Credit Acceptance Posts $56.6 Million Loss Despite Growth in Adjusted Income in Third Quarter
Key Facts
Credit Acceptance reported a U.S. GAAP net loss of $56.6 million, or $5.43 per diluted share, in the third quarter on October 29, 2026, compared with net income of $108.2 million, or $9.43 per share, a year earlier. The reversal came as the provision for credit losses increased and estimated future cash flows from the portfolio declined. By contrast, the company reported non-GAAP adjusted net income of $135.5 million, or $13.01 per share, compared with $117.9 million and $10.28 per share in the third quarter of 2025. Trading data showed the stock closed at $575.78 on October 29 and then $464.89 on October 30. The results came amid growth in loan assignments, but a review of collection forecasts affected key accounting figures.
The total provision for credit losses was $410.9 million in the third quarter, compared with $152.0 million in the same period of 2025, and reached $709.7 million in the first nine months of 2026, according to the quarterly report filed with the U.S. Securities and Exchange Commission. The company said the year-over-year increase in the provision was $258.9 million, or 170.3%. It attributed $193.8 million of the increase to changes in forecasts and $65.1 million to newly assigned consumer loans. Total revenue rose 2.1% to $594.6 million from $582.4 million a year earlier. Revenue growth therefore coincided with a larger increase in estimated credit losses, weighing on GAAP net income.
The company said it adjusted its forecasting methodology in the third quarter and lowered estimated collection rates for consumer loans assigned between 2022 and 2026. The expected collection rate for 2022 loans was about 59.2% through September 30, 2026, compared with the initial estimate of 67.5% when they were assigned. For 2023 loans, the expected collection rate fell to 62.4% from 67.5%. The company said the performance of these loans fell short of the cash flows it had expected, prompting it to revise its estimates. Expected future cash flows from the portfolio fell 2.5%, or $291.2 million, in the third quarter, compared with a decline of 0.5%, or $58.6 million, in the same quarter of 2025. The company said the change in forecasting methodology was the main reason for the latest decline.
The company defined the impact within the portfolio, saying loans assigned in 2022 and earlier represented less than 10% of total expected future cash flows as of September 30, 2026. Loans assigned after 2022 accounted for a larger share of estimated cash flows, and much of their expected collections had yet to be realized. In the second quarter of 2026, the company reported GAAP net income of $135.9 million, compared with $87.4 million in the second quarter of 2025. This highlights the contrast between the second- and third-quarter results, while the third-quarter review showed that updated estimates had a substantial effect on loan results. On a non-GAAP basis, economic earnings rose to $50.7 million from $43.0 million, an increase of 17.9% from the third quarter of 2025.
Alongside the risk reassessment, consumer loan assignments accelerated in the third quarter to 110,010 loans worth $1.4 billion, increases of 37.7% in loan count and 51.0% in value from the same period of 2025. The count had fallen 1.0% year over year in the second quarter to 84,615 loans, while dollar value rose 0.1% to $1.0 billion. The company said at the time that monthly assignment volume returned to year-over-year growth in June and continued to grow in July. In the third-quarter results announcement, the chief executive said growth included increases in loan volume by units and value, double-digit growth in economic earnings and adjusted net income, and a record number of active dealers. Together, the indicators point to activity growth and improvement in adjusted metrics on one hand, and lower collection estimates for newer loans on the other.
Total liquidity was $1.2 billion on September 30, 2026, and the company completed a $600 million asset-backed financing during the quarter. These figures provide a view of liquidity and financing alongside the rise in the credit provision and the update to cash-flow forecasts. The company had scheduled its third-quarter results call for October 29, 2026, at 5:00 p.m. Eastern time, and made a transcript and presentation available on its investor relations website. In the second quarter, the chief executive described the results as reflecting progress in profitability, a stronger trend in loan originations and momentum in the dealer network. The third-quarter announcement brought together increased assignments, growth in adjusted income and revised collection estimates, the elements that shaped the reported results.