OppFi (OPFI) Q3 2026 earnings review
OppFi launches its new credit line, but loan losses rise
OppFi, a digital lender for Americans who lack traditional credit, saw revenue and profit drop as loan defaults stayed high. Revenue fell 4% from a year ago and profit per share excluding one-offs fell 20%, because the company tightened lending and its bank partners kept a larger share of new loans. Chief executive Todd Schwartz launched the delayed line of credit product and moved all new applicants onto the LOLA software, but management still cut the top end of its full-year revenue and profit plan.
| Revenue | $149.2M -3.8% from a year ago |
|---|---|
| Profit per share, excluding one-offs | $0.37 -20.1% from a year ago |
| Retained net loan originations | $190.7M -11.4% from a year ago |
| Full-year profit outlook | Cut $5M middle of the range: $117.5M (-16%) |
⚖️ Verdict: 🔴 Bearish
The story got worse because falling loan originations have now shrunk the total loan portfolio below last year's level, forcing a second consecutive cut to the annual outlook. One positive: the new line of credit and application software are now live, and a 38% jump in cash collected from old written-off loans helped cushion the profit decline.
The question now is whether the new line of credit and the pending purchase of BNC National Bank can reverse the shrinkage in the core loan book. Either the new product and bank charter reignite loan growth at lower funding costs, or persistent borrower defaults keep forcing the lender to hold back on approvals. Fourth-quarter loan originations and regulatory sign-off on the bank deal will tell.
🐂 Bull Case
New Line of Credit and Loan Software Reached Customers
OppFi wants to offer longer loans with smaller monthly payments, so it spent the year building two products: a revolving line of credit and LOLA, its new software for processing loan applications. After a two-month delay last quarter, the company launched the line of credit in the third quarter, calling it "representing a significant milestone in the expansion of OppFi's product suite".
The software rollout also moved forward, as "All new customers now run through LOLA, OppFi’s new application system", and the share of loans approved automatically without a human underwriter rose 1 percentage point to 80.1%. These launches matter because the core installment loan book is shrinking, but the company gave no volume or revenue numbers for the new credit line yet.
What to watch: separate loan origination figures for the line of credit in the third-quarter filing or fourth-quarter results. A disclosed volume figure would show whether the new product is large enough to offset the drop in standard installment loans.
Loan Recoveries and Buybacks Cushion the Profit Drop
When borrowers default and pass 90 days overdue, OppFi writes off the loans and tries to collect what it can later. Those cash recoveries of previously written-off loans rose 38% from a year ago to $15.2 million in the third quarter, following a 39% rise in the second quarter, which helped soften the blow from higher defaults.
The lender also stepped up share buybacks after slowing them in the spring. It spent $6.7 million to buy back stock in the third quarter at an average price of about $8.12 per share by our math, bringing nine-month repurchases to $17.9 million and cutting the diluted share count by 3.0% from a year ago.
What to watch: fourth-quarter share repurchases under the remaining $27.6 million buyback authorization. Continued buying while preparing to pay cash for the BNC National Bank purchase would show management sees excess cash beyond its deal needs.
Positives this quarter didn't test
Two standing drivers of the long-term bull case depend on the pending purchase of BNCCORP and its subsidiary, BNC National Bank, and got no new numbers in the earnings release.
- National bank charter transformation: OppFi mailed the definitive proxy statement to BNCCORP shareholders, and the fourth-quarter closing window will test whether the deal finishes on time.
- Multi-year profit targets: the company previously targeted $3.00 in profit per share by 2028 and $500 million in five-year profit, and the fourth-quarter call will test whether those goals hold after a second cut to the 2026 baseline.
🐻 Bear Case
Rising Defaults Are Shrinking the Loan Book
"The strategic transformation of OppFi continued to gain momentum during the third quarter as we delivered strong execution across a number of priorities that we believe will drive our next phase of growth," chief executive Todd Schwartz said. Yet credit losses rose against a year ago for afifth straight quarter, pulling net revenue down 11.3% to $92.8 million.
- Net charge-offs (defaults minus recoveries): 40.1% of revenue, up 5.0 percentage points from a year ago
- Annualized net charge-offs as a share of average loans: 52.6%, up 5.9 percentage points
- Gross charge-offs before recoveries: about $75 million by our math, up 15% from a year ago
- Annualized average yield on loans: 131.4%, down 1.8 percentage points because delinquent loans stopped paying interest
The company values its loans at fair value on its balance sheet, and the quarterly write-down for expected credit losses jumped by 5.3 percentage points of revenue to 37.8%. That loss jump, plus a 2.1-point rise in professional and administrative fees for the bank acquisition, cut operating margin by 6.4 percentage points to 24.8%.
What to watch: fourth-quarter net charge-offs as a share of revenue against last year's 45% peak. A reading above 45% would show that tighter lending standards have not yet stopped the credit slide.
Fewer New Loans Forced a Second Plan Cut
OppFi makes money by originating high-interest loans through partner banks and buying back most of the loan balances. Because defaults rose, the lender held back on marketing and credit approvals, so total net loan originations — new loans issued minus refinanced balances — fell 6.8% from a year ago to $229.3 million "as a result of tightened marketing partner screening criteria year over year".
The portion of loans OppFi kept on its own books fell even faster, dropping 11.4% to $190.7 million, "furthered by the growth in the percentage of loans retained by our bank partners". By our math, partner banks kept 16.9% of new loans, up from 12.5% a year ago. With fewer retained loans feeding the portfolio, quarterly revenue fell 3.8% from a year ago — its first drop of the year — and the company cut the top end of its full-year revenue and profit outlook for a second straight quarter.
What to watch: fourth-quarter retained net loan originations against last year's $201.2 million. Another double-digit drop would shrink the starting loan balance for 2027 and put next year's standalone profit growth at risk.
OppFi Tapped Its New Term Loan and Lifted Debt
OppFi wants to buy BNC National Bank so it can fund its loans with low-cost bank deposits instead of expensive credit lines. Earlier this year the company "terminated the Gray Rock SPV LLC revolving line of credit" and signed a new corporate term loan agreement with Castlelake.
On September 15, the digital lender "borrowed $75M under the term loan agreement with affiliates of Castlelake". That draw pushed total debt up 26.5% from last quarter to $349.6 million, even though the loan portfolio is smaller than a year ago. Quarterly interest expense still fell 14.1% from a year ago to $8.7 million because the new loan was drawn only two weeks before the quarter ended.
What to watch: fourth-quarter interest expense after a full quarter of carrying the extra $75 million in debt. Higher interest bills will weigh on profit until the bank acquisition closes and provides deposit funding.
Risks this quarter didn't answer
Two regulatory and legal risks that govern OppFi's bank partnership model and its planned bank purchase received no substantive update in the release.
- Regulatory approval for the BNCCORP acquisition: requires sign-off from federal banking regulators; fourth-quarter filings will show whether the deal closes on its end-of-year target.
- California regulator appeal: the state appealed OppFi's court win over whether its partner-bank loans are exempt from state interest-rate caps; the quarterly filing's legal footnote will show any procedural steps.
💲 Other KPIs
Unpaid principal balances on loans fell 4.7% from a year ago, turning negative after growing 0.5% in the second quarter and 9.4% in the first. By our math, the loan book added $18.6 million from last quarter, less than half the $43.3 million seasonal build it recorded in the third quarter of last year.
Unrestricted cash on the balance sheet rose by $38.4 million from last quarter and is up $53.2 million since the end of 2025, boosted by the $75 million term loan draw in September. Including restricted cash and $198.5 million of unused credit lines, total funding capacity stood at $690.7 million.
Total operating expenses — which include marketing, payroll, interest, and overhead — dipped 0.7% from a year ago and fell from $61.8 million last quarter. Because revenue fell faster, expenses rose by 1.1 percentage points as a share of revenue to 37.3%, including $1.8 million of one-off costs for the pending bank acquisition.
🔮 Guidance
Cut. OppFi trimmed the top end of its full-year revenue plan by $15 million, bringing the middle of the range to $605 million, or 1.3% growth for the year. By our math, that leaves $158.7 million for the fourth quarter, down 0.3% from a year ago. This is the second cut in a row after a $50 million reduction at the middle of the range last quarter.
Cut. The lender lowered the top end by $10 million, putting the middle of the range at $117.5 million, down 16% from 2025. By our math, that leaves $27.1 million for the fourth quarter, up 5.1% from a weak fourth quarter last year when defaults spiked. Across four quarters, the middle of the range has moved by $0 million, -$34 million, and -$5 million.
Cut. Management reduced the top end by $0.11 per share on an unchanged estimate of 86 million diluted shares, leaving the middle of the range down 14% for the year at $1.37. By our math, the plan leaves $0.32 per share for the fourth quarter, up 6.7% from $0.30 a year ago.
❓ Key Questions
How much loan volume did the line of credit generate?
OppFi launched its revolving line of credit in the third quarter to drive its next phase of growth, but it did not disclose how many loans it issued or what interest yield and default rates those borrowers are showing.
Why are partner banks keeping a larger share of loans?
Partner banks kept 16.9% of net loan originations in the third quarter by our math, up from 12.5% a year ago, which caused OppFi's retained loan volume to fall nearly twice as fast as total originations.
Why draw $75 million of term debt in mid-September?
Unrestricted cash was already $64.3 million in June and the BNC National Bank purchase is not yet closed, so drawing $75 million under the Castlelake term loan adds interest cost ahead of the merger.
Does the $3.00 profit per share target for 2028 still hold?
The company cut its 2026 profit per share outlook for a second straight quarter to a $1.37 middle of the range, leaving a much wider gap to reach its previously stated $3.00 goal for 2028.