Consumer Portfolio Services, Inc. Q3 FY2024 earnings call

• Comfort with credit going forward, with problematic paper from 2022-2023 now down to less than 33% of the portfolio.
• Securitization has benefited from the rate drop, with a strong market remaining positive for future.
• Q3 origination volume was $446 million, with October being the best origination month of the year and the second best in the company's 33-year history.
• Portfolio receivables grew to $3.3 billion at quarter end, a 12% increase from Q3 2023.
• Utilization of AI for faster processing, including quick proof of income checks and verifications.
• Lowered funding time to an all-time low of 1.79 days, with same-day funding at 17.35% of deals funded.
• Increased large dealer group originations, with $119 million in Q3, up 21% from Q2 and 40% from Q1.
• Portfolio performance: annualized net charge-offs in Q3 2024 were 7.53% of the portfolio vs. 6.86% in Q3 2023; delinquencies >30 days were 14.04% of the total portfolio vs. 12.31% in Q3 2023.
• Implemented Gen 8 credit decisioning model, tightened collection model, and hired more collectors.
• Migrated omnichannel collection system to the cloud, expecting collection lift and AI voice Bot pilot.

Revenues for the third quarter were $100.6 million, an increase of 9% compared to the $92.1 million in the third quarter of the previous year. Year-to-date revenues stood at $288.2 million, which was 11% higher than the first three quarters of 2023 ($260 million). Origination volume in the third quarter was $446 million, a significant 38% rise from the $322 million in the third quarter of 2022. For the year-to-date period, originations totaled $1.224 billion, representing a 16% increase over the $1.056 billion of the first three quarters of 2023. The fair value portfolio was valued at $3.1 billion. Expenses for the third quarter were $93.7 million, up from $77.9 million in the third quarter of 2022. Pre-tax earnings for the third quarter were $6.9 million, down from $14.2 million in the same period last year. Net income for the quarter was $4.8 million, compared to $10.4 million in the third quarter of 2022. Year-to-date net income was $14.1 million, whereas it was $38.2 million in the first nine months of 2023. The fair value portfolio yield was 11.3% net of losses. The securitization debt balance was $2.875 billion, a 28% increase from $2.243 billion in the third quarter of 2022.

• Anticipation of growth as problematic paper runs off and new paper comes in.
• If current origination pace continues, year-over-year growth rate of 18%-20% expected.
• Positioning for next year with a strong economy, low unemployment, and expected rate cuts.

• Forward-looking statements subject to risks of actual results differing from projections.
• Impact of industry changes and competition on business performance.
• Fraud risks, with ongoing efforts to mitigate via AI fraud scores, having saved nearly $4 million to date.

Q: No specific questions from analysts noted A: No explicit Q&A exchanges occurred as part of this earnings call