Consumer Portfolio Services (CPSS) Small-Cap Growth Virtual Investor Conference summary

Company overview and market position

• Operates as a subprime auto finance indirect lender, purchasing contracts from dealers in all 50 states, with 33 years in business and a strong management tenure averaging 24 years.

• Management and insiders own about 48% of diluted shares, aligning interests with shareholders.

• Not owned by private equity or hedge funds, allowing for responsible credit decisions and consistent profitability, with 51 straight profitable quarters.

• Regularly accesses the ABS market, having completed 101 securitizations, with all bond investors receiving principal and interest.

• Faces light competition with only about six main competitors and high barriers to entry due to capital intensity, regulation, and dealer relationships.

Technology and operational strategy

• Early adopter of AI and machine learning in originations, with algorithms grading up to 8,000 applications daily and updated every 12-18 months.

• AI integrated into servicing and sales, optimizing collections and dealer grading, while maintaining a significant human workforce for underwriting and collections.

• Balances technology with human expertise, employing 150 in originations and 400 in collections.

• Maintains relationships with 14,000 dealers, with 9,000 submitting applications daily.

Portfolio, credit, and performance trends

• Holds $3.3 billion in subprime auto loans, an all-time high, with 80% of business from franchise dealers and 20% from independents.

• Average APR is 21%, average FICO 570, LTV 118, and average term 68 months; average amount financed is $21,000.

• 2022 originations were $1.85 billion, 2023 at $1.35 billion due to intentional credit tightening, and 2024 is pacing to match 2022 levels.

• Credit performance for 2022 vintages is expected to finish with CNLs around 19.5%, outperforming competitors.

• Delinquencies rose in 2023 but are declining in 2024, with improved customer quality and stable unemployment supporting performance.