Credit Acceptance Posts $56.6 Million Loss as Credit Provision Surges
Key Facts
Credit Acceptance said on October 29 that it recorded a consolidated net loss of $56.6 million, or $5.43 per diluted share, in the three months ended September 30, 2026. The company reported net income of $108.2 million, or $9.43 per share, in the third quarter of 2025. It attributed the swing to a loss mainly to a 170.3% increase in the provision for credit losses, equivalent to $258.9 million compared with the same period a year earlier. On a separate, non-GAAP basis, adjusted net income rose to $135.5 million, or $13.01 per share, from $117.9 million, or $10.28 per share. The results highlight the effect of re-estimating loan collections in quarterly accounts, alongside an improvement in the adjusted measure disclosed by the company.
The company said $193.8 million of the increase in the provision was related to changes in estimates, while $65.1 million was related to new loans. It said a revision to its estimation methodology lowered expected collection rates on loans assigned between 2022 and 2026 to the levels the company expects over the full life of those loans. Expected collection rates during the quarter also declined for loans assigned between 2023 and 2026, while they remained generally in line with expectations at the start of the period for the other assignment years shown. The company said loan performance had been consistently slightly below expected cash flows in every quarter before the methodology change, with a sharper decline in lower-scoring segments. It added that most of the impact of the change related to loans issued before it changed its scoring card in the second quarter of 2026.
Expected net cash flows from the loan portfolio fell 2.5%, or $291.2 million, in the third quarter of 2026. The decline in the corresponding period of 2025 was smaller, at 0.5%, or $58.6 million. At the end of September 2026, outstanding loans totaled $11,960.7 million, the provision for credit losses was $3,833.5 million, and net loans stood at $8,127.2 million. On a quarterly basis, financial statements filed with the U.S. Securities and Exchange Commission showed that the provision for credit losses was $410.9 million, compared with $152.0 million in the third quarter of 2025. The average portfolio balance rose to $8.1 billion, up 1.1% from the same quarter a year earlier.
On the business activity side, the company assigned 110,010 consumer loans worth $1.4 billion during the third quarter. That represented year-over-year increases of 37.7% in loan count and 51.0% in value. Interest expense also fell 7.8%, or $9.1 million, from $116.3 million to $107.2 million, which the company attributed mainly to a decline in its average cost of debt. Economic profit, a non-GAAP measure, was $50.7 million, compared with $43.0 million a year earlier, an increase of 17.9%. The company repurchased 269,150 shares during the quarter, equivalent to 2.6% of the shares outstanding at its start, for a total cost of $161.6 million.
The company said total liquidity was $1.2 billion on September 30, 2026. It also completed a $600 million asset-backed financing, which it described as equal to the largest financing of its kind in its history. The company's shares, traded under the ticker CACC, closed at $464.89 on October 30, 2026. The company announced its results on October 29 and scheduled a webcast to discuss them at 5 p.m. Eastern Time that day. It said a replay and transcript would be available in its investor relations section; the call page also provides the transcript and presentation.