Consumer Portfolio Services, Inc. (NASDAQ: CPSS)

Consumer Portfolio Services, Inc. is a specialty finance company. The company purchases and services retail automobile contracts. These contracts originate primarily from franchised automobile dealers and to a lesser extent from select independent dealers in the United States. The contracts finance the sale of new and used automobiles light trucks and passenger vans. Through purchasing these contracts Consumer Portfolio Services provides indirect financing to the customers of dealers. These customers have limited credit histories or past credit problems and are referred to as sub prime customers. The company serves as an alternative financing source for dealers. It facilitates sales to consumers who might otherwise be unable to obtain financing from traditional sources such as commercial banks credit unions or the captive finance companies affiliated with major automobile manufacturers. Consumer Portfolio Services was incorporated and commenced operations in March 1991. From inception through December 31 2025 the company has purchased approximately 24 7 billion of automobile contracts from dealers.

Consumer Portfolio Services generates revenue from multiple sources. The primary source is interest income earned on the automobile contracts held in its owned portfolio. When purchasing contracts from dealers the company pays a price based on the financed amount adjusted by an acquisition fee. This fee varies depending on the perceived credit risk of the contract. Interest accrues as customers make payments over the loan term. Additionally Consumer Portfolio Services earns servicing fees for managing contracts. For contracts it securitizes the company receives a base monthly servicing fee equal to 2.5 percent per annum of the declining outstanding principal balance. For contracts serviced for third parties the servicing fee structure differs but still contributes to revenue. The company also generates proceeds from its securitization activities. In these transactions pools of automobile contracts are sold to special purpose subsidiaries which issue asset backed securities to institutional investors. Furthermore Consumer Portfolio Services utilizes warehouse credit facilities to fund contract purchases prior to securitization and earns fees related to these facilities. The company has also engaged in direct lending to consumers and refinancing operations though these activities represent a small portion of total revenue. As of December 31 2025 the company's managed portfolio totaled approximately 3 898 425 000 dollars. The company funds its operations through a combination of equity capital debt financing and cash flows from operations including proceeds from securitizations and warehouse facilities.

Consumer Portfolio Services operates within the sub prime segment of the United States automobile finance industry. This segment provides financing to consumers with lower creditworthiness who typically receive higher interest rates than prime borrowers. The market is highly fragmented with numerous competitors. These competitors include national regional and local finance companies commercial banks credit unions captive finance companies affiliated with automobile manufacturers and other financial service providers. Many of these competitors possess greater financial resources and access to capital markets than Consumer Portfolio Services. Despite this the company maintains a competitive position. Its competitive advantages stem from its specialized focus on sub prime lending its proprietary credit scoring and underwriting models and its developed infrastructure for purchasing servicing and managing automobile contracts. The company's business model effectively supports dealer sales by providing a reliable financing option for consumers who do not qualify for traditional credit thus addressing a specific need in the marketplace. Consumer Portfolio Services has maintained a consistent presence in the industry for over three decades demonstrating resilience through various economic cycles.

Consumer Portfolio Services serves sub prime automobile consumers in the United States. These consumers are defined by limited credit histories or past credit problems which prevent them from qualifying for standard prime lending. The company reaches these consumers through its network of automobile dealer partners. Consumer Portfolio Services purchases retail installment contracts directly from these dealers thereby providing indirect financing to the end user. As of December 31 2025 approximately 73 percent of the company's active dealers were franchised new car dealers selling both new and used vehicles. The remaining 27 percent were independent used car dealers. Consumer Portfolio Services does not extend credit directly to consumers in the majority of its operations. Instead it relies on dealer relationships to originate contracts. The company's customer base consists therefore of individuals seeking vehicle financing who fall outside the traditional credit spectrum and the dealer entities that facilitate these transactions. The company's underwriting process evaluates factors such as employment stability income level residency and credit history to assess the risk profile of potential borrowers and determine appropriate loan terms.