Financial Data and Key Metrics Changes - Revenues for Q2 2025 were $109.8 million, a 14% increase from $95.9 million in Q2 2024, driven by interest from the fair value portfolio yielding 11.4% [9][10] - Operating expenses for Q2 2025 were $102.8 million, a 15% increase from $89.2 million in Q2 2024, primarily due to a 26% increase in interest expenses [10] - Net income for Q2 2025 was $4.8 million, compared to $4.7 million in Q2 2024, with diluted earnings per share at $0.02, down from $0.19 in the prior year [11][12] Business Line Data and Key Metrics Changes - The company originated $433 million in new auto contracts in Q2 2025, slightly up from $431 million in Q2 2024, marking the second-best Q2 in the company's history [14] - The portfolio of assets under management increased to $3.708 billion, up 16.8% from $3.173 billion at the end of Q2 2024 [15] - The total delinquency rate greater than 30 days improved to 13.14% from 13.29% year-over-year, indicating a positive trend in credit performance [19] Market Data and Key Metrics Changes - The market appears cautious, with foot traffic reported down at dealership partners, impacting demand for products [15][25] - The company noted a potential for three to four interest rate cuts in the future, which could positively affect business operations [25][28] Company Strategy and Development Direction - The company is focusing on efficiency improvements and cost-cutting measures while maintaining a strong credit policy [25][31] - Implementation of AI technology in processing tasks aims to enhance operational metrics and improve collection efforts [17][22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing potential interest rate cuts and stable unemployment rates as favorable conditions for growth [25][30] - The company remains vigilant regarding macroeconomic headwinds, including job reports and tariffs, while continuing to adopt responsible lending practices [25][29] Other Important Information - The company achieved its lowest operating expenses as a percentage of the portfolio at 4.88% in Q2 2025, a 14% improvement from the previous year [12][24] - The company is exploring M&A activity in the industry that could benefit its competitive positioning [27] Q&A Session Summary Question: What is the outlook for interest rates and unemployment? - Management indicated that they do not expect interest rates to rise and are hopeful for cuts, which would benefit the company [28][30] - Unemployment trends are currently stable, which is a positive sign for the company's operations [30][31]

[Financial Highlights](index=1&type=section&id=Financial_Highlights) CPS reported a 14.5% revenue increase to $109.8 million in Q2 2025, with net income slightly up to $4.8 million, and similar growth for the first half Q2 2025 vs. Q2 2024 Financial Performance | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $109.8 million | $95.9 million | +14.5% | | Pretax Income | $7.0 million | $6.7 million | +4.5% | | Net Income | $4.8 million | $4.7 million | +2.1% | | Diluted EPS | $0.20 | $0.19 | +5.3% | Six Months Ended June 30, 2025 vs. 2024 Financial Performance | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $216.6 million | $187.6 million | +15.5% | | Pretax Income | $13.8 million | $13.2 million | +4.5% | | Net Income | $9.5 million | $9.3 million | +2.2% | [Operational Highlights & Credit Quality](index=1&type=section&id=Operational_Highlights_%26_Credit_Quality) The receivables portfolio grew to **$3.708 billion**, with stable new contract purchases, while net charge-offs slightly increased and delinquencies improved - Total receivables grew to **$3.708 billion** as of June 30, 2025, a significant increase from **$3.173 billion** as of June 30, 2024[6](index=6&type=chunk) - New contract purchases in Q2 2025 were **$433.0 million**, remaining relatively flat compared to **$431.9 million** in Q2 2024[6](index=6&type=chunk) Credit Quality Metrics (as of June 30) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Annualized Net Charge-offs | 7.45% | 7.26% | | Delinquencies > 30 days (incl. repo) | 13.14% | 13.29% | [Management Commentary](index=1&type=section&id=Management_Commentary) CEO Charles E. Bradley highlighted improved earnings and operational efficiencies, emphasizing focus on new credit quality and existing loan performance as the portfolio grows - The CEO, Charles E. Bradley, identified "Improvements in earnings and operating efficiencies" as the key highlights of the second quarter[8](index=8&type=chunk) - The company's strategic focus is on maintaining the quality of originated credit and ensuring the strong performance of existing loans as the portfolio grows[8](index=8&type=chunk) [Financial Statements Analysis](index=3&type=section&id=Financial_Statements_Analysis) Financial statements show revenue growth from higher interest income, offset by rising interest expenses, with balance sheet expansion driven by finance receivables and securitization trust debt, impacting net interest margin [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed_Consolidated_Statements_of_Operations) Q2 2025 saw interest income rise 19.2% to **$105.4 million**, but faster 25.7% growth in interest expense to **$58.7 million** compressed margins, leading to a modest pre-tax income increase Q2 Statement of Operations (in thousands) | Line Item | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Interest Income | $105,362 | $88,367 | +19.2% | | Interest Expense | $58,704 | $46,710 | +25.7% | | Employee Costs | $24,362 | $23,725 | +2.7% | | Income Before Taxes | $6,952 | $6,672 | +4.2% | | Net Income | $4,797 | $4,672 | +2.7% | H1 Statement of Operations (in thousands) | Line Item | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Interest Income | $207,295 | $172,655 | +20.1% | | Interest Expense | $113,622 | $88,678 | +28.1% | | Income Before Taxes | $13,754 | $13,229 | +4.0% | | Net Income | $9,491 | $9,262 | +2.5% | [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed_Consolidated_Balance_Sheets) Total assets reached **$3.76 billion** as of June 30, 2025, driven by a **$245 million** increase in finance receivables, funded by a **$219 million** rise in securitization trust debt, with shareholders' equity exceeding **$300 million** Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Finance receivables, fair value | $3,559,029 | $3,313,767 | +$245,262 | | Total Assets | $3,763,790 | $3,493,868 | +$269,922 | | Securitization trust debt | $2,813,234 | $2,594,384 | +$218,850 | | Shareholders' equity | $303,101 | $292,770 | +$10,331 | - Shareholder's equity achieved a record high, surpassing **$300 million** for the first time[9](index=9&type=chunk)[18](index=18&type=chunk) [Operating and Performance Data](index=5&type=section&id=Operating_and_Performance_Data) The total portfolio balance grew 16.9% to **$3.71 billion**, while annualized net charge-offs increased to **7.45%**, and net interest margin compressed to **5.5%** due to higher interest expenses Key Performance Indicators (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total portfolio balance | $3,708.38 M | $3,173.28 M | | Annualized Net Charge-offs | 7.45% | 7.26% | | Total Delinquencies & Repo. | 13.14% | 13.29% | | Net interest margin (% of avg. portfolio) | 5.5% | 6.3% | - The decline in net interest margin from **6.3%** to **5.5%** YoY was primarily driven by interest expense rising as a percentage of the average portfolio from **-6.0%** to **-6.4%**[19](index=19&type=chunk) [Corporate Information](index=2&type=section&id=Corporate_Information) CPS will hold a conference call on August 12, 2025, to discuss Q2 results, operating as a specialty finance provider offering indirect auto financing to individuals with limited credit histories - A conference call to discuss Q2 2025 results will be held on August 12, 2025, at 1:00 p.m. ET[10](index=10&type=chunk) - CPS's business model involves providing indirect automobile financing to individuals with past credit problems or limited credit histories by purchasing contracts from franchised dealerships[12](index=12&type=chunk)

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for the period ended June 30, 2025, reflect growth in total assets and net income, supported by strong operating cash flow [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to **$3.76 billion**, driven by finance receivables, while liabilities also grew, resulting in higher shareholders' equity Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$3,763,790** | **$3,493,868** | | Finance receivables measured at fair value | $3,559,029 | $3,313,767 | | **Total Liabilities** | **$3,460,689** | **$3,201,098** | | Warehouse lines of credit | $395,596 | $410,898 | | Securitization trust debt | $2,813,234 | $2,594,384 | | **Total Shareholders' Equity** | **$303,101** | **$292,770** | [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) For the three and six months ended June 30, 2025, net income slightly increased, driven by higher interest income largely offset by rising interest expenses Statements of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $109,764 | $95,880 | $216,638 | $187,624 | | Interest Expense | $58,704 | $46,710 | $113,622 | $88,678 | | Net Income | $4,797 | $4,672 | $9,491 | $9,262 | | Diluted EPS | $0.20 | $0.19 | $0.39 | $0.38 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, operating cash flow significantly increased, while investing activities used more cash and financing activities provided less cash Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $128,328 | $95,996 | | Net cash used in investing activities | ($360,829) | ($317,817) | | Net cash provided by financing activities | $255,272 | $363,001 | | **Increase in cash and cash equivalents** | **$22,771** | **$141,180** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, debt structure including **$2.8 billion** in securitization trust debt, legal contingencies, and a subsequent **$418.33 million** securitization - The company specializes in purchasing and servicing sub-prime retail automobile installment sale contracts, providing indirect financing to customers with limited or poor credit histories[18](index=18&type=chunk) - As of June 30, 2025, the company was in compliance with all financial covenants related to its securitization transactions, warehouse credit facilities, and residual interest financing[36](index=36&type=chunk) - The company estimates that the range of reasonably possible losses for legal proceedings and contingencies does not exceed **$3.2 million** as of June 30, 2025[78](index=78&type=chunk) - On July 28, 2025, the company executed its third securitization of the year, selling **$418.33 million** of asset-backed notes secured by automobile receivables with a weighted average yield of approximately **5.43%**[93](index=93&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes revenue growth to portfolio expansion, though profitability was constrained by rising interest expenses, while credit quality improved and liquidity remains supported by debt facilities [Overview](index=31&type=section&id=Overview) Consumer Portfolio Services, a sub-prime auto lender, consistently grew its managed portfolio to **$3.85 billion**, primarily funding through warehouse facilities and securitizations Contract Purchases and Managed Portfolio Growth ($ in thousands) | Period | Contracts Purchased in Period | Managed Portfolio at Period End | | :--- | :--- | :--- | | 2022 | 1,854,385 | 3,001,308 | | 2023 | 1,357,752 | 3,194,623 | | 2024 | 1,681,941 | 3,665,725 | | Six months ended June 30, 2025 | 884,236 | 3,854,825 | - The company utilizes two primary warehouse credit facilities with a total capacity of **$535 million** to fund automobile contract purchases on an interim basis before securitization[109](index=109&type=chunk)[110](index=110&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) Revenues increased significantly in Q2 and H1 2025 due to higher interest income from a larger loan portfolio, though net income growth was constrained by rising interest expenses Q2 2025 vs Q2 2024 Performance (in millions) | Metric | Q2 2025 | Q2 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenues | $109.8 | $95.9 | +$13.9 | +14.5% | | Interest Income | $105.4 | $88.4 | +$17.0 | +19.2% | | Interest Expense | $58.7 | $46.7 | +$12.0 | +25.7% | H1 2025 vs H1 2024 Performance (in millions) | Metric | H1 2025 | H1 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenues | $216.6 | $187.6 | +$29.0 | +15.5% | | Interest Income | $207.3 | $172.7 | +$34.6 | +20.1% | | Interest Expense | $113.6 | $88.7 | +$24.9 | +28.1% | - The blended cost of funds for new asset-backed term securitizations has shown a significant upward trend since early 2022, with rates for recent securitizations in 2025 hovering around **5.9%**[126](index=126&type=chunk)[150](index=150&type=chunk) [Credit Experience](index=42&type=section&id=Credit%20Experience) As of June 30, 2025, total delinquencies improved from year-end 2024, while annualized net charge-offs slightly increased, with the extension program continuing to mitigate losses Delinquencies as a Percentage of Gross Servicing Portfolio | Date | Percentage | | :--- | :--- | | June 30, 2025 | 10.50% | | June 30, 2024 | 10.87% | | December 31, 2024 | 12.11% | Annualized Net Charge-Offs as a Percentage of Average Servicing Portfolio | Period | Percentage | | :--- | :--- | | Q2 2025 | 7.45% | | Q2 2024 | 7.26% | | Full Year 2024 | 7.62% | - The company's loan extension program is presented as an effective loss mitigation tool, with **57.8%** of accounts granted extensions in 2019 either paid off or still active and performing as of June 30, 2025[174](index=174&type=chunk) [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains liquidity through operating cash flow, warehouse credit facilities, and securitization proceeds, with total outstanding debt at approximately **$3.4 billion** - As of June 30, 2025, the company had **$15.8 million** in unrestricted cash and **$136.4 million** in available borrowings under its two warehouse credit facilities, assuming sufficient eligible collateral[189](index=189&type=chunk) - Total debt outstanding at June 30, 2025, was approximately **$3.4 billion**, composed primarily of **$2.8 billion** in securitization trust debt and **$395.6 million** from warehouse lines of credit[193](index=193&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's principal executive and financial officers concluded that disclosure controls and procedures are effective, with no material changes to internal controls over financial reporting - The CEO and CFO have certified that the company's disclosure controls and procedures were effective as of June 30, 2025[195](index=195&type=chunk) [PART II. OTHER INFORMATION](index=50&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates legal proceedings information from Note 8, with estimated reasonably possible losses not exceeding **$3.2 million** from routine consumer litigation - The information regarding legal proceedings is incorporated by reference from Note 8 to the Unaudited Condensed Consolidated Financial Statements[197](index=197&type=chunk) [Item 1A. Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) The company highlights its substantial indebtedness of approximately **$3.4 billion** as a significant risk, potentially increasing vulnerability and limiting operational flexibility - The company highlights its substantial indebtedness of approximately **$3.4 billion** as of June 30, 2025, as a key risk factor[199](index=199&type=chunk) - Potential adverse effects of high debt include increased vulnerability to economic downturns, reduced cash flow for operations, limited business flexibility, and a competitive disadvantage[202](index=202&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2025, the company repurchased **76,880 shares** of common stock at an average price of **$9.72 per share** under its buyback program Share Repurchases in Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | – | $– | | May 2025 | 27,544 | $9.26 | | June 2025 | 49,336 | $9.98 | | **Total** | **76,880** | **$9.72** | [Item 5. Other Information](index=51&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the second quarter of 2025[205](index=205&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents - The exhibits filed with the report include certifications from the Chief Executive Officer and Chief Financial Officer, as well as Inline XBRL data files[207](index=207&type=chunk)

Core Insights - Consumer Portfolio Services, Inc. reported earnings of $4.8 million, or $0.20 per diluted share, for Q2 2025, reflecting an increase from $4.7 million, or $0.19 per diluted share, in Q2 2024 [1][2] Financial Performance - Revenues for Q2 2025 were $109.8 million, up $13.9 million, or 14.5%, from $95.9 million in Q2 2024 [2][10] - Total operating expenses for Q2 2025 were $102.8 million, compared to $89.2 million in the same period of 2024 [2][12] - Pretax income for Q2 2025 increased to $7.0 million from $6.7 million in Q2 2024 [2][10] - For the six months ended June 30, 2025, total revenues were $216.6 million, an increase of approximately $29.0 million, or 15.5%, compared to $187.6 million for the same period in 2024 [3] - Net income for the six months ended June 30, 2025, rose to $9.5 million from $9.3 million in the prior year [3][12] Portfolio and Contracts - During Q2 2025, CPS purchased $433.0 million of new contracts, slightly up from $431.9 million in Q2 2024 [4][14] - The company's receivables totaled $3.708 billion as of June 30, 2025, an increase from $3.615 billion as of March 31, 2025, and from $3.173 billion as of June 30, 2024 [4][14] Credit Quality - Annualized net charge-offs for Q2 2025 were 7.45% of the average portfolio, compared to 7.26% for Q2 2024 [5][15] - Delinquencies greater than 30 days were 13.14% of the total portfolio as of June 30, 2025, down from 13.29% as of June 30, 2024 [5][15] Management Commentary - The CEO highlighted improvements in earnings and operating efficiencies, emphasizing a focus on credit quality and loan performance as the portfolio grows [6]

Group 1 - Consumer Portfolio Services, Inc. (CPS) will hold a conference call on August 12, 2025, at 1:00 p.m. ET to discuss its second quarter 2025 operating results [1] - Participants can pre-register for the conference call through a provided link and will receive an email with dial-in options [2] - A replay of the conference call will be available for 12 months on the company's website starting two hours after the call concludes [2] Group 2 - Consumer Portfolio Services, Inc. is an independent specialty finance company that provides indirect automobile financing to individuals with past credit problems or limited credit histories [3] - The company purchases retail installment sales contracts primarily from franchised automobile dealerships, secured by late model used vehicles and, to a lesser extent, new vehicles [3] - CPS funds these contract purchases mainly through the securitization markets and services the contracts over their lives [3]

Group 1 - Consumer Portfolio Services, Inc. (CPS) announced the closing of its third term securitization in 2025, marking its 56th senior subordinate securitization since 2011 and the 39th consecutive securitization to receive a triple "A" rating from at least two rating agencies on the senior class of notes [1][2] - The transaction involved qualified institutional buyers purchasing $418.33 million of asset-backed notes secured by $433.50 million in automobile receivables originated by CPS, issued by CPS Auto Receivables Trust 2025-C [2] - The securitization notes consist of five classes with varying amounts, interest rates, and ratings, with a weighted average coupon of approximately 5.43% [3] Group 2 - The 2025-C transaction features initial credit enhancement including a cash deposit equal to 1.00% of the original receivable pool balance and overcollateralization of 3.50%, with agreements requiring accelerated principal payments to achieve specified overcollateralization levels [4] - CPS is an independent specialty finance company that provides indirect automobile financing to individuals with past credit problems or limited credit histories, primarily funding contract purchases through securitization markets [6]

Financial Data and Key Metrics Changes - Revenues for Q1 2025 were $106.9 million, a 17% increase from $91.7 million in Q1 2024 [7] - Net income for Q1 2025 was $4.7 million, a 2% increase from $4.6 million in Q1 2024 [8] - Total managed portfolio size increased to $3.45 billion, up 24% from $2.79 billion year-over-year [9] - Securitization debt rose to $2.74 billion, a 20% increase from $2.27 billion in March 2024 [9] - Shareholders' equity reached a record high of $298.4 million, a 7% increase from $279.1 million last year [9] Business Line Data and Key Metrics Changes - Originations for Q1 2025 were $451 million, a 31.5% increase from $346 million in Q1 2024 [11] - The average APR was maintained at 20.32%, with LTVs around 117-118% [14] - Core operating expenses were $46.1 million, a 3% increase from $44.9 million last year, but as a percentage of the managed portfolio, they improved to 5.2% from 6% [10] Market Data and Key Metrics Changes - Total delinquency rate (DQ) for Q1 2025 was 12.35%, slightly improved from 12.39% in Q1 2024 [15] - Annualized net charge-offs for Q1 2025 were 7.5%, down from 7.84% in Q1 2024 [16] - Unemployment rate is currently at 4.2%, with predictions of a rise to 4.6% by the end of 2026 [21] Company Strategy and Development Direction - The company aims to grow while maintaining credit quality, focusing on high creditworthy paper and managing expenses [4][24] - The strategy includes tightening credit terms while expanding dealer relationships and entering new territories [12][14] - The company is leveraging technology, such as AI voice agents, to improve operational efficiency [19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the portfolio's growth and credit quality despite economic uncertainties [23][24] - The company is focused on navigating through the legacy issues of lower-quality paper from 2022 and early 2023 [26] - The industry is stable with no new entrants, and the company is outperforming competitors in credit performance [27][28] Other Important Information - The company completed its second quarter securitization successfully despite market uncertainties [6] - The operational efficiency has improved, allowing the company to do more with fewer employees [20] Q&A Session Summary - No specific questions or answers were documented in the provided content, thus this section is not applicable.

Financial Data and Key Metrics Changes - Revenues for Q1 2025 were $106.9 million, a 17% increase from $91.7 million in Q1 2024 [7] - Expenses also increased by 17% to $100.1 million from $85.2 million in the previous year [8] - Net income rose to $4.7 million, a 2% increase from $4.6 million in Q1 2024, translating to diluted earnings per share of $0.19, unchanged from the prior year [9] - Shareholders' equity reached a record high of $298.4 million, up 7% from $279.1 million last year [10] - The total managed portfolio size increased to $3.45 billion, a 24% rise from $2.79 billion as of March 31, 2024 [9][12] Business Line Data and Key Metrics Changes - The company originated $451 million in new contracts in Q1 2025, a 31.5% increase from $346 million in Q1 2024 [12] - The average APR was maintained at 20.32%, with loan-to-value ratios reduced to around 117-118% [15] - Core operating expenses were $46.1 million, a 3% increase from $44.9 million last year, but as a percentage of the managed portfolio, they improved to 5.2% from 6% [11] Market Data and Key Metrics Changes - The unemployment rate is currently at 4.2%, with predictions of a slight increase to 4.6% by the end of 2026, which is viewed as a healthy indicator for the business [22] - The company reported a total delinquency rate of 12.35%, slightly improved from 12.39% in Q1 2024 [16] - Annualized net charge-offs were 7.5% of the average portfolio, down from 7.84% in the previous year [17] Company Strategy and Development Direction - The company aims to grow while maintaining credit quality, focusing on acquiring high creditworthy paper and managing expenses frugally [4][24] - There is a strategic emphasis on tightening credit terms while still expanding the dealer base and entering new territories [14] - The company is leveraging technology, such as AI voice agents, to improve operational efficiency and focus on more challenging accounts [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the current economic environment, noting that while interest rates are high, they do not expect them to rise further [24] - The company is focused on navigating through the legacy issues of lower-quality paper from 2022 and early 2023, with a significant portion of the portfolio now being high-quality [27] - The industry is viewed as stable, with no new entrants and strong players remaining, which bodes well for future growth [28][29] Other Important Information - The company completed its second quarter securitization successfully, despite market uncertainties [6] - The company continues to maintain a workforce of around 950 employees, achieving a record high in managed portfolio relative to headcount [21] Q&A Session Summary - No specific questions or answers were documented in the provided content, thus this section is not applicable.

Financial Performance - CPS reported earnings of $4.7 million, or $0.19 per diluted share, for Q1 2025, compared to $4.6 million, or $0.19 per diluted share, in Q1 2024[3][4] - Revenues for Q1 2025 were $106.9 million, an increase of $15.2 million, or 16.6%, from $91.7 million in Q1 2024[4][9] - Interest income for Q1 2025 was $101.9 million, an increase of 11.4% from $84.3 million in Q1 2024[17] - The company’s net interest margin for Q1 2025 was 51.96%, compared to 49.78% in Q1 2024[17] Portfolio and Contracts - Total portfolio balance reached $3.615 billion as of March 31, 2025, the highest in company history, up from $3.021 billion a year earlier[5][17] - New contract purchases amounted to $451.2 million in Q1 2025, compared to $346.3 million in Q1 2024[5][17] - CPS achieved the highest amount in new loan originations for any first quarter in company history[7] Credit Quality - Annualized net charge-offs for Q1 2025 were 7.54% of the average portfolio, down from 7.84% in Q1 2024[6][17] - Delinquencies greater than 30 days were 12.35% of the total portfolio as of March 31, 2025, slightly down from 12.39% a year earlier[6][17] Future Plans - The company plans to hold a conference call on May 13, 2025, to discuss its Q1 2025 operating results[7][8]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Consumer Portfolio Services, Inc. for Q1 2025, including balance sheets, statements of operations, cash flows, and detailed notes [Unaudited Condensed Consolidated Financial Statements](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Financial%20Statements) For Q1 2025, net income slightly increased to **$4.7 million**, total assets grew to **$3.67 billion**, and cash from operations significantly increased, driven by higher finance receivables and a new securitization Condensed Consolidated Balance Sheet (Unaudited) | (In thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$3,673,606** | **$3,493,868** | | Finance receivables measured at fair value | $3,449,106 | $3,313,767 | | **Total Liabilities** | **$3,375,179** | **$3,201,098** | | Securitization trust debt | $2,743,269 | $2,594,384 | | **Total Shareholders' Equity** | **$298,427** | **$292,770** | Condensed Consolidated Statement of Operations (Unaudited) | (In thousands, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total Revenues | $106,874 | $91,744 | | Total Expenses | $100,072 | $85,187 | | Interest Expense | $54,918 | $41,968 | | **Net Income** | **$4,694** | **$4,590** | | Diluted EPS | $0.19 | $0.19 | Condensed Consolidated Statement of Cash Flows (Unaudited) | (In thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $73,868 | $52,705 | | Net cash used in investing activities | ($194,111) | ($108,632) | | Net cash provided by financing activities | $166,324 | $81,451 | | **Increase in cash and cash equivalents** | **$46,081** | **$25,524** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the company's sub-prime auto contract business, key accounting policies including fair value for receivables, debt structures, lease obligations, legal proceedings, and a significant **$419.95 million** securitization completed in May 2025 - The company specializes in purchasing and servicing retail automobile contracts for sub-prime customers, providing indirect financing through motor vehicle dealers[18](index=18&type=chunk) - Finance receivables acquired since January 1, 2018, are accounted for at fair value, where anticipated credit losses are incorporated into the level yield calculation, eliminating a separate periodic provision for credit losses for this portfolio[22](index=22&type=chunk)[24](index=24&type=chunk) Securitization Trust Debt Outstanding | (In thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Outstanding Principal** | **$2,759,276** | **$2,609,855** | - On March 20, 2025, the company completed a **$65 million** securitization of residual interests from previously issued securitizations with a coupon of **11.00%**[58](index=58&type=chunk) - The company estimates the range of reasonably possible losses for all legal proceedings and contingencies does not exceed **$3.2 million** as of March 31, 2025[72](index=72&type=chunk) - Subsequent to the quarter end, on May 12, 2025, the company executed a securitization of **$419.95 million** of asset-backed notes secured by **$439.29 million** in automobile receivables[86](index=86&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's analysis shows **16.6%** revenue growth driven by an expanding **$3.77 billion** portfolio, offset by a **17.5%** increase in operating expenses, resulting in flat net income, improved credit quality, and liquidity dependent on securitization markets with **$3.3 billion** in total debt [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Q1 2025 revenues increased **16.6%** to **$106.9 million** due to portfolio growth, but total operating expenses rose **17.5%** to **$100.1 million**, primarily from a **$12.9 million** increase in interest expense, resulting in flat net income of **$4.7 million** - Revenues increased by **$15.2 million (16.6%)** YoY, mainly from higher interest income due to a larger average balance of finance receivables, including a **$3.5 million** fair value mark-up on the portfolio[107](index=107&type=chunk) - Total operating expenses increased by **$14.9 million (17.5%)** YoY, primarily due to a **$12.9 million** increase in interest expense[111](index=111&type=chunk)[114](index=114&type=chunk) Net Interest Income Change Analysis (Q1 2025 vs Q1 2024) | (In thousands) | Total Change | Change Due to Volume | Change Due to Rate | | :--- | :--- | :--- | :--- | | **Interest Income** | **$17,645** | **$16,752** | **$893** | | **Interest Expense** | **$12,950** | **$10,808** | **$2,142** | | **Net Interest Income** | **$4,695** | **$5,944** | **($1,249)** | - The net interest yield decreased to **4.7%** in Q1 2025 from **4.9%** in Q1 2024, as the average rate on interest-bearing liabilities rose faster than the yield on interest-earning assets[120](index=120&type=chunk)[121](index=121&type=chunk) [Credit Experience](index=33&type=section&id=Credit%20Experience) Credit quality improved with total delinquencies decreasing to **9.75%** and annualized net charge-offs slightly improving to **7.5%**, while payment extensions remain a key loss mitigation tool Delinquency as a Percentage of Gross Servicing Portfolio (by Amount) | Period | 31-90+ Days Delinquent | | :--- | :--- | | March 31, 2025 | 9.75% | | March 31, 2024 | 9.98% | | December 31, 2024 | 12.11% | - Annualized net charge-offs as a percentage of the average servicing portfolio was **7.5%** for the three months ended March 31, 2025, compared to **7.8%** for the same period in 2024[132](index=132&type=chunk) - The company's extension program is presented as effective, with **57.8%** of accounts granted extensions in 2019 either paid in full or active and performing as of March 31, 2025[137](index=137&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is primarily sourced from securitizations and warehouse facilities, with Q1 2025 operating cash flow at **$73.9 million**, total debt at **$3.3 billion**, and **$29.8 million** unrestricted cash with **$153.6 million** available borrowings - Primary sources of cash are securitization transactions, warehouse credit facilities, and customer payments, with primary uses being purchases of automobile contracts and operating expenses[143](index=143&type=chunk) - As of March 31, 2025, the company had **$29.8 million** in unrestricted cash and **$153.6 million** in aggregate available borrowings under its two warehouse credit facilities[149](index=149&type=chunk) - Total outstanding debt was approximately **$3.3 billion** at March 31, 2025, primarily composed of **$2.74 billion** in securitization trust debt and **$365.7 million** in warehouse lines of credit[152](index=152&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures are effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures are effective in recording, processing, summarizing, and reporting material information on a timely basis[154](index=154&type=chunk) - There were no changes in internal controls over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[154](index=154&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine consumer litigation and a class action lawsuit, with management estimating the maximum reasonably possible loss for all legal contingencies not to exceed **$3.2 million** - The company is routinely involved in various legal proceedings resulting from its consumer finance activities[70](index=70&type=chunk)[156](index=156&type=chunk) - Management believes the range of reasonably possible losses for all legal proceedings as of March 31, 2025, does not exceed **$3.2 million**[72](index=72&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) Substantial indebtedness of approximately **$3.3 billion** as of March 31, 2025, poses a key risk, increasing vulnerability to economic downturns and limiting financial flexibility - The company has substantial indebtedness, totaling approximately **$3.3 billion** at March 31, 2025, consisting primarily of securitization trust debt and warehouse lines of credit[158](index=158&type=chunk) - This high level of debt could adversely affect financial condition by increasing vulnerability to economic downturns, requiring dedication of substantial cash flow to debt payments, and limiting flexibility[159](index=159&type=chunk)[160](index=160&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any shares of its common stock during the first quarter of 2025 - The company did not repurchase any shares of its common stock during the first quarter of 2025[161](index=161&type=chunk) [Item 5. Other Information](index=42&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated any Rule 10b5-1 trading arrangement during the quarter ended March 31, 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter[162](index=162&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL financial data files - The exhibits filed with the report include CEO and CFO certifications (Exhibits 31.1, 31.2, 32) and Inline XBRL documents (Exhibit 101)[163](index=163&type=chunk)[165](index=165&type=chunk)