Pagaya Technologies BMO Capital Markets 2026 Financials Conference

Welcome. Thank you. Thanks for having me.

It has been a great conference so far.

Yeah, sure. First, just to answer the question, we are not a second look originator. About 50% of our flow today comes from applications that may have been first declined by our partner bank or lender. That number a year or two ago looked more like 80%. So we are moving very much kind of up the funnel through different products with our bank partners, with our lending partners to access a far greater percentage of the total application flow. But let us take a step back. So what is Pagaya? We are a credit decisioning solution that helps lenders convert more of their borrowers. Over time, what we have formed is a network. On one side of that network is over 35 banks, fintechs, other lenders in the personal loan space, auto, and to a lesser extent, point of sale. On the other side of the network are more than 190 unique investors.

These are the largest asset managers, insurance companies in the world who want access to the diversified flow of consumer credit assets that our network originates. What is it that all translated to? We are run rate right now about $14 billion of funded loan volume a year. We went net income positive about seven quarters ago, the first quarter of 2025. We have grown net income every quarter since, and we are now at a run rate of GAAP net income of about $200 million, which has strengthened the business considerably. What is the value prop? How do we work with people on more than just the decline business?

I think of our value proposition at sort of a pretty high level. On personal loans, we are essentially a deposit retention tool for banks. What does that mean? Citizens, who is our newest bank partner who came on just over the last couple of months, they view Pagaya as enabling their ability to provide a personal loan product, which is a vital product for them to attract new deposit customers.

And keep existing deposits, as there might be more competitive products in that set at faster moving fintechs. On the auto side, our solution dramatically improves the lender's relationship with its dealer network. If we can make an Ally, a Westlake, or whoever else on the auto side of our network provide a more fulsome, more dealer-friendly solution, then that lender's relationship with its dealer network will be dramatically improved, which apart from the economics that our lending partners are getting, just that positioning has been so vital.

Yeah, I think it's a couple of things. One, the first one's always kind of the hardest to get. As we ramped up U.S. Bank, Ally, and others, our ability to walk into other banks, can be banks that are larger than those or smaller, and allow those banks to really have the confidence that we know what we're doing and we know how to work with banks and we know how to integrate, I think is very powerful. The other piece is increasingly, and this is something our partnerships team has noticed and we've noticed in higher level conversations with banks, in a way, the balance sheet strategy and the product strategy are now sort of seen as not independent of each other, but both having validity on their own.

It may be that personal loans in the space where we're providing personal loans, so this is a 670, 680 FICO borrower, $125,000 of annual income, so a very good borrower.

Yep And most likely a very good deposit customer.

It may be that from a balance sheet standpoint, that may not be sort of the targeted borrower for the bank. However, there is a recognition that from a product standpoint, it's something that they have to have to really compete in a much more fintech-centric landscape. I think it's really that. It's realizing that you can't just think so monolithically about your balance sheet in the bank context. It needs to be, how are we going to best service our customers so we retain that long-term value and we can work with them in so many other ways?