ジェファーソン・キャピタル（JCAP）2026年第2四半期決算説明会：回収額が18%増加、自動車関連の資金投入が加速

主要ポイント

• 第2四半期の回収額は、2024年および2025年の投資（ポートフォリオ買取り）に支えられ、前年同期比18%増の3億100万ドルに達しました。ブルーステムが4,100万ドル、コンズが2,400万ドル貢献しました。
• 売上高は16%増の1億7,800万ドルとなり、調整後EPSは0.77ドル、調整後キャッシュEBITDAは12%増の2億2,600万ドルとなりました。
• ポートフォリオ買い取り額は21%増の1億5,200万ドルに達しました。7月の投資額は1億8,500万ドルと月間最高記録を更新し、その相当部分が正常および不良自動車ローンポートフォリオに配分されました。
• 推定残存回収額（ERC）は18%増の34億ドルに増加しました。同社は今後12ヶ月間で11億ドルを回収すると見込んでいます。
• キャッシュ効率性は72.2%でした。ブルーステムとコンズを除いた比率は67.8%で、法的チャネルでの活動増加に伴う訴訟費用の増加を反映しています。
• 調整後キャッシュEBITDAに対する純有利子負債倍率は1.71倍に改善しました。経営陣は、これによりポートフォリオの成長と戦略的柔軟性のための余地が確保されると述べています。

主要財務データ

事業および営業実績

自動車ローン（オートローン）は、ジェファーソン・キャピタルの2026年第2四半期決算説明会における中心的な成長テーマでした。経営陣は、全米の自動車ローン債権が過去最高の1兆6,900億ドルに達したこと、毎月の支払額の上昇、および中小規模の融資会社やディーラーネットワークにおける過重債務・ストレスの高まりを強調しました。

ジェファーソン・キャピタルは7月、正常債権、償却済債権、および破産関連の自動車ローンポートフォリオ全体に資金を投入しました。経営陣によると、自動車ローンは従来の無担保債権よりも複雑な引受審査、書類管理、顧客対応、サービシング（回収管理）を必要とします。これらの参入障壁が、担保付および無担保ポートフォリオ全体における同社の競争力を支えています。

法的チャネルでの回収額は54%増の6,400万ドルに増加しました。同社はこの成長の要因として、債権委託から訴訟提起までの処理の迅速化、対象債権の在庫増加、および収益性の高い新たな回収機会を特定したモデリングの改善を挙げています。経営陣は、債務者が支払い可能であるにもかかわらず対応や支払いを拒否しているとみなされた場合、法的措置は最終手段として使用されると強調しました。

継続的買い取り契約（フォワードフロー）のコミットメント額は6月30日時点で過去最高の4億8,070万ドルに達し、前年同期比で約80%増加しました。そのうち3億1,200万ドルは、今後12ヶ月間に投入される予定の契約となっています。

ジェファーソン・キャピタルはまた、7月に初の資金投入を行い、メキシコの債権買い取り市場に参入しました。経営陣は、予測モデルの検証とサービシング能力の構築を進めながら、段階的に資金を投じていくと述べています。同社はコロンビアとペルーでも拡大を続けており、過去にスポット取引が中心であった市場においてフォワードフロー契約などを活用しています。

経営見通し

経営陣は、6月30日時点のERC残高のうち11億ドルが今後12ヶ月間で回収されると見込んでいます。また、ERCの約46%が2027年末までに回収される見通しです。

第2四半期の買取り価格倍率に基づき、同社は減少分（ランオフ）を補いERCを現在の水準に維持するためには、今後12ヶ月間で世界全体で約5億6,500万ドルの新規投資が必要になると試算しました。7月の投資額と契約済みのフォワードフローの合計は4億9,700万ドルに達していますが、経営陣は7月の1億8,500万ドルという投資水準を毎月の継続的なランレートとして扱うことに対して注意を促しました。

ブルーステムとコンズを除いた場合、経営陣はキャッシュ効率性が引き続き60%台後半で推移すると見込んでいます。第2四半期の訴訟費用については、年内の残りの期間においても妥当な目安になると説明されました。

経営陣は、回収見込額の変動はポートフォリオの規模に相応し、概ね数百万ドル（1桁ミリオン）にとどまると述べています。同社の長期的な持続的レバレッジ目標は引き続き2.0倍〜2.5倍です。

リスクと注視点

• 法的チャネルでの回収増加には先行して訴訟費用がかかるため、費用発生と回収の間にタイムラグが生じます。
• 自動車ローンの残債（ディフィシェンシー）および不振ポートフォリオには、車両の回収（引き揚げ）、州ごとの固有の書類要件、ならびに法的回収への依存度の高まりが伴う可能性があります。
• 経営陣によると、回収率は景気後退期を除けば概ね安定していますが、失業率が6%〜7%を超えて急上昇した場合にはボラティリティが高まる可能性があるとのことです。
• メキシコはジェファーソン・キャピタルにとって新規市場です。同社は引受前提やサービシング能力を検証しながら、初期の資金投入額を制限しています。
• 自動車ローンポートフォリオの供給は、足元の借入手の資金繰り悪化や融資会社の資金調達の難航によって一部支えられており、機会の中には永続的なものではなく一時的なものも含まれます。

アナリストQ&Aの要点

アナリストは自動車ローン市場における機会の規模と持続可能性に強い関心を寄せました。経営陣は、7月の記録的な資金投入は複数のアセットクラスに分散されていたものの、自動車ローンへの配分が大きかったと説明しました。成長は既存の売主（セラー）との関係深化と新規クライアントの獲得の双方によるものです。

リターンについて、経営陣は7月のアディショナルな資金投入における利回りは同社の過去のリターン目標と大きく変わらないと述べました。自動車ローンの運用面の複雑さにもかかわらず、ジェファーソン・キャピタルはこのアセットクラスがキャッシュ効率性プロファイルに急激な変化をもたらすとは予想していません。

ERCの成長に関して、経営陣は、必要とされる年間更新額の推計5億6,500万ドルに対し、7月の投資実績および契約済みのフォワードフローを踏まえると、今後1年間の大幅な拡大に向けた明確な逆風は見当たらないと述べました。

経営陣はまた、資金投入の動きは通常下半期に加速し、歴史的に第4四半期が最大になると指摘しました。ただし、7月の好調さは季節性というよりも、むしろ自動車ローンや消費者信用全般における好機によるものが主因であるとしています。

決算説明会 文字起こし全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Thank you. Capital's Second Quarter of 2026 Conference Call. With us today are David Burton, Founder and Chief Executive Officer, and [ Christo Riel ], Chief Financial Officer. As a reminder, this conference call is being recorded. This call may contain forward-looking statements regarding the company's plans, initiatives, and strategies, and the anticipated financial performance of the company, including, but not limited to, sales and profitability, anticipated benefits of the debt purchasing market in Mexico, expectations for the market and macroeconomic factors, and target performance metrics. Such statements are based upon management's current expectation, projections, estimates, and assumptions. Words such as expect, believe, anticipate, think, outlook, hope, and variations of such words and similar expressions identify such forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties that may cause future results to differ materially from those suggested by the forward-looking statements.

Such risks and uncertainties are further disclosed in the company's most recent filings with the Securities and Exchange Commission. Shareholders, potential investors, and other readers are urged to consider these factors carefully in evaluating the forward-looking statements made herein and are cautioned not to place undue reliance on such forward-looking statements. The company does not undertake to update the forward-looking statements except as required by law. Also, during this conference call, the company will be presenting certain non-GAAP financial measures. Reconciliations of the company's historical non-GAAP financial measures to their most directly comparable GAAP financial measures appear in today's earnings press release. I will now turn the call over to [ Dr. D'Alessandro ].

David Burton

[ to David Burton. ] Thank you, Operator, and thanks, everyone, for joining our investor call. Let's dive into our second quarter financial performance highlights. We generated another quarter of excellent results for shareholders. The company delivered strong collections growth, with collections up 18% year-over-year to $301 million, and we continue to perform well versus our underwriting expectations. The market backdrop remains attractive, and our deployments for the quarter were $152 million, up 21% versus the prior year period. Estimated remaining collections grew 18% to $3.4 billion, driven by our continued deployment performance and attractive anticipated returns. We delivered a sector-leading cash efficiency ratio of 72.2%, driven in part by strong collections from the Bluestem and Conn's portfolio purchases.

The company also generated strong cash flow for the quarter, which improved our leverage ratio to 1.71x, a level which positions us well for future growth and creates significant strategic optionality. Adjusted EPS for the quarter was $0.77. Next, I'd like to offer a brief market update and cover some of the macroeconomic indicators to provide better context for why we remain confident in the investment opportunity for our business. The fundamental backdrop remains unchanged. Near-record consumer credit balances and elevated levels of charge-offs and delinquencies across all asset classes create a long runway for robust portfolio supply. The environment is also underpinned by a low level of unemployment, which supports the expected liquidation rates on our existing portfolio and gives us confidence in underwriting new purchases. I want to focus more closely on auto finance, an asset class which presents a substantial opportunity for our business. This is a large and growing segment of consumer credit, but also one which is highly fragmented and experiencing significant headwinds.

Auto finance receivables have grown steadily to a new record of $1.69 trillion. Higher loan amounts for both new and used vehicles have been driven by higher vehicle prices, but also by the need for borrowers to roll over past negative equity balances with nearly one-third of used vehicle trade-ins carrying negative equity. As a result, loan payments, also driven by elevated interest rates, have grown significantly and have pressured household budgets. The average monthly new vehicle loan payment is currently $773, up 40% compared to pre-pandemic, and the average used vehicle monthly loan payment has reached $531, up 35% post-pandemic. In addition, 72-month or longer loans account for nearly a third of all financed new vehicle sales. For smaller auto finance originators or dealership networks, deteriorating credit quality is frequently coupled with financing challenges, where a portfolio sale could become the value-maximizing option for the business going forward. All of these trends set the stage for increasing portfolio supply for an asset class where significant complexity limits the number of interested buyers. We remain uniquely positioned to offer solutions across the spectrum of performing, charged-off, and insolvency auto finance portfolios for both secured and unsecured accounts and to capitalize on this growing opportunity.

Moving on, I'd like to review in more detail some key performance trends for the quarter. Our collections were $301 million, up 18% year-over-year, driven by strong deployments in 2024 and 2025. $41 million of collections for the quarter were attributable to the Bluestem portfolio purchase and $24 million were attributable to the Conn's portfolio purchase. More broadly, our collection performance on the overall portfolio continues to reflect the accuracy of our underwriting models. A key trend in collection performance has been the increase in legal channel collections, which were up 54% year-over-year to $64 million. Jefferson Capital utilizes the legal channel as a means of last resort in instances where we believe the account holder has the ability, but not the willingness to engage or pay. We've achieved a number of important process improvements, specifically in the U.S., which have significantly compressed the timing from placement of the account to filing the lawsuit, which in turn has accelerated suit volumes. The inventory of suit-eligible accounts has increased the significant growth in deployments over the past three years.

So over time, we expect to see continued growth in legal collections. A separate component of the increase is driven by modeling improvements which have allowed us to identify new portfolio segments from prior purchases where we have uncovered opportunities to profitably increase collections through use of the legal channel. The increased consumer litigation activity will result in incremental court costs, but the resulting collections will profitably support this upfront expense. Our portfolio purchases for the quarter were $152 million, up 21% year-over-year. Returns remain attractive, and we remain confident in the deployment landscape. I am pleased to report that as a result of our strong execution on our asset class-based growth strategy and the favorable market backdrop I described, we were able to generate record deployments in the month of July of $185 million, a significant portion of which was invested in performing and non-performing auto finance portfolios. This is an important milestone as we have now added auto as a third asset class segment to our performing portfolio purchase capabilities, following credit cards with Bluestem and installment loans with Conn's.

To further this strong purchasing momentum, we generated robust growth in forward flow commitments. As of June 30, we had $480.7 million of deployments locked in through forward flows, which is a new record for the company and an important building block of our deployment strategy for the coming quarters. Finally, I'm pleased to announce that after significant evaluation, Jefferson Capital has entered the debt purchasing market in Mexico. As in our past efforts to enter a new geography, we deploy relatively low amounts of capital initially as we build our servicing capabilities and validate our forecast model. But we believe this is a large market which offers attractive U.S. dollar risk-adjusted returns and adds another growth pillar for our Latin American strategy. In addition, our foray is supported by a number of significant competitive advantages, including global relationships with key sellers, more sophisticated modeling and servicer management capabilities, and a substantially lower cost of capital compared to local competitors. We're excited to report more on our progress in the coming quarters as we gain more experience in this market. Moving on, our estimated remaining collections as of June 30 were $3.4 billion, up 18% year-over-year, with ERC related to the Bluestem and Conn's portfolios comprising $218 million and $83 million of U.S. distressed.

Our ERC is relatively short in duration due in part to the lower average account balances in our portfolio with 46% of our ERC to be collected through 2027. We expect to collect $1.1 billion of our June 30 ERC balance during the next 12 months. Based on the average purchase price multiples recorded in the second quarter, we would need to deploy approximately $565 million globally over the same timeframe to replace this runoff and maintain current ERC levels. I would note that as of June 30, we had $312 million of deployments already contracted via forward flows for the next 12 months. Lastly, I'd like to review in more detail another core pillar of our business model and a critical building block of our differentiated return profile, our best-in-class operating efficiency. We seek to own high value-added aspects of the purchasing and collection process, including portfolio and consumer payment performance data, extensive analytical and modeling capabilities, certain proprietary technological capabilities, and the collection processes and techniques that we believe create both a competitive advantage for the company as well as a significant barrier to entry. Conversely, we seek to outsource the aspects of the collection value chain that we view as commoditized or operationally intensive and do not produce a competitive advantage, such as running large domestic call centers.

We utilize Champion Challenger performance measures to allocate portfolio segments to the best servicers, and our internal collection platform competes for market share against external collection service providers. Finally, our mostly variable cost structure provides flexibility to scale deployments depending on market conditions. The benefits of our relentless pursuit of operating efficiency are evident in our efficiency metrics relative to the rest of the sector. As mentioned earlier, our cash efficiency ratio for the quarter was 72.2%. It was aided by collections on the Bluestem and Conn's portfolios, which carry lower cost to collect given the significant portion of paying accounts. Excluding the Bluestem and Conn's portfolio collections and expenses, the cash efficiency ratio would have been 67.8%, which is also materially higher than other public companies in the sector. Our leading operating efficiency is a powerful competitive advantage, and coupled with the strong returns on our differentiated investment strategy, supports consistent, attractive shareholder returns.

With that, I would now like to hand the call over to [ Christo ] for a more detailed look at our financial results.

Christo Realov

Thank you, David. Taking a closer look at the financial details for the second quarter, revenue was $178 million, up 16% year-over-year, driven by continued strong deployments and higher net yields. Changes in recoveries were $9 million for the quarter, reflecting the accuracy of our modeling and strong execution against our underwritten forecast. Operating expenses were $95 million, up 46% year-over-year, with the increase due to two key components. An increase in court costs as a result of increased legal channel volumes, and non-cash stock-based compensation expense resulting from the IPO. Adjusting for stock-based comp and adjusting the prior year quarter for IPO-related items, expense growth would have been 35%. Expenses remain well controlled relative to the growing collections with our cash efficiency ratio at 72.2% for the quarter. Adjusted pre-tax income was $59 million for the quarter, resulting in an adjusted pre-tax margin of 51.6%.

We realized a material level of collections on portfolios purchased in 2024 and 2025, including the Bluestem and Conn's portfolio purchases, which in turn drove our adjusted cash EBITDA to $226 million for the quarter, up 12% year-over-year. Finally, for the second quarter, Jefferson Capital recognized portfolio revenue of $11 million and net operating income of $7.1 million related to the Bluestem portfolio purchase. Separately, we recognized portfolio revenue of $11.1 million, servicing revenue of $0.6 million, and net operating income of $8.1 million related to the Conn's portfolio purchase. Our credit profile remains strong and positions us well for future opportunities. As of June 30, our net debt to adjusted cash EBITDA improved to 1.71x, a level which is significantly lower than our publicly traded peers. Over the long term, our target leverage ratio is in the range of 2x to 2.5x on a sustained basis. Our balance sheet is solid with ample liquidity to support growth, create strategic optionality, and pay our quarterly dividend.

Our senior secured revolving credit facility, with aggregate committed capital of $1.15 billion, had $226 million drawn at June 30. Today, we drawn the RCF and transferred $300 million to the bond trustee for the repayment of our senior unsecured notes, due August 2026. The notes will be discharged August 17. Our strong liquidity profile is a critical component of our value proposition to sellers, who value certainty of closing periods when portfolio activity increases, but the funding markets could be constrained or unavailable. With regard to our capital allocation priorities, our primary focus remains on deploying capital to purchase portfolios at attractive risk-adjusted returns. Our board has declared a regular quarterly dividend of $0.24 a share, which represents a 4.8% annualized yield as of July 19. The dividend offers an attractive component of shareholder return, which is not available from other public companies in the sector.

It also reinforces long-term discipline around investment returns. In conjunction with the follow-on equity offering in January, we also repurchased 3 million shares, or approximately 5% of the total issued shares, for $59 million. This was a tactical share repurchase where the company used its capital to support the offering and to further reduce the sponsor overhang. We will evaluate open market share repurchases if the share price exhibits significant volatility. Finally, we have a long history of successful M&A, but we intend to remain disciplined and opportunistic. Now we will be happy to answer any questions that you may have. Operator, please open up the lines.

Operator

Thank you. [Operator Instructions] Our first question today is from Mark Hughes with Truist Securities. Please proceed.

質疑応答

Mark Hughes

You talked in the auto segment, it sounds like you're seeing a lot of success in the month of July. How broad is that? I mean, how should we think about the opportunities the rest of the year, probably as the year progresses, just a little more detail on that auto would be great.

David Burton

Sure. I guess as we don't really provide, you know, guidance around, you know, deployments or really guidance in general, what I can do is, you know, characterize that July in particular had us deploying capital across the spectrum in auto, both in terms of charge-offs, insolvencies, and performing. And so I think that's indicative, and it's why we've been talking about the auto market opportunity in particular, that we have seen a growing opportunity set in that space. And I think we're uniquely positioned to be a beneficiary of the headwinds that are facing that sector.

Mark Hughes

Could you refresh us on any differences in terms of the collections profile or costs associated with the auto channel?

David Burton

Sure. So I'll start with insolvency. Insolvency, as a reminder, in general, has a very low cost to collect as most of the interaction takes place with the bankruptcy trustees. However, there are some concerns about the secured loans, there are occasions, both in insolvency and outside of insolvency and distressed, where the consumer still retains the vehicle. And as part of that, there could be a repossession process that takes place, which is a higher-cost undertaking. And so I would think about deployments and insolvencies as largely being similar in aggregate to other insolvency costs to collect, and on the deficiency side or the charge-off distress side of the business, that is more in line but has some unique components, and that are higher cost to collect than insolvency. And finally, on the performing side, the sort of cost to collect for installment lending, as in our purchase of the Conn's portfolio, is a good template to think about what the cost to collect would be for performing auto.

Mark Hughes

Very good. And then, [ Christo ], the change in recovery is a nice positive number again, maybe starting to look like a trend. How should we think about that line item? Is that something where it sounds like your modeling and legal collections, you're having good success. Is that something that emerges over time or is that something we shouldn't anticipate in future quarters? Just how to approach that.

Christo Realov

I think probably the best way to answer the question is that historically we have guided to kind of single digits of millions as a number that should be expected given the size of the portfolio. And I think for the quarter, this number was maybe slightly higher than in prior quarters, but it's still what we can expect to see in the future. And then I'll go back to our comments that we've made on this topic previously, which is that the objective of our modeling of ERC is accuracy and not necessarily conservatism.

Operator

Thank you very much. Our next question is from David Scharf with Citizens JMP. Please proceed.

David Scharf

I wanted to follow up maybe on Mark's questions on auto. You know, Dave, you've historically enjoyed, you know, some pretty formidable sort of competitive barriers, if you will, you know, in your core kind of low balance accounts. Can you talk, I know you referenced you believe you're the only one who can kind of service the breadth or the mix of performing, charged-off, and insolvency across auto. But can you talk a little bit more about, you know, just the competitive landscape there, the breadth of how many sellers you work with? Just trying to get a sense for whether auto as an asset class is from a competitive standpoint kind of closer to the traditional credit card world, or if it's closer to the barriers you enjoy in your core assets.

David Burton

David, and I think it will be helpful to others to understand that distinction. I view auto as an area with more complexities both in underwriting and engaging consumers. And even though you utilize similar collection channels, whether it be call center or legal, each of those are made more difficult because of the complexities involved in collecting on an auto account. You have, in some cases, the consumer has, you know, voluntarily surrendered the car or it's been repossessed, and the balance to be able to communicate clearly about the composition of the balances and important criteria to have an effective communication with the consumer. Similarly, should the consumer still have the vehicle, then you're also undertaking a more complex undertaking as it relates to replevin action or repossession. And so operationally, it's more complex. In terms of consumer engagement, it's more complex. And that also applies to the legal channel where the documentation requirements are much more comprehensive and complex as there are state-based regulations which apply that are different from state to state. And oftentimes, you need to have evidence of those required communications in order to initiate litigation.

It's a higher touch, more complex process and one that we excel at and have built systems and processes to be able to do so effectively. And I don't know that there are many other competitors in the space that are able to do that, and that's especially true as you consider the array of account segments with secured and unsecured insolvency, performing and non-performing. And it again, that's why we have expertise and capability across that spectrum, and that makes us an ideal counterparty for an originator that has sale objectives.

David Scharf

No, that color is very helpful. And I guess just so we have a flavor for kind of the momentum in the business, I guess compared to a year ago, would you say that your auto volumes represent mostly deeper penetration of, you know, some existing originator relationships, or have you been adding new relationships over that time?

David Burton

It's a mix of both. I think we have cultivated relationships with existing customers where we're doing more, and while at the same time we've been able to cultivate new clients as well.

David Scharf

Got it. And just one last question for [ Christo ]. You know, with the legal channel growing, you know, obviously the returns will be similar, but with more upfront court costs, you know, there's sort of a delayed kind of cash flow dynamic as that channel grows. You know, as we think about second half modeling, I know you're not giving any guidance, but is there any type of step function we should think about in terms of court costs, or is it going to continue along this typical trajectory?

Christo Realov

I would make two comments. The first one is the cash efficiency ratio that we put out obviously includes the court cost for the quarter. We provide that both on a kind of as reported basis, which is the 72.2% number, and on an excluding Conn's and Bluestem basis, which is the 68% number. And we've also said that we expect that excluding Conn's and Bluestem to be kind of in the high 60s. Those comments are relevant and that probably is a good way to think about this. As it relates to the actual court cost amounts, I would think of this quarter as a good kind of guide to what to expect for the balance of the year.

Operator

Our next question is from [ Randy Benner ] with Texas Capital. Please go ahead.

Unknown Analyst

On the July deployment number, did I hear that correctly? Did you say $185 million, David?

David Burton

We did, and we normally wouldn't disclose a monthly deployment number, but as you note, it's more in July than for the entire second quarter, and we thought that was valuable information to share with shareholders.

Unknown Analyst

Yes, and the other three analysts, there was some good Q&A about auto, which is helpful, you know, to learn about and kind of understand, because it's clearly the direction you're moving. But I guess the one, because 185 is a big number, what was the nature of that? I kind of missed that. Was that like a big lumpy thing or that was just a deployment kind of across the board? Presumably it was large in auto, but was there like anything episodic or lumpy there? Or is that just trying to figure out how to sequence, you know, I wouldn't put 185 in the model every month. Let me put it that way. So maybe just trying to understand if there was anything unusually large about it.

David Burton

Yes, we certainly wouldn't encourage you to do that. But what we would say is, you know, it's a wide distribution of our more of like a normal kind of distribution across asset classes. Yes, there was a larger distribution in the month of July for auto.

Unknown Analyst

Got it, okay. And then I have a question just about, so the collection activity just continues to be good and ahead of our expectation. Do you talk about collection performance by vintage? Meaning is it, you know, kind of given the dynamic where there's a larger, you know, balance and charge-off at the same time that people have jobs? Are collections better on kind of more recent vintages and not as good in older vintages? How should we think about that?

David Burton

Yes, I don't know that that's necessarily the way I would think about it, as your underwriting should take into account, you know, the capability sort of repayment based on, you know, history and the volatility around liquidation rates as it relates to things like levels of unemployment are pretty, are relatively narrow, except in the case where there's an actual recession where unemployment increases rapidly to levels that exceed 6%, 7%. And so I would say the level of variance in times of non-recession is the liquidation rates don't have substantial changes, you know, macroeconomic fluctuations.

Operator

Our next question is from John Hecht with Jefferies LLC.

John Hecht

David, can you talk about the pipeline? I mean, obviously, you guys have a lot of good organic growth, but both performing portfolio acquisitions as well as buying into other channels has been an important part of your story. Maybe talk about the characteristics of the pipeline and pricing and so forth?

David Burton

Yes, I think what I would say is that the level of activity is certainly elevated across all of the kinds of investments that we make. And so when you look at deployments across all of our geographies, for example, you're going to see attractive levels of growth. And I think that's evidence of both an attractive backdrop in terms of supply, but also it's indicative of increased effectiveness in building our pipeline.

John Hecht

Okay, and then, [ Christo ], maybe, can you, I mean, I guess you have to think about Bluestem and Conn's in this, but then also just general, like, Q2 to Q3 seasonality. Just maybe remind us and refresh us how those factors impact the coming quarters.

Christo Realov

Right, that's one of the key things. Yes, I mean, look, I think the seasonality impact is probably a much bigger driver of performance, and specifically collections in the first quarter. Going kind of into the rest of the year, that obviously kind of, I think the seasonality impact weakens. We certainly see on deployments a trend of acceleration of activity as we're getting into the second half of the year. And typically, right, the fourth quarter is the largest quarter in terms of deployments, as we have discussed before. So I don't think that there's anything out of the ordinary that we're seeing. And the activity that we saw in the month of July is probably indicative more of this broader opportunity that we discussed in the prepared remarks around auto finance and around the broader consumer credit asset class, rather than any seasonal impacts.

David Burton

And I'll just add to that, John, a reminder of the record-level forward flow commitments that we have, which are $480 million, which is a substantial increase. I think if you looked at that on just a year-over-year basis, that's up 80%. And so I think that is one component of the future deployment pipeline.

John Hecht

Okay. And then final question for me is, I mean, all geographies seem to be doing very well, but Latin America kind of stuck out this quarter in terms of growth and momentum. Maybe anything to point out there that was one-time or maybe just talk about the overall conditions there and opportunities you've seen?

David Burton

Yes, thank you. Thanks for noticing that. We're really proud of the platform that we're continuing to build in Latin America and continuing to be a leader in the Colombian and Peru market as we have expanded our pipeline of opportunities there and we also have been successful in putting in place I think some of the first forward flows that that region has initiated as that market has historically been characterized really just by spot sales. And so that helps us develop sustained growth as we build these longer-term relationships with originators in the region. And, of course, we did mention to you that we did an inaugural deployment in Mexico, which, in July. And as often all of our initial forays when we're making an organic investment into a new geography, we take a very measured and patient approach to ensure that we validate our underwriting model and that we build a robust servicing capacity before deploying, you know, lots of capital in that market.

Operator

Our next question is from Robert Dodd with Raymond James.

Robert Dodd

On the timing of collections on auto, obviously we look at non-auto, right, where there's legal challenges, some obviously the court costs run collections to a degree, so we kind of understand what's going on there. On the auto channel, when you do have those higher cost elements, like if it's a repo, for example, which is not all of it, obviously, but I would imagine those high costs are incurred kind of essentially in the same or very closely related time period to when the collection occurs as well, i.e., maybe wholesaling the vehicle at an auction. So does the auto, it does have high collection, but are those closely aligned? They're not as distortive time-wise to cash efficiency ratios as, say, sometimes the regular court cost rates component is, if that makes sense.

David Burton

It does make sense. My answer is not intentionally confusing, but I just want to flag that we purchase across kind of the three core businesses, if you will, of, you know, charge-off, insolvency, and now performing. And auto and performing has a low cost to collect. And as you at least in the context of how closely do the expenses correlate to collections, and I think they're not in any way out of sequence in the performing side of the business, nor are they really in insolvency, at least for secured insolvencies, as those are paid out at 100% in the bankruptcy process plus interest in some cases. But it's in the deficiency collections in distressed where you may have a disconnect between some expenses and recoveries. Repossession is one example of that and court costs is another, and because deficiency balances tend to be a low priority obligation for the consumer, a higher percentage of recoveries in the deficiency balance and distressed segment will require the legal channel, and so you'll see a greater disconnect between costs and recoveries or collections. Um, so again, because in the quarter we deployed capital across all three of those, I make the answers a little complicated and we're not going to disclose exactly how much was in each. But I think your bigger question is, do you expect some kind of a step function change in the timing of your expenses and your collections, how would that flow through perhaps to your cash efficiency ratio? And I think, you know, [ Christo ] sort of guided on that, and it's consistent with what we've really indicated in the past, you know, both with and without the performing side, without performing, you know, high 60s is what we would expect, and despite the larger deployments in auto, we are not anticipating really any change in that.

Christo Realov

Robert, one additional comment. The return profile of the incremental deployments in July is not substantially different than our historical return targets and what we're seeing on the rest of the portfolio, right?

Robert Dodd

Got it, got it, thank you. So the follow-up to that, I mean, you said in the prepared remarks a day or two ago, I can't remember if it was you or David, [ Christo ]. You've got forward flows locked in over the next year at $312 million. You bought $185 million in July. Maybe a tiny part of that was from the forward flows, but I don't imagine very much. That's $497 million. And you also said that you need to deploy over the next year $565 million to maintain ERC. I mean, that looks like you're almost there in July, right, with contracts and forward flows. I mean, so are there any headwinds you can see where you would not generate substantial, maybe you don't want to use the word substantial, but meaningful ERC growth over the course of the next year, given the position you're starting in in July and the amount that you need to deploy over the next 12 months?

David Burton

The clear answer is no.

Operator

Our next question is from Bose George with KBW.

Bose George

Just going back to the auto discussion, you know, it seems like it's hitting kind of an inflection point, that asset class. You know, how much of the change is being driven by just the increased supply that you noted versus, you know, a shift among lenders, maybe recognizing that the outcomes, you know, could be better through selling the receivables?

David Burton

You have a number of drivers in the auto market. Some are permanent and some are sort of episodic to this moment in time. And so the permanent drivers are that a relatively low percentage of autos happen to be sold into the market. And our quest is to cultivate relations with more originators and encourage them to undertake their first sale, which is a profit-maximizing option for them. And so there's a large organic opportunity that really has nothing to do with the level of charge-offs or any headwinds that are sort of an episodic component right now. And then turning to the episodic aspect, there happens to be higher balances in auto, a more stressed consumer, that also happens to have depleted the savings that were built up during the pandemic after receiving government stimulus. And the level of delinquency and defaults for some originators has become an important headwind that is driving them to look at asset sales either at levels that are higher than they were before or, in some cases, more holistically and potentially exiting the origination business altogether.

And so, you know, it's a very fragmented industry, and so there's lots going on. And it's hard for me to characterize how much of our deployments were derived from either the episodic trends or the broader trend of more auto originators choosing to optimize their profitability by beginning to sell their charge-offs to us or to the sector.

Bose George

Okay, great. That's helpful. Thanks. And then just on the forward flow numbers, can you just remind us, is there kind of a sweet spot for purchase forward flow commitments as a percentage of your total acquisitions?

David Burton

Historically, that percentage has ran, you know, in the 50% range, you know, plus or minus. And so we're not really trying to optimize around a specific percentage of our deployments. Our goal is to deploy capital at attractive risk-adjusted returns, and we seek to have as many forward flows in place that reflect those levels of attractive risk-adjusted returns. They certainly help in terms of having certainty and allow us to have a base to be able to jump off of as we attempt to grow in the aggregate. So, forward flows is not a specific like target. It hopefully is a byproduct of a good relationship with originators where we can add value and we turn that value into something that's more long-term in a forward flow agreement.

Operator

That will conclude today's question and answer session. I would now like to turn the floor back to David Burton for closing remarks.

David Burton

Thanks, Operator. Looking forward, we're excited about the growth prospects for our business for the remainder of this year and beyond. We've built an outstanding platform over the past 23 years, and we're in a great position to capitalize on opportunities as the market continues to evolve. Thank you all very much for joining us in today's call, and we look forward to providing another update on our third quarter earnings call.

Operator

Thank you. This does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.