크레딧 악셉턴스(CACC) 2026년 3분기 실적 발표 컨퍼런스 콜: 대출 성장 및 2억 9,100만 달러 전망치 수정

핵심 요약

• 소비자 대출 양도 건수는 전년 동기 대비 38% 증가한 11만 건 이상을 기록했으며, 대출금액 총액은 51% 늘어난 14억 달러를 기록했다.
• 경제적 이익은 18% 증가한 5,070만 달러를 기록했으며, 희석주당 경제적 이익은 30% 늘어난 4.87달러를 기록했다.
• 크레디트 억셉턴스는 전년 동기 1억 820만 달러의 순이익을 기록했던 것과 달리, 이번 분기 5,660만 달러(희석주당 5.43달러)의 GAAP 순손실을 기록했다.
• 회사가 2022년부터 2026년까지 양도된 대출의 예상 수명 주기 회수금을 하향 조정함에 따라 예상 순현금흐름은 2.5%(2억 9,100만 달러) 감소했다. 실적 부진은 내부 위험 점수가 낮은 구간에 집중됐다.
• 활성 딜러 수는 전년 동기 대비 19% 증가한 1만 2,093개로 역대 최고치를 기록했다. 활성 딜러당 평균 취급액은 15% 증가하며 7분기 연속 하락세를 반전시켰다.
• 경영진은 새 스코어카드 도입 이후 초기 성과가 긍정적이라고 밝혔으나, 해당 대출의 경과 기간이 상대적으로 짧아 더 많은 성과 기록이 필요하다고 강조했다.

주요 재무 데이터

사업 및 영업 성과

크레디트 억셉턴스는 딜러 네트워크의 규모와 생산성을 모두 확장했다. 회사는 이번 분기 1,350개의 신규 딜러를 등록하며 역대 최고치인 1만 2,093개의 활성 딜러로 분기를 마감했다. 경영진이 인용한 커런트 벨로시티(Current Velocity) 데이터에 따르면, 핵심 부문인 서브프라임 소비자의 중고차 할부 금융 시장 점유율은 2025년 동기의 4.5%에서 3분기 첫 두 달 동안 5.4%로 상승했다.

경영진은 이러한 성장 가속화의 주요 원인으로 스코어카드 개편, 딜러 참여도 증가, 애그리게이터 플랫폼과의 연계 확대를 꼽았다. 이러한 시스템 연계를 통해 딜러십 금융팀이 이미 사용하는 플랫폼에서 대출 신청을 직접 처리할 수 있게 됨으로써 프랜차이즈 및 대형 독립 딜러로의 접근성이 확대되고 있다.

또한 회사는 경미한 구조적 손상이 있는 차량 대상 금융 상품의 전국 확대를 지속했다. 계정 셀프서비스를 위한 소비자 모바일 앱 사용량은 전년 동기 대비 19% 증가했다.

크레디트 억셉턴스는 자체 데이터를 중앙집중화하고 위험 선정, 가격 책정, 재고 매칭, 대출 관리 및 자본 배분을 위한 AI 기반 도구를 개발하고 있다. 경영진은 개발 주기가 단축됨에 따라 일부 플랫폼 기능 개선을 몇 주가 아닌 며칠 만에 적용할 수 있게 되었다고 밝혔다.

영업비용은 급여, 임금 및 일반관리비 감소에 힘입어 전년 동기 대비 10% 줄어들었다. 대출 규모 증가에 따른 수수료 등 영업·마케팅 비용 증가로 절감액 일부가 상쇄되었으나, 회사는 해당 분기 동안 인력을 약 6% 감축했다.

크레디트 억셉턴스는 분기 초 발행주식수의 2.6%에 해당하는 269,150주를 1억 6,160만 달러에 매입했다. 또한 8월에는 역대 최대 규모인 6억 달러 규모의 자산유동화증권(ABS) 발행을 완료하며 2021년 말 이후 가장 낮은 신용 스프레드를 기록했다.

리스크 및 주시 영역

개정된 예측 방법론으로 인해 2022년부터 2026년까지 양도된 대출의 예상 회수율이 하향 조정되었다. 2025년 및 2026년 대출 빈티지의 예상 회수율은 현재 약 65% 수준이다. 경영진은 조정분의 대부분이 새 스코어카드가 도입되기 전에 취급된 대출과 관련되어 있다고 설명했다.

회사는 변동성이 큰 논프라임(nonprime) 신용 환경에서 예측의 불확실성이 지속되고 있다고 지적했다. 신규 스코어카드 코호트의 초기 결과는 긍정적이지만, 확정적인 결론을 내리기에는 경과 기간이 충분하지 않다고 덧붙였다.

포트폴리오 실적 부진의 불균형적인 비중은 내부 위험 점수가 낮은 구간에서 발생했다. 2026년 1월부터 6월까지 양도된 대출의 경우 예측치가 250bp 하향 조정된 반면, 2026년 3분기 대출의 조정폭은 90bp에 그쳤다.

조기 상환은 예측치 및 과거 수준을 밑돌았으나, 경영진은 이것이 이번 분기 조정에 미친 영향은 미비했다고 밝혔다.

크레디트 억셉턴스는 이번 분기 뉴욕주 및 다수 주 규제 당국과의 문제를 해결했다. 경영진은 현재 평가를 바탕으로 이번 합의가 회사의 성장 전략이나 영업 모델에 실질적인 영향을 미치지 않을 것으로 예상한다고 전했다.

애널리스트 Q&A 주요 내용

애널리스트들은 2억 9,100만 달러의 예측 조정이 향후 조정 수익률을 저하시킬지에 주목했다. 경영진은 해당 영향이 3분기에 모두 반영되는 것이 아니라 대상 빈티지의 잔여 기간에 걸쳐 인식될 것이라고 밝혔다. 또한 비중이 줄어드는 기존 빈티지가 만기 소멸되고 신규 가격이 적용된 대출이 포트폴리오에 진입함에 따라 시간이 지나면서 전체 수익률 구성에 영향을 미칠 것으로 전망했다.

경영진은 이번 예측 조정이 소송 문제와는 무관함을 확인했다. 이는 내부 위험 구간, 특히 점수가 낮은 코호트에 대한 회수 성과를 더욱 세분화하여 분석한 결과이다.

개정된 스코어카드에 대한 신뢰도를 묻는 질문에 경영진은 예측이 고정되어 있지 않을 것이라고 답변했다. 세분화 확대, 모델 업데이트 속도 향상, 보다 상세한 코호트 분석을 통해 포트폴리오 변화를 파악하고 대응하는 역량이 강화되었다고 회사는 보고 있다. 다만 경과 기간이 짧아 신규 대출에 대해 단정적인 결론을 내리지는 않았다.

신규 취급액 성장에 대해 경영진은 단일 이니셔티브에 의존하기보다 다방면에 걸쳐 성장이 이루어졌다고 강조했다. 애그리게이터 연계, 영업 타겟팅 개선, 기존 딜러의 성장, 프랜차이즈 및 대형 독립 딜러로의 확장이 모두 기여했다.

실적 발표 컨퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good day, everyone, and welcome to the Credit Acceptance Corporation Third Quarter 2026 Earnings Call. A webcast recording and transcript of today's earnings call will be made available on Credit Acceptance website.

At this time, I would like to turn the call over to Credit Acceptance Chief Financial Officer, Joe Billante.

Joseph Billante

Thank you. Good afternoon, and welcome to the Credit Acceptance Corporation Quarterly Earnings Call. As you read our news release posted on the Investor Relations section of our website at ir.creditacceptance.com, and as you listen to this conference call, please recognize that both contain forward-looking statements within the meaning of federal securities law. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. and which could cause actual results to differ materially from such statements. These risks and uncertainties include those spelled out in the cautionary statement regarding forward-looking information included in the news release. Consider all forward-looking statements in light of those and other risks and uncertainties.

Additionally, to comply with the SEC's Regulation G, please refer to the supplemental information section of our news release, which provides tables showing how non-GAAP measures reconcile to GAAP measures.

At this time, I would like to introduce our Chief Executive Officer, Vinayak Hegde.

Vinayak Hegde

Good afternoon, everyone, and thank you for joining us. As I approach my 1-year mark as CEO, the work we began when I stepped into this role is starting to produce tangible results. We set out to transform credit acceptance into a deeply data inform AI-enabled company while maintaining a disciplined approach to risk and capital allocation. We are focused on executing this strategy while building a culture that puts dealers and consumers at the center of how we operate.

Our third quarter results show meaningful progress. Consumer loan assignment unit volume increased 38% year-over-year. Loan dollar volume increased 51%. Economic profit increased 18%. Economic profit per diluted share increased 30% and active dealers reached a record more than 12,000. We expanded our dealer network generated more volume from existing dealer relationships. We continue to strengthen the operating capabilities that support profitable growth.

We continue to drive operational rigor and data-driven disciplines across our business. As part of that work, we adjusted and strengthened our methodology for forecasting future net cash flows from our loan portfolio, which reduced forecasted collection rates from consumer loans assigned from 2022 to 2026. Additional seasoning, performance history and more granular segmentation gave us better insight into expected lifetime collections. I'll discuss what changed, what we learned and how those insights are reflected in our current score card.

Today, I'll focus on 3 important takeaways. First, our third quarter growth was strong and broad-based. Second, we are advancing our pricing and forecasting capabilities provided insights that inform the portfolio forecast adjustment we made during the quarter. Third, the operating capabilities we have built give us confidence in the opportunity for disciplined profitable growth. We achieved these results through execution across 4 core operating pillars: customer obsession, segmentation, leveraging data in and disciplined operating rhythms and practices. These will remain our center of gravity and priorities as we transform and grow our business.

We achieved growth without compromising our credit discipline, purchasing short-term volume because our focus is growth that maximizes long-term economic profit per share. We're still early in capturing the opportunity ahead, but our transformation is well underway. Our first core operating pillar is customer obsession. We spent time with dealers in their stores, listened to their feedback, and work with them to help more consumers find reliable vehicles with affordable payments. Those conversations inform our product and technology priorities and keep our investments focused on the problems dealers and consumers need us to solve.

We're also making it easier for dealers to do business with us by integrating directly into the aggregator platforms they already use to submit financing applications. These integrations simplify the path from application to funding and expand our reach, particularly among franchise and large independent dealers. Additionally, continue to make it easier for consumers to interact with us. For example, mobile app usage, their consumer self-service their accounts has increased 19% year-over-year. The second pillar is segmentation. We are increasingly evaluating opportunities across multiple dimensions, including consumer credit, dealer characteristics, geography, vehicle attributes and deal structure. This approach allows us to evaluate opportunity and risk with more granularity across specific segments, tailor our approach and allocate resources where we believe we have the strongest opportunity to create value.

We have strengthened our go-to-market execution and are building a more capable commercial engine. Segmentation generates insights at shape our commercial strategies and our sales organization translates these strategies into field execution, tailored by dealer type, geography and channel. The work is contributing to growth among franchise and large independent dealers and is opening new distribution channels. Segmentation is also helping us identify opportunities within existing markets. The light structural damage vehicle offering we launched last quarter continues to add incremental volume and adoption is increasing as it scales nationally.

More broadly, we are evaluating opportunities to expand the products we support in established segments where dealer and consumer demand already exist and where we believe we can maximize economic value added. But segmentation is just as valuable in telling us where to be more selective. That discipline is central to how we think about growth. Let me address an important question directly. How are we growing faster at the same time that we are lowering our forecast to certain existing loan cohorts.

The majority of the impact of this quarter's forecast adjustment is related to loans assigned to us before the introduction of our new score card. Our current growth is driven by stronger commercial execution, expanded aggregator distribution and a new scorecard, which was designed to enhance our risk assessment capabilities. We began rolling out our new scorecard late in the second quarter and enhanced it throughout the third quarter.

In developing the new score card, we returned to first principles, we analyzed more recent performance across detailed consumer, vehicle, dealer and transaction segments and back tested those results against our prior expectations. We use those insights to inform the new score card which uses more tailored approaches for customer segments with different risk characteristics. We expect this approach to provide a richer and more current view of the risk, allowing us to differentiate loan attributes more effectively in making more informed pricing and assignment decisions.

That analysis also helped us better understand the primary drivers of the small but consistent negative forecast changes that had been recording. It showed the underperformance of loans assigned to us in 2022 through 2026 was most pronounced in lower score bands. We made the portfolio forecast adjustment this quarter because the expanded analysis indicated that the underperformance in the affected cohorts was likely to continue.

Without the insights that inform this adjustment, it is possible that quarterly adjustments would have continued through the remaining life of these loans. Coming to the performance of the loans assigned under the new core card. We are closely monitoring them, and early indications are encouraging. However, these loans remain relatively unseasoned, and we need additional performance history before drawing firm conclusions. We view the current scorecard as an important step not the end state. Over time, we'll continue to advance our models so we can refine pricing and implement decisions with greater speed and precision.

Alongside the scorecard, our aggregator integrations expanded our reach towards franchise and large independent dealers, and our commercial team executed against those opportunities. Our unified strategy drove the growth and the capabilities we are building are designed to help make it repeatable. Our objective is to make more informed tailor decisions for each consumer, dealer, vehicle and transaction. That should help us support consumers throughout the life of their loans, grow alongside our dealers and allocate capital to opportunities where we maximize economic profit.

The third pillar is leveraging data and our objective is practical, use better data and predictive tools to improve risk selection, pricing, capital allocation, operating efficiency and customer service. We are modernizing our technology stack and bringing decades of proprietary data into a centralized platform, so our teams can make faster, more informed decisions.

For dealers, we are applying proprietary data and AI to inventory matching tools that help identify vehicles that fit well with our programs for consumers. We are embedding these capabilities in the systems dealers already use, so they can fit naturally into dealer workflows. For consumers, we are expanding digital self-service and personalization across the life of the loan while preserving access to our team and human support is needed. To accelerate this evolution, we brought in G2 Mitch Andani as Chief Technology Officer to lead our digital-first strategy and technology transformation.

The fourth pillar is disciplined operating rhythms and practices. Customer obsession, segmentation and AI only create value when they are supported by clear ownership, consistent measurement and timely decisions. Over the past year, we have established a more consistent cadence, setting priorities, measuring results and holding teams accountable. We're also reducing internal constraints and shortening development cycles. As a result, we can deploy certain platform enhancements in days rather than weeks and align resources against a unified road map. We will not get every decision right.

Our objective is to test ideas thoughtfully identify what is not working early and direct resources towards the initiatives producing the strongest results. Over the past year, we have deliberately assembled an executive leadership team the capabilities needed to lead the next phase of our transformation. During the quarter, we welcomed the additions of Sid Law as Chief Marketing Officer; GTMs Chandani as Chief Technology Officer; and Shannon Wilson as Chief Human Resources Officer.

At the same time, we have preserved deep institutional knowledge throughout credit acceptance. We paid leaders who understand our business and customers with complementary experience from industries that have navigated similar challenges to the ones we are tackling today. This combination is already driving innovation and accelerating our business transformation. With our executive leadership team in place, we continue to invest in our talent and deepen our leadership bench to ensure we have capabilities required to execute our long-term strategy. These pillars define our core operating model and our recent progress reflects the value of that work.

Turning to our third quarter operating results. Economic profit is the primary metric around which we optimize our business. Economic profit for the quarter was $50.7 million, up 18% year-over-year while economic profit per diluted share increased 30% to $4.87. Consumer loan assignment unit volume increased 38% year-over-year to more than 110,000 loans. Loan dollar volume increased 51%. This was the first quarter of year-on-year growth since the fourth quarter of 2024. Active dealers reached a record of more than 12,000 in up 19% from the prior year.

Average volume per active dealer increased by 15%, reversing 7 consecutive quarters of year-over-year declines. These results reflect growth from active dealers and higher volume from existing dealers. The breadth of that performance is important because it indicates that the quarter's growth did not depend on a single level. Our momentum is driven by sharper execution across multiple commercial and operational initiatives. Our objective remains profitable growth that maximizes long-term economic profit per share.

Turning to forecast adjustment in more detail. During the third quarter, we updated our methodology for forecasting future net cash flows. The change reduced forecasted collection rates for consumer loans assigned from 2022 through 2026 to the levels we now expect over the lives of those loans. Before this adjustment, we had observed small but consistent quarterly underperformance relative to forecast and had updated our expectations incrementally each quarter. The underperformance was more pronounced in lower score card bands.

Additional loan seasoning, performance history and more granular segmentation give us greater visibility into the pattern of those variances. Based on that work, we concluded that a more comprehensive update to our lifetime collection expectations was appropriate. Most of the impact relates to loans assigned before the news core card was introduced. We are monitoring newer cohorts closely, but they need additional seasoning before we can reach firm conclusions about their performance.

We believe our segmentation analysis I discussed earlier have improved our pricing and forecasting processes. Forecasting will never be static, particularly in a dynamic nonprime credit environment, and we'll continue updating our assumptions as additional information becomes available. It is important to note that our business model is designed with a significant margin of safety intended to produce acceptable aggregate returns E1 when loan performance is below forecast. We also believe we have improved our understanding of the drivers of portfolio performance and our ability to identify and respond to changes.

Turning to regulatory updates. During the quarter, we reached agreements resolving the New York and multistate matters. We are pleased to have achieved those resolutions and are focused on fulfilling our obligations under the agreement. Many of the standards reflected in the agreement are consistent with practices already in place at credit acceptance. Based on our current assessment, we do not expect agreements to have a material effect on our growth strategy or the way we operate the business.

Our mission remains unchanged to make vehicle ownership possible for consumers who might otherwise have limited access to credit and to help create opportunities that come with reliable transportation. With these agreements in place, our focus remains on executing our strategy and building for the future.

Looking ahead, we are applying the same operating model to 3 areas. First, in collections and servicing we are developing more personalized approaches intended to engage consumers with support suited to their circumstances throughout the life of the loan. Second, across our dealer network, we are using predictive models to identify high potential dealer relationships and markets so we can deploy our field resources more effectively.

Third, we are expanding our digital and mobile capabilities to create a simpler consumer experience and support longer-term relationships. These initiatives remain in their early stages as they develop we will evaluate them based on their effect on customer experience, operating efficiency, portfolio outcomes and economic profit. Stepping back, the investments we made over the past year are beginning to drive operating efficiencies and build momentum across the business. We are encouraged by our progress this quarter and remain focused on the quality and profitability of our growth.

Our priorities are clear: advance the precision of our pricing and forecasting capabilities, deepen our dealer relationships, create a better consumer experience and allocate capital to the opportunities that can maximize long-term economic profit per share. We have more work ahead and the progress will not be linear. But the capabilities we have built, the leadership team we have assembled and the operating discipline now in place give me confidence in our ability to execute.

With that, I'll turn it over to Joe to discuss our results in additional detail.

Joseph Billante

Thank you, Vinayak. I'll provide some additional perspective on our third quarter financial results, loan performance, capital position and expenses. As Vinayak mentioned, for the third quarter, economic profit was $50.7 million, up 18% year-over-year, while our economic profit per diluted share increased 30% to $4.87. The Economic profit is our most important measure because it reflects both the profitability of the business and the cost of the capital required to generate those profits, helping us evaluate whether our growth is creating long-term shareholder value.

Our focus is on improving returns over time through disciplined capital deployment, precision in forecasting and pricing and improved operating efficiency, while continuing to pursue attractive opportunities to grow market share. Moving to other financial metrics for Q3. We incurred a GAAP net loss of $56.6 million or negative $5.43 per diluted share compared with GAAP net income of $108.2 million or $9.43 per diluted share in the third quarter of 2025.

As discussed previously, we do not believe GAAP provides sufficient transparency into the underlying economics of our business. primarily because of the timing of revenue and credit loss recognition under CECL rules. For that reason, we also measure our adjusted results, which we believe more accurately reflect our financial health. To that end, adjusted net income was $135.5 million or $131 per diluted share, up 15% and 27%, respectively, year-over-year.

The increase in adjusted earnings reflects the benefit of stronger loan volume and operating expense leverage, partially offset by the impact of changes in expected cash flows from our loan portfolio. Overall, we continue to balance investments to support growth with a disciplined focus on profitability and returns.

Let me break this down into more specifics. Beginning with origination activity. As you heard, consumer loan assignment unit volume was over 110,000, an increase of 38% year-over-year, a significant acceleration versus last quarter when volume declined by 1%. The Also, in Q3, dollar volume increased 51% to $1.4 billion. We enrolled 1,350 new dealers during the quarter and had a record 12,093 active dealers. Volume per active dealer increased by 15%. The scorecard changes that Bank outlined, combined with significant increases in dealer engagement by our sales team and expanded integration with the aggregator platforms were the largest contributing factors to the growth acceleration.

The combination of a larger active dealer base and higher volume per dealer is also leading to market share gains. For the first 2 months of Q3, according to current velocity data, market share in our core segment of used vehicles financed by subprime consumers was 5.4%, up from 4.5% for the same period of 2025. Importantly, while our growth trajectory has changed, our disciplined approach to capital returns has not changed.

We continue to evaluate the incremental capital we deploy based on the economic return we expect that capital to generate over the life of the loans. Turning to loan performance. Forecasted net cash flows declined by 2.5% or $291 million during the quarter compared with a decline of 0.5% in or $59 million in the third quarter of 2025. The strong majority of the third quarter impact was driven by the segmentation analysis you just heard about. More granular analytics capabilities helped us identify areas where actual performance and timing of cash flows had diverged from original forecast assumptions, with the underperformance more pronounced among consumer loans and lower scorecard bands.

Prepayments remain below our forecast as well, but were a minor contributor to the forecast change. The revised view of our forecasted collection rate for 2025 and 2026 loan vintages is approximately 65%. While the revision is meaningful to our GAAP results in the short term, it represents a relatively modest change when considered against nearly $12 billion of forecasted net cash flows in the portfolio. The impact on adjusted earnings and economic profit will be realized over the life of these vintages.

We believe that the actions we took in Q3 have enhanced our pricing and forecasting processes and position us to make faster, more informed decisions. recognizing that results will continue to be influenced by market conditions and other factors outside our control. It is important to note that our business model is designed with a significant margin of safety intended to produce acceptable aggregate returns even when loan performance is below forecasts.

lWe will continue to monitor trends closely and adjust our expectations as appropriate.

Turning to capital allocation. Our priorities remain clear. First, we fund profitable loan growth that expands economic profit. Second, we evaluate new growth opportunities based on their ability to generate attractive economic returns and increase long-term economic profit per share. That framework also applies to decisions around share repurchases and other uses of capital to increase shareholder returns.

During Q3, we repurchased 269,150 shares for $161.6 million, representing 2.6% of shares outstanding at the beginning of the quarter. On a year-to-date basis, share repurchase activity has accounted for $0.83 of Q3 adjusted earnings per share. We ended September with $1.2 billion of liquidity, consisting of amounts available for borrowing under our revolving lines of credit and unrestricted cash and cash equivalents.

In August, we completed a $600 million securitization, matching our largest ABS transaction to date and achieving our lowest credit spreads since late 2021. We believe this liquidity, together with our access to the capital markets provides us with the flexibility to grow the company. Finally, on expenses, we remain focused on operating efficiency while continuing to direct resources toward areas where we believe they can create the greatest long-term value. Operating expenses decreased $14.2 million or 10% year-over-year. The decrease primarily reflected lower salaries and wages and lower general and administrative expenses, partially offset by higher sales and marketing costs, including commissions associated with the significant increase in loan volume. The reduction in salaries and wages reflects lower head count and certain other personnel-related costs.

During the quarter, we reduced our team member base by approximately 6% and following a similarly sized reduction discussed on our first quarter earnings call. The decline in G&A also reflects the $5 million contingent loss recognized in the prior year period related to the multistate matters. No additional expenses were incurred in Q3 of this year related to this settlement. Our objective is not simply to minimize expenses. It is to make sure we are allocating resources efficiently to maximize economic profit over the long term.

We are continuing to use technology and automation to improve productivity while maintaining discipline around both existing expenses and new investments. Taking in all that happened in the past 3 months, the third quarter combined significantly higher origination activity with pricing rigor, disciplined expense management, ample liquidity and value accretive capital allocation. We're excited by the opportunities we are seeing to deploy capital while remaining focused on generating attractive returns and maximizing long-term economic profit per share.

At this time, Vinayak and I will take your questions, along with Jay Brinkley, our Senior Vice President and Treasurer; and Jeff Sutor, our Vice President and Assistant Treasurer.

Operator

[Operator Instructions] Our first question comes from Moshe Orenbuch with TD Cowen.

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Moshe Orenbuch

Great. I want to digest here. I guess maybe the first question -- just trying to understand, I mean, first of all, just to be very clear, none of this write-down had anything to do with the litigation, correct? And then the write-down to the expected cash flows.

Vinayak Hegde

Moshe, yes, thanks for the question. Yes, none of this write-down had to do anything with the litigation.

Moshe Orenbuch

Got it. Okay. I just wanted to make that clear -- now I guess the -- what I don't, I guess, understand is maybe 2 things. First off, I mean you're talking about like adjusted earnings and economic profit, but doesn't the adjusted yield go down prospectively. So it's not -- I mean, the current quarter is based upon an old adjusted yield, not a new adjusted yield with the effects of that write-down in it? And what would it look like, I guess, if that if you did take that into account.

Vinayak Hegde

Yes. So look, Moshe, I think the best way to think about the adjusted results, right, is that takes the forecast adjustment it spreads it over the life, more in line with the overall yield, right, and performance. The GAAP results are a little bit misleading because it requires you to take everything upfront for the CECL rules. That's true for all new volume and any free cash flow adjustments and forecast changes, right? But the adjusted is better reflective of everything taken into account, takes into account the new volume growth, takes into account the forecast adjustment and applies it over the life of those vintages.

Moshe Orenbuch

I guess -- but I'm asking you, in other words, when you're comparing third quarter adjusted profit and economic profit, you're using an out of date adjusted yield, correct? Because you've now got to reflect that in the adjusted yield going forward. And I'm just asking what that would look like.

Vinayak Hegde

Yes. Remember, our forecasted cash flows predict future expectations of performance. right? And so we reflect that. And we're comparing where we are at this point in time, we feel very good about that forecast adjustment, right, comparing where we are today in that adjusted result compared to what it was a year ago.

Moshe Orenbuch

7 Right. I'm just going to try this significant way, sorry. The adjusted yield was 19.2% on average adjusted capital, right, in the quarter. that was going to be lower in Q4, correct, because you're now going to take 3% of your cash flows out. So should we assume it's going to be down 3%. And and whatever that math works out to 50-some-odd basis points lower. Is that the way that we should be modeling it?

Vinayak Hegde

I don't think it's the right way for you to think through it. Remember, this adjustment will take approximately 2.5% on right, on a book of $12 billion, right, over time, over the life of that vintage, okay? And so when you look at the -- we disclosed all the schedules, you can look at our release in terms of the vintage performance. year-by-year, they've been improving and getting better. And when you look at the expected performance on an adjusted basis, this adjustment won't all hit obviously, Q3, it will spread over the coming quarters.

And so yes, those vintages will perform in line with our current expectation, right, which, as the legacy vintages roll off, we expect that to help the overall yield. But we're also -- since the forecast adjustment was made, we are writing -- and as we price new loans, we've been getting enhanced pricing and more accurate. And when we look at this adjustment, we feel good about this -- the new volume we've been getting, and it's also performing if you look at the the split of the adjustment between kind of the more current vintages and the current loans in the quarter, the adjustment was much smaller. And so you're going to have lower performing vintages fall off and you're going to have better performing vintages come in. which will help that overall yield mix.

Moshe Orenbuch

Okay. I guess maybe just as a follow-up, in terms of the the steps that you've already taken that have improved the kind of efficiency, the customer experience, the dealer experience, do you have a sense as to like what that's going -- what that impact could be in terms of originations, market share? Or any other way that you'd like to -- that you could frame it?

Vinayak Hegde

Yes. So definitely, I'll talk about the dealer experience first. And I've talked about this, Moshe, in my previous calls as well on us changing our strategy to partner with aggregators like Ron and DealerTrack and which helps us actually get more applications and thereby contracts from large franchise and independent dealers, a significant portion of the growth that we are seeing is actually coming from that. Our core principle is we want to operate where our dealers and customers operate.

And if you go to many of these dealers, the people who work that the F&I managers are used to using aggregated platforms like Wheeler track and Drug 1 and dealer center. So they don't want to get trained to a new method of actually operating like CAPS. So we -- our goal is to make sure, like we meet the dealer where they want to meet us in terms of the customer experience. So that's 1 thing we are doing. And that is definitely contributing to growth. And it's not just that, right, even our portfolio dealers who use caps are also growing. So improving the customer experience, that's 1 area.

The second area is also what we are doing with respect to actually where we spend time with the dealer itself. -- our sales focus and go-to-market is much more sharpened in terms of how do we actually communicate with which dealer. We understand what is happening with the lifetime value for dealer and how we can improve. So it's a more broad-based approach to growth and not just 1 particular lever.

Operator

[Operator Instructions] Our next question comes from Robert Wildhack with Autonomous Research.

Robert Wildhack

Maybe a little bit more on the forecasted collections and the revision. Looking backwards, as forecasted or changes to forecasted collections had generally started to level off they were only down marginally in the first quarter and maybe down a little more in the second quarter, but I think you messaged the 2Q revision is basically just like normal variance and ups and downs. And then really the only small but consistent underperformance had been from the prepayments, which you're saying are not a big driver of this change. So can you give us any more color on where where you were seeing the underperformance in collections that's leading to the big adjustment here? Is it on particular FICO bands or income or vehicle type? Just any additional color because it seems like revisions to forecasted collections have actually been improving until May.

Vinayak Hegde

Let me take the question. And then, Joe, you can add on. Yes. So as we have told in the forecast in our opening remarks itself, -- the adjustment -- when we started making changes to the score card, we saw certain cohorts. We score all of our deals on a risk band. And we saw underperformance in some of the lowest scoring risk bands within our portfolio. And so when we started making the adjustments to the scorecard, that helped us understand like what is happening to the forecast. So that's how -- it's not just particular FICO bands, but it's our own internal risk scoring that actually helped us understand the performance. And we use that as the input to figure out how to actually make the changes to the forecast.

Joe, do you want to take the rest?

Joseph Billante

Yes. Regarding the prepayments, we had seen some movement in that in past quarters, and they were up slightly year-over-year in the quarter, but they remain below historical norms. They were not a material contributor to the Q3 adjustment, right, really, what's going on here is more of what Vanatalked about. And as we started to understand behavior earlier this year, we saw a much better result in Q1, and that started to change kind of late Q2 and into Q3. And at the same time, as we were making scorecard changes, we've got better insights. We've got better granular visibility into what was happening.

And if we had not made this adjustment, it's possible, as you heard in the earlier remarks, that we would have had some of these small adjustments going forward. And so the vast majority of this, keep in mind is related to loans that were before the recent scorecard change at the beginning of the quarter. we iterated on that through Q3. So there was a slight adjustment in Q3. But this really relates to the past. This relates to loans before the recent scorecard change. And because it was in those lower bands, disproportionately, that drove more of the value. I don't know none, do you want to add anything else?

Jay Brinkley

Yes. Yes. I just want to add, like, look, our business model is built with significant margin of safety, right, designed to operate with acceptable aggregate returns even when the collections are below initial forecast. And when we started making the core card changes, I mean you see it in our earnings report here where -- if you look at the cohort of loans from January to June of 2026, there were -- we adjusted the forecast by 250 basis points, whereas if you look at it for Q3 alone, it's only 90 basis points but keep in mind that we're making multiple changes to the scorecard right now. But we started late Q2, but we have made multiple changes.

We are fine-tuning it and making it more and more accurate. The seasoning of the loans has given us the visibility into that. And there are 2 things you have to see here. It used to take a long time to make scorecard changes. Now we have the capability to actually make consistent fine-tuning of scorecards with much faster speed than we ever had before. And we are kind of doing the same thing with the forecast as well. So over a period of time, we'll continue to make it more and more accurate.

Robert Wildhack

Okay. Just to confirm and make sure I'm hearing you right, you're saying that were there like significant changes in realized collections, i.e., lower that you saw in late Q2 and into Q3 that really sparked the change?

Vinayak Hegde

Not necessarily, right? What I'm saying is the changes that we are seeing were more primarily related to certain cohorts, which were in the lower risk bad, right? It's not just necessarily in Q2 or something it's in the lower risk bands. And so those lower risk bands is where we actually fine-tune the score card to adjust for that where we got more conservative in our pricing on those for all future loans. SP34257719 Yes. And I would add that if you look at the last 2 years, not just the last couple of months, right, Q1 was better than the last 8 quarters, but 7 out of those 8 quarters were performing relatively consistently, right? And this, we feel like takes care of all of that.

Robert Wildhack

Okay. I guess if I just zoom way out, it kind of felt like we had just worked through the drag of the 22 vintage. And now we see you marking down the 23 through 26 vintages pretty significantly. I mean broadly speaking, what's your message to the market to the investment community on how we should all feel comfortable that the scorecard is now right this time?

Vinayak Hegde

Yes. So let me take that forecasting will never be starting, right, particularly in a dynamic non-prime credit environment. Previously, we were taking small but consistent quarterly underperformance. If you look at the previous like 8 to 10 quarters, you will see that we are updating it incrementally, right? Now that we see the data more closely, we feel more confident that these adjustments that we understand by cohorts actually helps us be a little more confident about where the market is going. This better understanding of the drivers of the portfolio performance and better ability to respond to changes makes us feel a little more confident about where we are going with respect to this.

And we have the ability to kind of fine-tune it more and more now, understand the risks at a much finer grain level than we ever had before. And that's what we'll continue to do going forward.

Operator

Thank you. With no further questions in the queue. I would like to turn the conference back over to Mr. Volante for any additional or closing remarks.

Vinayak Hegde

All right. Thanks. Look, we'd like to thank everyone for your support and for joining us on the conference call today. If you have any additional follow-up questions, please direct them to our Investor Relations mailbox at ir@creditacceptance.com. We look forward to talking to you again next quarter. Thank you.

Operator

Once again, this does conclude today's conference. We thank you for your participation.