OPFI

Good morning, and welcome to OppFi's first quarter 2026 earnings conference call. All participants are in a listen-only mode. As a reminder, this conference call is being recorded. Following management's presentation, a question and answer session will be held. For those listening by dial-in, you will be prompted to enter the queue after the prepared remarks. I am pleased to introduce your host, Mike Gallentine, Head of Investor Relations. You may begin.

Thank you, operator. Good morning, and welcome to OppFi's first quarter 2026 earnings call. Today, our Executive Chairman and CEO, Todd Schwartz, and CFO, Pamela Johnson, will present our financial results, followed by a question and answer session. You can access the earnings presentation on our website at investors.oppfi.com. During this call, OppFi may discuss certain forward-looking information. The company's filings with the SEC describe essential factors that could cause actual results, developments, and business decisions to differ materially from forward-looking statements. Please refer to slide 2 of the earnings presentation and press release for our disclaimer statements covering forward-looking statements and references to information about non-GAAP financial measures, which will be discussed throughout today's call. Reconciliations of those measures to GAAP measures can be found in the appendix to our earnings presentation and press release.

In addition, certain important information related to the BNCC transaction will be included in the registration statement on Form S-4 that will be filed by OppFi in conjunction with the transaction. Investors are encouraged to read the Form S-4 and other documents filed with the SEC in conjunction with the transaction. Additionally, OppFi and BNCC and their directors and officers may be deemed to be participating in a solicitation of proxies in favor of the proposed merger. Please refer to the disclaimer information included in our earnings release. With that, I'd like to turn the call over to Todd.

Thanks, Mike, and good morning, everyone. Thank you for joining us today. Pam will review our strategic investments and our Q1 financial performance and metrics. First, I'd like to share a little bit more about OppFi's recently announced plans to acquire BNCC Corp and BNC National Bank in a cash and stock transaction valued at approximately $130 million. OppFi's goal has always been to be the leading digital finance platform, offering essential financial products and services to everyday Americans. This acquisition, in addition to our previous investment in Bitty, our LOLA lending system, and our new line of credit product, is a pivotal step toward fulfilling that promise. BNC National Bank is a community-focused institution with over $1 billion in total assets and a veteran management team with decades of banking experience.

They serve individuals and small to medium businesses through a diversified set of financial products, including personal and commercial loans, SBA loans, and wealth management. We believe the BNC transaction will not only provide OppFi with a larger geographic footprint to expand credit access, but will also unlock significant synergies in operating efficiencies and capital. By uniting OppFi's technology with BNC's national charter and established deposit base, which totaled approximately $1 billion at the end of 25, we will be positioned to provide broader access to financial products for underserved populations. Financially, this acquisition is expected to be transformative. BNC brings a stable, low-cost funding profile with over 80% of BNC's deposits carrying a cost of less than 2%. We expect this to significantly enhance our balance sheet flexibility and lower our overall funding costs.

We expect this combination to be at least 25% accretive to adjusted EPS in the first year post-closing, 40% accretive in the second year, and 50% accretive in the third year. We are very excited to work alongside the BNC team to expand and digitize their core business. We believe that vertically integrating with BNC will provide our platform with the strongest possible strategic footprint, allowing us to expand our products and consumer choices and credit access while reducing costs for our customers. We believe this will also benefit our investment in Bitty by enabling us to further expand our small business platform, offering multiple products and serving additional customer segments. We expect to close in the fourth quarter of 2026, subject to regulatory approval and other closing conditions, and look forward to providing further updates throughout the year.

In addition to the acquisition of BNC, we have simplified our corporate structure by transitioning from an Up-C structure to a traditional C Corp legal structure. This change is intended to provide tax optimization and remove operational complexity of the Up-C structure. As a result of this simplification, all OppFi stockholders now hold Class A common stock with identical economic and voting interests. We believe this enhances our acquisition currency as our stock is more straightforward and attractive vehicle for future growth and M&A activity, ensuring our capital structure is as agile as our technology platform. For the remainder of my remarks, I will be discussing product and credit initiatives and the LOLA migration. OppFi fully deployed the Model 6.1 refit in Q1. The refit is designed to increase volume while improving overall delinquencies.

As discussed last quarter, our current goal is to launch a model refit every 6 months and a new model every year. This will allow us to have the most current data to build our models and keep up with the ever-changing macro environment and customer sentiment. The team is hard at work building our most powerful model, Model 7. We expect to launch Model 7 in the fall of this year. OppFi continues to make great progress on building LOLA, the origination and servicing system of the future. LOLA provides a clean architecture designed to leverage rapidly evolving AI tools across origination, servicing, and corporate operations. The building phase and test phase is complete, and we are actively finalizing the quality assurance phase of the project.

Initial migration is planned for this month, with substantial completion to our new software system expected in the third quarter of 2026. Early indicators give us confidence in our belief that LOLA will help continue to improve funnel metrics, increase automated approvals, enhance efficiency in servicing and recoveries, better integrate major systems, deliver reduced cycle times, and greater throughput for our product, tech, and risk teams. With the initial launch of LOLA in Q2 2026, OppFi is excited to announce a new line of credit product. We expect this product to launch with our bank partners in the summer of 2026. This exciting product will not only serve as another high-quality credit access option for customers in our current states, but also enable us to serve new geographies.

This product will have the same fair and transparent features that OppLoans installment product has provided to millions of customers. Our LOLA system and architecture enable us to deploy and develop new products in response to customer needs and market dynamics. Finally, the board of directors has approved a new $40 million share repurchase program, which replaces our prior repurchase program, reflecting our firm conviction that OppFi stock is currently trading below its intrinsic value. This decision underscores our board and management's confidence in the robust long-term cash generation capabilities of the business we have built. By allocating capital toward our own shares, we are reaffirming our commitment to enhancing stockholder value, signaling our optimistic outlook on the company's financial health and growth potential. Our recent announcement to acquire BNC marks another major milestone in the evolution of OppFi.

OppFi is strategically retooling and investing more than $150 million in 2026 to prepare our business for sustainable long-term growth. We are excited to get to work with the BNC team and execute on our shared vision of being the leading technology-enabled bank platform that offers essential credit access and community banking services to everyday Americans and businesses. With that, I'll turn the call over to Pam.

Thanks, Todd. Good morning, everyone. I want to reiterate Todd's remarks. 2026 is a strategic and transformational year for OppFi as we direct our focus toward investing for the long term. While we remain confident in our ability to navigate the normal cycles of our business, we are not managing the company solely maximizing returns for the next quarter. Instead, we are executing against a clear long-term strategy, investing in our platform capabilities and customer experience with the goal of driving sustainable returns in the future. This commitment to future growth is reflected in our investment of more than $150 million this year. This includes LOLA, the acquisition of BNC, and its planned integration with OppFi, and the strategic dissolution of our Up-C structure.

Even as management navigates a challenging current environment characterized by historically low consumer sentiment, inflationary pressures, and higher average tax refunds that have temporarily limited loan demand, these investments are designed to ensure we are building a superior technology-enabled banking organization ready to lead the digital finance platform space for years to come. The announced acquisition of BNC is expected to be financially transformative. We expect significant revenue synergies in 2027 and beyond by expanding our ability to deliver a comprehensive suite of financial products in more states. OppFi expects to generate adjusted EPS accretion from synergies of at least $60 million in the first year post-closing, $90 million in the second year post-closing, and over $115 million in the third year post-closing. Synergies are based on our views of achievable geographic expansion, marketing opportunities, and funding optimization.

The combination of OppFi and BNC will create a banking organization that will be well capitalized with significant liquidity and is expected to generate returns on assets on an equity of +10% and +35%, respectively, by 2028. We expect to maintain capital ratios well in excess of market standards. OppFi has also taken proactive steps to simplify our corporate structure. With our announced reorganization moving from an Up-C structure to a traditional C Corp, OppFi terminated the tax receivable agreement. OppFi recorded tax amortizable goodwill of approximately $466 million. This tax amortizable goodwill is expected to result in approximately $111 million in future cash tax savings for OppFi, subject to tax changes and other conditions with no associated ongoing tax receivable agreement liability.

Transitioning to the existing business, we started 2026 on a positive note, generating revenue of $152 million, an 8% increase over Q1 2025. Revenue growth was fueled largely by higher receivables, which ended the quarter 9% higher at $445 million. First quarter 2026 originations decreased 7% to $176 million compared to the prior year quarter. The year-over-year decrease in originations primarily reflects a tightening of credit for certain consumer segments as we began rationalizing new loan issuance to specific segments beginning in Q2 2025. Furthermore, the first quarter of 2026 had reduced demand due to higher average tax refunds, which naturally reduced the immediate need for loans. We have previously discussed that one of the benefits of OppFi shorter duration loans is that the loans move through the system relatively quickly.

The loans originated last summer had higher expected delinquencies as we had discussed, but this was partially offset by our recoveries, which were up 38% from the prior year quarter, helping mitigate the impact of higher default rates. Overall, net charge-offs as a percentage of revenue increased to 42% for the quarter, up from 35% in the prior year quarter, and net charge-offs as a percentage of receivables increased to 55%, up from 47% in the prior year quarter. Due to higher defaults, the revenue yield decreased to 131%, down from 136% in Q1 2025. OppFi continues to maintain tight control over operating expenses. Total expenses as a percentage of total revenue were 34% in the first quarter, flat with the prior year.

As a result of our revenue growth, offset by higher net charge-offs, adjusted net income decreased 11% in the first quarter to $30 million, and adjusted earnings per share decreased to $0.35 from $0.38 last year. Looking at the balance sheet, we continue to maintain a robust financial position, ending the quarter with approximately $100 million in cash equivalents and restricted cash, alongside $284 million in total debt and $343 million in total stockholders' equity. Our total funding capacity is strong at $625 million at quarter's end, including $241 million in unused debt capacity. This robust balance sheet serves as the foundation for our capital allocation strategy. OppFi has built a very strong cash generation engine with its existing business.

In the first quarter of 2026, the company generated $69 million free cash flow. We plan to put this cash to work through a combination of buybacks, dividends, and strategic M&A. During the first quarter, the company repurchased 1 million shares of Class A common stock for $9.9 million. Additionally, as Todd mentioned, the board has authorized $40 million for a new share repurchase program because at current share prices, the board and management believe this is an attractive use of cash to generate positive returns for stockholders. Also, we will continue to explore strategic M&A opportunities in addition to our plan to acquire BNC. Given our solid start to the year, current economic uncertainties, and ongoing OppFi investments and restructuring, we are maintaining our 2026 guidance. With that, I would now like to turn the call over to the operator for Q&A. Operator?

We'll move first to David Scharf with Citizens Capital Markets. Your line is open.

Hey, good morning. This is Zach on for David. Thanks for taking our question. I wanted to dig in a little bit on the SMB side, especially with the acquisition of BNC, and kind of see if we can get some more details on how, you know, the average Bitty customer compares to, you know, the average SBA customer in the legacy BNC business. Yeah, what kind of any more details on what that combined SMB customer base might look like?

Yeah. Hey, thanks. Good morning. Thanks for the question. BNC has a well-established SBA and commercial lending program, and that will continue through their community bank. The area that OppFi is specifically focused on is working capital SMB originations in the neighborhood of below $150,000. We think there's a real supply-demand imbalance, and that's something through different products like revenue-based finance, installment line of credit. We plan to have a full suite of products across the risk segments. That's something that we've been working with Bitty on to develop and, you know, are excited about the potential on especially becoming a bank.

I'm sorry. Thank you.

We'll move next to Dave Storms with Stonegate Capital Markets. Your line is open.

Hey, good morning. This is Maximus. I'll be asking questions for Dave today. I just wanted to start off with the recent acquisition, you know, opening up the opportunity for new states. We were just curious about if you guys can just apply the current playbook that you guys had prior to the acquisition. If this is a copy and paste. Specifically, like any changes to your risk-based pricing model or customer acquisition strategy. Thank you.

Yeah. Thanks for the question. We think that there's a geographical expansion that will happen to allow us to operate in more states. We will continue to offer our core product, which is our installment product. We already are risk-based pricing. We've introduced lower prices, higher prices across the risk spectrum and seen a lot of success there. That will continue. We think that there's a lot more geographical expansion. It's also potential to even further lower prices for consumers and our commitment to credit access with the operational and revenue synergies that we're gonna receive from becoming a bank.

Awesome. Thank you. If you guys were able to walk through, you know, the main puts and takes and, you know, the outlook for the rest of 2026, you know, particularly around originations, receivables and revenue. Thank you.

Yeah. I mean, I think like, you know, I mean, you read the news, you know, the consumer, the sentiment, you know, has because of some of inflationary pressures with the war. We're, you know, we're being thoughtful about it. I mean, it's not to say, though, our origination, new originations were up 8%, receivables were up 9.4% year-over-year. We're continuing to find ways to grow. We're also being thoughtful. You know, we're about long-term sustainable growth, we want customers to be successful. We're not just gonna do short-term originations to show revenue spikes or growth. That really doesn't do a lot for us long term. We're really focused on long-term value creation and, you know, being careful.

Our Model 6.1 launched in the quarter, which we're really excited about. It's our refit. We're actively building our most powerful model ever, Model 7, which will factor it, you know, in a new way of building models where we're using more AI. We're very excited about that. That should launch in fall, which will allow us to propel us to grow with lower losses. You know, I think we're positioned really well with our pricing. Our balance sheet's strong, and we're just gonna You know, we're waiting and seeing a little bit on some of the inflation and macro events, but we feel really confident we can continue to grow profitably in this environment.

Thank you, and good luck next quarter.

Thank you.

As a reminder, if you would like to ask a question, you may press star 1 on your keypad. To leave the queue at any time, please press star 2. We'll take our final question from Mike Grondahl with Northland Securities. Your line is open.

Hey, guys. Thank you. A couple questions here, but first, are you guys able to drill down a little bit into those revenue synergies? $60 million is a lot. I know the 3 I think I wrote down was, 1, more states, 2, some marketing benefits, and 3, some funding efficiency. Could you kinda just go through each one and talk through those? Like more states, is that a couple states? You know, what kind of lift do you expect to get there? I don't know if you could just help on those 3 revenue synergies, that would be great.

Good question. We believe that, you know, with the national banking platform, it, you know, we're currently in 40 states. It opens up the full, you know, 50. Obviously, you know, we're gonna work with our regulatory council to make sure that, you know, we're doing everything federally and state, you know, applicable laws. We do think there's definitely more than I think you said 2 states. We think there's more expansion. We also have the line of credit product, which we'll be expanding as well, through that national bank charter, which we're excited about.

I think, when it comes to some of the revenue synergies, it's the structure of the bank partnership program. Doing it directly yields a lot of synergies that accrue to us and is favorable in the funding structure, and we're doing a lot of volume. If, you know, if you look at it over a year, it's pretty significant.

Got it. Secondly, the LOC product, can you kinda describe like will the customer apply for a loan from you guys, and then it'll just automatically offer that if it's the best fit? Like, I guess, what will the customer see and how will they apply for that product? What are your kinda goals for it? Is that gonna be 5%, 10% of the mix in a year? Just a little bit of color on the LOC.

Yeah. It's gonna be done through the OppLoans brand. We're gonna be offering 2 products under the OppLoans brand, an installment and a line of credit product. What's being contemplated for the summer launch is that we're gonna be picking up 3 new geographies with the line of credit product. Originally it's gonna be offered in 1 in certain states, and installment will be offered in other. Soon after launch, and once we get the early data reads, we will provide customers with optionality to select between the 2 products, what they, you know, what best suits them and fits them. We're excited to have another product option for our customers. You know, some customers prefer line of credit over installment.

They feel that it provides them a little bit more control. It changes a little bit of how refinances happen versus with the line of credit, there's no refinances. You know, we're excited to provide another high-quality option. It'll have all the same features as our installment. There's gonna be no draw fee on the original origination. There's gonna be no late fees, no prepayment. You know, we're excited to offer a largely similar product, but just another option for customers. It also allows us to better compete. We know that a lot of our competition uses line of credit in various ways to serve their customers. You know, we think it's merited and will be a good high-quality option for our customers.

Got it. Then just lastly, I wanted to ask about credit quality. I think there was a little cleanup in 4Q. Would you guys say there was also a little bit cleanup in 1Q? Do you see that continuing? Just where are we in credit quality, how you guys are viewing it and thinking about it?

Yeah. I mean, you know, just to, you know, point out, we, you know, our charge-off as receivables was elevated from last year. Last year was an exceptional year. we were, you know, we were kind of in a growth. We were extending term a little bit, so we had a really strong Q1 last year. this year is more of a normalization. If you go back to 2024 and 2023, it's still better than those months. You know, we were able to grow receivables, like I said, 9.4% in new originations. you know, it's elevated. The, they're elevated. I think customers are being a little cautious here, you know, on the demand side and then also, you know, on the, you know, on repayments.

You gotta be a little cautious when there's inflationary pressures that we're seeing. You know, we're hopeful that this Iran conflict and gas prices will get resolved quickly. We feel like in the second half, we have a lot of growth levers. Our pricing, our Model 6 are already in market. They're doing really well. This line of credit product's gonna add new geography expansion, which will add a lot of, you know, growth. You know, we're able now with our risk-based pricing to be able to operate, you know, in different credit environments and cycles. It's much different kind of than in 2022. We had a single price product.

We feel like we're much better prepared to be able to operate with a little bit of a higher past dues coming in.

Fair. That's helpful. Best of luck the rest of 2026 and with the acquisition.

I'm sorry, Mike, could you just repeat the question?

Oh, no. I just said best of luck in 2026 and with the acquisition.

Thank you. Thanks, Mike. I appreciate that. Thank you.

We have a follow-up question from David Scharf with Citizens Capital Markets. Your line is open.

Hey, guys. Just wanted to squeeze one more question in here. Obviously, you know, seeing good things from the LOLA platform. I wanted to see if we can possibly get some KPIs or, you know, quantitative metrics around that to kind of show kind of the upside that it's providing.

Yeah. I mean, we're starting the migration literally this month, which we're very excited about. It's gonna reduce cycle times. We were already, you know, really doing well. Like, our auto-approval rate went from 78.6 last year in Q1 to 79.2. We're still even on our old system making progress on auto-approvals. But this is structurally gonna allow us to reduce processing times and to approval for customers. Customers are gonna get approved faster. We're gonna continue to push up the auto-approval rates. This allows us to launch products. We started talking about a line of credit product in the beginning of the year, and we're gonna be able to launch it, you know, four months later, not even.

That's all due to, you know, having a clean architecture and a modular, you know, infrastructure from our, from our loan servicing system that'll allow us to launch. You know, we're excited. I mean, from a corporate standpoint, better corporate integrations into our accounting systems. Our data was all repacked and cleaned up, so we're gonna be able to deploy AI tools to better read out data and have better information faster. And I think from, like, product enhancements, from a risk perspective, from a credit perspective, because of the clean architecture, we think cycle time. Meaning if we have an idea to enhance our installment product, for us to get that to market will be a 50% reduction in cycle time to get something to market, by having that architecture. There's, there's tremendous benefits.

We'll continue to report out on those benefits in our quarterly earnings call and how the company is using it to its benefit in going forward.

Understood. Thank you very much. Congratulations on the strong quarter again.

Thank you.

It appears we have no further questions, and this concludes today's program. Thank you for your participation, and you may disconnect your line at any time.

Thank you for your continued patience. Your meeting will begin shortly. If you need assistance at any time, please press 0, and a member of our team will be happy to help you. Thank you for your continued patience. Your meeting will begin shortly. If you need assistance at any time, please press 0, and a member of our team will be happy to help you. Good morning, and welcome to OppFi Inc.'s Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. All participants are in a listen-only mode. As a reminder, this conference call is being recorded. Following management's presentation will be a question-and-answer session. For those listening by dial-in, you will be prompted to enter the queue after the prepared remarks. I am pleased to introduce your host, Mike Gallentine, Head of Investor Relations. You may begin.

Thank you, Operator. Good morning, and welcome to OppFi Inc.'s Fourth Quarter 2025 Earnings Call. Today, our Executive Chairman and CEO, Todd G. Schwartz, and CFO, Pamela D. Johnson, will present our financial results followed by a question-and-answer session. You can access the earnings presentation on our website at investors.opfi.com. During this call, OppFi Inc. may discuss certain forward-looking information. The company's filings with the SEC describe essential factors that could cause actual results, developments, and business decisions to differ materially from forward-looking statements. Please refer to Slide 2 of the earnings presentation and press release for our disclaimer statement covering forward-looking statements and references to information about non-GAAP financial measures which will be discussed throughout today's call. Reconciliations of those measures to GAAP can be found in the appendix to our earnings presentation and press release. With that, I would like to turn the call over to Todd.

Thanks, Mike, and good morning, everyone. Thank you for joining us today. I am looking forward to discussing another year of record-breaking performance at OppFi Inc. For 2025, total revenue increased 13.5% year over year and adjusted net income increased 69% year over year while keeping our industry-leading 78 Net Promoter Score. We continue to find benefits from Underwriting Model 6 which is designed to identify riskier borrowers and properly price risk across segments. Despite higher delinquencies on our summer vintages, OppFi Inc. maintained strong unit economics and adjusted in real time to support continued growth into the fourth quarter. The auto-approval rate in the fourth quarter was 79%, which allowed more customers to be approved without human interaction and helped increase originations 48% year over year. In conjunction with our lending partners, we plan to release Model 6.1 in 2026, which we anticipate will boost originations and reduce risk. We believe Model 6.1 better weights attributes in the model and enables more accurate segmentation of risk when identifying borrowers. The credit team is actively working on Model 7.0 with our bank partners and early indicators are promising on both origination and risk fronts. We plan to launch Model 7.0 in Q3 of this year. We are encouraged to see improving vintage metrics in December and January coupled with strong recovery metrics in Q4, which we believe will enable us to grow the top and bottom line in the double digits in 2026. OppFi Inc. continues to make great progress on building LOLA, the origination and servicing system of the future. LOLA is designed with a clean architecture to leverage rapidly evolving AI tools across origination, servicing, and corporate operation. The build and test phase is complete, and we are actively finishing up the QA phase of the project. We plan to substantially migrate to our new software system in Q3 2026. Early indicators give us confidence that LOLA will help continue to improve funnel metrics, increase automated approvals, enhance efficiency in servicing and recoveries, better integrate major systems, deliver reduced cycle times, and provide greater throughput for our product, tech, and risk teams. We believe our LOLA system and architecture will allow us to rapidly deploy and build new products to respond to our customers' needs and market dynamics. To that end, we are excited to announce a new line of credit product. We expect this product to launch with our bank partners in 2026. We believe this exciting product will not only serve as another high-quality credit access option for customers in the states where we operate, but also enable us to serve new geographies. This product is designed to have fair, transparent features that the OppLoans installment product has provided to millions of customers. 2025 was a great year for OppFi Inc. as we executed on our vision of being the leading technology-enabled platform that facilitates essential credit access and community services to everyday American businesses. We believe the strong foundation of performance sets OppFi Inc. up for another year of potentially double-digit revenue and earnings growth. With that, I will turn the call over to Pam.

Thanks, Todd, and good morning, everyone. As Todd noted, we achieved another record year, and we finished with a strong fourth quarter generating revenues of $159,000,000, an impressive 17% increase over Q4 2024. Model 6 has been a significant contributor to this growth. Its enhanced predictive power has enabled us to better manage our loan economics through risk-based pricing and to underwrite larger loan amounts for creditworthy individuals, helping fuel record originations and receivables balances. In the fourth quarter, originations increased by 8% to $230,000,000 compared to the prior-year quarter. Factoring in loan repayments, origination growth increased our ending receivables by 16% to $493,000,000 for the quarter. The growth in revenue was fueled by these originations and receivables growth, generating a stable revenue yield of 130%. As Todd noted, for the loans originated in the summer, we continued to see higher default rates. However, one of the benefits of short-duration loans is that loans work through the system relatively quickly. That means that by first quarter 2026, the majority of the higher default rate loans should be reflected in our earnings. As a result of the higher defaults, net charge-offs as a percentage of revenue increased to 45% for the quarter, up from 42% in the prior-year quarter, and net charge-offs as a percentage of receivables increased to 59%, up from 54% in the prior-year quarter. It is important to note we believe that much of the higher risk associated with these loans was appropriately priced into them through higher interest rates. Our scale and focus on cost discipline contributed to our strong financial performance in the quarter. Continued operational improvements drove notably lower total expenses before interest expense, which declined to 28% of revenue in the fourth quarter, a substantial improvement compared to 33% in the same quarter last year. Additionally, by paying down our corporate debt and successfully upsizing one of our main credit facilities at more attractive interest rates earlier in the year, we reduced interest expense to 6% of total revenue, down from 8% in the prior year. As a result of strong revenue growth and improvements in our operating expense structure, adjusted net income increased 27% to a fourth-quarter record of $26,000,000, an increase from $20,000,000 last year, and adjusted earnings per share grew 28% to $0.30 from $0.23 last year. On a GAAP basis, net income increased by 175% to $38,000,000, reflecting our higher revenues, lower expenses, and a $12,000,000 non-cash gain related to the change in the fair value of our outstanding warrants. Because our Class A common stock price decreased during the quarter, the estimated value of the warrants issued when we went public decreased, driving this non-cash income. However, as we have consistently stated, this is a non-cash item and does not affect the company's underlying profitability. Looking at the balance sheet, we continue to maintain a robust financial position, ending the quarter with $93,000,000 in cash, cash equivalents, and restricted cash, alongside $321,000,000 in total debt and $309,000,000 in total stockholders' equity. Our total funding capacity stood at a strong $618,000,000 at quarter's end, including $204,000,000 in unused debt capacity. During the fourth quarter, OppFi Inc. strategically repurchased 515,000 shares of Class A common stock for $5,000,000. Now looking at the full-year results, total revenue increased to $597,000,000, up 14% compared with 2024. Driving this strong growth was a 12% increase in originations to $899,000,000 in 2025, which contributed to a 16% increase in ending receivables to $493,000,000. This also translates to an average yield of 133%, up from 131% in 2024. As we discussed, we experienced growth in originations, ending receivables, and yield from the improvements from Model 6, but we also saw a decrease in net charge-offs as a percentage of total revenue, down to 37% from 39%, and a decrease in net charge-offs as a percentage of average receivables to 49%, down from 51% in 2024, respectively. While OppFi Inc. generated record revenues, the company maintained tight control over expenses excluding interest, driving a sharp decrease in expenses as a percentage of revenue to 29% from 35% in 2024. As a result of the record revenues, coupled with the decreases in expenses, GAAP net income increased significantly to $146,000,000, up from $84,000,000 in 2024, and diluted EPS for the full year was $0.99, up significantly compared with $0.36 in 2024. Adjusted net income increased to $140,000,000 compared with $83,000,000 in 2024. Adjusted EPS was $1.59, also up significantly compared with $0.95 in 2024. The company delivered strong full-year results, exceeding guidance and Street estimates, driven by the successful implementation of numerous strategic initiatives and operational improvements throughout the year. These efforts enhanced efficiency, expanded market opportunities, and strengthened financial performance, underscoring the company's ability to execute its long-term strategy and deliver stockholder value. Given our strong operating performance driven by growth in net originations, revenue, and adjusted net income, we are pleased to provide the following 2026 full-year guidance. For total revenues, we expect $650,000,000 to $675,000,000, an increase of 9% to 13% over 2025. Adjusted net income is expected to be $153,000,000 to $160,000,000, an increase of 9% to 14% over 2025. Based on an anticipated diluted weighted average share count of 87,000,000 shares, adjusted earnings per share are expected to be $1.76 to $1.84, an increase of 11% to 16% from 2025. With that, I would now like to turn the call over to the Operator for Q&A. Operator?

Thank you. We will now open for questions. We will take our first question from David Michael Scharf with Citizens Capital Markets. Your line is open.

Great. Thanks for taking my questions. Good morning. Todd, maybe to start more on the macro side, and given the events going on right now geopolitically, can you remind us, since these are such short-duration loans, how quickly loss emergence—like, in weeks or months—typically occurs, and specifically whether it is far too early to be talking about the impact of gas prices on some of your borrowers?

Yes. David, thank you for the question. We see early indicators very early within the month of when they are originated, looking at first payments 28 days, 42 days out. So we get earlier indicators. And, in the summer, what was interesting was we saw consumer sentiment index take a nosedive during the summer, and what followed was some lower repayments, I should say, and we course corrected pretty quickly. Also, the business is structured with risk-based pricing now, which better prices risk for customers throughout the risk segments, and that helps unit economics tremendously. So, we were still able to grow into the fourth quarter, and the good news is we have definitely seen some improvement on those in December and in January on those early indicators, and it is giving us confidence to allow for double-digit growth on top and bottom line for 2026. Yes, sorry about the cost again. Yes, there is no doubt. Inflation is a tax on our customers. It hits their discretionary income and ability to repay, something we are watching closely. We are hoping it is temporary, but anytime prices of major items like gas go up rapidly like it just has over the last week, it is something that we are going to watch. We are also going to continue to watch the customer sentiment index and just make sure that the customer is in a good place. It is definitely going to be top of mind here in 2026.

Got it. Understood. And maybe just staying on credit. I know you do not provide specific loss guidance for 2026, and as you mentioned, obviously risk-based pricing has to be factored in for total returns, but is there anything we should think about in terms of the cadence of losses coming out of—type thing—in the second half?

Yes. I mean, there was some tightening that was done in response to some of the summer vintages. However, it is stable, and we were starting to feel more confident. Obviously, it is a wait and see here through the first quarter, but we think there are also some strategic initiatives that we are working on in the business that are going to unlock some more growth. We are very bullish on our model refit 6.1, which factors in more recent data to allow us to give us confidence to grow. And then I will point to we are getting more yield. We are getting more yield to price the risk properly across the segments. So back in 2022 when there were some credit spikes due to rapid inflation, we did not have risk-based pricing. So it was not a lever in our toolkit to be able to properly price risk across the segment. So we feel like with our model, with our new product line of credit, and with some of the risk-based pricing initiatives, we are well positioned to continue to grow profitably and keep strong unit economics.

Got it. Maybe just one more follow-up, and then I will get back in queue. You noted in your presentation that your bank partners had increased the percentage of their retention. I am assuming it was notable enough for it to be included in the deck. Can you give us some color on both order of magnitude, but more importantly, is this something that usually cycles up and down that maybe we had not paid attention to, or if there is anything else that we should take away from that?

Yes. It is really just in some states. Every state is a little bit different because we abide by all federal and state laws. Banks do take higher percentages in some states of originations, and so, obviously, our gross to net comes down a little. But I think what gives us comfort is the banks are very comfortable with our servicing and underwriting capabilities and are willing to put their equity into the originations, which is our interest alignment and builds confidence for us. And so we view it as a good thing long term and think that it shows the confidence that the banks have in us.

Got it. Great. Thank you.

We will move next to Michael John Grondahl with Northland Securities. Your line is open.

I wanted to ask on those early summer vintages. If you look back, what are the learnings from that? Was there any region to call out, type of loan, or a risk tier to call out? Just curious what you learned from some of those higher losses.

Yes. That is a great question. We did look at—we have extensive data: banking data, cash flow data, in addition to a lot of customer-level data to look at—and the repayment, the actual repayment. So you cannot get better data than that. There is nothing that stood out to us as being the sole reason as to why we started to see some strain and some lower repayment rates. One thing that is and has been is customer sentiment index—has been something that we have started to look at as being a way to, not obviously decision on credit, but as an early indicator of how the customer is, how the customer is feeling. And there is some ability to see that when the customer is not feeling financially secure, or they do not feel like the direction of their financial path is upward, that you see some lower repayments. But there is nothing to decision on. We looked across the spectrum at a lot of different data points. There was nothing that stood out as, “Oh, that is the reason for this happening.” But that is why we monitor this on a daily basis, and it is something that we have really good reporting to be able to read and react. In this world, it is not set-and-forget anymore on credit. That is why we are doing the refit. That is why we are building Model 7. The pace of model building and change is rapid now, and I think we are well positioned to respond to it and make course corrections along the way.

Got it. And then just to clarify, is it Model 6.1 goes live in 2026?

Model 6.1 is going to go first half. We are going to be launching—it is a refit, so it is taking Model 6 and improving on it—and we do see early indicators are boosting originations and better credit performance across the board. It really has a benefit on the origination side too, which we are excited about. We have been testing it all throughout the fourth quarter and into the first quarter, so our confidence level is getting higher. And then we are also already starting to work on building Model 7, which is a brand-new model, which will take in a lot of the data from last year and the most current data and be able to build our strongest model ever.

Got it. And if there is one or two things to call out in 6.1, which you are relaunching now, what advantages or what benefits—is it a certain data cohort, or what would you say you are getting an edge from there?

Yes. It is looking at repayment data and reweighting our variables to have the model be more predictive. That is really what it is. We look at a lot of different data points throughout the application process to determine creditworthiness, and when you actually have repayment data to support it, it becomes extremely powerful. So it is a reweighting. We have really good tools. Our credit team does a great job at constantly back testing and finding areas for improvement. Once they go to work and they start to run the regression analysis, we found some things where we could better weight different variables and produce a more accurate score.

Got it. Then, lastly, 2024 had $95,000,000 of free cash flow, 2025 had $94,000,000—low to mid-nineties each year. I would assume 2026 is going to be in a similar ballpark, maybe adjusted for a little bit of growth. How are you thinking about capital allocation? Do you have a chunk of buyback ability to buy in 2026? I am trying to think about uses for another large year for free cash flow.

In the fourth quarter, we did buy back some shares. We thought that the long-term value of our stock price and the record performance that we have had and the consistency of that was not being valued properly. So we did buy back some shares with some of our capital. I am happy to support the stock at those prices for sure. I kind of always say this, but it is a menu of options. We like to be well capitalized to read and react to the broader markets and see what is going on. We are still active in the M&A space looking at stuff. We are exploring different strategic initiatives that would need capital. We have been investing in our tech systems. We believe that LOLA, when launched, will be the most cutting-edge tech-enabled lending system out there, and it will allow us to plug into AI tools. So we are investing in that. There is a menu of options. In the past, we have done a special dividend as well. We do anticipate free cash flow to continue to increase this year. We are paying down debt, as you can see, and getting the benefit there as well. We are using our cash wisely and strategically and like to be well capitalized to take advantage of situations that come up and continue to build the business.

Got it. Thank you.

We will move next to David Joseph Storms with Stonegate. Your line is open.

Morning, and thanks for taking my questions. I wanted to start by maybe pivoting back to the macro question from earlier. You mentioned that in the summer you guys course corrected pretty quickly. You would expect to do the same thing again should gas prices run. I was hoping you could illuminate a little more about what the playbook would be here. Is that targeting higher-quality segments? Is that adjusting your pricing a little more aggressively? What does that look like?

Yes, absolutely. That is something that we have successfully been able to do: targeting lower-risk customers and even adjusting pricing to accommodate more growth in the lower-risk segments. We have been launching that in the fourth quarter and will continue that throughout the year. The lower-risk segments are more predictable on payback and repayment rates. We are not seeing as much degradation in those segments, and we will continue to market and target. We think that the line of credit product that we are building, when we launch, will potentially open up some new geographies for us with our bank partners. We are excited about that. It will give us some new geographies to provide credit access for customers. Inflation is something we are watching, and seeing gas shooting up that quickly is concerning, but we are ready to respond if needed, and right now it appears to be a temporary surge. Hopefully, it will come back down in line and will not impact our customer repayment rates.

Very helpful. Thank you. Turning to the new model we will also have this year, maybe could you spend a little time talking about what has changed between—not maybe the models themselves—but the process of putting a model together? I have to imagine you have a lot of tools at your disposal to create better, faster, stronger models with the advent of AI and such. Are we going to see that turn into faster model rollouts, or should we expect a step change in the quality of the model?

First of all, you are absolutely right. The AI tools and the tools that we are now able to deploy—the pace of change, the cycle times of developing refits and developing new models—has significantly reduced, which is a huge benefit to read and react. But the world is also changing at a much faster pace. I do not remember a time where gas went from $80 a barrel to $120 in one week. You have to— that is table stakes now—be able to read and react and be out in front of any macro noise that may affect repayment rates and be ready to make changes as needed. You will continue to see more rapid model development, reduced cycle times, and better, more predictive data as we continue to operate.

That is great. And one more for me if I can sneak it in. Just looking at your guidance, anything here that is baked in that we should be aware of? Do we expect pretty simple seasonality on the year based on what you can see? Anything there would be very helpful.

We are encouraged by some of the early vintage metrics of December and January. We are seeing a normal to strong tax refund season. It was well documented from the IRS that the average return would increase this year, which is also very beneficial for us from a credit perspective. We see growth. We feel like we have some good growth initiatives and feel good throughout the year that we can achieve double-digit revenue and profit growth.

It does appear that there are no further questions at this time. This does conclude the Q&A portion of today's call, and this also concludes today's meeting. We appreciate your time, and you may now disconnect.