Subprime auto lending company Flagship Credit agreed to sell its business operations and other assets to specialty finance firm InterVest, a deal that comes as headwinds in the industry are raising concerns over the quality of auto loans https://t.co/SWTzAKtk5Z ...

Jeffrey Gundlach In markets awash in “garbage lending” and unhealthy valuations, Jeffrey Gundlach is keeping his strategy simple: load up on cash and stay away from private credit. One of Wall Street’s bond kings is spotting overpriced assets almost everywhere he looks. In an episode of the podcast recorded to mark the show’s 10-year anniversary, Gundlach called out nosebleed valuations in the equity market and warned investors against “incredibly speculative” bets. Most Read from Bloomberg The DoubleL ...

A used auto dealer and lender named Trialor suddenly filed for bankruptcy in September after alleged fraud was flagged in their books. >> You're looking at hundreds of millions of losses across the industry. >> When Trialor started to go down, it set off a wave of fear on Wall Street.Everybody was wondering what's the next shoe to drop. >> The credit market has stopped buying some of these subprime auto loans and investors have started pulling away from more risky borrowings. Tricolor was a car dealer and a ...

The record number of Americans falling behind on car payments is stoking concerns that more pain is in store for subprime auto lenders, following the recent high-profile collapses of Tricolor and PrimaLend https://t.co/lU48ZljoE4 ...

Tremors have rippled through the $25 trillion US credit market. We had an exposure to Tricolor. I'm obviously not happy about it.This story is about the sudden, unexpected, spectacular collapse of a subprime auto lender backed by some of the largest banks on Wall Street. Tricolor’s collapse in the subprime auto lending space could be the tip of the iceberg. A used auto dealer and lender named Tricolor suddenly filed for bankruptcy in September after alleged fraud was flagged in their books.You’re looking at ...

Core Insights - Veteran investor Howard Marks warns of investor complacency and carelessness in the credit market, highlighting recent bankruptcies but refraining from labeling the situation as a systemic issue [1][2]. Group 1: Market Conditions - The recent bankruptcies of First Brands and Tricolor indicate potential issues within the credit market, but Marks does not see these as signs of a broader systemic problem [2]. - Marks emphasizes that defaults are a normal occurrence, suggesting that a few dozen defaults in a year should not be surprising [3]. Group 2: Investor Behavior - Rising markets often lead to increased risk tolerance and carelessness among investors, creating an environment conducive to potential wrongdoing [4]. - During market upswings, negative factors are often overlooked, while downturns tend to exaggerate negatives and downplay positives [5]. - Marks notes that good times foster complacency and aggressive bidding for assets, which can lead to failures in a challenging environment [6].

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $24.2 million, up 3% from the prior year period, including a positive $1.1 million change in estimate profit-share revenue associated with historical vintages [24][25] - Net losses for Q3 2025 were $7.6 million compared to net income of $1.4 million in Q3 2024, with diluted net loss per share at $0.06 [27] - Adjusted EBITDA for Q3 2025 was $5.6 million compared to $4.5 million in Q3 2024, excluding a one-time payment of $11 million [27] Business Line Data and Key Metrics Changes - The company facilitated 23,880 certified loans in Q3 2025, down from 27,435 in Q3 2024, reflecting a deliberate tightening of lending standards [11][23] - Program fee revenues were $13.3 million, profit-share revenues were $8.5 million, and claims administration fees and other revenues were $2.4 million in Q3 2025 [24] - Profit-share revenue associated with new originations was $7.4 million, or $310 per certified loan, compared to $13.8 million, or $502 per certified loan in Q3 2024 [25] Market Data and Key Metrics Changes - The CERT mix by channel for the quarter was 89.8% through credit unions and banks, with 10.2% from OEMs, indicating a drop in OEM production due to tighter underwriting requirements [12] - Credit builder exposure has been reduced, with super thin files now comprising a negligible amount of new originations, down from 24% in Q3 2024 to 6% [13] Company Strategy and Development Direction - The introduction of Apex One Auto, a new prime credit automated decisioning platform, aims to diversify revenue and add a recurring revenue stream through subscription-based minimum application volumes [6][9] - The company is focused on improving profitability and reducing volatility in profit-share unit economics, achieving three consecutive quarters of positive Adjusted EBITDA [10][11] - The company amended its contract with Allied Solutions, expected to generate over $2.5 million in annual cost savings once fully implemented in 2027 [26] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing challenges such as rising delinquencies and affordability pressures but emphasized proactive measures to capture opportunities [13][20] - The company believes it is well-positioned for growth in 2026, with improved underwriting and pricing actions [34] - Management highlighted that the tightening of credit standards has positioned the company for more sustainable profitability in future vintages [11][21] Other Important Information - The company exited Q3 with $287.7 million in total assets, including $222.1 million in unrestricted cash [28] - Operating expenses were $26.6 million in Q3 2025, a 71% increase year over year, primarily due to a one-time payment to Allied [26][27] - The company is actively recruiting for a new Chief Revenue Officer to refresh its go-to-market strategy [19] Q&A Session Summary Question: Details on Apex One Auto's subscription model - Apex One Auto will be a completely subscription-based product with three-year contracts and monthly minimums, with overage fees per loan charged for amounts exceeding the minimum [31] Question: Expected savings from the Allied contract amendment - The anticipated $2.5 million annual savings will start phasing in during the second half of 2026, with the majority realized in 2027 [32] Question: Insights on the macro environment and stabilization - Management indicated that 2025 was a transition year with significant tightening and changes to pricing models, positioning the company well for growth in 2026 [33][34] Question: Expectations for fourth quarter certified loan assumptions - The fourth quarter is typically one of the lowest CERT volume quarters, with expectations for stabilization as the company moves into 2026 [36] Question: Long-term expectations for Apex One Auto uptake - If Apex One captures a 50% adoption rate among credit unions, revenues could reach between $30 million and $40 million, indicating significant growth potential [39]

Core Insights - Open Lending Corporation has launched ApexOne Auto, an advanced decisioning platform aimed at enhancing its capabilities in serving a diverse range of auto borrowers [1][3] - The platform integrates automation, data, and explainable intelligence to facilitate faster and more consistent credit decisions while ensuring effective risk management [2][3] Company Overview - Open Lending specializes in automotive lending enablement and risk analytics solutions for financial institutions, providing services such as loan analytics, risk-based pricing, and risk modeling [5] - The company has been operational for 25 years, focusing on empowering financial institutions to develop profitable auto loan portfolios with reduced risk [5] Product Features - ApexOne Auto is designed to integrate seamlessly with existing loan origination systems, enhancing the overall credit evaluation and performance management process for financial institutions [4] - Early adopters of the platform have reported positive experiences, particularly regarding its automation and integration capabilities [3][4] Market Context - The auto lending market is evolving, necessitating comprehensive solutions that can address the needs of various borrower profiles with speed and confidence [3] - The launch of ApexOne Auto aims to break through existing credit spectrum silos, providing a unified decisioning engine that supports growth while managing risk [3]

Core Points - The dismantling of the Consumer Financial Protection Bureau (CFPB) is significantly impacting consumer protections in various financial sectors, including auto lending and credit reporting [1][3][4] - The Trump Administration has reversed several CFPB rulings, allowing companies like Toyota and Navy Federal to retain millions that were meant to be returned to consumers [2][3][4] - The CFPB has historically provided substantial consumer relief, totaling $20 billion to 195 million consumers since its inception [5] Group 1: Regulatory Changes - The Trump Administration has halted nearly all CFPB enforcement actions, leading to a significant reduction in consumer protections [6][8] - The CFPB's supervisory activities have ceased, with a substantial number of employees idled and unable to perform their duties [14] - The current administration's actions could result in an additional $240 million in consumer payments being retained by companies [4] Group 2: Impact on Financial Institutions - Major financial institutions, including JPMorgan Chase and Bank of America, are benefiting from reduced regulatory scrutiny, as lawsuits against them have been dismissed [9][10] - Financial services companies are investing less in consumer compliance, indicating a shift towards minimal regulatory adherence [11] - The lack of oversight is leading to slower responses to consumer complaints, with some companies significantly reducing their timely response rates [16] Group 3: Consumer Vulnerabilities - Consumers, particularly low- and middle-income individuals, are facing increased financial strain, with delinquencies on credit cards and auto loans reaching 12-year highs [12][20] - Predatory practices are likely to proliferate in the absence of regulatory oversight, especially in auto loans and payday loans [17][19] - The CFPB's diminished role raises concerns about the accuracy of credit reports and the potential for increased errors affecting consumers' credit scores [22][23] Group 4: Future Implications - The potential reduction of CFPB oversight from 63 auto lenders to as few as 5 could leave subprime lenders unregulated, exacerbating risks for vulnerable consumers [21] - The rollback of CFPB regulations may hinder long-term innovation in the financial services industry, as companies seek guidance on complex financial laws [30] - The recent surge in complaints against digital payment platforms like PayPal highlights the growing consumer dissatisfaction and potential risks in the fintech space [28][29]

Core Insights - The recent bankruptcies of auto lender Tricolor and auto-parts manufacturer First Brands have been misattributed to the private credit market, according to Blackstone executives [1][2][5] - Blackstone's CEO Steve Schwarzman emphasized that these failures are linked to bank-led credits rather than private credit, specifically citing over $2 billion in asset-backed securities arranged by major banks [3][4] - Despite a late-credit cycle leading to potential increases in defaults, Blackstone maintains that these bankruptcies are isolated incidents and do not reflect broader credit market issues [5][6] Private Credit Market Overview - Blackstone's non-real estate credit assets under management rose to $432.3 billion, with $36 billion in inflows during the last quarter [6][12] - Including real estate credit, Blackstone manages $500 billion in credit, an 18% increase from the previous year, making credit approximately 40% of its total $1.24 trillion in assets [7] - Retail investors contributed $3.6 billion in inflows to Blackstone's BCRED, its largest private wealth vehicle, which now has nearly $85 billion in assets under management [12] Performance and Expectations - Blackstone expects strong inflows in credit despite lower yields, as the firm anticipates continued interest from private wealth channels [13] - The firm reported returns of 2.6% for private credit and 1.6% for liquid credit in the last quarter, with BCRED having a 97% floating rate [14] - Historically, Blackstone has maintained low annual losses, averaging just 0.1% even during financial crises, and its investment-grade focused private credit platform has experienced zero realized losses to date [15][17]