company Performance - HCL Technologies saw a rise of 1.2% due to optimism surrounding a potential U.S. government reopening, which is expected to positively impact the export-driven sector [2][11] - Vodafone Idea jumped 7.8% after reporting a narrower-than-expected second-quarter loss, attributed to more users migrating to higher-margin 4G and 5G plans [5][11] - Bajaj Finance experienced a decline of 7.4% after cutting its asset growth forecast, citing rising bad loans and increased competition in consumer lending [5][11] Global Market Influence - Global equities increased, driven by relief over the end of the U.S. government shutdown, although concerns about technology valuations limited gains [6][11] - The U.S. Senate approved a deal to end the longest government shutdown, which may lead to the release of key economic data that could affect market volatility [7][11] - On Wall Street, the S&P 500 surged 1.54%, marking its largest daily gain since mid-October, while the Nasdaq rose 2.3%, its strongest advance since May [8][11] Commodity and Currency Movements - Oil prices remained stable, with Brent crude futures rising by 27 cents to $64.33 per barrel, and U.S. West Texas Intermediate gaining 26 cents to $60.39 [9][11] - The Indian rupee appreciated by 16 paise to close at 88.57 against the U.S. dollar, supported by progress on the U.S. government funding bill and optimism regarding a potential U.S.-India trade deal [10][11]

Financial Data and Key Metrics Changes - The company reported net income of $14.4 million and diluted earnings per share of $1.42, an improvement of 87% year over year [4][5] - Total revenue reached a record high of $165 million, up 13% year over year [15][16] - The operating expense ratio improved to 12.8%, marking an all-time best [9][10] Business Line Data and Key Metrics Changes - The portfolio grew by $93 million sequentially, surpassing $2 billion in net receivables for the first time [4][5] - Total originations in the third quarter reached a record high of $522 million, up 23% from the prior year [14][15] - Auto-secured loans grew by $80 million, or 41% year over year, representing 13.4% of the portfolio [11][12] Market Data and Key Metrics Changes - The 30-plus-day delinquency rate was 7%, a slight increase of 10 basis points year over year, but improved by 30 basis points when adjusted for prior year hurricane impacts [8][16] - The net credit loss rate improved to 7.2%, a 170 basis point improvement sequentially and a 40 basis point improvement year over year [8][16] Company Strategy and Development Direction - The company plans to open five new branches before year-end and another 5-10 in the first half of 2026, with potential entry into one to two new states [10][12] - The Barbell strategy focusing on growth and higher-quality auto-secured loans continues to be effective [10][11] - Investments in technology and data analytics are aimed at improving customer experience and operational efficiency [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in consumer health and the company's ability to grow responsibly while maintaining a tight credit box [5][6] - For 2025, the company forecasts full-year net income of $43.5 million, with growth dependent on macroeconomic conditions [12][13] - The board approved an increase in the stock repurchase program from $30 million to $60 million, indicating a strong balance sheet [13][19] Other Important Information - The company announced the retirement of its President and CEO, Rob Beck, with Lockbier Lomba set to succeed him [4][22] - The company has returned an aggregate of $26 million in capital to shareholders through stock repurchases and dividends [9][19] Q&A Session Summary Question: What is driving the acceleration in same-store sales? - Management noted strong momentum from digital channels and traditional renewal customers, allowing for selective customer choices within a tight credit box [24][25] Question: Any changes in product mix expected for 2026? - The company remains nimble and expects continued growth in auto-secured loans while adapting to economic conditions [27][28] Question: What factors contributed to the outperformance versus guidance? - Demand remained strong, and the company was able to meet that demand within its conservative risk box [39][40] Question: How is the marketing expense efficiency achieved? - The efficiency is attributed to new models that allow for optimized spending and customer selection, which management hopes will be sustainable [43][45]

Core Insights - LendingClub has partnered with Wisetack to enter the home improvement financing market, leveraging Wisetack's extensive network of contractor merchants and software partnerships [2][4] - The partnership will unfold in two phases: initially, LendingClub will purchase participation certificates from Wisetack's loan production, followed by the use of its own underwriting model for larger loans starting in mid-2026 [3] - The home improvement industry is valued at $500 billion, presenting significant growth opportunities for LendingClub and Wisetack [4] Company Developments - LendingClub reported a 37% increase in loan originations in Q3, reaching $2.6 billion, the highest in three years, driven by strong consumer demand and enhanced marketing efforts [5][6] - Marketplace revenues for LendingClub reached $108 million, accounting for 75% of total revenues, while structured certificate sales exceeded $1 billion [6] - BlackRock has entered into a new agreement with LendingClub to invest up to $1 billion through its marketplace programs, following an initial $100 million transaction [7]

Financial Data and Key Metrics Changes - The company reported core earnings per share of $0.29 for the quarter, adjusting for significant items, while the core loss per share was $0.84 [14] - The expected life of loan cash flows increased by approximately $195 million due to lower prepayment speeds and updated assumptions [10][11] - The company announced a new share repurchase authorization of $100 million, providing additional capacity to purchase future value at a discount [4] Business Line Data and Key Metrics Changes - Total loan originations in the Consumer Lending segment grew to $788 million, a 58% increase from the previous year, driven by over 100% growth in Refi originations [17] - The Refi loans accounted for $528 million, marking the highest quarterly volume this year, while in-school lending reached a record $260 million [5][17] - The net interest margin for the Consumer Lending segment was 239 basis points, an increase from 232 basis points in the previous quarter [18] Market Data and Key Metrics Changes - The company experienced a decline in total delinquencies from 19% to 18.1%, while the net charge-off rate increased by 1 basis point to 15 basis points [16] - The provision expense for the quarter was $168 million, with $151 million related to previously originated loans, reflecting elevated delinquency rates [14][15] Company Strategy and Development Direction - The company is focused on aggressively reducing expenses and has exceeded its initial goal of $400 million in run-rate expense reductions ahead of schedule [8][22] - The company plans to provide an update on the growth strategy for its Earnest business on November 19th, indicating ongoing strategic initiatives [13] - The company is well-positioned to capitalize on opportunities in the Refi market, particularly as federal loan policies become less attractive to borrowers [79] Management's Comments on Operating Environment and Future Outlook - Management noted that the expected future cash flows increased due to changes in public policy and customer repayment behavior, with a focus on legacy loan portfolios [10][29] - The outlook for the fourth quarter is a range of $0.30-$0.35 per share, which would place the company within the full-year guidance of $1-$1.20 per share [15] - Management expressed confidence in the ability to finance rapid asset growth through ABS issuances, indicating a strong capital position [48][49] Other Important Information - The company completed its fourth term ABS financing of the year, backed by Refi loan collateral, demonstrating strong investor demand [12] - The total reserve build in the quarter was driven by various factors, including changes in borrower behavior and macroeconomic outlook [21] Q&A Session Summary Question: Regarding the provision and delinquencies noted - Management explained that the provision expense reflects incremental defaults and lower prepayment rates, which are expected to continue [26][29] Question: Where is the credit weakness coming from? - Management indicated that the majority of the weakness is focused on legacy portfolios, with some changes in other products but not as significant [38] Question: Breakdown of the $151 million provision - Management stated that the majority of the provision is related to trends in the private legacy portfolio, with macroeconomic conditions contributing only a small part [75] Question: Outlook on competition and market opportunities - Management highlighted that the company is well-positioned to take advantage of opportunities in the market, particularly in graduate loan originations [84] Question: Potential Grad PLUS opportunity - Management estimated the Grad PLUS market to be around $14 billion, with expectations for significant expansion opportunities [91]

Financial Data and Key Metrics Changes - The company reported core earnings per share of $0.29 for the quarter, adjusting for significant items, while the core loss per share was $0.84 [12][4] - The expected life of loan cash flows increased by approximately $195 million due to lower prepayment speeds and updated assumptions [9][10] - The company announced a new share repurchase authorization of $100 million to enhance shareholder value [4] Business Line Data and Key Metrics Changes - Total loan originations in the Consumer Lending segment grew to $788 million, a 58% increase year-over-year, driven by over 100% growth in refinance originations [15] - The Federal Education Loan segment's net interest margin for Q3 was 84 basis points, up 14 basis points from the previous quarter [13] - In-school lending reached a record high of $260 million, marking the highest quarterly volume in the company's history [5] Market Data and Key Metrics Changes - The company experienced strong investor demand for asset-backed securities (ABS), completing its fourth term ABS financing of the year [11][20] - The total reserve build in the quarter was driven by changes in borrower behavior, elevated delinquency rates, and macroeconomic outlook changes [17][18] Company Strategy and Development Direction - The company is focused on aggressively reducing expenses, exceeding its initial goal of $400 million in run-rate expense reductions ahead of schedule [6][8] - The company aims to capitalize on growth opportunities in the refinance market, particularly as federal loan policies become less attractive to borrowers [88][90] - The company plans to provide an update on its growth strategy for the Earnest business on November 19th [11] Management's Comments on Operating Environment and Future Outlook - Management noted that delinquency rates are improving but remain elevated, reflecting ongoing credit trends and lower prepayment activity [12][25] - The outlook for Q4 is a range of $0.30 to $0.35 per share, with expectations of continued strong origination growth [13][21] - Management emphasized the importance of macroeconomic conditions and public policy changes in shaping future performance [71][72] Other Important Information - The company has completed its final obligations under the Transition Services Agreement, allowing for further expense reductions [7][18] - The allowance for loan loss, excluding expected future recoveries, stands at $765 million for the entire education loan portfolio [17] Q&A Session Summary Question: Can you discuss the provision and delinquencies noted on the call? - Management explained that the provision expense reflects incremental defaults due to changes in borrower repayment behavior and macroeconomic conditions, particularly affecting legacy portfolios [24][25] Question: Where within consumer lending are you seeing credit weakness? - The majority of credit weakness is concentrated in legacy portfolios, with some changes in newer products but not as significant [36][38] Question: What is the breakdown of the $151 million provision? - Management indicated that the macroeconomic condition piece is relatively small, with the majority driven by trends in the private legacy portfolio [84][86] Question: How do you view the competition going forward? - The company believes it is well-positioned to take advantage of opportunities in the market, particularly in graduate loan originations and refinancing [96][98] Question: What is the potential opportunity in the Grad PLUS market? - Management estimates the Grad PLUS market to be around $14 billion, with expectations of significant expansion opportunities [103]