Jefferson Capital - Earnings Call - Q2 2025

Executive Summary

• Strong inaugural quarter as a public company: revenue $152.7M (+47% y/y), net income $47.7M (+48% y/y), cash efficiency ratio 75.9% (+638 bps y/y), leverage improved to 1.76x; board declared a $0.24 quarterly dividend.
• Results materially beat Wall Street: consensus revenue $147.7M vs. actual $152.7M; consensus EPS $0.62 vs. S&P-actual $0.794, and company pro forma diluted EPS $0.81; strength driven by elevated collections ($255.7M, +85%) and ERC at a record $2.85B (+31% y/y).
• Conn’s portfolio purchase contributed meaningfully ($24.7M portfolio revenue, $3.1M servicing revenue, $19.5M net operating income) while overall deployments were $125.3M (down 11% y/y); forward flows locked-in $257.3M, with $218.8M over the next 12 months.
• Near-term catalysts: favorable delinquency/charge-off backdrop, ample liquidity (RCF $825M undrawn; cash $51.7M), pre-funded 2026 maturity, target leverage 2.0–2.5x, and declared dividend; management remains bullish on pipeline and operating efficiency.

What Went Well and What Went Wrong

What Went Well

• Record operational metrics: collections $255.7M (+85% y/y) and ERC $2.85B (+31% y/y); cash efficiency ratio 75.9% vs. 69.5% a year ago.
• CEO highlighted sector-leading efficiency and favorable market supply: “We are very proud of our best-in-class Cash Efficiency Ratio… operating efficiency is a powerful competitive advantage,” and “investment environment remains favorable with elevated…delinquencies and charge-offs”.
• Balance sheet strength and liquidity: leverage improved to 1.76x; $825M RCF undrawn; $51.7M unrestricted cash; $500M 2030 notes issued to pre-fund 2026 maturity.

What Went Wrong

• Operating expenses rose 37% y/y to $65.5M, driven by court costs, agency commissions, and IPO-related professional fees; interest expense also increased 42% y/y.
• Deployments decreased 11% y/y to $125.3M in Q2 despite strong ytd deployments; UK net operating income contracted on lower deployments and higher servicing costs.
• Effective tax rate came in ~23% with a significant catch-up tied to the IPO-related change in tax status, dampening bottom-line vs. pretax strength; management now guides ~23% going forward.

Transcript

Speaker 5

Good afternoon, and welcome to Jefferson Capital's second quarter 2025 conference call. With us today are David Burton, Chief Executive Officer, and Christo Realov, Chief Financial Officer. As a reminder, this conference call is being recorded. This call may contain forward-looking statements regarding the company's plans, initiatives, strategies, and the anticipated financial performance of the company, including but not limited to sales and profitability. Such statements are based upon management's current expectations, projections, estimates, and assumptions. Words such as expect, believe, anticipate, think, outlook, hope, and variations of such words and similar expressions identify such forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties that may cause future results to differ materially from those suggested by the forward-looking statements. Such risks and uncertainties are further disclosed in the company's most recent filings with the Securities and Exchange Commission.

Shareholders, potential investors, and other readers are urged to consider these factors carefully in evaluating the forward-looking statements made herein and are cautioned not to place undue reliance on such forward-looking statements. The company does not undertake to update the forward-looking statements except as required by the law. Also, during this conference call, the company will be presenting certain non-GAAP financial measures. Reconciliations of the company's historical non-GAAP financial measures to their most directly comparable GAAP financial measures appear in today's earnings press release. Now, I'll turn the call over to David Burton.

Speaker 4

Thank you, Operator, and thanks everyone for joining our investor call. On June 25, we completed our initial public offering, which was both the culmination of over 22 years of execution on our differentiated growth strategy and the very first step in what is a new and incredibly exciting chapter in the company's history. I'd like to welcome our new investors to the call. We appreciate your support in the offering, and I look forward to delivering on the investment thesis I laid out in the roadshow. Now, let's dive into the financial results. In the second quarter, we again generated strong results for shareholders. Our collections were $256 million, up 85% versus the second quarter of 2024, and we continued to perform well versus our underwriting expectations.

Our estimated remaining collections reached a new record of $2.9 billion, up 31% year over year, driven by our continued deployment performance and attractive returns. Revenue for the quarter was $153 million, up 47% versus the prior year period. We delivered a sector-leading cash efficiency ratio of 75.9%, driven in part by strong collections from the Khanz portfolio purchase, which we completed in the fourth quarter of last year. We generated strong cash flow with LTM-adjusted cash EBITDA of $654 million, which in turn improved our leverage to 1.76 times, a level which positions us well for future growth and creates significant strategic optionality. Next, I'd like to offer a brief market update and cover some of the macroeconomic indicators to provide better context for why I remain bullish on the investment opportunity for our business.

I'll start with delinquency trends, which remain elevated across all non-mortgage consumer asset classes and create favorable portfolio supply trends for our business. An important component to better understand the state of the consumer is the current level of personal savings. During the pandemic, consumers accumulated abnormally high savings as a result of the unprecedented levels of government stimulus, which served as a financial cushion against life's unexpected events. By the end of 2022, the excess savings had been depleted, and in fact, the current level of personal savings at $1 trillion is lower than the long-term pre-pandemic average from January 2013 through December 2019 of $1.1 trillion, and the reduction in personal savings in real terms is even more substantial when considering inflation. This suggests that consumers have a more limited ability to absorb unanticipated temporary financial hardships, which is an important driver for delinquency and charge-off volumes.

Next, regarding the insolvency market, we've seen a well-pronounced increase in the number of insolvencies in both the U.S. and Canada from the pandemic trough in 2021, which in turn has fueled a resurgence in supply of insolvency portfolios. Insolvency valuation and servicing requires highly specialized expertise, a robust dataset to develop accurate forecasts, and a technologically advanced servicing platform, and we remain one of the very few debt buyers in the U.S. and by far the largest debt buyer in Canada that can take advantage of this market opportunity. Finally, this backdrop is also underpinned by a low level of unemployment, which supports the expected liquidation rates on our existing portfolio and gives us confidence in underwriting new purchases.

All of these trends point in one direction: elevated levels of consumer delinquencies and charge-offs, which we're seeing across all consumer asset classes and which we believe create a long runway for a robust portfolio supply over the coming quarters, coupled with continued strong collection performance on our existing book and on any future portfolio purchases. Moving on, I'd like to review in more detail some key performance trends for the quarter. Our collections, as I mentioned, were $256 million, up 85% year over year, driven by strong deployments in 2023 and 2024. The Khanz portfolio purchase represented $65 million of collections for the quarter. Our collection performance continues to reinforce the accuracy of our underwriting models. Our portfolio purchases for the quarter were $125 million, compared to $140 million for the second quarter of 2024. Year-to-date deployments were $301 million, up 24% versus the same period in 2024.

Returns remain attractive, and we remain bullish on the deployment landscape. An important trend which continued in the quarter was the increase in insolvency deployments both in the U.S. and Canada, which grew 45% on a combined basis as a result of the insolvency trends I outlined earlier. As of June 30th, we had $257 million of deployments locked in through forward flows, which is an important building block of our deployment strategy for the coming quarters. Our estimated remaining collections, or ERCs, as of June 30th were $2.9 billion, up 31% year over year, with ERC related to the Khanz portfolio purchase comprising $227 million of the total. Our ERC is relatively short in duration, with 66% to be collected through 2027. The short duration of our ERC is due in part to the lower average account balances in our portfolio.

We expect to collect $889 million of our June 30th ERC balance during the next 12 months. Based on the average purchase price multiples recorded thus far in 2025, we would need to deploy approximately $465 million globally over the same timeframe to replace this runoff and maintain current ERC levels. I would note that as of June 30th, we had $219 million of deployments contracted via forward flows for the next 12 months. Moving on to slide eight, I'd like to review in more detail another core pillar of our business model and a critical building block of our differentiated return profile: our best-in-class operating efficiency.

We seek to own the high value-add aspects of the purchasing and collection process, including portfolio and consumer payment performance data, extensive analytical and modeling capabilities, certain proprietary technological capabilities, and the collection processes and techniques that we believe create competitive advantage for the company and a significant barrier to entry. In contrast, we seek to outsource the aspects of the collection value chain that we view as commoditized or operationally intensive and do not produce a competitive advantage, such as running a large domestic call center. We utilize Champion Challenger performance measures to allocate portfolio segments to the best servicers, and our internal collection platform effectively competes for market share against external vendors in both the agency and the legal collection channels. Our mostly variable cost structure provides flexibility to scale deployments depending on market conditions.

The benefits of our relentless pursuit of operating efficiency are evident in our efficiency metrics relative to the rest of the sector. As I mentioned, our cash efficiency ratio for the quarter was 75.9%. It was aided by the collections on the Khanz portfolio purchase, which carry lower costs to collect, given the significant portion of paying accounts in the Khanz portfolio. When excluding the Khanz portfolio collections and expenses, the cash efficiency ratio would have been 71.8%. That's approximately 1,000 basis points higher than other public companies in the sector. Our leading operating efficiency is a powerful competitive advantage, and coupled with the strong returns on our differentiated investment strategy, supports consistent, attractive shareholder returns. With that, I would now like to hand the call over to Christo Realov for a more detailed look at our financial results.

Speaker 0

Thank you, David. Taking a closer look at the financial details for the second quarter, revenue was $153 million, up 47% year over year. Continued strong performance of our UK servicing businesses, as well as incremental revenue related to servicing arrangements for the core securitizations, drove servicing revenue growth of 48% year over year. Operating expenses were $66 million, up 37% year over year, with an increase due to significant growth in collections. Expenses remain well controlled relative to collections, and our cash efficiency ratio at 75.9% for the quarter was significantly higher than our much larger public interest rate industry peers. Given the change in our tax status related to the initial public offering, I will focus on profitability metrics before taxes. Net operating income was $87 million for the quarter, up 57% year over year.

Adjusted pre-tax income, in turn, was $62 million, up 55% year over year, resulting in an adjusted pre-tax return on average equity of 58.4%. Finally, we recognize portfolio revenue of $25 million, servicing revenue of $3 million, and net operating income of $19.5 million related to the Khanz portfolio purchase. As you can see on slide 10, our credit profile remains strong and positions us well for future opportunities. As of June 30, our net debt to adjusted cash EBITDA improved to 1.76 times following the comms-related uptick in December as a result of strong collections in the quarter. This leverage ratio is significantly better than our public interest rate peers. Over the long term, our target leverage ratio is in the range of 2 to 2.5 times. Our balance sheet is solid, with ample liquidity to support growth, create strategic optionality, and pay out quarterly dividends.

On May 2, we completed our third unsecured bond offering, raising $500 million, with the intent to effectively pre-fund the $300 million 2026 maturity. We used the net proceeds of the offering to pay off our revolving credit facility, which at June 30 had zero balance outstanding. In addition to that, at quarter end, we had $52 million of unrestricted cash to further support our liquidity needs. We have earmarked $300 million of the RCF capacity to repay the 2026 bonds. Given the maturity is fully pre-funded, and at this point we are not taking on any market risk, we plan to keep the bonds outstanding as long as possible to take advantage of the attractive 6% coupon.

This strong liquidity profile is a critical component of our value proposition to sellers, who value certainty of close in periods when portfolio activity increases, but the funding markets may be constrained or unavailable. With regard to our capital allocation priorities, our primary focus remains on deploying capital with attractive risk-adjusted returns. A fourth quarter typically offers an elevated level of deployment opportunities, and we're well positioned with capital to respond. Our board has declared a quarterly dividend of $0.24 per share, which represents a 5.7% annualized dividend yield. The dividend offers an attractive component of shareholder return, which sets us apart from other publicly traded companies in the sector and also induces long-term discipline around investment returns. We will evaluate share repurchases at the appropriate time while also aiming to maintain trading liquidity in the stock.

Finally, we have a long history of successful M&A, but we intend to remain disciplined and opportunistic. Now, we would be happy to answer any questions that you may have. Operator, please open up the line for questions.

Speaker 5

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. Our first question comes from John Heck with Jefferies. Please go ahead.

Speaker 1

Afternoon, guys, and congratulations on your first post-IPO quarter. First question is just looking at the deployments. Obviously, a good number, but I'm wondering the mix of the deployments. Was there anything worthy of noting with respect to the change in mix, or is it pretty consistent with the past mix or the current ERC?

Speaker 4

Thank you for your question, John. The mix is consistent with our recent trends, and no substantial, you know, material changes other than those noted in our prepared comments as it related to continued growth and insolvency deployments in the U.S. and Canada.

Speaker 1

Okay. Maybe can you talk a little bit about, is there any development? It sounds like supply is good. Any change of cadence, like whether you're talking about credit card or personal loans or telco? Is there any kind of update you can give us with respect to pricing or supply in the various markets that you guys specialize in?

Speaker 4

Yeah, I would say that the trends that exist in the first quarter with respect to kind of supply across the asset classes have remained pretty consistent. I wouldn't consider there to be any material change between the first and the second quarter. Generally speaking, we're seeing increased supply across all asset classes.

Speaker 1

Great. I appreciate that very much.

Speaker 4

Yeah, thanks for the question, John.

Speaker 5

Thank you. Our next question comes from David Schaff with Citizens Capital. Please go ahead.

Speaker 1

Yeah, good afternoon. Thanks for taking my questions as well. I’ll echo John’s congrats. Hey, Dave, I appreciate all the color on both kind of the macro backdrop as well as the visibility into volumes via what’s under contract for forward flow. I’m wondering if you could also maybe provide, if there’s any commentary on just sort of the seller pipeline of new potential sellers. Clearly, you’re benefiting from the tailwinds of high debt levels. If there’s anything you can provide just in terms of whether there are more sellers across various asset classes coming to market, you think?

Speaker 4

Thank you for the question, David. Our quest is to continually expand our funnel of opportunities with the greatest emphasis on the asset classes where we're already kind of the market leader, where we have some sustainable competitive advantages, beyond just having a better cash efficiency ratio. There is continued progress in cultivating new clients in those asset classes, kind of per normal. With respect to, and I think your question probably is more along the lines of the credit card asset class, there has been an expectation that over time, particularly perhaps with a CFPB, which has been maybe less active, that other credit card issuers perhaps that hadn't been selling but represent large opportunities, that they may come to market.

I would note that I'm not really aware of any new credit card companies coming to market of any of the top issuers, although I will note that the combination of Capital One and Discover have many people wondering about whether Discover, which historically hasn't been a seller, might become one. I don't have any information on that, but I would think that to the extent that there would be a new entrant in the charge-off sales, that would be more likely because Capital One has been a seller, that that would be the most likely new entrant.

Speaker 1

Got it. No, it's helpful. Maybe just as one follow-up, you know, you had called out the particular strength in the growth in insolvency for both the U.S. and U.K. Can you just remind us, is there anything we ought to keep in mind about just the impact on sort of your consolidated yields and efficiency ratio as insolvency continues to grow as a part of the mix?

Speaker 4

Great question. First, let me just slightly correct you. You mentioned an increase in insolvencies in the U.S. and the U.K., and really the U.S.

Speaker 1

Yeah, I'm sorry.

Speaker 4

It's okay. I just want to make sure for listeners that they note that. To the extent that there would be a massive change in our deployment volumes and mix more toward insolvency, which does have a lower kind of cost to collect, that would be seen over time to increase our cash efficiency ratio. The opposite had been the case since 2021 as insolvency volumes hit that trough. We've had probably lower deployments in insolvency relative to prior years before 2021. I would think that we were experiencing, on a marginal basis, the opposite effect where our mix was increasing toward distress in our overall ERC and collections. You're right that the mix does matter in terms of cash efficiency ratio, but insolvency deployments are not at a level where I would anticipate much of an impact today on near-term cash efficiency ratio.

Speaker 0

I think that's exactly right. I would add to that that the net return to us is very similar between distressed portfolios and insolvency portfolios, as the purchase price multiple on an insolvency portfolio is typically lower, right? As it relates to the overall profitability profile, we would underwrite these portfolios to a similar net return to us. The other impact you may see is, of course, as the mix shifts a little bit, is lower purchase price multiples, the gross multiple may be lower.

Speaker 1

Right. Understood. Great. Thank you very much.

Speaker 4

Yeah, thank you, David.

Speaker 5

Thank you. Our next question comes from Matthews with Trust Securities. Please go ahead.

Speaker 1

Yeah, thank you. Good afternoon. Christo, the effective tax rate in the quarter was above, I think, earlier thoughts about what the rate would be in 2Q. Am I thinking about that properly? If so, what was the driver of that?

Speaker 0

I think the effective tax rate for the quarter was 23%. There were a number of one-time items, and there was a material sort of catch-up for taxes in the second quarter. However, coincidentally, we think that the 23% is probably the right number as we think about the third quarter and going forward. We'll update the market to the extent that that changes. 23% round numbers for aggregate tax rate is the right ballpark.

Speaker 1

Am I correct in thinking the initial thought was it would be upper single digits? Was that to me, or was that the original expectation you all had?

Speaker 0

Upper single digits was the historical tax rate.

Speaker 1

For this quarter, not for this quarter.

Speaker 0

You are right in the sense that we were a C corp for only four days. However, what happened was we needed to effectively accrue a tax provision for the full six months. The tax expense that you see on the P&L is the difference between the amount that was accrued for the six months and what we paid under our old structure for the first quarter, right? As such, due to that catch-up, and that catch-up is quite significant. The difference is around, I think it's around $12.2 million of an adjustment as it relates to taxes for the quarter. I think there's a little bit of coincidence here, but the tax rate that you see, the effective tax rate for the third quarter is expected to be around the same as it was in the second quarter.

Speaker 1

Exactly. Just trying to be clear that the kind of the original thoughts you all had about pre-tax income, you did substantially better, but then the tax rate and that catch-up was higher. On a reported basis or an adjusted basis, that unusual tax item dampens the bottom line result. Is that a fair way to think about it?

Speaker 0

That is very much a fair assessment of what happened. That adjustment is $12.2 million out of the $14 million that you see there.

Speaker 1

Yeah, I think that's broken out in the Q if I looked at it properly. Okay. Do you happen to have the adjusted cash EBITDA number for this quarter and then the second quarter last year?

Speaker 0

I do.

Speaker 1

You provide it on a trailing basis, and I could probably figure that out. I wonder if you had it there handy.

Speaker 0

Bear with me for one second. The adjusted cash EBITDA number for the second quarter of 2025 was $204 million. You wanted the reference quarter in 2024?

Speaker 1

Yeah. Correct.

Speaker 0

That was $101.70.

Speaker 1

$101.7. A final question, the Khanz, could you talk a little bit about the performance? You know, you have a performing and non-performing part of that portfolio, just some update on how you're seeing either bucket performing here through the second quarter?

Speaker 4

Sure. I think my comments will be on the performing portfolio. The non-performing portfolio, which was a small part of the acquisition, is kind of encompassed and incorporated into our charge-off purchases in the distressed business. With respect to the performing Khanz portfolio, we have continued to exceed the underwritten expectations, and that portfolio continues to perform well. We did disclose what the collections were for the quarter, what the operating expenses were, and what the servicing revenue was related to the securitizations that we're servicing.

Speaker 0

Yeah. I think to add, as we've said before, we expect that this is a relatively short portfolio, and we expect the financial impact of the collections to taper off and to continue to taper off over the course of 2025, and the material component of the impact would be contained within 2025 for that portfolio.

Speaker 1

Appreciate the detail.

Speaker 0

For sure.

Speaker 5

Thank you. Our next question comes from the line of Robert Dodd with Raymond James. Please go ahead.

Speaker 2

Hi, guys. Congratulations on getting the first quarter out of the way. Not focusing on Khanz, but sort of focusing on Khanz. I think, Christo, in your prepared remarks, you mentioned M&A, you've been disciplined and opportunistic. Obviously, Khanz was the last opportunity, and the return on that has been pretty acceptable. In terms of opportunities on that front, are you seeing any changes that make opportunities more likely to occur in the near-medium term, or is that still kind of like, yes, you'd like to do more, but you're just not seeing anything that's attractive right now?

Speaker 4

Sure. Thanks for the question. I'll make a couple of comments. The first one I would say is I consider the Khanz portfolio purchase really not to be an M&A type of acquisition. The company has a long history of doing successful acquisitions of companies. I think Christo's comments in our prepared remarks really were referring to M&A activities to acquire a debt buyer, a specialized servicer, you know, in either a new geography or a new asset class, which has been kind of our ongoing long-term strategy to support growth. We're constantly looking at those types of opportunities. Of course, we look at a lot more than we're actually able to transact on. I suppose that's a reference to Christo's comment about being disciplined.

It's not just the importance of being able to buy a good platform with a good management team, but it's also important to buy it at the right price. Secondly, your comment, I think, is really relating to performing portfolios. The Khanz portfolio, as you mentioned, had an acceptable return. We would agree with you on that. I would say that while we have looked at performing portfolios in the past and have had success in acquiring them, not to the size and scale of the Khanz opportunity, I would say that acquisition itself, the fact that it was through a 363 bankruptcy process, there was a fair amount of press related to that transaction. I believe as a result, we've been seeing more opportunities.

Those types of performing portfolio dislocations where a business like Khanz is exiting its business are not ones where we can create the opportunity, but we are prepared to respond to the opportunities that get presented to us. I suspect that we have been seeing and will continue to see more of those opportunities as it has become known that we have a unique capability and have proven to be an excellent counterparty in transactions like that.

Speaker 2

Thank you for that, Carla. One moment if I can. On cost efficiency, obviously, the Khanz comes into play here, right? It was less of cash collections this quarter than last quarter, and I would expect that trend to continue. There's a bit of a headwind on just a reported basis. If we look through that and look at the underlying cost efficiency, if you were to exclude Khanz, for example, the trends are still pretty robust. What other levers do you have to continue that? It's already pretty high, right? You're not going to get to a cost efficiency ratio of 100%, right? It gets harder and harder as it is high to gain any improvements that move the numbers. What are your thoughts on how much more you can do on that on a like-for-like basis mix aside? Insolvency can move it, etc.

There's lots of moving parts in there. How much more efficiency have you got that you can squeeze out of the collections process on a like-for-like basis?

Speaker 4

First, let me respond that I sort of agree with everything you've said, which is if you take the mix issues aside and you take the Khanz impact aside, I would also acknowledge that the ability to have the same impact on a nominal % basis gets more difficult each year. However, if you look at all of the quarters prior to the Khanz purchase, I think that would give you the best indication for the continuous improvement that the company has been able to actually achieve in driving down our cost to collect and improving our cash efficiency. We absolutely have an expectation and a set of initiatives around continuous improvement in our cash efficiency.

That is a hallmark of our practices and focus here because the power of improving cash efficiency is so profound when you think, you know, we obviously have a great track record of underwriting portfolios accurately and then delivering the expected collections. If you then can, on top of achieving your expected returns at origination, reduce costs in a way that wasn't considered as part of your underwritten model and forecast, that has a powerful operating leverage impact in increasing and generating, you know, excess cash flow and profitability. That will forever be an area of focus for us. I would forever expect that we would continue to, you know, create improvement opportunities in cash efficiency. To your bigger point, do they become harder and therefore less impactful in terms of nominal %? Probably. I would not expect them to flatline.

Speaker 2

Got it. Thank you.

Speaker 5

Thank you. The next question comes from Boss George with KBW. Please go ahead.

Speaker 3

Yes, good afternoon, and my congratulations as well. You noted the normalized leverage ratio of 2 to 2.5 times. Based on your deployments, I would say over the next 12 months, do you get there, or do you need a ramp-up in deployments or something opportunistic like the acquisitions you've talked about to get you into that range?

Speaker 4

You're talking about future deployments, and we're kind of not giving guidance in that regard. I would note that a helpful fact is that, of course, the historical seasonal trend regarding deployments is that the fourth quarter has tended historically to be our largest deployment quarter. Our goal will be to continue to expand our funnel and grow our deployments for the long term. As we do that, we would expect to see a normalized leverage ratio in that 2 to 2.5 range.

Speaker 3

Okay. Great. Can you just discuss how an economic slowdown could impact both the existing portfolio and the outlook for new deployments?

Speaker 4

Sure. I think I'll point to what I view as possibly the most extreme kind of downturn that we've had in the 20, almost 23 years in the company's history. That would have been the Great Recession in 2008, where the country experienced the most rapid rise in unemployment. In the period following the onset of that recession, we saw liquidation rates decline about 10%, and that lasted for about 18 months until they reverted to the mean expectation. That dramatic and highly unlikely outcome, given that it was the most significant increase in unemployment since the Great Depression, with that kind of a book-ended expectation, kind of shows you what would be sort of a worst-case kind of scenario, at least given our own historical data. More likely, some type of recessionary onset would not have that dramatic of an impact. Even that impact itself was not that material.

Ultimately, the more important aspect of a recessionary environment is the impact that happens to the supply of charge-offs, which massively increase. Of course, pricing because of that also gets more attractive. Returns get much better. If you look at the returns coming out of that Great Recession and look at the 2009, 2010, and 2011 vintages from the public debt buyers, you'll see that those were among the very best returns available over a long period of time. That demonstrates that the onset of a recession would, on a net basis over kind of near to medium term, be a net positive for the company.

Speaker 3

Okay. Great. Thank you.

Speaker 5

Thank you. Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to David Burton for the closing comments.

Speaker 4

Thank you again. Looking forward, we're excited about growth prospects for our business for the remainder of this year and beyond. We've built an outstanding platform over the past 22 years, and we're in a great position to capitalize on opportunities as the market continues to evolve. Thank you all for attending today's investor earnings call. We look forward to providing a further update on our third quarter investor call in November.

Speaker 5

Thank you. Ladies and gentlemen, the conference of Jefferson Capital has now concluded. Thank you for your participation. You may now disconnect your lines.