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Consumer Portfolio Services Inc (CPSS) is a specialized finance company dedicated to providing indirect automobile financing to individuals who face challenges such as past credit problems, low incomes, or limited credit histories. Founded in 1991, the company has built a robust portfolio by purchasing retail installment sales contracts from automobile dealerships. These contracts are primarily secured by late-model used vehicles, with a minor portion involving new vehicles.
The company's core business involves acquiring these contracts from franchised and select independent dealerships across the United States. By doing so, CPSS offers an alternative financing solution for customers who are often referred to as sub-prime due to their credit profiles. This approach not only aids consumers in securing vehicle financing but also supports dealerships in closing sales that might otherwise be unattainable.
CPSS funds its contract purchases primarily through the securitization markets, ensuring long-term stability and sustainability. The company then services these contracts over their entire lifespan, maintaining a steady revenue stream and fostering lasting relationships with its customers. As of June 2015, CPSS has purchased over $11.8 billion in contracts and is currently servicing a managed portfolio worth approximately $1.8 billion, encompassing around 140,000 customers.
Headquartered in Irvine, California, CPSS operates additional servicing branches in Florida, Illinois, Nevada, and Virginia, strategically positioned to optimize operational efficiency and customer service. With a dedicated workforce of approximately 900 employees and dealer relationships spanning across 48 states, CPSS stands as a significant player in the U.S. specialty finance sector.
Consumer Portfolio Services (Nasdaq: CPSS) is enhancing its FinTech capabilities through AI and machine learning to streamline auto loan processing. The company secured three significant partnerships to improve efficiency, reduce funding times, and expand payment options. Collaborating with Informed.IQ will automate income calculations, while Prodigal optimizes collections. Partnering with PayNearMe aims to accelerate digital payments and eliminate cash transactions. An AI credit model is set for Q1 2023 to enhance fraud detection and approval rates, marking a transformative year for CPS.
Consumer Portfolio Services (CPSS) reported significant growth for Q3 2022, with a net income of $25.4 million, an 85% increase from $13.7 million in Q3 2021. Earnings per share rose to $0.95 compared to $0.52 last year. Total revenues reached $90.3 million, up from $68.6 million, and pretax income soared 76% to $34.3 million. New contract purchases totaled $468.2 million, a 43% increase year-over-year. However, annualized net charge-offs increased to 4.93% from 2.82% in the prior year.
Consumer Portfolio Services, Inc. (Nasdaq: CPSS) will host a conference call on November 10, 2022, at 1:00 p.m. ET to discuss its third quarter 2022 operating results. Interested participants can pre-register for the call online and are advised to join 15 minutes early to avoid delays. A replay will be accessible for 12 months after the call via the company's website. CPS is a specialty finance company focusing on indirect automobile financing for individuals with past credit challenges, primarily acquiring retail installment sales contracts from franchised dealerships.
Consumer Portfolio Services (Nasdaq: CPSS) has completed its fourth term securitization of 2022, marking the 45th senior subordinate securitization since 2011. The $307.0 million in asset-backed notes, secured by $337.4 million in automobile receivables, were purchased by institutional buyers. This deal is notable as it continues the trend of achieving a triple 'A' rating for the 28th consecutive time from two rating agencies. The weighted average coupon on the notes is approximately 8.48%, and initial credit enhancement includes a cash deposit of 1.20% and 9.00% overcollateralization.
Consumer Portfolio Services (Nasdaq: CPSS) has partnered with Prodigal to enhance its collections and servicing operations with AI technology. This collaboration aims to improve efficiency by automating routine tasks, which frees up agents to focus on customer interactions. Prodigal's AI solution is expected to reduce after-call wrap time and improve overall productivity, ultimately leading to increased revenue. CPS continues its commitment to advancing FinTech initiatives and enhancing the auto lending experience through innovative technology.
Consumer Portfolio Services (CPSS) partners with Informed.IQ to enhance its auto lending process through AI and machine learning. This collaboration aims to automate income calculations, credit stipulation collection, and documentation, ultimately improving efficiency and customer experience. By leveraging Informed's technology, CPS anticipates larger origination volumes and reduced risks, including fraud. The initiative supports CPS's strategic focus on digital transformation and inclusive lending practices, positioning it competitively amidst regulatory scrutiny in the financial sector.
Consumer Portfolio Services (Nasdaq: CPSS) announced the closing of its third term securitization in 2022, marking the company's 44th senior subordinate securitization since 2011. The transaction involved the sale of $391.6 million in asset-backed notes backed by $440.0 million in automobile receivables. This securitization received a triple 'A' rating from two agencies, Standard & Poor's and DBRS Morningstar. The weighted average coupon on the notes is approximately 6.02%. Additionally, initial credit enhancements include a cash deposit of 1.00% and overcollateralization of 11.00%.
Consumer Portfolio Services (CPSS) reported significant growth in its second-quarter results for 2022, achieving a net income of $25.3 million, or $0.91 per diluted share, up from $9.7 million, or $0.39 per diluted share, in the same period last year. Pretax income surged to $34.2 million, a 147% increase year-over-year. Revenues hit $82.0 million, compared to $66.8 million in 2021, while new contract purchases increased by 33.7% to $548.1 million. Operating expenses fell to $47.8 million from $52.9 million in 2021, enhancing overall profitability.
Consumer Portfolio Services (Nasdaq: CPSS) will hold a conference call on July 26, 2022, at 1:00 p.m. ET to discuss second quarter 2022 operating results. Participants can pre-register for the call via a provided link. The company, focused on providing indirect automobile financing to individuals with credit issues, purchases retail installment sales contracts primarily from franchised dealerships. The financing is mainly funded through the securitization market, supporting the growth of its portfolio.
On July 15, 2022, Consumer Portfolio Services (Nasdaq: CPSS) announced the renewal of its revolving credit agreement with Citibank, increasing its borrowing capacity from $100 million to $200 million. This agreement allows CPS to secure loans against automobile receivables until July 2024, with options for repayment or amortization thereafter. CPS specializes in providing auto financing to individuals with challenging credit histories, and this funding will support their operations and growth.
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