Consumer Portfolio Services (CPSS) 2024 Annual Gateway Conference summary

Company overview and business model

• Operates exclusively in subprime auto finance, with 33 years in business and a $3.5 billion portfolio, the highest in its history.

• Employs about 1,000 people across five branches, with a sales force of 150 calling on franchise and independent auto dealers nationwide.

• Originates $100–$200 million in auto contracts monthly, aiming to increase to $200–$300 million in 2025 and beyond.

• Sells loan originations through quarterly ABS transactions, having completed 103 deals, missing only one during the 2008 recession.

• Management team averages 24 years of tenure, with insiders owning 48% of the company.

Financial performance and strategy

• Achieved 53 consecutive profitable quarters, focusing on profitability over aggressive growth.

• Record originations of $1.85 billion in 2022, a purposeful pullback to $1.3 billion in 2023, and renewed growth in 2024.

• Net profit ranged from $45–$100 million over the past four years; $86 million in 2022, $46 million in 2023.

• Interest expense is the largest variable, with ABS funding costs peaking at 8% and recently declining to 6.5%.

• Projected further cost of funds reduction to 4% in 2025, supporting higher profitability and growth.

Market dynamics and competitive positioning

• Subprime auto finance is a $200 billion segment within a $1.4 trillion auto finance market, with only six major competitors.

• Holds a 3–5th place market position among peers, with strong demand evidenced by rising daily applications (8,000 in 2022 to 10,000 in 2024).

• Differentiates through long industry experience, proprietary AI-driven underwriting, and extensive data.

• Not directly competing with Credit Acceptance due to fundamentally different business models.