Jefferson Capital reported record first-quarter collections and revenue, while executives said elevated consumer delinquencies and charge-offs continue to support a favorable environment for portfolio purchases.
Founder and Chief Executive Officer David Burton said the company generated $310 million in collections, up 19% from the prior-year period, and record revenue of $176 million, up 14%. Adjusted earnings per share were $0.73 for the quarter.
Portfolio Purchases and Collections
Jefferson Capital purchased $150 million of portfolios during the quarter, down from $175 million in the first quarter of 2025. Burton said the year-earlier period benefited from a $28.5 million insolvency back-book purchase in Canada and noted that the company’s business typically sees deployment seasonality, with the fourth quarter generally the largest period for deployments.
Collections tied to recent large portfolio purchases were significant. Burton said $54.5 million of quarterly collections were attributable to the Bluestem portfolio purchase, while $31 million were attributable to the Conn’s portfolio purchase.
As of March 31, Jefferson Capital had $353 million of deployments locked in through forward flows. The company expects to collect $1.1 billion of its March 31 ERC balance over the next 12 months. Burton said the company would need to deploy approximately $563 million globally over that period, based on first-quarter purchase price multiples, to replace runoff and maintain current ERC levels.
Consumer Credit Backdrop Remains Favorable for Supply
Burton said delinquency trends remain elevated across non-mortgage consumer asset classes, creating favorable supply trends for portfolio purchases. He pointed specifically to auto finance, where receivables have grown to $1.68 trillion and average monthly new vehicle loan payments have risen to $806, up 52% from pre-pandemic levels.
Burton also cited negative equity among used vehicle trade-ins and longer loan terms as signs of strain. He said Jefferson Capital is positioned to offer solutions across performing, charged-off and insolvency auto finance portfolios.
Consumer savings levels also remain an important factor, according to Burton. He said personal savings of $857 billion are below the long-term pre-pandemic average of $1.1 trillion from 2013 through 2019, suggesting consumers have less capacity to absorb unexpected financial stress.
“All of these trends point in one direction, elevated levels of consumer delinquencies and charge-offs,” Burton said, adding that the trends could create a “long runway” for portfolio supply in coming quarters.
Legal Collections and Efficiency
Burton said legal channel collections have increased as the company has made process improvements in the United States, shortening the time between account placement and lawsuit filing. He described litigation as a “means of last resort” when the company believes an account holder has the ability, but not the willingness, to engage or pay.
In the financial review, Chief Financial Officer Christo Realov said operating expenses rose 47% year over year to $96 million, reflecting the growth in collections. Court costs increased 86% to $17.3 million due to higher legal channel volumes. He said court costs are expected to remain around current levels given the increased inventory of suit-eligible accounts.
Realov said adjusted pre-tax income was $58 million, resulting in an adjusted pre-tax return on equity of 50.8%. Adjusted cash EBITDA increased 12% year over year to $235 million, driven by collections on portfolios purchased in 2024 and 2025, including Bluestem and Conn’s.
Balance Sheet, Dividend and Capital Allocation
Jefferson Capital said net debt to adjusted cash EBITDA improved to 1.79 times as of March 31. Management said its long-term target leverage ratio is 2.0 to 2.5 times on a sustained basis.
The company also amended its senior secured revolving credit facility on April 22, increasing aggregate committed capital by $150 million to $1.15 billion. Management said $254 million was drawn as of March 31, and $300 million of capacity has been earmarked to repay 2026 bonds.
The board declared a regular quarterly dividend of $0.24 per share, which management said represented a 4.6% annualized yield as of the end of April. In conjunction with a January follow-on equity offering, the company repurchased 3 million shares, or about 5% of total legally issued shares, for $59 million.
Management Sees Stable Competition and More Sellers
During the question-and-answer session, Burton said forward flow commitments increased about 28% between Dec. 31 and March 31, reflecting deeper client relationships and efforts to convert some spot-sale-oriented sellers into more programmatic sellers.
Asked about competition, Burton said pricing remained “stable and attractive” across asset classes, including insolvency and charge-offs. He said the broader trend is that there are more sellers today than one or two years ago, including in auto, telecom, installment loans and credit cards.
Burton closed the call by saying Jefferson Capital is “excited about the growth prospects” for the remainder of the year and beyond, citing the platform the company has built over the past 23 years.
About Jernigan Capital (NASDAQ:JCAP)
Jernigan Capital is a New York Stock Exchange-listed real estate investment trust (NYSE: JCAP) that provides debt and equity capital to private developers, owners and operators of self-storage facilities with a view to eventual outright ownership of facilities the Company finances. The Company's mission is to maximize shareholder value by accumulating a multi-billion dollar investment portfolio consisting of the newest, most attractive and best located self-storage facilities in the United States through a talented and experienced team demonstrating the highest levels of integrity, dedication, excellence and community.
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